Sensex, Nifty Gain For A Second Day As Rally In Metal Stocks Continues

India stocks rose for the second day of gains after the central bank unveiled measures to support businesses amid surging coronavirus cases.

The S&P BSE Sensex climbed 0.56% to 48,949.76, while Nifty gained 0.73% to 14,724.80. Housing Development Finance Corp. contributed the most to the index gain, increasing 2.2%. Hindalco Industries Ltd. had the largest increase, rising 5.1%.

Stocks climbed yesterday after the Reserve Bank of India provided additional liquidity to banks for lending to vaccine makers, hospitals and providers of health services, as well as easing rules for small businesses to restructure loans.

Adani Power reported net income for the fourth quarter of Rs 13.13 crore vs. loss Rs 1,310 crore year-on-year.

• Revenue Rs 6,370 crore, +3.2% YoY
• Total costs Rs 6,670 crore, -16% YoY
• Other income Rs 528 crore vs. Rs 155 crore YoY
• Ebitda Rs 2,140 crore vs. Rs 360 crore YoY

COMMENTARY AND CONTEXT

• Q4 average plant load factor 59.6% vs 65.6% y/y; aggregate sales 14.8 billion units vs 16.5 billion units
• Says Ebitda growth aided by prior period income recognition, lower cost of domestic alternate coal, favourable currency movement, lower provisioning of one-time expenses, and lower revenue reversal
• The company said operating performance affected due to lower merchant sales and grid back down in various plants, as well as reserve shutdown at Udupi due to higher penetration of renewables

Happiest Minds Technologies Ltd. rose 9.2%. Trading volume was triple the average for this time of day. The stock was the best performer among its peers.

• Trading volume was 7.58 million shares, triple the 20-day average of 3 million shares for this time of day.
• The relative strength index on the stock was above 70, indicating it may be overbought.
• Analysts have two buy, no hold, and no sell recommendations on the stock
• The price target of Rs 565 represents a 31% decrease from the last price
• The company is scheduled to report earnings on May 12.

• Tata Steel options volume 2.3x the 20-day average, with 100,540 calls changing hands vs 62,550 puts
  • Stock up 2.8%, volume 1.4x the 20-day average for this time of day
• Hero MotoCorp options volume 2x the average, with 15,432 calls vs 5,769 puts
  • Stock up 3.7%, volume 2.1x the average
• Cipla options volume 1.8x the average, with 34,468 calls vs 7,627 puts
  • Stock down 0.4%, volume 1.4x the average
• Bajaj Auto options volume 1.5x the average, with 8,646 calls vs 2,283 puts
  • Stock up 2.9%, volume 1x the average
• India VIX Index down 1.2%

Sovereign bonds are mixed as traders watch for the cut-off yields at a Rs 10,000 crore ($1.4 billion) operation twist, where the Reserve Bank of India buys longer-tenor bonds and sells shorter notes.

• The RBI plans to buy 6.97% 2026 bond, 7.17% 2028 bond, and 5.85% 2030 bond on Thursday while selling an equivalent amount of 182-day Treasury bills

The RBI will have to balance its objective of supporting economic recovery on one hand, while remaining mindful of inflation pressures on the other, according to an HSBC note.

Shares of Tata Steel Ltd. jumped 5.5% to a new record high of Rs 1,129 after its profit surged on higher sales and prices.

The steelmaker’s consolidated net profit rose 79.7% over the preceding quarter to Rs 6,644 crore in the three months through March, the steelmaker said in its exchange filing. That, however, was below the Rs 7,422-crore consensus estimate of analysts tracked by Bloomberg.

While the bottom line missed estimates, operating performance surpassed estimates.

[Read the full earnings report here]

CLSA says

• Q4 consolidated Ebitda 11% above estimates with a beat across all segments.
• The outlook for steel prices, Europe profitability and the timeline for expansion will be key.
• Net debt fell Rs 10,700 crore partly helped by proceeds from a share issuance.
• Best-ever standalone profitability boosted by inter-company iron sales.
• Q1 likely to be even stronger.
• Deleveraging on track, focus shifts to expansion projects.
• Rated 'Buy' with a target price of Rs 1,064.

IDBI Bank Ltd. rose 10% after a plan to privatize the lender was approved.

The government plans to sell all or part of its 45.5% stake in the lender, as well a state-owned Life Insurance Corp. of India’s 49.2% ownership, according to a government statement on Wednesday. The sale envisages ceding management control, according to the statement.

The strategic buyer is expected to infuse funds and generate more business “without any dependence on LIC and government assistance,” according to the statement.

• The stock was the best performer among its peers.
• Trading volume was 9.5 million shares, 68 times the 20-day average of 139,696 shares for this time of day.
• The shares are up 19% in the past 5 days and rose 11% in the past 30 days.
• Analysts have one buy, no hold, and no sell recommendations on the stock.
• The price target of Rs 54.60 represents a 30% increase from the last price

Indian equity benchmarks rose even as the country continued to report record Covid-19 cases and deaths.

The S&P BSE Sensex climbed as much as 0.45% to 48,898.68, while Nifty too gained a similar magnitude. ITC Ltd. contributed the most to the index gain, increasing 2.1%. Tata Steel Ltd. had the largest increase, rising 3.9%.

Seventeen of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of metal companies.

Stocks climbed yesterday after the Reserve Bank of India provided additional liquidity to banks for lending to vaccine makers, hospitals and providers of health services, as well as easing rules for small businesses to restructure loans.

Good Morning!

Asia stocks rose Thursday and U.S. futures ticked higher as investors mulled an ongoing debate about inflationary pressures. Bonds pared overnight gains.

India’s SGX Nifty 50 Index futures for May delivery rose 0.5% to 14,764.00, while MSCI Asia Pacific Index gained 0.7%. The NSE Nifty 50 Index added 0.8% Wednesday.

Stocks outperformed in Japan as trading resumed after a holiday and also rose in Hong Kong and South Korea.

Benchmark 10-year Treasury yields edged higher. Oil gave up earlier gains as traders assessed an increase in gasoline stockpiles.

The Bloomberg Commodity Spot Index returned to its highest level since 2011 as growth bets boost demand, while poor weather and transportation bottlenecks threaten supply.

Back home, Tata Steel, Adani Green, Blue Dart, Oracle Financial may react as the companies reported quarterly results after the market closed Wednesday. Hero MotoCorp, Tata Consumer, Coforge, Blue Star, Adani Power are among the companies scheduled to report earnings Thursday. Foreign investors sold net Rs 1,740 crore of stocks on May 4, according to NSDL website.

Meanwhile, the RBI will conduct Rs 10,000 crore of Operation Twist-style special open-market operation, to buy bonds and sell an equivalent amount of 182-day T-Bills