KEY HIGHLIGHTS
Closing Bell
India’s equity benchmarks fell for a second day as investors weighed the impact of the U.S. Federal Reserve’s plan to speed up its expected pace of policy tightening on inflows into local stocks.
The S&P BSE Sensex fell 0.3% to 52,323.33, while the NSE Nifty 50 Index declined 0.5% to 15,691.40. Out of 30 shares in the Sensex index, 10 rose and 20 fell.
Sixteen of the 19 sector indices compiled by BSE Ltd. slipped, with a gauge of power stocks leading the losers. The S&P NSE Information Technology index was the best performer, up 0.9%.
Stocks have risen to new highs even in the face of near-record valuations and a mixed earnings season. The benchmark index has advanced 10% this year compared with a gain of 5% for the MSCI AC Asia Pacific Index. Its 1-year forward price-to-earnings ratio has increased to 22 times since April, close to record valuations of about 23.4 times reached in January, according to data compiled by Bloomberg.
Natco Pharma Q4 Net Income Misses Estimates
Natco Pharma reported net income for the fourth quarter that missed the average analyst estimate.
Net income Rs 53 crore, -44% YoY, estimate Rs 93.07 crore
Revenue Rs 330 crore, -27% YoY, estimate Rs 451 crore
Total costs Rs 289 crore, -20% YoY
Other income Rs 28.4 crore, +27% YoY
COMMENTARY AND CONTEXT
Says company expects strong growth during the current year due to multiple high product launches in the U.S., rebound in domestic India business with new products and contribution from Crop Health division
Company expects strong growth during the current year due to multiple high product launches in the U.S., rebound in India and contribution from Crop Health division
Asian Paints, Nestle India in Focus: Options Watch
Nestle India options volume 3.2x the 20-day average, with 3,753 calls changing hands vs 387 puts
Stock up 0.7%, volume 0.8x the 20-day average for this time of day
Asian Paints options volume 1.7x the average, with 32,118 calls vs 7,337 puts
Stock up 1.7%, volume 0.8x the average
Tata Consumer options volume 1.6x the average, with 12,710 calls vs 3,076 puts
Stock up 1.1%, volume 0.8x the average
Dodla Dairy, KIMS IPO Subscription Updates: Day 2
Krishna Institute of Medical Sciences IPO
General Atlantic-backed hospital chain KIMS was subscribed 0.36 times as of 1 p.m., according to exchange data.
KIMS has set the price band of its shares at Rs 815-825 apiece. The company plans to raise up to Rs 2,144 crore in its initial share sale.
Subscription Details Watch
Institutional subscription: 0.14 times.
Non-institutional investor subscription: 0.05 times.
Retail subscription: 1.46 times.
Employees: 0.30 times.
Also Read: KIMS IPO: All You Need To Know
Dodla Dairy IPO
The issue was subscribed 2.24 times as of 1 p.m.
Dodla Dairy is selling shares at Rs 421-428 in its Rs 520-crore IPO. The maiden offer comprises a fresh issue worth up to Rs 50 crore and an offer-for-sale of up to 1.09 crore equity shares by promoters and private equity investors such as TPG, according to its red herring prospectus.
Subscription Details:
Institutional subscription: 0.24 times.
Non-institutional investor subscription: 0.39 times.
Retail subscription: 4.18 times.
Also Read: Dodla Dairy IPO: All You Need To Know
Incred Capital’s Aditya Khemka On Why Investing In Healthcare Is Different
Nazara Technologies Reverses Loss On New Purchase
Shares of the Rakesh Jhunjhunwala-backed firm made a U-turn after it announced that it has signed a binding term sheet to acquire a majority stake in Publishme, a full-service games marketing and publishing agency based in Turkey and the Middle East region. This will be the company’s first acquisition since it went public in March.
Nazara will invest approximately Rs 20 crore for a 69.82% stake in Publishme, by way of primary and secondary transaction through its subsidiary, it said in a press release.
After the announcement, Nazara’s stock gained as much as 1.6%, paring a 1.6% opening drop. The shares of the gaming and sports media company have risen 50% since its March 30 listing.
Rupee Weakens On Stronger $, Higher Oil Prices
The Indian rupee drops by the most in two months, tracking losses in regional currencies, after the Federal Reserve’s hawkish comments at Wednesday’s review. Bonds fall before the central bank’s 400b rupees debt purchases as part of its government securities acquisition program.
USD/INR weakens as much as 0.7% to 73.8075, the most since April 19
10-year yields rose by 1bp to 6.05%; 5.63% 2026 yield up 3bps to 5.71%
Fed has spooked the markets by talking about interest rate hikes instead of tapering, says Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors
USD/INR has now become buy-on dips with 73.30 a strong support. Importers will now buy any good dip while exporters can start covering near term around 73.80
Talking Point With Saurabh Mukherjea
Advanced Enzyme Falls After 2.7% Equity Trades In Bunches
Advanced Enzyme has about 3 million shares change hands in Mumbai, according to data compiled by Bloomberg.
Shares snap two-day gain; trading about 0.7% lower, having fallen as much as 5.9% to their lowest intraday level since April 28
Trading volume >7.8x 3-month full-day average
Buyers, sellers not immediately known
ITI Jumps Most in Four Months On Heavy Volumes
ITI Ltd. rose 7.1%. Trading volume was five times the average for this time of day.
The stock was the best performer among its peers.
Trading volume was 318,238 shares, five times the 20-day average of 68,885 shares for this time of day.
Stock advanced 57% in the past 52 weeks, compared with a 154% increase for the company's Bloomberg peers. The Sensex gained 56%.
Gujarat Gas Gain On Morgan Stanley Target Hike
Shares of the state-owned city gas distributor rose as much as 4% after Morgan Stanley maintained its bullish ‘overweight’ rating and hiked the target price on the stock.
“We see better pricing power for industrial sales, expanding total addressable market from ceramics and chemical segments, higher penetration of gas sales for transportation, and upside from improving domestic gas supplies, which should stabilize margin volatility after almost half a decade to a new higher normal,” a note co-authored by Morgan Stanley’s Mayank Maheshwari and Akash Mehta said.
It increased its target price to Rs 733 from its earlier Rs 467 for Gujarat Gas.
The relative strength index on the stock was above 70, indicating it may be overbought.
Gujarat Gas trades at 30 times its estimated earnings per share for the coming year.
Adani Stocks Drop With Four Companies Slumping By Daily Limit
Shares of all six companies controlled by billionaire Gautam Adani fell, with four of them dropping 5% to hit the lower circuit.
Adani Total Gas Ltd., Adani Power Ltd. and Adani Transmission Ltd.slipped by their daily limit for the fourth consecutive session
Adani Green Energy Ltd also fell 5% to hit the lower circuit
Adani Enterprises Ltd. dropped as much as 6.8% while Adani Ports and Special Economic Zone Ltd. slipped as much as 6%
JK Cement Stock Rises As Citi Initiates Coverage
Shares of JK Cement rose 1.25% to Rs 2803.55 as Citi Research initiated coverage on the stock as its new top buy in India's mid-cap cement space.
“Our positive thesis is premised on potentially higher pricing for grey cement, better visibility into medium-term growth and rerating expectations,” Citi Research said in a note dated June 16.
It added that JK Cement has historically traded at a discount to larger pan-India producers, but its stronger balance sheet, better return on capital and improving growth visibility is helping narrow the valuation gap. “We believe the next rerating leg will be triggered by pent-up demand once the Covid restrictions are lifted,” it added.
The research firm set a 12-month target price of Rs 3,650 for the stock.
Opening Bell: Sensex, Nifty Slide In Line With Asian Peers
Indian equities fell, in line with their Asian peers, after Federal Reserve officials sped up their expected pace of policy tightening.
The S&P BSE Sensex fell 0.4% to 52,303.81 as of 9:30 a.m. in Mumbai, while the NSE Nifty 50 Index declined 0.4% to 15,709.45. HDFC Bank Ltd contributed the most to the drop on both indexes, decreasing 0.9%. Out of 30 shares in the Sensex index, 9 rose and 20 fell, while one was unchanged.
Fourteen of the 19 sector sub-indices compiled by BSE Ltd. dropped, led by a gauge of power stocks. The S&P BSE Oil & Gas index was the best performer, up nearly 0.5%.
“The slightly hawkish policy meeting outcome of the FOMC may weigh on sentiment in the near term,” Binod Modi, strategist at Reliance Securities Ltd., wrote in a note. “Investors must focus on quality stocks with robust earnings visibility and margins of safety.”
Stocks have risen to new highs even in the face of near-record valuations and a mixed earnings season. The benchmark index has advanced 10% this year compared with a gain of 5% for the MSCI AC Asia Pacific Index. Its 1-year forward price-to-earnings ratio has increased to 22 times since April, close to record valuations of about 23.4 times reached in January, according to data compiled by Bloomberg.
Federal Bank To Raise Rs 916 Crore From IFC; Plans More Share Sales
Federal Bank’s board approved issue of as many as 104.85 million shares to International Finance Corp., IFC Financial Institutions Growth Fund and IFC Emerging Asia Fund at Rs 87.39 each, according to a stock exchange filing.
The bank also approved a plan to raise as much as Rs 4,000 crore in one or more tranches via modes including rights issue, preferential issue and Qualified Institutions Placement
It also approved a plan to raise as much as Rs 8,000 crore by selling bonds including AT1 bonds, Tier 2 bonds and Masala bonds
Rupee Bond Traders To Weigh Debt Buying, RBI Paper
Rupee bond traders await a scheduled debt purchase of Rs 40,000 crore by the central bank as part of its government securities acquisition programme, and will take note of an RBI research paper that said 10-year bond yields have room to fall.
10-year yields rose by 1 bp to 6.05% on Wednesday
RBI Paper Says There is Scope for 10-Yr Yields to Ease Further
There is further scope for the 10-year yield to ease from current levels in the July-September quarter, the Reserve Bank of India said in a research paper published in its monthly bulletin on Wednesday
Comparing actual yields for Q2, 2021 (up to June 10) with the forecasts, the yield-macro model points to the scope for yields to adjust upwards by 1-23bps in the 2-3 years maturity segment and downwards by 39-56 bps in the 6-9 years segment
Out of sample forecasts indicate scope for moderation of longer-term yields from current levels
USD/INR little changed at 73.3275 on Wednesday
Implied opening from forwards suggest spot may start trading around 73.84
SGX Nifty Falls Along With Asian Peers As Traders Mull Fed
Asian stocks and U.S. futures declined Thursday after Federal Reserve officials sped up their expected pace of policy tightening.
An MSCI gauge of Asian shares was on track for its biggest slide in a month, though the number of stocks that rose and fell was evenly split. Japanese stocks underperformed, while Hong Kong shares fluctuated and Chinese equities ticked up.
India’s SGX Nifty 50 Index futures for June delivery fell 0.7% to 15,662.50, while MSCI Asia Pacific Index slips 0.8%. The NSE Nifty 50 Index fell 0.6% Wednesday to 15,767.55.
S&P 500 futures slipped after the benchmark closed down, but off its lows as Fed Chair Jerome Powell downplayed the risk of an immediate rate increase. Policy makers disclosed that they expect two hikes by the end of 2023 and would begin a discussion about scaling back bond purchases.
Crude oil declined as the strengthening dollar reduced the appeal of commodities priced in the currency. Gold steadied.
Back home, CESC, Somany Ceramics, Welspun Enterprises may react as the companies reported quarterly results after the market closed Wednesday. Power Grid, Natco Pharma, J&K Bank are among the companies scheduled to report earnings Thursday. Cyient is holding their annual shareholders’ meeting. Foreign investors bought net Rs 680 crore of stocks on Tuesday, according to NSDL website.
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