Sensex, Nifty Snap Two-Day Winning Streak As Metals, Lenders Drag

India equity benchmarks snapped a two-day winning streak as investors weighed declining coronavirus infections in the nation against the impact of global inflationary pressures and fund outflows.

The S&P BSE Sensex fell 0.6% to 49,902.64, after reaching a two-month high on Tuesday. The NSE Nifty 50 Index also gained by a similar magnitude. Eleven of the 19 sector sub-indices compiled by BSE Ltd. dropped, led by a gauge of telecom companies. On the flip side, the S&P BSE Realty index gained the most, closing at 2.2% higher.

“Concerns from rising inflationary pressure globally and increasing apprehension among investors about Federal Reserve’s soft monetary stance due to sharp rise in CPI inflation may weigh on sentiments,” Binod Modi, strategist at Mumbai-based Reliance Securities Ltd. said in a note. “Investors will continue to focus on trajectory of daily caseload and vaccination ramp up in the country in the near term.”

Indian Oil reported net income for the fourth quarter that beat the average analyst estimate.

• Net income Rs 8,780 crore vs. loss Rs 5,190 crore YoY, estimate Rs 4,720 crore
• Revenue Rs 1.64 lakh crore, +17% YoY, estimate Rs 1.30 lakh crore
• Total costs Rs 1.54 lakh crore, +6.9% YoY
• Other income Rs 1,100 crore, -36% YoY
• To pay final dividend of Rs 1.5 per share
• FY21 average GRM $5.64 per barrel vs $0.08 per Bbl YoY

• Tata Motors options volume 2.7x the 20-day average, with 88,763 calls changing hands vs 40,179 puts
  • Stock down 4.6%, volume 1.7x the 20-day average for this time of day
• UPL options volume 1.9x the average, with 36,216 calls vs 12,530 puts
  • Stock up 1.5%, volume 1.3x the average
• Mahindra options volume 1.6x the average, with 11,228 calls vs 6,256 puts
  • Stock down 1.4%, volume 0.7x the average

Shares of the agri and fine chemicals maker fell as much as 7.2% after a disappointing fourth-quarter performance.

• Company’s Q4 operating profit margins contracted by 279 bps YoY, leading to Ebitda growth of 22%, according to note
  • Net profit for 4Q was Rs 180 crore, compared with a Rs 1.9-crore estimate in a Bloomberg survey
• Higher other income helped negate the poor performance, the note said

Indian sovereign bonds rise as a slide in crude prices eases concern about price pressures in the net-oil importing nation. The central bank’s plan to purchase Rs 35,000 crore ($4.8 billion) of government bonds Thursday is also aiding sentiment.

• Traders look forward to the results of a 360b-rupee ($4.9b) sale of Treasury bills due later on Wednesday
• 10-year yields down 1bp at 5.97%; 6.64% 2035 yield drops 1bp to 6.60%
• USD/INR falls 0.1% to 72.9650; pair down about 0.6% in four trading sessions

The first 2-3 months of the financial year are crucial for the RBI to keep it tight so that yields don’t flare up, Anoop Verma, bond trader at DCB Bank

• Eventually, the market starts believing that the RBI will always be there, and it won’t be wise to go short on bonds because then you get caught on the wrong foot
• Once the market starts believing it's not prudent to short, you can then only stay away from the market or go long

Shares of the Jaguar Land Rover owner dropped as much as 6.1% after it reported a surprise loss on account of exceptional items even as demand for its cars and utility vehicles lifted domestic sales.

The automaker reported a loss of Rs 7,585 crore in the January-March period against the Rs 2,941-crore profit in the quarter ended December, according to an exchange filing. A consensus of analysts tracked by Bloomberg had pegged the bottom line at Rs 2,774 crore. [read the full earnings report here]

Torrent Pharmaceuticals Ltd. rose 5%. Trading in the company's call options was quadruple the average.

• Trading volume was 470,561 shares, ten times the 20-day average of 47,422 shares for this time of day.
• Trading in the company's call options totalled 2,797 contracts, compared with the average of 749 over the past 20 days. Trading in the company's put options totalled 292 contracts, compared with the average of 94 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. It trades at 47 times trailing EPS.
• Analysts have 17 buy, eight hold, and nine sell recommendations on the stock.
• The price target of Rs 2,892.18 represents a 1.1% increase from the last price

India stocks swung between gains and losses as investors weighed declining coronavirus infections in the nation against the impact of global inflationary pressures and fund outflows.

The S&P BSE Sensex rose 0.1% to 50,260.42, trading at a two-month high. The NSE Nifty 50 Index also gained by a similar magnitude. Fifteen of the 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of realty companies. Both indices have gained about 3% this week.

The nation added 267,334 new cases in a day on Tuesday, sharply lower than over 400,000 at the start of the month. Still, death due to the virus have climbed above 4,500 to a record. Foreign investors have withdrawn $966 million from local stocks this month through Monday.

Adani Green Energy Ltd. said it has agreed to buy SoftBank Group Corp.’s renewable power business in India, bolstering its efforts to expand capacity.

Adani Green, controlled by billionaire Gautam Adani, signed pacts for the acquisition of a 100% interest in SB Energy India from SoftBank and partner Bharti Group, according to statements to stock exchanges. The deal values SB Energy at $3.5 billion.

To read the full story, click here

The Specified Undertaking of the Unit Trust of India or SUUTI will sell a little more than half its shareholding in Axis Bank Ltd. through an offer for sale.

SUUTI proposes to sell up to 3.6 crore equity shares, representing 1.21% of paid up equity share capital, the bank said in an exchange notification. It also retains the option to sell an additional 2.2 crore shares or 0.75% of equity share capital.

The floor price for the OFS is set at Rs 680 per share. The offer for sale will be open on May 19 and May 20.

Read the full report here

Good morning!

Asian stocks tracked U.S. declines Wednesday as concern about faster inflation shadows the economic recovery from the pandemic. A dollar gauge ticked up from near the lowest level this year.

Australia underperformed, with the benchmark on track for its worst day in almost three months.

Shares also fell in Japan and China after key U.S. equity benchmarks closed lower and large technology stocks like Amazon.com Inc. and Microsoft Corp. erased gains.

Contracts on the S&P 500 and Nasdaq 100 were in the red. The Singapore-traded SGX Nifty, an early indicator of India's Nifty 50 Index’s performance, fell 0.6% to 15,064.50 as of 8:30 a.m.

A slide in crude on the possibility of more supply from Iran hurt energy stocks. Treasury yields were steady. Bitcoin and other cryptocurrencies extended a retreat after China warned digital tokens can’t be used as a form of payment. Markets are closed Wednesday in Hong Kong and South Korea for holidays.

Back home, Tata Motors, Torrent Pharma, GSK Pharma, Aarti Industries, PI Industries may react as the companies reported quarterly results after the market closed Tuesday. Indian Oil, Indiabulls Housing are the companies scheduled to report earnings Wednesday. Foreign investors sold net Rs 1360 crore of stocks on May 17, according to NSDL website.