Sensex, Nifty End Lower In See-Saw Trade; Small Caps Worst Hit

Indian equity benchmarks edged lower dragged by recent outperformers like HDFC Bank, Kotak Mahindra Bank and Infosys.

The S&P BSE Sensex fell 0.27 percent or 95 points to 35,227 and the NSE Nifty 50 index declined 0.37 percent or 40 points to 10,696.

The benchmarks rose for second week in a row led by energy shares. The Sensex advanced 0.87 percent and Nifty climbed 0.86 percent.

Meanwhile, in today’s session, sixteen out of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Utilities index's 1.7 percent drop. On the flipside, the S&P BSE Auto index was top gainer, up 0.67 percent.

Mid- and small-cap shares underperformed their larger peers as the S&P BSE MidCap index fell 1 percent and the S&P BSE SmallCap index plunged 1.57 percent.

Stocks headed for a positive end to a tumultuous week in which political developments in Europe and escalating trade tensions roiled markets. Treasuries edged lower and the dollar was steady.

Shares of aviation companies were trading lower after prices of aviation turbine fuel (ATF) were raised for 11-month in a row.

ATF prices were raised by 7 percent, the highest in 17 months, to Rs 71,245 per kilolitre.

Higher fuel prices to impact the financials of aviation companies as fuel accounts for more than a third of airlines’ operating costs.

• SpiceJet fell 6.2 percent
• Jet Airways declined 2.6 percent
• Interglobe Aviation tumbled 3 percent

Shares of the Mumbai-based auto maker rose 2 percent to Rs 288.35 after its sales rose 58 percent to 54,295 units in May, according to its stock exchange filing. The sales was driven by its commercial and passenger vehicle businesses in the domestic market.

Key sales highlights (May, YoY):

• Domestic passenger vehicle sales rose 61 percent at 10,855 units.
• Domestic commercial vehicle sales rose 56 percent at 36,806 units.
• Medium and heavy commercial vehicle segment’s sales rose 90 percent at 36,806 units.

Shares of the Bhopal-based road developer rebounded after posting losses in previous two sessions. The stock rose as much as 5 percent to Rs 874 after brokerages maintained their stance on the stock despite the recent selloff.

Citi in a note said:

• Maintained ‘Buy’ with a price target of Rs 1,405.
• Stock fell on unconfirmed market rumors relating to resignation of statutory auditors.
• Exceptional losses booked to get reversed when remaining roads move out of books.
• Debt increased due to interest cost, capex and investment in SPVs.

Nomura in a note said:

• Maintained ‘Buy’; cut price target to Rs 1,322 from Rs 1,347.
• March quarter witnessed a strong execution; stock down on speculation.
• Believe reported operating margin is credible in our view.
• Not concerned about the ability of Shrem Infraventures to fund the asset sale deal.

Goods and services tax collections fell month-on-month but stayed above the average mop-up in May.

The total gross revenue for the month stood at Rs 94,016 crore, Finance Secretary Hasmukh Adhia tweeted. That’s lower than Rs 1 lakh crore in April but higher than the average of Rs 89,885 crore a month in 2017-18.

Shares of the country's second largest hospital chain operator declined over a percent to Rs 145.

Fortis Healthcare's board has appointed Ravi Rajagopal, a non-executive independent director as the chairman, the company said in an exchange filing.

Shares of the Delhi-based government-owned bank fell 0.66 percent to Rs 83.10. The bank is planning to sell its Bhikaji Cama Place headquarter in Delhi, a government official said.

• PNB to sell Bhikaji Cama headquarter for Rs 1,300 crore, deal almost finalized
• PNB confident to raise Rs 12,000-13,000 crore by end of Q2FY19
• No further trigger for PNB and other banks to come under prompt corrective action
• Expect Bhushan Steel resolution to add Rs 900 crore to profitability
• Expect Rs 12,000-13,000 crore from NPA resolution, non-core, PNB Housing sale by second quarter

Shares of the Bajaj Auto rose as much as 7 percent, the most in a month, to Rs 2,944 after it reported best May sales growth in eight years.

The Pune-based two- and three-wheeler maker sold 4.07 lakh units last month, an increase of 30 percent over the year-ago period, it said in a statement today. Overall motorcycle sales increased 24 percent to 3.42 lakh units. In the domestic market, motorcycle sales rose 23 percent to 1.92 lakh units.

• The broader markets were underperforming their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes fell over 1 percent each.
• The S&P BSE Sensex fell 0.11 percent to 35,283 and the NSE Nifty 50 index declined 0.2 percent to 10,710.
• Seventeen out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Utilities index's 2 percent drop. On the other hand, auto stocks rose reacting to their May sales numbers. the S&P BSE Auto index rose 0.7 percent.
• The overall market breadth was bearish as 1,627 shares were declining while 695 were advancing on the BSE.

Shares of Ashok Leyland snapped its two-day decline and rose as much as 2.7 percent to Rs 152 apiece after the announcement.

Ashok Leyland sales in May rose 51 percent over the year-ago period to 13,659 units, it said in an exchange filing.

The Chennai-based truck and bus maker sold 10,421 medium and heavy commercial vehicles last month, up 70 percent over the year-ago period. Its light commercial vehicle sales rose 10 percent to 3,238 units.

Shares of the Delhi-based Royal Enfield bike maker fell 1.7 percent to Rs 30,255.

• Total bike sales rose 23 percent to 74,697 units versus 60,696 units (YoY)
• Exports rose 7 percent to 2,187 units versus 2,049 units (YoY)

Shares of the country's largest car maker rose as much as 2.5 percent to Rs 8,754 after its monthly sales rose for fifteenth month in a row.

• Total car sales rose 26 percent to 1,72,512 units versus 1,36,962 units (YoY)
• Exports rose 48 percent to 9,312 units versus 6,286 units (YoY)
• Domestic sales rose 25 percent to 1,63,200 units versus 1,30,676 units (YoY)
• Sales of compact segment which include Swift, Dzire, Baleno rose 50.8 percent to 77,263 units versus 51,234 units (YoY)

Investing in pharma stocks has to be from a perspective of 3-5 years. However, the U.S. FDA issues surrounding some pharma companies still exist, Kashyap Pujara, head of research at Axis Capital told BloombergQuint in an interview.

Key highlights of the conversation:

• Capex plays will be a theme to watch out for in 2019
• Valuations still reasonable among certain IT stocks
• Rural consumption and auto good themes to play
• Don't see substantial risk to macros if oil remains at current levels
• Need to look at businesses with long-term earnings potential
• PE multiples have come off due to macro and political headwinds
• Markets have seen PE compression post budget
• Won't be surprised with price hikes been passed to consumers
• Inflation may rise to 5-5.5 percent by June 2018
• Strong growth may offset threats to corporate earnings
• Macro level tailwinds have turned into headwinds
• Expect Sensex EPS to grow 20 percent over the next two years
• Maintaining 20 percent earnings growth estimate for FY19 and FY20
• Most companies positive about their earnings prospects
• Earnings recovery is likely to come through

Shares of the state-run oil exploration company fell as much as 4.1 percent to Rs 170.60.

The government may ask Oil and Natural Gas Corporation to bear fuel subsidy to help cut petrol and diesel prices, news agency Press trust of India reported citing sources.

The government does not want to cut excise duty and is looking at alternative means to reduce petrol and diesel prices that had on Tuesday touched an all-time high, the report added.

Shares of the country's second largest private sector lender by assets pared gains after rising as much as 4.95 percent, the most in nearly a month, to Rs 299.95.

The ICICI Bank's board has denied a report that its MD and CEO Chanda Kochhar has been asked to go on leave and stated that she is on her annual leave, according to ICICI Bank’s exchange filing.

The board also denied appointing any panel to find successor for the CEO.

Earnings season has been ‘ok’ and markets are likely to be sideways, Mahesh Patil, co-chief investment officer at Aditya Birla Sun Life Mutual Fund told BloombergQuint in an interview.

Key highlights of the conversation:

• GDP growth should be good this year, expect 7.3 to 7.4 percent.
• Believe mid-caps and small-caps should show better earnings growth.
• Private banks to gain market share and compound over the years.
• $80/bbl seems to be a resistance for oil.
• Downstream valuation looks attractive compared to upstream oil companies.

Shares of the Mumbai-based e-governance services provider were locked in five percent upper circuit at Rs 34.20 after hitting lower circuit in 28 sessions.

Vakrangee had 55 lakh shares changed hands multiple blocks.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Pune-based two-wheeler maker rose as much as 2.51 percent to Rs 2,819 after its sales jumped 30 percent in the month of May.

• Domestic motorcycle sales rose 23 percent to 1,92,543 units versus 1,56,523 (YoY)
• Motorcycle exports rose 24 percent to 1,50,052 units versus 1,20,592 units (YoY)
• Total motorcycle sales rose 24 percent to 3,45,595 units versus 2,77,115 units (YoY)
• Commercial vehicle sales rose 76 percent to 64,449 units versus 36,641 units (YoY)
• Total vehicle sales up 30 percent to 4,07,044 units versus 3,13,756 units (YoY)

Indian equity benchmarks were little changed in early trading as gains in ICICI Bank, Tata Motors and Sun Pharma were offset by losses in ONGC, HDFC Bank and ONGC.

The S&P BSE Sensex rose 0.2 percent or 75 points 35,396 and the NSE Nifty 50 index gained 0.15 percent or 16 points to 10,753.

Thirteen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Auto index's 0.9 percent gain. On the other hand, the S&P BSE Utilities index was the top loser, down 0.7 percent.

The broader markets were trading on a muted note as both the S&P BSE MidCap and S&P BSE SmallCap indexes were little changed.

• Rupee opened higher at 67.34 per dollar against yesterday's close of 67.40.

Growth accelerated to 7.7 percent in the fourth quarter, beating the median estimate. This makes India the fastest growing economy but for bonds, it means more pain.

Yield on the 10-year benchmark bond climbed 4 basis points to 7.83 percent in the last session. Traders are expecting the yield to stay in a range of 7.80-7.90 percent till the policy review.

In the currency market, implied opening from forwards suggest the pair could open at 67.39. Dollar is seen consolidating around the initial support of 67.2962 in the near-term as investors focus on next week's RBI monetary policy announcement.

For today, the pair could stay in a range of 67.30-67.80 a dollar.

Macquarie on Maruti Suzuki

• Maintained ‘Buy’ with a price target of Rs 11,500.
• Maruti Suzuki’s strength is its widest sales and service network.
• Roll-out of NEXA has been transformational for Maruti.
• Maruti now upgrading all existing channel outlets to ARENA.
• Digital integration of online and in-store experience is key differentiator.

HSBC on Cox and Kings

• Upgraded to ‘Buy’ from ‘Hold’; maintained price target at Rs 290.
• Outlook for hotel business remain strong.
• Company planning to improve business mix by increasing focus on retail segment.
• Inexpensive valuation outweighs deteriorating balance sheet concerns.
• Risk-reward looks favourable at current valuations.

Morgan Stanley on SAIL

• Maintained ‘Underweight’ with a price target of Rs 66.
• March quarter ahead of estimates driven by higher volumes and better EBITDA/ton.
• Management's focus remains on capacity ramp-up, cost efficiency and improvement in product mix.
• Expect volume ramp-up will be gradual and cost efficiency to still take time.

Macquarie on Jubilant Foodworks

• Maintained ‘Outperform’ with a price target of Rs 3,103.
• Very positive on the business fundamentals post meeting with CEO.
• Focus is to drive same store sales growth (SSSG); operating leverage story to continue on higher SSG.
• Top pick in India’s consumer space.

Brokerages On Dilip Buildcon

Citi

• Maintained ‘Buy’ with a price target of Rs 1,405.
• Stock fell on unconfirmed market rumors relating to resignation of statutory auditors.
• Exceptional losses booked to get reversed when remaining roads move out of books.
• Debt increased due to interest cost, capex and investment in SPVs.

Nomura

• Maintained ‘Buy’; cut price target to Rs 1,322 from Rs 1,347.
• March quarter witnessed a strong execution; stock down on speculation.
• Believe reported operating margin is credible in our view.
• Not concerned about the ability of Shrem Infraventures to fund the asset sale deal.

Who’s Meeting Whom

• Capacit’e Infra to meet Sundaram MF and Unilazer Ventures on June 1.
• Welspun India to meet Philip Capital on June 1.
• TVS Motor Company to meet Reliance MF, Kotak MF, Max Life, ICICI Prudential Life, DSP MF and others on June 5.

Insider Trades

• Anoop Moopen promoter of Aster DM Healthcare buys 20,000 shares from March 28 - 29.
• Laurus Labs Dr Satyanarayana Chava acquired 6.33 lakh shares on May 25.

(As reported on May 31)

Bulk Deals

Avenue Supermarts

• BlackRock India Equities Fund (Mauritius) Ltd. bought 56.62 lakh shares at Rs 1,575.55.

InterGlobe Aviation

• BlackRock Funds International Opportunities Portfolio bought 43.87 lakh shares or 1.14 percent equity at Rs 1,219.75.

ACC

• BlackRock India Equities Fund (Mauritius) Ltd. sold 12.8 lakh shares at Rs 1,354.38.

Divis Labs

• BlackRock India Equities Fund (Mauritius) Ltd. sold 14.5 lakh shares at Rs 1,047.17.

Container Corp

• BlackRock India Equities Fund (Mauritius) Ltd. bought 12.58 lakh shares or 0.52 percent equity at Rs 1,379.41.

IDFC Bank

• Blackrock Funds International Opportunities sold 4.31 crore shares or 1.27 percent equity at Rs 40.69.

Maharashtra Seamless

• Gagandeep Credit Capital Pvt. Ltd. bought 3.63 lakh shares or 0.54 percent equity at Rs 425.

Tata Motor DVR

• Goldman Sachs Investments Mauritius I brought 26.8 lakh shares at Rs 168.48.
• Integrated Core Strategies (Asia) brought 35 lakh shares at Rs 168.51.

NRB Bearings

• HDFC Mutual Fund Small and Mid Cap Fund brought 15 lakh shares at Rs 162.5.
• Ubs Principal Capital Asia Ltd. sold 17.1 lakh shares at Rs 162.5.
• Trilochan Sawhney Singh Trust 1 sold 9.4 lakh shares at Rs 162.63.

Trading Tweaks

• Apex Frozen Foods, Bombay Dyeing, Dilip Buildcon, Graphite India, GVK Power, HEG, Radiko Khaitan, Rain Industries, Venky(S) placed under additional surveleince measure by BSE.
• Reliance Naval and Engineering Ltd circuit filter revised to 20 percent.

F&O Cues

• Nifty June Futures ended at 10,702, at a discount of 33.9 points.
• Nifty Rollover at 62.6 percent, Bank Nifty Rollover at 75 percent.
• All series-Nifty open interest (OI) up 11 percent and Bank Nifty open interest up 28 percent.
• India VIX ended 13.2, down 1.4 percent.
• Maximum open interest for June series call at 11,000 strike price call option, OI at 30.4 lakh, up 3 percent.
• Maximum open interest for June series put at 10,600 strike price put option, open interest at 30.5 lakh, up 46 percent.

• Infosys extends alliance with Microsoft for cloud-based digital transformation solutions
• Idea Cellular completes sale of 9,900 standalone towers to ATC for Rs 4,000 crore
• Cochin Shipyard signs agreement with Kerala government for procurement of marine ambulances for fisheries department
• Maruti Suzuki targets to sell over 2 lakh automatic cars in FY19
• Bayer Cropscience to invest Rs 400 crore in Monsanto India
• Fortis Healthcare says arm sold off 1.8 crore units of RHT Health Trust for 13.65 million Singapore dollars
• PNC Infratech declared lowest bidder for Nagpur-Mumbai expressway project worth Rs 2,100 crore
• Bodal Chemicals to acquire additional 17 percent stake in Trion Chemicals for Rs 3 crore
• Cholamandalam Investment & Finance to invest Rs 50 crore in its subsidiary Cholamandalam Home Finance
• Ashiana Housing has acquired 6.67 acres land in Rajasthan to develop a group housing project with 6.15 lakhs square feet area

• BJP’s bypoll diary since 2014: Just 5 out of 24 LS seats it fought
• Modi’s most high-profile asset sale flops
• Air India needs a plan B: Downsizing
• India’s push for cleaner air may make power costlier
• Centre to ask ONGC to bear fuel subsidy to help cut petrol, diesel price
• AirAsia India blames the one person not yet being investigated by CBI
• Italy populists surge to power in challenge to Europe
• Commerce ministry seeks probe into Walmart-Flipkart deal
• Power Finance Corporation says stressed assets at 11% of loan book
• U.S. allies hit back as Trump revokes steel tariff reprieve
• How the government met its FY18 fiscal goal
• What do steel tariffs have to do with Iran? Plenty

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.16 percent to 10,733 as of 8:41 a.m.

Asian stocks traded mixed Friday after the Trump administration’s tariffs on imports from key allies sent U.S. and European stocks into a tailspin. The yen declined, and Japanese bonds fell after the Bank of Japan cut purchases of some debt at its regular operations.

Shares in Australia dropped, while those in Japan and Korea pushed higher. The S&P 500 fell for the fourth time in five days, as the president’s escalation of trade tensions with Canada, Mexico and the European Union hammered American industrial and financial shares.

Bonds

• The yield on 10-year Treasuries rose one basis point to 2.87 percent.
• Japan’s 10-year yield increased less than one basis point to 0.035 percent.
• Australia’s 10-year yield rose two basis points to 2.69 percent.

Commodities

• West Texas Intermediate crude fell 0.2 percent to $66.92 a barrel.
• Gold fell less than 0.05 percent to $1,298.44 an ounce.
• LME copper fell 0.2 percent to $6,838.00 per metric ton.

Here are some key events to watch this week:

• The U.S. employment report for May is due Friday. It’s the last before the June Fed meeting.
• Automakers report May U.S. sales the same day.
• Also Friday: some onshore Chinese stocks join MSCI Inc.’s global indexes.
• On Saturday U.S. Secretary of Commerce Wilbur Ross will travel to Beijing for more talks with Vice Premier Liu He on topics including ZTE Corp. and trade.