Sensex, Nifty Decline Paring Weekly Gains

India’s benchmark equity index fell amid the extension of lockdown-like curbs in some states and as exit polls indicated the nation’s ruling political party is trailing in key state elections.

The S&P BSE Sensex lost 2% to 48,761.82, while the NSE Nifty 50 Index dropped by 1.85% to 14,619.10. However, both measures logged their best weekly advance in three weeks. Fifteen of the 19 sector sub-indices compiled by BSE Ltd. slipped, led by a gauge of finance company stocks.

The HDFC twins were the biggest losers on the Sensex while ONGC Ltd. was among the few winners.

The market breadth was skewed in favour of the bears. About 1,356 stocks advanced, 1,589 declined and 170 remained unchanged at end of the session.

Nifty This Week

Tata Power Co., controlled by India’s largest conglomerate Tata Group, is weighing an initial public offering for its renewable energy business that could raise about Rs 3,500 crore ($473 million), Bloomberg News reporting people in the know.

The power company has abandoned earlier plans to seek a partner to invest in its green assets via an investment trust, the people said, asking not to be identified as the information is private. Tata Power will seek approval for the IPO plan from its board, they said. If they approve, the proposed listing in Mumbai could take place as soon as this year, one of the people said.

Shares of the lender dropped after it reported a spike in its non-performing assets.

Its asset quality worsened as the gross non-performing assets (NPAs) spiked to 4.25% of gross advances as of March 31, from 1.68% in the same period last year.

Net NPAs or bad loans also soared to 2.18% from 0.81%.

The drugmaker’s stock rose 5.6%, the most in five months, with trading volume was double the average for this time of day. It was the best performer on the NSE Nifty Pharma index.

• Trading volume was 1.45 million shares, triple the 20-day average of 534,868 shares for this time of day.
• The relative strength index on the stock was above 70, indicating it may be overbought.
• Stock advanced 76% in the past 52 weeks, compared with a 39% increase for the company's Bloomberg peers. The Sensex gained 46%.
• Analysts have 18 buy, one hold, and three sell recommendations on the stock.
• The price target of Rs 4,144.64 represents a 1.1% increase from the last price

Marico reported net income for the fourth quarter that missed the average analyst estimate.

• Net income Rs 219 crore, +13% YoY, estimate Rs 229 crore (range Rs 215 crore to Rs 249 crore) (Bloomberg Consensus)
• Revenue Rs 2,012 crore, +34% YoY, estimate Rs 1,815 crore
• Total costs Rs 1,739 crore, +37% YoY

Commentary

• Company says the magnitude and reach of the ongoing second wave in India is concerning
• “The extent and duration of the underlying impact on business environment and consumption is also uncertain at this time, but we expect a clearer picture to emerge in May,” Marico said of the Indian business
• Holds its medium-term aspiration of delivering 8%-10% domestic volume growth and 13%-15% revenue growth
• Would be comfortable maintaining its threshold operating margin of 19% plus over the medium term
• Operating margins, however, will be lower in the immediate near term, given the unprecedented input cost pressure and Covid-related disruption, especially in 1Q
• Marico sees FY22 capex at Rs 125 crore to Rs 150 crore

Shares of Titan fell as much as 2.4% to Rs 1,471 apiece before paring losses.

Most analysts expect the fresh Covid-19 restrictions to impact Titan Co.’s sales in the near term.

The owner of Tanishq brand saw sales of its mainstay jewellery segment, accounting for 88% of total revenue, climb 71% year-on-year to Rs 6,678 crore in the quarter ended March. CaratLane, which sells jewellery online and offline, ended the period with a profit before tax of Rs 10 crore.

“Given the ongoing lockdown/restrictions across India, we have cut our FY22 EPS estimate by 12.2%,” Motilal Oswal said in a report. Prabhudas Lilladher, too, said the near-term outlook looks hazy but remains optimistic about the jewellery division’s growth.

Of the 32 analysts tracking Titan, 16 recommend a ‘buy’, 10 suggest a ‘hold’ and six have a ‘sell’ rating on the stock, according to Bloomberg data.

To read what top brokerages recommend on Titan post Q4, click here

Indian bonds advance after the central bank announced Operation Twist for next week. Traders are awaiting the results of Rs 26,000 crore ($3.5 billion) of the government-bond auction later on Friday for cues on the trajectory of yields.

• 10-year yields fell 2bps to 6.04%; down 13bps so far this month, most since October
• RBI will conduct 100b rupees ($1.35b) of Operation Twist-style special open-market operation on May 6, it said after close of markets Thursday
• USD/INR steady at 74.0350; the rupee is set to drop about 1.2% this month, its steepest depreciation against the dollar since March last year

Shares of the FMCG major fell 2.7% after reporting its fourth-quarter earnings on Thursday after market hours.

India’s largest consumer goods maker saw its volume jump 16% over the year-earlier in the quarter ended March. Although that was on a low base as volumes contracted last year because of Covid-19 lockdowns. The company’s profit and revenue, too, surged in the reported period despite elevated inflationary pressures.

Brokerages remained bullish on Hindustan Unilever Ltd. after fourth-quarter results, citing digital enhancement through its Shikhar app and launch of affordable packs for health drinks, among others.

Read what brokerages made of HUL’s Q4 performance here

Indian equity benchmarks opened lower on the first day of the new derivatives series amid the extension of lockdown-like curbs in some states and as exit polls indicated the nation’s ruling political party is trailing in key state elections.

The S&P BSE Sensex declined as much as 0.6% to 49,465.40 while the NSE Nifty 50 Index dropped as much as 0.5% to 14,825.10. Both the indices are on track to register their biggest weekly gain since Feb. 7.

The HDFC twins, along with Hero MotoCorp Ltd and Titan Company Ltd., were the biggest drag on the Nifty.

Ten of 19 sector sub-indexes compiled by BSE Ltd. fell, led by a gauge of lenders. The market breadth was skewed in favour of the bulls. About 1,225 stocks advanced, 926 declined and 103 remained unchanged in early morning trade.

India reported 3,86,452 new infections and 3,498 deaths on Friday The country has confirmed 18.7 million Covid-19 cases in total and over 2,08,330 deaths. The resurgence of the virus has forced a number of countries including Australia to ban flights from India, while the U.S. government has asked its citizens to leave as soon as possible.

The company now expects revenue from IT Services business in the range of $2.32 billion to $2.37 billion, up from $2.2 billion to $2.24 billion it had earlier forecast, according to a statement on exchanges.

Asian stocks slipped Friday as China's crackdown on technology firms dented sentiment despite another all-time record for the U.S. market overnight amid solid economic growth data.

China and Hong Kong opened in the red, while Japan was little changed. U.S. futures fell following a new high for the S&P 500. India's SGX Nifty 50 Index futures for May delivery fall 1.3% to 14,744.00, while MSCI Asia Pacific Index fell 0.4%.

China's purchasing managers surveys signalled expansion in manufacturing and services activity in the world’s second-largest economy, after the U.S. reported growth at a 6.4% annualised pace in the first quarter.

Meanwhile, copper topped $10,000 a metric tonne for the first time since 2011, nearing that year’s record high as the global recovery stokes demand and mines struggle to keep up. Crude oil traded just below $65 a barrel.

Back home, Titan, Ambuja Cements, Dalmia Bharat, Exide, Persistent Systems, Shriram Transport, L&T Finance, Coromandel, AU Small Finance may react as the companies reported quarterly results after the market closed Thursday. Reliance, IndusInd Bank, Marico, Yes Bank, Ajanta Pharma are among the companies scheduled to report earnings Friday. Foreign investors bought net Rs 913 crore of stocks on Wednesday, according to NSDL website.