Sensex, Nifty Rally For Fourth Week In A Row, Longest Stretch Since April

Indian equity benchmarks ended on a flat note as gains in drugmakers and IT shares were offset by losses in oil retailers and financials.

The S&P BSE Sensex was little changed at 35,622 while the NSE Nifty 50 index rose 0.1 percent to 10,818.

The benchmarks rose for a fourth week in a row, posting their longest rally since April. The Sensex advanced 0.5 percent while the Nifty climbed 0.46 percent.

In today’s trade, seventeen out of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Metal index’s 1.5 percent drop. On the other hand, the S&P BSE Information Technology index rose 2.2 percent led by a sharp rally in TCS after it announced share buyback plan.

Mid- and small-cap shares underperformed their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes fell 0.4 percent each.

Shares of the country's largest firm by market value rose as much as 3.4 percent, to Rs 1,849. The company’s board approved buyback proposal for up to Rs 16,000 crore.

The company will buy about 1.99 percent equity for Rs 2,100 each, according to its stock exchange filing. The company reclaimed the Rs 7 lakh crore-mark in its market capitalisation. The stock rose 36 percent so far this year, and gained 53 percent in the past 12 months.

Sugar makers staged a sharp upmove in late trading led by strong gains in Shree Renuka Sugars.

Shares of the Hyderabad-based drugmaker rose as much as 4.8 percent to Rs 2,378 after it received U.S. drug regulator's approval for buprenorphine and Naloxone Sublingual Film in the U.S. Market.

The drug is therapeutic equivalent generic version of Subaxone which is used to treat adults with opioid dependence/addiction, Dr. Reddy’s Labs said in an exchange filing.

India's trade deficit in May widened to $14.62 billion which was higher than the Bloomberg estimate of $14.28 billion.

Highlights of May trade data:

• Exports rose 20.2 percent (YoY) to $28.86 billion
• Imports rose 14.9 percent (YoY) to $43.48 billion
• Oil imports at $11.5 billion, up 49.5 percent (YoY)
• Gold imports at $3.48 billion, down 30 percent (YoY)

• Indian equity benchmarks extended losses dragged by weakness in bluechips like ITC, Larsen & Toubro, Axis Bank and State Bank of India.
• The S&P BSE Sensex fell 0.3 percent or 114 points to 35,484 and the NSE Nifty 50 index declined 0.3 percent or 32 points to 10,775.
• Nine out of 11 sector gauges compiled by National Stock Exchange were trading lower led by the Nifty PSU Bank index's 1.7 percent drop. On the other hand, the Nifty Pharma index was top gainer, up 1.9 percent.
• Mid- and small-cap shares erased morning gains as the Nifty Midcap 100 and Nifty Smallcap indexes fell 0.5 percent each.
• The overall market breadth was negative as 1,419 shares were declining while 1,029 were advancing on the BSE.

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Shares of the Mangalore-based oil refiner fell as much as 5 percent to Rs 89.80.

Trading volume was more than double its 20-day average.

• ITDC: The Delhi-based government-owned tourism development corporation fell 2.15 percent. Trading volume was 23.2 times its 20-day average.
• Gujrat Flurochemicals: The Panchmahal-based chemical maker 0.44 percent to Rs 749. Trading volume was 13.5 times its 20-day average.
• Alkem Labs: The Mumbai-based drugmaker fell 0.27 percent to Rs 1,985. Trading volume was 9.4 times its 20-day average.
• McLeod Russel: The Kolkata-based tea cultivator rose 4.2 percent to Rs 147.80. Trading volume was 6.7 times its 20-day average.

Nifty 10,900 strike price call option was most active on the National Stock Exchange.

The premium on the contract fell 17 percent to Rs 41.90. Over 5.5 lakh shares were added to the open interest which stood at 41.26 lakh shares.

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Shares of the government-owned construction company rose 0.47 percent to Rs 85.75.

NBCC won contracts worth Rs 481 crore in the month of May, it said in an exchange filing.

The rupee plunged by 40 paise to hit a three-week low of 68.03 against the U.S. dollar following strong demand for the greenback amid sustained foreign capital outflows.

Besides, the dollar strengthening against other currencies overseas as the European Central Bank (ECB) pledged to leave interest rates unchanged until mid-2019, weighed on the rupee, traders said.

Foreign portfolio investors (FPIs) sold shares worth Rs 1,372.84 crore yesterday, as per provisional data issued by the stock exchanges.

Source: Press Trust of India

Shares of pharmaceutical companies witnessed good buying interest in an otherwise subdued session.

The NSE's Nifty Pharma index extended gains to eighth day and rose over 2 percent intraday led by Dr Reddy's Labs, Cipla and Lupin.

Shares of the auto components maker rose as much as 6.7 percent, the most in over two weeks to hit a new high at Rs 668.45.

Trading volume was 19.7 times its 20-day average, Bloomberg data showed.

The Shanghai Composite Index dropped to its lowest since September 2016 and a whisker away from the 3,000-point mark as the U.S. prepared to release a list of goods upon which it will impose tariffs.

Shares of the Vadodara-based drugmaker rose as much as 7 percent to Rs 540 after the company received Establishment Inspection Report from the U.S. drug regulator.

The company received EIR from U.S. FDA for inspection conducted by it between March 12-20, Alembic Pharma said in an exchange filing.

Shares of the Jaipur-based financial services firm were locked in a five percent upper circuit at Rs 45.40 after the company announced bonus issue.

The company will be issuing one bonus share for every four shares held by the shareholders. June 20 has been considered as the record date for issuing bonus issue.

• Ambuja Cements has 10 lakh shares change hands in a single block. Stock up 0.5 percent at Rs 207.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Delhi-based construction firm rose as much as 5.4 percent to Rs 15.65 after the company said NCLT may not admit ICICI Bank’s insolvency plea.

The company informed exchanges that under the leadership of State Bank of India the 90 percent of lenders have agreed to the debt restructuring plan.

Moreover, the State Bank of India will challenge maintainability of ICICI Bank’s insolvency plea in the NCLT on June 24.

Shares of the Vadodara-based fruit juice maker fell as much as 3.61 percent to Rs 160.

The BSE has placed the company's share under Additional Surveillance Measure or ASM.

Shares of the Mumbai-based e-governance service provider resumed its decline after rising for six days in a row and fell as much as 4.96 percent to Rs 41.20.

The company post market hours yesterday informed exchanges about changes in its share buyback offer.

Indian equity benchmarks edged lower dragged by Larsen & Toubro, Hindustan Unilever and IndusInd bank. However, the losses were capped as drugmakers extended gains to the eighth day.

The S&P BSE Sensex fell 0.12 percent or 40 points to 35,558 and the NSE Nifty 50 index declined 0.13 percent to 14 points to 10,794.

Eleven out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE oil & Gas index's 0.5 percent drop. On the other hand, the S&P BSE Healthcare index was top gainer, up over a percent.

Mid- and small-cap shares were outperforming their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes rose 0.2 percent each.

• Indian rupee opened lower at 67.90 per dollar against yesterday's close of 67.63.

The good news for the rupee and bonds is that the monsoon rains so far has been 16 percent above normal. That augurs well for the sowing of kharif crops and may help in containing inflation.

But the uncertainty over crude oil prices is creating a whiplash that is keeping the markets concerned. A $100 a barrel price is not in the realm of imagination anymore.

Saudi Arabia and other OPEC producers will meet their partners including Russia next week to chart out a possible increase in production. India would be hoping that the group decides on pumping more oil so prices could come down.

Another pressure on emerging markets like India is coming from the European Central Bank. The ECB is quitting quantitative easing. The ECB’s dovish tone has weakened the euro, resulting in a stronger dollar.

There are no auctions today, which will keep bond investors happy. The RBI decided to permit Interest Rate Swaptions in rupees, which will enable better timing flexibility for the market participants seeking to hedge their interest rate risks.

• ICICI Bank’s offer-for-sale in ICICI Prudential Life shares at minimum price of Rs 390 rupees each to retail investors open. OFS for non-retail investors gets 206 percent demand Thursday
• Tamil Nadu Newsprint approves Rs 2,520 crore mill expansion plan
• Punj Lloyd says NCLT may not admit ICICI Bank’s insolvency plea.
• Transcorp International mulls issuing bonus at 1:4, record date being June 20.
• Bayer CropScience: To explore Monsanto merger upon open offer; says India asked Monsanto to divest Mahyco stake. The company intends to explore possibility of merging Monsanto India.
• Manappuram Finance: To raise up to Rs 100 crore rupees via debentures
• Wipro wins cargo management contract from Latam Cargo; gets supply chain digital transformation deal from Nokia.

Investec on RBL Bank

• Maintained ‘Buy’; raised price target to Rs 660 from Rs 630.
• Rapidly scaling multiple partnerships, creating niche in credit cards segment.
• Partnerships to be a source of high profitability.
• Visibility on RoA improvement is high on a two-year timeframe.
• Expect 10 basis points RoA improvement every year leading to 40 percent compounding in net profit.

Macquarie on Zee Entertainment

• Maintained ‘Outperform’ with a price target of Rs 675.
• OTT viewership continues to scale up.
• Confident about ZEE’s strong near-to-medium-term outlook.
• ZEE5 remains crucial over the medium to long term.
• Recent stock correction provides an attractive entry point.

Deutsche Bank on UPL

• Maintained ‘Buy’ with a price target of Rs 890.
• Cross currency movements favorable for UPL so far.
• Constant currency revenue growth to meet upper end of guidance.
• Margins to also expand driven by backward integration.
• Trades at discount to Indian and global peers.
• Preferred pick in Indian agri-inputs sector.

Citi on Avenue Supermarts Analyst Meet

• Maintained ‘Sell’ with a price target of Rs 1,255.
• Management not concerned about slowing SSS or average bill sizes.
• Doesn’t expect upside to margins from current levels; Will pass on benefits to consumer.
• To focus on store ownership model which will benefit in long-term.
• Not worried on competition; Believes there is large consumption opportunity.
• Heavy discounting by large e-commerce players in not sustainable in FMCG.
• DMart’s e-commerce still miniscule and investments could continue.

JPMorgan on Avenue Supermarts Analyst Meet

• Maintained ‘Underweight’ with a price target of Rs 1,050.
• Key message: Consistency across business initiatives with small incremental changes.
• Focus to remain on competitive pricing, sharper product assortment, store additions and on fine tuning the e-commerce model.
• No plans for a loyalty program, unlike peers.

Macquarie on Ceat

• Maintain ‘Outperform’ with price target of Rs 2,000.
• Management expects a revenue to compound at 12–17 percent over the next five years.
• Capex to peak in FY20E, to be funded through accruals and debt.
• Expect operating margins to improve over the fiscal 2018-2021.
• Expect earnings per share to compound at 26 percent over the fiscal 2018-2021, led by the sales volume compounding at 12 percent.

Deutsche Bank on Ceat

• Maintained ‘Buy’; cut price target to Rs Rs 1,800 from Rs 1,950.
• Investing in capacities to drive market share in truck and car segments.
• Company expects an average cost to increase 3-4 percent on a sequential basis, starting from July.
• Near term cash flows to be under pressure as company is entering high-capex phase.
• Preferred picks within tyre sector are Apollo Tyres and MRF.

Insider Trades

• JB Chemicals and Pharma promoter sold 20,000 shares between June 12-13.
• Vikas EcoTech promoter acquired 5 lakh shares on June 12.
• Siti Networks promoter sold 15.8 lakh shares on June 13.

(As reported on June 14)

Bulk Deals

GPT Infraprojects

• Ampersand Growth Opportunities Fund Scheme-1 sold 1.97 lakh shares or 0.68 percent equity at Rs 159 each.

Satin Creditcare Network

• Goldman Sachs Singapore PTE acquired 3.59 lakh shares or 0.73 percent equity at Rs 378.7.
• DBS International (Asia) Ltd sold 3.59 lakh shares or 0.73 percent equity at Rs 378.7.

Trading Tweaks

• Manpasand Beverages placed under Additional Surveillance Measure or ASM.
• Jubilant Industries circuit filter revised to 10 percent.
• United Spirits ex-date for 5:1 stock split. F&O lot size revised to 1,250.

F&O Cues

• Nifty June Futures ended at 10,813.9, with a premium of 5.9 points versus a discount of 11.8 points.
• Nifty June series open interest (OI) down 3 percent and Bank Nifty OI down 1 percent.
• India VIX ended at 12.09, down 4.2 percent
• Max OI for June series call at 11,000 strike price call option, OI at 41.4 lakh shares, up 8 percent.
• Max OI for June series put shifts to 10,700 strike price put option, OI at 49.5 lakh shares, down 4 percent.

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• India’s tiny declaration of independence
• Millionaires now control half of the world’s personal wealth
• BOJ is drifting further from the global pack
• What if Tata Steel-Thyssenkrupp deal terms change
• Battle with Uber has wiped out a fourth of Ola’s $3 billion fundraise
• Best beer or not, Carlsberg should pour that Indian IPO now
• Deal to gradually boost OPEC output ‘inevitable’, says Saudi minister
• Rising Kashmir editor Shujaat Bukhari shot dead in Srinagar
• SEBI considers capping tenure of stock exchange CEOs
• ICICI Bank’s insolvency plea may not be admitted by NCLT, says Punj Lloyd

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.3 percent to 10,786 as of 6:47 a.m.

Asian stocks had a mixed open Friday as plans for U.S. tariffs on Chinese imports revived concerns about global trade growth. The dollar headed for its best week since 2016 after the Federal Reserve signaled further tightening in 2018 while the European Central Bank signaled it won’t raise interest rates for more than a year.

Equities edged higher in Japan, rose in Australia and dipped in South Korea. The S&P 500 closed with a modest rise Thursday, while the Nasdaq Composite Index hit a record high.

Commodities

• West Texas Intermediate crude was up 0.1 percent at $66.95 a barrel.
• Gold climbed 0.1 percent to $1,300.46 an ounce.
• LME copper sank 0.6 percent to $7,132 per metric ton.

These are some key events to watch this week:

• The Bank of Japan June monetary policy decision and news conference is Friday.

Economic Data To Watch

India May trade balance, estimate $14.3 billion deficit, prior $13.7 billion deficit.

• India May exports YoY, no estimate, prior 5.2 percent
• India May imports YoY, no estimate, prior 4.6 percent