Sensex, Nifty Close Flat After A Volatile Session As IT Leads, Metals Drag

India stocks fell after key stock indices closed at record high levels yesterday.

The S&P BSE Sensex fell 0.1% at 52,275.57, while the NSE Nifty 50 Index closed little changed at 15,740.10. State Bank of India Ltd. and HDFC Ltd. contributed the most to declines on both measures, dropping around 1.2%. Fourteen of the 19 sector gauges compiled by BSE Ltd. advanced, led by information technology stocks.

India’s daily Covid-19 cases dropped below 100,000 for the first time in two months as the government vowed to speed up an inoculation drive. Most Asian stocks slipped as investors await more news on whether the recovery from the pandemic will stoke price pressures and imperil looser monetary policy.

“The market has factored in the positives of slowing pace of infections and has shifted focus on the emerging inflation trends in the U.S. and the likelihood of Fed raising rates,” said Kranthi Bathini, a strategist at Wealthmills Securities Ltd. “Still, the global investment environment remains favourable and stable for equities.”

United Breweries Ltd. rose 4.8%. Trading in the company's call options was triple the average.

• The stock was the best performer among its peers.
• Trading volume was 964,756 shares, 56% above the 20-day average of 619,454 shares for this time of day.
• Trading in the company's put options totalled 1,343 contracts, compared with the average of 402 over the past 20 days. Trading in the company's call options totalled 7,296 contracts, compared with the average of 2,885 over the same period.
• The relative strength index on the stock was above 70, indicating it may be overbought.
• United Breweries trades at 73 times its estimated earnings per share for the coming year. It trades at 310 times trailing EPS.
• Analysts have 13 buy, two hold, and two sell recommendations on the stock.
• The price target of Rs 1,365.44 represents a 3.2% decrease from the last price

Indian equity benchmarks fluctuated between gains and losses after opening at fresh record highs.

The S&P BSE Sensex was little changed at 52,342.34, but remains on track for a fresh record high, while NSE Nifty 50 Index was trading flat as well at 15,748.90 -- after touching a record high of 15,778.80.

The broader market outperformed their larger peers. The S&P BSE MidCap gained 0.37% and S&P BSE SmallCap advanced 0.97%. Seven of the 19 sector sub-indices compiled by BSE Ltd. declined, led by metal stocks. The S&P BSE Information Technology was the best performer, up 2.91%.

The market breadth was slightly skewed in favour of the bulls. About 1,753 stocks gained, 1,366 declined and 140 remained unchanged.

Shares of Piramal Enterprises Ltd. rise after the Mumbai-based conglomerate’s plan to take control of Dewan Housing Finance Ltd. via bankruptcy process was approved by the company law court.

• Shares rise for third consecutive day, gaining as much as 7.7%, their biggest single-day surge since Feb. 15
• Piramal is acquiring Dewan Housing at around Rs 3,400 crore, assets include Rs 38,500 crore of net loans, Rs 1,000 crore of insurance and cash of Rs 9,500 crore rupees, Citi analysts wrote in a note
• The analysts see the implied purchase price of loans at Rs 24,000 crore or 0.6x of the book value
• The acquisition will be funded with around Rs 19,550 crore of bonds, carrying a 6.75% coupon, which will result in lowering the cost of funds for Piramal that stood at 10.8% for FY21, the note says
• The company’s share of retail loans should rise to ~45% vs 12% currently
• “A more granular book should get financing at lower rates and open up the possibility of a rating upgrade,” the note added.
• Citi retains buy rating on Piramal, raises price target to Rs 2,260 from Rs 2,110

Market watchers haven’t been this bullish on State Bank of India in almost two decades, as they bet on the lender’s improving asset quality to help it weather the pandemic.

Among 48 analysts who cover the stock, 47 recommend buy and only one has a hold rating -- a ratio of 98% that’s the highest since June 2004, according to data compiled by Bloomberg. The consensus 12-month price target calls for an 18% gain, nearly double that for the benchmark S&P BSE Sensex Index.

Read the full report here.

Metropolis Healthcare Ltd. leads the decline in shares of India’s diagnostic companies as the coronavirus wave in the country continues to slow down, which will ease demand for testing and related pathology services.

• India’s daily additions of coronavirus fell below 100,000 cases on June 8, a decline of more than 75% from the peak in early May, according to a government statement
• India aims to accelerate its vaccination program, as it announced free shots for all adults and also changed rules for the procurement of jabs

Pathology, healthcare-service providers decline

• Metropolis shares decline as much as 3.9%, before paring some losses to trade 1.5% lower in Mumbai; peers Dr Lal PathLabs Ltd. and Thyrocare Technologies Ltd. were down 0.7% and 2.8%, respectively
• Hospital stocks also fell as new rules will cap the service charges for inoculations at Rs 150
• Max Healthcare Institute Ltd. fell 3.3%, Shalby Ltd. -1.6%, Fortis Healthcare Ltd. -0.6%
• Vaccine makers traded lower, led by 2.6% decline in Cadila Healthcare Ltd.; Dr. Reddy’s Laboratories Ltd. -1%, Gland Pharma Ltd. -0.6%
• Shares of logistics companies were mostly higher; Snowman Logistics Ltd. +1.3%, Mahindra Logistics Ltd. +0.8%

Indian Overseas Bank and Central Bank of India gained for the second session, after a report says the government may sell stakes in two of such banks as a part of its divestment programme.

• Bank of India may also be a potential candidate for sale, the Times of India reported Monday, citing people familiar with the matter it didn’t identify.
• Indian Overseas Bank gains as much as 8.8% to the highest since Jan 29, 2018
• Central Bank shares rise as much as 6.5%, up for a fifth straight session

Shares of Indian power companies advanced, driving the S&P BSE Utilities Index up as much as 1.8% to a record high intraday, amid optimism that power consumption will recover as businesses gradually reopen from localised lockdowns.

• Top power-consuming states Maharashtra, Uttar Pradesh, Gujarat and Tamil Nadu began easing restrictions on business operations from Monday, in light of the slowing pace of new coronavirus cases
• “Utilities sector trades at P/B of 1.3x, a 32% discount to its historical average,” Motilal Oswal Financial Services Ltd. wrote in June report
• The index has gained for the seventh consecutive session.

India's benchmark equity index climbed to a record high as investors expect the gradual lifting of curbs by states to help economic activity recover.

The S&P BSE Sensex rose 0.2% to 52,432.43, while the NSE Nifty 50 Index gained a similar magnitude to a record high of 15,778.80. Out of 30 shares on the Sensex, 15 rose and 15 fell. Eighteen of the 19 sector indices compiled by BSE Ltd. advanced, led by a gauge of utilities, which rose to a new all-time high.

“Economic activity is likely to gather momentum as most states are gradually opening up since fresh Covid cases have fallen,” said Narendra Solanki, head of equity research at Anand Rathi Shares & Stock Brokers. “Also, sustained foreign fund inflow also supported the markets.”

Foreign investors bought $383.5 million of local shares this month through Thursday, taking total inflows this year to nearly $7 billion.

Shyam Metalics & Energy Ltd. plans an initial public offering of as much as Rs 909 crore, including Rs 657 crore via issue of new shares, according to an advertisement in the Financial Express newspaper Tuesday.

• The founders and shareholders of the company plan to sell Rs 252 crore worth shares in the IPO, lower than Rs 450 crore they had aimed to raise when the company had filed its initial prospectus in Feb.
• Investors can bid for minimum 45 shares of face value Rs 10 in the IPO which opens for subscription June 14 and closes June 16
• ICICI Securities, Axis Capital, IIFL Securities, JM Financial and SBI Capital are managing the initial sale in the Kolkata-based maker of long steel products and ferro alloys

The rupee could advance for a second day after the government announced it’ll offer free vaccines to those over 18. Bond traders await the sale of state government debt.

• USD/INR fell 0.3% to 72.8087 on Monday, the biggest drop in two weeks
  • Implied opening from forwards suggests spot may start trading around 72.84
• 10-year yields fell 1bp to 6.02% on Monday
• RBI to sell Rs 26,000 crore of governmentt bonds June 11
• Global funds sold a net INR1.86b of Indian stocks Monday: NSE
  
  • They bought Rs 7 crore of sovereign bonds under limits available to foreign investors, and withdrew Rs 306 crore of corporate debt
  • State-run banks sold Rs 4,220 crore of sovereign bonds on June 7: CCIL data. Foreign banks bought Rs 1300 crore of bonds

Asian stocks were steady and U.S. equity futures rose Tuesday as investors await more clues on the outlook for inflation and central bank stimulus amid the recovery from the pandemic.

Shares in Japan, Hong Kong and China reversed gains to inch lower. India’s SGX Nifty 50 Index futures for June delivery little changed at 15,784.50, while MSCI Asia Pacific Index little changed. The NSE Nifty 50 Index added 0.5% Monday to 15,751.65.

S&P 500 futures edged up and Nasdaq 100 contracts outperformed, weathering an international plan to ensure big firms such as Amazon.com Inc. pay a minimum level of tax.

The dollar ticked up and Treasury yields slipped. Traders are awaiting the U.S. inflation report to assess price pressures and expectations that the Federal Reserve is getting closer to starting talks about tapering asset purchases.

Oil extended a decline, losing some momentum after hitting $70 a barrel in New York for the first time in over two years. Digital tokens including Bitcoin retreated, with the Bloomberg Galaxy Crypto Index shedding as much as 8%.

Back home, Union Bank, New India Assurance, Mrs. Bectors may react as the companies reported quarterly results after the market closed Monday. Petronet LNG, Max Financial, Prestige Estate are among the companies scheduled to report earnings Tuesday. Foreign investors bought net Rs 1510 crore of stocks on June 4, according to NSDL website.