Nifty Posts Fourth Monthly Loss Of 2018 On Rising Oil, Trade Woes

Indian equity benchmarks halted their five-week winning streak on rising oil prices amid escalating trade tensions between U.S. and China.

For the week, the S&P BSE Sensex fell 0.75 percent to 35,423 and the NSE Nifty 50 index tumbled 1 percent to 10,714.

Rising oil prices have stoked fears that inflation will accelerate, and trade deficit could widen.

India’s Nifty 50 index declined for a fourth month in the first half of the calendar year.

“Second half will be difficult for Indian markets,” AK Prabhakar, head of research at IDBI Capital told BloombergQuint over phone. There are couple of state elections and general elections are also due next year which will keep the investors guessing, Prabhakar said.

“I am not comfortable with valuations and the selloff in mid and small caps can extend to large caps and second half can give negative returns as well,” Prabhakar added.

Market is likely to remain in a phase of consolidation going ahead as it is a pre-election year, says Shrikant Chouhan, senior vice president, equity technical research at Kotak Securities.

He expects Nifty to trade in range of 10,200 on downside and 10,900 on the upside.

Shares of the Nagpur-based synthetic yarn maker rose 7.2 percent to Rs 22.30 after it issued over 90 lakh shares by way of preferential issue on private placement basis.

Shares of the Ahmedabad-based shipping port operator rose 2.2 percent to Rs 370 after 2.7 crore shares or 1.3 percent equity changed hands in two blocks.

Buyers and sellers were not immediately known

Source: Bloomberg

• Indian equity benchmarks extended gains and were trading near intraday highs led by blue-chips like Reliance Industries, ITC, L&T and ICICI Bank.
• The S&P BSE Sensex rose 1 percent or 345 points to 35,382 and the NSE Nifty 50 index climbed 1.04 percent or 110 points to 10,700.
• All sector gauges compiled by BSE were trading higher led by the S&P BSE Utilities index's 2.4 percent surge.
• The overall breadth was extremely positive as 1,732 shares were advancing while 738 were declining on the BSE.

European stocks tracked a rally in Asia as global markets headed for an upbeat end to what has been a tumultuous quarter. The euro jumped as leaders reached a deal on migration.

Shares of the Uttar Pradesh-based steel maker rose as much as 10 percent to Rs 274 after its board approved stock split proposal.

The company informed exchanges that its board approved a proposal to split face value of of Rs 10 per equity share to face value of Re 1 per equity share.

Reserve Bank of India and government will together decide on what actions to take on rupee volatility, interim Finance Minister Piyush Goyal told media persons in Delhi.

Key highlights from Piyush Goyal’s conversation with media persons:

• Asian countries will have to work together to address the challenge of growing protectionism
• Efficient cost audits can positively change the profitability of companies
• Technology changing cost of companies
• Don’t think any country of scale and size like India had the audacity or capability to undertake a reform like GST
• Sporadic rail orders will not get you best price
• Reverse e-auctions to be initiated in railways
• Reverse auctions to reward efficient companies by significantly reducing costs
• External factors responsible for rupee volatility

• Finolex Industries: The Pune-based PVC pipe maker fell 0.4 percent to Rs 568.35. Trading volume was 22.2 times its 20-day average.
• Honeywell Automation: The Pune-based industrial automation service provider rose 0.6 percent to Rs 18,350. Trading volume was 13 times its 20-day average.
• Jindal Stainless: The Delhi-based stainless-steel products maker rose 2 percent to Rs 66.35. Trading volume was 7.7 times its 20-day average.
• Sobha: The Bengaluru-based real estate developer fell 1.85 percent to Rs 437.50. Trading volume was 6.7 times its 20-day average.

Shares of the Mukesh Ambani-led oil-to-telecom conglomerate snapped its 5-day losing streak and rose as much as 3.2 percent, the most in over two months, to Rs 975.40.

Gain in Reliance Industries contributed 80 points to over 250-points rally in Sensex.

Shares of the Noida-based auto parts maker rose 3.2 percent to Rs 168.25 after 1.4 percent equity changed hands in a block on BSE.

Buyers and sellers were not immediately known

Source: Bloomberg

Former IAS officer Girish Chaturvedi has been selected as the director on ICICI Bank board.

He will take over as non-executive part-time Chairman of the bank after MK Sharma retires tomorrow, subject to regulatory approvals, ICICI Bank said.

Speaking to BloombergQuint ICICI Bank chairman designate Girish Chaturvedi said that he has not got any official communication yet from ICICI Bank.

ICICI Bank shares rose 0.8 percent to Rs 273.

• Bharti Infratel has 18 lakh shares change hands in a block deal. Stock up 0.6 percent at Rs 299.80.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based transmission tower maker rose as much as 4 percent to Rs 407.80.

Kalpatru Power Transmission received multiple orders worth Rs 1,235 crore, the company said in an exchange filing.

Shares of graphite electrode makers like Graphite India and HEG were locked in a 5 percent upper circuit after international brokerage Macquarie initiated coverage on both the stocks with an 'outperform'.

Macquarie initiated 'outperform' on Graphite India for target price of Rs 1,260 and on HEG for target of Rs 4,810.

Macquarie in a note said:

• Uptick in graphite electrode business is structural and not just an upcycle before a leg down.
• Market tightness to keep electrode and needle coke prices firm.
• Expect graphite electrode prices staying strong for three years, as utilisation remains on an uptrend.
• Indian electrode makers have 22 percent global market share.

Shares of the Mumbai-based cement maker rose as much as 1.4 percent to Rs 3,775 after it commissioned 2.5 million tonnes per annum clinker capacity at Dhar in Madhya Pradesh.

After commissioning this plant, the company's total capacity is seen at 96.5 million tonnes per annum, UltraTech said in an exchange filing.

Shares of the Delhi-based news broadcast company were locked in an upper circuit for a third day in a row.

NDTV rose by its maximum daily limit of 10 percent to Rs 51.45.

The stock has been on a winning streak after SEBI ordered Vishvapradhan Commercial to make an open offer for NDTV Ltd. for indirectly acquiring up to 52 per cent via a convertible loan of Rs 350 crore in 2009 ‘sourced’ from a subsidiary of Reliance Industries Ltd.

Shares of the country's largest private sector lender fell as much as 0.8 percent to Rs 2,114 ahead of its annual shareholders' meeting scheduled later in the day.

Meanwhile, HDFC Bank had 11.6 lakh shares changed hands in a single bock deal on BSE.

Shares of Talwalkars Lifestyles, the demerged arm of Talwalkars Better Value Fitness, got listed at stocks exchanges at Rs 136.80 per share.

Talwalkars Lifestyles settled at Rs 145 on BSE post demerger.

Shares of the Mumbai-based steel maker rose as much as 3.13 percent to Rs 565 as Thyssenkrupp AG and Tata Steel are closing in on a European steel joint venture after a last-minute change to the deal terms that won approval from Thyssenkrupp’s union, Bloomberg reported citing people familiar with the matter.

In the revised deal, Thyssenkrupp will own about 55 percent of the equity in the new company and Tata will have 45 percent, the report added.

• Mahindra CIE Automotive had 2 crore shares or 5.28 percent equity changed hands in two blocks on BSE. Stock up 7.3 percent at Rs 263.

Buyers and sellers were not immediately known

Source; Bloomberg

Shares of the Mumbai-based public sector lender rose as much as 9.4 percent on the back of heavy volumes.

Trading volume was 5.7 times its 20-day average currently of the day, according to Bloomberg.

Earlier this week, media reports suggested that the government may sell a part of its stake in the bank.

Indian equity benchmarks recovered from two days of losses and opened July series higher led by Reliance Industries, State Bank of India and Infosys. Meanwhile, the Indian rupee rebounded from the record lows tested in yesterday’s session.

The S&P BSE Sensex rose 0.44 percent or 156 points to 35,190 and the NSE Nifty 50 index climbed 0.5 percent or 51 points to 10,639.

All sector gauges compiled by BSE were trading higher led by the S&P BSE Oil & Gas index's 1.7 percent gain.

The mid- and small-cap shares snapped their four-day losing streak as the S&P BSE MidCap and S&P BSE SmallCap indexes rose over a percent each.

India is insulated from global trade tensions as it is a strong domestic economy, Mark Matthews, head of research Asia at Bank Julius Baer & Company told BloombergQuint in an interview.

Key highlights of the conversation:

• Still maintain overweight on India.
• State elections in Rajasthan and Madhya Pradesh will not go well for ruling government.
• Indian micros are looking good. Weakening currency to significantly help IT sector; bank NPAs have peaked out and started to come down.
• Like Indian markets and like to be invested here.
• Positive on banks and consumer sector.
• Would look at buying pharma in case rupee remains weak against the dollar.
• Stocks move on cash flows and cash flow will be 50 percent higher from a three-year perspective.
• SIPs are contributing $1 billion a month which is a significant money.
• Expect markets could be further down during the summer months.
• Manufacturers not placing new orders as suggested by new orders to inventory data.
• Forward looking inflation gauge suggests higher inflation 6 months down the line.
• World economy may not grow at 4 percent as was expected earlier.

The focus will undoubtedly be on the rupee which hit a record low on Thursday, falling past 69 a dollar and set for its worst quarter in five years.

Rising crude oil prices is expected to widen the nation's current account deficit and stoke inflationary pressures. Oil, India's biggest import item, is poised for the biggest weekly gain since mid-April as declining stockpiles in the U.S. and disruptions in Libya and Canada raised global supply risks.

Traders expect the RBI to intervene and prevent a sharp drop in the local currency. But that intervention is likely to cause liquidity to tighten in the money market and cause short rates to rise. The rupee fell 0.2 percent to close at 68.7925 on Thursday and forwards suggest it may start trading at 68.81 on Friday.

Meanwhile, the yield on the 10-year bond rose 6 basis points to 7.94 percent on Thursday and was headed for a fourth quarter of gains. The RBI will auction Rs 12,000 crore of government bonds and that will test investor appetite in an environment of tightening liquidity.

Nomura on Media

• Zee's TV ratings remains strong; Remain positive on the stock.
• Sun has continued to lose share.
• On the subscription side, expect Sun to be the key beneficiary of digitisation.

Nomura on Exide

• Maintained ‘Neutral’ with a price target of Rs 268.
• Announcement of JV gives Exide a clear head-start over others in Lithium-ion batteries.
• By 2020 when EVs launch, Exide would have a proven product ready for auto manufacturers.
• Total investment could be CHF 80 million.
• Exide's cash balance and cash flow sufficient for investment.

Nomura on Auto

• Healthy demand and low base to lead to strong double-digit volume growth across segments.
• Expect passenger vehicle industry to report 27 percent YoY growth.
• Expect two-wheeler industry growth to remain healthy at 15 percent YoY.
• Expect medium and heavy commercial vehicle industry to report 37 percent YoY growth.

Deutsche Bank Research on BHEL

• Maintained ‘Buy’ with a price target of Rs 130.
• Four recent tie-ups to drive non-coal revenues.
• Power deficit and replacement demand to drive coal projects related revenue.
• Expect turnaround in orders and potential recovery of government receivables.

Macquarie on Graphite Electrode Sector

• Uptick in graphite electrode business is structural and not just an upcycle before a leg down.
• Market tightness to keep electrode and needle coke prices firm.
• Expect graphite electrode prices staying strong for three years, as utilisation remains on an uptrend.
• Indian electrode makers have 22 percent global market share.
• Graphite India: Initiated ‘Outperform’ with a price target of Rs 1,260; implying a potential upside of 63 percent from the last regular trade.
• HEG: Initiated ‘Outperform’ with a price target of Rs 4,810; implying a potential upside of 58 percent form the last regular trade.

Brokerages On Accenture

Morgan Stanley

• Accenture Q3 ahead of guided range and estimates.
• Revenue beat and constructive commentary signals positive sentiment for India IT.
• Upwards revision to full year revenue growth guidance positive.

CLSA

• Growth acceleration led by consulting, U.S. and CMT.
• Broad-based growth acceleration is a positive for all Indian IT firms.
• Acceleration in U.S. positive for most firms, more for Infosys and Cognizant.
• Acceleration in CMT positive for Tech Mahindra, Wipro and HCL Tech.
• Nature of demand with stronger consulting and Apps better for Infosys and HCL Tech.
• Relative softness in FS stays a concern for TCS, Cognizant and Infosys.

Who's Meeting Whom

• Lumax Auto Technologies & Lumax Industries to meet investors on June 29.
• Amber Enterprises to meet investors on June 29.
• Indian Hotels to meet HDFC AMC on June 29.
• Kamdhenu Ltd to meet investors on June 29.

Insider Trades

• Jain Irrigation promoter Jalgaon Investments Private Limited acquired 2 lakh shares on June 27.
• Piramal Enterprises promoter sold 2.97 lakh shares from June 25 – 26.
• Centrum Capital promoter BG Advisory Services LLP acquired 1.38 lakh shares on June 26.

(As reported on June 28)

Bulk Deals

• RPP Infra Projects: Albula Investment Fund bought 1.15 lakh shares or 0.5 percent equity at Rs 215 each.
• Strides Shasun: Birla Sunlife MF bought 5 lakh shares or 0.6 percent equity at Rs 388.94 each.
• V2 Retail: India 2020 Fund II Limited bought 2 lakh shares or 0.6 percent equity at Rs 405 each.
• IDFC: JM Financial MF sold 83.29 lakh shares or 0.5 percent equity at Rs 46.48 each.
• Manpasand Beverages: Nomura India Investment Mother Fund sold 12.84 lakh shares or 1.1 percent equity at Rs 137.02 each.
• PTC India: UBS Principal Capital Asia sold 16.24 lakh shares or 0.5 percent equity at Rs 73.08 each.
• ICRA: IIFL Management Services Limited bought 3.30 lakh shares or 3.3 percent equity at Rs 3,291 each. While, Punjab National Bank sold 3.30 lakh shares or 3.3 percent equity at Rs 3,291 each.
• IEX: Societe Generale sold 3.68 lakh shares or 1.2 percent equity at Rs 1,586 each.

Trading Tweaks

• Gammon Infrastructure Projects, KRBL and NDTV: Circuit filter revised to 10 percent.
• Adani Green Energy last trading day before shifting to B group.

Nifty Midcap 50 Index Changes

• Arvind and Tata Communications dropped while Indian Bank and NALCO added.

Nifty Infra Index Changes

• Tata Communications dropped while Torrent Power added.

F&O Cues

• Nifty July futures ended at 10,571, with discount of 18 points.
• All series Nifty open interest (OI) up 4 percent and Bank Nifty OI up 5 percent.
• Nifty Rollover at 64 percent and Bank Nifty Rollover at 72 percent.
• India VIX ended at 13.9, up 3.2 percent.
• Max OI for July series call at 11,000 strike price call option, OI at 29.9 lakh shares, up 20 percent.
• Max OI for July series put shifts to 10,600 strike price put option, OI at 35 lakh shares, up 45 percent.

• HDFC Bank to hold annual shareholders’ meeting.
• Titan Company: Rakesh Jhunjhunwala and his associates sell 1.25 crore shares.
• Kalpataru Power Transmission receives multiple orders worth Rs 1,235 crore.
• Bang Overseas to sell Bangalore land for Rs 20 crore.
• Orient Abrasives says operations at Gujarat plant stopped due to workers’ unrest.
• Wipro completes sale of hosted data center services operations to Ensono.
• Zee Media to sell its entire stake in Ez-Mall Online for Rs 8.60 crore.
• Newgen Software receives order worth Rs 63.93 crore.
• Bharat Financial Inclusion completes first securitisation transaction of Rs 550.07 crore in FY19.
• Clariant Chemicals permanently closes manufacturing unit in Gujrat, to sell land and unit to related party for Rs 7.33 crore.
• Adani Ports completes acquisition of Kattupalli Port from L&T.

• Varroc Engineering's Rs 1,950 crore IPO was over subscribed on the final day. Issue was subscribed 3.5 times.

FIFA World Cup Update

• Colombia beats Senegal 1-0
• Poland beats Japan 1-0
• Bengium beats England 1-0
• Tunisia beats Panama 2-1

Teams In Round Of 16

• Uruguay
• Russia
• Spain
• Portugal
• France
• Denmark
• Croatia
• Argentina
• Brazil
• Switzerland
• Sweden
• Mexico
• Belgium
• England
• Colombia
• Japan

More Talking Points

• Indian money in swiss banks rises 50% reversing three-year decline
• India asks refiners to mull alternatives as it seeks to cut Iranian oil imports
• Adidas says millions of U.S. customers being alerted of breach
• SBI’s managing director Sriram resigns amid IDBI Bank stake sale buzz
• Thyssenkrupp closer to joint venture with Tata Steel
• How Nirav Modi pulled it off
• U.S.-China trade war could flood India with steel
• India’s newest unicorn is nursing a healthcare dream
• Can Netflix beat Bollywood?
• Trade war: A global game of wrestling, and India’s ‘thumb war’

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.14 percent to 10,589 as of 7:54 a.m.

Asian stocks had a muted start to the final day of what’s been the worst quarter in nearly three years -- characterized by trade tensions between the U.S. and China.

Treasuries steadied alongside the dollar.

Shares in Japan were little changed while those in South Korea and Australia showed modest gains.

Currencies

• The Bloomberg Dollar Spot Index fell less than 0.05 percent.
• The Japanese yen rose 0.1 percent to 110.41 per dollar.
• The euro fell less than 0.05 percent to $1.1568.

Commodities

• West Texas Intermediate crude fell 0.1 percent to $73.34 a barrel.
• Gold rose 0.1 percent to $1,248.94 an ounce.
• LME copper climbed 0.2 percent to $6,634.50 per metric ton.

These are key events coming up for the remainder of this week:

• Indonesia’s central bank is expected to raise its benchmark interest rate for a third time since May in a bid to halt a deepening currency rout. Read our decision day guide here.
• U.S. personal spending probably increased in May for a third month, economists forecast ahead of Friday’s data.
• China manufacturing and non-manufacturing PMI are due on Saturday.