Sensex, Nifty Close At Record High Led By Lenders; Titan Jumps 6.7%

India’s key stock gauge climbed to a new record amid optimism that accelerated vaccination efforts will help revive the economy ravaged by the coronavirus.

The NSE Nifty 50 Index advanced 0.7% to 15,690.35, while the S&P BSE Sensex also rose by a similar magnitude to 52,232.43 -- a new record close for both the large-cap benchmarks. All of the 19 sector sub-indices compiled by BSE Ltd. climbed, led by a gauge of consumer durable companies.

A gauge of India’s consumer stocks climbed to a record high on optimism that a pick up in the pace of vaccinations and gradual reopening of businesses from localised lockdowns will help revive demand for air-conditioners, ceiling fans, washing machines and other consumer-utility products.

India announced ordering 300 million doses of the coronavirus vaccine from local manufacturer Biological-E while the daily additions for coronavirus cases continue to decline.

India’s real-estate stocks surged after the government rolled out a model law that aims to overhaul the legal framework for rental housing in the country.

• The law, titled the Model Tenancy Act, proposes to establish legal authority to handle issues related to tenancy, form courts to handle related matters in every state to ensure speedy dispute resolution, according to a government statement issued Wednesday

• The act will make renting more lucrative for both landlords and tenants by plugging the many gaps that currently exist in policies regulating the rental-housing segment, Pritam Chivukula, a director at Mumbai-based Tridhaatu Realty & Infra Pvt Ltd., said in a statement

India is planning to ask for proposals from investment banks this month for the initial public offering of Life Insurance Corp. of India, according to a Bloomberg report quoting people familiar with the matter.

The government will send out invitations in the coming weeks for the share sale of the country’s biggest insurer, said the people, who asked not to be identified as the discussions are private. An offering could happen as soon as March 2022, the people said.

Shares of Spandana Sphoorty Financial jumped 20%, the biggest move since the company's IPO on Aug. 19, 2019. Trading volume was almost 40 times the average for this time of day.

• The relative strength index on the stock was above 70, indicating it may be overbought.
• The shares are up 16% in the past 5 days and rose 11% in the past 30 days.
• Stock advanced 27% in the past 52 weeks. The Sensex gained 53%.
• Spandana Sphoorty Financial trades at 26 times its estimated earnings per share for the coming year.
• Insiders hold a 16% stake. In the past six months, they cut their holdings by less than 0.1%. Officers and directors disclosed 15,000 shares of open market purchases at an average price of Rs 675.45 a share and 20,000 of sales at Rs 742.70 a share.
• Of the six analysts tracking Spandana Sphoorty, 5 have a ‘buy’ rating, 1 suggests a ‘hold’, according to Bloomberg data. The average of 12-month consensus price targets implies an upside of 20.1%

Source: Bloomberg

• Titan Co options volume 3.9x the 20-day average, with 64,346 calls changing hands vs 18,884 puts
  • Stock up 5.1%, volume 2.6x the 20-day average for this time of day
• IndusInd Bank options volume 2.8x the average, with 27,374 calls vs 26,355 puts
  • Stock down 2.2%, volume 2.1x the average
• Adani Ports options volume 2.2x the average, with 52,449 calls vs 14,074 puts
  • Stock up 2.3%, volume 1.4x the average
• Eicher Motors options volume 2.1x the average, with 10,277 calls vs 2,485 puts
  • Stock up 2.5%, volume 0.9x the average
• ONGC options volume 1.8x the average, with 18,875 calls vs 3,732 puts
  • Stock up 4.4%, volume 1.3x the average

Indian sovereign bonds trade little changed as traders bid at a Rs 32,000-crore ($4.4b) bond auction, before the central bank’s rate decision on Friday.

• The Reserve Bank of India will keep the benchmark repurchase rate at 4%, according to all but one of the 31 economists surveyed by Bloomberg. Traders will be watching for cues on an extension of a bond-buying program as well as for any change in language on its policy stance guidance
• 10-year yields steady at 6%; fell 2bps on Wednesday
• The RBI may raise bond purchases to about 1.5 trillion rupees under the second tranche of its government securities acquisition program for 2Q fiscal 2022. That would be up from an announced 1 trillion for fiscal Q2, according to Bloomberg Economics
• USD/INR steady to 73.14; pair rose about 0.9% in the previous three trading sessions to Wednesday

A gauge of India’s services sector contracted for the first time in eight months, with the intensification of the Covid-19 crisis causing renewed declines in new business and output.

The India Services Business Activity Index, compiled by IHS Markit, stood at 46.4 in May compared with 54 in April 2021, according to a media statement. A reading above 50 indicates expansion in business activity.

The Composite PMI Output Index, too, dropped to 48.1 from 55.4 in April, a reading indicative of a moderate pace of reduction.

While PMI data released at the start of the month showed that the manufacturing industry managed to keep its head above water in May, the service sector struggled as the pandemic escalated. the release said.

Shares of the auto parts maker fell as much as 6.9%, the most since April 12, after some foreign brokerages downgrade the stock.

• Trading volume was 31.6 million shares, eight times the 20-day average of 3.94 million shares for this time of day.
• Trading in the company's put options totalled 9,499 contracts, compared with the average of 3,937 over the past 20 days. Trading in the company's call options totalled 18,054 contracts, compared with the average of 13,040 over the same period.
• Analysts have 20 buy, eight hold, and two sell recommendations on the stock.

Analyst Rating Changes:

• Jefferies analyst Nitij Mangal downgraded the recommendation on Motherson Sumi to underperform and assigned a target price of Rs 205.
• Nomura analyst Kapil Singh downgraded the recommendation to neutral and assigned a target price of Rs 301.
• CLSA’s analyst Amyn Pirani downgraded the recommendation to outperform and assigned a target price of Rs 295.

Snowman Logistics, a unit of Gateway Distriparks, jumps as much as 15% to its highest level in more than four months after a tie-up with Dr. Reddy’s Laboratories to manage delivery of Sputnik Covid-19 vaccine in India.

• Stock best performer on S&P BSE Industrials Index; extends gain to 2nd day
• Trading volume 2.3x three-month full-day average
• Gateway Distriparks gains as much as 5.8%
• Snowman has capability to store 650 million vaccine does; also has a capex plan of about 4.25 billion rupees to expand capacity

India’s oil refiners, sugar companies and ethanol manufacturing services providers rallied after the government further advanced the deadline for blending gasoline with 20% ethanol by almost two years.

• India advanced the decision on higher ethanol blending to April 2023, according to a government notification issued yesterday

Stocks Reacting To The News

• Oil refiners such as Indian Oil Corp. (+0.8%), Bharat Petroleum Corp. (+0.8%)
• Sugar producers including Bajaj Hindusthan Sugar (+5%), Balrampur Chini Mills (+7.6%), Shree Renuka Sugars (+4.7%)
• Biofuel plant maker Praj Industries (+10%)

India’s key stock gauge climbed to a new record amid optimism accelerated vaccination efforts will help revive the economy ravaged by the coronavirus.

The NSE Nifty 50 Index advanced by as much as 0.8% to 15,693.15, a new record high, while the S&P BSE Sensex also rose by a similar magnitude to 52,240.61 as of 09:30 a.m. in Mumbai, near a previous record high of 52,516.76 reached on Feb. 16. All of the 19 sector sub-indices compiled by BSE Ltd. climbed, led by a gauge of consumer durable companies.

Reliance Industries gained 1.7% after the company said that its proposed oil-to-chemicals businesses unit will attract new investors and strategic partnerships. The stock has now risen for seven days, its longest rally since July.

The government is also looking to expand pace of vaccinations in the country amid increasing pressure to cover more of the population. India announced ordering 300 million doses of the coronavirus vaccine from local manufacturer Biological-E while the daily additions for coronavirus cases continue to decline.

India’s sovereign bond traders will gauge the demand for debt at a Rs 32,000-crore bond auction later in the day, before the central bank’s rate decision on Friday.

• India’s monetary policy makers will likely maintain interest rates at a record low for a sixth straight meeting, while retaining their dovish bias for as long as needed to revive the economy from the pandemic
  • The Reserve Bank of India’s six-member Monetary Policy Committee will keep the benchmark repurchase rate at 4% Friday, according to all but one of the 31 economists surveyed by Bloomberg as of Wednesday afternoon. Traders will be watching for cues on extension of a bond-buying program as well as for any change in language on its policy stance guidance
• USD/INR rises 0.3% to 73.0825 on Wednesday  
  • Implied opening from forwards suggests spot may start trading around 73.02
• 10-year yields fall 2bps to 6.01% on Wednesday

Most Asian stocks climbed Thursday and U.S. equity futures rose, weathering the latest twist in U.S.-China ties as well as Federal Reserve comments on a potential tapering in the stimulus.

Japan led gains, boosted by optimism over the nation’s vaccine rollout, while Hong Kong and China fluctuated. U.S. contracts advanced after the S&P 500 and Nasdaq 100 posted a modest increase.

India’s SGX Nifty 50 Index futures for June delivery rose 0.5% to 15,700.00, while MSCI Asia Pacific Index gained 0.4%. The NSE Nifty 50 Index ended little changed Wednesday at 15,576.20.

Philadelphia Fed President Patrick Harker said it’s appropriate “to slowly, carefully move back” on bond purchases at the appropriate time, and to avoid any kind of “taper tantrum.” Ten-year U.S. Treasury yields dipped below 1.60%.

Chinese shares in early trading shrugged off President Joe Biden’s plans to amend a U.S. ban on investments in companies linked to China’s military. Investors are also looking ahead to Friday’s U.S. jobs report for the latest insight into the rebound from the pandemic and inflation risks.

Oil added to gains on the prospect of a recovery in demand. Bitcoin traded at about $37,500, maintaining its advance this week after May’s cryptocurrency rout.

Back home, Panacea Biotec, MTAR Technologies, NRB Bearings may react as the companies reported quarterly results after the market closed Wednesday. Gujarat Petronet, Quess Corp are among the companies scheduled to report earnings Thursday.

Markit India Services PMI and Composite PMI for May to be released. Foreign investors bought a net Rs 524 crore of stocks on June 1, according to NSDL website.