(Source: Bloomberg)

Nifty Falls For Second Session As Miners Take A Drubbing

Closing Bell

Indian shares fell for a second straight session, as China downgrade weighed on miners while below-estimate earnings by drugmaker Lupin dragged down healthcare stocks.

The S&P BSE Sensex fell 0.21 percent at 30,301 and the NSE Nifty declined 0.27 percent to 9,360.

Among the sectoral indices, S&P BSE Metal shed 2.2 percent while the S&P BSE Healthcare dropped 1.9 percent.

The market breadth was skewed in the favour of losers, with about 7 stocks declining to every 2 stocks that advanced.

F&O Expiry Eyed

“We expect increased volatility ahead of the expiry. Nifty is likely to touch 9,300 levels tomorrow,” said Abnish Kumar Sudhanshu, research head at Amrapali Aadya Trading and Investments.

Chart Of The Day: Bearish Divergence May Undercut Indian Stocks

Lupin Drops 6.6% After Q4 Earnings Miss Estimates

Shares of the drug maker dropped as much as 6.6 percent to Rs 1,167, the lowest intraday since August 2014, after its fourth quarter earnings missed street expectations.

  • Q4 group net income Rs 380 crore versus estimate of Rs 643 crore
  • Revenue Rs 4,250 crore versus estimate of Rs 4,369 crore
  • Net income Rs 549 crore on a standalone basis
  • Dividend per share Rs 7.50
Net impact of foreign exchange fluctuation on EBITDA was a loss of Rs 168 crore during the quarter compared to a gain of Rs 26.7 crore during pervious quarter, and a gain of Rs 27.6 crore during Q3 FY17.  
Lupin Press Release

Reliance Communications Bond Rebounds

Amara Raja Falls 6.7% After Q4 Net Misses Estimate

Shares of the battery maker dropped as much as 6.7 percent after its fourth quarter profit missed street estimates.

Net profit for January-March quarter stood at Rs 99.91 crore compared to an estimate of Rs 122 crore, according to Bloomberg poll. Its revenue came in at Rs 1,510 crore for the quarter, compared to Rs 1,360 crore estimated.

  • Q4 total costs Rs 1,380 crore
  • Other income Rs 15.06 crore
  • Dividend per share Rs 4.25

Stock Alert: Cement Makers Fall

  • ACC (-2.6%)
  • Ambuja Cements (-2.4%)
  • UltraTech Cement (-2.1%)
  • Shree Cement (-4.2%)
  • Heidelbercement India (-3.4%)

Orchid Pharma Jumps After FDA Approval

  • Shares of the drugmaker jumped as much as 7.2% to Rs 31.85, the most since April 3
  • Orchid gets ANDA approval from the U.S. FDA for drug Aripiprazole, which is used to treat psychotic conditions
  • Stock has a negative one-year return of 20%

Indo-Pak Tensions Escalate

  • Jet fighters of Pakistan Air Force made flights near Siachen Glacier today, news agency ANI tweeted
  • Indian Air Force said there was no violation of India's air space, news wire PTI reported citing unidentified sources

Europe Opens Mixed

Bharat Forge Rises On Q4 Beat

  • Shares of the world's largest forging company gained as much as 2% to Rs 1,068, the most since April 24
  • Q4 net income Rs 208 crore vs estimate Rs 162 crore
  • Q4 revenue Rs 1,210 crore vs estimate Rs 1,070 crore
  • Declares dividend of Rs 5 a share

Anil Ambani-Led Companies Down For 2nd Day

Also Read: Reliance Communications Bonds Fall to Record Low as Rating Cut

Chart Of The Day

Max Financial Slumps On Reports Over Merger Delay

  • Stock fell as much as 9.5% to Rs 562, the most since November 15, 2016
  • HDFC Life to go ahead with its IPO plans as merger between company and Max Life is getting delayed, Business Standard reported citing unidentified senior company officials
  • The merger, which was announced in August 2016, ran into rough weather after the insurance regulator sent it to the attorney general for approval, the report said
  • Max Life Insurance is a unit of Max Financial Services

Nifty Rollover Lower Vs Three-Month Average

Nifty rollover stood at 39 percent on Tuesday, lower than the three-month average of 43.7 percent, according to the NSE data.

Market wide rollover at 37.7 percent was lower than the three-month average of 43 percent.

May futures and options series will expire on Thursday.

Videocon Industries Extends Selling Streak To Day 3

  • Stock locked in the 10% lower circuit
  • Falls for a third straight session; shares fell 20% on Tuesday
  • More banks may downgrade Videocon debt to non-performing status in April-June quarter, two bankers in the know told BloombergQuint
  • Earlier this month, public sector lender Dena Bank had said that it had classified Rs 520 crore worth of debt to Videocon as NPA

Rupee Down 5 paise Against Dollar

  • The rupee lost 5 paise to 64.94 against the U.S. dollar, its lowest since April 3
  • The currency had slumped by a whopping 34 paise to end at a fresh seven-week low of 64.89 against the greenback on Tuesday on the back of frantic dollar demand

Miners Weighed Down By China Downgrade

  • Metal stocks fall on China growth concerns
  • Moody's downgraded debt rating of China, the world's biggest consumer of metals, saying the outlook for its financial strength will worsen
  • S&P BSE Metal index down for a 5th straight session; falls 0.5% on Wednesday
  • Vedanta (-1.5%), Hindalco Industries (-0.9%), JSW Steel (-0.8%)
  • Industrial metals retreat from 3-week high; LME Copper -0.6%, LME lead -1%, zinc -0.8%, aluminium -0.2%

Hindustan Construction Falls On Lavasa Setback

  • Shares fall as much as 2.7% to Rs 40, the lowest since March 31
  • Special Planning Authority (SPA) status of Lavasa, the real estate arm of the company has come to an end, news wire PTI reported
  • SPA gave Lavasa total control over the use of the land and its development
  • Lavasa, a private hill city developed by HCC near Pune, got the SPA status from Maharashtra govt in 2008

Block Deal Alert

Yes Bank: 12.9 lakh shares change hands in a block

*Buyers & sellers were not known

Adani Enterprises Defers Investment On Carmichael Mine

  • Adani Enterprises clarified on reports saying it deferred investment on Carmichael mine project
  • Adani could withdraw from its $16.5 billion Carmichael coal mine in Queensland without royalties deal, Bloomberg reported quoting Federal Minister Matthew Canavan as saying
  • Adani Enterprises (+1.1%), Adani Power (-0.8%)

Earnings Reaction

  • Aarti Drugs (-0.9%): Q4 net income Rs 20.7 crore vs Rs 18.6 crore last year
  • Clariant Chemicals (+2%): Q4 net income Rs 7.8 crore vs Rs 10.6 crore last year
  • Hindustan Composites (-2.4%): Q4 net income Rs 7.3 crore vs Rs 29 lakh last year
  • J.B. Chemicals (-1.8%): Q4 net income Rs 42.3 crore vs Rs 50.5 crore last year
  • Jubilant Life (+2.8%): Q4 net income Rs 150 crore vs estimate Rs 151 crore
  • NCC (-4.9%): Q4 net income Rs 63.7 crore vs estimate Rs 70.6 crore
  • Novartis India (-2.5%): Q4 net income Rs 2.9 crore vs Rs 22.8 crore last year
  • Radico Khaitan (-3.3%): Q4 net income Rs 16.6 crore vs Rs 14 crore last year
  • Sheela Foam (-2.8%): Q4 net income Rs 14.5 crore vs Rs 25.4 crore last year
  • TCI Express (+2.4%): Q4 net income Rs 12.3 crore vs Rs 10 crore last quarter
  • Torrent Power (+4.3%): Q4 net income +91% to Rs 136 crore
  • Voltas (+7.2%): Q4 net income Rs 200 crore vs estimate Rs 143 crore

Tata Motors Jumps After Q4 Beat

  • Shares of the country's largest automaker jumped as much as 5% to Rs 473, the most since November 8, 2016
  • Q4 group net income Rs 4,296 crore vs estimate Rs 2,580 crore
  • Q4 revenue Rs 73,730 crore vs estimate Rs 78,797 crore
  • Jaguar Land Rover Q4 EBITDA 1.06 billion pounds vs estimate 793.5 million pounds
  • Tata Motors-ADR closed +5.5%

Opening Bell

Indian shares edged higher, led by gains in Tata Motors after better-than-expected quarterly earnings while positive global cues also supported sentiment.

The S&P BSE Sensex rose 0.39 percent to 30,843, while the NSE Nifty advanced 0.30 percent at 9,414.

Among the sectoral indices, S&P BSE Auto advanced 1 percent while S&P BSE Oil & Gas gained 0.6 percent.

The market breadth was skewed in the favour of gainers, with about 6 stocks advancing to every 3 stocks that declined.

Tata Motors Poised For Gains

  • Automaker’s shares jumped nearly 6% in New York after Q4 results
  • Q4 earnings showed Tata’s profit margin improved on strong demand for its sport utility vehicles in major markets including China and the U.S.
  • 10 out of 12 analysts maintain ‘buy’ rating on the stock: Bloomberg data

Read the full story HERE

(Source: Bloomberg)
(Source: Bloomberg)

Stocks To Watch

  • IDBI Bank: ICRA downgrades outstanding debt worth Rs 25,924 crore, citing weak capital position.
  • HCC: Special Planning Authority status of Lavasa, the real estate arm of the company has come to an end.
  • Bharti Airtel: Outlook to negative by Moody's; rating affirmed.
  • AIA Engineering: Terminates JV with Belgium's Magotteaux.
  • Videocon Industries: CCI approves Videocon's D2H's merger with Dish TV.
  • Kalpataru Power: To consider raising Rs 100 crore.

For a complete list of stocks, click HERE

5 Things To Watch

Money Markets Heads-Up

A slew of bearish news will keep the markets under pressure.

Moody's cut China's sovereign rating by one notch to A1, citing 3 reasons. Soaring debt, the slow pace of reforms and reliance on fiscal stimulus to achieve growth.

Geopolitical uncertainties will add to the woes. Indian army on Tuesday raided in a Pakistan-controlled part of Kashmir. Also, UK prime minister Theresa May raised the threat level to "critical" from "severe," meaning another terror attack may be imminent.

Asia pacific currencies reflected these concerns and were down against the greenback. Considering these, the rupee is probably set for a fall today.

One of the U.S. Federal Reserve presidents said a June interest rate increase "is a distinct possibility."

In bonds, International funds increased rupee-debt holdings by Rs 4000 crore on Tuesday. That's the biggest one-day inflow since early April. Markets would be watching for the outcome of T-bill sales.

Rupee Outlook

Earnings Today

  • Amara Raja Batteries
  • Bharat Forge
  • Adani Enterprises
  • Adani Ports and Special Economic Zone
  • Dish TV India
  • Lupin Limited

Brokerage Calls

  • Brigade Enterprises: Raised to buy at HDFC Securities
  • Glenmark Pharma: Cut to equal-weight at Morgan Stanley; cuts price target to Rs 706 from Rs 1,146
  • Hinduja Global: Raised to buy at Anand Rathi Securities

Nifty Outlook

Talking Points

  • India hits terrorists across Line of Control with Pakistan
  • Pakistan military says India’s attack claims are ‘false’
  • Indian fighter jet missing in region claimed by China
  • JLR to spend over 4 billion pound in FY18 including new Slovakia plant
  • Adani may exit $16.5 billion coal mine without royalties deal: Canavan
  • CCI approves Aceville’s acquisition of 6.02% stake in Flipkart

Also Read: Hello Paytm Payments Bank, Goodbye Paytm Wallet?

  • RBI likely sold dollars to arrest rupee slide: traders say
  • Superhero blockbuster aside, India film industry ripe for reboot
  • Corporate borrowers run to the markets as Indian banks wilt
  • Asian graft worsens, and millennials pose a challenge: EY Survey
  • Global funds sold Rs 401 crore of local stocks; domestic funds bought Rs 353 crore on May 23: Provisional data
  • India’s govt said to plan expanding its drug regulator
  • China downgraded to A1 by Moody’s on worsening debt outlook

Also Read: What's Wrong With Modi's Outmoded Idea of India

China Stocks Fall After Moody's Cut

  • Chinese stocks declined after Moody’s cut its rating on the country’s debt
  • The Shanghai Composite Index down nearly 1 percent, headed for the lowest closing level since September.
  • Moody’s cut the rating on China amid concerns over rising debt and slowing economic growth
  • Rating on China debt cut to A1 from Aa3; changed the outlook to stable from negative

Good Morning!

The Singapore traded SGX Nifty, an early indicator of how the benchmark Nifty’s performance in India, was little changed at 9,398.

Asian shares advanced in early trade, while the dollar strengthened after data showed economic momentum is building in the euro area.

The S&P 500 Index’s fourth straight gain took it back towards 2,400. The dollar also rose after posting three days of losses.

Risk appetite improved after reports showed the Germany's business confidence rose to the highest since 1991 in May, while manufacturers saw the fastest growth in six years. Economic expansion also accelerated in France.

Also Read: Fed Minutes Likely to Leave June Hike Firmly in Play for FOMC

Attention now turns back to the U.S., with the Federal Reserve due to release the minutes of its latest meeting, offering clues on the pace of interest-rate increases.

Oil held gains after data showed crude stockpiles declined ahead of a key Organisation of Petroleum Exporting Countries’ meeting on Thursday to decide on extending supply cuts.

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