Sensex, Nifty Close At Record High; Adani Stocks Slide For Second Day

India stocks extended their record run on expectations of rebound in economic activity as virus cases continue to decline, ignoring that inflation data that showed rising supply-side pressures.

The S&P BSE Sensex rose 0.4% to 52,773.05. The NSE Nifty 50 Index also advanced 0.4% to 15,869.25. Both gauges registered fresh record levels. Fifteen of the 19 sector sub-indices compiled by BSE Ltd. climbed, led by a gauge of real-estate companies. The S&P BSE Healthcare index was the worst performer.

India’s retail inflation showed unexpected surge in May to 6.3% from a year earlier, according to data released after trading hours yesterday. The reading was above the median forecast of 5.4% and was in line with separate data that showed wholesale prices soared by 12.94% in the previous month.

Prospects of a sharp recovery in economic activities in the coming months are overshadowing the concerns over inflation, Binod Modi, head of strategy at Reliance Securities said in a note. “While domestic equities continue to look good, investors must focus on quality stocks with robust earnings visibility and margins of safety.”

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

• Net income Rs 104 crore vs. Rs 21.05 crore YoY, estimate Rs 107 crore (Bloomberg Consensus)

• Revenue Rs 1,030 billion rupees, +15% YoY, estimate Rs 1,030 crore

• Total costs Rs 900 crore, +4.5% YoY

• Same-store sales +11.8% vs. -3.40% YoY

• Ebitda Rs 249 crore, +46% YoY, estimate Rs 264 crore

• Dividend per share Rs 6

• Asian Paints options volume 2.2x the 20-day average, with 39,052 calls changing hands vs 9,744 puts

  • Stock up 2.7%, volume 1.3x the 20-day average for this time of day

• ONGC options volume 1.9x the average, with 23,032 calls vs 6,046 puts

  • Stock up 1.8%, volume 0.9x the average

• Tech Mahindra options volume 1.8x the average, with 22,018 calls vs 6,584 puts

  • Stock up 0.1%, volume 1.3x the average

• Nifty 50 options volume 0.4x the average, with 2.42 million calls vs 2.74 million puts; gauge up 0.5%

  • Cost of hedging as measured by the 90/110, one-month skew ranks in the 66th percentile over the past year

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

• Net income Rs 124 crore, +42% YoY, estimate Rs 120 crore

• Revenue Rs 1,780 crore, +32% YoY, estimate Rs 1,660 crore

• Total costs Rs 1,630 crore, +29% YoY

• Raw material costs Rs 1,180 crore, +39% YoY

• Dividend per share Rs 5

Indian equity benchmarks pared some of their morning gains.

The S&P BSE Sensex held almost 0.4% gain at 52,745.37, while NSE Nifty 50 Index too gained by a similar magnitude at 15,871.50.

The broader market outperformed their larger peers. The S&P BSE MidCap gained 0.6% and S&P BSE SmallCap advanced 0.5%. Three of the 19 sector sub-indices compiled by BSE Ltd. declined, led by power stocks. The S&P BSE Realty was the best performer, up 1.3%.

The market breadth was heavily skewed in favour of the bulls. About 2,102 stocks gained, 1,024 declined and 155 remained unchanged.

Indian sovereign bonds decline by the most in more than a week after retail inflation quickened, triggering fears of sooner-than-expected monetary policy normalization. Traders look forward to a Rs 13,100 crore ($1.8 billion) sale of state debt.

• 10-year yields up 3bps to 6.03%; 6.64% 2035 bond yield rises 4bps to 6.64%; swaps also surge with 1-year OIS up 7bps to 3.73%; 5-year OIS up 8bps to 5.1525%

• CPI inflation rose 6.3% for the month of May, faster than the median estimate of 5.4% in a Bloomberg survey, data showed Monday after close of market hours

• USD/INR down 0.1% at 73.2162; fell 0.2% earlier

Shares of the gas distributer rose as much as 8.6%, the most since March 1, to a record high of Rs 653.40 a piece.

• The stock was the best performer among its peers.

• Trading volume was 2.76 million shares, triple the 20-day average of 995,816 shares for this time of day.

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

• Analysts have 23 buy, six hold, and three sell recommendations on the stock.

• The price target of Rs 577.81 represents a 9% decrease from the last price

Nomura said Gujarat Gas' performance in FY21 reinforces its belief that city gas distributors are effectively monopolies with strong pricing power.

In spite of the second wave, the firm's volume revival was sharpest in FY21 due to its higher industrial share, the broking firm said. "We expect a similar trend in FY22F."

"With rising investor concerns on competition from EV for IGL, Gujarat Gas is now our preferred pick in city gas distributors, as well as India Gas."

Shares of some companies controlled by billionaire Gautam Adani fell for a second day, with three of them dropping by their daily limit.

The stocks plunged early on Monday after a local media report said a depository had frozen accounts of three overseas investors in some of the shares; however, they pared losses after the Adani companies refuted the report.

• Adani Total Gas Ltd., Adani Power Ltd., Adani Transmission Ltd. hit the lower circuit by dropping 5% each

• Adani Green Energy Ltd. slipped 2.6%, while Adani Enterprises Ltd. gained 1% and Adani Ports and Special Economic Zone Ltd. rose 0.6%.

Indian equity benchmarks climbed, amid mixed Asia trading, led by banks and consumer companies.

The S&P BSE Sensex gained 0.5% to 52,836.31 while the NSE Nifty 50 Index advanced 0.5% to 15,889.60, with both gauges ending at a fresh record. Fifteen of 19 sector sub-indices compiled by BSE Ltd. gained, led by a gauge of real estate companies, while power companies were the worst performers.

India’s retail inflation showed unexpected surge in May to 6.3% from a year earlier, according to data released after trading hours yesterday. The reading was above the median forecast of 5.4% and was in line with separate data that showed wholesale prices soared by 12.94% in the previous month.

Prospects of a sharp recovery in economic activities in the coming months are overshadowing the concerns over inflation, Binod Modi, head of strategy at Reliance Securities said in a note. “While domestic equities continue to look good, investors must focus on quality stocks with robust earnings visibility and margins of safety.”

Newgen Software jumped as much as 11.4%, most since May 26, after about 7.38 million shares changed hands on BSE, according to data compiled by Bloomberg.

• The stock hit a record high of Rs 510, before paring some of its gains.
• Extends advance to fourth day
• Trading volume >34x 3-month full-day average
• Buyers, sellers not immediately known

Rupee bonds could take a hit after India registered a bigger than expected surge in consumer prices for the month of May.

• 10-year yields were little changed at 6% on Monday, ahead of data that showed CPI inflation at 6.3% for the month of May, faster than the median estimate of 5.4% in a Bloomberg survey
• USD/INR rises 0.3% to 73.2750 on Monday
• Implied opening from forwards suggest spot may start trading around 73.26

“CPI inflation partly depicted the pass-through of impending input price pressures. Core goods inflation may remain elevated ahead with a relentless increase in global commodity prices. Meanwhile, the ensuing demand revival in contact-sensitive household services amid reopening could pressure core services inflation,” says Madhavi Arora, the lead economist at Emkay Global Financial Services wrote in a note

• Overall, core inflation will likely remain sticky ahead and will likely outdo headline through the year
• The Monetary Policy Committee may still choose to look through the spike in inflation in the near term, with the monetary reaction function currently hinging more on growth revival becoming sustainable

Good morning!

Asian stocks traded mixed Tuesday after their U.S. peers closed at a record and a bond rally stalled ahead of a key Federal Reserve meeting. Commodities retreated.

Japanese shares gained, while Australian stocks outperformed after a holiday. Benchmarks in China and Hong Kong fell, as they too reopened after a break, amid a slide in metals prices led by copper.

U.S. futures edged higher after gains in technology shares pushed the S&P 500 to a record Monday. The 10-year Treasury yield pulled back under 1.5%, wh

India’s SGX Nifty 50 Index futures for June delivery fell 0.1% to 15,819.00, while MSCI Asia Pacific Index little changed. The NSE Nifty 50 Index added 0.1% Monday to 15,811.85.

Investors are awaiting clues from the Fed about a timetable for scaling back emergency monetary stimulus after a pullback in bond yields eased tapering concerns.

Bitcoin continued to gyrate amid a barrage of comments, briefly climbing above $41,000 only to pull back. The digital currency got a boost after veteran hedge fund manager Paul Tudor Jones re-endorsed the coin in a television interview.

Elsewhere, the Australian dollar dipped after central bank meeting minutes showed members thought it would be premature to consider ceasing its bond-buying scheme. Crude oil fluctuated around $71 a barrel.

Back home, Coal India, JB Chemicals may react as the companies reported quarterly results after the market closed Monday. LIC Housing, Jubilant Foodworks, Whirlpool India, Power Finance are among the companies scheduled to report earnings Tuesday.