Sensex, Nifty Fall For Second Day Ahead Of U.S. Consumer Price Data 

Indian stocks fell, erasing early gains, with energy companies leading the decline ahead of the release of U.S. consumer-price data on Thursday, a report that investors are taking cues from in absence of major triggers in the domestic market.

The S&P BSE Sensex closed 0.6% lower at 51,941.64, while the NSE Nifty 50 Index fell nearly 0.7% to 15,635.35. Fourteen of the 19 sector indexes compiled by BSE Ltd. fell, led by a gauge of energy stocks.

The selloff in the broader market was in line with their larger peers. The S&P BSE MidCap was down 0.7% and S&P BSE SmallCap fell 0.9%. Sixteen of the 19 sector sub-indices compiled by BSE Ltd. fell, led by S&P BSE Energy. The S&P BSE Utilities was the best performer, up 0.9%.

“Investors remain in a wait-and-watch mode ahead of crucial U.S. inflation data tomorrow, with domestic equities looking muted as of now,” said Binod Modi, a strategist at Reliance Securities Ltd. “The beginning of gradual withdrawal of restrictions by states indicates that economic indicators should start improving from this month.”

GAIL India reported net income for the fourth quarter that beat the average analyst estimate.

• Net income Rs 1,910 crore, -37% YoY, estimate Rs 1,830 crore
• Revenue Rs 15,550 crore, -12% YoY, estimate Rs 18,420 crore
• Total costs Rs 13,510 crore, -14% YoY
• Other income Rs 568 crore, +11% YoY

Indian equity benchmarks fell in afternoon trade as banks and autos led the decline, while utilities extended their record run.

The S&P BSE Sensex dropped as much as 0.8% at 51,858.21, while NSE Nifty 50 Index slipped 0.8% as well to 15,608.40.

The selloff in the broader market was in line with their larger peers. The S&P BSE MidCap was down 0.9% and S&P BSE SmallCap fell 0.6%. Sixteen of the 19 sector sub-indices compiled by BSE Ltd. fell, led by S&P BSE Telecom. The S&P BSE Utilities was the best performer, up 0.6%.

The market breadth was slightly skewed in favour of the bulls. About 1,603 stocks gained, 1,493 declined and 152 remained unchanged.

• Power Grid options volume 2.7x the 20-day average, with 21,638 calls changing hands vs 3,152 puts
  • Stock up 3.7%, volume 1x the 20-day average for this time of day
• SBI Life options volume 2.7x the average, with 20,429 calls vs 3,427 puts
  • Stock up 2.6%, volume 1.4x the average
• NTPC options volume 2.4x the average, with 31,336 calls vs 6,437 puts
  • Stock up 3.6%, volume 1.3x the average
• Adani Ports options volume 1.6x the average, with 52,601 calls vs 11,549 puts
  • Stock up 0.4%, volume 1.1x the average

Tata Power is a prominent gainer as utilities continue to rally on expectations that demand for electricity will rise with Indian states loosening lockdown rules amid a steady fall in coronavirus cases.

• S&P BSE Utilities index extends gain to an eighth day; boosting its YTD rally to ~49%
• All but two of its 26 constituents rise
• Tata Power, Torrent Power and Power Grid Corp. contribute the most to the index’s increase
• Tata Power rises 10% to head for its highest level since January 2008; trading volume is 2.6x 3-month full-day average

• NOTE: On June 8, India’s antitrust agency approved Tata’s proposal to acquire a 51% stake in three power utilities in eastern Odisha state

India’s sovereign bonds are marginally lower as traders await the details of the debt RBI will purchase at the third tranche of its govt securities acquisition program on June 17.

• RBI will purchase Rs 40,000 crore of bonds on June 17, including Rs 10,000 crore of state debt
• A sale of Rs 36,000 crore of Treasury bills to gauge the direction of short-term rates after yields eased Tuesday
• The cues are mixed today with U.S. yields lower and crude higher. So yields are treading largely sideways, says Debendra Kumar Dash, head of fixed income at AU Small Finance Bank
  • Traders are awaiting details of the papers that RBI will purchase under its GSAP auction
• 10-year yields up 1bp to 6.02%

Indian investors ploughed money into the nation’s equity funds for a third straight month in May, even as a deadly wave of coronavirus spurred lockdowns in states to contain the spread.

Equity mutual funds saw a net inflow of Rs 10,082.9 crore in May compared with Rs 3,437.4 crore inflow in April, according to data released by the Association of Mutual Funds in India.

• Multi-cap funds: Inflow of Rs 1,954.2 crore vs outflow of Rs 157.7 crore in April
• Large-cap funds: Inflow of Rs 937.4 crore vs inflow of Rs 324.9 crore in April
• Mid-cap funds: Inflow of Rs 1,368.1 crore vs inflow of Rs 958.2 crore in April
• Small-cap funds: Inflow of Rs 1,080 crore vs inflow of Rs 183.9 crore in April

AMFI data also showed that corporates withdrew from liquid and overnight funds last month.

• Liquid funds: Outflow of Rs 45,447.4 crore vs inflow of Rs 41,507.5 crore in April

• Overnight funds: Outflow of Rs 11,573 crore vs inflow of Rs 18,492.1 crore in April
• Credit risk funds: Inflow of Rs 258.3 crore vs outflow of Rs 157.4 crore in April

Meanwhile, the contribution through SIPs stood at Rs 8,818.9 crore in May.

• Systematic Investment Plans: Inflow of Rs 8,818.9 crore vs inflow of Rs 8,596.3 crore in April
• SIP folios: 3.85 crore vs 3.79 crore in April

Shares of sugar companies rallied for the third day in a row on a strong outlook.

Prime Minister Narendra Modi announced that the target of 20% ethanol-blended petrol has been advanced by five years to 2025 to cut pollution and reduce import dependence. Ethanol extracted from sugarcane as well as damaged food grains such as wheat and broken rice and agriculture waste is less polluting and its use also provides farmers with an alternate source of income.

“Balrampur Chini Mills is the most efficient sugar company with sustainable earnings and strong cash flow generation. We believe the company would increase shareholder’s payout (buybacks, dividend) to around 60% from the current 40% payout. We believe the market recognises the big opportunity in ethanol blending programme and the stock is poised to command better valuation multiples,” ICICI Securities said in a Q4FY21 result update.

Crompton Greaves Consumer Electricals Ltd. rose 6.1%. Trading volume was 115 times the average for this time of day.

• The stock was the best performer among its peers.
• Trading volume was 35.4 million shares, 115 times the 20-day average of 308,450 shares for this time of day.
• Stock advanced 93% in the past 52 weeks, compared with a 13% increase for the company's Bloomberg peers. The Sensex gained 54%.
• Crompton Greaves trades at 45 times its estimated earnings per share for the coming year. It trades at 44 times trailing EPS.
• Analysts have 38 buy, two hold, and one sell recommendations on the stock.
• The price target of Rs 461.25 represents a 6.9% increase from the last price

Indian equity benchmarks fluctuated between gains and losses as investors await U.S. consumer price data due Thursday, which may influence perceptions of when the Federal Reserve could begin tapering its easy monetary policy.

The S&P BSE Sensex climbed 0.3% to 52,432.63, while the NSE Nifty 50 Index advanced by a similar magnitude. Both indices remain on course for new records, with HDFC Bank Ltd. contributing the most to their gains. Of 30 shares in the Sensex, 20 rose, while 10 fell. All but one of 19 sector indices compiled by BSE Ltd. advanced, led by a gauge of realty stocks.

“Investors remain in a wait-and-watch mode ahead of crucial U.S. inflation data tomorrow, with domestic equities looking muted as of now” said Binod Modi, a strategist at Reliance Securities Ltd. “The beginning of gradual withdrawal of restrictions by states indicates that economic indicators should start improving from this month,”

Sona BLW Precision Forgings Ltd. will sell shares in a range of Rs 285 to Rs 291 each in an initial public offering that opens for subscription June 14, according to an advertisement in the Financial Express newspaper Wednesday.

• Sona BLW plans to raise Rs 300 crore ($41.2 million) by selling new shares in the IPO, while its controlling shareholder, a Blackstone affiliate, plans to raise as much as Rs 5,250 crore in an offer-for-sale

• Singapore VII Topco III Pte., the Blackstone affiliate which owns 66.3% of auto component maker Sona BLW, had earlier aimed to sell Rs 5,700 crore of shares, according to the company’s initial prospectus
• Investors can bid for minimum 51 shares of face value Rs 10 in the IPO which opens for subscription June 14 and closes June 16
• Gurugram, Haryana-based Sona BLW plans to repay Rs 241 crore of loans from the IPO proceeds
• Kotak Mahindra, Credit Suisse, JM Financial, JPMorgan and Nomura are managing the sale

India’s sovereign bond traders are awaiting the sale of Rs 36,000 crore of Treasury bills to gauge the direction of short-term rates after yields eased Tuesday.

• 10-year yields fell 2bps to 6.01% on Tuesday
• India’s 10-year government bond yields have been largely rangebound since mid-April, as investors count on the government’s cash balances and central bank’s active presence to manage FY22 borrowings, according to note from DBS
  • This was reinforced by the increase in size of the RBI’s GSAP bond purchase program in Q3 to Rs 1.2 lakh crore, besides regular market operations and Operation Twists
  • For FY22, revenues in Q2FY21 may take a hit due to the second Covid wave, but look up from Q3. FY22 expenditure faces an upside risk of ~0.4-0.5% of GDP, posing risks to the budgeted deficit of -6.8% of GDP
  • However, the final math might find some wiggle room from nominal GDP buoyancy (higher deflators) and a likely reprioritization in spending to minimize the risk of a deficit slippage
• USD/INR rises 0.1% to 72.8950 on Tuesday

Most Asian stocks edged lower Wednesday after U.S. equities treaded water near a record ahead of key data on price pressures in the global economy.

Shares slipped in Japan and Hong Kong and fluctuated in China, where surging commodity costs drove factory-gate inflation to its highest level since 2008.U.S. equity contracts were little changed after the S&P 500 ended just shy of its May 7 record close.

India's SGX Nifty 50 Index futures for June delivery fell 0.1% to 15,753.00, while MSCI Asia Pacific Index slipped 0.3%. The NSE Nifty 50 Index fell 0.1% Tuesday to 15,740.10.

Traders will be alert for any repercussions after passage of a bill to invest almost $250 billion in bolstering U.S. manufacturing and technology to meet the challenge from China.

Oil resumed its rally to top $70 a barrel in New York as investors grow more confident that the recovery from the pandemic will help demand. Bitcoin remains under pressure, trading around $32,740 after a retreat this week.

Back home, Petronet LNG, Max Financial, Prestige Estates, Engineers India may react as the companies reported quarterly results after the market closed Tuesday. GAIL India, Bata, TeamLease Services are among the companies scheduled to report earnings Wednesday. Foreign investors bought net Rs 161 crore of stocks on June 7, according to NSDL website.