Sensex, Nifty Halt Two-Day Gains Dragged By Infosys, Reliance

Indian equity benchmarks halted two-day rally dragged by Infosys and Reliance Industries.

The S&P BSE Sensex fell 0.2 percent or 71 points to 35,575 and the NSE Nifty 50 index declined 0.19 percent or 20 points to 10,750.

For most part of the day, the benchmarks fluctuated between gains and losses as profits in ITC and HDFC Bank were offset by losses in Infosys and Reliance Industries.

Fourteen out of 19 sector gauges compiled by BSE ended lower dragged by the S&P BSE Consumer Durables index's 2.8 percent drop. On the flipside, the S&P BSE FMCG index was the top gainer, up 1 percent.

The mid- and small-cap shares underperformed their larger peers as the S&P BSE MidCap index fell 0.7 percent and the S&P BSE SmallCap index slipped 0.4 percent.

• NTPC has 37.3 lakh shares change hands in a single block on the BSE. Stock down 0.6 percent at Rs 152.

Buyers and sellers were not immediately known

Source: Bloomberg

• Power Grid has 19.9 lakh shares change hands in a block on BSE. Stock down 0.9 percent at Rs 181.45.

Buyers and sellers were not immediately known

Source: Bloomberg

• Future Lifestyle Fashions: The Mumbai-based apparel retail store operator rose as much as 5.26 percent to Rs 420.25 after it announced plan to acquire 29.9 percent stake in online fashion platform Koovs Plc. for about Rs 140 crore.
• Shriram Transport Finance: The Mumbai-based truck finance company rebounded after yesterday's sharp fall and rose as much as 9 percent to Rs 1,250 after Deutsche Bank maintained ‘Buy’ rating for target price of Rs 1,700.
• Yes Bank: The Mumbai-based private lender snapped its 3-day losing streak and rose as much as 4.5 percent to Rs 350.80 after SEBI gave its approval to launch mutual fund business.
• Info Edge: The Noida-based website operator rose as much as 4.74 percent to Rs 1,218.80 after Kotak Securities raised it to 'buy' from 'reduce' target price of Rs 1,390.

European stocks rose alongside U.S. futures while Asian shares dropped to a nine-month low as traders prepare for the implementation of fresh trade restrictions between the U.S. and China. The euro rallied on the prospect of earlier-than-anticipated monetary tightening.

• Indian equity benchmarks swung between gains and losses as profits in ITC, HDFC Bank, Yes Bank and Maruti Suzuki were offset by losses in Infosys, Reliance Industries and Vedanta.
• The S&P BSE Sensex was flat at 35,620 and the NSE Nifty 50 index fell marginally to 10,763.
• Fourteen out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Consumer Durables index's 2.3 percent drop. On the flipside, the S&P BSE FMCG index was top gainer, up 1 percent.
• The mid- and small-cap shares were underperforming larger peers as the S&P BSE MidCap index fell 0.3 percent and the S&P BSE SmallCap index declined 0.2 percent.

Shares of the country's second largest IT company fell as much as 5.7 percent, the most since April 16, to Rs 1,268.10 on heavy volumes.

Trading volume was 3.3 times its 20-day average, according to Bloomberg.

Shares of the cable television service provider extended decline after Reliance Industries announced launch of fixed-line broadband service Jio GigaFiber from August 15.

• Security & Intelligence Services: The Delhi-based security and intelligence service provider fell as much as 2.9 percent to Rs 1,106.60. Trading volume was 20.6 times its 20-day average.
• Kitex Garments: The Kochi-based garment exporter and manufacturer fell as much as 7.14 percent to Rs 111.25. Trading volume was 11.4 times its 20-day average.
• Orient Cement: The Hyderabad-based cement manufacturer rose as much as 9.32 percent to Rs 120.20. Trading volume was 7.8 times its 20-day average.
• WABCO India: The Chennai-based auto parts maker fell as much as 1.14 percent to Rs 6,959. Trading volume was 9 times its 20-day average.

Shares of micro finance lenders came under pressure after Karnataka Chief Minister HD Kumaraswamy announced a Rs 34,000-crore crop loan waiver scheme in the state budget. "I have decided to limit the loan waiver amount to Rs 2 lakh. Due to this crop loan waiver scheme farmers will get benefit of Rs 34,000 crore,” Kumaraswamy said in the state assembly.

• Bharat Financial Inclusion down 0.4 percent
• Ujjivan Financial Services fell 1.95 percent
• Equitas Holdings declined 3.46 percent

Shares of the Mukesh Ambani-led company erased gains and fell as much as 0.98 percent to Rs 980.40 after its shareholders' meet ended.

During the AGM stock over 1.5 percent.

Shares of liquor makers fell after Karnataka Chief Minister HD Kumaraswamy proposed four percent tax hike on liquor in today’s Budget speech.

Commenting on the performance of hydrocarbon business, Ambani said the Jamnagar refinery has completed 20 years into existence and Reliance is nearing end its investment in Jamnagar.

Key highlights:

• Will further maximize oil to chemical upgradation
• Plan to reach full production in KG-D6
• RIL targets 30-35 MSMCD gas production by 2022
• Butyl rubber unit will be commissioned soon
• RIL now largest recycler of PET bottles in India
• Commissioned and stabilized largest paraxylene complex
• Reliance Industries largest paraxylene producer in the world with capacity of 4.2 million tonnes
• Adding composites and carbon fiber materials to the portfolio

Customers will now be able to exchange their feature phones for JioPhones for Rs 501, starting July 21, said Mukesh Ambani today.

• Customers can exchange existing feature phones for JioPhones for Rs 501 starting July 21
• Existing Jiophone scheme will continue
• Effective entry cost of JioPhone reduced to Rs 501 from Rs 1,500
• JioPhone 2 will be available at an introductory price of Rs 2,999
• YouTube, WhatsApp and Facebook services will be available to JioPhone users from Aug. 15

Shares of cable TV service providers fell as Reliance launches Jio Gigafiber.

Mukesh Ambani announced a new service called the Jio Gigafiber. “We will now use fiber connectivity to provide fixed broadband connectivity,” the Chairman said.

• Hathway Cable fell 4.13 percent
• Den Networks down 5.4 percent
• SITI networks down 2.9 percent

• Reliance Communications has 21.2 lakh shares change hands in two blocks. Stock up 1.5 percent at Rs 13.85.

Buyers and sellers were not immediately known

Source: Bloomberg

Mukesh Ambani, CMD, Reliance Industries speaks at shareholders’ meeting in Mumbai.

Key highlights:

• Reliance launches new upgraded JioPhone 2
• Youtube, Facebook and Whatsapp to work on JioPhones.
• Jio is performing a task of vital national importance.
• Doubled customer base to 215 million customers, that's within just 22-months.
• Data usage has grown to 240 crore GBs per month from 125 crore GBs.
• We will now use fiber connectivity to provide fixed broadband connectivity.
• Jio to extend fiber connectivity to homes, SMEs.
• Will roll out broadband connectivity services in 1,100 cities.
• Voice usage has hit 530 crore minutes per day.
• Video consumption reached 340 crore hours per month.
• Customers actively engaged for 290 minutes per day on average.
• Have 25 million JioPhone users in India
• RIL is one year into its "golden decade"
• New age consumer businesses have started delivering profits
• Our hydrocarbon & consumer businesses have helped RIL scale greater heights than ever before
• RIL's earning profile has undergone a fundamental change
• RIL has reached an inflection point
• Our consumer businesses will contribute as much to overall earnings as petrochem business

• Reliance Industries has 5.2 lakh shares change hands in a block. Stock up 0.98 percent at Rs 1,000.

Buyers and sellers were not immediately known

Source: Bloomberg

The latest CMIE data on investments show a sharp drop in new projects. In fact, project completions have also dropped to a 3-year low. Mahesh Vyas, MD and CEO of CMIE explains how the economy is functioning on the ground.

Key highlights of the conversation:

• Quarterly project activity data disappointing and expected.
• Unlikely that new investment proposals will pick up.
• Increase in private sector project announcements only because of Jet Airways' order.
• Government and private sector investments moving in tandem in the recent past.
• Capacity utilisation low at 70-74 percent.
• Disappointment on project announcements in the road sector.
• Commendable ramp up in implementation of road projects.
• Surprised on the apparent scaling back in road orders.
• 80 percent plus capacity utilisation levels will prompt fresh capacities.
• Jobs and investments, both are not growing.
• Economy in a slack position, needs to be pumped up.
• Disagree with RBI's statement that growth is accelerating.
• MSP is not a game changer.

Nifty Bank 26,600 call was among the most active option contracts on the National Stock Exchange ahead of its weekly expiry.

Premium on the contract fell 10.2 percent to Rs 25.15. Over 8.39 lakh shares were added to the open interest which stood at over 16.65 lakh shares.

Shares of the Bengaluru-based bio-pharmaceutical company rose as much as 1.76 percent to Rs 639.30.

Biocon has received EU GMP certification for its sterile drug product manufacturing facility in Bengaluru, which was inspected by European agencies in March, the company said in an exchange filing.

The facility is used to manufacture Biocon's portfolio of biosimilars.

Shares of the Mumbai-based private sector lender rose as much as 3.2 percent to Rs 346.30 after it received approval from market regulator to launch mutual fund business.

The approval is after the Reserve Bank of India's (RBI) approval granted to Yes Bank to sponsor a Mutual Fund, the private lender said in an exchange filing.

Shares of the watch and jewellery retailer fell as much as 4 percent to Rs 850.40 after it issued a subdued revenue guidance for the June quarter due to transition to Goods and Services Tax.

The jewellery industry has been going through a significant soft patch in the first five months of calendar years 2018 as evidenced in the decline of imports of gold by 39 percent in volume terms, Titan said in an exchange filing.

Here’s what brokerages say on Titan’s quarterly update:

CLSA

• June quarter preview has a weak commentary after several quarters.
• Jewellery was weak, but watches had a great quarter.
• Focus on new launches and expansion in retail footprint continues.
• Expect revenue and net profit to grow 12 percent and 10 percent respectively in April-June period.

Goldman Sachs

• Maintained ‘Buy’ with a price target of Rs 1,061.
• Jewellery segment's performance below targets due to weakness in gold demand.
• Watches segment reported solid growth due to strength in modern retail and e-commerce.
• Expect revenue and Ebitda to grow at 9 percent and 10 percent respectively in June quarter.

Shares of the Mumbai-based parent of luxury carmaker Jaguar Land Rover fell as much as 5.4 percent to Rs 252.55.

Jaguar Land Rover, Britain’s biggest carmaker, warned Theresa May’s government that a “bad Brexit” deal without “frictionless” access to the European Union would jeopardize as much as 80 billion pounds ($106 billion) in investments over the next five years.

Extra costs and delays in parts deliveries coming from outside the U.K. would cut profit by 1.2 billion pounds a year, Ralf Speth, chief executive officer of the manufacturer owned by Tata Motors Ltd., said late Wednesday in an emailed statement.

Indian equity benchmarks edged lower tracking weakness in heavyweights like HDFC Bank, Tata Motors and Bajaj Auto. However, losses were capped as Reliance Industries rose ahead of its annual shareholders' meet.

The S&P BSE Sensex fell 0.07 percent to 35,619 and the NSE Nifty 50 index declined marginally to 10,767.

Twelve out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Consumer Durables index's 1.2 percent drop. On the other hand, the S&P BSE Energy index was top gainer, up 0.9 percent.

• Rupee opened lower at 68.84 per dollar against yesterday's close of 68.74.

Analysts expect only a mild impact on consumer prices because of the government's decision to boost minimum support prices for kharif crops. Bloomberg Economics expects the move to raise headline inflation by 30 to 40 basis points. The move is expected to boost the BJP's chances in state elections due later this year and general elections next year.

The tide may be turning for Indian sovereign bonds as the relentless selling from government-owned banks is showing signs of easing. The question now is whether the revival will be sustained.

One piece of caution for investors will be June inflation data due next week. The consensus is for the CPI to rise further. But that should mark a peak as favorable base effects will kick in from this month.

Globally, the PBOC strengthened the yuan's fixing by the most since October, while Hong Kong equities were firmly lower. Treasury yields edged up after the holiday, while S&P 500 futures were flat. Most metals rose.

Macquarie on United Spirits

• Maintained ‘Underperform’ with a price target of Rs 443.
• Route to market changes in U.P. led to surge in volume run-rate in last three months.
• U.P. volumes to normalise going forward as share gains will be gradual.
• Expect advertisement spend to remain high and price hikes to be limited.
• United Spirits trade at a significant premium to peers.

Deutsche Bank on Shriram Transport Finance

• Maintained ‘Buy’ with a price target of Rs 1,700.
• Off balance sheet exposure to have limited impact on book value.
• Proper management communication is now critical to assuage concerns over corporate governance.
• Expect core operations to remain robust with strong growth momentum.

Daiwa Capital Markets on India Capital Goods

• New investments continue to decline.
• Private sector was key driver of new project announcements.
• New announcements largely driven by transport, power and manufacturing.
• See mixed signs of capex recovery.
• L&T is preferred pick.

Brokerages On Titan Quarterly Update

CLSA

• June quarter preview has a weak commentary after several quarters.
• Jewellery was weak, but watches had a great quarter.
• Focus on new launches and expansion in retail footprint continues.
• Expect revenue and net profit to grow 12 percent and 10 percent respectively in April-June period.

Goldman Sachs

• Maintained ‘Buy’ with a price target of Rs 1,061.
• Jewellery segment's performance below targets due to weakness in gold demand.
• Watches segment reported solid growth due to strength in modern retail and e-commerce.
• Expect revenue and Ebitda to grow at 9 percent and 10 percent respectively in June quarter.

Brokerages On MSP

Elara Capital

• Government announces highest increase in MSP since the financial year-ended 2013; MSP hike to act as price signal and may boost output; CPI weighted rise at 1.6 percent, but actual impact could be lower at 50-60 basis points.

Kotak

• Quantum of hike in line; Modality of MSP implementation is more important for rural demand; Statistical impact on inflation to be 90-95 basis points, but real impact to around 40-60 basis points; Fiscal impact to be minimal.

UBS

• Price support to farmers bodes well towards improving rural demand; Expect 35-70 basis points impact on CPI inflation depending on procurement policy; Fiscal impact to be 0.1 percent of GDP in 2018-19.

Citi

• Pre-election trend of large MSP increase continues; MSP increases could result in 90 basis points higher CPI; Large MSP increase coupled with elevated core and high oil prices to push RBI MPC to consider 25 basis points hike in August.

Who's Meeting Whom

• Dilip Buildcon to meet investors on July 5.
• Puravankara to meet LIC Mutual Fund and other investors on July 5.
• Insecticides (India) to meet investors from July 5-6.
• Indian Bank to meet investors from July 5-6.
• Ramco Systems to meet HDFC Mutual Funds and other investors on July 5.

Insider Trades

• DCM Shriram promoters acquired 2.61 lakh shares between July 2-3.
• Menon Bearings promoters acquired 27,000 shares between June 21-29
• Infibeam Corporation promoters acquired 6.56 lakh shares between July 2-3

(As reported on July 4)

Bulk Deals

Indiabulls Ventures

• Cinnamon Capital sells 1.38 crore shares or 2.7 percent equity at Rs 471 per share.
• Jasmine Capital Investments PTE buys 1.38 crore shares or 2.7 percent equity at Rs 471 per share.

Trading Tweaks

• NDTV and Opto Circuits shifted to T group from B group

F&O Cues

• Nifty July Futures ended at 10,771.3, with a premium of 1.4 points versus 24 points.
• July series: Nifty open interest (OI) up 4 percent and Bank Nifty OI up 5.4 percent.
• India VIX ended at 12.6, down 2.6 percent.
• Max OI for July series call at 11,000 strike price call option; OI at 36.7 lakh shares, up 1 percent.
• Max OI for July series put at 10,600 strike price put option; OI unchanged at 51.7 lakh shares.

• Titan says jewellery business to post muted growth in quarter ended June 2018
• Biocon’s sterile drug product facility receives EU GMP certification
• Yes Bank receives SEBI approval to launch Mutual Fund business
• Reliance Industries to hold shareholders’ meeting in Mumbai at 11 AM
• Force Motors June total sales up 8.2 percent (YoY) at 2,669 units versus 2,466 units
• Nath Bio Genes (India) says promoters release pledge on shares held by ARCIL after clearing all outstanding loans
• Intellect Design Arena in pact with Banco Santander for implementation of its digital transaction banking platform
• FIEM Industries partners with Toyodeso, Japan and Toyota Tsusho, Japan for manufacturing of Bank Angle Sensor for motorcycles for Indian market
• Future Lifestyle to acquire upto 29.9 percent in Koovs for Rs 140 crore
• Religare files plea under IBC against Bharat Road Network claiming a default of Rs 51.3 crore
• Va Tech Wabag to consider fund raising proposal on July 9
• Seamec in consortium with Kreuz Subsea enters into contract with ONGC for charter hire of vessel. Deal valued at $22 million
• Som Distilleries & Breweries proposed arm acquires brewery in Odisha for Rs 46 crore.

• Modi rushes to insure half a billion Indians before election
• Deepak Parekh says succession planning imminent at HDFC companies
• Jaguar Land Rover warns U.K. of $106 billion ‘bad brexit’ toll
• Record deal run maps Mukesh Ambani’s consumer ambitions
• Not a good time to sell or list Air India, says Piyush Goyal
• Federer’s match made in retail heaven
• If you are holding bitcoins in India, here’s what you can do
• The China-U.S. power struggle is just beginning
• In 535-page Supreme Court judgment, both AAP and BJP see victory
• Rs 3.8 lakh crore in loans to come up for resolution by September: ICRA

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India was little changed at 10,770 as of 7:44 a.m.

Asian stocks traded mixed Thursday after holiday closures for U.S. equity and bond markets meant there were few leads overnight for traders. Treasuries resumed trading with small declines, and the dollar was little changed.

Japanese shares slipped while those in Australia and South Korea pushed higher.

China will grab attention again amid signs that some stability is returning to the yuan after its sharpest decline since policy makers devalued the currency in 2015.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro was flat at $1.1658.
• The pound was little changed at $1.3226.
• The yen fell 0.1 percent to 110.59 per dollar.

Commodities

• West Texas Intermediate crude fell 0.1 percent to $74.05 a barrel.
• Gold rose 0.1 percent to $1,256.24 an ounce.
• LME copper gained 0.4 percent to $6,414.50 per metric ton

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.