Sensex, Nifty Log Second Week Of Gains Helped By A Rally In Metal Stocks

India equity benchmarks capped a second week of gains, boosted by lenders as the central back announced surprise support to tackle the coronavirus situation, while the global metal rally pushed resources stocks to near-record levels.

The S&P BSE Sensex climbed 0.5% to 49,206.47, taking its weekly advance to 0.87%. The NSE Nifty 50 Index gained 0.67% to 14,823.15, ending the week up 1.3%. All but four of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of metal companies.

Stocks climbed this week after the Reserve Bank of India provided additional liquidity to banks for lending to vaccine makers, hospitals and providers of health services, as well as easing rules for small businesses to restructure loans.

Most stocks across Asia rose after positive U.S. economic data and better-than-expected growth in China’s exports. The S&P BSE Metal Index has risen about 70% this year, helped by global prices and the 10-constituent gauge is nearing its highest level since January 2008.

Bajaj Finance Ltd. and ICICI Bank Ltd. contributed most to Sensex’s growth over the past fortnight, while HCL Technologies Ltd. was the worst performer in that period.

India’s central bank sold a planned 320 billion rupees ($4.4 billion) of bonds at its weekly sale on Friday, with many traders expecting the monetary authority to buy off the stock later.

The Reserve Bank of India bought 100 billion rupees of the 6.64% 2035 bond at 6.5881% as against 6.58% estimated in a Bloomberg poll and purchased another 110 billion rupees of the 2026 bond at a 5.5442% yield. Earlier, the low underwriting fees had indicated that the auction will be well bid.

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

• Net income Rs 378 crore, +35% YoY, estimate Rs 432 crore
• Revenue Rs 2,340 crore, +25% YoY, estimate Rs 2454 crore
• Total costs Rs 1970 crore, +25% YoY
• Other income Rs 84.98 crore, +12% YoY
• Sales volume +25.4%
• Ebitda Rs 527 crore, +23% YoY, estimate Rs 515 crore
• Ebitda margin 22.6% vs. 22.9% YoY
• Dividend per share Rs 3

HDFC reported net income for the fourth quarter that beat the average analyst estimate.

• Net income Rs 3,180 crore, +43% YoY, estimate Rs 2,920 crore (Bloomberg Consensus)
• NII Rs 4,065 crore vs Rs 3,564 crore (up 14% YoY)
• GNPA: 1.98% vs 1.91% (QoQ)
• Net interest margin 3.5%, estimate 3.27%
• Dividend per share Rs 23

Key Announcements

• Recommended to Increase borrowing powers to up to Rs 6 lakh crore
• Approves raising Rs 1.25 lakh crore via bonds for one year period
• Approves Keki Mistry re-appointment as managing director for three years

Read the full report here.

Vedanta Ltd. rose 7.1%. Trading in the company's call options was double the average. Trading volume was triple the average for this time of day.

• The stock was the best performer among its peers.
• Trading volume was 29.6 million shares, triple the 20-day average of 11 million shares for this time of day.
• Trading in the company's put options totalled 9,984 contracts, compared with the average of 3,853 over the past 20 days. Trading in the company's call options totalled 24,207 contracts, compared with the average of 10,004 over the same period.
• The relative strength index on the stock was above 70, indicating it may be overbought.

Meanwhile, the metal rally continues...

• Hero MotoCorp options volume 3.2x the 20-day average, with 25,405 calls changing hands vs 12,512 puts
  • Stock down 2.2%, volume 2x the 20-day average for this time of day
• SBI Life options volume 3.2x the average, with 25,937 calls vs 9,875 puts
  • Stock up 3.3%, volume 18x the average
• Tata Consumer options volume 2.3x the average, with 13,209 calls vs 6,968 puts
  • Stock down 4.1%, volume 3.2x the average
• Tata Steel options volume 2x the average, with 96,356 calls vs 64,064 puts
  • Stock up 6.5%, volume 1.4x the average
• UltraTech Cement options volume 2x the average, with 12,270 calls vs 2,129 puts
  • Stock up 1.1%, volume 0.8x the average
• Hindalco options volume 1.8x the average, with 26,573 calls vs 10,559 puts
  • Stock up 3.2%, volume 1.4x the average
• India VIX Index down 4%

Source: Bloomberg

India’s sovereign bonds are marginally lower ahead of a Rs 32,000-crore ($4.3 billion) sale Friday. The rupee rises in line with Asian peers.

• USD/INR falls 0.1% to 73.6850; down 0.6% so far this week
• 10-year yields up 1bp to 5.98%; 2035 bond yield up 1bp to 6.58%

SRF Ltd. fell as much as 9.3%, the most since March 2020, after its rating was cut at brokers including Motilal Oswal following its recent earnings.

The company’s specialty chemicals business may report slower growth on the back of high base created over the past three years, while its packaging segment is expected to see a contraction in margins, Motilal Oswal said in a note, lowering its rating to neutral from buy

• SRF’s earnings momentum may slow as a result; expects the company to report Ebitda and profit after tax annual growth of 17% and 21%, respectively, for next two years vs 33% and 42% for the past three years
• SRF is trading at 18.1x 1-year forward EV/Ebitda, a premium of ~50% to avg trading multiples for 3 and 5 years, Motilal Oswal said, adding that valuation looks rich vs earnings growth

Tata Motors will increase the prices of its passenger vehicles by an average of 1.8% depending on the variant and model, the company said in a statement.

• The company will offer protection from the price increase to customers who have booked passenger vehicles on or before May 7
• “Increase in prices of commodities, such as steel and precious metals, necessitates us to pass on a part of it through increase in price of our products,” Shailesh Chandra, president of Tata Motors passenger vehicle business, said in the statement

Shares of Tata Consumer fell 6%, the most over seven months, after its fourth-quarter profit missed the average analyst estimate.

• Net income Rs 53.9 crore vs. loss Rs 76.49 crore YoY, estimate Rs 187 crore
• Revenue Rs 3,040 crore, +26% YoY, estimate Rs 2,856 crore
• Total costs Rs 2,820 crore, +29% YoY
• Other income Rs 42.96 crore
• Dividend per share Rs 4.05
• Q4 includes an exceptional gain of Rs 63.93 crore vs Rs 264 crore YoY

While the medium-term drivers remain intact, the stock now looks fully valued at about 43x FY23 earnings after a strong performance over the past year with most positives now priced in, according to a note by Yes Securities.

Indian equity benchmarks opened higher in line with Asian peers after rallies in U.S. indices on positive economic data, and commodities extended their advance.

The S&P BSE Sensex added 0.8% to 49,381.07, while the NSE Nifty 50 Index advanced by 0.9%. HDFC Bank Ltd. contributed the most to the index gain, increasing 1.3%. Tata Steel Ltd. had the largest increase, rising 3.9%.

All of the 19 sector sub-indices compiled by BSE Ltd. climbed, led by a gauge of metal companies.

Stocks extended their gains for the third session after the Reserve Bank of India provided additional liquidity to banks for lending to vaccine makers, hospitals and providers of health services, as well as easing rules for small businesses to restructure loans.

India’s sovereign bond traders will gauge demand at a Rs 32,000-crore ($4.3 billion) sale Friday after the central bank bought the entire amount in 10-year debt at its Operation Twist the previous day. The rupee may rise in line with Asian peers.

What began as a second wave restricted to the state of Maharashtra has quickly engulfed the rest of India, resulting in localized lockdowns, ANZ says in note. These restrictions are impacting mobility more than economic activity

• Maintains sub-consensus forecast of 10% GDP growth in FY22 although the bank is monitoring the evolving situation
• While it’s not the bank’s base case, a national level lockdown of three to four weeks could see full-year growth dipping below 7.5%. Material progress on vaccination would boost expansion in the second half of FY22
• Given the amplified fiscal risks as economic growth dwindles, RBI is expected to lead with greater regulatory and liquidity support

Good Morning!

Asian stocks headed higher after rallies in U.S. indices on positive economic data, and commodities extended their advance.

Markets opened higher in China and Hong Kong. Shares also rose in Japan, South Korea and Australia. The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.5% to 14,867 as of 8:45 a.m.

U.S. contracts climbed after renewed gains in U.S. benchmarks overnight, which included a fresh record for the Dow Jones Industrial Average. Copper soared to an all-time high on expectations that rebounding economies will spur a boom in global demand.

China’s open shrugged off news overnight that the Biden administration is likely to preserve limits on U.S. investments in certain Chinese companies.

U.S. economic reports helped sentiment, as applications for state unemployment insurance fell to a fresh pandemic low, and separate data showed a rebound in productivity. Traders now turn to Friday’s payrolls numbers. Treasuries were steady with yields well below recent highs.

Elsewhere, spot iron ore broke $200 a tonne for the first time, while oil climbed.

Back home, Hero MotoCorp, Tata Consumer, Blue Star, Adani Power, Adani Transmission, P&G Health may react as the companies reported quarterly results after the market closed Thursday. HDFC, UltraTech, Dabur, Cholamandalam, Kansai Nerolac are among the companies scheduled to report earnings Friday.

Carlyle Group plans to sell up to 3.5% stake in SBI Life at minimum Rs 945 a share. Foreign investors sold net Rs 458 crore of stocks on May 5, according to the NSDL website.