Sensex, Nifty End Lower For Second Day After RBI’s Neutral Stance Disappoints

Indian equity benchmarks ended lower for the second consecutive trading session after the Reserve Bank of India cut repo rate as per the expectations, but refrained from shifting to a more easy stance.

The S&P BSE Sensex ended 0.49 percent lower at 38,684.22 and the NSE Nifty 50 ended at 11,598, down 0.39 percent. The broader market index represented by the NSE Nifty 500 Index ended 0.7 percent lower.

The market breadth was tilted in favour of sellers. About 1,047 stocks fell and 701 shares advanced on National Stock Exchange.

Seven out of 11 sectoral gauges compiled by NSE fell, led by the NSE Nifty IT Index’s 1.37 percent decline. On the flipside, the NSE Nifty Media Index was the top sectoral gainer, up 1.09 percent.

Varroc Engineering

• Stock rose as much as 12.9 percent to Rs 654.50.
• Trading volume was more than 100 times its 20-day average.

Cera Sanitaryware

• Stock fell as much as 3.1 percent to Rs 2,775.70.
• Trading volume was more than three times its 20-day average.

Heritage Foods

• Shares fell as much as 1.3 percent to Rs 540.25.
• Trading volume was more than five times its 20-day average.

Jyothy Laboratories

• Stock rose as much as 1 percent to Rs 183.85.
• Trading volume was more than five times its 20-day average.

CreditAccess Gramin

• Stock fell as much as 2.1 percent to Rs 544.30.
• Trading volume was more than four times its 20-day average.

Mukesh Ambani and Sunil Mittal are considering competing bids for a stake in Zee Entertainment Enterprises, Bloomberg reported.

• Bharti Airtel has started due diligence of Zee Entertainment Enterprises and is expected to make a formal proposal soon.
• Reliance Jio Infocomm is also considering a bid.
• Deliberations are preliminary and may not lead to a transaction.

Source: People familiar with the matter.

The Indian rupee traded at day’s low against the U.S. dollar. The home currency depreciated as much as 1.04 percent to 69313 against the greenback.

European equities dipped, weighed by a fall among basic resources and oil stocks.

About 45.6 lakh shares changed hands in a block deal on BSE, Bloomberg data showed. Buyers and sellers were not known immediately.

Shares of Tata Motors rose as much as 2.2 percent to Rs 205.80.

Sales of Jaguar rose 20.38 percent on a yearly basis last month and sales of Land Rover rose 0.15 percent to 16,680 units during the period, according to U.K. Auto Body.

The stock returned 18.7 percent so far this year and fell 42.4 percent in the past 12 months.

Shares of SRF rose as much as 4.2 percent to hit an all-time high at Rs 2,484.

The company said that it received a revocation order from Gujarat Pollution Control Board for its plant in Dahej, according to its stock exchange filing. The company is set to commence its operations at the earliest, it added.

Trading volume was more than double its 20-day average, according to Bloomberg data. The stock advanced 23 percent in the past 12 months.

RBI has a very good reason to be dovish if the inflation expectation in itself has come down, according to Dalton Capital Advisors’ UR Bhat.

Incipia Advisors said that it expects one more rate cut if not more as the markets would start pricing in after the current policy, according to its Managing Partner Neeraj Gambhir.

The path of CPI inflation is revised downwards to 2.4 percent in the fourth quarter of the previous fiscal, 2.9-3.0 percent in the first half of the current fiscal and 3.5-3.8 percent in the second half of the current fiscal, with risks broadly balanced.

The MPC sees headwinds to growth emerging from the global economy, which could accentuate recent softness in momentum in the domestic economy.

The committee noted that the output gap remains negative and the domestic economy is facing headwinds, especially on the global front. The need is to strengthen domestic growth impulses by spurring private investment which has remained sluggish.

• RBI expects GDP growth at 7.2 percent in FY20 compared to 7 percent in FY19.
• Private consumption is likely to remain its mainstay and investment activity expected to remain strong.
• Urban consumption may get support from election spending, tax exemptions and strong flow of personal loans.
• Rural consumption may get support from farm income schemes, loan waivers and thrust on rural infrastructure.
• Global economic activity and trade have been shedding momentum and downside risks have increased.

Banking shares fell after RBI cut repo rate for the second time this year.

• Indian equity benchmarks traded lower after RBI cut repo rate for the second time this year.
• The S&P BSE Sensex fell as much as 0.3 percent to 38,761.48 and the NSE Nifty 50 fell as much as 0.33 percent to 11,605.45.

Bond Yields spike after RBI cut repo rate for the second time this year.

Nifty’s 11,700 call option contract was among the most active Nifty option contracts on National Stock Exchange.

Premium on the contract fell 55.67 percent to Rs 10.75. Over 14.86 lakh shares were added to the open interest which stood at over 28.55 lakh shares.

The Nikkei India Services Business Activity Index fell to 52 last month from 52.5 in February, according to a statement by research firm IHS Markit, which compiles the index. A reading below 50 indicates contraction in activity, while a number above it signals expansion.

About 57 lakh shares changed hands in four block deals, Bloomberg data showed. Buyers and sellers were not known immediately.

Shares of the pharma company rose as much as 4.5 percent, the most in nearly a month, to Rs 266.55.

The company received product patents in Israel, Japan, New Zealand and Sri Lanka for the treatment of neurodegenerative disorders, according to its stock exchange filings. The company said these patents will be valid through 2029 and 2036.

Trading volume was more than nine times its 20-day average, Bloomberg data showed.

Shares of the Royal Enfield parent pared opening gains and fell as much as 1 percent to Rs 20,026.15 per share.

Brokerage firm Morgan Stanley downgraded its recommendation on the stock to ‘Equal-weight’ from ‘Overweight’. Also, the price target was cut price to Rs 21,331, indicating a potential upside of 5.6 percent from previous close.

Here’s what the firm had to say on the stock:

• Regulation driven price hikes led to sharp slowdown in volumes.
• See margin headwinds; Expect 300 basis points margin contraction over FY19-21.
• RE will face competition from Jawa and Bajaj Triumph.
• The stock declined 28 percent in the past 12 months compared with a 17 percent gain in the Sensex Index.

Shares of Amara Raja Batteries rose as much as 3.8 percent, the most in over two months, to Rs 700. The stock fell as much as 9.8 percent during the last regular trade, the most in over a decade.

This after the company ended its partnership with Johnson Controls.

Trading volume was 60 times its 20-day average, Bloomberg data showed.

Shares of Wipro fell as much as 1.9 percent to Rs 256.55.

About 4.44 crore shares changed hands in a pre-market block deal, Bloomberg data showed. Buyers and sellers were not known immediately.

Trading stock advanced 23 percent in the past 12 months compared to a 17 percent gain in the Sensex.

Indian equity benchmarks fluctuated between gains and losses in the opening trade ahead of the RBI policy.

The S&P BSE Sensex traded a little changed at 38,930. The NSE Nifty 50 also traded a little changed at 11,653.80. The broader market index represented by the NSE Nifty 500 Index rose as much as 0.17 percent to 9,675.20.

The market breadth was tilted in favour of sellers. About 1,216 stocks fell and 616 shares advanced on National Stock Exchange.

All the sectoral gauges compiled by NSE traded lower, led by the NSE Nifty PSU Bank Index’s 2.7 percent fall.

The Indian rupee opened lower against the U.S. dollar ahead of the RBI policy. The home currency depreciated as much as 0.22 percent to 68.57 against the greenback.

F&O Cues

• Nifty April Futures closed trading at 11730, premium of 87 points.
• Max open interest for Apr 25 series at 12,000 Call (open interest at 23.6 lakh shares)
• Considerable open interest for Apr 25 series at 11,500 Put (open interest at 21.3 lakh shares)
• Max open interest for Apr 25 series at 11,000 Put (open interest at 24.7 lakh shares)

Stocks In F&O Ban

• Adani Power
• IDBI Bank
• Jet Airways
• Reliance Power
• Jet Airways (new)

Put-Call Ratio

• Nifty PCR at 1.42 versus 1.52 .

Macquarie on Consumer

• Expect FMCG demand to pick up post first half of 2019, led by government incentives and liquidity ease.
• Believe price hikes and operating leverage will continue to support margins.
• Pidilite: Initiated ‘Outperform’ with a price target of Rs 1,474.
• Higher urbanisation to continue to help demand for building material products.

JPMorgan on Container Corp

• Maintained ‘Overweight’ with a price target of Rs 600.
• Volume growth moderates to 3 percent in March quarter.
• Growth tad below expectation given some slowdown in EXIM trade.
• Expect step up change in volume once DFC is ready

Goldman Sachs on TVS Motor

• Maintained ‘Buy’ with a price target of Rs 728.
• Remarkable growth to continue; Expect 25 percent Ebitda CAGR till 2020-21.
• See solid volume growth prospects.
• Impeccable track record of new launches bodes well.

Morgan Stanley on Eicher Motors

• Downgraded to ‘Equal-weight’ from ‘Overweight’; cut price target to Rs 21,331 from Rs 28,992.
• Regulation driven price hikes led to sharp slowdown in volumes.
• See margin headwinds; Expect 300 basis points margin contraction over FY19-21
• RE will face competition from Jawa and Bajaj Triumph.

Morgan Stanely on SAIL

• Maintained ‘Equal-weight’ with a price target of Rs 54.
• March quarter dispatch volume surprised positively.
• Realisation will decline QoQ, but strong volumes will lend operating leverage.
• Strong Q4 volumes should support the stock in the near term.

Nomura on Small Finance Banks

• Equitas: Initiated ‘Buy’ with a price target of Rs 165.
• Positives: conservative approach, niche position in core segments and operating leverage.
• RoA to improve to 2 percent by FY21; Valuation warrants re-rating.
• AU Small Finance: Initiated ‘Neutral’ with a price target of Rs 590.
• Best positioned among SFBs across most metrics.
• Demanding valuations leave little room for disappointment.
• Ujjivan: Initiated ‘Sell’ with a price target of Rs 315.
• Concerned on its strategy to gain traction through liability business.
• Lower RoA compared to Equitas warrants a discount.

Morgan Stanley on Amara Raja

• Maintained ‘Overweight’ with a price target of Rs 1,065.
• Johnson Controls confirmed that Amara Raja stake will also go to Brookfield.
• This should meaningfully ease investor concerns on stake sale.
• Don’t expect further sell-down by Brookfield any time soon.
• New investor would likely look to create value first before exiting.

• Bharat Road Network price band revised to 10 percent.
• Moving into short-term ASM Framework: Monnet Ispat & Energy, MT Educare.

• JSW Steel promoter group Danta Enterprises revoked pledge of 3.7 lakh shares on March 29.
• Forbes & Company promoter Shapoorji Pallonji created pledge of 9.5 lakh shares on March 29.
• Future Enterprises promoter group Central Departmental Stores released pledge of 12.14 lakh shares on April 1.
• V2 Retail promoter group Unicorn Marketing revoked pledge of 7.7 lakh shares on April 2.
• Adani Ports & SEZ promoter group Gautam Adani revoked pledge of 23.7 lakh shares on March 30.
• JSW Energy promoter group Danta Enterprises revoked pledge of 13.75 lakh shares on March 29.
• Eros International Media promoter Eros Worldwide revoked pledge of 10 lakh shares from April 2-3.
• Future Life Fashions promoter Ryka Commercial Ventures created a pledge of 7.1 lakh shares and revoked pledge of 3 lakh shares from March 30 to April 1.
• Future Retail promoter Future Corporate Resources released pledge of 3.63 lakh shares on April 1.

• AstraZeneca Pharma: ICICI Pru MF sold 1.25 lakh shares or 0.5 percent equity at Rs 2,000 each.
• S H Kelkar: Fidelity Investment Trust acquired 19.56 lakh shares or 1.35 percent equity at Rs 151.26 per share.

• GM Breweries

• Reliance Industries’ Jio entered into a definitive business transfer agreement with Haptik for around Rs 700 crore. The company will hold around 87 percent stake in the target company. Haptik is a conversational artificial intelligence platform.
• Godrej Properties entered into a joint venture with a developer to develop 4.25 acres property in Mumbai. The project will offer approximately have 1 lakh square meters of saleable are and will be developed as a luxury project.
• Indiabulls Housing Finance Q4FY19 Update: The company said it held cash and cash equivalents of Rs 27,512 crore, or $4 billion. The press release also stated that its CRAR on March 31 is over 24 percent, and the net gearing is at four times. To deliver 17 percent to 19 percent PAT growth in the current financial year, the company plans to raise a net total of ₹ 26,000 crore in the four quarters of the current financial year.
• Gruh Finance and Bandhan Bank said that they received observational letters from stock exchanges, and the companies said they have received no-objection for the amalgamation of the companies. Gruh Finance said it will file the draft deal plan with NCLT.
• Gujarat Gas received grant of authorization for six city gas distribution networks. The company has been granted 300 months of infrastructure exclusivity i.e. valid up to March 28, 2044 and 96 months of marketing exclusivity valid up to March 28, 2027.
• Suven Life Sciences product patents in Israel, Japan, New Zealand and Sri Lanka for treatment of neurodegenerative disorders. The company said these patents will be valid through 2029 and 2036.
• Mannapuram Finance infused Rs 263.92 crore in its arm. The company says that it recently subscribed rights issue of its subsidiary Asirvad Microfinance Limited to enhance its net worth. (Press Release)
• Nalco’s Alumina output at a record 2.15 million tons for financial year 2019, as compared to last year’s 2.1 million tons. Aluminium production at 440,000 tons versus 426,000 tons. The company said net sales this fiscal year will be at Rs 11,397 crore versus Rs 9,376 crore, as earnings from exports jump to 18 percent. (Bloomberg News)
• Shriram Transport Finance board approved increasing the medium term note program from Rs 5,000 crore to global medium-term note program of $2 billion by way of debt from international markets. The board also approved that external commercial borrowing to be raised up to $750 million.
• Tata Global Beverages said its Russian arm has been liquidated consequent to the completion of the restructuring. The liquidation will not have any significant impact on the financials of the group.
• CEAT Board approved amalgamation of wholly owned arm CEAT Specialty Tyres with self. The target company is engaged in the manufacturing of tyres for off-the-road vehicles.
• Tata Coffee to consider dividend on April 19.
• Coffee Day approved investment of Rs 26 crore in its material subsidiary Coffee Day Consultancy Services. The company says the acquisition will be completed before April 30.
• Indo Rama-Synthetics allotted 8.3 crore shares at Rs 36 per share aggregating to Rs 298.8 crore to its Netherland arm.
• Kanoria Chemicals and Industries commissioned its plant in Canada for production of automotive and industrial electronics with effect from April 2. (Alert: Company has market cap of Rs 276 crore)
• Godrej Agrovet increased its stake in its arm Godrej Maxximilk from 52.06 percent to 62.97 percent.

India’s Monetary Policy Committee is set to cut interest rates for a second consecutive time today.

Forty one of the 43 economists polled by Bloomberg expect the MPC to cut the repo rate by 25 basis points to 6 percent. In February, the MPC cut rates by 25 basis points to 6.25 percent.

Economists are divided on whether the MPC would change its stance to ‘accommodative’ to signal further monetary policy easing or if they will retain flexibility by holding the stance at ‘neutral’.

Read these to get up to speed:

• RBI’s use of call money rate does not make sense, says Ananth Narayan
• MPC’s Dilemma: How deep is the slowdown?
• MPC needs to be mindful of core inflation, says JP Morgan’s Sajid Chinoy

• 10:30am: Nikkei India Services PMI for March, prior 52.5
• 10:30am: Nikkei India Composite PMI for March, prior 53.8
• The monthly U.S. jobs report on Friday is projected to show non-farm payrolls up 180,000 in March, similar to the 186,000 average over the prior three months, after recent readings whipsawed analysts.

• Brent crude traded unchanged at $69.31 per barrel.
• West Texas Intermediate was little changed at $62.43 a barrel.
• Gold rose 0.2 percent to $1,292.13 an ounce.

London Metal Exchange

• Aluminium halted a two-day fall, ended 0.37 percent higher.
• Nickel rallied for the fourth consecutive trading session, ended 1.43 percent lower.
• Copper halted a two-day fall, ended 1.02 percent higher.
• Lead ended 1.31 percent higher.
• Zinc ended 2.59 percent higher.
• Tin ended lower for the second day, down 0.09 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.15 percent to 11,730.50 as of 8:30 a.m.

Stocks in Asia were mixed in early Thursday trading after American equities edged up to a six-month high, as investors look for signs of progress on U.S.-China trade negotiations.

Shares in Australia sank, with declines more muted in Tokyo and Seoul little changed.

Short on time? Well, then listen to this podcast for a quick summary of ALl You Need To Know before the opening bell podcast.