Sensex, Nifty Slide For Second Day; IRCTC Q4 Net Profit Misses Estimates

Indian stocks fell, after seesawing between gains and losses, with the benchmark equity gauge registering a second day of declines after Friday’s record high close.

The S&P BSE Sensex lost 0.3% to 52,549.66, while the NSE Nifty 50 Index dropped by 0.4% to 15,748.45. ICICI Bank Ltd. contributed the most to the index decline, decreasing 1.6%. Indian Oil Corp. had the largest drop, falling 2.4%. Sixteen of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by a gauge of metal companies.

Most Asian markets traded lower as investors remained concerned over the spread of the Delta variant of coronavirus. India on Monday unveiled more support measures for the pandemic-hit economy, including a 50% expansion in its emergency credit program, as well as support for the health care and tourism sectors.

“While the policy focus remains on small and vulnerable segments, it needs to be seen if this helps boost credit offtake,” Madhavi Arora, an economist with Emkay Global said in a note. She cited concerns about asset quality as an economic recovery remains uncertain.

Indicators later this week may underscore the state of the economy, with scheduled releases including the performance of key industries, the government’s fiscal deficit, and manufacturing PMI.

IRCTC reported net income for the fourth quarter that missed the average analyst estimate.

• Net income Rs 104 crore, estimate Rs 123 crore

• Revenue Rs 339 crore, estimate Rs 317 crore

• Total costs Rs 216 crore

• Dividend per share Rs 5

• Q4 exceptional loss of Rs 2.88 crore vs Rs 40 lakh gain YoY

Stocks of Indian companies that earn a large chunk of their revenues from the nation’s hinterland are facing the brunt of the coronavirus pandemic as a lack of health-care facilities and delayed advance of the monsoon hits consumption in rural areas.

Micro lenders, motorcycle manufacturers and makers of fast-moving consumer goods, which earn a sizable portion of their revenue from the rural regions, have fared poorly this year in comparison with stocks focused on urban consumption, Bloomberg Intelligence’s strategists Gaurav Patankar and Nitin Chanduka write in a note.

Fertiliser suppliers and tractor makers are also likely to struggle during the current wave of Covid-19 in the country, according to the note.

Oil India Ltd. fell 4.3%, making it the worst performer among its peers.

• Trading volume was 2.32 million shares, 26% above the 20-day average of 1.83 million shares for this time of day.

• One-month implied volatility was 121%.

• The shares are up 2.1% in the past 5 days and rose 16% in the past 30 days.

• Oil India trades at 5.6 times its estimated earnings per share for the coming year. It trades at 4.8 times trailing EPS.

• Analysts have 16 buy, three hold, and four sell recommendations on the stock.

• The price target of Rs 168.06 represents a 8.4% increase from the last price

Mumbai-based Chalet Hotels Ltd., which owns, develops and manages high-end hotels in larger Indian cities, is scouting for distressed hospitality assets as the declining rate of Covid-19 infections enables some parts of the country to ease movement curbs.

To read the full story, click here.

Indian equity benchmarks continued to stay subdued after opening volatile.

The S&P BSE Sensex was down 0.1% at 52,680.97, while NSE Nifty 50 Index was trading 0.2% lower at 15,786.10. ICICI Bank Ltd. contributed the most to the index decline, decreasing 1.3%. Hindalco Industries had the largest drop, falling 2%.

The broader market were trading inline with their larger peers. The S&P BSE MidCap fell 0.11% and S&P BSE SmallCap advanced 0.28%. Only six of the 19 sector sub-indices compiled by BSE Ltd. advanced, led by healthcare stocks. The S&P BSE Oil & Gas was the worst performer, down 0.8%.

The market breadth was slightly skewed in favour of the bulls. About 1,742 stocks gained, 1,395 declined and 138 remained unchanged.

Global index provider MSCI has warned India and four other emerging markets against restrictive policies, and reiterated that any move that impedes overseas investment could lead to a downgrade.

MSCI said global market participants expect that stock exchanges should not directly or indirectly restrict the Availability of Investment Instruments domestically or globally.

• However, some exchanges restrict use of their data to create certain derivative works such as indexes and investment instruments based on such indexes (including ETFs, futures and options contracts listed on any exchange in the world, and other types of funds and derivative instruments).

• Any anti-competitive policy put forth by any exchange in any market in the world that restricts the Availability of Investment Instruments and results in deterioration of the accessibility of an equity market could potentially lead to a downgrade in market classification.

Indian sovereign bonds are higher amid a decline in crude prices and U.S. Treasury yields with demand watched at a Rs 20,600 crore ($2.8b) state debt sale. The rupee is trading marginally lower.

• 10-year yields down 2bps to 6.04%; 5.63% 2026 bond yield drops 3bps to 5.69%

• USD/INR up 0.1% at 74.2250

• NOTE: India unveiled more support measures for the pandemic-hit economy, including a 50% expansion in its emergency credit program, as well as support for the health care and tourism sectors

Shares of Marico Ltd. jumped as much as 4.5% to a record high as Credit Suisse termed its brand Saffola to have “potential to be one of the best total addressable market (TAM) expansion stories in Indian FMCG”.

The firm said Saffola scores strongly on two key factors for TAM expansion -- brand extendibility and potential for a new entrant in target categories. Among Saffola’s four new categories of honey, soya chunks, health supplements and healthy noodles, the research firm believes honey and soya chunks hold the most promise, as these are fast growing categories with large unbranded consumption, and do not have more than two major players.

It further added that Saffola edible oils also have a long runway as it dominates premium edible oil with 81% market share and with more consumers adopting healthier edible oils with rising income and health consciousness.

Credit Suisse added that Marico’s relative valuations to peers in the past have improved when non-Parachute brands deliver strong growth and it expects this to happen again over FY21-23 with the Saffola foods expansion.

The research firm maintained its ‘outperform’ rating while increasing target price to Rs 600. Shares of Marico Ltd. jumped as much as 4.5% to Rs 532.60, the highest price since May 3, 1996. Of the 43 analysts tracking the stock, 35 have a ‘buy’ rating, seven suggest a ‘hold’ and one recommends a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies a downside of 8.7%.

Godrej Agrovet Ltd. rose 6.1%. Trading volume was 17 times the average for this time of day.

• The stock was the best performer among its peers.

• Trading volume was 1.98 million shares, 17 times the 20-day average of 118,306 shares for this time of day.

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

• The shares are up 11% in the past 5 days and rose 16% in the past 30 days.

• Godrej Agrovet trades at 30 times its estimated earnings per share for the coming year. It trades at 39 times trailing EPS.

• Analysts have nine buy, two hold, and one sell recommendations on the stock.

• The price target of Rs 579.89 represents a 9.7% decrease from the last price

HDFC Life Insurance had about 101.7 million shares change hands in Mumbai, according to data compiled by Bloomberg.

• Most traded Indian stock by value, volume

• Worst performer on NSE Nifty 50 Index

• Extends decline to second day

• Trading volume >38x 3-month full-day average

• Shares drop as much as 3.5% to their lowest level since June 2

• Buyers, sellers not immediately known

Indian stocks fell, after seesawing between gains and losses, with the benchmark equity gauge headed for a second day of declines after Friday’s record high close.

The S&P BSE Sensex lost 0.3% to 52,565.85, after swinging between gains and losses at least six times. The NSE Nifty 50 Index dropped by a similar magnitude. Eleven of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by a gauge of oil and gas companies.

“While the policy focus remains on small and vulnerable segments, it needs to be seen if this helps boost credit offtake,” Madhavi Arora, an economist with Emkay Global said in a note. She cited concerns about asset quality as an economic recovery remains uncertain.

Indicators later this week may underscore the state of the economy, with scheduled releases including the performance of key industries, the government’s fiscal deficit, and manufacturing PMI.

Indian bonds may open with a positive bias on a decline in crude prices with demand watched at a Rs 20,600 crore ($2.8b) state debt sale. Traders will also be assessing implications of the government’s new fiscal steps announced on Monday.

• India unveiled more support measures for the pandemic-hit economy, including a 50% expansion in its emergency credit program, as well as support for the health care and tourism sectors.

• USD/INR little changed at 74.1925 on Monday

  • Implied opening from forwards suggest spot may start trading around 74.23

Read more details of the latest stimulus package here.

Good morning!

Asian stocks dipped Tuesday amid concerns a more infectious Covid-19 strain will derail an economic recovery.

An MSCI index of Asia-Pacific shares was on track for its first decline in six days as countries in the region are struggling to contain the highly transmissible Delta variant of the virus.

India’s SGX Nifty 50 Index futures for July delivery fell 0.1% to 15,855.50, while MSCI Asia Pacific Index slipped 0.4%. The NSE Nifty 50 Index fell 0.3% Monday to 15,814.70.

U.S. futures dipped after technology stocks led U.S. benchmarks to fresh records Monday. The S&P 500 eked out a gain on news that Facebook Inc. won dismissal of two monopoly lawsuits.

The Treasury yield curve flattened amid month-end index rebalancing and the break in auctions until July 12, reducing supply. Oil was steady after dropping with the market expecting OPEC+ producers to increase supply at an upcoming meeting. Bitcoin was steady around mid-$34,000.

Back home, National Aluminium, NLC India, Graphite India may react as the companies reported quarterly results after the market closed Monday. IRCTC, Ruchi Soya, EID Parry, NBCC India are among the companies scheduled to report earnings Tuesday. Asian Paints, Angel Broking among companies holding their annual shareholders’ meeting. Foreign investors sold net Rs 179 crore of stocks on June 25, according to NSDL website.