Indian Stocks Post Weekly Losses Amid Rate Hikes, Tech Selloff

Indian equity benchmarks managed to notch tiny gains but closed the week lower as investors digested a hawkish sounding U.S. Fed and a selloff in technology shares.

The S&P BSE Sensex was little changed at 31,056 after fluctuating between gains and losses throughout the trading session. The NSE Nifty 50 Index climbed 0.1 percent to 9,588 – the second close below the 9,600-mark.

Both the key benchmarks posted their losses for the week, the Sensex (-0.6 percent) for the second time, and a first for the Nifty (-0.8 percent) in six. It was also their worst weekly performance in two months.

“9,600 was more of a physiologically level. Technically, 9,540 and then 9,500 are the more important support levels to watch out for,” Pushkar Kanetkar, AVP technical research at GEPL Capital.

Kanetkar expects the Nifty range to remain between 9,500 on the downside and 9,700 on the upside. “Right now, the bias is towards the lower end of the trading range,” he told BloombergQuint by phone.

In terms of strategy, he advised investors to remain cautious at current levels. He said a drop below 9,500 would be an opportunity to go short on the I.T. and pharma stocks while a break above 9,700 should be used to go long on the financials.

While we wait for both the Sensex and the Nifty to decide which way they want to move next, let’s take a look at the all new Apple iPad.

Market Update

• Sensex (-0.1 percent to 31,059)
• Nifty (unchanged at 9,572)
• Rupee strengthens 0.15% to 64.4375 against the $
• Top losers: Nifty IT (down 1%) and Nifty Pharma (down 1.6%)
• Top gainers: Nifty Realty (up 0.9%) and Nifty FMCG (up 0.6%)

• The stock jumped over 11.5% intraday, the most since March 30
• It has managed to add around 30 percent to its market value helped by the fourth straight day gain
• Trading volume is at over 5 times the 20-day average
• The auto component maker has a market cap of Rs 2,570 crore and has returned 130% so far this year

Tata Motors Ltd. will be holding a meeting on June 21 to consider raising funds up to Rs 500 crore through a series of its rated, listed, unsecured, redeemable non-convertible debentures.

The issuance is subject to approval from the company's shareholders.

Shares of the company were trading higher by 1.3 percent at Rs 454.25 on the National Stock Exchange.

Also Read: IPCA Labs Slumps As U.S. Drug Regulator Bans Drugs From Three Plants

• Aurobindo Pharma, Federal Bank see maximum addition in open interest
• Bank of Baroda, Fortis and Lupin see fresh short build up

Check out BloombergQuint’s brand new F&O page, HERE

• Transport Corp raised to 'Buy' at Antique Stock Broking from 'Hold'. It has set a price target of Rs 380, a potential upside of over 20 percent from yesterday’s close.
• Mahindra and Mahindra upgraded the rating to 'Buy' from 'Add' at Kotak Securities with a price target of Rs 1,650, 17.1 percent above current stock price.

Source: Bloomberg

Shares of the Kumar Mangalam Birla-led firm gained as much as 3.9 percent, the most in over a month, after over 15 lakh shares changed hands in two block deals.

Meanwhile, brokerage house CLSA said the stock could double in the next three years.

Shares of the drug maker dropped as much as 15.4 percent, the most intraday since November 2016, after the U.S. FDA denied admission to some drugs made at three plants.

The stock fell to its lowest level since in almost a year on volumes over 10 times its three-month daily average, Bloomberg data showed. It was the top loser in the S&P BSE 200 and 500 indexes.

Indian shares rebounded from close to three-week lows with investors initiating the ‘buy-on-dips’ strategy even as a key benchmark struggled to hold an important technical support level.

The S&P BSE Sensex gained 0.2 percent to 31,140 while the NSE Nifty 50 index gained 0.3 percent to 9,608. The market breadth firmly was tilted in favour of the bulls. About 5 stocks advanced to every 1 that declined on the NSE.

Barring the Nifty IT index, all other 10 sectoral gauges led by the Nifty Realty and Nifty FMCG index. Indian technology stocks joined their global peers lower as investors shift focus to value stocks from growth oriented plays.

With inflation still distant from its target, the Bank of Japan maintained its promise to keep pouring stimulus into the economy, days after the Federal Reserve raised interest rates and set out more details of its plan to normalize policy.

The BOJ will continue to manage the yield curve through a negative interest rate and buying trillions of yen worth of bonds, it said in a statement Friday. The result was expected by all 43 economists surveyed by Bloomberg.

To read the full Bloomberg report, click here

• Canara Bank: Approves fund raising plans for FY18 including raising up to Rs 3,500 crore via share sale options
• Hindustan Petroleum: Expands Bathinda refinery to restart by month-end
• IPCA Labs: U.S. FDA to deny admission to drugs made at three plants
• NTPC: Fitch affirms NTPC at ’BBB-’; outlook stable
• Sheela Foam: To be included in NSE Nifty 500; IIFL Holdings to be excluded
• Tata Motors: Warburg Pincus to Buy Unit Tata Technologies Stake for $360 million

For a complete list of stocks to watch, click here

• Eris Lifesciences IPO offer to start; to allot 1.29 crore shares to anchor investors
• Tejas Networks IPO offer to end June 16
• VLCC Health Care plans IPO this fiscal year (Mint)

The big question: Is the rally in government bonds stalling? The yield on the benchmark bond rose one basis point in the last session to 6.48 percent. For the week, yields are down only 2 basis points.

Since its debut in mid-May, yield on the 10-year note have dropped 25 basis points. On the other hand, an auction to allot debt quota to FIIs last evening wasn’t fully subscribed. This is enough reason to believe the rally is surely slowing down if not over in the absence of fresh triggers.

Analysts believe yield could stay in a range of 6.45-6.50 percent in the day.

In the currency markets, the South Korean won is down 0.6 percent, which can weigh on the rupee. An index of dollar strength was little changed after rising 0.5 percent on Thursday, snapping three days of losses.

Local stocks do hold the key and a strong recovery from yesterday's close could help the local unit to gain. It is forecast to be in a broad range of 64.40-64.60 a dollar in the session.

• India invites Reliance, BP to invest in local fuel retailing
• BP, Reliance to revive investments in India after eight years
• India said to plan gold policy overhaul for $19 billion sector
• Uber accused of ‘rape denialism’ by victim of India assault
• European Steel Industry sounds alarm over U.S. trade Inquiry
• India Jan.-March current account deficit $3.4 billion; Estimate $6.3 billion gap
• India’s May exports rise 8.3 percent YoY to $24 billion

• Gazprom mulls supplies to India via swaps in China, Iran
• India telecom regulator open to considering proposals on interconnection usage charges
• India government ready to review notification on cattle trade, says Prasad
• India approves raising limestone mining limits in Maharashtra
• India said to sell Rs 16,708 crore of FII debt quota, less than plan

• Amazon, BigBasket said to be in 60-day exclusivity pact (Times of India)
• Mobikwik’s Taku confirms talks to raise $100m-$150m (TechCrunch)

Good Morning!

The Singapore traded SGX Nifty, an early indicator of Nifty’s performance in India, climbed 0.1 to 9,608.

Asian stocks were mixed in early trade, dollar held gains while gold maintained losses as traders assessed the more hawkish tone struck by the Federal Reserve. Japanese shares gained following the yen’s steepest slide since January.

Technology shares once again sold off as the threat of higher interest rates prompted a shift from growth into value shares.

Crude held losses near a seven-month low, gold slid more than 1.5 percent and base metals continue falter. However, softening commodity prices did little bolster arguments that inflation will pick up the pace, even as the U.S. labour market remains on strong footing – raising the spectre that central officials made a policy error.

The Bank of Japan is expected to leave policy rates unchanged as a two-day meeting concludes on Friday. Meanwhile, Washington will remain in focus as the special counsel investigating Russia’s interference in the 2016 election was said to be planning to interview two top U.S. intelligence officials.