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Nifty Rises To Record As Easing Inflation Spurs Rate Cut Hopes

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Closing Bell

Indian shares closed at fresh record highs, led by rate-sensitive sectors such as banks and real-estate on hopes of an interest rate cut by the central bank following a sharp decline in headline retail inflation.

Consumer price inflation fell to 2.99 percent in April compared to estimate of 3.30 percent. Headline retail inflation is now well below the Reserve Bank of India’s medium term target of 4 percent.

The data bolstered optimism that the Reserve Bank of India would ease interest rates in its upcoming monetary policy review on June 7.

The 10-year benchmark bond yield fell 9 bps to 6.82%, its lowest since April, from its 6.91% close on Friday

Meanwhile, the rupee rose to 64.09 per dollar, its strongest since April 27, on expectations of additional foreign portfolio inflows into Indian markets.

The S&P BSE Sensex rose 0.44 percent at 30,322 while the NSE Nifty advanced 0.47 percent to 9,445.

Among the sectoral indices, S&P BSE Bankex gained 0.82 percent while the S&P BSE Realty rose 0.9 percent.

The market breadth was skewed in the favour of gainers, with about 5 stocks advancing to every 4 stocks that declined.

Metals Outlook Improves

"Markets are on an upside trajectory and are making new highs so the momentum is positive. Metal stocks have a better outlook as global economy improves amid expectations of a rebound in the second-half of the year," said Rajesh Shanbhag, advisory head – alternate channel at Way2Wealth Brokers.

Vedanta Swings To Q4 Profit; Shares Rise

  • Shares up as much as 2.6% to Rs 243, highest since April 28
  • Q4 consol income Rs 1,410 crore vs loss Rs 13,931 crore last year
  • Q4 consol revenue Rs 24,612 crore vs Rs 18,172 crore last year
  • Analyst consensus price target is 25% above the current price

Colgate India Shares Fall After Q4 Net Misses Estimates

Shares of the toothpaste maker slid as much as 2.3 percent after its fourth quarter earnings miss street estimates.

  • Q4 net income Rs 143 crore versus Rs 155 crore estimated
  • Revenue Rs 1,180 crore versus Rs 1,130 crore
  • Total costs Rs 967 crore
  • Other income Rs 8.01 crore

Colgate India FY17 volumes drop by 3 percent due to ‘soft’ consumer demand, company said in its exchange filing.

BQSpotted: V2 Retail Jumps Most In Nine Months

  • Stock has gained 11%, the most since Aug 26,2016
  • Volumes at 25 times its previous 20-day average
  • The retail group has a market capitalization of Rs 675 crore
  • Stock has gained as much as 20% in the past one month

South Indian Bank Extend Gains As Bad Loans Fall

  • Shares up as much as 5% to Rs 27.10, highest since January 2015
  • Gross bad loans 2.45% end-March vs 3.98% end-December
  • Q4 net income Rs 75.5 crore vs estimate Rs 100 crore
  • RSI at 71, indicating that the stock may be overbought

Oil Explorers Jump As Crude Rises More Than 2%

  • ONGC (+1.9%), Oil India (+0.9%) as crude oil rallies
  • Brent crude for July settlement climbed 2.1% to $51.88 as Saudis, Russia favour extending output deal to 2018
  • S&P BSE Oil & Gas index up 0.8%, the most since May 2

Europe Opens Mixed

Metal Index Poised For Best Gain In Two Months

  • S&P BSE Metal index up as much as 1.9%, the most since March 16
  • Global commodity prices rise: Zinc rebounds from 1-month low, copper climbs for third day
  • Momentum strong as China pledges $78 billion of investment in Belt & Road Initiative, boosting demand outlook
  • Hindalco Industries (+3.6%), Tata Steel (+2.7%), Jindal Steel & Power (+1.9%)

Nifty IT Index Snaps 2-Day Gains

  • NSE Nifty IT index down as much as 0.71%, the most since April 26
  • Tata Consultancy Services (-0.7%), Infosys (-1.4%) and Wipro (-0.8%) down as rupee rallies
  • Indian rupee has gained 5.6% against the dollar so far this year
  • IT exporters get more than 90% of revenue from abroad

Bank Stocks Gain On Rate Cut Optimism

  • ICICI Bank (+1.9%), Axis Bank (+0.9%), State Bank of India (+0.6%); S&P BSE Bankex (+0.8%)
  • April consumer prices rises 2.99% vs estimate 3.30%
  • Headline retail inflation is now well below the RBI’s medium term target of 4%
  • The 10-year benchmark bond yield fell 9 bps to 6.82%, its lowest since April, from its 6.91% close on Friday
  • The rupee was trading at 64.07 to the dollar at 9.40 a.m. The local currency opened 17 paise stronger than its previous close of 64.30

Earnings Preview: Colgate-Palmolive India

Earnings Preview: Vedanta

Piramal Enterprises Jumps On Earnings Boost

  • Shares up as much as 8.1% to a record high of Rs 2,809
  • Q4 net income Rs 311 crore vs estimate Rs 193 crore
  • Says loan book at Rs 24,400 crore end-March vs Rs 13,050 crore
  • Volume at 6.3 times its 30-day average

Block Deal Alert

  • Hathway Cable: 18 lakh shares change hands in a block
  • Dabur India: 24 lakh shares change hands in a block
  • Ambuja Cements: 39 lakh shares change hands in a block

*Buyers & sellers were not immediately known

Earnings Reaction

  • Atul Auto: (-1.1%): Q4 net income Rs 6.2 crore vs Rs 10.9 crore last year
  • Central Bank of India (-3.5%): Q4 net loss Rs 592 crore vs loss Rs 898 crore last year
  • D-Link India (-16.8%): Q4 loss Rs 1.3 crore vs profit Rs 6.3 crore last year
  • Gati (+0.9%): March-quarter net income Rs 7.7 crore vs Rs 5.9 crore last year
  • Jammu & Kashmir Bank: (+2.3%): Q4 net loss Rs 554 crore vs loss Rs 56 crore last year
  • Nestle India (+3.2%): Q1 net income Rs 300 crore vs estimate Rs 331 crore
  • New Delhi Television (+9.7%): Q4 net income Rs 5.3 crore vs loss Rs 77 lakhs last year
  • Tata Teleservices (-1.8%): Q4 net loss Rs 1,370 crore vs loss Rs 21.9 crore last year

Idea Cellular Falls On 2nd Straight Quarterly Loss

  • Shares down as much as 2.5% to Rs 90, the most since March 2017
  • Q4 loss Rs 326 crore vs profit Rs 451 crore last year
  • Q4 revenue Rs 8,195 crore vs Rs 9,500 crore last year
  • Stock has gained 25% year-to-date vs 14% for S&P BSE Sensex

Read the full story HERE

Inox Wind Slumps As Q4 Profit Plunges

  • Shares of wind turbine maker fell as much as 19.2% to a record low of Rs 163
  • Q4 income Rs 128 crore vs Rs 201 crore last year
  • Q4 revenue Rs 1,030 crore vs Rs 1,860 crore
  • Stock has gained 11% year-to-date vs 13.6% for S&P BSE Sensex

Read the full story HERE

Opening Bell

Indian shares opened higher, led by financial stocks on hopes of an interest rate cut by the Reserve Bank of India after a sharp fall in headline retail inflation.

Consumer price inflation fell to 2.99 percent in April compared to estimate of 3.30 percent. Headline retail inflation is now well below the Reserve Bank of India’s medium term target of 4 percent.

The data will provide guidance for the next monetary policy on June 7.

The S&P BSE Sensex rose 0.38 percent to 30,303, while the NSE Nifty gained 0.32 percent at 9,430.

Among the sectoral indices, S&P BSE Bankex rose 0.33 percent while S&P BSE Realty advanced nearly 1 percent.

The market breadth was skewed in the favour of gainers, with about 7 stocks advancing to every 2 stocks that declined.

Market Outlook

Money Markets Heads-Up

Starting with sovereign bonds. After a long spell of inaction and hard yields, the market finally has something to cheer.

The inflation data came in much lower than estimated and is the lowest on record as food costs continue to ease. Now this provides some fillip to the rate cut doves, who are in fact only a few. The new 10-year bond was auctioned on Friday and yield on the new paper now stands at 6.73 percent. With positive sentiment, we may see strong demand for the new paper as investors recalibrate their rate view.

In the currency markets, looks like another session of gains for the rupee with most Asian currencies trading stronger against the dollar. The currency had climbed 0.1 percent to 64.31 a dollar last week. It is expected to trade in a range of 64.15-64.50 in the day.

5 Things To Watch

Rupee Outlook

Stocks To Watch

  • Idea Cellular: The telecom operator reported a loss for the second straight quarter.
  • Titan Company: Net profit missed estimate due to higher raw material and other input costs.
  • Inox Wind: Wind turbine maker postd a 36 percent decline in March-quarter profit, missing estimates.
  • Nestle India: Net profit in the March quarter grew 6.9 percent, but missed analyst estimates.
  • Godrej Industries: Board of Directors of subsidiary Godrej Agrovet Ltd. grant approval for the proposed IPO.
  • IndiaBulls Ventures: Merrill Lynch Markets Singapore PTE. Ltd. buys 27.5 lakh shares at Rs 149.99 each.

For a complete list of stocks, click HERE

Brokerage Calls

  • Asian Paints: Cut to hold at Reliance Securities
  • Glenmark Pharma: Cut to hold at HSBC; price target Rs 791
  • Titan: Cut to outperform at CLSA; price target Rs 555
  • Havells India: Cut to neutral at JPMorgan; price target Rs 480

Earnings Today

  • Bata India
  • Colgate Palmolive
  • Indo Count Industries
  • Kajaria Ceramics
  • Mangalore Refinery and Petrochemicals
  • Polaris Consulting & Services’
  • Vedanta

Talking Points

  • North Korea says new missile can carry ‘large’ nuclear warhead
  • Xi pushes Chinese-led globalization after pledging $78 billion
  • India says China-Pakistan corridor raises sovereignty concerns
  • GST introduction to benefit Indian states: RBI Report says
  • India inflation eases more than expected to lowest on record

Also Read: Consumer And Wholesale Inflation Fall Sharply In April

  • Indian tech giants have new worry with surprise rupee strength
  • India exempts some individuals from quoting Aadhaar
  • India oil demand rises 3.3% in April after falling for 3 months
  • Forex reserves rose $3.0 billion to $375.7 billion in a week to May 5: RBI
  • India reservoirs hold 25% more water than a year earlier
  • Global funds bought Rs 842 crore of local stocks; domestic funds sold Rs 711 crore on May 12: Provisional data

Also Read: Indian Tech Giants Have New Worry With Surprise Rupee Strength

Good Morning!

The Singapore traded SGX Nifty, an early indicator of Nifty’s performance in India, rose 0.4 percent to 9,457.

Asian shares were mixed in early trade as tepid U.S. economic growth data and another missile test by North Korea weighed on investor sentiment.

North Korea fired a ballistic missile early on Sunday, its seventh such test this year, just days after South Korea appointed a new president.

The weekend cyber attack that crippled computers across over 150 countries also kept investors on the edge. While the hackers have been contained for now, experts have warned of a possibility of more IT systems falling prey, as offices open on Monday.

Also Read: New Wave of Ransom Threats Seen in Unprecedented Global Attack

Meanwhile, weak U.S. economic data also curbed risk appetite. Consumer prices rebounded last month, though at a slower pace than expected, while retail sales advanced after an unexpected drop in March.

On Friday, the Dow Jones Industrial Average declined 0.11 percent to end at 20,896.61 points while the S&P 500 lost 0.15 percent to 2,390.9, dragged down by financial and industrial stocks.

Oil halted gains near $48 a barrel after crude production in the U.S. climbed for a 17th week, countering a report that Organisation of Petroleum Exporting Countries (OPEC), and its allies had reached agreement on production cuts.

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