Sensex, Nifty Close At Record; Power Grid, Tech Mahindra Advance

India’s stock benchmarks closed at record, led by the gains in power, utilities, technology and banking stocks. Small and midcap stocks rebounded after the weakness in previous session. Focus shifts to macroeconomic data as investors eyed July retail inflation and June industrial production data, due later in the day, to gauge the extent and trajectory of economic recovery.

The S&P BSE Sensex gained 0.58% to 54,843.98, a record close for the 30-stock index which hit a new high of 54,874.10 in intraday trade. The NSE Nifty 50 advanced by a similar magnitude to close at a record 16,364.40. The 50-stock index had hit a high of 16,375.50 in intraday trade.

The broader indices recovered after yesterday’s slide and outperformed their larger peers with S&P BSE MidCap adding over 1% and S&P BSE SmallCap gaining nearly 2%. Barring S&P BSE Energy, all the sectoral indices compiled by the BSE Ltd advanced, led by S&P BSE Utilities rising 3% and S&P BSE Power which added over 2.5%.

The market breadth was skewed in favour of the bulls. About 2,361 stocks advanced, 842 declined and 123 remained unchanged.

"Barring pharma, most key sectoral indices traded in green today, while meaningful correction in quality midcap and smallcap stocks attracted investors today in these spaces. Given sharp improvement in key economic indicators like GST collection, auto sales volume despite supply disruption and other high frequency indicators like e-way bills in July indicate sustainable rebound in corporate earnings in subsequent quarters. This should aid market to sustain premium valuations", Binod Modi, Head Strategy at Reliance Securities wrote in a note.

India's major stock benchmarks are set for a record close with broad-based gains. Barring S&P BSE Energy, all the other sectors advanced with S&P BSE Utilities gaining over 3%. All the constituents of the Utilities index rose with Nava Bharat Ventures and Power Grid Corporation adding the most.

Oil India Ltd. reported net income for the first quarter that beat the average analyst estimate.

June Quarter Results (Standalone)

• Net income at Rs 507.94 crore vs estimate of Rs 429 crore (Bloomberg Consensus)

• Revenue at Rs 3,006.99 crore vs estimate of Rs 3,020 crore

• Total costs at Rs 2,393.41 crore vs Rs 2,699.32 crore QoQ

• Other income at Rs 63.79 crore vs Rs 1,330.11 crore QoQ

Shares of Oil India pared over 4% gains post the Q1 numbers. Of the 20 analysts tracking the company, 14 maintained ‘buy’, 3 maintained ‘hold’ and 3 maintained ‘sell’ recommendations. The overall consensus price of analysts tracked by Bloomberg implied an upside of 5.4%

Coal India Ltd. plans to have 3 GW of solar power generation capacity by March 2024, part of efforts to reduce its carbon footprint, exchange filings by the company showed.

• Coal India is currently building 455 MW of solar projects, including a 100 MW facility it won in an auction.

• Company plans to raise annual coal output to 1 billion tons by FY24.

• India’s coal demand could reach 1.5 billion tons by 2030, if power consumption grew by 8% per year from now.

• Coal India had identified 23 mines for closure in FY21, out of which 12 mines have been shut down.

Indian groceries-to-fashion conglomerate Future Group has assured lenders that a unit that missed a $14 million bond coupon payment will pay the obligation before the grace period ends later this month, according to a Bloomberg report.

• Future Retail Ltd., the nation’s second-largest supermarket chain, had missed the dollar note interest payment due July 22, citing an adverse impact from the pandemic.

• The firm had said then that it would seek to make the payment within the grace period of 30 days allowed by the bond rules.

Shares of Bharat Petroleum Corporation Ltd. declined nearly 2% to Rs 442.10 apiece after the company reported net income for the first quarter that missed the average analyst estimate.

June Quarter Results (Standalone)

• Net profit at Rs 1501.65 crore vs estimate of Rs 1881 crore (Bloomberg Consensus)

• Revenue at Rs 70921.28 crore vs estimate of Rs 72342 crore

• EBITDA at Rs 3,252.74 crore vs estimate of Rs 3,281 crore

• EBITDA margins at 4.6% vs estimate of 4.5%

• Total costs at Rs 88,065.64 crore vs Rs 95,175.14 crore QoQ

• Other income at Rs 451.72 crore vs Rs 1,664.01 crore QoQ

Shares of Indian Railway Catering and Tourism Corporation Ltd. rose 5.72% to Rs 2,719.40 apiece after the company reported first quarter numbers. Net income missed the average analyst estimate while revenue was in-line.

June Quarter Results

• Net income at Rs 82.52 crore vs estimate of Rs 84.07 crore (Bloomberg Consensus)

• Revenue at Rs 243.37 crore vs estimate of Rs 240 crore

• Total costs at Rs 146.86 crore vs Rs 216.17 crore QoQ

• Other income at Rs 14.57 crore vs Rs 19.46 crore QoQ

Commentary and Context

• Company approves splitting each share into five.

• Stock split to comply with guidelines on capital restructuring of Central Public Sector Enterprises.

Natco Pharma Ltd. reported net income for the first quarter that beat the average analyst estimate.

June Quarter Results (Consolidated)

• Net income at Rs 75 crore vs estimate of Rs 69.15 crore (Bloomberg Consensus)

• Revenue at Rs 410.3 crore vs estimate of Rs 406 crore

• Total costs at Rs 336.3 crore vs Rs 289 crore QoQ

• Other income at Rs 17 crore vs Rs 28.4 crore QoQ

Commentary and Context

• Pandemic continues to impact revenue but recovered compared to March quarter.

• Company has strong product launches both in export markets and domestic India business during the current financial year and expects good growth.

Of the 15 analysts tracking the company, 7 maintained 'buy', 5 maintained 'hold' and 3 maintained 'sell' recommendations. The overall consensus price of analysts tracked by Bloomberg implied an upside of 12.6%

Shares of Bharat Forge Ltd. gained 6.53% to Rs 833.80 apiece after the company reported net income for the first quarter that beat the average analyst estimate.

June Quarter Results (Standalone)

• Net income at Rs 166.69 crore vs estimate of Rs 147 crore (Bloomberg Consensus)

• Revenue at Rs 1,371.85 crore vs estimate of Rs 1,160 crore

• Total costs at Rs 1,122.94 crore vs Rs 1,062.53 crore QoQ

• Other income at Rs 33.29 crore vs Rs 31.96 crore QoQ

Commentary and Context

• First quarter numbers include one-time expense of Rs 61.65 crore.

• In an exchange filing, the company stated that India’s domestic automotive industry across segments is being impacted by many issues ranging from sharp increase in input costs, semiconductor shortage and interruption to economic revival due to covid. The FY22 outlook remained strong as industrial business is poised to grow meaningfully in the medium to long term driven by the revival of the capex cycle in India, potential opportunities arising out of the various PLI schemes and defence manufacturing in India.

Out of the 29 analysts tracking the company, 20 maintained ‘buy’, 3 maintained ‘hold’ and 6 maintained ‘sell’ recommendations. The overall consensus price of analysts tracked by Bloomberg implied a downside of 3.9%.

India’s stock benchmarks rose to record high, aided by the gains in power and tech stocks as investors eyed key economic data due later in the day to gauge the extent and trajectory of economic recovery. .

The S&P BSE Sensex was up 0.47% to 54,782.08 after hitting a record of 54,808.14 in intra-day trade. The NSE Nifty 50 advanced by a similar magnitude to 16,354.70. The 50-stock index had hit a new high of 16,361.35 in intraday trade.

The broader indices recovered after yesterday’s slide and outperformed their larger peers with S&P BSE MidCap adding 0.7% and S&P BSE SmallCap gaining over 1.7%.

Barring S&P BSE Consumer Durables, all the sectoral indices compiled by the BSE Ltd advanced, led by S&P BSE Utilities, up over 2% and S&P BSE Power which added nearly 2%.

The market breadth was skewed in favour of the bulls. About 2,273 stocks advanced, 807 declined and 129 remained unchanged.

Shares of Power Grid Corporation of India Ltd. gained 4.03% to Rs 183.45 apiece, the most in two months. Trading in the company’s call options was triple the average. Trading volume was 18.3 million shares, almost triple the 20-day average of 6.28 million shares for this time of the day.

Power Grid approved a proposal to infuse fresh equity up to Rs 425 crore in Energy Efficiency Services Ltd., a joint venture of Power Grid, NTPC, PFC and REC, exchange filings show. The company reported net income for the first quarter that beat the average analyst estimate, on Tuesday.

Out of the 25 analysts tracking the company, 21 maintained ‘buy’ and 4 maintained ‘hold’ recommendations. The overall price consensus of analysts tracked by Bloomberg implied an upside of 9%

Sales of passenger vehicles, which include cars and SUVs, rose to 264,442 units in July from 182,779 units a year ago, Society of Indian Automobile Manufacturers says in a statement.

• July local car sales 130,080 units vs 102,773 YoY

• July local two-wheeler sales 1.25 million units vs 1.28 million YoY

• July local three-wheeler sales 17,888 units vs 12,728 units YoY

• India automakers face “heavy headwinds” in the form of global semiconductor shortage and steep rise in commodity prices, Siam Director General Rajesh Menon says in statement.

Shares of Lupin Ltd. shed over 6% to Rs 986.65 apiece and extended its decline for the fourth day. The company had reported the first quarter numbers post market hours Tuesday. Analysts turned cautious on the stock and flagged off unfavourable product mix, low U.S. sales, rising competition and delay in inspection at key facilities are areas of concern.

Prabhudas Lilladher

• Downgrades to ‘reduce’ from 'accumulate' with a target price decreased to Rs 955 from Rs 1,314 earlier.

• Unfavourable product mix and non-supply penalty led to margin contraction.

• Delay in resolution of two key plants a matter of concern as they account for 50% of pending ANDAs.

• Tailwind in India formulations acute-therapy drugs was the only silver-lining.

• Disappointed with declining sales and slower ramp up in key generics including key complex generics like Levothyroxin and Albuterol.

Macquarie

• Maintains ‘underperform’ with a target price of Rs 1,018, an implied downside of 11.5%

• Lower U.S. sales and gross margins led to weak core Q1 performance.

• Increased competition in Famotidine likely to be a major behind behind sequential decline in U.S. sales.

• Near to medium-term hopes hinge largely on the success of Albuterol and Brovana AG.

• Delay of inspection of Lupin’s facilities under Official Action Indicated (OAI) could hurt growth prospects.

Motilal Oswal

• Maintains ‘neutral’ with the target price unchanged at Rs 1,240.

• Domestic Formulation sales were up 27.3% YoY while API Sales declined 40%.

• Addition of low-margin authorized generic sales for g-Brovana and higher raw material cost led to margin contraction.

• Lower interest and tax rate led to the sharp uptick in net profit.

Of the 42 analysts tracking the company, 21 maintained ‘buy’, 8 maintained ‘hold’ and 13 analysts maintained ‘sell’ recommendation. The overall consensus price of analysts tracked by Bloomberg implied an upside of 13.2%.

Aptus Value Housing Finance India Ltd.’s IPO witnessed demand on the final day of the subscription with the offer getting subscribed 9.79 times when markets closed.

The initial public offering of Chemplast Sanmar Ltd. was fully subscribed on day 3 with the IPO getting subscribed 1.19 times at the time of closing bell. The retail portion of the offering was subscribed 2.10 times.

• Follow the subscription updates live:

• Aptus Value Housing Finance IPO Subscription Updates: Day 3

• Chemplast Sanmar IPO Subscription Updates: Day 3

Shares of Bata India Ltd. added over 5% to hit a 52-week high of Rs 1,755 apiece after the company reported June quarter numbers post market hours Wednesday.

First Quarter Results (Consolidated, QoQ)

• Revenue at Rs 267 crore Vs Rs 589.90 crore

• Net loss of Rs 69.40 crore Vs net profit of Rs 29.40 crore

• Ebitda loss at Rs 31.70 crore Vs Ebitda gain of Rs 112 crore

Dolat Analysis & Research Themes

• Maintains ‘accumulate’ with the target price raised to Rs 1,770, an implied upside of over 6%.

• Sales down due to nationwide lockdowns during major part of the quarter as closure of malls and restricted working hours had an adverse impact.

• Expect Bata to recover sales growth and regain lost momentum with the gradual re-opening of malls, schools and offices.

• E-Commerce sales and Bata Store on Wheels initiative aided growth in the June quarter.

ICICI Securities

• Maintains ‘reduce’ with the target price raised to Rs 1,500, an implied downside of 10.88%.

• Weak performance continued in June quarter due to operating restrictions.

• Company likely to be a key beneficiary of improved mobility as things normalize.

• Inferior product mix is likely to weight on profitability.

• Efforts to scale-up digital initiatives a positive factor.

Of the 15 analysts tracking the company, 10 maintained ‘buy’, 1 maintained ‘hold’ and 4 analysts maintained ‘sell’ recommendations. The overall consensus price of analysts tracked by Bloomberg implied a downside of 0.6%

India’s stock benchmarks rose, with broad based gains across sectors barring pharma stocks, as investors eyed July retail inflation and June industrial production data to gauge the extent and trajectory of economic recovery.

The S&P BSE Sensex gained 0.15% to 54,609.33. The NSE Nifty 50 advanced by a similar magnitude to 16,309.20. ITC Ltd. contributed the most to the index gain, increasing 1.4%. Power Grid Corp. of India had the largest increase, rising 2.7%.

The broader indices recovered after yesterday’s slide and outperformed their larger peers with S&P BSE MidCap adding 0.3% and S&P BSE SmallCap gaining over 1%. Fifteen out of the 19 sectoral indices compiled by the BSE Ltd. advanced, led by S&P BSE Utilities, up over 0.6%.

The market breadth was skewed in favour of the bulls. About 1,747 stocks advanced, 702 declined and 70 remained unchanged.

Indian bonds traders will await a Rs 25,000 crore ($3.4 billion) purchase of debt by the central bank to see what cutoff yields the authority will be offering for the various papers. Traders will also watch for the release of July CPI print, which is expected to show some easing from the previous month.

• RBI to buy 5.63% 2026, 7.17% 2028, 7.26% 2029, 7.61% 2030 and 7.95% 2032 bonds as part of its G-SAP program.

• July retail inflation is expected to ease to 5.72% y/y as against 6.26% the previous month, as per a Bloomberg survey. June industrial production is expected to show a 14% YoY growth against the 29.3% the previous month, a separate survey shows

Asian stocks were mixed on Thursday as China’s regulatory push sapped sentiment, overshadowing a Wall Street record on easing inflation that reduced concerns about an imminent pull back in Federal Reserve stimulus.

Equities edged up in Japan, fluctuated in China and slipped in Hong Kong. U.S. contracts were little changed after the S&P 500 hit an all-time high and the tech-heavy Nasdaq 100 fell amid a rotation to cyclical shares. Ten-year Treasuries pared gains spurred by a strong auction and a U.S. inflation report supporting the view that price pressures are transitory. The dollar held a drop.

India’s SGX Nifty 50 Index futures for Aug. delivery rose 0.2% to 16,323.00, while MSCI Asia Pacific Index shed 0.2%. The NSE Nifty 50 Index closed little changed Wednesday at 16,282.25.

China released a five-year plan calling for greater business regulation as Beijing pursues a crackdown that has shaken investors. One of the latest steps is stepped up scrutiny of insurance technology platforms. The central bank also faces calls to cut interest rates as virus outbreaks hamper the economy. Credit in China expanded last month at the slowest pace since February 2020.

In the U.S., prices paid by consumers climbed at a slower pace in July but remained elevated. The inflation trajectory has implications for the Fed’s likely timeline for tapering bond purchases and President Joe Biden’s push for unified Democrat support for another $3.5 trillion in social spending.

Elsewhere, oil held a climb as a weaker dollar offset a smaller-than-expected decline in crude stockpiles. Bitcoin traded around $46,000 following a sharp rally since mid-July.

Back home, Cummins India, CESC, Bata, HEG, CreditAccess may react as the companies reported quarterly results after the market closed Wednesday. Tata Steel, BPCL, Hero, Eicher Motors, Ashok Leyland, Page, Aurobindo Pharma, Bharat Forge are among the companies scheduled to report earnings Thursday.

Government to release June industrial-production and July consumer-price inflation data. MRF, Page Industries, Cummins, CSB Bank, Bata, Equitas Small are holding their annual shareholders’ meeting. Foreign investors sold net Rs 80.15 crore of stocks on Tuesday, according to NSDL website.