The National Stock Exchange of India (NSE) stands in the Bandra Kurla Complex in Mumbai, India. (Photographer: Brent Lewin/Bloomberg)

Sensex, Nifty Rise For Third Day Led By Pharma, IT Shares

Closing Bell

Indian equity benchmarks extended gains to third day led by pharma and IT shares

The S&P BSE Sensex rose 0.13 percent or 47 points to 35,739 and the NSE Nifty 50 index gained 0.13 percent or 14 points to 10,857.

The benchmarks traded firmly higher for most part of the day, but pared gains in the last hour of trade as bluechips like HDFC twins, ITC and Bharti Airtel declined.

Twelve out of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Telecom index's 1.26 percent drop. On the other hand, the S&P BSE Information Technology index was the top gainer, up 1.29 percent.

The mid- and small-cap shares underperformed their larger peers as the S&P BSE MidCap index fell 0.46 percent and the S&P BSE SmallCap index declined 0.21 percent.

Bharti Infratel Swings After Block Deal

  • Bharti Infratel has 40 lakh shares change hands in a single block. Stock up 0.23 percent at Rs 300.40.

Buyers and sellers were not immediately known

Source: Bloomberg

Carlsberg Said To Plan Domestic Listing For Indian Operations

Carlsberg A/S is planning a domestic initial public offering of its Indian business, Bloomberg reported citing people with knowledge of the matter, who wished not to be identified. The Danish brewer is interviewing potential arrangers for the share sale over the next few weeks, according to the people.

Fab Four Stocks Of The Day

  • KEC International: The Mumbai-based power transmission company rose as much as 3.88 percent to Rs 384 after international brokerage Macquarie initiated coverage on the stock with ‘outperform’ for target price of Rs 454.
  • Page Industries: The Bengaluru-based innerwear maker rose as much as 6.6 percent to record high of Rs 26,320 after Jockey extended license pact with the company until December 2040.
  • HUDCO: The Delhi-based housing and urban infrastructure finance company rose as much as 9.35 percent to Rs 64.35 after housing and urban affairs ministry increased carpet are of houses eligible for interest benefit under PM Awas Yojana.
  • TCS: The country’s largest IT company rose nearly 3 percent after it announced that its board will meet on June 15 to consider share buyback proposal. Meanwhile, Morgan Stanley maintained its outperform call on the stock and raised its target price to Rs 2,010 from Rs 1,825.

Delta Corp Shares Surge As Trading Volume Doubles

Shares of the Mumbai-based offshore casino operator rose as much as 10.12 percent to Rs 250.80 on the back of heavy volumes.

Trading volume was 2.5 times its 20-day average.

Pharma Index Rallies For Sixth Day In A Row Led By Cadila Healthcare

Shares of drugmakers rose for sixth day in a row led by strong gains in Cadila Healthcare and Dr Reddy's Labs.

Gauge of pharma shares that is the NSE’s Nifty Pharma index rose 1.95 percent.

Tata Steel Falls As Thyssen-Krupp Said To Be Renegotiating European Deal

Shares of the Mumbai-based steel maker fell as much as 2.39 percent to Rs 566.15.

Thysen-Krupp is said to be renegotiating its European deal and is also said to have asked for additional concessions, German newspaper Handelsblatt reported.

Market Check: Nifty Holds Above 10,850 Led By Pharma, IT Shares

  • Indian equity benchmarks held on to gains led by IT and pharma heavyweights like TCS, Infosys, Dr Reddy's Labs and Sun Pharma.
  • The S&P BSE Sensex rose 0.4 percent or 155 points to 35,847 and the NSE Nifty 50 index climbed 0.35 percent or 37 points to 10,880.
  • Fourteen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Healthcare index's 1.5 percent gain. On the other hand, the S&P BSE Telecom index was the top loser, down 0.6 percent.
  • The overall market breadth was positive as 1,414 shares were advancing while 1,074 were declining on the BSE.

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Stocks Moving On Heavy Volumes

  • MAS Financial Services: The Ahmedabad-based non-banking finance company fell as much as 1.85 percent to Rs 580.05. Trading volume was 66.1 times its 20-day average.
  • Redington India: The Chennai-based supply chain solution provider rose as much as 18 percent to Rs 139. Trading volume was 36.2 times its 20-day average.
  • Kwality: The Delhi-based dairy products maker rose as much as 4.4 percent to Rs 28.45. Trading volume was 15.3 times its 20-day average.
  • Thomas Cook: The Mumbai-based travel service provider rose as much as 3 percent to Rs 284.20. Trading volume was 23.2 times its 20-day average.

Vedanta Trades Lower Amid Block Deal

  • Vedanta has 17.5 lakh shares change hands in a block on BSE. Stock down 0.9 percent at Rs 243.20.

Buyers and sellers were not immediately known

Source: Bloomberg

TCS Rises On Share Buyback Talks

India’s largest software service provider rose as much as 2.75 percent to Rs 1,830 after it announced that its board will meet on June 15 to consider buyback of shares.

Meanwhile, Morgan Stanley has maintained its 'overweight' stance on the stock and has raised its target price to Rs 2,010 from Rs 1,825.

Vakrangee Locked In Upper Circuit For Fifth Straight Day

Shares of the Mumbai-based company were locked in a five percent upper circuit for fifth session in a row at Rs 41.30.

In the last five sessions the stock has rallied 27 percent.

Bharat Forge Rises On Acquiring Stake In U.K.'s Tevva Motors

Shares of the Pune-based auto parts maker rose as much as 2.49 percent, the most since May 25, to Rs 668.20.

Bharat Forge has picked up a strategic stake in UK-based Tevva Motors, a provider of electric powertrain solutions for commercial vehicles, for £10 million.

The company has also acquired a license for commercialisation of the Tevva technology within India and for strengthening its research and development activities in the e-mobility space, the company said in a regulatory filing.

Dish TV Falls After 2.2% Equity Change Hands

  • Dish TV has 3.95 crore shares or 2.2 percent equity change hands in five block deals. Stock down 0.48 percent at Rs 72.40.

Buyers and sellers were not immediately known

Source: Bloomberg

KEC International Surges After Macquarie Initiates Coverage

Shares of the Mumbai-based power transmission company rose as much as 3.88 percent to Rs 384 after international brokerage Macquarie initiated coverage on the stock with an 'outperform'.

Macquarie in a note said:

  • Play on railway electrification opportunity in India.
  • Power T&D to witness stable growth.
  • RoE of +20 percent to sustain; Leverage to come down further.
  • Expect revenue and net profit to compound at 13 percent and 21 percent over the fiscal 2018-2021.
  • Multiple catalysts in place, deserves premium.

Page Industries Surges After Jockey Extends License Pact

Shares of the Bengaluru-based innerwear maker rose as much as 3.2 percent, the most in nearly a fortnight, to Rs 25,480.

The company informed exchanges that its license agreement with Jockey has been extended until December 2040.

Sundar Genomal of Page Industries told BloombergQuint that the company is looking forward to get equal revenues from both men and women wear in future.

Key highlights of the conversation:

  • Move shows the confidence Jockey has on Page Industries and India
  • Have been with Jockey for the past 60 years
  • Have been best performing licensee for Jockey worldwide
  • No change in terms of contract with Jockey
  • Our strength has been mostly in men’s innerwear segment
  • Men’s innerwear constitute 70 percent and women innerwear is 30 percent
  • Regional brands make women wear very fragmented
  • Taking aggressive steps to boost women innerwear segment
  • Men's wear is not saturated, lots of room to grow
  • Only credible competition to Page Industries is ourselves
  • Comfortable at current promoter shareholding

Q1 Will Be Muted For Company’s Financials: Thyrocare

First quarter will be a muted one but company expects uptick of 15 percent from the monsoon season, A Velumani, CEO of Thyrocare told BloombergQuint in an interview.

Key highlights of the conversation:

  • Degnue and chikungunya treatment rampant during monsoon season
  • Focus shifts mainly to preventive care segment
  • Monsoon season shows an uptick of around 15 percent
  • Looking to let go off 200 basis points to get topline growth
  • Ebitda will not drop despite cutting price

Select Real Estate Players Gain After Government Raises Carpet Area

Shares of companies providing affordable housing projects rose after the government approved a 33 percent increase in carpet area of houses eligible for interest subsidy under its affordable housing scheme Pradhan Mantri Awas Yojana-Urban.

The carpet area of a house has been enhanced to 160 square meters from 120 square meters for Middle Income Group-I (MIG-I), while it has been increased to 200 square meters from 150 square meters in case of MIG II.

  • Sunteck Realty rose 2.9 percent
  • Ajmera Realty advanced 3.38 percent
  • Kolte Patil Developers climbed 2.32 percent
  • Ashiana Housing gained 2.06 percent

Idea Cellular, Bharti Airtel Fall After Jio Offers More Data

Shares of the country's largest wireless carrier fell as much as 1.93 percent and Idea Cellular declined as much as 3.6 percent as tariff wars continue in the telecom space.

Jio is offering Rs 100 discount on Rs 399 plan along with double data (3GB/day) benefit to users. Subscribers can avail the scheme till June 30, the Reliance Jio in a statement said.

Sun Pharma Rises After U.S. FDA Clears Halol Plant

Shares of the country's largest drugmaker rose as much as 3.8 percent to Rs 560.95 after U.S. drug regulator cleared its Halol manufacturing unit in Gujarat.

Sun Pharma received the establishment inspection report (EIR) from the U.S. FDA for Halol plant, it said in an exchange filing. The inspection is now closed, and issues raised in the December 2015 warning letter have been addressed, it said.

Opening Bell

Indian equity benchmarks moved higher led by Sun Pharma which rose after the U.S. FDA cleared its Halol manufacturing facility.

The S&P BSE Sensex rose 0.4 percent or 143 points to 35,835 and the NSE Nifty 50 index climbed 0.42 percent or 46 points to 10,888.

Sixteen out of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Healthcare index's 1 percent gain. On the other hand, the S&P BSE Telecom index was the top loser, down 1 percent.

The mid- and small-cap shares were in line with the larger peers as the S&P BSE MidCap index rose 0.4 percent and the S&P BSE SmallCap index climbed 0.5 percent.

Rupee Depreciates Against Dollar

The rupee fell 13 paise to 67.62 against the US dollar in early trade today due to increased demand for the American currency from importers amid foreign fund outflows and rising retail inflation.

Retail inflation jumped to a four-month high of 4.87 per cent in May on costlier food items such as fruits, vegetables and cereals coupled with high fuel rates.

However, industrial production expanded by 4.9 per cent in April on improved performance by manufacturing and mining sectors as also a robust offtake of capital goods.

Forex dealers said dollar strengthening against other currencies overseas as investors await a key Federal Reserve decision later in the day also weighed on the rupee sentiment.

Source: Press Trust of India

Money Market Heads Up: Rupee Seen Opening Lower As Inflation Spikes In May

The rupee forwards have weakened against the dollar after inflation data showed a pickup in May. An indication that the currency may fall.

ANZ expects inflation won't see an “early reversal,” given higher oil prices, a seasonal increase in food prices and adverse base effects.

Chances are sovereign bonds too will remain under pressure. More negative news could pile up at the end of the day today if the U.S. Fed decides to raise interest rates.

Goldman Sachs closed their trade recommendation for India 5-year bonds due to their more hawkish outlook on the RBI after the latest interest rate hike.

A subdued April industrial production number and risks to growth mean the central bank will probably look though the May inflation data and leave rates on hold in August, Bloomberg Economics said.

Brokerage Radar: Macquarie Initiates Outperform On KEC International

Macquarie on KEC International

  • Initiated ‘Outperform’ and a price target of Rs 454.
  • Play on railway electrification opportunity in India.
  • Power T&D to witness stable growth.
  • RoE of +20 percent to sustain; Leverage to come down further.
  • Expect revenue and net profit to compound at 13 percent and 21 percent over the fiscal 2018-2021.
  • Multiple catalysts in place, deserves premium.

IDFC Securities on Sun Pharma

  • Maintained ‘Outperform’ with a price target of Rs 574.
  • Receipt of Halol EIR is major positive development for Sun’s U.S. business.
  • EIR underlines that the phase of FDA compliance related challenges is largely behind.
  • Growth trajectory of speciality portfolio will remain key monitorable.
  • Sun is clearly best placed amongst large domestic peers.

Morgan Stanley on Sun Pharma

  • Maintained ‘Underweight’ with a price target of Rs 448.
  • Halol clearance on expected lines.
  • New ANDA approvals held back for last three years should commence.
  • Sun should be able to gradually increase sales for the current portfolio.

Citi on Maruti Suzuki

  • Maintained ‘Buy’ with a price target of Rs 10,700.
  • Agree with management assessment of double-digit volume growth for 2018-19.
  • Share gains in PV cars have more than offset the slippage in UVs.
  • Well balanced growth, in both rural and urban with strong dealer network.

Citi on Reliance Industries

  • Maintained ‘Buy’; raised price target to Rs 1,180 from Rs 1, 150.
  • Period of consolidation YTD provides an attractive entry point.
  • Higher crude has improved economics of petcoke gasification to benefit.
  • Next telco event to watch out is FTTH & enterprise launch.
  • Top large-cap pick in Indian oil & gas space.

Goldman Sachs on IT Sector

  • Reduce EPS estimates for HCL Tech given challenges in IMS.
  • Maintain Buy on Tech Mahindra, Mphasis and Infosys; Sell on Wipro.
  • 5G remains a key structural growth opportunity yet to be priced in for Tech Mahindra.
  • Infosys is trading at a sharp discount to TCS, despite having similar growth profile.
  • Positive stance on Mphasis reflects strong deal momentum in direct channel.
  • Weak execution, client losses and challenges in healthcare not in valuation.

Nomura on NTPC

  • Maintained ‘Buy’ with a price target of Rs 200.
  • Plant load factor of thermal capacity was 73.7 percent in May-2018, down 170 basis point on a monthly basis and 120 basis points on a yearly basis.
  • PLF dragged lower largely due to accident-triggered outage and planned outages.
  • 15.7GW capacity across eight plants had less than a week’s coal inventory in May.

HSBC on ICICI Lombard

  • Maintained ‘Reduce’ with a price target of Rs 620.
  • Multi-year policies could result in reserving risks.
  • Impact of hike in compensation limits likely to be muted.
  • Biggest upside risk is passage of Motor Vehicles bill.

IDFC Securities on Hikal

  • Hybrid business model provides competitive advantage.
  • Pharma: healthy volumes drive growth.
  • Agrochemicals - new product launches to drive growth.
  • Management expects margins to improve and FCF to turn positive.

Morgan Stanley on TCS

  • Maintained ‘Overweight’; raised price target to Rs 2,010 from Rs 1,825.
  • Positives: Strong global growth, U.S. economy doing well, digital adoption and rupee depreciating.
  • Expect margins can move toward 26-28 percent.
  • Raised EPS estimates by 4-5 percent to factor gains from rupee depreciation.
  • Valuation should reflect superior profile.

BQ Heads Up! Who’s Meeting Whom And Insider Trades

Who's Meeting Whom

  • PI Industries to meet ICICI Prudential Mutual Fund on June 13.
  • Advanced Enzymes to meet Baron Funds, Dalton Investments and other investors from June 13-15.
  • Eris Lifesciences to meet Baring Private Equity Partners on June 13.

Insider Trades

  • Centrum Capital promoter BG Advisory Services LLP acquired 10,000 shares on June 8.
  • Panama Petrochem promoter acquired 24,624 shares from June 7–11.
  • Nandan Denim promoter Vedprakash Chiripal acquired 50,000 shares on June 7.
  • Intellect design Arena promoter Polaris Banyan Holding acquired 1 lakh shares from June 8–11.

(As reported on June 12)

Bulk Deals, Trading Tweaks And F&O Cues To Watch

Bulk Deals

KSK Energy Ventures

  • Mentor Capital bought 30 lakh shares or 0.7 percent equity at Rs 2.48 each.
  • Oriental Bank of Commerce sold 23.23 lakh shares or 0.5 percent equity at Rs 2.38 each.
  • Societe Generale sold 52.35 lakh shares or 1.2 percent equity at Rs 2.46 each.

Uttam Galva Steels

  • Asia Investment Corporation (Mauritius) Ltd sold 10 lakh shares or 0.7 percent equity at Rs 11.45 each.

Trading Tweaks

  • Usha Martin circuit filter revised to 10 percent.
  • Caplin Point Laboratories circuit filter revised to 5 percent.
  • L.G. Balakrishnan & Bros last trading day before ex-bonus.
  • TCS to consider buyback on June 15.

F&O Cues

  • Nifty June Futures ended at 10,839, with a discount of 3.7 points versus discount of 1 point.
  • June series Nifty open interest (OI) up 2 percent and Bank Nifty OI up 3.3 percent.
  • India VIX ended 12.7, down 3.4 percent
  • Max OI for June series call at 11,000 strike price call option, OI at 38.3 lakh shares, down 3 percent
  • Max OI for June series put at 10,600 strike price put option, OI at 50.6 lakh shares, up 2 percent.

Stocks To Watch: Page Industries, Federal Bank, Religare And More!

  • Page Industries says license pact with Jockey extended until December 2040.
  • Premier resumes operations at Pune plant following workers’ unrest.
  • Alok Industries says NCLT asks resolution professional to present resolution plan to lenders.
  • Bharat Forge acquires 35.26 percent stake in U.K.’s Tevva Motors for 10 million pounds.
  • Nitin Spinners says committee to meet on June 15 to approve issue price for preferential allotment.
  • Federal Bank agrees to acquire 19.98 percent in Equirus Capital.
  • Religare Enterprises sues Lakshmi Vilas Bank for invoking fixed deposits.

May Inflation At Four-Month High; April IIP Rises Marginally

  • May consumer price inflation stood at 4.87 versus 4.58 percent in April; Bloomberg estimate of 4.9 percent.
  • IIP rose 4.9 percent in April versus 4.3 percent.

Talking Points

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.31 percent to 10,812 as of 6:37 a.m.

Asian stocks traded mixed Wednesday following a lackluster session in the U.S. as investors turned their attention to the major central bank meetings this week after shrugging off Tuesday’s North Korea summit. The dollar and Treasury yields were steady.

Japan’s benchmarks gained, while Australian shares ticked lower.

Bonds

  • The yield on 10-year Treasuries held around 2.96 percent.

Commodities

  • West Texas Intermediate crude fell 0.6 percent to $65.95 a barrel after gaining for two days.
  • Gold was little changed at $1,295.36 an ounce.

Here are some key events to watch this week:

  • The Federal Reserve is expected to raise interest rates Wednesday as the U.S. economy remains solid.
  • The European Central Bank rates decision comes Thursday with a briefing from President Mario Draghi.
  • The Bank of Japan June monetary policy decision and news conference is Friday.
  • FIFA expects more than 3 billion viewers for the World Cup that begins this week in Russia.
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