Sensex Drops For A Third Session; Nifty Ends Flat

Indian stock benchmarks ended little changed, after a seesaw day of trade, as investors turned their attention to the second-quarter earnings season and prospects of economic recovery.

The S&P BSE Sensex was little changed at 52,372.69, while the NSE Nifty 50 Index too ended flat at 15,692.60. ICICI Bank was among the top contributers after 2.17 million shares changed hands in a pre-market trade.

The broader market outperformed thier larger peer. The S&P BSE MidCap index gained 0.4% while the S&P BSE SmallCap index advanced 0.7%. Twelve of the 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of real estate companies.

The Nifty appears to be consolidating in the range of 15,600-15,900, according to Binod Modi, Head Strategy at Reliance Securities."We continue to believe that any meaningful correction in the market should be taken as an opportunity to get in quality stocks."

Investors are looking ahead to Infosys’s results on Wednesday, after rival Tata Consultancy Services posted an earnings miss last week. The outlook for rainfall may weigh on the economy, with India receiving 242 millimeters of rains during this monsoon season, which runs through September, compared with the typical 261.8 millimeters.

Redington India Ltd. rose 8.5%. Trading volume was double the average for this time of day.

• The stock was the best performer among its peers.

• Trading volume was 3.7 million shares, double the 20-day average of 1.61 million shares for this time of day.

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

• Stock advanced 274% in the past 52 weeks. The Sensex gained 43%.

• Redington India trades at 14 times its estimated earnings per share for the coming year. It trades at 18 times trailing EPS.

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

• The price target of Rs 265.71 represents a 23% decrease from the last price

• The stock was the best performer among its peers.

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

• Stock advanced 249% in the past 52 weeks, compared with a 74% increase for the company's Bloomberg peers.

• Analysts have six buy, two hold, and no sell recommendations on the stock.

• The price target of Rs 111.40 represents a 1.8% decrease from the last price

India’s Aster DM Healthcare rises as much as 8.9%, the most since April 9, after 0.8% equity changes hands through two block trades.

• About 40 lakh shares changed hands via the two trades, according to data compiled by Bloomberg

• Buyers, sellers not immediately known

• Trading vol. 6.8x of 3-month full-day avg; set for 3rd day of gains

• Stock has 9 buys with avg 12-month target price at Rs 200, ~23% above current price

• UltraTech Cement options volume 3.2x the 20-day average, with 29,725 calls changing hands vs 6,709 puts

  • Stock up 2.5%, volume 1.6x the 20-day average for this time of day

• Tata Consumer options volume 2.1x the average, with 12,012 calls vs 3,092 puts

  • Stock up 1.4%, volume 1.3x the average

• JSW Steel options volume 1.6x the average, with 20,209 calls vs 7,190 puts

  • Stock up 1.8%, volume 1.3x the average

• Nifty 50 options volume 0.5x the average, with 4.22 million calls vs 4.19 million puts; gauge up 0.1%

  • Cost of hedging as measured by the 90/110, one-month skew ranks in the 49th percentile over the past year

• Nifty Bank index options volume 0.5x the average, with 7 million calls vs 6.99 million puts; gauge up 0.3%

  • 90/110, one-month skew in the 24th percentile

• India VIX Index up 2.2%

Most brokerages retained their ‘sell’ call on Avenue Supermarts Ltd., the operator of DMart stores, citing below-estimates quarterly earnings and expensive valuations.

Shares of Avenue Supermarts fell as much as 1.2% in trade on Monday compared with a 0.44% rise in the benchmark Nifty 50.

Net profit of the supermarket and hypermarket chain fell 74% over the previous quarter to Rs 115.1 crore in the three months ended June, according to its exchange filing. That compares with the Rs 159.7-crore consensus estimate of analysts tracked by Bloomberg.

Prabhudas Lillladher View

• Results depicted the impact of the strong second wave

• Rising footfalls , work on new store openings, vaccination drive, sales growth in DMart Ready are positive triggers

• Optimistic about the long-term potential of DMart

• Maintain buy with a target price of Rs. 3,686

To read what top brokerages views on the stock, click here

Shares of the Hyderabad-based cloud communications firm rose 5%, hitting a daily price limit, to Rs 886.45.

The stock snapped a two-session losing streak after the company informed the exchanges that its board will meet on July 21-22 to consider a share buyback proposal.

Besides that, it said board will also consider June quarter earnings in the meeting.

The stock has risen over 31% so far this year vs 10.9% gain for the Sensex.

Indian bonds edge lower ahead of the release of key inflation data later on Monday that’s likely to show price pressures further accelerated above the central bank’s upper 6% tolerance level. Rupee is trading higher in line with Asian peers.

• Yield on 6.64% 2035 bond up 2bps to 6.78%; new 6.1% 2031 bond yield up 2bps to 6.12%.

• NOTE: Yields rose on Friday after the central bank auctioned a new benchmark 10-year bond at a higher 6.1% coupon

• USD/INR falls 0.3% to 74.43

Flipkart has completed a fundraising round valuing the Indian online retailer at about $40 billion, with main owner Walmart Inc. joining investors including SoftBank Group Corp. in injecting almost $4 billion, according to a Bloomberg News report quoting people familiar with the matter said.

Blackstone Group Inc.-backed Antara Capital and half-a-dozen several sovereign wealth and pension funds are also participating, the people said, asking not to be named as the deal isn’t public. Those include the Abu Dhabi Investment Authority and the country’s sovereign fund ADQ, Singapore’s GIC Pte, Qatar Investment Authority and Canada Pension Plan Investment Board.

The latest fundraising round could set up Flipkart for an IPO in the U.S. in 2022, according to the Bloomberg News report.

Read the full report here

India’s BSE Realty Index touched its highest level in more than a decade as the formalization of sector and hopes of demand revival triggered a rally in property stocks.

• S&P BSE Realty index rose 3.6% to 3,017.46 after touching 3,040.82, the highest since Dec. 2010

• Indiabulls Real Estate gained as much as 15.6%, Oberoi Realty was up 4.5%, Godrej Properties gained 2.5%, Sunteck Realty was up 3.2% at 13.17 IST

• “We have seen a good turnaround from real-estate sector after the hit from the covid-19 pandemic,” said Yash Gupta Equity Research Associate at Angel Broking Ltd. “We expect the Real-estate sector to outperform and this may be a start of a new up-cycle after consolidation in the last 10 years”

Shares of the small finance banks surged after the Reserve Bank of India’s decision to allow them to begin the process of merging with their holding companies.

• Equitas Holdings Ltd. jumped as much as 20.1%, the most in over a year, while its subsidiary Equitas Small Finance Bank Ltd. gained as much as 17.9% to a record high of Rs 76.80 apiece.

• Ujjivan Financial Services jumped 20%, the most since Nov. 23, 2020. While Ujjivan Small Finance Bank climbed 10.8%, the most since March 21, 2021.

• IDFC Ltd gained as much as 13.7%, while IDFC First Bank Ltd. rose nearly 2%

• AU Small Finance Bank fell as much as 1.1%.

The Association of Small Finance Banks of India had made a representation to the RBI seeking prior in-principle approval for small finance banks to reverse merger with their respective holding companies on completion of initial five years from the date of commencement of business.

The RBI’s decision is positive for listed holding companies which are currently trading at a discount, said Jefferies in a note on Monday.

“This is positive for listed holding companies Ujjivan Financial Services and Equitas Holding that may complete five years by Q3-Q4 2021 and trade at close to a 40% holding company discount vs. value of stake in bank,” Jefferies said.

Prices of Swift and CNG models will increase by as much as Rs 15,000 in Delhi, effective today, Maruti Suzuki India Ltd. says in a stock exchange filing.

• Price increase due to increase in various input costs

• Company is planning price increase in other models “shortly”

Indian equity benchmarks climbed along with Asian peers as investors continued to bet that global growth remains on track despite new Covid-19 variants.

The S&P BSE Sensex gained as much as 0.6% to 52,683.74, while the NSE Nifty 50 too gained by a similar magnitude. ICICI Bank Ltd. contributed the most to the index gain, increasing 1.6%. UltraTech Cement Ltd. had the largest increase, rising 2.1%.

The broader market slightly outperformed their larger peers. The S&P BSE MidCap rose 0.6% while the S&P BSE SmallCap advanced 0.91%. All the 19 sectoral indices climbed, led by a gauge of real estate companies.

The market breadth is firmly in favour of the bulls. About 2,088 stocks gained, 625 declined and 120 remained unchanged.

Investors are looking ahead to Infosys’s results on Wednesday, after rival Tata Consultancy Services posted an earnings miss last week. The outlook for rainfall may weigh on the economy, with India receiving 242 millimeters of rains during this monsoon season, which runs through September, compared with the typical 261.8 millimeters.

Indian bond traders will be awaiting the release of key inflation data later on Monday that’s likely to show price pressures further accelerated above the central bank’s upper 6% tolerance level.

• Consumer price index probably rose 6.59% y/y in June after rising by 6.30% in May, according to a Bloomberg survey

• NOTE: RBI Governor Shaktikanta Das in a recent interview said that recent inflation humps were ‘transitory’ and an early exit from pandemic stimulus may hurt gains; he expects inflation to ease from third quarter of fiscal year

• 10-year yields rose 6bps to 6.19% on Friday after the central bank auctioned a new benchmark 10-year bond at a higher 6.1% coupon

• USD/INR fell 0.1% to 74.6350 on Friday

  • Implied opening from forwards suggest spot may start trading around 74.55

Asian stocks started the week higher after their U.S. peers chalked fresh records and Treasury yields stabilised after jumping Friday.

Shares in Japan outperformed and Hong Kong also rose. Australia advanced despite a prolonged lockdown in the largest city, Sydney, as virus cases continue to rise.

The Singapore-traded SGX Nifty, an early indicator of India's Nifty 50 Index’s performance, rose 0.4% at 15,795 as of 8:30 a.m.

U.S. futures fluctuated. The S&P 500 finished last week at all-time highs as investors continued to bet that global growth remains on track despite new Covid-19 variants.

Investors turn their attention this week to the second-quarter earnings season in order to gauge whether corporate profitability can support equity valuations.

Elsewhere, the euro was little changed after European Central Bank President Christine Lagarde told investors to prepare for new guidance on monetary stimulus in 10 days. Oil was steady after its first weekly loss in seven amid an OPEC+ dispute over a production increase.

Back home, Avenue Supermarts (DMart) and Bhansali Engineering Polymers may react as the companies reported quarterly results after the market closed Friday. HFCL, HMT, Steel Strips Wheels are among the companies scheduled to report earnings Monday.