Sensex, Nifty Close Lower As Pharma Stocks, Reliance Drag

India stocks ended lower as the country continues to witness a persistent increase in the daily caseload of coronavirus, forcing investors to weigh the chances of the government announcing a nationwide lockdown to control the situation.

The S&P BSE Sensex declined 0.95% to 48,718.52 while the NSE Nifty 50 Index lost 0.94% to 14634.15. Reliance Industries Ltd. fell 2.1%, extending the decline for the third straight day.

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

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

• Net income Rs 251 crore, +12% YoY, estimate Rs 233 crore
• Total costs Rs 992 crore, +6.6% y/y
• Raw material costs Rs 275 crore, -16% q/q
• Ebitda Rs 359 crore, +5.9% y/y, estimate Rs 326 crore
• Revenue Rs 1,280 crore, +5.8% YoY, estimate Rs 1,280 crore
• Dividend per share Rs 14

COMMENTARY AND CONTEXT

• International formulations grew 19% for FY21; U.S. Generics grew 9%
• Ex-US International Formulations grew 57%
• RD spend 12% of revenue or 6.7 billion rupees for the year
• India branded formulations business grew 5%
• API business grew 38% in the quarter and 35% for FY21

Shares of Sun TV Ltd., owner of Hyderabad franchise of Indian Premier League erased gains to fall as much as 2% after the T-20 cricket tournament was deferred following some players testing positive for Covid-19.

Stock Reaction

• Reliance Industries Ltd., which owns Mumbai Indians team, extends drop to as much as 2%, set for a third day of losses.
• India Cements Ltd., which owns team Chennai Super Kings that has won 3 IPL titles, swung between gains and losses. Down as much as 0.6% as of 2:40 p.m.
• United Spirits Ltd., the holder of Royal Challengers Bengaluru franchise, declined 0.6% but soon recouped the losses to trade little changed.

SBI Life Insurance rises as much as 4.9% to its highest since Feb. 1.

“Growth runway” afforded by parent SBI’s customer pool, of which the insurer has tapped less than 3%, and new bancassurance partnerships, according to Jefferies.

SBI Life will leverage partnerships with state-owned banks such as Indian Bank, Syndicate Bank, Uco Bank, Punjab & Sind Bank, analysts including Prakhar Sharma write in a note.

Jefferies raise price target by 3.6% to Rs 1,150; maintains buy

Market Insight

• Trading volume was more than six times the 20-day average for this time of day.
• Trading in the company's call options totalled 24,981 contracts, compared with the average of 5,684 over the past 20 days. Trading in the company's put options totalled 8,893 contracts, compared with the average of 2,110 over the same period.

Punjab National Bank rose 9.1%. Trading in the company's call options was triple the average. Trading volume was triple the average for this time of day.

• Trading volume was 178.5 million shares, triple the 20-day average of 61.3 million shares for this time of day.
• Trading in the company's call options totaled 15,105 contracts, compared with the average of 4,524 over the past 20 days. Trading in the company's put options totaled 2,909 contracts, compared with the average of 1,442 over the same period.
• Analysts have four buy, four hold, and 13 sell recommendations on the stock.
• The price target of 37.32 rupees represents a 0.9% decrease from the last price

Sugar stocks in India, the world’s second-biggest producer of the sweetener, have climbed to their highest level in more than a decade as prices of the commodity continue to boom.

The rally is also an outcome of the government’s efforts to rationalize exports and make production of ethanol viable for companies in a bid to reduce the country’s sugar stockpiles and its dependence on imported oil.

Source: Bloomberg News

Shares of the Mukesh Ambani flagship dropped as much as 1.5%, making it the third session of losses.

India’s rising wave of new coronavirus cases and stricter curbs on people and business operations pose a challenge for Reliance Industries Ltd.’s sprawling businesses. India’s largest company by market value reported lower-than-forecast earnings for the March quarter after the market closed on Friday.

In March, according to Morgan Stanley, domestic institutional ownership in the company led by Asia’s richest person Mukesh Ambani was at a decade low, while there was a “creep up” in foreign institutional holding.

• Sees company as at the start of new upcycle as global fuel demand rises, supply growth slows in refining/petrochemicals, new telecom subscriber addition accelerate, retail sales bounce back
• A faster ramp-up of gas production, high energy business margins to cushion retail/telecom challenges
• Investor positioning in March shows domestic institutional ownership at a decade low

Magma Fincorp, an Indian financier for vehicles and homes, jumped by its daily limit after about 23.4 million shares changed hands in Mumbai, according to data compiled by Bloomberg.

• Among most traded Indian stocks by volume, value
• Trading volume >12x 3-month full-day average
• Shares surged as much as 5%, most intraday since April 30
• Buyers, sellers not immediately known

Tata Steel BSL Ltd. rose 19%. Trading volume was six times the average for this time of day.

• The stock was the best performer among its peers.
• Trading volume was 21.1 million shares, six times the 20-day average of 3.6 million shares for this time of day.
• The relative strength index on the stock was above 70, indicating it may be overbought.
• Stock advanced 515% in the past 52 weeks, compared with a 357% increase for the company's Bloomberg peers.

Indian stocks opened higher as investors saw no major surprises in the ruling Bharatiya Janata Party’s failure to win key states. The defeats were seen as having little impact on the grip of the Prime Minister Narendra Modi-led party over politics while the focus shifts to the government’s efforts to control the pandemic.

The S&P BSE Sensex rose as much as 0.6% to 48,996.53, while the NSE Nifty 50 Index gained a similar magnitude. ICICI Bank Ltd. contributed the most to the index gain, increasing 1.5%. Hindalco Industries Ltd. had the largest increase, rising 3.2%.

Seventeen out of the 19 sector sub-indices compiled by BSE Ltd. rose, led by a gauge of metal stocks. The S&P BSE Fast Moving Consumer Goods was the worst-performing, down 0.2%.

There is limited significance from these results for the next national elections, which aren’t due until 2024, analysts at Jefferies India Pvt. Ltd. wrote in a note. The next important election will be Uttar Pradesh, among the most politically important states in the country, which will vote in May next year, they added.

Indian sovereign bond investors will watch demand at a Rs 14,900 crore ($2 billion) sale of state debt. Rupee traders will watch whether forward premiums will ease after the sharp surge seen on Monday.

• USD/INR near-term forward premiums surged on Monday amid a glut of dollars in the banking system, with traders citing inflows related to PowerGrid InvIT IPO for which foreign funds may have sold dollars in spot and taken a contrary position in forwards
• The second, much deadlier wave of virus infections in India is likely to cause further rupee weakness until September, according to Bloomberg Economics’ forecasting model
• 10-year bond yields fell 3bps to 6%; yields dropped after the reported deals segment showed Rs 3100 crore of 10-year changed hands, leading traders to suspect RBI intervention

Good Morning!

Asian stocks were mixed and U.S. equity futures retreated Tuesday in the wake of a dip in technology giants on Wall Street.

South Korean shares edged down while Hong Kong fluctuated and Australia rose modestly. Trading will be limited with Japan and China among markets closed for holidays.

India’s SGX Nifty 50 Index futures for May delivery fell 0.3% to 14,645.50, while MSCI Asia Pacific Index -0.1%. The NSE Nifty 50 Index little changed Monday at 14,634.15.

Ten-year Treasury yields dropped back to around 1.6% amid comments from Federal Reserve Chair Jerome Powell that the economic recovery is patchy.

A gauge of commodity prices is at the highest level since 2012. Silver is among the precious metals that have rallied as the prospect of near-zero rates for longer boosts demand. Oil was steady after climbing over 1%. Digital token Ether extended its surge to set another record.

Back home, L&T Technology, Tata Chemicals may react as the companies reported quarterly results after the market closed Monday. Adani Ports, RBL Bank, L&T Infotech, Alembic Pharma, Adani Total are among the companies scheduled to report earnings Tuesday. Foreign investors sold net Rs 3150 crore of stocks on April 30, according to the NSDL website.