Sensex, Nifty Halt Three-Day Winning Streak On Hawkish Fed

Indian equity benchmarks halted three-day winning streak on weak global cues after U.S. Federal Reserve raised benchmark rates and hinted at prospect of two more rate hikes for calendar year 2018.

The S&P BSE Sensex fell 0.39 percent or 139 points to 35,600 and the NSE Nifty 50 index declined 0.45 percent or 49 points to 10,808.

Street was expecting three rate hikes for 2018 but Fed signalled four, which is very negative for emerging market currencies, AK Prabhakar, head of research at IDBI Capital Market, told BloombergQuint over the phone. “Rate deferential is very low and money will flow to the U.S. We will have to hike rates very soon and that will keep pressure on our markets.”

Moreover, if European Central Bank announces a road map for winding down or withdrawing quantitative easing, that will add to the negative sentiment, Prabhakar said.

Fifteen out of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Information Technology index's 1.2 percent drop. On the other hand, the S&P BSE Healthcare index rose for seventh day in a row, the index climbed 1.5 percent.

• ICICI Securities: The Mumbai-based brokerage firm rose as much as 3.43 percent to Rs 369.25 after CLSA initiated coverage on the stock with a 'buy' for target price of Rs 520.
• Alembic Pharma: The Vadodara-based drugmaker rose as much as 7.74 percent to Rs 529.90 after the U.S. drug regulator approved Doxycycline Hyclate capsules, Alembic Pharma said in an exchange filing.
• Hindusthan National Glass: The Kolkata-based glass bottle maker was locked in a 20 percent upper circuit at Rs 89 after sold 11.23 percent stake in HNG Float Glass JV for $19.3 million to Trakya Cam Sanayii AS.
• Reliance Industries: The Mukesh Ambani-led oil-to-telecom conglomerate rose in 10 out of 11 sessions to a record of Rs 1,012. The stock has gained 8.5 percent so far this month.

The mood in global markets was risk-off on Thursday, as investors came to terms with the prospect of faster-than-expected U.S. interest rate hikes and a raft of disappointing data out of China. A looming European rate decision added another layer of uncertainty.

Shares of the Delhi-based state-run tourism development firm rose 20 percent, the most in over a month, to hit an upper circuit of Rs 465.05.

Trading volume 8.3 times its 20-day average.

• Gujarat Gas: The Ahmedabad-based city gas distribution company fell 0.12 percent to Rs 820. Trading volume was 17.5 times its 20-day average.
• Vinati Organics: The Maharashtra-based chemical maker fell 1.48 percent to Rs 974.25. Trading volume was 9.1 times its 20-day average.
• SKF India: The Mumbai-based metal ball and bearings maker fell 1.1 percent to Rs 1,784. Trading volume was 2.7 times its 20-day average.
• Eris Lifesciences: The Ahmedabad-based drugmaker fell 2.2 percent to Rs 750. Trading volume was 6.4 times its 20-day average.

The Delhi-based dairy products maker rose 4.7 percent to Rs 29.95.

SICOM sold 47 lakh Kwality shares in yesterday's session upon pledge invocation, Bloomberg reported.

Shares of drugmakers were seen outperforming in an otherwise weak market.

NSE's Nifty Pharma index rose 1.4 percent and extended gains to seventh day led by Divi's Labs and Aurobindo Pharma.

Shares of the Noida-based IT firm rose 1.3 percent to Rs 935.85.

The company has received an infrastructure service contract from Flack, a global leader in healthcare and ambulance markets, HCL Tech said in a press release.

Shares of the Mumbai-based e-governance service provider was locked in a five percent upper circuit for sixth day in a row at Rs 43.35. ahead of its March quarter earnings.

The stock risen 33.6 percent in last six sessions.

Wholesale prices rose to their highest level in 14 months in May. WPI inflation in May rose 4.43 percent on higher fuel and power prices, according to data shared by Ministry of Commerce and Industry. The WPI was higher than the Bloomberg estimate of 4.00 percent and 3.18 percent in April.

Key highlights of May WPI data:

• Vegetables inflation at 2.5 percent versus -0.89 percent (MoM)
• Non-food articles inflation at -0.58 percent versus -1.81 percent (MoM)
• Core inflation at 4.4 percent versus 3.6 percent (MoM)
• Egg, meat, fish inflation at 0.15 percent versus -2 percent (MoM)
• Onion WPI at 13.20 percent versus 13.62 percent (MoM)
• Cement, lime, plaster inflation at -0.09 percent versus 1.60 percent (MoM)
• Basic metals wpi at 15.79 percent versus 13.04 percent (MoM)
• Food inflation at 1.12 percent versus 0.67 percent (MoM)
• March inflation WPI revised to 2.74 percent from 2.47 percent
• Manufactured product inflation at 3.73 percent versus 3.11 percent (MoM)
• Fuel, power inflation at 11.22 percent versus 7.85 percent (MoM)
• Primary articles inflation at 3.16 percent versus 1.41 percent (MoM)

Nifty Bank 26,800 call was among the most active option contracts on the National stock Exchange.

Premium on the contract slumped 88 percent to Rs 5.90. Over 14.85 lakh shares were added to the open interest which stood at over 21.89 lakh shares.

Click here to see the complete options chain

Shares of the Bengaluru-based IT company fell as much as 4 percent to Rs 988.65 after Citi downgraded the stock to 'sell' from 'neutral' and raised target price to Rs 970 from Rs 875.

Citi in a note said:

• Mindtree’s business has seen a good turnaround.
• Valuations at are sector-leading; Don’t leave any room for disappointment.
• Raised EPS estimates by 6 percent primarily due to rupee depreciation.
• Turnaround in the business priced in.

Shares of the Ahmedabad-based electricity transmission and distribution company rose as much as 2.94 percent to Rs 147.

Adani Transmission has received letter of intent from REC Transmission Projects Company to build, own, operate and maintain the transmission project in the state of Uttar Pradesh, the company said in an exchange filing.

Shares of the Vadodara-based drugmaker rose as much as 7.74 percent to Rs 529.90 after the U.S. drug regulator approved Doxycycline Hyclate capsules, Alembic Pharma said in an exchange filing.

The drug is therapeutic equivalent to Vibramycin Capsules of Pfizer and is used to treat wide variety of bacterial infections.

Shares of the Delhi-based infrastructure construction company fell as much as 4.2 percent to Rs 16.05 after National Companies Law Tribunal (NCLT) agreed to hear ICICI Bank's insolvency plea against Punj Lloyd.

NCLT has issued notice to Punj Lloyd on ICICI Bank's plea.

In an exclusive conversation with BloombergQuint market veteran Vallabh Bhanshali tells what made him advise all his clients back in 1993 to buy Infosys and hold on?

Key highlights of the conversation:

• Infosys benefited from having strong leadership, managers and founders.
• If you asked me if the bet on Infosys was for national interest, I would have said yes.
• Given the state of the economy then, the Infosys opportunity was big.
• Promoters and founders did not take super salaries, neither behaved like super class
• There is importance of Narayana Murthy taking up issues with Infosys openly

• Indian equity benchmarks extended decline dragged by banking and IT shares.
• The S&P BSE Sensex fell 0.6 percent or 215 points to 35,524 and the NSE Nifty 50 index tumbled 0.66 percent or 72 points to 10,785.
• All sector gauges barring the Nifty Metal index were trading lower dragged by the Nifty PSU Bank index's 1.7 percent drop.
• The losses were broad-based as the S&P BSE MidCap index fell 0.4 percent and the S&P BSE SmallCap index declined 0.2 percent.

• Bharti Infratel has 33.7 lakh shares change hands in a block on the BSE. Stock down 1.3 percent at Rs 296.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Kolkata-based glass bottle maker rose as much as 14.10 percent, the most in over two months, to Rs 89.

Hindusthan National Glass sold its 11.23 percent stake in HNG Float Glass JV for $19.3 million to Trakya Cam Sanayii AS.

Shares of the Mumbai-based brokerage firm rose as much as 3.43 percent to Rs 369.25 after CLSA initiated coverage on the stock with a 'buy' for target price of Rs 520.

CLSA in a note said:

• Benefits from financialisation of household savings and parent’s brand and reach.
• Distribution and margin financing will drive revenue expansion.
• Expect revenue and net profit to compound at 17 percent and 21 percent respectively over the fiscal 2018-2021.
• Dividend yield one of the highest among Nifty companies.
• ICICI Securities trades at discount to global peers.

Shares of the country’s largest private sector lender rose as much as 0.45 percent to Rs 2,044.50 after the Union Cabinet approved Rs 24,000 crore foreign direct investment in the bank.

The current foreign holding in HDFC Bank is 72.78 percent which is being raised to 74 percent through this infusion, Finance Minister Piyush Goyal said.

Indian equity benchmarks edged lower mirroring losses in other Asian markets after the U.S. Federal Reserve raised benchmark rates by 25 basis points and upgraded forecast to four total increases in 2018.

The S&P BSE Sensex fell 0.3 percent or 117 points to 35,625 and the NSE Nifty 50 index declined 0.3 percent or 32 points to 10,825.

Sixteen out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Information Technology index's 0.6 percent drop. On the other hand, the S&P BSE Healthcare index was the top gainer, up 0.4 percent.

The mid- and small-cap shares were in line with their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes fell over a percent each.

• Rupee opened higher at 67.56 per dollar against yesterday's close of 67.64.

Citi on Mindtree

• Downgraded to ‘Sell’ from ‘Neutral’; raised price target to Rs 970 from Rs 875.
• Mindtree’s business has seen a good turnaround.
• Valuations at are sector-leading; Don’t leave any room for disappointment.
• Raised EPS estimates by 6 percent primarily due to rupee depreciation.
• Turnaround in the business priced in.

Credit Suisse on Westlife Development Investor Conference

• Company targets doubling revenue and margins over the fiscal 2018-2022.
• McCafe and Delivery to drive aggressive growth plans over the fiscal 2018-2022.
• Store expansion to accelerate mostly in existing cities.
• Margin expansion driven by SSSG leverage and gross margins.
• Overall momentum for QSR industry intact.

Investec on BSE

• Maintained ‘Buy’ with a price target of Rs 1,270.
• Several levers to support revenue momentum.
• Investments in last few years to contribute meaningfully in the current and the next financial year.
• Cut core EBITDA estimates for 2018-19 by 4 percent to factor in higher expenses.

UBS on Infosys

• Maintained ‘Buy’ with a price target of Rs 1,335.
• Management commentary suggests growing confidence in margin outlook.
• U.S. hiring less expensive than expected, pricing commentary stable.
• Pace of investments could recede post 2018, helping earnings momentum.

CLSA on ICICI Securities

• Initiated ‘Buy’ with a price target of Rs 520; implying a potential upside of 46 percent from the last regular trade.
• Benefits from financialisation of household savings and parent’s brand and reach.
• Distribution and margin financing will drive revenue expansion.
• Expect revenue and net profit to compound at 17 percent and 21 percent respectively over the fiscal 2018-2021.
• Dividend yield one of the highest among Nifty companies.
• ICICI Sec trades at discount to global peers.

Motilal Oswal on India Strategy

• Weight of Metals to increase 130 basis points to 2.6 percent post rejig.
• Hike Sensex EPS estimates for the current and the next financial year by 1.7 percent and 1.8 percent respectively due to increase in free float net profit.
• Expect Sensex EPS at Rs 1,870 and Rs 2,241 for the current and the next financial year respectively.

Who's Meeting Whom

• Lemon Tree Hotels to meet investors on June 14.
• Bodal Chemicals to meet investors on June 14.
• Eicher Motors to meet Franklin Templeton, HSBC Securities and Motilal Oswal Asset Management on June 14.

Insider Trades

• Maharashtra Seamless promoter acquired 41,950 shares on June 1.
• KPR Mill promoters sold 30,000 shares between June 5-7
• Prozone Intu Properties promoter sold 27,500 shares between May 8-June 11

(As reported on June 13)

Bulk Deals

Dish TV

• Rare Enterprises bought 1.30 crore shares or 0.7 percent equity at Rs 71.3 each.

Supreme Industries

• Small Cap World Fund Inc sold 13 lakh shares or 1 percent equity at Rs 1,250.2 each.

Ruchi Soya

• Promoter Evershine Oleochem sold 25 lakh shares or 0.7 percent equity at Rs 12.66 each.

Trading Tweaks

• Jagran Prakashan ex-date for determining buyback eligibility.
• L.G. Balakrishnan & Bros ex-date for 1:1 bonus.
• United Spirits last trading day before 5:1 stock split.

F&O Cues

• Nifty June futures ended at 10,844.5 with a discount of 11.8 points versus a discount of 3.7 points.
• June series-Nifty open interest (OI) up 3.5 percent and Bank Nifty OI up 4.5 percent.
• India VIX ended 12.6, down 0.7 percent.
• Max OI for June series call at 11,000 strike price call option, OI at 38.5 lakh shares, up 1 percent.
• Max OI for June series put shifts to 10,700 strike price put option, OI at 51.6 lakh shares, up 13 percent.

• HDFC Bank gets cabinet nod for Rs 24,000 crore FDI.
• ICICI Bank to sell 2 percent stake in life insurance arm.
• Lupin launches generic Tobramycin Inhalation Solution USP in the U.S.
• Cipla says Ugandan unit CiplaQCI exploring IPO. Appoints Renaissance Capital Kenya as book runner.
• Cipla receives final U.S. FDA approval for generic Isuprel injection.
• Kansai Nerolac starts commercial production at Gujarat unit.
• Oberoi Realty QIP opens; Floor price fixed at Rs 509.29 per share.
• Ruchi Soya declares Adani Wilmar as highest bidder.
• Hindustan National Glass to sell 11.23 percent stake in HNG Float Glass JV for $19.3 million.

• Government now open to listing Air India
• Current account gap widens on higher trade deficit
• Fed’s rate-hike path should remain a close call
• Trump says he may upset China on trade as U.S. tariffs loom
• No letup for Bitcoin as biggest cryptocurrency extends drop
• SEBI cancels registration of JPMorgan Mutual Fund
• Thyssenkrupp, Tata Steel discuss changing deal terms
• The women’s libido pill is back, and so is the controversy
• Truecaller buys Sequoia-backed payments startup Chillr
• Global emissions hit record
• Football vs cricket world cup: 9-0
• Bank CEOs and the difficulty of being ‘above board’

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.4 percent to 10,803 as of 6:26 a.m.

Stocks in Asia followed U.S. equities lower as the Federal Reserve struck a hawkish tone in its latest policy statement. The dollar maintained losses and Treasury yields stabilized after briefly touching 3 percent.

Equities fell in Japan, Australia and South Korea, which reopened after a holiday. The Fed raised rates Wednesday and signaled it may pick up the pace of increases this year as unemployment falls and inflation flirts with target levels..

Bonds

• The yield on 10-year Treasuries rose hovered around 2.96 percent.
• Australia’s 10-year bond yield fell about three basis points to 2.75 percent.

Commodities

• West Texas Intermediate crude was little changed at $66.58 a barrel after jumping 0.5 percent.
• Gold was steady at $1,299.67 an ounce.
• LME copper fell 0.5 percent to $7,221.50 a metric tonne.

Here are some key events to watch this week:

• Chinese central bank Governor Yi Gang will give opening remarks and a keynote speech at a Shanghai conference where top Chinese economic officials, including the banking regulator head, are speaking.
• China’s consumption probably accelerated in May while production remained steady and retail sales may have gained. Factory output and fixed-asset investment are both forecast to advance in Thursday’s data deluge.
• Australia employment figures are also out on Thursday.
• 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.