Indian Stocks Gain On Rate Cut Hopes; Titan Jumps Most In Over 8 Years

Market Wrap

Closing Bell

Indian shares managed to shrug off weak global cues, with key equity benchmarks gaining on hopes of an interest-rate cut from the central bank in its policy decision due Wednesday.

The S&P BSE Sensex rose 0.1 percent to 31,320 while the NSE Nifty climbed 0.2 percent 9,675. The market breadth was tilted in favour of the buyers. About 2 stocks advanced, against every 1 that declined.

The Nifty I.T. index led the nine sectoral gauges higher, while Nifty Metal and Nifty Pharma index were the only two losers. The benchmark 10-year yield held near the lowest level since April, driven by expectations the bank will soften its hawkish stance.

The Nifty range for now seems to be between 9,780 on the upside and 9,630 on the downside, with 9,500 being a major support level, said Dhaval P Vyas, Founder & Chief Market Analyst,

Vyas said investors should stick to stock specific approach. “One should also look at churning their portfolio from time-to-time,” he told BloombergQuint by phone. He is bullish on the NBFC companies, especially the housing finance stocks. Also, he likes real estate stocks. He also has a contrarian call on Tata Consultancy Services.

Jewellery Stocks Surge On GST Boost; Titan Jumps Nearly 17%

Shares of jewellery makers jumped anywhere between 15 percent and 2 percent on the back of the GST rates announced on Saturday.

Titan jumped climbed almost 16.9 percent, the most since April 02, 2012, after the tax rate decided was marginally higher than what the company had anticipated.

“This comes as a big relief given gold was expected to be almost like a balancing figure in some sense as taxes on most other products had already firmed up,” CLSA note read.

The broking firm upgraded the stock to ‘Buy’ from outperform earlier. It also raised its target price to Rs 620 from Rs 555 earlier.

Other Jewellery Stocks

  • PC Jeweller (+8%)
  • Gitanjali Gems (+5%)
  • TBZ Jewellers (+4%)
  • Tara Jewels (+6%)

Retail Stocks Rally On GST Boost

Shares of the retail companies rallied anywhere between 19 and 2 percent after the final GST rates announced on footwear and apparel were closer to the current tax structure.

The universal tax structure is expected to help increase compliance, thereby favouring organised retail players. GST is also expected to make value fashion (priced below Rs 1,000) retailers more indirect tax-efficient.

Similarly, analysts said it can accelerate market share gains in low-ticket-size segment as unorganised lose advantage of low tax compliance.

“We will try to pass it on the benefit to customer through price cuts, we will try to see that the customer get the better products for better prices,” Lalit Agarwal, CMD of V-Mart Retail Ltd. told BloombergQuint.

Top Movers

  • Future Retail (+5.2%)
  • Aditya Birla Fashion (+4.2%)
  • Trent (+1.7%)
  • Future Lifestyle Fashions (+6.4%)
  • Shoppers Stop (+4.1%)
  • V-Mart (+13%)
  • Mandhana Retail (+19%)

Metal Stocks Continue To Drag

Chart Of The Day

European Shares Trade Mixed

NDTV Drops After CBI Raids Founders’ Residences

Shares of the media firm dropped as much as 7 percent after the Central Bureau of Investigation (CBI) carried out searches at different properties owned by the company, and its promoters Prannoy and Radhika Roy.

The company confirmed the news in a filing with exchanges and said that it will “fight tirelessly” against what it called a “witch-hunt” by multiple agencies.

Qatar Stocks Plunge Most In Over A Year

Also Read: Oil Rebounds After Saudi-Led Alliance Cuts Qatar Ties Over Iran

Cadila Gets U.S. Regulator’s Nod For Antidepressant Pills

Shares of the drug maker gain after it received the U.S. health regulator's nod to sell its antidepressant tablets in the American market.

The drug maker received the final approval from the U.S. Food and Drug Administration (U.S. FDA) to market Mirtazapine - orally disintegrating tablets USP - in strengths 15mg, 30mg and 45mg, the company said in a BSE filing.

The stock has returned 39 percent so far this year, compared to a 9.7 percent decline in the Nifty Pharma index.

GST Coming Soon...

India Grid Trust To List Tomorrow

India Grid Trust, the Infrastructure Investment Trust (InvIT) sponsored by Sterlite Power Grid Ventures Ltd. will be listing on the Bourses on Tuesday. The second private InvIT to list on the exchanges has set its issue price at Rs 100.

The initial public offering was subscribed 1.17 times prior to which it had raised over Rs 1,000 crore from anchor investors.


India Services PMI Rises To 52.2 In May

The Nikkei India Services Purchasing Managers' Index, or PMI, rose to 52.2 in May from April's 50.2, marking the highest since October.

A reading above 50 indicates economic expansion, while a reading below 50 points toward contraction. May's growth was supported a quicker rise in new business inflows.

"The pick-up in service sector growth seen mid-way through the first quarter [of fiscal 2017] suggests that GDP could expand at a faster rate should growth momentum be maintained in June," said Pollyanna De Lima, an economist at IHS Markit.

However, the economist pointed that "Despite accelerating from April, rates of increase in both services activity and new work are much weaker than typical for India. Moreover, business confidence fell as a reflection of firms' concerns regarding competitive pressures and lackluster demand."


SpiceJet Pares Some Losses

Shares of the low-cost carrier dropped as much as 4.1 percent before paring most of its losses after it reported weak set of earnings during the weekend.

The company’s profit for the three-month ended March 31 declined to Rs 41.64 crore from Rs 107.88 crore a year ago, the Gurgaon-based airline said in a stock exchange filing on Saturday. Revenue grew 11.4 percent to Rs 1,613.8 crore.

Rest Of The Pack

  • Jet Airways (+0.4%)
  • InterGlobe Aviation (+1.6%)
  • Global Vectra Helicopter (+2.3%)

Big Global Headline

Rupee Moves Higher

Continuing with its rising streak, the rupee appreciated 12 paise to 64.32 against the dollar in early trade on sustained selling of the U.S. currency by exporters and banks.

The dollar was quoting stronger against some other currencies like euro and yen, whereas a lower opening of the domestic equity market capped the rupee's gains, forex dealers said.

On Friday, the rupee had gained 4 paise to a fresh one-week high of 64.44 against the US dollar on sustained selling of the American currency by exporters.


Tata Elxsi Gains After Deal

Shares of the Tata group firm gained as much as 5 percent, the most since March 17, after it signed a licensing and integration support deal for a driverless car program.

The company said deal was signed with “one of the world’s top 5 automotive original equipment manufacturers”. The company did not provide any details as to the size and scope of the deal.

“The Autonomai platform provides carmakers and Tier 1 automotive suppliers with a comprehensive and modular solution covering perception, GNC and drive-by-wire systems, to quickly build, test and deploy autonomous vehicles,” the press release said.

Reliance Communications Gains After Lenders Float Lifeline

Shares of the Anil Ambani-owned firm gained as much as 5.3 percent after lenders agreed to a seven-month moratorium on the telecom company’s debt payments.

Credits have given Reliance Communications, or RCom, time until December to sell its towers to Canadian asset manager Brookfield Infrastructure Group and merge the wireless business with Aircel Ltd., Chairman Ambani said at a press conference in Mumbai on Friday.

Also Read: The Story Behind Reliance Communications’ SDR

Opening Bell

Indian equity benchmarks swung between gains and losses as weak global cues kept traders’ from taking any big bets. Jewellery and apparel stocks were the top gainers after the final set of GST rates were announce during the weekend while FMCG and metal stocks lost some shine.

The S&P BSE Sensex slipped 0.1 percent to 31,230 while the NSE Nifty was little changed at 9,652. The market breadth was skewed in favour of the bulls as well. About 3 stocks advanced to every 1 that declined on the NSE.

5 Things To Watch

Technical Check

Stocks To Watch

  • Can Fin Homes: To consider stock split on June 23
  • Federal Bank: To consider raising up to Rs 4,000 crore rupees via debt options
  • GVK Power: To exit Bangalore Airport; Sells 10 percent stake to Fairfax India
  • Lupin: Drug makers drug facility at Pithampur, Indore gets Form 483 from U.S. FDA with 6 observations
  • Reliance Communications: Says lenders agree to give seven months standstill on debt obligations
  • Suzlon Energy: Gets India tribunal nod for arrangement with some units
  • Spicejet profit falls 61 percent year-on-year on higher fuel cost

For a complete list of stocks to watch, click here

Data To Watch

  • 10:30am: Nikkei India Services PMI for May (prior 50.2)
  • 10:30am: Nikkei India Composite PMI for May (prior 51.3)

Money Market Heads-Up

Government bonds are seen trading in a range today as bankers position for a softer RBI. Many in the market are convinced that with record low inflation and an unexpected slowdown in economic growth will prompt RBI to abandon its hawkish stance on Wednesday.

Later today, RBI will auction Rs 30,000 crore of 63-day cash management bills. The Indian rupee may open firmer in line with other regional currencies after U.S. treasury yields fell following disappointing U.S. jobs data.

Talking Points

  • Saudi Arabia, Bahrain sever diplomatic ties with Qatar
  • Anil Ambani’s telecom unit gets 7-month reprieve to pay debt
  • Credit Suisse outsources 119 I.T. jobs to HCL Technologies
  • Economy must play role in verdicts, India’s Supreme Court rules (More details HERE)
  • VTB’s Kostin sees lenders agreeing on Rosneft-Esaar deal soon
  • Modi says India remains a responsible nation on climate change
  • Merkel’s chief of staff says European Union to join China, India on climate
  • Macron says France, India to work together on climate change
  • Modi says National Sales Tax to be rolled out on July 1
  • India fixes 3 percent GST on gold, Jaitley says
  • Infosys Rao meets India’s Prasad; Says layoffs only in hundreds
  • MobiKwik CEO says company aims to become profitable by second half 2019
  • SEBI sets up corporate governance panel; Kotak to lead
  • Forex reserves -$547 million to $378.8 billion in a week to May 26: RBI
  • Global funds sell Rs 59.13 crore of local stocks; domestic funds buy Rs 222 crore on June 2: Provisional data
  • Flush with cash, Americans buy more diamond jewellery than ever
  • Minister says India tourism gained 10.7 percent due to e-visa policy
  • India said to consider three options for Air India (Times of India)
  • SBI Chair sees share sale mostly complete by year-end (Reuters)
  • Bank of India to sell stakes in subsidiaries to raise capital (PTI)

Good Morning!

Most of Asian and the British pound slipped after a weekend terror attack in the heart of London killed seven people. This was the third such attack in U.K. this year.

Prime Minister Theresa May's address to the nation saw a different undertone to her previous speeches of tolerance. "Enough is enough," she said, days before the U.K. general election.

Yen and gold retained their gains, while U.S. and Australian bonds rallied as wage growth and hiring strength in the American labour market came below forecasts.

The U.S. labor market gave mixed signals in May, with a decline in the unemployment rate to a 16-year low contrasting with below-forecast hiring and wage growth, Labor Department figures showed Friday.

However, the latest jobs report likely won’t deter the Federal Reserve from increasing interest rates in two weeks as the economy continues to grind higher even as Washington shows few signs of moving forward with tax and spending reforms.

The World Bank expects a modest rise in global growth despite uncertainty regarding the U.S. monetary policy and bond traders' concerns of dwindling inflation.

Oil held losses after the biggest weekly decline in a month amid concern that a boost in U.S. drilling may hamper efforts by OPEC and its allies to trim global glut.

Stay Updated With Stock Market News on BloombergQuint