Sensex, Nifty Take A Breather From Record Run Ahead Of RBI Policy

Indian equity benchmarks ended lower today and took a breather from a rally to record highs ahead of Reserve Bank of India’s policy decision Thursday.

The S&P BSE Sensex closed 184 points or 0.46 percent lower at 40,083.54 and the NSE Nifty 50 ended at 12,021.65, down 0.55 percent. The broader market index represented by the NSE Nifty 500 Index closed 0.47 percent lower.

The 31-stock index and the 50-share gauge had clocked record highs of 40,312.07 and 12,103.05 respectively yesterday. The markets will be shut Wednesday on account of Id-Ul-Fitr.

The market breadth was tilted in favour of sellers. About 990 stocks declined and 789 shares advanced on National Stock Exchange.

Nine out of 11 sectoral gauges compiled by NSE ended lower, led by the NSE Nifty IT Index’s 1.6 percent fall. On the flipside, the NSE Nifty PSU Bank Index was the top sectoral gainer, up 0.25 percent.

JTEKT India

• Stock rose as much as 3.3 percent to Rs 117.50.
• Trading volume was almost 11 times its 20-day average.

GE Power India

• Stock rose as much as 5.4 percent to Rs 929.
• Trading volume was more than nine times its 20-day average.

IDBI Bank

• Stock rose as much as 10.5 percent to Rs 40.70.
• Trading volume was more than quadruple its 20-day average.

About 48 lakh shares of Mahindra Logistics changed hands in a block deal, Bloomberg data showed. Buyers and sellers were not known immediately.

Adani Ports & Special Economic Zone Ltd. will buy back as much as Rs 1,960 crore worth of its shares.

The company will repurchase 3.92 crore shares (or 1.89 percent of equity) at Rs 500 apiece, according to its stock exchange notification today. The price is at a premium of 17.6 percent from the current market price.

The company also announced dividend of Rs 0.2 per share.

Shares of Adani Ports pared losses and rose as much as 1.2 percent to Rs 429.85 after the announcement.

Shares of Axis Bank erased losses and rose as much as 1.6 percent to hit an all-time high at Rs 826.25.

The NSE Nifty Bank Index pared losses and rose 0.24 percent, led by the gains in Bank of Baroda and Yes Bank.

About 13 lakh shares of Motherson Sumi changed hands in a block deal, Bloomberg data showed. Buyers and sellers were not known immediately.

Indian equity benchmarks were trading at day’s low. Sensex fell 176 points and Nifty traded near 12,025, down 0.53 percent.

Shares of the oil marketing companies halted a three-day decline. Indian Oil Corporation fell 1.7 percent and Bharat Petroleum Corporation fell 1.3 percent. Shares of Hindustan Petroleum Corporation fell 0.7 percent.

Seven out of 11 sectoral gauges compiled by NSE declined, led by the NSE Nifty IT Index’s 1 percent fall. On the flipside, the NSE Nifty PSU bank Index was the top sectoral gainer, up 1.15 percent.

About 12.7 lakh shares of ITC changed hands in a block deal, Bloomberg data showed. Buyers and sellers were not known immediately.

Nifty’s 12,100 call option contract was among the most active Nifty option contracts on National Stock Exchange.

Premium on the weekly contract which is set to expire Thursday fell 26.4 percent to Rs 36.10. Over 6.7 lakh shares were added to the open interest which stood at over 21.04 lakh shares.

Shares of Dr. Reddy’s Laboratories traded 0.17 percent higher at Rs 2,728 on NSE. The stock fell 12 percent intraday. This after the stock futures fell near Rs 2,400.

On BSE, the scrip traded 0.5 percent higher at Rs 2,732.50 after falling 10 percent intraday.

Trading volume was more than nine times, its 20-day average, Bloomberg data showed. The stock advanced 33 percent in the past 12 months compared to a 15 percent gain in the Sensex.

Shares of Jubilant Life Sciences extended declines for the third consecutive trading session. The stock fell as much as 2.5 percent to Rs 476.10, the lowest since August 2016.

The stock traded at 7.5 times its estimated earnings per share compared to a 12.3 times for the two-year historical average, according to Bloomberg data.

Shares of ICICI Bank fell as much as 1.3 percent to Rs 417.50 and shares of Axis Bank fell as much as 0.88 percent to Rs 805.80.

Fitch Ratings Inc. has downgraded two leading private sector lenders ICICI Bank Ltd. and Axis Bank Ltd. as India’s banking industry remains under stress, according to a PTI report.

Fitch Ratings said it took the action after lowering its midpoint for India's operating environment to 'bb+' from 'bbb-' following a review of the banking sector's performance, its regulatory framework and the outlook in the near term, the news agency said quoting Fitch report.

Shares of L&T Technology Services fell as much as 1.8 percent to Rs 1,687.

Larsen & Toubro plans to sell 3.88 percent stake in the company. The promoter will sell up to 40.34 lakh shares at a floor price of Rs 1,650 a piece—a discount of about 4 percent to current market price—through an offer-for-sale, according to an exchange filing.

Trading volume as 30-times its 20-day average, Bloomberg data showed. The stock traded at 21 times its estimated earnings per share for the coming year.

Shares of Bharti Airtel fluctuated between gains and losses to trade 0.16 percent higher at Rs 353.30.

The company’s Africa unit plans to raise $750 million plus a greenshoe option of 15 percent of $750 million from IPO, according to its stock exchange filing. The total proceeds from IPO could be close to $862.5 million, the statement added.

Of the shares traded, 39 percent were at the ask price and 45 percent were at the bid, according to Bloomberg data.

Indian equity benchmarks opened lower, led by the declines in Tata Consultancy Services Ltd. and Infosys Ltd.

The S&P BSE Sensex fell as much as 138 points or 0.34 percent to 40,130 and the NSE Nifty 50 fell as much as 0.38 percent to 12,042. The broader market index represented by the NSE Nifty 500 Index fell as much as 0.33 percent.

The market breadth was slightly tilted in favour of buyers. About 716 stocks advanced and 715 shares declined on National Stock Exchange.

Eight out of 11 sectoral gauges compiled by NSE declined, led by the NSE Nifty IT Index’s 1 percent fall. On the flipside, the NSE Nifty Realty Index was the top sectoral gainer, up 0.24 percent.

The Indian rupee opened higher against the U.S. dollar. The home currency appreciated as much as 0.32 percent to 69.05 against the greenback.

June Futures

• Nifty futures closed at 12,104, premium of 16 points
• Nifty Futures open interest up 9 percent, adds 15.9 lakh shares
• Bank Nifty futures closed at 31,679.9, premium of 26 points
• Bank Nifty futures open interest up 9 percent, adds 1,6 lakh shares in open interest

Options

• Nifty PCR at 1.75 Vs 1.3 (across all series)

Nifty Weekly Expiry June 6

• Max open interest call side at 12,100 (14.8 lakh shares)
• Max open interest on put side at 12,000 (25.9 lakh shares), 11,900 (25 lakh shares)
• open interest addition seen at 12,000P (+21 lakh shares), 11,900 P (+13.4 lakh shares)
• open interest shedding seen at 12,000C (-12.9 lakh shares)

Nifty Monthly Expiry June 27

• Max open interest on call side at 12,500 (18 lakh shares)
• Max open interest on put side at 11,500 (26 lakh shares)

On Indian Autos

Nomura

• May-19 volumes: PVs surprise positively, while other segments disappoint.
• Measures to address liquidity and recent fall in oil prices can lead to demand recovery in the second half of the current financial year.
• Recovery likely to be slower than expectation.
• Most companies are likely to see further consensus estimate cuts.

UBS

• Demand softness continues; two wheelers demand sluggish.
• Passenger vehicles and Tractors volumes slump.
• Trucks remain weak but Ashok Leyland volumes relatively better.

More Calls

HSBC on Maruti Suzuki

• Maintained ‘Hold’ with a price target of Rs 7,200.
• Some green shoots but a long, tough ride ahead.
• Maruti retail traction remains weak as well.
• On a positive note, enquiries picked up post-election; quality and sustenance of these is critical.

UBS on Indian Consumer Sector

Key Highlights From March Quarter:

• Volume growth was 6.4 percent, a sharp slowdown from 9.9 percent growth in nine months of the previous financial year
• Growth differential between rural and urban significantly narrowed in the fourth quarter.
• Gross margin trends and commentary were different across sub-segments.
• Discretionary companies grew at an average rate 2.2 times that of staples in 2018-19.
• This indicates robust urban demand despite the uncertain rural outlook.
• Our top picks in the sector: ITC, Asian Paints, Godrej, Titan and Britannia.

JMFinancial on AMC

• Price hikes across liquid schemes should mitigate Total Expense Ratio-cut pain.
• Four of top five AMCs take price hikes in liquid MF schemes.
• Banning of upfront commissions will continue to aid profitability in the transition period.
• Larger AMCs will be able to maintain their profitability in the current financial year.

Citi on IndusInd Bank

• Maintained ‘Buy’ with a price target of Rs 1,980.
• Expects growth in CV financing segment to remain healthy.
• Reiterated that entire 1.9 percent exposure to stressed groups is part of below investment grade.
• Expects the merger to get formal NCLT approval in few weeks and will deliver synergies from day one.

Citi on HDFC Bank

• Maintained ‘Buy’ with a price target of Rs 2,800.
• HDFC Bank is looking to step-up its branch presence from the current network of 5,103 branches.
• Management depth remains strong.

Citi on Ambuja Cements

• Maintained ‘Buy’ with a price target of Rs 285.
• Pace of capacity additions has slowed down since 2005-11 and should decline further.
• Management expects industry demand should grow 7-8 percent in 2019-20.
• Pricing to be resilient in the North, Centre and West.
• Management is evaluating solar power and participation in captive power projects to save cost.

Citi on Havells India

• Maintained ‘Buy’ with a price target of Rs 850.
• For room ACs, summers have been good and Havells has put through a price hike.
• Next focus area is launching refrigerators; expect definite announcements over next 6-9 months.
• Started working on expanding its distribution network to tier-3/ tier-4 towns.

Citi on Balkrishna Industries

• Balkrishna growth to outperform industry growth.
• FY20 volume growth guidance for Balkrishna is 3-5 percent versus negative 15-20 percent for the tyre industry.
• Margins to remain in 25-28 percent range; currently, margins are at lower end of this range.
• Balkrishna could be carbon black surplus with both phases of the carbon black plants operational.

Citi on Varroc Engineering

• Despite slowdown in auto industry, management noted that there are no pricing pressures.
• Volume growth in 2019-20 expected to be in range of 7-10 percent, Ebitda Margin to be in double-digits.
• Varroc should benefit from BS-VI transition with increase in demand.
• FY20 revenues from BS-VI related components expected to be Rs 550 crore versus Rs 100 crore.

CLSA on FY19 GST Collection

• Weak end to FY19 fiscal builds FY20 worries.
• GST collections weaken, cess issues may emerge.
• FY20 has seen a sluggish start adding to concerns of limited fiscal space.
• This puts a floor to the bond yield correction despite our expectation of a 100 basis point policy rate cut
• GST compliance measures are badly needed.
• Government’s ability to give a fiscal boost rests largely on RBI’s return of capital.

CLSA on India Financials

• See limited impact on Fitch’s rating cut on ICICI Bank and Axis Bank.
• Incremental issuances may become a tad difficult, and risks can arise from other downgrades.
• With slippages moderating see turnaround in earnings from FY20 as credit costs normalise.

CLSA on United Spirits

• Maintained ‘Sell’ with a price target of Rs 450.
• Management sounded positive on India and reiterated its double-digit medium-term growth and margin guidance of mid-to-high teens.
• Focus to remain on execution, cost optimisation, working capital savings and agility.
• Cost saving is in the DNA, but easy gains are already made; further upsides looks difficult.

• Adani Enterprises promoter group Gautam Adani revoked pledge of 41.62 lakh shares on May 31.
• Sun Pharma promoter group Shanghvi Finance revoked pledge of 41 lakh shares on May 30.
• Adani Ports & SEZ promoter group Gautam Adani revoked pledge of 40.21 lakh shares on May 30.
• Max Financial Services promoter group Max Ventures Investment Holdings created pledge of 5 lakh shares on May 30.
• Sical Logistics promoters created pledge of 17.2 lakh shares and revoked pledge of 6 lakh shares from May 8-30.
• Atul promoter Aagam Holdings revoked pledge of 1.5 lakh shares on May 30.
• Future Lifestyle Fashions promoter Ryka Commercial Ventures revoked pledge on 25 lakh shares on May 31.
• Chambal Fertilisers & Chemicals promoter groups created pledge of 8.4 lakh shares on May 30.
• AU Small Finance Bank promoter Chiranjilal Agarwal created pledge of 25.5 lakh shares from May 10-13.

Mahindra & Mahindra

• Caisse De Depot Et Placement Du Quebec acquired 2.2 crore shares or 1.86 percent equity at Rs 648 each.
• Promoter MM Benefit Trust sold 1.92 crore shares or 1.63 percent equity at Rs 648 each.

Bharat Financial Inclusion

• Goldman Sachs Singapore acquired 8.32 lakh shares or 0.59 percent equity at Rs 1,004 each.
• Europacific Growth Fund sold 8.32 lakh shares or 0.59 percent equity at Rs 1,004 each.

Swaraj Engines

• Mahindra & Mahindra acquired 1.77 lakh shares or 1.46 percent equity at Rs 1,387 each.
• Jupiter India Fund sold 1.77 lakh shares or 1.46 percent equity at Rs 1,387 each.

Allsec Technologies

• Conneqt Business Solutions acquired 53.9 lakh shares or 35 percent equity at Rs 319 each.
• Promoter Adiseshan Saravanan sold 27.31 lakh shares or 17.9 percent equity at Rs 319 each.
• Promoter Ramamoorthy Jagadish sold 26.56 lakh shares or 17.4 percent equity at Rs 319 each.

• CESC Ventures: acquired 64.6 percent stake in Herbolab India Private Limited for Rs 32.2 crore. The company is involved in manufacturing of Ayurveda medicines and products.
• L&T Technology Services’ promoter Larsen & Toubro plans to sell 3.88 percent stake in the company. The promoter will sell up to 40.34 lakh shares at a floor price of Rs 1,650 a piece—a discount of about 4 percent to current market price—through an offer-for-sale, according to an exchange filing.
• Wipro set June 21 as record date for share buyback.
• Dr. Reddys Laboratories to re-launch Zenatane capsules in the U.S. market.
• GE Power India awarded contract worth Rs 738.3 crore by NTPC JV for engineering work on a full turnkey basis.
• Mahindra’s arm entered into a partnership with Japan based Mitsui to jointly develop and operate distributed solar power generation projects in India. The unit will continue to hold 51 percent stake in the joint venture.
• Essel Propack’s acquisition plans of up to 75 percent of shareholding in the company by Epilson Bidco was approved by the Competition Commission of India. (Twitter)
• Welspun Enterprises’s HAM project in Maharashtra received appointed date for the project as May 26 from Public Works Department. The project has achieved financial closure.
• Lemon Tree Hotels said that it has taken a Chandigarh property of 102 rooms from its arm on a lease basis.
• Saregama India lauched Carvaan Mini in Bengali.
• ICICI Bank’s long-term issuer default rating downgraded by Fitch to ‘BB+’ (Junk) from ‘BBB-’. Senior unsecured debt rating rated by Fitch to ‘BB+’. Outlook remains stable.
• Axis Bank’s long-term issuer default rating downgraded by Fitch to BB+ from BBB-. Senior Unsecured Debt Rating was downgraded by Fitch to BB+ from BBB-. Outlook to stable from negative.

• U.S. President Donald Trump meets U.K. Prime Minister Theresa May in London Monday.
• Tuesday sees the Reserve Bank of Australia policy meeting, with many expecting an interest-rate cut.
• China President Xi Jinping begins a two-day visit to Russia on Wednesday.
• Theresa May steps down on Friday as leader of the Conservative Party.
• Friday’s U.S. jobs report is projected to show payrolls rose by 190,000 in May, unemployment held at 3.6 percent, a 49-year low, and average hourly earnings growth sustained a 3.2 percent pace.

• Brent crude fell 0.9 percent to $60.79 per barrel.
• West Texas Intermediate crude lost 0.4 percent to $53.05 a barrel.
• Gold was steady at $1,325.88 an ounce after sliding.

London Metal Exchange

• Copper halted a three-day fall, closed 0.2 percent higher.
• Zinc ended lower for the second day, down 2.2 percent.
• Aluminium closed 0.98 percent lower.
• Nickel ended loser for the second day, down 1.2 percent.
• Lead closed higher for the second day, up 0.28 percent.
• Tin ended 2.32 percent higher.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.4 percent to 12,070 as of 7:30 a.m.

Asian stocks were mostly lower Tuesday after a technology rout sank Nasdaq shares overnight.

Equity benchmarks edged down in Japan, China, Hong Kong and South Korea. Australian shares were little changed.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell podcast.