Sensex Ends At 3-Week Low; Nifty Fails To Hold 9,600

Indian equity benchmarks slipped to near three-week lows after gains in drug makers and property developers were countered by losses in almost all their other sectoral peers.

The S&P BSE Sensex declined 0.26 percent to 31,075 – after changing directions at least 9 times during the trading session. The NSE Nifty 50 Index declined 0.4 percent to 9,578. This was the 50-share index’s first close below the 9,600-mark – an important level watched by a lot of technical analysts.

The market breadth was once again split right in the middle at 1:1 between the gaining and the declining stocks on the NSE.

Long-Term Uptrend Intact

A 100-200 points dip should only be looked at as a buying opportunity, said Amit Jeswani, founder, Stallion Asset said, adding “…we will not be worried until unless 9,100 is not broken.” He said the concerns for Indian equities remain largely global rather than anything local.

“We are bullish on the financial services space,” he told BloombergQuint by phone.

RBL Ltd., the youngest listed bank in the country, was among his top picks. “We think the Kolhapur-based bank could be the next ICICI or HDFC Bank,” he said.

Shares of the oil to telecom conglomerate rose 2.3 percent, making it one of the best performers on the Sensex and the Nifty.

The stock is up for a second straight session. Chairman Mukesh Ambani and British Petroleum CEO Bob Dudley met India’s oil minister in Delhi, according to Bloomberg News.

Six years after entering into a partnership with Reliance Industries Ltd., BP Plc. may be looking to scale up operations in India by venturing into fuel retailing, according to a presentation uploaded by BP on its website indicates as much.

Bob Dudley will hold a press conference along with RIL chairman Mukesh Ambani later in the day.

Read more about BP’s plans for India, right HERE

Shares of the information technology company rose 2 percent, making it the second-best performer on the Nifty, after it managed to bag services contract from Finland-based Valmet.

As part of the multi-year engagement, Wipro will deliver the maintenance and support of the new ERP platforms in a Managed Services model covering all global locations in which Valmet operates.

The stock is up at high trading volume with 2.3 times its 30-day average volume

Blue Blends India Surges

• The stock rose as much as 23.4 percent intraday, the most since January 2016.
• Trading volume is well over 16 times the 20-day average for this time of the day
• The textile manufacturer has a market capitalisation of Rs 112 crore.
• The stock has returned 24.5 percent on a year-to-date basis

Shares of the pipeline operator rose as much as 7 percent intraday, their biggest jump since March 1, to Rs 78.6 after it brought down holding in its U.S. unit to 19 percent.

The company also sold stake in its Singapore unit and closed its subsidiary in Spain.

Trading volume rose 9.7 times the 20-day average during the session

Coal India Ltd., the worst performer on the S&P BSE Metal Index so far this year, could see further downside on higher expenses, lower prices and offtake, said Goldman Sachs.

The international brokerage house has downgraded the world’s largest coal company to a ‘Sell’ and also lowered its target price to Rs 225 from Rs 290 earlier – potential downside of around 12 percent from Wednesday’s closing price.

Read more on what the brokerage had to say about Coal India, HERE

European stocks fell for a second day in a broad decline led by retailers and commodity producers, which tracked a drop in metal prices.

• Ambuja Cements has 14.4 lakh shares change hands in a block
• NTPC has 10 lakh shares change hands in a single block
• HDFC has 23.3 lakh shares change hands in a block

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the drug maker gained after it received the final approval from the U.S. FDA for the generic version of Genzyme’s Renvela medication.

• Gets final approval from the U.S. FDA for Sevelamer Carbonate
• Product to be launched immediately.
• Indicated for the control of serum phosphorus in patients with chronic kidney disease (CKD) on dialysis.
• Has estimated market size of $140 million for the twelve months ending April 2017 according to IMS.
• ANDA approval is out of Unit VII formulation facility
• Alert: 50 out of 115 approvals pending with the US FDA are from the Unit-VII

Shares of the shipping vessel operator rose as much as 15.87 percent, its biggest intraday gain in three years, after NITI Aayog proposed a 26 percent strategic stake sale in the company, according to PTI report.

The proposal is said to fetch Rs 960 crore.

The stock gained on high trading volume at 65.7 times its 30-day average. It returned 51 percent so far this year and a gain of 31 percent in the past 52 weeks.

Indian shares fluctuated between gains and losses amid weak trade in Asian equities on concerns that the U.S. Fed is too complacent on inflation targeting. Investors were also kept on the edge after a report that investigators are probing whether President Trump attempted to obstruct justice.

The S&P BSE Sensex was little changed, after changing direction at least six times in opening trade, at 31,152. The NSE Nifty 50 Index slipped 0.2 percent to 9,596. The 9,600-mark has been a key support level for the 50-share index, which it has been testing all through the week.

The market breadth was encouraging with buyers getting the upper hand over sellers. About 2 stocks advanced to every 1 that declined on the NSE.

The Federal Reserve raised interest rates for the second time in 2017, playing down a softening of price pressures in the last few months. In fact, Fed chair Janet Yellen sounded confident that the ongoing strength of the labour market will prevail.

But it is important to note here that the road to normalization is not without perils. If Yellen is wrong the market may conclude that Fed is turning complacent on inflation.

A Bloomberg Dollar Spot Index was little changed after falling for three consecutive sessions. Asian stocks are down and if Indian markets too show a weak trend, the rupee could retreat from 64.2950 a dollar at last close.

In bonds, yields on the benchmark note fell another three basis points to 6.47 percent on the back of record low inflation. The market looks all set to garner more gains but the pace could slow down as Fed looks poised to raise rates again this year. Analysts feel yields could stay in a range of 6.45-6.50 percent in the session.

• Adani Ports: Revises outlook to stable versus negative by S&P
• Biocon: To trade ex-bonus today
• Central Bank of India: RBI initiates prompt corrective action in view of high net NPA
• Essar Steel: Said to be one of the 12 loan accounts referred to Insolvency and Bankruptcy Code (IBC).
• Housing Development Finance: Redeemed some debentures before scheduled redemption
• NTPC: Started mining from eastern quarry of Pakri-Barwadih mine; aim to produce more than 3 million tonne coal this fiscal year
• Repco Home: Approves allotment of Rs 272 crore of debentures to IFC
• State Bank of India: 52.22 crore shares allotted under QIP to be listed June 16
• Wipro: Wins IT applications managed services contract with Valmet
• Wockhardt, Alkem Labs: Get U.S. FDA approval
• Jindal Saw: Reduced stake in foreign subsidiary

For a more comprehensive list of stocks to watch, click here

IPO Watch

Tejas Networks IPO Subscribed 11% On First Day

• Qualified institutional buyers: 6%
• Non-institutional investors: 1%
• Retail investors: 38%
• Total subscription: 11%

Source: PTI

Data/Event To Watch

• 06/15-06/16: Trade balance for May; estimate -$12.4 billion (prior -$13.2 billion)

• AIA Engineering new positive at Sharekhan
• Coal India cut to sell at Goldman; price target cut to Rs 225
• Info Edge India cut to hold at Sharekhan; price target Rs 1,075
• Simplex Infrastructures cut to underperform at IDFC Securities
• S&P upgrades outlook for Adani Ports to ‘Stable’

Jefferies says Infosys remains top sector pick

• Maintains ‘Buy’; target price Rs 1,100 per share
• First half strength and details of $2 billion cash return could be positive triggers
• Guidance reiterated, BFSI positive, retail to remain under pressure
• Company has executed well with growth in line with peer group

CLSA says Infosys had more misses than hits in FY17

• Maintains underperform with target of Rs 990 a share
• Infosys’s FY17 annual report recounts the changes the company is attempting
• Short-term and long-term challenges weigh on the firm
• Growth slowing down; cash deployment – lack of M&A

• Promises of government-subsidised farm-loan waivers have become fashionable
• Agri stress indicates that Tamil Nadu, Karnataka, Haryana may waive farm loans
• Further farm waivers could rise to $28 billion from current $10 billion
• Estimate annual rise in consolidated fiscal deficit to 25 basis of GDP
• Government’s rural focus likely for the next two years

CLSA’s Top Rural Plays

Mahindra & Mahindra

• New product launches improve the outlook for LCVs and tractors
• Believe growth has bottomed for SUVs

ITC

• Maintain buy with target of Rs 375 per share
• ITC derives about 30 percent of revenues from rural India
• GST rollout may reduce taxes on cigarettes and may improve volume growth

• Fed forges on with hike, asset plan amid inflation concern
• Yellen doubles down on bet hot job market stokes inflation
• Special Counsel Robert Mueller said to examine whether Trump sought to slow Flynn probe

• India palm imports climb for fourth month on low local crushing
• Tesla in talks with India on temporary import tax relief, says Musk (Bloomberg)
• India monsoon seen advancing in rice, peanut, cane regions
• Sucden raises 2017-18 sugar surplus estimate to 3.5 million tonne
• India banks inform government of stress in telecom sector
• India imposes anti-dumping duty on Hydrogen Peroxide imports from Bangladesh, Taiwan
• India may look at strategic partner for mega west coast refinery
• India antitrust regulator imposes penalty on Hyundai Motor unit
• India to start daily fuel prices revision from June 16 at 6 a.m.
• Saudi Aramco seeks talks for India refinery stake (Reuters)

Good Morning!

The Singapore based SGX Nifty, an early indicator of Nifty 50 Index’s performance in India, fell 0.4 percent to 9,600.

Most Asian stocks declined in early trade, along with U.S equity futures, after a report that investigators are probing whether President Trump attempted to obstruct justice.

Investigators are also looking for any evidence of possible financial crimes among Trump associates, the Washington Post report said.

Yen remained steady while gold rebounded, after sliding 0.5 percent a day before, after the U.S. Federal Reserve hiked interest rates for the third time in six months while maintaining their outlook for one more hike in 2017.

Fed Chair Janet Yellen played down a softening of price pressures in the last few months and voiced confidence the central bank was on course to hit its 2 percent inflation goal. The Fed also provided further details of its plan to begin reducing its balance sheet this year.

Oil slipped below the $45 a barrel mark to its lowest value in more than a month after U.S gasoline supplies rose for a second week unexpectedly.