Sensex, Nifty Decline For Second Straight Day Dragged By Banks

Indian equity benchmarks fell for second day in a row dragged by financial heavyweights like HDFC twins, ICICI Bank and Kotak Mahindra Bank.

The S&P BSE Sensex fell 0.6 percent or 215 points to 35,012 and the NSE Nifty 50 index tumbled 0.6 percent or 68 points to 10,628.

Nine out of 11 sector gauges compiled by the National Stock Exchange ended lower led by the Nifty Realty index's 3.3 percent drop. It was followed by Nifty Bank index which fell 1.6 percent. On the other hand, the Nifty IT index was the top gainer, up 0.3 percent.

The mid- and small-cap shares underperformed their larger peers as the Nifty Midcap 100 index fell over a percent while the Nifty Smallcap 100 index plunged 2.8 percent.

Sovereign Indian bonds extend decline after an unidentified finance ministry official flagged the possibility of an increase in interest rates to curb inflation.

• Hardening of rates looks inevitable given inflation trajectory, a finance ministry official told reporters in New Delhi, asking not to be identified citing rules.
• Risks to RBI’s inflation target has increased significantly: official
• Meeting fiscal deficit aim this fiscal year will be challenging: official
• Yield on benchmark 10-year government bonds rose 5 basis points to 7.90 percent versus 7.87 percent before the comments; was at 7.85 percent on Friday

• Yes Bank has 20 lakh shares change hands in a block. Stock up 0.04 percent at Rs 342.80.

Buyers and sellers were not immediately known

Source: Bloomberg

• SAIL: The Delhi-based government owned steel maker rose as much as 5.5 percent to Rs 76. International brokerage has upgraded the stock to 'neutral' from 'sell' and also raised its target price to Rs 83 from Rs 50.
• Anant Raj: The Delhi-based real estate developer surged as much as 11.44 percent to Rs 45.30. The board has considered a proposal for realign and reorganize certain business activities of the company to have better focus and faster execution of projects, Anant Raj said in an exchange filing.
• Dr Reddy's Labs: The Hyderabad-based drugmaker rose as much as 4.5 percent to Rs 2,027.90 after U.S. FDA completed inspection at its Srikakulam plant with no observations.
• Pfizer: The Mumbai-based drugmaker rallied for ninth day in a row, posting its longest winning streak since December 2013, and rose as much as 3.3 percent to Rs 2,650.

Shares of the country's largest private sector lender fell as much as Rs 104 from day's high to Rs 2,053.20.

Global funds can increase their stake in the Mumbai-based bank by 1.68 percent or 4.3 crore shares, according to NSDL data.

Banking shares were trading lower as Reserve Bank of India's Monetary Policy Committee began its bi-monthly meeting to chalk out future course of interest rates.

The RBI will hold its repurchase rate at 6 percent this week, according to 25 of 33 economists surveyed by Bloomberg. The rest see an increase to 6.25 percent.

The gauge on banking shares on the National Stock Exchange fell 1 percent dragged by Bank of Baroda, IDFC Bank and Federal Bank.

European stocks tracked Asian gains and U.S. futures advanced as optimism for the world’s largest economy helped investors put concerns over protectionism to one side.

Nifty Bank 27,000 strike price call option was among the most active option contracts on the National Stock Exchange.

The premium on the contract fell 38 percent to Rs 69.50. Over 5.38 lakh shares were added to the open interest which stood at over 14.22 lakh shares.

Click here to see the complete options chain

Shares of the Chandigarh-based steel wheel rim maker surged as much as 7.2 percent to Rs 1,410 after it bagged an export order from the U.S. truck and trailer aftermarket.

SSWL has bagged an export order from U.S. truck and trailer aftermarket for supply of approximately 9,500 truck wheels which will be shipped from its Chennai plant later this month, the company said in an exchange filing.

The total order is valued at Rs $4,25,000.

Shares of the Delhi-based jewellery retailer slumped as much as 14.82 percent, the most since May 8, to Rs 133.05.

• JBF Industries: The Mumbai-based textile products maker fell as much as 5 percent to Rs 82.10. Trading volume was 55.5 times its 20-day average.
• VRL Logistics: The Hubli-based logistics service provider fell as much as 2.7 percent to Rs 360.55. Trading volume was 13.4 times its 20-day average.
• Bhushan Steel: The Delhi-based steel maker fell as much as 4.92 percent to Rs 42.50. Trading volume was 7.9 times its 20-day average.
• Indoco Remedies: The Mumbai-based generic drug maker fell as much as 2.56 percent to Rs 194.65. Trading volume was 7.6 times its 20-day average.

Shares of the Gandhinagar-based oil and gas field service provider fell as much as 20 percent to Rs 107.15, its lowest level since July 2015 after the Central Bureau of Investigation named company as one of the accused in Rs 80 crore scam.

The CBI has booked 13 senior serving and retired officials of the ONGC for alleged irregularities in giving a contract worth Rs 312 crore given to Deep Industries Limited for supplying the gas dehyrdation units (GDUs), causing a loss of Rs 80 crores to ONGC, news agency Press Trust of India reported citing Central Bureau of Investigation.

• Indian equity benchmarks were little changed as gains in Reliance Industries, Infosys and Mahindra & Mahindra were offset by losses in HDFC Bank, Hindustan Unilever and Kotak Mahindra Bank.
• The S&P BSE Sensex was little changed at 35,220 and the NSE Nifty 50 index fell 0.1 percent to 10,685.
• The small-cap shares were underperforming their larger peers as the S&P BSE SmallCap index fell 0.9 percent.
• Thirteen out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Realty index's 1.5 percent drop. On the other hand, the S&P BSE Healthcare index was top gainer, up 0.46 percent.
• The overall market breadth was extremely bearish as 1,722 shares were declining while 661 were advancing on the BSE.

Click here for more stock market statistics

Shares of the Hoshiarpur-based auto parts maker rose as much as 3.91 percent to Rs 528 after HDFC MF acquired additional 0.46 percent equity in GNA Axles.

Shares of the Mumbai-based e-governance service provider were locked in a 5 percent upper circuit at Rs 35.90 for second day in a row.

Baron Emerging Markets Fund bought 72.67 lakh shares or 0.7 percent equity at Rs 34.08 each in the Friday's session.

Shares of the country’s largest private lender fell as much as 2.5 percent, the most since April 23, to Rs 2,058.

Global funds can increase their stake in the Mumbai-based bank by 1.68 percent or 4.3 crore shares, according to NSDL data. At present, they hold 72.3 percent of HDFC Bank, right under the cap of 74 percent for lenders.

Trading volume was 43.7 times the 20-day average, Bloomberg data showed. The stock is trading 10 percent below the Bloomberg consensus one-year target price.

JM Financial expects a significant rebound in corporate facing banks in the current and the next financial year, its Head of Institutional Equity Research, Suhas Harinarayanan told BloombergQuint in an interaction.

Key highlights from the conversation:

• Headline numbers for the recent earnings season were bad.
• Believe March quarter was the worst since Q2FY17 concerning "beats" and "misses".
• Positively surprised by margin beat by consumer companies.
• Electrical consumer durable companies have reported a good set of earnings.
• Bullish on NBFCs and private financials.

• Indian equity benchmarks erased early gains and were dragged lower, led by HDFC Bank.
• The S&P BSE Sensex Index fell as much as 0.4 percent to 35,089 and The NSE Nifty 50 Index fell as much as 0.5 percent to 10,648.20.
• The market breadth was tilted in favour of sellers. About 1,213 stocks declined and 394 shares advanced in NSE.

Shares of the business consulting service provider rose as much as 1.6 percent to hit a record high at Rs 290.40.

About 10.5 lakh shares changed hands in a block deal on BSE, according to Bloomberg report. Buyers and sellers were not known immediately. The stock returned 59 percent so far this year and gained 151 percent in the past 12 months.

Shares of the country’s largest two-wheeler maker swung between gains and losses and traded at Rs 3,618 as of 9:50 a.m. The company’s sales in May rose 11 percent over the year-ago month to 7.06 lakh units, according to its exchange filing.

Trading volume was 2.1 times its 20-day average. The stock fell 0.2 percent last month, compared to 1.1 percent advance in Sensex.

Nifty is expected to touch 12,000-mark if oil corrects to $70 a barrel, Manish Sonthalia, head of equities - PMC at Motilal Oswal Asset Management Company told BloombergQuint in an interaction.

Key highlights from the conversation:

• Except for corporate banks, earnings were decent in March quarter.
• Market is looking more positive now as oil is off highs.
• Not seeing too much probability of a rate hike at the moment.
• Markets already factoring in 50 basis points hike this year, as of now expect a status quo.
• Mid Cap correction on account of SEBI reclassification.
• Have seen some volume uptick for consumer companies.
• Inflationary environment works well for staples.
• Expect more haircuts in banking space going forward.

Shares of the drugmaker rose as much as 3.8 percent to Rs 2,013.85. The U.S drug regulator concluded inspection at the pharmaceutical company's Srikakulam Plant with no observations.

The stock was the best performer on Nifty. Dr. Reddy’s Lab trades at 35.1 times trailing 12-month earnings per share and 22 times its estimates for the coming year, according to Bloomberg data.

• Yes Bank: About 26.2 lakh shares changed hands in a single block.
• Zee Entertainment: About 12.6 lakh shares changed hands in a single block
• Hindalco: About 13 lakh shares changed hands in a block deal.
• Intellect Design: About 10.8 lakh shares changed hands in a block deal.
• Bajaj Finance: About 10.3 lakh shares traded in a block in pre-market.
• Vedanta: About 11 lakh shares traded in a block in pre-market.

Buyers and sellers were not known immediately.

Source: Bloomberg

Indian equity benchmarks open higher, following its Asian peers after U.S. jobs data bolstered optimism in the world's largest economy.

The S&P BSE Sensex Index rose as much as 0.9 percent o 35,555.59, while the NSE Nifty 50 Index rose as much as 0.7 percent to 10,770.

The market breadth was tilted in favour of buyers.

Eight out of 11 sectoral gauges compiled by NSE advanced, led by NSE Nifty Bank Index's 0.7 percent gain. On the flipside, NSE Nifty PSU Bank Index was the top sectoral loser, down 0.3 percent.

Investors in both bonds and rupee this week will be focusing on the Reserve Bank of India's interest rate decision and accompanying commentary.

The RBI will probably keep benchmark repurchase rate unchanged at 6 percent at its June 6 policy decision, according to 22 of 29 economists in a Bloomberg News survey; seven, though, expect an increase of 25 basis points. That rise in expected amid rising inflationary pressures and signs that growth is picking up.

The yield on benchmark 10-year bonds rose five bps last week to end 7.85 percent after faster economic growth data for the fourth quarter stoked speculation the central bank could raise rates this week.

Meanwhile, the implied forwards suggest the rupee will start trading around 66.93 per dollar, having gained over 1 percent against the dollar last week. The dollar pulled back overseas after completing its seventh week of gains with attention turning to the pace of Fed rate hikes.

• Nifty June futures closed trading at 10,683.9, discount of 12.3 points versus 33.9 points.
• June series-Nifty OI up 2.4 percent and Bank Nifty OI down 5 percent.
• India VIX ended 13.5, up 2.6 percent.
• Max OI for June series at 11,000 Call, OI at 37.2 lakh, OI up 22 percent.
• Max OI for June series at 10200 Put, OI at 31.8 lakh, OI up 10 percent.

F&O Ban

• In Ban: None

Put-Call Ratio

• Nifty PCR at 1.47 versus 1.14.
  Nifty Bank PCR at 0.91 versus 1.03.

Citi on SAIL

• Upgraded to ‘Neutral’ from ‘Sell’; raised price target to Rs 83 from Rs 50.
• Expect steel spreads to sustain on better demand, supply limits and falling inventories.
• expect strong volumes and fall in net debt-to-EBITDA to three times by 2019-20.
• Raise Ebitda estimates for the current and the next financial year by 26 percent and 25 percent respectively on potentially higher steel prices.

Credit Suisse on India Automobile

• May 2018: PVs see demand acceleration.
• Volume CAGR is strongest for tractors.
• Healthy growth in CVs with market share gain for Tata.
• 2W: Another month of double-digit growth.
• Ashok Leyland and TVS lose share.
• Prefer M&M and Escorts among OEMs.

Credit Suisse on Jammu and Kashmir Bank

• Maintained ‘Neutral’; cut price target to Rs 62 from Rs 77.
• March quarter results were in line with other corporate banks.
• Loan growth weak as growth slowed across segments.
• With coverage down, bank would need additional provision.
• Stock is attractive but RoE likely to remain muted at 10 percent.

Nomura on Tata Motors

• Maintained ‘Buy’ with a price target of Rs 495.
• JLR U.S. retail sales better than expected at 17 percent in May.
• Land Rover drives volume; Jaguar continued to remain weak.
• Expect 9 percent growth in overall JLR volumes in 2018-19.

Nomura on Coal India

• Maintained ‘Neutral’ with a price target of Rs 332.
• Output growth maintains rapid pace in May.
• Growth uptick were arguably boosted by base-effect.
• Expect production and offtake at 611mt and 622mt respectively, implying 8 percent and 7 percent growth respectively in the current financial year.

• Reliance Naval, Prakash Industries and Water Base placed under Additional Surveleince Measure by BSE.
• Atlanta circuit filter revised to 10 percent.
• Shree Renuka Sugar acquisition window open from today to 15 June.
• Delta Corp, Trent, Thermax, Bliss GVS Pharma, V Mart, Cyient, IEX limit reached for FII investment.

• Just Dial: Ishana Capital bought 4.25 lakh shares or 0.6 percent equity at Rs 583.12 each.
• Vakrangee: Baron Emerging Markets Fund bought 72.67 lakh shares or 0.7 percent equity at Rs 34.08 each.
• Balrampur Chini: State Street EM Fund sold 13.33 lakh shares or 0.6 percent equity at Rs 73.43 each.

• FII limit for HDFC Bank open for 4.3 crore shares.
• Government weighs on mega-merger of IDBI Bank, OBC, Central Bank and BoB (Mint).
• ICICI Bank board begins search for new chairman. MK Sharma’s term expires this month. (The Economic Times)
• Cadila Healthcare’s Zydus received final approval from the U.S.FDA for Doxycycline Hyclate Capsules.
• Whirlpool approved acquisition of 49 percent stake in Elica PB India for Rs 180 crore in cash.
• Dilip Buildcon received letter of award by NHAI for project valued at Rs 1,313.9 crore in Karnataka.
• U.S. FDA completed inspection at Dr. Reddy’s Srikakulam Plant with no observations.
• Hero MotoCorp sales up 11 percent year-on-year to 706365 units in May 2018.
• SBI hiked MCLR by 10 basis points across tenors with effect from June 1.
• Shivam Autotech said that the company has achieved 8 percent increase in sales in May.
• HDFC MF acquired additional 0.46 percent equity in GNA Axles.
• Kajaria Ceramics to acquire 8 percent equity in Clean Solar Power (Jaipur) for Rs 2 crore.
• Punj Lloyd divested balance shareholding of 51 percent in three units.
• Karnataka Bank raised interest rates on domestic & NRE rupee term deposits to 7.25 percent from 7.10 percent from May 31.
• Coal India May production at 47.14 million tonne versus target of 51.16 million tonne. Offtake at 52.86 million tonnes versus target of 58.18 million tonne.
• CBI registered case against 13 officials of ONGC, Rajahmundry and Deep Industries.
• HDFC increased its Retail Prime Lending Rate on it Home Loans by 10 basis point with effect from June 2.
• Idea Cellular seek shareholders approval to change name to Vodafone Idea Ltd.

Petrol and diesel prices were cut by 15 paise and 14 paise respectively today. Petrol now costs Rs 85.77 in Mumbai and diesel costs Rs 73.43, according to the data available on Indian Oil Corporation Ltd.’s website.

• West Texas Intermediate crude was flat at $65.81 a barrel. It lost 1.8 percent Friday.
• Brent crude traded 0.3 percent lower at $76.57 a barrel.
• Gold was little changed at $1,293.11 an ounce.
• Aluminium ended 0.9 percent higher at $2,318 per MT.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.4 percent higher at 10,721 as of 8:40 a.m.

Asian stocks opened higher on Monday after U.S. jobs data bolstered optimism in the world’s largest economy, all but firming an interest rate increase from the Federal Reserve later this month.

Here are some key events coming up this week:

• Apple Worldwide Developers Conference in San Jose, California, kicks off Monday. The company is expected to unveil projects such as new versions of iPhone and Mac operating systems.
• Australia retail sales are due Monday as well as Indonesia CPI.
• Reserve Bank of Australia monetary policy decision is out Tuesday.
• Tesla holds its annual shareholder meeting also Tuesday.
• U.S. ISM non-manufacturing index out Tuesday. Growth at U.S. service industries probably improved in May for the first time in four months, indicating the economy is strengthening after a first-quarter slowdown, economists forecast.
• Reserve Bank of India rate decision on Wednesday.
• U.S. trade balance and Australia GDP also out on Wednesday.
• On Thursday, Japanese Prime Minister Shinzo Abe meets with U.S. President Trump at the White House to discuss the planned U.S. summit with North Korea’s Kim Jong Un.
• Also on Thursday, euro-zone GDP, Australia trade.
• Turkey rate decision is due on Thursday.
• Group of Seven Leaders’ Summit starts in Quebec Friday through to June 9.