Sensex, Nifty Resume Decline After A Day’s Breather As ITC Drags

Indian equity benchmarks resumed decline after a day’s breather dragged by bluechips like ITC and Mahindra & Mahindra.

The S&P BSE Sensex fell 0.32 percent or 115 points to 35,432 and the NSE Nifty 50 index declined 0.29 percent or 31 points to 10,741.

“A trade war is taking shape, leading to a correction globally. That’s taking a toll on India as well,” AK Prabhakar, head of research at IDBI Capital, told BloombergQuint over the phone.

Foreign funds have sold $19 billion in emerging market equities and they continue to remain sellers, according to him. “2018 will be a washout year with mid and small caps eroding more. I expect a 10-15 percent downside for benchmarks in the current year.”

In today’s trade, seventeen out of 19 sector gauges compiled by BSE ended lower led by the S&P BSE Telecom index’s 1.6 percent drop. On the other hand, the S&P BSE Energy index was the top gainer, up 0.85 percent.

The mid- and small-cap shares underperformed their larger peers as the S&P BSE MidCap index fell 0.5 percent and S&P BSE SmallCap index tumbled 0.8 percent.

• Mphasis: The Bengaluru-based IT company rose as much as 5.23 percent to Rs 1,116 after JP Morgan initiated coverage on the stock with a ‘overweight’ rating for target price of Rs 1,285, indicating an upside of 21 percent.
• InterGlobe Aviation: The Gurugram-based budget airline operator rose as much as 6 percent to Rs 1,205 after it clarified that it has not received any summons from Enforcement Directorate for FEMA violations.
• Axiscades Engineering Technologies: The Bengaluru-based technology solutions provider rose as much as 5.56 percent to Rs 122.50 after it signed joint venture with Assystem for engineering services in energy sector.
• Lakshmi Vilas Bank: The Tamil Nadu-based private lender rose as much as 6.74 percent on heavy volumes. Trading volume was 4.2 times its 20-day average.

Shares of the Chandigarh-based steel wheel rim maker rose as much as 3.23 percent to Rs 1,252 after SMC Global initiated coverage on the stock with a buy.

SMC Global in a note said:

• SSWL over last two years has laid a strong foundation by expanding its capacities in key product segments.
• SSWL makes a healthy investment proposition given the multi-year opportunity for its alloy wheels and current uptick in CV cycle.
• Trades at significant discount to other listed peer Wheels India, valuation gap may narrow down if SSWL continues to deliver stronger performance.

ICICI Bank's performance has been disappointing as it has lost market share to peers like HDFC Bank, IndusInd Bank and others, Dipan Mehta, member of BSE told BloombergQuint in an interview.

Key highlights of the conversation:

• ICICI Bank is not a great long-term investment bet
• There are better opportunities in private banks like HDFC Bank, IndusInd Bank, RBL Bank and Kotak Mahindra Bank
• RBL Bank may be slightly riskier than HDFC Bank but bank is growing on qualitative parameters
• RBL Bank is focusing on retail banking considering growth
• RBL Bank is nice compounding story and returns can be phenomenal
• In capital goods space, positive on companies which have good order book
• Positive on transmission towers companies
• Bharat Electronics is a good play on defence sector
• Selective capital goods stocks are in a cyclical upswing
• Have been great fans of IT companies but hold negative for two to three years
• Current rally has taken us by surprise
• For large cap IT companies maintaining single digit growth rate will be challenging
• Maintaining low double-digit growth will be tough for mid-cap IT companies
• Investors who are stuck in IT should use the current rally to exit this space

• Zee Entertainment has 22 lakh shares change hands in a block on BSE. Stock up 1.3 percent at Rs 568.40.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mukesh Ambani-led oil-to-telecom conglomerate rose as much as 1.5 percent to record high of Rs 1,034.

The stock has been on record breaking spree as it has risen fourteen times in last 16 trading sessions.

Rail India Technical and Economic Services' Rs 460 crore IPO was fully oversubscribed as of 12:00 noon on day 2 of its subscription.

• Non-institutional bidders portion subscribed 24 percent
• QIB portion subscribed 3 percent
• Retail portion subscribed 2.8 times
• Overall IPO subscribed 1.02 times

Source: Company PR

• Indian equity benchmarks continue to trade in a narrow band as gains in Reliance Industries and ICICI Bank were offset by losses in ITC, Mahindra & Mahindra and Axis Bank.
• The S&P BSE Sensex declined 0.12 percent to 35,504 and the NSE Nifty 50 index slipped 0.14 percent to 10,756.
• Fifteen out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Telecom index's 0.9 percent drop. On the flipside, the S&P BSE Energy index was top gainer, up 0.3 percent.
• The overall market breadth was bearish as more than 1,500 shares were declining while 750 shares were advancing on the BSE.

Click here for more stock market statistics

Shares of the Mumbai-based state-run lender fell as much as 7.12 percent to Rs 12.40.

The Economic Offences Wing of Pune police arrested six persons, including the serving and a former CMD of the Bank of Maharashtra in a cheating case lodged against city-based real estate developer DS Kulkarni and his wife.

• Thyrocare Technologies: The Mumbai-based diagnostic lab operator rose as much as 1.2 percent to Rs 600. Trading volume was 41.5 times its 20-day average.
• Trent: The Mumbai-based department store operator fell as much as 0.55 percent. Trading volume was 18.2 times its 20-day average.
• Network 18 Media and Investments: The Noida-based entertainment content company rose as much as 2.75 percent to Rs 44.90. Trading volume was 11.1 times its 20-day average.
• Gujarat Gas: The Ahmedabad-based city gas distribution company rose as much as 1.73 percent to Rs 790. Trading volume was 7.5 times its 20-day average.

Shares of the Vadodara-based fruit juice maker snapped its four-day decline and rose as much as 5 percent to Rs 142 after it informed exchanges that it will consider and approve financial results by newly appointed auditors on June 27.

The company's board will meet on June 27 to consider financial results and dividend, Manpasand Beverages said in an exchange filing.

Manpasand Beverages had on May 28 informed exchanges about sudden resignation of its statutory auditor Deloitte Haskins & Sells. Following this development, the stock came under intense selling pressure, and since then plunged 67 percent.

Shares of the Hyderabad-based construction firm fell as much as 2.87 percent to Rs 165 after U.P. government cancelled its Rs 1,111 crore bid for Purvanchal expressway.

Shares of the Mumbai-based software developer rose as much as 4.94 percent to Rs 489.

Singapore-based NTUC Income has selected Majesco to advance its distribution management operations.

Shares of the Gurugram-based operator of IndiGo Airlines rose as much as 6 percent to Rs 1,205 after it clarified that it has not received any summons from Enforcement Directorate for FEMA violations.

Markets will not go substantially higher this year, the fund manager who oversees $15 billion in assets under management told BloombergQuint in an interview.

Key highlights of the conversation:

• Have exposure to three cheap and contrarian sectors.
• Launched Fund of Fund for people who do not have a demat account.
• Not worried about the near-term under-performance of the ETF.
• Anchor list comprises of some large schemes of ICICI Prudential AMC.
• Would worry about oil shooting up to $100/barrel.
• Believe the ETF is a value proposition.

Shares of Indian pipe makers like Jindal Saw, Maharashtra Seamless and Man Industries fell as much as 6 percent after U.S. imposed taxes on large-diameter welded pipes from China, India, Korea and Turkey.

• Jindal Saw fell 5.9 percent
• Man Industries declined 4.9 percent
• Maharashtra Seamless tumbled 2.6 percent

Shares of the Mumbai-based drugmaker rose as much as 1 percent to Rs 609 after U.S. FDA gave its final approval to Abbreviated New Drug Application (ANDA) fot Testosterone Cypionate injection.

Cipla’s Testosterone Cypionate injection is generic therapeutic equivalent version of Pharmacia and Upjohn’s DepoTestosterone. The drug is indicated for replacement therapy in males in conditions associated with symptoms of deficiency or absence of endogenous testosterone, the company said in an exchange notification.

Shares of the Delhi-based dairy products maker fell as much as 5.16 percent to Rs 28.50.

Kwality informed exchanges that it has rescheduled the board meet to discuss bonus issue of shares to July 3 due to non-availability of majority directors.

Shares of the Mumbai-based electrical power equipment maker rose as much as 4.6 percent to Rs 55.80 after Citi and Kotak upgraded the stock to buy.

Citi in a note said:

• Upgraded to ‘Buy’ from ‘Sell’; cut price target to Rs 65 from Rs 76.
• Operational business rebound is apparent; Expect 20% EBIT CAGR over FY18-FY21.
• Cut EPS estimates by 18 percent and 34 percent for the current and the next financial year respectively to adjust for the delay in sale of international business.
• Stock adequately factored in delay in sale of loss-making international business.
• Among power equipment companies, CG Power is our only Buy.

Kotak in a note said:

• Upgrade to ‘Buy’ from ‘Reduce’: cut price target to Rs 66 from Rs 87.
• Upgrade driven by the strength of core business.
• Cut in price target cut to factor in deferment of Hungary deal by two quarters.
• Do not expect any payout from sale of remaining discontinued operations.
• After the recent selloffs, valuations cheap.

• Infibeam had 20 lakh shares changed hands in a block deal. Stock down 1.2 percent at Rs 154.40.
• Adani Ports had 2.7 percent equity, or 5.52 crore shares changed hands in a block deal in pre-market trade. Stock up 1.54 percent at Rs 373.

Buyers and sellers were not immediately known

Source: Bloomberg

Indian equity benchmarks edged higher led by banking stocks after the Reserve Bank of India's monetary policy meet minutes signaled that future rate hikes will be data dependent.

The S&P BSE Sensex rose 0.29 percent or 102 points to 35,650 and the NSE Nifty 50 index advanced 0.28 percent or 30 points to 10,802.

Minutes of the Reserve Bank of India’s June policy review -- when it hiked rates for the first time in more than four years -- point to a hawkish pause at its next meeting in August, Bloomberg economist Abhishek Gupta wrote in a note.

The minutes highlighted the central bank’s discomfort with higher inflation. Members said that a rate increase would signal strong intent to keep inflation expectations in check. Our view is that data beyond July will show a slowdown in inflation and growth, keeping the RBI on a long pause, Gupta’s note added.

Meanwhile, eight out of 11 sector gauges compiled by National Stock Exchange were trading higher led by Nifty Private Bank index's 0.4 percent gain. On the other hand, Nifty Pharma index was top loser, down 0.4 percent.

The mid- and small-cap shares were trading on a muted note as the Nifty Midcap 100 and Nifty Smallcap 100 indexes were little changed.

Yield on India’s 7.17 percent bond maturing in January 2028 dropped 4 basis points to 7.79 percent after Reserve Bank of India’s minutes signaled that future rate hikes will be data dependent against the earlier perception that it was a given.

Gayatri Projects suffered a setback after the Uttar Pradesh government cancelled its Rs 1,111 crore bid for Purvanchal expressway. T V Sandeep Kumar Reddy, managing director at Gayatri Projects told BloombergQuint that no reason for cancellation has been cited by U.P. government.

Key highlights of the conversation:

• To participate in re-bidding process scheduled for July 5.
• Authority feels bids have been 8-10 percent higher than estimates.
• No reason for cancellation has been cited by U.P. government.
• Cancelled order forms around 10 percent of order book.

After the decision to buyback debt to ease liquidity, the minutes of RBI's last monetary policy meeting provide more reasons for bond markets to celebrate.

The minutes signal that future rate hikes will be data dependent against the earlier perception that it was a given. Yield may ease further and stay in a range of 7.78-7.85 percent in the day.

In the currency market, implied opening from the forwards suggest the pair may start trading at 68.0575. The rupee clocked some gains in the last session, but today Asian stocks are mixed and the U.S-China trade tensions continue to loom in the backdrop.

Traders expect a range of 67.80-68.30 a dollar in the day.

Citi on CG Power

• Upgraded to ‘Buy’ from ‘Sell’; cut price target to Rs 65 from Rs 76.
• Operational business rebound is apparent; Expect 20% EBIT CAGR over FY18-FY21.
• Cut EPS estimates by 18 percent and 34 percent for the current and the next financial year respectively to adjust for the delay in sale of international business.
• Stock adequately factored in delay in sale of loss-making international business.
• Among power equipment companies, CG Power is our only Buy.

Kotak on CG Power

• Upgrade to ‘Buy’ from ‘Reduce’: cut price target to Rs 66 from Rs 87.
• Upgrade driven by the strength of core business.
• Cut in price target cut to factor in deferment of Hungary deal by two quarters.
• Do not expect any payout from sale of remaining discontinued operations.
• After the recent selloffs, valuations cheap.

CLSA on Havells

• Maintained ‘Buy’ with a price target of Rs 655.
• Lloyd’s integration relatively smooth with several strategic changes.
• Focus on innovation-led growth to stay ahead of curve.
• The current financial year is likely to be decisive year for Lloyd as it starts new facility and expands.

HSBC on Eicher Motors

• Maintained ‘Buy’ with a price target of Rs 34,000.
• Vintage stores and launch of 650cc bikes are good long-term initiatives.
• Stable second-hand prices and reducing average age of RE buyers are good signs.
• Current stock price factors volume growth compounding at 9-10 percent for 10 years which looks undemanding.

IIFL on Apollo Tyres

• Maintained ‘Buy’ with a price target of Rs 335.
• Low-cost plant to help drive growth into new markets.
• High automation to bring in operating leverage as volumes scale-up.
• Plant to reach Ebitda break-even in the first half of the current financial year.
• Expect debt reduction from March 2020 as company plans another Rs 3,500 crore capex in India.

Deutsche Bank on Apollo Tyres

• Maintained ‘Buy’ with a price target of Rs 340.
• Hungary plants’ cost of production to be 15-20 percent lower.
• Europe profitability to improve as incremental volumes come from Hungary plant.
• Expect strong growth in India and a recovery in Europe.
• Apollo is our top pick within the tyre segment.

Who's Meeting Whom

• Power Mech to meet IIFL Institutional Equities on June 21-22.
• Tata Steel to meet DSP Blackrock, Centrum Broking and HPS Investment Partners on June 21.
• MCX to meet Premji Invest on June 21.
• Kaya Ltd to meet SAIF Partners on June 21.

Insider Trades

• Bajaj Holdings & Investment promoters acquired 146,512 shares from June 15-19.
• Centrum Capital promoter group acquired 2.4 lakh shares on June 18.
• Nandan Denim promoter Vedprakash Devkinandan Chiripal acquired 43,500 shares on June 18.

(As reported on June 20)

RBI Watch

• RBI to conduct Rs 20,000 crore 1-day variable rate repo auction
• RBI to purchase Rs 10,000 crore of bonds via open market operations

Trading Tweaks

• Indiabulls Ventures: Steadview Capital increases stake in the company to 5.9 percent from 3.5 percent.
• Kwality: Board meeting to consider buyback/bonus issue rescheduled to July 3 due to non-availability of majority Directors.
• MRO-TEK Realty placed under ASM.
• Jubilant Foodworks ex-date for 1:1 bonus. F&O lot size revised to 500.
• Emami ex-date for 1:1 bonus.
• Max Ventures and Industries to trade ex-rights basis.
• DCM Financial Services last trading day in T group.

F&O Cues

• Nifty June futures ended trade at 10790, premium of 19 points.
• Max OI for June series at 11,000 Call, OI at 49.7 lakh.
• Max OI for June series at 10,700 Put, OI at 53.7 lakh.

F&O Ban

• In Ban: DHFL, Jet Airways, Infibeam
• New In Ban: Jaiprakash Associates

Only intraday positions can be taken in stocks which are in F&O ban. There is a penalty in case of a rollover of these intraday positions.

Put-Call Ratio

• Nifty PCR at 1.56 versus 1.47.
• Nifty Bank PCR 1.05 versus 0.80.

• SBI MD B Sriram appointed MD and CEO of IDBI Bank for a temporary period of three months.
• International Finance Corporation to invest Rs 200 crore in Mahindra Lifespace Developers’ Jaipur project.
• InterGlobe Aviation clarifies it has not received ED summons for FEMA violation.
• Majesco selected by Singapore’s insurance company for distribution solutions.
• Bayer-Monsanto takeover approved by CCI.
• Gayatri Projects’ EPC order worth Rs 1,111 crore cancelled by U.P. government.
• Adani Transmissions acquires 100 percent stake of REC subsidiary for Rs 17.93 crore.
• Prabhat Telecom announces bonus issue at 1:5; record date of June 29.
• Axiscades Engineering Technologies signs JV with Assystem in energy and other sectors.

• Fine Organic Industries continues day 2. Issue subscribed 0.12 times on day 1.
• RITES Ltd continues day 2. Issue subscribed 0.59 times on day 1.
• Anmol Industries seeks SEBI nod for Rs 750 crore IPO.

• Petrol price cut by 11 paise per litre to Rs 76.16 in Delhi
• Diesel price cut by 10 paise per litre to Rs 67.68 in Delhi

• Portugal beat Morocco 1-0
• Uruguay beat Saudi Arabia 1-0
• Spain beat Iran 1-0

Today’s match schedule

• Denmark versus Australia at 5:30 PM IST
• France versus Peru at 8:30 PM IST

• Punjab National Bank’s internal probe on Nirav Modi scam names 54 officers
• OPEC races for oil deal as Iran strikes more conciliatory tone
• Bank of Maharashtra chairman among six held in DSK Group loan fraud case
• Walmart borrows $16 billion to finance its Flipkart investment
• Taj acquires Lutyen’s Delhi hotel through NDMC auction
• Arvind Subramanian to step down as chief economic adviser
• Disney’s Fox bid is aggressive, but not punchy enough
• One cop’s fight against fake news is saving lives in India
• Michael Bloomberg: Why I’m supporting democrats in 2018
• Uday Kotak seeks waiver to bid for hotel Ivanka stayed in
• Trump’s order on family separation: What it does and doesn’t do
• The world’s leading central bankers on one stage

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.17 percent to 10,774 as of 7:09 a.m.

Asian stocks had a muted start to trading Thursday as concern simmers about an escalation of trade tensions between the U.S. and China. Treasury yields and the dollar were steady as oil retreated.

Benchmarks edged higher in Japan, while South Korean shares were little changed. Australian stocks rose, cementing gains at an eight-year high.

Currencies

• The Bloomberg Dollar Spot Index was flat.
• The euro held at $1.1577.
• The pound traded at $1.3173.
• The yen was steady at 110.40 per dollar.

Commodities

• West Texas Intermediate crude fell 0.9 percent to $65.69 a barrel.
• Gold was steady at $1,268.92 an ounce, near the weakest in six months.

Here are some key events to watch for this week:

• The Bank of England’s policy decision is due on Thursday.
• Also on Thursday: U.S. jobless claims and South Korea export data.
• The Organization of Petroleum Exporting Countries meets in Vienna on Friday.