Sensex, Nifty Log Best Quarterly Stretch Since 2015 Despite Three-Day Loss

India stocks declined for a third day as investors booked profit after key benchmarks closed at record levels last week.

The S&P BSE Sensex lost 0.1% to 52,482.71, but registered fifth-straight quarterly gain after advancing 6% in April-June. The measure rose 2% this month. The NSE Nifty 50 Index fell nearly 0.2% to 15,721.50. It gained 1.8% this month and 7% for the quarter.

The broader market outperformed their larger peers. The NSE Nifty Midcap 100 rose 0.22% and NSE Nifty Smallcap advanced 0.26%. Eleven of the 19 sector sub-indices compiled by BSE Ltd. declined, led by a gauge of utilities companies.

"Market is in profit booking mode for last couple of days, as recent surge in crude prices and weakening rupee weighed on sentiment," Binod Modi, Head Strategy at Reliance Securities wrote in a note. "We believe any meaningful correction in the market should be offering opportunity to investors to get in quality stocks."

India has been stepping up the pace of coronavirus vaccinations, while states begin to ease restrictions. Indicators later today may shed more light on the state of the economy, with scheduled releases including the performance of key industries and the government’s fiscal deficit.

Shares of Adani group companies were among the worst performing stocks on the bourses.

• Adani Total Gas - down 5%, hits lower circuit for sixth straight day.

• Adani Transmission - down 5%, sixth session of loss.

• Adani Power - down 2.6%, second day of loss.

• Adani Enterprises - down 1.1%, second day of loss.

• Adani Ports & SEZ - down 1.2%, second day of loss.

• Adani Green Energy - up 0.6%, second day of gains.

Promoters of Macrotech Developers have repaid an entire debt of 15.96 billion rupees owed to the company as of March 31 this year, the Mumbai-based developer said in a stock exchange filling.

• The repayment, combined with funds raised via an IPO and continued organic free cash flow generation are helping the Mumbai-based company to progress further in its deleveraging plans, it said

  • The developer targets significant reduction in net debt to Rs 10,000 crore by the end of FY22

  • NOTE: On May 14, Macrotech said the company will become net cash positive in 3 years

  • It will continue to focus on capital-light growth strategy around affordable and mid-income housing, and digital infrastructure such as warehousing, data centers and industrial parks

• Promoters raised debt-repayment funds by means of a long-term instrument having tenure greater than 3 years with no repayment obligation prior to that

  • Promoters plans to deleverage themselves by bringing their holding in the company down to a maximum of 75% over a period of three years

Shares of Cummins India Ltd. jumped the most in three months after Kotak Institutional Equities increased its fair value for the stock citing business benefits of CPCB-IV norms and acceleration envisaged in the data center market.

Cummins India's stock gained as much as 6.3%, the most since March 03, to Rs 904.30. It has risen nearly 58% year-to-date versus the 11.3% for the S&P BSE Sensex Index.

Of the 16 analysts tracking the stock, 17 have a ‘buy’ rating, eight suggest a ‘hold’ and eight recommend a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies an downside of 11.3%.

Shares of Manappuram Finance Ltd. gained as much as 3.53% after BofA Global Research initiated coverage on the stock with a ‘buy’ rating and a target price of Rs 225.

In a note, it said that the NBFC’s existing valuation “grossly undervalues its gold loans business” and that a re-rating would be on the cards once its microfinance institution credit costs improve. “We look past the near-term stress in its MFI share, which is 22% of its portfolio and see a business well-placed to deliver 20% earnings-per-share growth and 24% return on equity through FY24.”

It added that it expects the impact of the second Covid-19 wave to wear down by second quarter of FY22 and gold loans to resume their “steady state growth of 12-15% per annum” as branches reopen by then. “A renewed focus on adding customers, the latest loan-to-value ratio at 63% and scope for a sustained increase in ticket size allows for a positive surprise on asset growth,” it said.

In the long-term, BofA said it thinks Manappuram’s MFI arm Asirvad can deliver cross-cycle RoEs in “high-teens”, with strict caps on state and district exposures acting as prudent risk mitigation strategy.

It listed hikes in gold price, lower than expected credit costs and value-unlocking from its potential Asirvad spin-off as upside catalysts, while significant decline in gold price, Covid 3.0 and asset quality cycles in Asirvas as downside risks.

Shares of Manappuram Finance Ltd. gained as much as 3.53%, the most since May 31 this year, to Rs 168.5. Of the 16 analysts tracking the stock, 13 have a ‘buy’ rating, three suggest a ‘hold’ and none recommend a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies an upside of 24.2%.

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 wrote in a note. Fertilizer suppliers and tractor makers are also likely to struggle during

To read the full story, click here.

The global research firm has initiated coverage on five technology stocks in India -- Tata Consultancy Services Ltd., Wipro Ltd., Infosys Ltd., Tech Mahindra Ltd. and HCL Technologies Ltd.

"Indian IT companies have shifted their business mix aggressively towards digital and are positioned well to cash in on the potential incremental spending on technology over the next 10 years, which is slated to be bigger than in the previous two decades," Morgan Stanley said in a note.

• Overweight on TCS and Infosys and expect them to narrow the valuation gap with global peers such as Accenture. Revenue surprises could offset margin misses at these firms.

• Evenweight on HCL Tech and Tech Mahindra on lagging growth. Believe the valuation discount for these two will remain high as growth lags that of peers.

• Underweight on Wipro given its small valuation discount to Infosys while revenue growth will continue to lag that of Infosys and the acquisition will drag earnings.

Shares of the packaging materials company jumped as much as 19.4%, the most since April 28 last year, to a record high of Rs 570.05 apiece.

The company reported a two-fold jump in consolidated net profit at Rs 264.95 crore for the fourth quarter ended March 2021. Total income rose 45.05% to Rs 2,571.77 crore as against Rs 1,773 crore in the corresponding period of the previous fiscal.

• The company expects higher volumes during the current financial year from newly set-up capacities; it will also strive to maintain Ebitda margin of 20%, Group CFO Rajesh Bhatia says in a statement

Indian equity benchmarks climbed, in line with Asia peers, as after U.S. shares closed at a record on economic optimism and signs that vaccines can counter a highly infectious coronavirus strain.

The S&P BSE Sensex rose as much as 0.4% to 52,764.28, while the NSE Nifty 50 Index advanced by a similar magnitude. Fourteen of the 19 sector sub-indexes compiled by BSE Ltd. gained, led by a gauge of metal companies. The S&P BSE Power Index was the worst performer, down 0.9%.

India’s rupee and sovereign bonds may be pressured amid a rise in crude prices, which will weigh on inflation and finances of the net oil-importing nation. Traders will also await the current-account deficit data for the March-quarter which is expected to sharply widen. The rupee is headed for its worst month since March last year.

• USD/INR up 0.1% to 74.2312 on Tuesday; pair is up 2.2% this month, headed for the biggest gain since March 2020

  • Implied opening from forwards suggest spot may start trading around 74.30

• 10-year yields fell 2bps to 6.04% on Tuesday; 5.63% 2026 bond yield drops 5bps to 5.68%

Asian stocks rose Wednesday after U.S. shares closed at a record on economic optimism and signs that vaccines can counter a highly infectious coronavirus strain.

Australian equities outperformed, shrugging off lockdowns imposed to fight the delta variant of the virus, while China and Hong Kong fluctuated. U.S. contracts were higher after the S&P 500 eked out a gain, remaining on track for a fifth monthly advance -- the longest run since August.

India's SGX Nifty 50 Index futures for July delivery rose 0.3% to 15,828.50, while MSCI Asia Pacific Index advanced 0.2%. The NSE Nifty 50 Index fell 0.4% Tuesday to 15,748.45.

The dollar has firmed on haven demand due to Covid-19 flareups, a climb that has hurt gold, which is set for the biggest monthly drop in over four years.

Oil climbed back above $73 a barrel. OPEC+ ministers are divided ahead of a key meeting later this week on production policy.

Back home, Ruchi Soya, Finolex Cables, NBCC India, EID Parry, Suzlon Energy may react as the companies reported quarterly results after the close of market Tuesday. Vodafone Idea, SpiceJet, Dish TV are among the companies scheduled to report earnings Wednesday. Tata Steel, Balkrishna Industries among companies holding their annual shareholders’ meeting.

Government will release eight core industries output data for May, fiscal deficit for April-May & balance of payment for Jan.-March. Foreign investors sold net Rs 1,180 crore of stocks on Monday, according to NSDL website.