Sensex Ends At 5-Month High As Focus Shifts To June Quarter Earnings

India's Sensex rose to its highest level in five months as investors shifted focus to June quarter earnings which begin today with Dish TV and Uttam Galva Steels.

The S&P BSE Sensex rose 0.78 percent or 277 points to 35,935, its highest level since Jan. 31, 2018, and the NSE Nifty 50 index climbed 0.74 percent or 80 points to 10,853.

Reliance Industries, Infosys, Larsen & Toubro and Yes Bank led the rally for Sensex in today's session.

All sector gauges compiled by BSE ended higher led by the S&P BSE Energy and S&P BSE Capital Goods indexes’ 1.5 percent gain.

The mid- and small-cap shares outperformed their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes rose over a percent each.

Shares of the Hyderbad-based drugmaker rose as much as 2.86 percent to Rs 2,334 after it enteres into an agreement with UCB India, a biopharmaceutical firm, to co-promote and distribute drug to treat epilepsy in India.

Dr Reddy's Labs and UCB India will distribute Briviact (brivaracetam), which is approved as an adjunctive therapy for the treatment of partial-onset seizures in epilepsy patients who are 16 years of age and older.

• Sterlite Technologies: The Pune-based optical fiber cable maker rose as much as 6.58 percent to Rs 308.65 as its arm plans to acquire Metallurgica Bresciana, a European specialised optical cable manufacturer, for 47 million euros in an all-cash deal.
• V-Mart: The Delhi-based department store chain operator rose as much as 17 percent to record high of Rs 3,294. Jefferies has maintained its hold call on the stock and it said in a note that V-Mart will be a key beneficiary of increase in MSP for crops.
• GVK Power: The Secunderabad-based power plant operator rose by its daily maximum limit of 5 percent to Rs 10.05 after achieved 'financial closure' for 1st phase of construction of Navi Mumbai Airport on July 7.
• Asian Paints: The Mumbai-based paint maker rose as much as 3.4 percent to record high of Rs 1,367 on heavy volumes. Trading volume was 1.4 times its 20-day average.

• Union Bank of India has 17.3 lakh shares change hands in a block. Stock up 0.2 percent at Rs 81.45.

Buyers and sellers were not immediately known

Source: Bloomberg

• Indian equity benchmarks held on to gains led by Reliance Industries, banks and pharma shares.
• The S&P BSE Sensex rose 0.7 percent or 249 points to 35,906 and the NSE Nifty 50 index climbed 0.67 percent or 72 points to 10,845.
• All sector gauges compiled by BSE were trading higher led by the S&P BSE Healthcare index's 1.3 percent gain.
• The mid- and small-cap shares were outperforming their larger peers as the S&P BSE MidCap and S&P BSE SmallCap indexes rose over a percent each.
• The overall market breadth was positive as over 1,600 shares were advancing while 789 were declining on the BSE.

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Shares of the Mangalore-based private sector lender rose as much as 6.35 percent to Rs 117.25 on the back of heavy volumes.

Trading volumes was more than double its 20-day average.

Shares of the Ahmedabad-based construction company rose 3.27 percent to Rs 495 after it won orders worth Rs 52.07 crore from various clients for industrial, institutional and residential projects.

The ruling of the National Company Law Tribunal is disappointing although not surprising, Cyrus Mistry's office issued statement on Tata Sons case ruling.

Cyrus Mistry's office in a statement said:

• Will continue to strive for ensuring good governance and protection of interests of minority shareholders.
• Appeal on merits on Tata to be pursued.

• Manappuram Finance: The Thrissur-based non-banking finance company rose as much as 4.6 percent to Rs 105.50. Trading volume was 28.4 times its 20-day average.
• Security & Intelligence Services: The Delhi-based security service provider rose as much as 1.12 percent to Rs 1,180. Trading volume was 24.7 times its 20-day average.
• DB Corp: The Gujarat-based media company rose as much as 7.6 percent to Rs 281. Trading volume was 8 times its 20-day average.
• EID Parry: The Chennai-based fertiliser and ceramic tiles maker rose as much as 2.77 percent to Rs 222.25. Trading volume was 7.3 times its 20-day average.

The country's largest private sector lender’s shares rose 0.35 percent to Rs 2,123 after its loan book grew at 7.75 percent sequentially in June quarter to Rs 7.09 lakh crore, HDFC Bank said in an exchange filing.

• Advances rose 7.75 percent to 7.09 lakh crore versus Rs 6.58 lakh crore (QoQ)
• Deposits rose 2.15 percent to Rs 8.06 lakh crore versus Rs 7.89 lakh crore (QoQ)
• CASA ratio at 41 percent at June end versus 43.5 percent at March end
• HDFC Bank purchased Rs 9,700 crore of loans in June quarter from HDFC

All Tata Group companies barring Tata Consultancy Services (TCS) and NELCO were trading higher after Mumbai branch of National Companies Law Tribunal (NCLT) rejected Cyrus Mistry's petition demanding to be reinstated on Tata Sons board.

Mumbai branch of National Companies Law Tribunal (NCLT) rejected Cyrus Mistry's plea for reinstatement on Tata Sons board.

• NCLT rejects petition Cyrus Mistry's plea demanding to be reinstated on Tata Sons board
• NCLT says Mistry openly went against the board and the company
• NCLT says did not find any merit in allegations that Ratan Tata and NA Soonawala were interfering in Tata Sons

This quarter earnings will be impacted by base quarter and there will be strong momentum across auto sector, Dhananjay Sinha, head of research at Emkay Global told BloombergQuint in an interview.

Key highlights of the conversation:

• Seeing retail lending happening across the board
• NBFCs seeing momentum in commercial vehicle and retail lending
• HDFC Bank and ICICI Bank top picks among private banks. Like State Bank of India from PSU space
• ACC, Ambuja and Ultratech expected to report EBITDA margin contraction
• Seeing local business pick up for Tata Motors

Nifty 10,900 strike price call was among the most active Nifty option contracts on the National Stock Exchange.

Premium on the contract rose 20 percent to Rs 65.90. Over 3.11 lakh shares were added to open interest of 33.57 lakh shares.

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• GMR Infrastructure has 39 lakh shares change hands in a block. Stock up 1.5 percent at Rs 16.50.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the Mumbai-based automobile company rose as much as 1.8 percent to Rs 276.10.

Jaguar Land Rover sold 52,049 units in June, up 0.9 percent (YoY), Tata Motors said in an exchange filing.

• Jaguar sales rose 6.4 percent to 16,328 units
• Land Rover sales rose fell 1.5 percent to 35,721 units

Shares of the Pune-based optical fiber cable maker rose as much as 6.58 percent to Rs 308.65 as its arm plans to acquire Metallurgica Bresciana, a European specialised optical cable manufacturer, for 47 million euros in an all-cash deal.

The acquisition is an all-cash deal for approximately 47 million euros, which is being funded through a combination of euro debt instruments and internal accruals, Sterlite tech said in an exchange filing.

Brokerages have given a thumb’s up to Sterlite Tech's new acquisition.

Emkay in a note said:

• Maintain Buy with target price of Rs 500.
• New acquisition is a positive.
• Earnings to grow at 22 percent CAGR over FY18-21.
• Expect acquisition to add 5 percent/7 percent to FY19/20 earnings.

Edelweiss said:

• Maintain Buy with target price of Rs 425.
• Believe that this acquisition is attractive.
• Acquisition will lead to 9 percent EPS accretion.

• Bharat Forge has 10.08 lakh shares change hands in a block. stock up 1.5 percent at Rs 642.

Buyers and sellers were not immediately known

Source: Bloomberg

Shares of the country's second largest hospital chain operator rose as much as 3.8 percent to Rs 143.80 as IHH is likely to take control of Fortis Healthcare, Mint reported citing two unidentified people aware of the matter.

IHH Healthcare Bhd. has offered Rs 4,700-5,400 crore to buy at least 51 percent stake in the hospital. IHH Healthcare outbid TPG-backed Manipal Health Enterprises by placing a higher per share offer for the promoters, the report added.

Shares of the Delhi-based government-owned lender rose as much as 2.14 percent to Rs 78.60 after it invited bids for selling non-performing assets.

Punjab National Bank invited bids to sell its three non-performing accounts to recover Rs 136 crore, news agency Press Trust of India reported.

The three non-performing accounts that have been put up for sale are Gwalior Jhansi Expressways with an outstanding loan of Rs 55 crore; SVS Buildcon Rs 50 crore and Shiva Texfabs Rs 31.06 crore, the report added.

Shares of the country's second largest steel maker rose as much as 2.2 percent to Rs 565.75 after it reported June quarterly sales update.

Tata Steel's crude steel sales rose 8 percent to 2.97 million tonnes and its production jumped 7.8 percent to 3.17 million tonnes.

Indian equity benchmarks rose sharply led by heavyweights like Reliance Industries, ICICI Bank, Infosys and HDFC Bank.

The S&P BSE Sensex rose 0.6 percent or 215 points to 35,872 and the NSE Nifty 50 index climbed 0.5 percent or 56 points to 10,829.

All sector gauges compiled by BSE were trading higher led by the S&P BSE Metal index's 1.6 percent gain.

The mid- and small-cap shares were also witnessing buying interest as the S&P BSE MidCap index rose 0.6 percent and S&P BSE SmallCap index advanced 0.7 percent.

• Rupee opened higher at 68.59 per dollar against Friday's close of 68.88.

On Sterlite Tech's New Buy

Emkay

• Maintain Buy with target price of Rs 500.
• New acquisition is a positive.
• Earnings to grow at 22 percent CAGR over FY18-21.
• Expect acquisition to add 5 percent/7 percent to FY19/20 earnings.

Edelweiss

• Maintain Buy with target price of Rs 425.
• Believe that this acquisition is attractive.
• Acquisition will lead to 9 percent EPS accretion.

Goldman Sachs On Voltas

• Maintain Buy with target price of Rs 640.
• Stock declined on concerns of weak AC sales in Q1FY19.
• Long term thesis remains intact.
• Appealing opportunity to add to positions.
• Voltas - Market leader to be biggest beneficiary of demand uptick.

Deutsche Bank On Oil And Gas

• LNG demand robust despite rising prices.
• New city gas auctions offer growth opportunities.
• Sharp rise in demand, due to an increase in industrial activity.
• Majority of new demand driven by switching of fuel to gas.

CIMB On Dilip Buildcon

• Upgraded to Add from Hold; cut target price to Rs 800 from Rs 988.
• Concerns over high proportion of HAM projects factored in.
• Core EPC business remain robust.
• Strong order book provides visibility to earnings.
• Increasing in-house projects warrants lower valuation multiple.

Nomura On India Roads Sector

• Robust execution and orderbook implies strong revenue visibility at least until FY20/21.
• Rising macro risk perception is leading to sharp correction.
• Concerns: rising interest rates and crude oil prices, rupee depreciation, risk of an unstable government and declining appetite of public sector banks for infrastructure funding.
• PNC Infratech: Maintain Buy; cut target price to Rs 210 from Rs 272.
• KNR Construction: Maintain Buy; cut target price to Rs 302 from Rs 390.
• Dilip Buildcon: Maintain Buy; cut target price to Rs 815 from Rs 1,322.

Who’s Meeting Whom

• Eris Lifesciences to meet Motilal Oswal Securities on July 9
• Shriram Transport Finance to meet Birla Sun Life Mutual Fund on July 9
• Tata Motors to meet HDFC Life Insurance on July 10

Insider Trades

• Singer India promoter sold 41,000 shares on July 5
• Man Infraconstruction promoter group acquired 61,000 shares on July 5
• Sadbhav Infrastructure Projects promoter Sadbhav Engineering acquired 20,000 shares from July 3-4

(As reported on July 6)

Bulk Deals

• Varroc Engineering: Nomura acquired 11.1 lakh shares at Rs 1027.69 each.

Trading Tweaks

• City Union Bank last trading day before ex-date for 1:1 bonus.
• Gitanjali Gems last trading day before shifting to 'Z' group.

F&O Cues

• Nifty July futures ended at 10,778.4, premium of 5.8 points versus 2 points
• July series: Nifty open interest up 1.5 percent and Bank Nifty open interest down 2 percent
• India VIX ended at 12.44, down 1 percent
• Max open interest for July series call at 10,800 strike price call option (open interest at 37.6 lakh shares, up 10 percent)
• Max open interest for July series put at 10,600 strike price put option (open interest at 51.2 lakh shares, down 1 percent)

• PNB invites bids to sell 3 NPA accounts to recover over Rs 136 crore (PTI)
• IHH may have won Fortis Healthcare with Rs 4,700-5,400 crore bid (Mint)
• Thyssenkrupp board accepts CEO resignation, backs Tata Steel JV (PTI)
• Shriram group may merge two of its listed non-banking finance companies (Business Standard)
• Maruti Suzuki June total production up 12 percent at 132,616 units versus 118,667 units
• Tata Steel Q1 update: Crude steel sales up 8 percent at 2.97 MT, production up 7.8 percent at 3.17 MT
• Sterlite Technologies to acquire Italian optical cable manufacturer company for 47 million euros
• Goa Carbon Salcete’s Goa plant operations suspended for maintenance
• NMDC: Total iron ore output up to June at 6.87 MT versus 8.52 MT (YoY); sales (provisional) up to June at 6.84 MT versus 9.21 MT (YoY)

Earnings To Watch

• Dish TV
• Uttam Galva Steels

• Xiaomi drops on debut as investors question internet vision
• Death toll hits 90 as Japan battles with historic rain aftermath
• Delete section on reverse charge, defer digital payment discount: GST GoM
• North Korea reminds Trump its nuclear weapons won’t come cheap
• India’s foodgrain output may surpass last year’s level
• Fund raising via IPOs almost doubles to Rs 23,670 crore in first half of 2018
• Indian Railways’ units plan Rs 1,500 crore IPOs
• Trolling the trolls: How Congress is trying to better the BJP
• Does currency really impact exports: A study of the textile sector
• How India could cut irrigation water by 33%
• Why China’s growth doesn’t work for America anymore

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.6 percent to 10,829 as of 8:45 a.m.

Asian stocks gained, building on a positive Friday session for global equities, as investors set aside concerns about escalating trade tensions to prepare for the latest earnings season after signs of continued economic strength.

China’s currency rose against the dollar one week after Chinese officials emphasized that they wouldn’t use the yuan as a trade-policy weapon. The dollar slipped to a three-week low, helping reduce pressure on emerging markets.

Currencies

• The Bloomberg Dollar Spot Index fell 0.2 percent, touching the lowest since mid-June.
• The euro rose 0.2 percent to $1.1763.
• The British pound was up 0.1 percent at $1.3294 after rising as much as 0.4 percent earlier.
• The Japanese yen was flat at 110.42 per dollar.

Commodities

• West Texas Intermediate crude rose 0.2 percent early Monday to $73.96 a barrel.
• Gold advanced 0.2 percent to $1,258.23 an ounce.

These are some events to look out for this week:

• European Central Bank President Mario Draghi addresses the European Parliament on Monday and may shed light on the timing of a rate increase next year.
• Chinese trade data due at the end of the week will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said. China releases June PPI and CPI on Tuesday, both of which should show a pickup.
• The most noteworthy U.S. data is the June inflation report on Thursday, which consensus expects will show both headline and core price growth picking up. There’s another deluge of Treasury debt sales too, with a total $156 billion of notes and bills offered.
• Earnings season gets going with JPMorgan Chase & Co. and Citigroup among the largest companies due to give results, as well as India’s Infosys Ltd.