Market Wrap
Closing Bell
Indian equity benchmarks managed to notch tiny gains even as investors held back big bets ahead of the U.S. Federal Reserve’s interest rate decision later in the day.
The S&P BSE Sensex gained 0.17 percent to 31,155 while the NSE Nifty 50 Index too gained 0.1 percent to 9,618. The market breadth was skewed 2:1 in favour of the bears on the NSE.
Six of the 11 sectoral gauges compiled by the NSE advanced, led by Nifty Realty’s 1.36 percent climb. The Nifty FMCG and Nifty Metal fell the most, losing close to 0.7 percent.
The market is going through a time correction, said Kunal Saraogi, CEO of market research firm Equityrush. “The Nifty is likely to spend some more time in this 200-point range [which is] between 9,550 and 9,750,” he told BloombergQuint by phone.
Saraogi said investors will be focused more on commentary coming out of the FOMC meet, rather than on interest rate decision. “A 25-basis point rate hike has been factored in,” he said.
In terms of investment idea, Saraogi picks midcap private sector banks over their larger peers. He also like some of the monsoon related themes. “The tyre stocks look good right now,” he said. Moreover, he advised investors to stay away from the pharma stocks despite some of them making a comeback.
Reliance Industries Tops Sensex, Nifty
Shares of the Mukesh Ambani-owned company gained 3.2 percent, the most since April 25, after its telecom unit added 3.9 million users in April and held about 10 percent of the market.
Besides that, around 20 lakh shares changed hands in two block deals, according to Bloomberg data.
Ballarpur Industries Rises After Share Allotment Plan
Shares of the paper maker rose 2.8 percent after it sought share nod for reclassification of share capital, according to its exchange filing.
The company is looking to allot shares to its lenders upon loan conversion. The lenders will hold 51 percent stake in the company upon allotment, the filing said.
Another Bad Day For Metal Stocks
Crompton Extends Decline Even As CLSA Says Good Time To ‘Buy’
Shares of the consumer electricals company declined for a fourth straight session, their worst performance since April.
CLSA Note On Crompton Greaves
- Maintain 'Buy' with target price of Rs 270 a share
- Company has margin tailwinds with an opportunity to grow
- Company's core product portfolio like fans and lighting more geared towards affordable housing
Crompton Vs Havells
- Prefer CGCEL over Havells for higher EPS CAGR, ROE, valuation differential
- Expect Crompton Consumer valuation discount to narrow versus Havells
- CGCEL core product categories are dependent on replacement demand while Havells categories are more dependent on new housing demand
PSU Banks Gain On Consolidation Report
Shares of the state-owned banks gained after report that government discussions around the consolidation in the sector has reached advanced stage.
According to a ETNow report, quoting government sources, Bank of Baroda and Canara Bank are the two top contenders to absorb smaller banks, while Dena Bank would be merged with a stronger bank.
Top Gainers
- Dena Bank (+15%)
- UCO Bank (+11%)
- Vijaya Bank (+6.7%)
- United Bank of India (+5.2%)
- Indian Overseas Bank (+5.3%)
- Bank of Baroda (+2%)
- Syndicate Bank (+4.3%)
- Canara Bank (+1.3%)
- Punjab National Bank (+1.1%)
Wholesale Inflation Falls In May After Crude, Fish And Eggs Get Cheaper
Lower food prices and a drop in fuel and power costs led to the wholesale price index fall to 2.17 percent in May, according to data released by the Ministry of Commerce and Industry, the second monthly reading after the government revised the base year to 2011-12, last month.
A survey conducted among economists by Bloomberg had pegged wholesale inflation at 2.9 percent.
For a complete break-up of the WPI data, click HERE
The Mutual Fund Show
BQSpotted
Jindal Worldwide Gains For A Third Day
- Stock jumps over 17.5% intraday, the most since April 11
- Trading volume was over 15 times its 20-day average on the NSE
- The textile company has a market capitalisation of Rs 1031 crore
- It has returned over 190% so far this year
Hexaware Pares Losses After Reiterating 2017 Guidance
Shares of the IT firm pared some of its losses after the company clarified to the exchanges that none of its top-20 clients terminated relationship in the past 10 years.
The stock dropped as much as 5.6 percent in early trade after a report said the company is facing revenue headwind from client Ernst & Young.
While the company said it won’t comment on contracts with individual clients, it reaffirmed its 2017 guidance for financial performance set in the beginning of year.
Block Deal Alert
- Reliance has 10.2 lakh shares change hands in a block
Buyers and sellers were not immediately known
Source: Bloomberg
Debt-Ridden Companies Decline Post RBI Move
Shares of debt-ridden companies dropped anywhere between 17 percent and 1.7 percent after the central bank identified large stressed accounts to be referred under India’s insolvency and bankruptcy rules.
Top Losers
- Bhushan Steel: -7.4%
- Alok Industries: -8.2%
- Electrosteel Steels: -16.7%
- ABG Shipyard: -4.6%
- Lano Infratech: -4.3%
- IVRCL: -1%
- Moser Baer India: -1%
- JP Associates: -1.7%
- GMR Infra: -2.4%
- GVK Power: -4.3%
- Jaiprakash Power: -2.6%
- Aban Offshore: -1.9%
- HCC: -1.7%
Bombay Burmah Shares Gain After Block Deal
- Bombay Burmah Trading has 11.8 lakh shares change hands in a block, according to Bloomberg data.
- Stock gains as much as 9.2 percent, best performer on S&P BSE 500, Nifty 500 and Nifty Smallcap indexes.
- Group company Bombay Dyeing jumps 5.3 percent to highest since May 11
Buyers and sellers were not immediately known
Reliance Gains On TRAI Data
- Reliance Industries (+1.9%): Jio added 3.9 million subscribers in April to hold 9.6 percent market share
- Bharti Airtel (+0.5%): Added 2.85 million subscribers in April; had 23.54 percent share
- Idea Cellular (-0.2%): Had 16.69 percent market share
- Reliance Communications (+0.3%): Lost subscribers in April
- Tata Teleservices (unchanged): Lost 1.5 million subscribers in April
Bank Stocks Gain After RBI Identifies Accounts For IBC
The Nifty Bank index gained after the central bank identified large stressed accounts to be referred under India’s insolvency and bankruptcy rules.
Top Gainers
- ICICI Bank (+1.6%)
- SBI (+0.7%)
- Axis Bank (+0.7%)
- Bank of Baroda (+1.3%)
- PNB (+1%)
For more details on the story, click here
Rupee Pares Early Gains
The rupee gave up early gains against the dollar as traders expect an increase on interest rate by the U.S. Fed at its policy meet today.
Forex dealers said weakness in the dollar against other currencies overseas supported the rupee. Yesterday, the domestic unit ended higher by 11 paise at 64.33 against the greenback on easing retail inflation.
Opening Trade With BQResearch
Opening Bell
Indian shares climbed, following a rebound in U.S. equities, led by drugmakers after Franklin Templeton Investments said India’s beaten-down pharmaceutical stocks are good bets in a market that has hit record highs.
The S&P BSE Sensex gained 0.2 percent to 31,183 while the NSE Nifty was little changed at 9,603. The market breadth was once again split right down in the middle, highlighting the lack of direction.
BQ HEADS UP
Chart Check
Stocks To Watch
- Dr. Reddy’s: Gets EIR from U.S. FDA for Miryalaguda API plant
- MCX: SEBI issues framework for option trading in commodity market
- Gati: Holds board meeting to approves conversion of overseas bond
- Greaves Cotton: To partner Pinnacle Engines for 3-wheelers
- Indian Oil, Bharat Petroleum, Hindustan Petroleum: To sign JV pact for West Coast project
- Infosys: Warns of shareholder activism risk in filing, Times of India reports
- JSW Steel: Crude steel output in May +1 percent YoY to 1.36 million tonne
- Lux Industries: Reliance Mutual Fund bought 444,103 shares yesterday, BSE says
- NTPC: Azure commissions 100 mw NTPC solar project in Andhra Pradesh
- Shriram Transport: Raises Rs 965 crore via debenture issue
- Wipro: Invests in Drivestream; to hold 26 percent stake in company
For a more comprehensive list of stocks to watch, click here
IPO Watch
- Tejas Networks to start sale of shares in IPO; share sale to end June 16; to allot 13.6 crore shares to 17 anchor investors
- Mahindra approves partial stake sale in logistics unit via IPO
Data To Watch
- 12:00pm: Wholesale-price inflation for May y/y; est. 2.90% (prior 3.85%)
Talking Points
- Indian Tycoon Mallya says ‘keep dreaming’ when it comes to fraud
- RBI identifies large stressed accounts to be referred under insolvency and bankruptcy rules
- 12 accounts totalling about 25 percent of Indian banking system’s current gross bad loans qualify for resolution under new rules
- India emphasizes national sales tax to roll out on July 1
- India had 1.2 billion telephone subscribers as of April 30, TRAI says
- Jio added 3.9 million, Bharti Airtel 2.85 million subscribers in April
- Girish Wagh to head Tata Motors’ commercial vehicles business
- Nomura sees election math raising risks on Indian farm loans
- Widespread rain seen in India’s cane, tea, coffee areas
- SEBI releases product design for options on commodity futures
- RBI allows Infomerics Valuation to risk weight banks’ capital adequacy claims
- India’s cabinet to meet today morning
Money Markets Heads-Up
All eyes are now on the U.S. Federal Reserve. While a rate hike, the second one this year, is widely anticipated, market will be closely watching for signals on future policy.
The key questions are: what is the path ahead for policy rates? What are the plans to trim the $4.5 trillion balance sheet?
In the currency markets, an index of dollar strength was little changed after falling for two consecutive sessions. Asian currencies are holding their gains against the U.S. dollar as stocks are positive. The rupee may trade higher and stay in a range of 64.25-64.45 a dollar in day.
In bonds, yields on the benchmark note fell two basis points to 6.49 percent as easing inflation has spurred bets of a policy rate cut. With improving domestic data, the market is biased up but the Fed event is likely to cap strong gains. Yield may stay in a range of 6.45-6.52 percent in the session.
Fed Policy: BloombergQuint Speaks To Hao Zhou Of Commerzbank
Good Morning!
The Singapore traded SGX Nifty, an early indicator of Nifty’s performance in India, swung between gains and losses around the 9,612 level.
Most Asian stocks gained in early trade, after the U.S. benchmarks snapped a two-day slide to close at record high as tech stocks rebounded from their worst drop of the year. Chinese shares fell, led by financial and technology shares, after the release of economic data.
The dollar held declined and U.S. Treasuries were steady before the Federal Reserve announces its policy decision. Traders are pricing in a nearly 98 percent chance the central bank will raise interest rates for the second time this year later in the day, fed fund futures showed.
Central banks in Japan, Switzerland and Britain are also scheduled to weigh in with policy decisions this week.
Oil resumed its decline as industry data showed U.S. crude stockpiles expanded, exacerbating an inventory overhang.
Meanwhile, drama in Washington continued to demand attention, with U.S. Attorney General Jeff Sessions testifying to lawmakers that he never spoke with Russian officials concerning “any type of interference” with the 2016 presidential campaign.
RECOMMENDED FOR YOU
POPULAR