Nifty Logs Another Record Close On Longest Stretch Of Gains In Six Months

India’s stocks gained, with a key benchmark posting another record close, led by Reliance Industries Ltd. even as investors await the release of the country’s economic growth data for the fiscal year ended March later today.

The S&P BSE Sensex climbed 1% to 51,937.44, the highest since Feb. 17. Seventeen of the 19 sector sub-indices compiled by BSE Ltd. gained, led by a gauge of energy companies.

The NSE Nifty 50 Index advanced 1% as well, making it the sixth straight of gains, to 15,582 -- a record close. The index touched an all-time high of 15,606 during the session.

India is due to release GDP data for the quarter. It will also release data for the fiscal year ending March, in which the economy is expected to have contracted 7.5%, according to a Bloomberg survey. The outlook for growth remains a cause for concern for both the government and the central bank.

India’s earnings season for the March quarter has been mixed with 23 of the 43 Nifty 50 companies that have posted quarterly results, missing analysts’ estimates. Eighteen companies have reported numbers ahead of or in line with analysts estimates, according to data compiled by Bloomberg.

India’s Solar Industries Ltd., a manufacturer of explosives, climbed 11% to touch a record high after upgrades by brokerage KR Choksey Shares and Securities Pvt Ltd. and ICICI Securities Ltd.

• “We like Solar Industries’ business model with established client base and good order book visibility coupled with a stable margin profile despite Covid-related uncertainties,” Parvati Rai, KR Choksy analyst said in a note
  • Upgrades stock to accumulate and raised PT to 1,602 rupees vs 1,350 rupee
  • Company’s January-March revenues jumped 45% led by strong performance in coal, housing and infra companies along with exports segments
• ICICI Securities raises recommendation to add from hold
• “There are umpteen revenue and profitability triggers yet to be captured in the overseas business segment. New capex plan for packaged explosives across three greenfield sites highlights future growth potential,” Abhijit Mitra, ICICI Securities analyst said in note

The Indian rupee reversed early gains to trade lower amid speculation state-run banks bought dollars probably on behalf of the central bank.

• USD/INR +0.2% to 72.5875 after falling to 72.3463 earlier in the day
• NOTE: Rupee has gained 2.1% month-to-date in Asia’s best performance
• “State-run banks likely bought dollars for the RBI from 72.35 levels,” says Amit Pabari, managing director at CR Forex in Mumbai

Gujarat Gas Ltd. rose 4.2%. Trading in the company's call options was double the average. Trading volume was triple the average for this time of day.

• The stock was the best performer among its peers.
• Trading volume was 1.77 million shares, triple the 20-day average of 654,533 shares for this time of day.
• Trading in the company's call options totalled 794 contracts, compared with the average of 373 over the past 20 days. Trading in the company's put options totalled 66 contracts, compared with the average of 171 over the same period.
• Gujarat Gas trades at 30 times its estimated earnings per share for the coming year. It trades at 31 times trailing EPS.
• Analysts have 23 buy, five hold, and four sell recommendations on the stock.
• The price target of Rs 548.76 represents a 3.1% increase from the last price

Aurobindo Pharma reported net income for the fourth quarter that missed the average analyst estimate.

• Net income Rs 802 crore, -7.2% YoY, estimate Rs 833 crore
• Revenue Rs 6000 crore, -2.6% YoY, estimate Rs 6366 crore
• Total costs Rs 5,010 crore, -2% YoY
• Other income Rs 78.1 crore vs. Rs 32.59 crore YoY
• Ebitda Rs 1270 crore, -5.2% YoY, estimate Rs 1338 crore
• Ebitda margin 21.2% vs. 21.8% YoY
• R&D expenses Rs 457 crore
• Europe sales Rs 1550 crore, -6.1% YoY, estimate Rs 1683 crore
• U.S. revenue Rs 2,860 crore, -4.3% YoY

COMMENTARY AND CONTEXT

• Received final approval for 9 ANDAs from USFDA including 3 injectables

Shares of the non-banking finance company jumped as much as 20%, the most since Oct. 25, 2019, after its board approved a Rs 4,000 crore fundraise proposal.

The fundraising will be led by entities affiliated with The Carlyle Group Inc and will trigger an open offer. Carlyle entity to invest up to Rs 3,185 crore through a preferential allotment of equity shares and warrants, at a price of Rs 390 per share.

The existing shareholders of the company also participating in the fundraise. Salisbury Investments Pvt. Ltd., the family investment vehicle of Aditya Puri, Senior Advisor for Carlyle in Asia, will also invest in the capital raise.

Puri is expected to be nominated to the PNB Housing Finance Board as a Carlyle nominee director in due course, according to the company’s notification to the exchanges.

Shares of the drugmaker rose 3.9%, making them the best performer on the Nifty Index, after reporting fourth-quarter earnings that beat analyst estimates.

• Trading in the company's call options was double the average. Trading volume was 11 times the average for this time of day.
• Trading volume was 1.09 million shares, 11 times the 20-day average of 96,120 shares for this time of day.

• Trading in the company's call options totalled 14,797 contracts, compared with the average of 6,856 over the past 20 days. Trading in the company's put options totalled 3,438 contracts, compared with the average of 2,381 over the same period.
• The relative strength index on the stock was above 70, indicating it may be overbought.
• Analysts have 17 buy, one hold, and three sell recommendations on the stock.
• The price target of Rs 4,310.31 represents a 0.7% increase from the last price

Shares of the public sector lender fell 5.7%, the most since April 19, after it reported an unexpected Rs 1,047 crore loss in the fourth quarter.

The loss was mainly on account of higher tax expenses. Net interest income for the quarter rose 4.54% year-on-year to Rs 7,107 crore while non-interest income rose 71% from a year ago to Rs 4,848 crore.

The bank’s asset quality condition improved, with gross non-performing asset ratio falling to 8.87% on March 31, as compared with 9.63% as of Dec. 31, 2020. Net NPA ratio rose to 3.09%, up 70 basis

The lender said it plans to raise Rs 5,000 crore ($690 million) from sales of shares and bonds.

CLSA’s Take

• Maintains ‘buy’ rating, raises target price from Rs 125 to Rs 130
• Bank’s Q4 surprised positively with less than 50 bps of slippage and strong adjusted net interest income performance.
• Corporate and overseas slippages were high but with the cycle turning, corporate slippage will likely come down leading to the partial normalisation of its return on equity.
• While the risk from the second wave of Covid-19 remains for its retail book and a true picture of SME stress will be reflected in 2HFY21, the corporate cycle is clearly turning
• While we prefer SBI, which has a more structural story, Bank of Baroda’s current <0.55x FY23 book valuation is undemanding.

Shares of the automaker slipped as much as 6.3%, the most since April 12, making it the worst performer on the Nifty 50 Index.

• Trading volume was 2.88 million shares, ten times the 20-day average of 279,210 shares for this time of day.

• Analysts have 31 buy, no hold, and four sell recommendations on the stock.

Indian stocks were off to a volatile start, after a key benchmark index closed at a record high last week, as investors remain cautious ahead of the release of the country’s economic growth data for fiscal year ended March later Monday.

The S&P BSE Sensex fluctuated between gains and losses, before slipping 0.47% to 51,179.94. The NSE Nifty 50 also declined by a similar magnitude. Sixteen of the 19 sector sub-indexes compiled by BSE Ltd. gained, led by a gauge of energy companies.

India’s earnings season for the March quarter has been mixed with 23 of the 43 Nifty 50 companies that have posted quarterly results, missing analysts’ estimates. Eighteen companies have reported numbers ahead of or in line with analysts estimates, according to data compiled by Bloomberg.

Indian sovereign bond traders will assess the extra Rs 1.58 lakh crore ($22b) of borrowing that will have to be factored into supply for the current fiscal year. Markets will also look forward to the March quarter economic-growth data due later Monday. The rupee is inching closer to its 2021 highs.

• India needs to borrow more to compensate its states for a shortfall in a nationwide consumption tax collection, Finance Minister Nirmala Sitharaman said Friday
• The Indian economy’s resilience will be tested by its ability to overcome a devastating outbreak of Covid-19, although no one’s yet doubting its potential to pull off the world’s fastest pace of growth among major economies this year  
  • The economy is on track to grow 10% in the year that began April 1, according to the median of 12 estimates compiled by Bloomberg News. That’s after several economists downgraded their forecasts in recent weeks to factor in local curbs on activity, including in India’s political and commercial hubs
• 10-year yields rose 2bps to 6% on Friday after the RBI asked underwriters to partly rescue the benchmark 10-year bond auction in efforts to cap borrowing costs

Data To Watch

• 4pm: March Fiscal Deficit. No est., prior 171,543
• 5:30pm: April Eight Infrastructure Industries, prior 6.8%
• 5:30pm: 2021 GDP Annual Estimate YoY, est. -7.5%, prior -8.0%
• 5:30pm: 1Q GDP YoY, est. 1%, prior 0.4%

Most Asian stocks retreated Monday and U.S. equity futures were steady as investors continue to weigh inflation risks and the strength of the economic recovery.

Equities slipped in Japan, Hong Kong and China, where a gauge of the manufacturing industry suggested the economy’s recovery momentum might have peaked. U.S. contracts fluctuated after the S&P 500 notched its fourth-straight monthly advance. Treasury yields ticked back below 1.60% on Friday. There’s no Treasuries cash trading in Asia amid holidays in the U.S. and U.K.

India’s SGX Nifty 50 Index futures for June delivery fell 0.4% to 15,432.50, while MSCI Asia Pacific Index +0.2%. The NSE Nifty 50 Index added 0.6% Friday to 15,435.65.

The offshore yuan fell back in the wake of comments leaning against its climb. Two state-run newspapers flagged risks fueled by rapid gains in the currency. China also set its daily reference rate at a weaker-than-expected level.

Bitcoin traded around $35,000 after a Friday slump as Bank of Japan Governor Haruhiko Kuroda warned about the token’s volatility and speculative trading.

Home back, Bank of Baroda, Indian Bank, City Union, Glenmark Pharma, Divi’s Labs, Affle India, HeidelbergCement, Sundaram Finance, V-Mart, Kaveri Seed, Unichem Labs may react as the companies reported quarterly results after the market closed Friday. Aurobindo Pharma, Magma Fincorp, Honeywell Automation are among the companies scheduled to report earnings Monday.

India to release GDP data for quarter and estimate for fiscal year ended March, budget deficit data for 12 months through March and eight core industries output data for April. Foreign investors bought net Rs 44.6 crore of stocks on May 27, according to NSDL website.