Sensex, Nifty Gain For Second Day Led By HDFC Twins, Reliance

Indian equity benchmarks rose for second straight day led by HDFC twins, Reliance Industries and Maruti Suziki.

The S&P BSE Sensex rose 0.75 percent or 267 points to 35,645 and the NSE Nifty 50 index climbed 0.65 percent or 70 points to 10,770.

For most part of the day, the benchmarks moved in a narrow range but late buying in HDFC Bank helped in breaking out of rangebound trading on the upside.

Eleven out of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Auto index's 1.3 percent gain. On the flipside, the S&P BSE Information Technology index was top loser, down 0.6 percent.

The mid- and small-cap shares ended on a mixed note as the S&P BSE MidCap index fell 0.17 percent while S&P BSE SmallCap index rose 0.4 percent.

Shares of the Ahmedabad-based paper manufacturer rose as much as 6.67 percent to Rs 113.60.

The company has received an order for supply of 4,000 million tonnes of kraft paper valued at Rs 12 crore, Astron Paper said in an exchange filing.

• Kohinoor Foods: The Delhi-based rice mill operator rose as much as 16 percent to Rs 43.70 after the government hiked minimum support price of paddy.
• Taj GVK Hotels: The Hyderabad-based hotel company rose as much as 8.5 percent to Rs 232 as GVK Group may sell its nearly 50 percent stake in TAJ GVK Hotels and Resorts—a joint venture with Tata Group’s Indian Hotels Company—to Fairfax Holdings, The Economic Times reported.
• Sobha: The Bengaluru-based real estate developer rose as much as 10 percent to Rs 489.90 after Deutsche Bank initiated coverage on the stock with a ‘Buy’ rating for target price of Rs 550.
• Ducon Infratechnologies: The Mumbai-based was locked in a 20 percent upper circuit at Rs 22.80 after its U.S.-based subsidiary won orders worth Rs 52 crore.

• NTPC has 10 lakh shares change hands in a block. Stock down 1.4 percent at Rs 152.85.

Buyers and sellers were not immediately known

Source: Bloomberg

About 1.38 crore shares or 2.6 percent equity of Indiabulls Ventures changed hands in a block deal, according to Bloomberg report. Buyers and sellers were not known immediately.

Shares of the real estate developer rose as much as 9.9 percent, the most in over five months, to Rs 489.

International brokerage and research firm Deutsche Bank initiated coverage on the stock with a ‘Buy’ rating and expects its shares to reach Rs 550 in the next 12 months, according to Bloomberg report.

The price target implies a potential upside of 23.6 percent from the last regular trade. The stock is 22 percent below the Bloomberg consensus one-year price target.

European equities dipped at the open, reversing some of Tuesday’s gains amid ongoing trade tensions between the U.S. and China, while auto shares rose on a report saying the European Union is considering talks on a tariff-cutting deal between the world’s big car exporters.

Addressing the media persons after the cabinet briefing Home Minister Rajnath Singh said the MSP hike announced by the government is higher than the input cost calculated by Commission for Agricultural Costs and Prices.

Key highlights from the conference:

• India's biggest producer, consumer and customer is farmer
• Farmers have never received fair price for their produce since independence
• PM Modi had already announced to double farmers income by 2022, this is a move in that direction
• Commission for Agricultural Costs and Prices (CACP) has calculated input cost for paddy at Rs 1,166 per quintal, government has decided to give Rs 1,750 per quintal versus Rs 1,550 last year.
• CACP calculated input cost of bajra at Rs 990/quintal, government has decided to give Rs 1950/quintal
• CACP calculated input cost of tur at Rs 3,432/quintal, government has decided to give Rs 5,675/quintal
• Input cost for moong is Rs 4,650, government to give Rs 6,975 /quintal
• MSP for urad revised to Rs 5,600/quintal
• Soyabean MSP revised to Rs 3,399/quintal

Shares of the Mumbai-based company were locked in a 20 percent upper circuit at Rs 22.80.

Ducon Infratechnologies’ U.S.-based subsidiary won orders worth Rs 52 crore for two 50 megawatt packaged power co-generation plant from South Korean EPC company, the company said in an exchange notification.

Abhijit Sen, economist and professor at JNU

• Farmers will be more bothered about actuality that takes place after hike in MSP
• A move to C2 formula would not have been correct
• There has been an increase in the cost of cultivation between last year and this year, which has been reflected.

Tanvee Gupta Jain, chief India economist at UBS Securities

• See incremental impact of 35 basis points on CPI inflation
• MSP hike in line with estimates
• Fiscal impact of MSP hike could be only 0.1 percent of the GDP

Shares of rice mill operating companies rose after the government increased minimum support price for paddy.

• Kohinoor Foods rose 5.7 percent
• LT Foods advanced 5.9 percent
• Gokul Agro Resources advanced 6.6 percent
• Chaman Lal Setia up 1 percent

Shares of the Hyderabad-based hotel company rose as much as 8.5 percent to Rs 232.

GVK Group may sell its nearly 50 percent stake in TAJ GVK Hotels and Resorts—a joint venture with Tata Group’s Indian Hotels Company—to Fairfax Holdings, The Economic Times reported.

The government has approved hiking minimum support price for monsoon-sown crops including rice and pulses, news agency Press Trust of India reported citing sources.

Cabinet has hiked minimum support price (MSP) of common variety of paddy by Rs 200 per quintal, the report added.

• Pigeon pea MSP set at Rs 5,675 per quintal versus Rs 3,432
• Soybean MSP set at Rs 3,399 versus Rs 2,266
• Peanut MSP set at Rs 4,890 per quintal versus 3,260
• Sun flower seed MSP set at Rs 5,388 per quintal versus Rs 3,592
• MSP for common grade paddy set at Rs 1,750 per quintal versus production cost of Rs 1,166, says Minister of Food & Public Distribution and Consumer Affairs Ram Vilas Paswan.
• MSP for maize set at Rs 1,700 per quintal versus production cost of Rs 1,131 per quintal: Paswan.

• Indian equity benchmarks were stuck in a narrow range as gains in pharma shares were offset by losses in IT and oil & gas stocks.
• The S&P BSE Sensex rose 0.14 percent or 50 points to 35,428 and the NSE Nifty 50 index 0.18 percent or 20 points to 10,720.
• Seven out of 11 sector gauges compiled by National Stock Exchange were trading lower led by the Nifty IT index's 0.6 percent drop. On the other hand, Nifty Pharma index was top gainer, up 1 percent.
• The overall breadth was negative as 1,239 stocks were declining while 1,071 were advancing on the BSE.

Nifty Bank 26,300 strike price call option was among the most active option contracts on the National Stock Exchange.

Premium on the contract fell 36.25 percent to Rs 71.30. Over 4.82 lakh shares were added to the open interest of 10.89 lakh shares.

Click here for more stock market statistics

Shares of the Mumbai-based logistics services provider rose as much as 5 percent to Rs 116.90 after its promoter increased stake in the company.

Allcargo's promoter Shashi Kiran Shetty bought 12.29 lakh shares or 0.5 percent equity at Rs 110 each.

Shares of Piramal Enterprises fell as much as 2.43 percent to Rs 2,402.90 following sharp slump in share price of Shriram Transport Finance and Shriram City Union Finance.

Piramal Enterprises has exposure of nearly 10 percent in both the companies.

Shriram Transport Finance fell as much as 18.86 percent, the most since November 2016, to Rs 1,052.40 after it issued corporate guarantee of Rs 870 crore to its subsidiary for non-convertible debentures sold by SVL Ltd.

Shares of Ramco Cements, Zee Entertainment and ICICI Bank declined after CLSA removed these stocks from the list of its model portfolio.

Meanwhile, it added Sun Pharma and Maruti Suzuki and both the stocks were trading higher.

• ITC Has 10 lakh shares change hands in a single block. Stock down 0.8 percent at Rs 263.30.

Buyers and sellers were not immediately known

Source: Bloomberg

Activity in India’s services sector, that contributes about 60 percent to the GDP, improved at the fastest pace in a year in June. This was largely due to the highest yearly growth in new businesses on the back of rising demand.

The Nikkei India Services Business Activity Index rose to 52.6 last month from 49.6 in May, according to a statement by research firm IHS Markit, which compiles the index. A reading below 50 indicates contraction in activity, while a number above it signals expansion. The 52.6 index reading is the highest since June last year when it stood at 53.1.

Shares of the Chennai-based software developer rebounded after plunging over 35 percent in the previous two sessions.

Shares of the country's second largest hospital chain operator fell as much as 4 percent to Rs 136.40.

Sunil Kant Munjal of Hero Enterprises and Burman family of Dabur group have pulled out of race to acquire stake in Fortis Healthcare, The Economic Times reported citing unidentified people aware of the matter.

• Wipro has 15 lakh shares change hands in a block. Stock down 0.5 percent at Rs 260.50.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of metal mining company fell as much as 2.5 percent to Rs 225.20 on report that Anil Agarwal’s Volcan Investments is considering a plan to acquire Anglo American’s South African business by merging it with Vedanta Resources via a share swap, Mint newspaper reported citing two unidentified people.

The merger of Vedanta Resources and Anglo American South Africa will create an entity valued at about $7 billion and eventually give Volcan Investments control of the merged entity, the report added.

Shares of the Mumbai-based truck finance company fell as much as 18.86 percent, the most since November 2016, to Rs 1,052.40 after it issued corporate guarantee of Rs 870 crore to its subsidiary for non-convertible debentures sold by SVL Ltd.

Jefferies analyst led by Bhaskar Basu wrote in a note dated July 3. With SVL and units likely under financial stress, NCD repayment may be an issue, according to the report.

While other group companies could help in repayment, Shriram’s book value may take a hit of 4 to 5 percent if the guarantee are invoked, resulting in additional provisions under accounting rules, the analysts wrote.

Meanwhile, Credit Suisse analyst Sunil Tirumalai downgraded the stock to 'neutral' from 'outperform', Bloomberg reported.

Credit Suisse has also lowered its target price on Shriram Transport Finance to Rs 1,400 from Rs 1,900.

Speaking to BloombergQuint Umesh Revankar, MD & CEO at Shriram Transport Finance said he is confident that they will be able to resolve SVL issue when maturity comes.

Key highlights of the conversation:

• Guarantee for loan given for NCD was in 2014.
• Wanted to show this guarantee as disclosure.
• In touch with SVL management to ensure that matters get resolved.
• In touch with management to resolve SVL issue.
• Have pledged shares that will cover exposure to SVL group.
• SVL’s NCDs will be due by FY19.

Indian equity benchmarks opened marginally higher led by Reliance Industries, Sun Pharma and HDFC. However, the gains were capped as Infosys, TCS, ITC and Vedanta were facing selling pressure.

The S&P BSE Sensex rose 0.1 percent to 35,413 and the NSE Nifty 50 index advanced 0.1 percent to 10,710.

Ten out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Metal index's 0.75 percent drop. On the other hand, the S&P BSE Power index was the top gainer, up 0.5 percent.

The mid- and small-cap shares were trading mixed as the S&P BSE MidCap index fell 0.2 percent while the S&P BSE SmallCap index was little changed.

Rupee opened higher at 68.53 per U.S. dollar against yesterday's close of 68.57 as traders point to the comfort that Brent below $78 a barrel is offering investors.

Sentiment is also being helped by the People’s Bank of China’s pledge to keep the yuan stable and which helped reduce investor anxiety globally before a U.S. tariff deadline on Friday.

The rupee rose as much as 0.18 percent or 12 paise to 68.45.

The Indian rupee is seen opening firmer as traders point to the comfort that Brent below $78 a barrel is offering investors.

Sentiment is also being helped by the People’s Bank of China’s pledge to keep the yuan stable and which helped reduce investor anxiety globally before a U.S. tariff deadline on Friday. The rupee rose to end at 68.57 per dollar on Tuesday, well above an all-time low of 69.0925 hit last week, with implied forwards suggesting it would open at 68.4663 per dollar on Wednesday.

Meanwhile, bond traders will be watching for a key government decision this week, where it’s likely to announce minimum-support prices for crops and which may have a bearing on inflation and interest rates. India’s cabinet will approve this week a minimum support price of 150 percent of input costs for 2018-19 season Kharif crops, the Press Information Bureau said in an emailed statement on July 1. The benchmark 10-year bond yield fell 3 basis points on Tuesday to end at 7.88 percent.

CLSA Model Portfolio

• Remove Ramco Cements, Zee Entertainment and ICICI Bank and add weight to Maruti Suzuki and Sun Pharma.
• Changes sits well with our cautious view on equity markets.
• Remove Ramco Cement as cement industry is seeing pricing pressure.
• Remove ICICI Bank as management changes may lead to more uncertainty.
• Believe the worst is over for Sun Pharma.
• Maruti Suzuki continues to report robust growth with market share gains.

Goldman Sachs on United Breweries

• Initiated ‘Neutral’ with a price target of Rs 1,171.
• Well placed to benefit from a pickup in volume and premiumisation of the market.
• Government intervention can be very disruptive to volumes/margins.
• Cultural/social norms and retail network issues to limit acceleration in beer consumption.
• Rising competitive intensity from global peers to challenge market share growth.

Citi on Jindal Steel & Power

• Maintained ‘Buy’ with a price target of Rs 401; implying a potential upside of 94 percent from the last regular trade.
• June quarter production and sales show decent traction despite weak seasonality
• Steel spread in June quarter to expand on a quarterly basis
• Qualitatively operations have done well across locations in the previous quarter.
• Valuations quite attractive with improving cash flows and Ebitda.

Emkay on ACC

• Upgraded to ‘Buy’ from ‘Hold’; cut price target to Rs 1,613 from Rs 1,622.
• Focus back on growth after a lull of five years a big positive.
• Cost pressures prevail, but cost efficiency measures are paying off.
• Cheap valuation and strong balance sheet provide comfort.
• Any announcement of capacity addition/acquisition would be taken positively.

Who’s Meeting Whom

• Zensar Technologies to meet investors on July 5.
• Mahanagar Gas to meet Jefferies India on July 11.

Insider Trades

• Laurus Labs promoter Dr Satyanarayana Chava acquired 84,564 shares from June 28–29.

(As reported on July 3)

Bulk Deals

All Cargo Logistics

• Promoter Shashi Kiran Shetty bought 12.29 lakh shares or 0.5 percent equity at Rs 110 each.

8K Miles Software Services

• Kotak Mahindra Investments sold 1.70 lakh shares or 0.6 percent equity at Rs 323.54 each.

Windsor Machines

• Indianivesh Capitals Limited bought 3.40 lakh shares or 0.5 percent equity at Rs 104.97 each.

Saurashtra Cement

• Indianivesh Capitals Limited bought 4.95 lakh shares or 0.7 percent equity at Rs 57.4 each.

Trading Tweaks

• Bombay Dyeing to continue in ASM but shifted to T group from A group.
• 8K Miles Software Services Ltd. circuit filter revised to 10 percent.
• Gammon Infrastructure Projects Ltd. circuit filter revised to 5 percent.
• DCM Shriram Limited buyback up to Rs 250 crore at maximum price of Rs 450 per shares starts today.
• Safari Industries (India), Sandur Manganese & Iron Ores and Waterbase shifted to B group.
• RITES and Fine Organic Industries added to S&P BSE IPO Index.

F&O Cues

• Nifty July futures ended at 10,723.9, with a premium of 24 points versus 0.9.
• July series: Nifty open interest up 3 percent and Bank Nifty open interest up 5 percent.
• India VIX ended at 13, down 2.7 percent.
• Max open interest for July series call at 11,000 strike price call option; open interest at 36.3 lakh shares, down 1 percent.
• Max open interest for July series put at 10,600 strike price put option; open interest at 51.6 lakh shares, up 9 percent.

• Fortis Healthcare will evaluate binding bids it received with advisors.
• IFC invested $100 million in M&M Financial Services.
• GE Power India received order worth Rs 468 crore from BHEL.
• ISGEC Heavy Engineering emerged as lowest bidder for Rs 700 crore thermal power project.
• VST Tillers June total sales down 24 percent to 3,819 units versus 5,053 units.
• Sadbhav Infra achieved financial closure for Rajasthan project.
• Kwality said board deferred proposed share buyback and bonus issue.
• Dena Bank proposed to sell NSDL E-Governance Infrastructure, NSDL and SIDBI shares.
• United Bank of India hiked MCLR by 10 basis points across all tenors from July 5.
• GVK Group may sell its nearly 50 percent stake in TAJGVK Hotels and Resorts—a joint venture with Tata Group’s Indian Hotels Company—to Fairfax Holdings.(Economic Times).
• Federal Bank in talks to acquire Madura Microfinance for Rs 720-750 crore (Economic Times).

• Kotak retains top slot in bumper year for India wealth firms
• CCEA may raise minimum support prices of paddy, ragi today
• Senate Russia probe agrees that Putin meddled to help Trump
• To spite Harley, Trump may have to turn to foreign bike foes
• LIC’s stake buy in IDBI Bank may not need parliament nod
• WhatsApp warned after mob lynchings fuelled by fake news
• Bond vigilantes won’t let India use a band-aid on banks
• Sashakt means empowered... to make no decisions
• Trump’s tweets hurt oil prices more than help
• SEBI’s action a big lesson for mutual fund industry: Dhirendra Kumar
• Tata mulls folding food businesses into single company

FIFA World Cup Update: England Beats Colombia

• Sweden beats Switzerland 1-0
• England beats Colombia in penalty shoot-out 4-3

Teams That Have Made It To The Quarter Finals

• Uruguay
• France
• Brazil
• Belgium
• Russia
• Croatia
• Sweden
• England

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.22 percent to 10,708 as of 8:01 a.m.

Asian stocks opened mixed after gains in their U.S. counterparts fizzled out as investors continued to assess the impact of trade tensions on the outlook for global growth. The dollar held on to losses after Treasuries climbed.

Equities in Japan dropped, while indexes in South Korea and Australia were flat. China’s yuan and stock market remain in the spotlight after the nation’s central bank vowed to keep the currency stable and not to deploy it as a weapon in the trade conflict with the U.S..

Currencies

• The Bloomberg Dollar Spot Index held on to losses from Tuesday, when the index declined 0.6 percent.
• The euro traded at $1.1662.
• The yen was up 0.1 percent at 110.44 per dollar.

Commodities

• The Bloomberg Commodity Index increased 0.2 percent Tuesday, recouping some of Monday’s 1.9 percent slide.
• West Texas Intermediate crude rose 0.5 percent to $74.28 a barrel.
• Gold was up 0.2 percent to $1,255.01 an ounce.

These are key events coming up this week:

• Federal Reserve releases minutes of its June 12-13 meeting, when FOMC policy makers raised the benchmark rate a quarter point for the second time this year and lifted the median forecast to four total increases in 2018.
• U.S. payrolls are due Friday.
• Also on Friday, the U.S. is scheduled to impose tariffs on $34 billion of Chinese goods. Beijing has said it will slap tariffs on an equal value on U.S. exports including agricultural and auto exports.