Sensex Gains 600 Points Day After Modi’s Historic Win

Indian equity indices closed at record highs as investors were buoyed with optimism after the Narendra Modi-led government was reelected for a second term.

The S&P BSE Sensex ended 1.6 percent higher at 39,434.70 and the NSE Nifty 50 ended at 11,844.10, up 1.61 percent. The broader market index represented by the NSE Nifty 500 Index ended 1.77 percent higher.

The market breadth was tilted in favour of buyers. About 1,405 stocks advanced and 342 shares declined on National Stock Exchange.

All sectoral gauges compiled by NSE ended higher, led by the NSE Nifty PSU Index’s 5.59 percent gain.

Shares of JSW Steel rose as much as 5.6 percent to Rs 291.50 apiece after the its fourth quarter earnings were announced.

Net profit of the company declined nearly 50 percent to Rs 1,523 crore, according to the Mumbai-based company's exchnage filing.

Other Highlights:

• Revenue up 4.8 percent to Rs 22,368 crore.
• Ebitda fell 16 percent to Rs 4,440 crore.
• Margin at 19.85 percent versus 24.80 percent.
• Total expenses up 12.7 percent to Rs 20,058 crore.

Theresa May said she will resign as the prime minister Of United Kingdom on June 7. May said her successor will have to find a parliament consensus on Brexit issue.

Nifty PSU Bank index emerged as the top sector gainer among the gauges compiled by National Stock Exchange. Bank of India and Union Bank were among the top gainers.

Vallabh Bhansali, chairman of Enam Group speaks to BloombergQuint in an interaction.

Here are the key highlights from the conversation:

• It's a never before opportunity presented to PM Modi to tap India’s growth potential and present it the way it should be.
• Three areas to be focused on is water management, energy sector and health sector.
• Massive opportunity to relocate industries to the country from China amid ongoing trade war.
• We have to involve start-ups to get "out of the box" solutions to problems faced in the rural India.
• Economy has been starved of liquidity on pretext and fears of transmissions not happening.
• Injecting liquidity into the economy is a top priority and requirement.
• The murmur and the complaints against Goods and Services Tax has almost died down.

Shares of the asset management company snapped its seven-day gaining streak and declined 4.3 percent intraday to Rs 224.50 apiece.

Trading volume on the stock was more than three times its 20-day average for this time of the day, Bloomberg data showed.

Reliance Nippon Life Asset Management Ltd.’s promoter Reliance Capital plans to sell 8.66 percent stake in the company worth Rs 1,155 crore. The promoter will sell up to 5.3 crore shares at a floor price of Rs 218 apiece—a discount of about 7.6 percent to current market price—through an offer-for-sale, according to an exchange filing.

The Hinduja Group, which recently threw its hat in the ring for a potential investment in Jet Airways Ltd, has laid down tough conditions for any investment in the airline. The conditions, unlikely to be acceptable to Jet’s bankers, mean that the future of the airline remains uncertain.

Shares of Jet Airways traded 3.7 percent lower at Rs 150.10. The stock fell 8.4 percent intraday.

About 24 lakh shares of Mindtree changed hands in two block deals, Bloomberg data showed. Buyers and sellers were not known immediately.

Indian equity benchmarks are trading at day’s high. The S&P BSE Sensex surged nearly 400 points and the NSE Nifty 50 traded above 11,750.

Ten out of 11 sectoral gauges compiled by NSE advanced, led by the NSE Nifty PSU Bank’s 3.75 percent gain. On the flipside, the NSE Nifty IT Index was the only sectoral loser, down 0.11 percent.

Shares of the multiplex chain rose as much as 10 percent to hit an all-time high at Rs 356.

Trading volume was more than 16 times its 20-day average, according to Bloomberg data. The relative strength index on the stock was more than 70, indicating it may be overbought.

Neelkanth Mishra, co-head of Asia Pacific Strategy and India strategist at Credit Suisse speaks To BloombergQuint in an interaction.

Here are the key highlights from the conversation:

• Investors will now have to focus on fundamentals as the political verdict is out.
• Cement, steel and staple companies are showing pockets of strength.
• Expect the Government to prioritise on judicial reforms and direct tax reform.
• Earnings growth for the larger indices will move higher.
• Premium of Indian markets has not expanded as compared to other global peers.
• No meaningful reform can be done without disruption.
• Expect banks to do we given the expectation of strong earnings growth in 2019-20.

Nifty’s 11,800 call option contract was among the most active Nifty option contracts on National Stock Exchange.

Premium on the contract fell 40.5 percent to Rs 52.60. Over 6 lakh shares were added to the open interest which stood at over 25.28 lakh shares.

Mark Mobius, founding partner at Mobius Capital Partners Speaks To BloombergQuint in an interaction.

Here are the key highlights from the conversation:

• Modi got a bigger mandate than anyone’s expectations.
• Big challenge for Modi is addressing the Farm Distress issue.
• Have been bullish on India for quite sometime.
• Want to invest more into Indian equities post elections outcome.
• Looking at medium and small sized companies in India.
• Need to see real action and reforms from Modi Government for confidence in markets to be maintained.
• ETFs, Index funds allocation is more into China as its weight has moved up.
• Consumer spending is moving up.
• Consumer spending is moving up in India.
• Need more infra spending in areas like roads, airports and railways.
• Would prefer to invest more in India even if wait is higher.
• Infra spending is expected to increase, need to look at companies which supplies goods to infra sector.
• NBFCs and Infra goods suppliers could provide investment opportunities.

Sun TV Network (Q4, YoY)

• Stock fell as much as 4.4 percent to Rs 561.30.
• Revenue up 23.9 percent to Rs 889 crore.
• Net profit down 2.4 percent to Rs 283 crore.
• Ebitda up 16.3 percent to Rs 608.1 crore.
• Margin at 68.4 percent versus 72.9 percent.
• Depreciation up 2 times to Rs 242 crore.
• Other Expenses up 52 percent to Rs 70 crore.

Eclerx Services (Q4, YoY)

• Stock rose as much as 4.4 percent to Rs 947.40.
• Revenue up 1.1 percent to Rs 365.1 crore.
• Net profit down 7.8 percent to Rs 59 crore.
• Ebitda down 0.7 percent to Rs 80.8 crore.
• Margin at 22.1 percent versus 22.5 percent.
• Other income down 40 percent to Rs 9.6 crore.

Novartis India (Q4 , YoY)

• Stock fell as much as 2.8 percent to Rs 697.10.
• Revenue down 11.9 percent to Rs 110.4 crore.
• Net profit down 26.4 percent to Rs 19.5 crore.
• Ebitda profit at Rs 19.9 crore versus Ebitda loss of Rs 22 crore.
• Other income down 88 percent to Rs 13.4 crore.

HealthCare Global Enterprises (Q4, YoY)

• Stock rose as much as 6.2 percent to Rs 208.70.
• Revenue up 16.7 percent to Rs 257.1 crore.
• Net loss of Rs 8.7 crore versus net profit of Rs 2.6 crore.
• Ebitda up 3.3 percent to Rs 31.4 crore.
• Margin at 12.2 percent versus 13.8 percent.
• Medical items purchase expenses up 24 percent to Rs 56.8 crore.
• Board approves issuing preference shares worth Rs 20.2 crore to U.S. based investor Dr. Kunnathu Geevarghese.

General Insurance Corporation of India (Q4, YoY)

• Stock rose as much as 1.8 percent to Rs 230.70.
• Revenue down 27.1 percent to Rs 6,092 crore.
• Net Premium written down 21 percent to Rs 5,774.8 crore.
• Net profit down 19.7 percent to Rs 603.4 crore.
• Board declared dividend of Rs 6.75 per share.

Eros International Media (Q4, YoY)

• Stock rose as much as 10 percent to Rs 75.85.
• Revenue down 5.9 percent to Rs 224.6 crore.
• Net profit up 14.6 percent to Rs 69.7 crore.
• Ebitda down 31.5 percent to Rs 61.9 crore.
• Margin at 27.6 percent versus 37.9 percent.
• Other Income up 2 times to Rs 38.6 crore.
• Film rights costs up 11 percent to Rs 88.7 crore.
• Deferred tax reversal of Rs 26.7 crore.

The markets are not expected to give mega return since the valuations are not cheap, ICICI Prudential Mutual Fund’s Executive Director and Chief Investment Officer S Naren told BloombergQuint in an interaction.

In Naren’s view:

• Financial and formalisation of economy is needed going ahead.
• Land prices were kept elevated by NBFCs and real estate players over past five years.
• Factors of cheaper land, labour and capital is needed to addressed by Government.
• GST needs to be implemented with lesser leakages by Government.
• Outlook for equities has improved for next 5 years post the clear political mandate.
• Need to emerge as a strong manufacturing base taking advantage of US - China Trade War.
• Government needs to work on turning around PSUs.
• Investors should look at dynamic and balance advantage funds.
• MSCI re-balancing selling in the market will create an opportunity.
• Market correction will make valuations reasonable moving ahead.
• Do believe that in the next 10-year period, small caps can perform better than mega caps.

Shares of Just Dial fell as much as 7.1 percent, the most since October 2018, to Rs 693.90.

The stock halted its eight-day gaining, its longest is in over 14 months. The scrip rose 14 percent in the past five days and advanced 24 percent in the past 30 days, Bloomberg data showed. Just Dial traded at 22 times its estimated earnings per share for the coming year, Bloomberg data showed.

Shares of the engineering equipment maker rose as much as 2.5 percent to Rs 144.90.

Greaves Cotton modified its share buyback plan. The board approved to buyback 5.32 percent of share capital at Rs 175 per share aggregating to Rs 227.5 crore, according to an exchange notification.

The stock traded at 16 times its estimated earnings per share for the coming year, according to Bloomberg data.

Shares of Gruh Finance fell as much as 7.5 percent, the most in over four months, to Rs 305.

About 2.36 crore shares or 3.4 percent equity of the housing finance company changed hands in six block deals, Bloomberg data showed. Buyers and sellers were not known immediately.

Of the shares traded, 24 percent were at the ask price and 73 percent were at the bid, Bloomberg data showed. The stock returned 4.7 percent so far this year compared to a 8.7 percent gain in the Sensex.

Indian equity benchmarks opened higher in today’s trade, led by the gains in HDFC Ltd., HDFC Bank Ltd., and Reliance Industries Ltd.

The S&P BSE Sensex rose as much as rose as much as 1.06 percent to 39,223 and the NSE Nifty 50 rose as much as 1.02 percent to 11,775. The broader market index represented by the NSE Nifty 500 rose as much as 0.97 percent.

The market breadth was tilted in favour of buyers. About 1,033 stocks advanced and 400 shares declined on National Stock Exchange.

All the sectoral gauges compiled by NSE advanced, led by the NSE Nifty Realty Index’s 1.38 percent gain.

The Indian rupee opened higher against the U.S. dollar. The home currency appreciated as much as 0.43 percent to 69.71 against the greenback.

The drop in oil prices is also likely to boost the rupee. In a post-election note, Goldman Sachs said it forecasts the rupee to ease to 71 per dollar on a 12-month horizon amid expectations of a widening current account gap.

Indian bonds may open stronger as a retreat in oil prices eases concern about inflation and as results on Thursday showed Prime Minister Narendra Modi securing a second term.

In a sign of political stability, Modi’s Bharatiya Janata Party swept to another single-party majority, a margin that surprised political watchers who expected him to return with a slightly weakened mandate.

The yield on the benchmark 2029 bonds fell two basis points Thursday to close at 7.24 percent after touching 7.19 percent, the lowest since April 2018. It is down 12 basis points for the week.

Futures –May series

• Nifty futures closed trading at 11,692.4, premium of 35 points versus 43 points
• Nifty open interest down 2 percent, sheds 3.2 lakh shares in open interest

Bank Nifty

• Bank Nifty futures closed trading at 30,477.9, premium of 69 points versus 79 points
• Bank Nifty open interest up 8 percent adds 1.1 lakh shares in open interest

Options

• Nifty PCR at 1.05 versus 1.12 (across all series)

Nifty Monthly Expiry 30 May

• Max open interest on call side at 12,500 (57.2 lakh shares) followed by 12,000 (47.7 lakh shares)
• Max open interest on Put side at 11,000 (38.2 lakh shares) followed by 11,500 (22.3 lakh shares)
• Max open interest addition seen at 12,500C (+18.9 lakh shares), 12,000P (+9.9 lakh shares)

Stocks In F&O Ban

In Ban:

• Adani Power
• IDBI Bank

Out Of Ban:

• Reliance Capital

On Election 2019 Results

CLSA

• Absolute majority for BJP would reduce the need for competitive populism.
• Some near-term pro-farmer announcements would be likely.
• Expect further push to affordable housing.
• Mid caps should be back in favour as domestic flows are expected to improve.
• Potential policy rate cut and market-friendly ministerial council would be next trigger.
• U.S.-China trade war and rich valuations to cap market returns to single digit.

Macquarie

• Verdict reduces risk of populism significantly, but unlikely to see major departure from existing policies.
• India stand to gain flows with global trade worries.
• Focus would move monetary policy to the front in the near term followed by budget.
• Recommend shifting from defensives and large caps to high beta domestic sectors and mid caps.
• Positive on Private Banks/Industrials/Real Estate; Negative on Consumption and NBFCs.

HSBC

• Near term growth could inch up as election uncertainties fade.
• But rise in potential growth to depend on whether reforms to augment capital and labour are undertaken.
• Expect short-term gains on currency but long-term strains.
• On rates, we remain cautious on duration.
• Government could focus on fiscal reforms, raising the investment cycle, continuing with banking sector clean-up, easing land acquisition, streamlining labour regulation and continuing efforts to raise rural income.

UBS

• Policy choice and reform narrative key to markets moving forward.
• Stimulating growth faces fiscal challenges; public capex may disappoint ahead.
• Base case is Nifty at 12,000 by Dec 2019; Upside/downside scenarios are 13,000/10,500.
• Overweight on Private Banks, Property, Oil & Gas, Consumer Discretionary and Auto-4W.
• Most Preferred:- Asian Paints, Axis Bank, BPCL, Britannia Industries, Cipla, Federal Bank, Godrej Properties, ICICI Bank, Infosys, ITC, Maruti Suzuki, NTPC, Petronet LNG, Reliance Industries, SBI.

On Sun TV

Macquarie

• Maintained ‘Outperform’; cut price target to Rs 700 from Rs 725.
• Tariff order impacts March quarter’s top line
• Tariff order impact to normalize by the September.
• Increased churn from Arasu augurs well; Telco deals with Sun Nxt should drive subscription growth.

CLSA

• Maintained ‘Buy’; cut price target to Rs 730 from Rs 770.
• Weak March quarter performance hit by TRAI’s new regime.
• OTT/SunNXT ramping up well and is awaiting agreement with Jio.
• Valuations are inexpensive.

More Calls

CLSA on ONGC

• Maintained ‘Buy’ with a price target of Rs 400
• Same government may eliminate subsidy worry; confirmation trigger next week.
• More action to slash oil subsidies is likely.
• Buy for 125 percent in three years.

CLSA on Adani Ports

• Maintained ‘Buy’ with a price target of Rs 475.
• Yangon – a long and profitable acquisition.
• See this as a profitable acquisition with 18-20 percent RoEs.
• Funding is not a problem as its post-acquisition leverage shall rise 8 percent in 2020-21.
• Expect this strategic asset to deliver 16 percent growth in port Ebitda over FY19-21.

CLSA on eClerx

• Maintained ‘Sell’; cut price target to Rs 880 from Rs 900.
• Growth surprise, but no confidence on sustainability.
• Margins rebounded, but will remain volatile till onsite reaches scale.
• Reiterate Sell till there is business visibility and sustainable margin recovery.

• UFO Moviez to move into short term ASM Framework.

• Max Financial Services promoter group Max Ventures Investment Holdings created pledge of 60,000 shares on May 20.
• Future Lifestyle Fashions promoter Ryka Commercial Ventures created pledge of 21.5 lakh shares on May 22.
• Chambal Fertiliser & Chemicals promoter Zuari Global created pledge of 2.5 crore shares on May 21.
• Aurobindo Pharma promoter group M Sumanth Kumar Reddy created pledge of 2.5 lakh shares on May 20.
• Wockhardt promoter Themisto Trustee created pledge of 1.5 lakh shares on May 20.

(As reported on May 23)

Earnings To Watch

• Grasim Industries
• JSW Steel

Other Earnings To Watch

• REC
• Page Industries
• Coffee Day Enterprises
• Dish TV India
• Dixon Technologies (India)
• Indraprastha Gas
• Advanced Enzyme Technologies
• Amber Enterprises
• Ashok Leyland
• AstraZeneca Pharma
• Bata India
• Birlasoft
• Butterfly Gandhimathi Appliances
• Varroc Engineering
• Camlin Fine Sciences
• Excel Industries
• FDC
• GIC Housing Finance
• Goodricke Group
• GVK Power & Infrastructure
• HeidelbergCement India
• Housing & Urban Development Corporation
• IDFC
• Jai Corp
• Jindal Stainless (Hisar)
• Liberty Shoes
• Mawana Sugars
• Meghmani Organics
• Nagarjuna Fertilizers and Chemicals
• Nagarjuna Oil Refinery
• NCC
• OnMobile Global
• Panama Petrochem
• PNC Infratech
• Ponni Sugars (Erode)
• Punjab & Sind Bank
• Transport Corporation of India
• TCI Developers
• Unichem Laboratories
• Zuari Global
• Sudarshan Chemical Industries
• Responsive Industries
• Nesco
• Empire Industries
• Fortis Healthcare
• Narayana Hrudayalaya
• Welspun India
• Whirlpool

• Adani Enterprises: Decisions on whether to approve two outstanding management plans for Adani’s proposed Carmichael coal mine are due by June 13, ABC News reports citing comments from Queensland Premier Annastacia Palaszczuk.
• Reliance Nippon Life Asset Management’s promoter Reliance Capital plans to cumulatively sell 8.66 percent stake in the company aggregating to Rs 1,155 crore. The promoter will sell up to 5.3 crore shares at a floor price of Rs 218 apiece—a discount of about 7.6 percent to current market price—through an offer-for-sale, according to an exchange filing.
• Ruchi Soya Industries: CARE Rating downgraded long-term bank facility worth Rs 9,915.2 crore as ‘CARE D’. The reason behind this downgrade is that the issuer has not been co-operating. The company is under provisions of IBC by order of NCLT with effect from December 2017.
• Zuari Agro Chemicals: ICRA downgraded both short term and long term funds worth Rs 4,215 crore to ‘D’. Rating Agency said the downgrade is on account of the company's cash credit account remaining over utilised for more than 30 days owing to devolvement of a series of Letters of credit beginning April and continuing in May, and liquidity position of the company deteriorated materially due to significant cash losses and delay in subsidy receipts from government of India during April-May.
• Radico Khaitan: Pollution Control Board revoked the closure directions on the company’s Uttar Pradesh plant. The directions for closure were received on Feb. 21 on environmental issues concerning liquid discharge. The company also stated in their press release that the Pollution Control Board has directed the company to restrict its capacity of molasses plant for country liquor from 200 KLD to 77 KL until June 30 and an additional environmental compensation of Rs 1.18 crore. These moves will not impact IMFL manufacturing operations and for country liquor manufacturing, the impact will be minimal, it said.
• Cipla signed an agreement to acquire 26 percent stake in AMP Solar Power Systems for Rs 12.9 crore. The commercial operation of the target company will start from May 2020.
• Omax Autos entered into an asset purchase agreement with Hema Engineering Industries.
• Zensar Technologies partnered with South African based insurance company Sanam to provide digital solutions.
• Greaves Cotton modified its share buyback plan. The board approved to buyback 5.32 percent of share capital at Rs 175 per share aggregating to Rs 227.5 crore.
• MOIL inked an MoU with Ministry of Steel for financial year 2020. Production target of 14.75 lakh tons of manganese ore and capex target of Rs 210 crore set.

• Brent crude rose 0.37 percent to $68.19 per barrel.
• West Texas Intermediate crude added 0.6 percent to $58.26 a barrel.
• Gold gained less than 0.1 percent to $1,283.83 an ounce.

London Metal Exchange

• Copper fell for the fifth consecutive trading session.
• Aluminium halted a four-day fall, closed 1 percent higher.
• Nickel ended lower for the second day, down 0.72 percent.
• Lead ended 0.44 percent higher.
• Tin ended flat.
• Zinc ended lower for the second day, down 0.87 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.54 percent to 11,742 as of 7:20 a.m.

Stocks in Asia pared losses, though remain on track for a third week of losses, as investors digest the latest headlines on the trade war.

Declines on Japan’s Topix index eased, with shares in Hong Kong opening higher alongside gains in S&P 500 Index futures. Shares in Australia and South Korea remained lower.

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

With inputs from Bloomberg.