Sensex, Nifty Register Weekly Gains Led By Banks, IT, Metals; RIL Drags

Indian equity benchmarks closed higher for the week, boosted by a rally in banks, metals and technology shares. Reliance Industries was the top loser after unveiling plans for a renewable energy business.

The S&P BSE Sensex climbed 0.4% to 52,925.04, making a weekly advance of 1.1%. The NSE Nifty 50 Index gained by a similar magnitude. Thirteen of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a measure of metal companies.

Reliance Industries said at Thursday’s shareholder meeting that it plans to spend as much as Rs 75,000 crore ($10.1 billion) on a renewable energy business. The stock fell 2.3%, taking its slide this week to 5.4%. The decision may weigh on the share price until there’s clarity on potential returns, analysts at JM Financial wrote in a note. [Read more here]

"An improved prospects of loan recovery along with better outlook of credit growth led banking stocks to rebound", according to Binod Modi, Head Strategy at Reliance Securities.

Meanwhile, he said the sharp rise in crude price with Brent surpassing $75/barrel and recent weakness in rupee have emerged as key overhangs for the market.

"Notwithstanding some adverse impact on economic activities in 1QFY22E, a sharp pickup in capital expenditures in current fiscal is still on the cards. Hence, earnings recovery in FY22E remains promising."

Godfrey Phillips India rises the most in more than a year after the cigarette maker reported a profit for the March quarter that was nearly double that from a year earlier, with lower spending on advertising among the reasons.

• Shares rise as much as 14.3%; most since April 2020

• Trading vol. 28.6x 3-month full-day avg.; set for fifth day of gains

• For March quarter, the company reported profit of Rs 95.43 crore versus Rs 48.26 crore a year earlier and Rs 114 crore in the immediate prior quarter, according to its earnings statement released Friday

  • Revenue rose 22% YoY to Rs 822 crore while advertising costs declined 41% YoY to Rs 23.27 crore

  • The company also announced dividend payout of Rs 24/share for fiscal year ended March

Shares of Allcargo Logistics Ltd. gained as much as 14.22% as the company posted strong fourth-quarter results.

The Mumbai-based logistics firm reported a revenue of Rs 3,349.31 crore for the quarter ended March 2021, up 79% from the year-ago period. Net profit was also up 3.19% at Rs. 53.71 crore.

ICICI Securities upgraded its rating on the stock to ‘buy’ and also raised its target price to Rs 189 from Rs 131. It cited the turnaround of Gati Ltd, the express courier firm that Allcargo Logistics acquired in 2020, as rationale for its change. “The management appears to be on the right track in Gati to deliver through divestment of non-core assets and bring about operational improvements to increase ‘express’ segment Ebitda to 12% in the next 3-5 quarters,” it said in a note dated June 24.

Of the eight analysts tracking the stock, five have a ‘buy’ rating, two suggest a ‘hold’ and one recommend a ‘sell’, according to Bloomberg data.

Indraprastha Gas reported net income for the fourth quarter that missed the average analyst estimate.

• Net income Rs 331 crore, +31% YoY, estimate Rs 364 crore (Bloomberg Consensus)

• Revenue Rs 1,710 crore, estimate Rs 1,560 crore

• Total costs Rs 1,300 crore, -7.1% YoY

• Other income Rs 27.98 crore, -10% YoY

• Ebitda Rs 492 crore, +31% YoY, estimate Rs 529 crore

• Dividend per share Rs 3.60

The fungicide and herbicide maker was subscribed 28.96 times as of 4:00 p.m. on June 25, according to exchange data.

The three-day IPO will see the chemical firm selling shares at Rs 290-296 apiece. The maiden offer comprises a fresh issue of up to Rs 100 crore and an offer-for-sale worth up to Rs 700 crore, according to its red herring prospectus.

Subscription Details

• Institutional subscription: 42.95 times.

• Non-institutional investor subscription: 51.88 times.

• Retail subscription: 11.15 times.

Shares of healthcare service producers rally as India said to prepare a stimulus plan which will include expanding the emergency credit program to 4.5 trillion rupees ($61 billion), according to a Bloomberg report quoting people it didnt identify.

• The expanded credit scheme from the present 3 trillion rupees will cover medical infrastructure, the people said, asking not to be identified as the matter is not public

Indian sovereign bonds decline ahead of a Rs 26,000 crore ($3.5b) debt sale later on Friday. The rupee trades steady, while most other emerging market peers advance.

• 10-year yields rise 2bps to 6.03%; up 3bps on the week; yields on 5-year bond up 8bps this week amid concerns higher oil prices may add to inflation

• USD/INR steady at 74.1725 on Friday; pair rises 0.4% on the week

Shares of Steel Authority of India Ltd. gained as much as 5.6%, the most since May 7, after Kotak Institutional Equities initiated coverage on the stock with ‘buy’ rating.

The brokerage firm said SAIL is well-placed to benefit from strong steel prices coupled with elevated iron ore prices given its high costs and captive iron ore. “Its expansion projects should help deliver volume growth in a tight domestic market and provide operating leverage benefits,” it added.

It cited Chinese policy changes that have structurally elevated steel prices and margins as a potential upside for the stock. It also expects SAIL’s net debt to reduce further to Rs 21,800 crore by FY22 aided by current strong prices. Hence, SAIL would likely end FY22 with the strongest balance sheet, after being the most leveraged steel major in FY20.

Of the 25 analysts tracking the stock, 18 have a ‘buy’ rating, four suggest a ‘hold’ and three recommend a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies an upside of 22.1%.

Kotak has set a 12-month target price for the stock at Rs 170 apiece.

Laurus Labs Ltd. rose 6.1%, making it a fifth straight day of gains. Trading volume was triple the average for this time of day.

• The stock was the best performer among its peers.

• Trading volume was 5.57 million shares, triple the 20-day average of 1.67 million shares for this time of day.

• The relative strength index on the stock was above 70, indicating it may be overbought.

• The shares are up 12% in the past 5 days and rose 29% in the past 30 days.

• Laurus Labs trades at 31 times its estimated earnings per share for the coming year. It trades at 36 times trailing EPS.

• Analysts have eight buy, no hold, and three sell recommendations on the stock.

• The price target of Rs 487 represents a 27% decrease from the last price

Shared of the Blackstone backed company rose as much as 14.7% in early trade but soon pared most of the gains.

The auto parts maker gained 24.2% over its issue price on its debut trade on Thursday.

Sona Comstar’s Rs 5,550-crore initial public offering was subscribed 2.3 times after a three-day share sale.

The IPO comprised fresh issue of shares amounting to Rs 300 crore and an offer for sale aggregating up to Rs 5,250 crore by selling shareholder Singapore VII Topco III Pte Ltd, an affiliate of the Blackstone Group Inc. The company plans to use Rs 241 crore from the fresh issue’s proceeds to pare debt.

Shares of Apollo Hospitals Ltd. gained as much as 4.3% as analysts hiked price targets and cheered on the company’s new acquisition completions, digital foray with Apollo HealthCo and improvement in fourth-quarter Ebitda.

The Chennai-headquartered hospital chain posted a revenue of Rs 2,868 crore, a 2% fall as compared to the same period last fiscal. However, it reported an Ebitda of Rs 412 crore, up 8% from the year-ago period.

Jefferies upgraded its rating on the stock to ‘buy’ from hold, while ICICI Securities, Nomura, Morgan Stanley and Edelweiss all maintained their bullish ratings. All these brokerages also hiked their 12-month price targets.

Of the 24 analysts tracking the stock, 21 have a ‘buy’ rating, none suggest a ‘hold’ and three recommend a ‘sell’, according to Bloomberg data. The stock’s total returns are 36.6% year-to-date, compared with 11% for S&P BSE Sensex.

To read what brokerages had to say, click here

Shares of the drugmaker fell 10% for second straight session. The stock is down around 23% this week.

Promoter Dhanuka Laboratories proposed to sell 32,80,115 equity shares, representing 8.04% of total paid-up equity via offer for sale, on June 24 for non-retail investors and June 25 for retail investors, according to a filing on exchanges.

• Minimum price for the share sale has been set at Rs 375 apiece

Ashok Leyland Ltd. gained as much as 9.6%, the most since Feb. 2, after the commercial vehicle maker reported net income for the fourth quarter that beat the average analyst estimate.

• ICICI Securities analyst Nishant Vass upgraded the recommendation on Ashok Leyland to buy and assigned a target price of Rs 143 today.

• Analysts have 34 buy, 10 hold, and four sell recommendations on the stock.

• The price target of Rs 137.79 represents a 9.2% increase from the last price

Shares of the oil-to-telecom major fell as much as 2.8%, making it the worst performer on the Sensex and the Nifty. The stock was down for a fourth straight session this week.

The Mukesh Ambani-owned conglomerate plans to spend Rs 75,000 crore — Rs 60,000 crore in next three years and Rs 15,000 crore on value-chain partnerships and future technologies — to build an ecosystem to make solar modules and batteries to hydrogen fuel cells in India.

The decision may weigh on the share price until there’s clarity on potential returns, analysts at JM Financial wrote in a note.

Ambani also said Saudi Aramco would invest in the Indian group’s oil-to-chemicals business, and the deal would close this fiscal. Aramco’s chairman, too, would join RIL’s board as an independent director as part of the deal.

India’s stock benchmark swung between gains and losses as a rally in banks and technology shares were offset by losses in index heavyweight Reliance Industries.

The S&P BSE Sensex was little changed at 52,692.31, on course for a weekly advance of 0.6%. The NSE Nifty 50 Index was also flat today, with Reliance Industries the biggest drag on both gauges. Twelve of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a measure of metal companies.

Indian bond traders will await the results of a Rs 26,000 crore ($3.5b) sale of government bonds later on Friday. The rupee may open higher along with other emerging Asian currencies.

• 10-year yields fell 1bp to 6.01% on Thursday; yields on 5-year bond up 3bps this week amid concerns higher oil prices may fuel inflation

• “High crude prices are adding significant inflationary pressure on India,” Oil Minister Dharmendra Pradhan told OPEC’s top official during a video-conference on Thursday, according to a statement on Twitter. He called for “affordable” supplies, with prices in a “reasonable band,” and repeated a request for OPEC+ to boost production

• USD/INR fell 0.2% to 74.1675 on Thursday

  • Implied opening from forwards suggest spot may start trading around 74.19

Asian stocks rose Friday after U.S. shares hit a record on a bipartisan $579 billion U.S. infrastructure deal that stoked economic optimism.

Equities made modest gains in Japan, China and Hong Kong. Australian shares weathered the imposition of virus lockdowns in parts of Sydney. India’s SGX Nifty 50 Index futures for July delivery was little changed at 15,843.50, while MSCI Asia Pacific Index gained 0.6%.

The NSE Nifty 50 Index added 0.7% Thursday to 15,790.45.

S&P 500 and Nasdaq 100 contracts were steady after both indexes reached new peaks. Sectors seen as beneficiaries of the recovery from the pandemic, such as energy, led gains in U.S. hours, and banks rose in postmarket trading after clearing stress tests.

The benchmark 10-year U.S. Treasury yield edged up to 1.50%. Investors took the latest comments from Federal Reserve officials in their stride, after the central bank reassured on supportive policy while signaling that the process of removing exceptional stimulus will be gradual.

The Mexican peso rallied, spurred by an unexpected central bank interest-rate increase. But the Bank of England pushed back against speculation that a surge in U.K. inflation heralds higher borrowing costs. The pound held a dip.

West Texas Intermediate crude oil stayed above $73 a barrel. Traders are awaiting upcoming deliberations among OPEC+ producers that may lead to a supply hike. Bitcoin extended a rebound from a swoon earlier in the week.

Back home, ONGC, Ashok Leyland may react as the companies reported quarterly results after the market closed Thursday. IGL, JSW Energy, Finolex Industries are among the companies scheduled to report earnings Friday. SBI, Kansai Nerolac, Tata Consumer among companies holding their annual shareholders’ meeting. Foreign investors sold net Rs 248 crore of stocks on Wednesday, according to NSDL website.