Sensex, Nifty Recover Aided By RIL; Adani Group Stocks Pare Loss After Clarification

Indian equity benchmarks recovered from their early losses in the second half of the session to close with small gains.

The S&P BSE Sensex climbed 0.1% to 52,551 while the NSE Nifty 50 was little changed at 15,811.85. Both the indices closed at a record high after falling over 1% in the first half of the session.

Eleven of the 19 sector sub-indices compiled by BSE Ltd. slipped, led by a gauge of power companies.

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

• Net income Rs 4,590 crore, -1.1% YoY, estimate Rs 4,841 crore

• Revenue Rs 26,700 crore, -3.2% YoY, estimate Rs 26,367 crore

• Total costs Rs 21,570 crore, -3.6% YoY

• Other income Rs 1,270 crore, -44% YoY

• Dividend per share Rs 3.50

The Gautam Adani-led companies said the report on India’s National Securities Depository Ltd. freezing accounts of three overseas funds which own over Rs 43,500 crore ($6 billion) worth of shares in four Adani Group companies is “blatantly erroneous and is done to deliberately mislead the investing community,” according to a statement to exchanges.

• Have confirmation that the demat account in which the aforesaid funds hold the shares of the company are not frozen, Adani group companies say in the statement
• Adani Enterprises was down 6.2%, paring a decline of as much as 25%, while Adani Ports & Special Economic Zone trimmed losses to 8.1%

Kajaria Ceramics reported net income for the fourth quarter that beat the average analyst estimate.

• Net income Rs 127 crore vs. Rs 49.59 crore YoY, estimate Rs 114 crore
• Revenue Rs 953 crore, +46% YoY, estimate Rs 877 crore
• Total costs Rs 791 crore, +34% YoY
• Ebitda Rs 191 crore vs. Rs 93.37 crore YoY, estimate Rs 181 crore

COMMENTARY AND CONTEXT

• Company approved expansion of manufacturing facility at Gailpur in Rajasthan state by 4.2 MSM of ceramic floor tiles a years through Rs 59.49 crore investment
• Approved increase in limits of investment in Kajaria Plywood to Rs 50 crore from Rs 35 crore in one or more tranches
• Board also considered plan to expand manufacturing facility of unit Kajaria Tiles Pvt. to 8.80 MSM of vitrified tiles a year and plan to expand manufacturing facility of unit Jaxx Vitrified to 12 MSM vitrified tiles per year

IOB reported net income for the fourth quarter of Rs 350 crore vs. Rs144crore YoY.

• Gross non-performing assets 11.7% vs. 12.2% QoQ
• Provisions Rs 1,380 crore, -8.6% QoQ
• Interest income Rs 4,060 crore, -8.6% YoY
• Interest expense Rs 2,650 crore, -8.9% YoY
• Other income Rs 2,020 crore, +94% YoY
• Net interest margin 2.22%

Indian equity benchmarks fluctuated between gains and losses after opening lower.

The S&P BSE Sensex was marginally up at 52,513.19, while NSE Nifty 50 Index is trading slightly lower at 15,796.25.

The larger market outperformed their smaller peers, though both remained in the red. The S&P BSE MidCap declined 0.9% and S&P BSE SmallCap fell 0.02%, while the S&P BSE LargeCap slid 0.03%. Eleven of the 19 sector sub-indices compiled by BSE Ltd. declined, led by power stocks. The S&P BSE Energy was the best performer, up 0.86%.

The market breadth was slightly skewed in favour of the bears. About 1,544 stocks gained, 1,680 declined and 166 remained unchanged.

The Rs 5,500-crore IPO of Sona Comstar was subscribed 0.06 times as of 12:40 p.m. The auto parts maker is selling shares at Rs 285-291 apiece in its three-day initial public offering.

• IPO Subscribed 0.06x
• QIB: 0.00x
• NII: 0.00x
• Retail: 0.37x
• Employee: 0.00x

The Rs 909-crore IPO of Shyam Metalics was subscribed 0.72 times as of 12:40 p.m.

The integrated metal producer is selling shares at Rs 303-306 apiece in its three-day offering starting on June 14, its second attempt to tap the primary market.

• IPO Subscribed 0.72x
• QIB: 0.00x
• NII: 0.03x
• Retail: 1.45x
• Employee: 0.08x

Source: Exchange Data

• Adani Ports options volume 3.2x the 20-day average, with 96,050 calls changing hands vs 50,926 puts
  • Stock down 11%, volume 4.1x the 20-day average for this time of day
• Dr Reddy's options volume 1.9x the average, with 46,431 calls vs 11,542 puts
  • Stock up 0.9%, volume 0.7x the average
• Bajaj Finance options volume 1.6x the average, with 104,928 calls vs 51,404 puts
  • Stock up 1.4%, volume 0.8x the average

India’s wholesale prices soared to their highest since June 1992 on the back of higher commodities costs, and accentuated by last year’s crash, highlighting mounting supply-side pressures in the virus-ravaged economy.

The wholesale price index in May rose 12.94% from a year ago, the Ministry of Commerce said Monday, compared with the 13.4% median estimate in a Bloomberg survey of 24 economists.

Consumer price inflation data for May is also due later Monday, forecast in Bloomberg survey to rise 5.38% from a year ago.

Shares of the IT services provider rose as much as 16.2% to a record high of Rs 1875.20.

• The stock gained for a third straight session.
• Trading volume was more than 13 times the 20-day average for this time of day.
• The relative strength index on the stock was above 70, indicating it may be overbought.
• eClerx trades at 19 times its estimated earnings per share for the coming year.

Of the seven analysts tracking the stock, six have a ‘buy’ rating and one recommends a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies a downside of 6.9%.

Click here to read analysts' take on the stock.

Infosys Ltd. rose as much as 2.1% after about one million shares changed hands in a large trade, according to data compiled by Bloomberg.

• Among best performers on S&P BSE Sensex, NSE Nifty 50 indices.
• Gained for a sixth day
• Buyers, sellers not immediately known

Zensar Technologies Ltd. plunged as much as 9.4%, the most since Dec. 22, after about 26.5 million shares changed hands in two large trades, according to data compiled by Bloomberg.

• Most traded Indian stock by value
• Among worst performers on S&P BSE 500, NSE Nifty 500 indexes
• Extends decline to second day
• Trading volume >65x 3-month full-day average
• Buyers, sellers not immediately known

Bharat Heavy Electricals Ltd. declined as much as 19%, the most since March 2020, after the Indian power-generation equipment maker posted a surprise quarterly loss, impacted by rising raw material costs and other expenses.

The state-owned BHEL's reported a consolidated net loss of Rs 1,036.32 crore in the March quarter. Total income during the period stood at Rs 7,245.16 crore.

In the full financial year 2020-21, the company's consolidated net loss widened to Rs 2,699.70 crore as compared with Rs 1,468.35 crore in 2019-20.

Adani Group’s stocks slumped after The Economic Times reported National Securities Depository Ltd. has frozen the accounts of three overseas funds which own over Rs 43,500 crore ($6 billion) worth of shares in four of the conglomerate’s companies, citing people it did not identify.

• Shares of Adani Ports and Adani Enterprises each declined as much as 15%; both stocks dropped the most since March 2020
  • Adani Transmission fell as much as 5.3%, Adani Total Gas -5%, Adani power -5%
• Action was likely taken against Albula Investment Fund, Cresta Fund and APMS Investment Fund due to insufficient disclosure of information regarding beneficial ownership, the report said
  • These accounts were frozen as of May 31, according to the depository’s website which didn’t give reasons for the move
  • Freezing of accounts means these funds won’t be able to sell or buy new securities, the report said
• Funds are based out of Mauritius and registered at the same address in Port Louis
• Market regulator SEBI is also said to be investigating whether there has been price manipulation in Adani Group stocks, which have gained a lot in the past one year: ET

Indian equity benchmarks opened lower amid muted Asia trading as investors prepared for a key Federal Reserve meeting later in the week.

The S&P BSE Sensex fell as much as 0.1% to 51,936.31, while the NSE Nifty 50 Index slipped as much as 1.2% to 15,606.50. Both indices clocked a fourth week of gains on Friday. Seventeen of the 19 sector sub-indices compiled by BSE Ltd. declined, led by a measure of industrial stocks.

Wholesale and consumer inflation data for May may show price increases accelerated in May from a year earlier. Retail price inflation has held above the central bank’s 4% target since October 2019. Policy makers on June 4 reiterated an an accommodative stance to support economic growth.

India’s stock exchange sought clarification from PNB Housing Finance Ltd. on its recent fund-raising plan led by Carlyle Group Inc., according to a filing.

• The company has to provide a pricing certificate from a registered valuer
• The valuation certificate has to be comprehensive and take into account various methodologies and justification for arriving at the valuation

Bond traders await consumer inflation data for May which may have risen to 5.3% according to a Bloomberg survey.

• India May Consumer Price Inflation YoY due after market; est. 5.38%, prior 4.29%
• 10-year yields fell 1bps to 6.01% on Friday
• USD/INR little changed at 73.0750 on Friday
• Implied opening from forwards suggest spot may start trading around 73.14

Asian stocks were mixed Monday in holiday-thinned trading as investors prepared for a key Federal Reserve meeting later in the week.

Shares saw modest gains in Japan and slipped in South Korea. Trading volumes are expected to be light with a number of holidays in the region including in Australia, China and Hong Kong.

U.S. futures were little changed after stocks staged a late rally Friday, closing at another record after a choppy day of trading. Ten-year Treasury yields inched up to around 1.46% after hitting three-month lows.

India’s SGX Nifty 50 Index futures for June delivery fell 0.4% to 15,761.00, while the MSCI Asia Pacific Index is little changed. The NSE Nifty 50 Index added 0.4% Friday to 15,799.35.

The dollar was steady against Group-of-10 peers during early Asia trading in the wake of a Group-of-Seven leadership meeting that emphasized unity.

Elsewhere, Bitcoin jumped over the weekend after Elon Musk said Tesla would resume transactions with the cryptocurrency when mining it is done with more clean energy. West Texas Intermediate crude rose 0.3% to $71.12 per barrel.

Back home, BHEL, DLF, Sun TV, Edelweiss, VRL Logistics and JK Cement may react as the companies reported quarterly results. Coal India, Kajaria Ceramics, JB Chemicals, Indian Overseas Bank are among those scheduled to report earnings Monday.

India is due to release wholesale-price inflation and consumer-price inflation data for May. Foreign investors bought net Rs 1,440 crore of stocks on June 10, according to NSDL website.