Sensex, Nifty Close Higher; UPL Jumps On CLSA’s Bullish Outlook

Indian stocks rose as investors shrugged off the rising number of virus cases to focus on positive global cues, the absence of nationwide curbs on business operations and the central bank’s liquidity support.

The S&P BSE Sensex advanced for a fourth day, rising 0.6% to 49,502.41, while the NSE Nifty 50 Index gained 0.8% to 14,942.35. Larsen & Toubro Ltd. contributed the most to the index gain, increasing 3.9%. Coal India Ltd. had the largest increase, rising 7.5%.

Eighteen of the 19 sector sub-indices compiled by BSE Ltd. climbed, led by a gauge of metal companies that’s surged to its highest level since 2008. The S&P BSE Information Technology was the only loser, down 0.17%.

Shares of UPL Ltd. jumped as much as 7.2%, the most since March 30, after broking firm CLSA said the fertiliser maker is in for a positive surprise.

Favourable macro conditions and peer commentary point to a strong FY22 for UPL, according to CLSA. "2021 is set to continued improvement in spending on agricultural inputs, driven by better agronomic conditions, rising crop prices, a rebound in demand from China, and better farm sentiment."

UPL will report its earnings on May 12.

• Trading volume was more than double the 20-day average for this time of day.
• Trading in the company's call options totalled 26,712 contracts, compared with the average of 8,722 over the past 20 days. Trading in the company's put options totalled 5,434 contracts, compared with the average of 3,370 over the same period.
• Average price target: Rs 705.29 (5.4% upside from current price)

• Coal India options volume 3.7x the 20-day average, with 27,209 calls changing hands vs 7,001 puts
  • Stock up 5.5%, volume 2.7x the 20-day average for this time of day
• Indian Oil options volume 2.4x the average, with 11,588 calls vs 2,570 puts
  • Stock up 3.7%, volume 1.6x the average
• UltraTech Cement options volume 2.2x the average, with 14,299 calls vs 4,022 puts
  • Stock down 1.4%, volume 0.9x the average
• UPL options volume 1.9x the average, with 18,684 calls vs 3,773 puts
  • Stock up 4.8%, volume 1.4x the average
• NTPC options volume 1.6x the average, with 8,622 calls vs 1,894 puts
  • Stock up 1.5%, volume 0.9x the average
• Divi's Labs options volume 1.6x the average, with 13,962 calls vs 3,053 puts
  • Stock up 3.7%, volume 0.9x the average
• Nifty 50 options volume 0.3x the average, with 2.98 million calls vs 2.97 million puts; gauge up 0.9%
  • Cost of hedging as measured by the 90/110, one-month skew ranks in the 99th percentile over the past year
• Nifty Bank index options volume 0.3x the average, with 4.54 million calls vs 4.02 million puts; gauge up 0.9%
  • 90/110, one-month skew in the 81st percentile
• India VIX Index down 2.3%

Torrent Pharmaceuticals Ltd. rose 5.9%, the most in more than nine months, compared with end-of-day price changes.

• Trading volume was almost quadruple the 20-day average for this time of day.
• Trading in the company's call options totalled 2,399 contracts, compared with the average of 717 over the past 20 days. Trading in the company's put options totalled 152 contracts, compared with the average of 59 over the same period.
• The relative strength index on the stock was above 70, indicating it may be overbought.
• Torrent Pharma trades at 39 times its estimated earnings per share for the coming year.

Coal India Ltd. rose 5.3%. Trading in the company's call options was triple the average. Trading volume was quadruple the average for this time of day.

• The shares increased to Rs 144.10, higher than any close since March 16, from Rs 136.85.
• The stock was the best performer among its peers.

Indian equities outperformed global markets so far in May, but the nation’s valuation premium has fallen to the bottom of the range seen last decade, according to Credit Suisse.

In April, the domestic stocks had underperformed global equities by 5% in U.S. dollars due to the emergence of an intense second wave of the Covid-19 pandemic, while Indian equities have outperformed global peers by 1.8% so far this month, Credit Suisse said in a May 6 report.

“India’s total equity market capitalisation fell 1.4% in April, as compared to the 3.6% rise for the world.” With some of the fears abating, the Indian market is up 1.2% in May month-to-date compared with a fall of 0.6% for global equities, it said.

Read the full report here

Shares of Tata Steel gained for the fourth straight session. The stock is up over 36% since April 20, taking the metal index to a new record high.

Continued strength in steel prices will support Tata Steel’s commitment to deleveraging and may also lead to upward rating pressure, according to S&P Global Ratings.

• S&P expects the company to outperform its debt reduction target of at least $1 billion annually in this fiscal year based on current steel prices and capex plans

Passenger vehicle registrations in April were 208,883 units, compared with 279,745 units in March, according to data released by the Federation of Automobile Dealers Associations.

• April commercial vehicle registrations 51,436 units, 23.7% lower m/m
• April motorcycles, scooters registrations 865,134 units, -27.6% m/m
• April tractor registrations 38,285 units, -44.6% m/m
• April total vehicle registrations 1.19 million units, -28.2% m/m
• FADA expects May sales to be sluggish as most of the states have announced an extension of lockdown until the end of the month

Coforge had about 1.3 million shares change hands on BSE, according to data compiled by Bloomberg.

• Most-traded Indian stock by value
• Extends decline to the second day
• Trading volume >3.9x 3-month full-day average
• Shares fell as much as 4.2%, most intraday since April 22
• Buyers, sellers not immediately known

Other Large Trade Alert

• Trident has 3.47 million shares change hands.
• Equitas Small Finance has 1.49 million shares change hands.
• PNB Has 1.3 million shares change hands.

Indian equity benchmarks opened higher, in line with their Asian peers, led by a rally in metal and drugmakers.

The S&P BSE Sensex climbed as much as 0.8% to 49,590.43, while the NSE Nifty 50 Index rose 0.9% to 14,951.25. All 19 sector sub-indices compiled by BSE Ltd. climbed, led by a gauge of metal companies that’s surged to its highest level since 2008.

India’s capital New Delhi extended its lockdown for another week and introduced stricter controls, with the country recording more than 4,000 deaths for a second consecutive day on Sunday. The Reserve Bank of India last week announced support to tackle the covid situation.

“We believe the market could be very volatile depending on how the Covid-19 situation evolves but any deep correction is quite unlikely, making this phase a ‘vulnerability phase’ within the overall bull market context,” analysts led by Amit Sachdeva, at HSBC Securities and Capital Markets (India) Pvt. wrote in a note. Vaccine drives and the overall trend of active cases will be key catalysts for the market, they added.

The Indian rupee’s recent gains could be short-lived as pressure grows on Prime Minister Narendra Modi’s administration to announce a nationwide lockdown to curb a deadly wave of coronavirus infections.

The prospect of stricter curbs is reviving memories of last year when similar measures dragged India’s economy into its worst contraction in four decades. It’s also threatening to weaken the rupee, which is among Asia’s top three performers this month, thanks to heavy foreign inflows for initial public offerings, a dovish Federal Reserve and a glut of dollars at state-run banks.

A technical gauge is also signalling that the rupee’s advance may be losing momentum. The dollar-rupee’s slow stochastics, a momentum indicator, shows that the currency pair is in oversold territory. The rupee rose 0.8% last week to 73.51 per dollar.

Read the full report here

Good Morning!

Asian stocks and U.S. equity futures climbed Monday after the S&P 500 hit a record on weak jobs data that added to the case for ongoing stimulus.

Australian stocks are set to close at an all-time high. Equities advanced from Japan to South Korea, but fluctuated in China. India’s SGX Nifty 50 Index futures for May delivery rose 0.9% to 15,006.50, while MSCI Asia Pacific Index gained 0.6%.

Gasoline jumped as much as 4.2% before paring some of the increase, with U.S. operator Colonial Pipeline providing no timeline for a restart following a shutdown late Friday due to a ransomware attack.

Iron ore futures in Singapore surged on strong demand from China. A “Goldilocks scenario” seems to be forming for commodities amid the economic recovery from the pandemic, according to Goldman Sachs Group Inc.

The dollar held losses after tumbling Friday, while the pound was the top performer among the Group of 10 currencies.

Back home, UltraTech Cement, DMart, Cholamandalam, Bandhan Bank, CSB Bank, IDFC First Bank, Kansai Nerolac, Godrej Agrovet may react as the companies reported quarterly results after the market closed Friday. Foreign investors bought net Rs 1,090 crore of stocks on May 6, according to the NSDL website.