Banks, RIL lift Sensex 267 points; Nifty ends above 10,750 despite weak Asia
04 July 2018
Market Outlook by Jayant Manglik, President, Religare Broking:
Despite negative global cues, the Indian equity benchmark indices showed firmness in Wednesday’s session, led by better than expected macro data and cabinet’s approval to raise MSP for kharif crops.
We expect the Indian equities to remain rangebound in the coming sessions. Domestic macro data and movement of currency & crude oil will dictate the further course of the market in the near term.
Market participants would also closely monitor the trade tension between US & China. Under uncertain domestic and global environment, steady reform implementation and revival in the corporate earnings is essential for the markets.
We advise traders to trade cautiously whereas investors can continue to accumulate fundamentally sound companies.
Global Update: Asian markets ended in the red with China's Shanghai Composite losing a percent after recording gains in the previous session. Trade tensions remained in the spotlight ahead of a looming tariff deadline, reports CNBC.
Japan's Nikkei and South Korea's Kospi were down third of a percent while Hong Kong's Hang Seng fell over a percent.
European stocks were mixed amid elevated trade tensions between the US and China. France's CAC was up 0.2 percent while Germany's DAX and Britain's FTSE fell 0.2 percent each at the time of writing this article.
Market Closing: Benchmark indices closed on a strong note with the Sensex rising more than 250 points, backed by banking & financials and Reliance Industries.
The rally was also led by the Cabinet Committee's approval to the proposal to raise minimum support price for kharif crops.
The 30-share BSE Sensex gained 266.80 points at 35,645.40 and the 50-share NSE Nifty rallied 70 points to 10,769.90 but the market breadth was weak.
About 1,338 shares declined against 1,256 advancing shares on the BSE.
HDFC, HDFC Bank, Reliance Industries, Maruti Suzuki, HUL, Bajaj Finserv, Bajaj Auto, Bharti Infratel, IndusInd Bank, Lupin and Indiabulls Housing were top contributors the Nifty's gains, which rallied between 1 percent and 4 percent.
Infosys, Grasim, Vedanta, HPCL, TCS, ITC, Tata Motors and HCL Technologies were losers.
Management outlook: Kerala-based Muthoot Finance has set a target to disburse Rs 300 crore personal loans during the current financial year, a top company official said today.
The company, which had earlier offered gold loans announced its foray into the personal loan category aimed at serving salaried individuals.
"We have noticed lot of gold loan customers have the potential to be given a personal loan. This is purely for salaried individuals. We have seen the potential and have already started offering it in Kerala and Karnataka," Muthoot Finance, Executive Director, George M Alexander said.
The company, has so far disbursed personal loans worth Rs 50 crore since its foray into the personal loan category.
Rise in unsecured bank loans: Banks' unsecured loan book has grown four times the bank credit during the past three years, helped by a rise in discretionary spending, technology-driven disbursements and lower interest rates, says a Crisil report.
Unsecured loans are the loans where individual exposures are smaller and more distributed and given without any collaterals but banks get higher margins. Typically personal loan, education loans and credit card spends fall under this category of loans.
"Between fiscals 2015 and 2018, unsecured credit - comprising personal, small and medium enterprise (SME), and credit card loans - clocked a compound annual growth rate (CAGR) of 27 percent, or almost four times growth in bank credit," the report says.
MEP Infra hits 52-week low: MEP Infrastructure Developers share price rallied 3 percent intraday Wednesday after signing a concession agreement for four projects with the National Highways Authority of India (NHAI), but it corrected later to hit fresh 52-week low of Rs 63.85 on the BSE.
The stock price was quoting at Rs 64.50, down Rs 1.50, or 2.27 percent.
The company said its four of the special purpose vehicles (SPVs) has signed the concession agreement, which are MEP Longjian ACR Private Limited, MEP Longjian CLR Private Limited, MEP Longjian Loha Waranga Road Private Limited and MEP Longjian VTR Private Limited.
A concession period of 15 years has been given to the SPVs' that does not include the construction period.
The company said it would receive Bi-Annual Annuity from NHAI post commercial operation date (COD).
Buzzing: Unichem Laboratories share price rallied more than 5 percent intraday after the company received final ANDA approval for its Montelukast Chewable tablets, 4 mg and 5 mg from the United States Food and Drug Administration to market in the US.
The Montelukast chewable tablets are the AB rated generic equivalent of Merck Sharp & Dohme Corporation's Singulair tablets, 4 mg and 5 mg.
The drug is indicated for the prophylaxis and chronic treatment of asthma in adults and pediatric patients 12 months of age and older, and the prevention of exercise-induced broncho constriction in patients 15 years of age and older.
Market Update: The market is trading at day's high with the Sensex rising more than 200 points, backed by HDFC twins and Reliance Industries. The rally is also after the Cabinet Committee approval the proposal to raise minimum support price for kharif crops.
The Nifty is trading firmly above 10,750 levels while the Nifty Midcap index continued to underperform frontliners.
Buzzing: Shares of Jiya Eco Products gained 19 percent intraday on Wednesday after the company announced the set up of a new pellet plant.
The management announced that its subsidiary company Jiya Eco Gandhidham Private Limited is setting up new pellet plant in 3 acres field at Chudva, Gandhidham.
The set up of the new plant is in its final stage. This will be a huge success for renewable energy and the company is stepping up to the growth, the pellets and briquettes manufacturer said in its filing.
Increase in price of common rice: India has raised the price at which the government will buy new-season common rice variety from domestic farmers by at least 13 percent, a source said, as the government looks to woo millions of farmers ahead of general elections due early next year.
The source did not give further details.
The government had fixed last year's local rice purchase price for the common variety at Rs 1,550 per 100 kilogrammes, reports Reuters.
Europe Update: European stocks were slightly lower Wednesday morning, amid elevated tensions between the US and China over looming trade tariffs and investment restrictions.
France's CAC, Germany's DAX and Britain's FTSE fell 0.1-0.4 percent.
Market focus is largely attuned to the ongoing US-Sino trade row, with investors concerned that the dispute could soon derail a rare period of synchronized global growth. At the end of the trading week, Washington is set to impose tariffs on $34 billion worth of goods from Beijing. China is then expected to respond with charges of its own on US products.
In Asia, equities slipped amid escalating fears of a full-blown trade war. MSCI’s broadest index, excluding Japan, edged around 0.3 percent lower on Wednesday, reports CNBC.
Market Update: The market extended gains in afternoon trade despite the correction in global peers, after the Cabinet Committee approved the proposal to raise minimum support price for kharif crops.
The Sensex rallied more than 150 points and the Nifty traded around 10,750 levels but the Nifty Midcap index remained in the red.
Reliance Industries and banking & financials continued to support the market but the upside is capped by selling pres sure in technology stocks and ITC.
The 30-share BSE Sensex gained 166.48 points at 35,545.08 and the 50-share NSE Nifty rose 45.30 points to 10,745.20. About 1,261 shares declined against 1,136 advancing shares on the BSE.
SME IPOs garner Rs 825-cr in Q1FY19: Small and medium enterprises (SMEs) raised a staggering Rs 825 crore through initial public offerings in the first quarter of 2018-19, more than two-fold jump from the preceding financial year.
Funds raised through initial public offers (IPOs) were meant for business expansion plans, working capital requirements and other general corporate purposes, according to offer documents.
A total of 47 companies got listed with initial shares-sale offers worth Rs 825 crore during April-June quarter of 2018-19 as compared to 24 firms which tapped the IPO route to garner Rs 310 crore in the same period of the previous year, as per the data provided by merchant banker.
This reflects a significant rise in the amount raised through SME platforms of BSE and NSE, reports PTI.
Consumer Affairs, Food and Public Distribution Minister Ram Vilas Paswan said the Cabinet Committee has increased the minimum support price on Jowar by 51 percent and Sunflower Seed by 50 percent while Ragi, Arhar and Tur MSP raised by 65.36 percent.
Market Update: The market gained strength in afternoon after Cabinet Committee approved the proposal to raise minimum support price for kharif crops.
The Sensex is up nearly 100 points while the Nifty is trading firmly above 10,700 levels, backed by HDFC twins and Reliance Industries.
The Nifty Midcap continued to underperform, falling 0.15 percent. About 1,236 shares declined against 1,082 advancing shares on the BSE.
Kohinoor Foods and LT Foods stocks rallied more than 4 percent after the cabinet approval to minimum support price proposal
Minimum support price hike: The minimum support price of Soyabean is likely to be raised to Rs 3,399 from Rs 3,050 per quintal and jowar ?to Rs 2,430 from Rs 1,700-1,725 per quintal while ragi MPS is likely to be raised to Rs 2,897 from Rs 1,900 per quintal.
Moong MSP is likely to be increased to Rs 6,975 per quintal from Rs 5,575, Seasme to Rs 6,249 from Rs 5,300, Sunflower seed to Rs 5,388 from Rs 4,100, groundnut to Rs 4,890 from Rs 4,450, Bajra to Rs 1,950 from Rs 1,425 per quintal, reports CNBC.
Cotton medium staple minimum support price is likely to be raised to Rs 5,150 from Rs 4,020 and cotton long staple to Rs 5,450 from Rs 4,320.
Cabinet approves MSP proposal: The Cabinet Committee has approved the proposal to raise minimum support price (MSP) for kharif crops.
The minimum support price for paddy increased by around Rs 250 per quintal.
The minimum support price of fine paddy is likely to be increased to Rs 1,770 per quintal from Rs 1,590 earlier and common paddy MSP raised to Rs 1,750 from Rs 1,550 per quintal earlier, reports CNBC-TV18.
Maize MSP is likely to be increased to Rs 1,700 from Rs 1,425 per quintal and tur MSP raised to Rs 5,675 from Rs 5,450 per quintal.
The minimum support price for urad also is likely to be increased to Rs 5,600 from Rs 5,400 per quintal.
The Cabinet also approved funding agency for higher education.
Moody's says higher oil prices risk to growth: Higher crude price is a key risk to India's growth, but subsidy reform in petrol and diesel has diminished the risk to sovereign credit profile, Moody's Investors Service said today.
As per market polls of 175 investors conducted by Moody's and its affiliate ICRA on 175 last month in Singapore and Mumbai, investors identified higher oil prices as a key risk to growth and said that there are risks to achieving 3.3 percent fiscal deficit.
The investors also said that the government's PSB recapitalisation package is not sufficient, given the banks have not been able to raise capital as planned.
In its report Moody's said: "Similarly to the views of the poll respondents, we also consider higher oil prices to be a risk to growth, but risks to sovereign credit dynamics from oil has diminished in recent years following subsidy reforms to petroleum and diesel fuel; only liquefied petroleum gas and kerosene oil remain subsidised".
The rating agency said it does not expect oil prices to remain elevated for an extended period, but this possibility "remains a downside risk", reports PTI.
Ducon Infratechnologies at upper circuit; Shares of Ducon Infratechnologies were locked at 20 percent upper circuit at Rs 22.80 following new orders for its US subsidiary.
The company said its US subsidiary, Ducon Combustion Equipment Inc has received new orders of Rs 52 crore for two 50 MW packaged cogeneration plants from a major South Korean EPC company during the month of June 2018.
These orders will be delivered in the next two months, it added.
Market Update: The market continued to be rangebound as investors after digesting global trade tensions gradually shifting focus to June quarter earnings season that will be kicked off by TCS next week.
Index heavyweights HDFC twins and Reliance Industries supported the market while selling in Infosys, ITC and TCS capped market gains.
Shriram Transport Finance stock fell 16 percent despite sources told CNBC-TV18 that there would not be financial impact of SVL loan on company's book.
"The matter of SVL Loan dates back to 2013-14. Term loan was converted to a debt with corporate guarantee in 2015 and the company had given a guarantee for a period of 4 years ending in June 2019," CNBC-TV18 said quoting unnamed sources.
Shriram Group will honour the payment on this loan, it added.
Rupee Trade: The rupee is off day's high to trade 2 paise higher at 68.55 against the dollar at the Interbank Foreign Exchange.
Services PMI rebounds: Activity in India's service industry rebounded in June from a mild contraction the prior month, a private survey showed, expanding at its quickest pace in a year on the back of a surge in new business orders.
The Nikkei/IHS Markit Services Purchasing Managers' Index climbed to 52.6 last month, its highest since June 2017, from 49.6 in May. The 50-mark separates growth from contraction.
The recovery in services firms' activity, along with a robust pace of manufacturing growth reported on Monday lifted the composite PMI to 53.3, its highest level since October 2016. That points to a solid finish for the three months ending in June, the first quarter of this fiscal year, after Asia's third-largest economy grew at its quickest pace in nearly two years in January-March, reports Reuters.
Goldman Sachs neutral on United Breweries: Shares of United Breweries declined 3 percent as foreign research house Goldman Sachs has initiated neutral call on the company with a target of Rs 1,171 per share.
According to Goldman Sachs, the company is well placed to benefit from a pick-up in volume growth and premiumisation of the market.
The government intervention can be very disruptive to volumes/margins, while cultural/social norms and retail network issues to limit acceleration in beer consumption.
Also, rising competitive intensity from global peers to challenge market share growth said Goldman Sachs.
Buzzing: Shares of Dena Bank rose 5 percent as company has proposed to sell 60.5 lakh shares in 3 entities.
The company is proposes to sell 6.25 lakh equity shares (1.5%) in NSDL E-Governance Infrastructure of face value Rs 10 each.
Also, in National Securities Depository the company to sell 2,25,000 equity shares (Lot-1), and 4,00,000 equity shares (Lot-2) of face value Rs 10 each.
The company to sell 48,00,000 equity shares of SIDBI of face value Rs10 each which is 0.90% of the total paid up equity share capital of the company.
In this regard, the bank is floating a request for quotation (RFQ) for purchase of the aforesaid equity shares.
Market Update: The market remained rangebound with the Nifty hovering around 10,700 levels as traders eagerly await June quarter earnings that will start next week.
The Sensex fell 0.47 points to 35,378.13 and the Nifty declined 0.50 points to 10,699.40.
The Nifty Midcap is down third of a percent while the sectoral trend is mixed with Nifty Pharma rising over a percent.
Shares of Shriram Transport Finance tanked around 14 percent as investors turned cautious of a guarantee of Rs 870 crore provided by the firm for its unlisted subsidiary.
Shriram Transport Finance under pressure : Shares of Shriram Transport Finance tanked around 14 percent in morning trade as investors turned cautious of a guarantee of Rs 870 crore provided by the firm for its unlisted subsidiary.
As per the annual report released by the firm recently, the company has provided a guarantee of Rs 870 crore for non-convertible debentures (NCDs) issued by SVL, an unlisted entity belonging to the financial conglomerate.
The management of Shriram Transport tried to allay fears of investors, but the Street may not be very convinced. The stock has maintained its downturn.
Market Update: Benchmark indices continued to be rangebound as traders remain cautious ahead of June quarter earnings season that will begin next week.
The Sensex fell 23.29 points to 35,355.31 and the Nifty slipped 5.70 points to 10,694.20.
Sales Volume: Prakash Industries said it has achieved highest ever quarterly sales volume of around 2.40 lakh tonnes in Q1 FY2019, registering growth of around 26 percent as against Q1 FY2018, owing to higher capacity utilization and operational efficiencies.
VST Tillers corrects: Share price of VST Tillers Tractors slipped as much as 3 percent in morning on the back of poor sales number reported by the company for the quarter and month ended June 2018.
The company sold 2,948 units of power tillers in June 2018 against 4,099 units in June 2017, de-growth of 28 percent. Also, the company's tractors sale declined 8 percent at 871 units in June 2018 versus 954 units in June 2017.
For the quarter ended June 2018, the company's power tillers sale was down 24.6 percent at 5,367 units and tractors sale was down 24.5 percent at 1,927 units.
Market Update: The market is mildly lower amid consolidation in morning as traders remained cautious ahead of Q1 earnings which will begin next week.
The Nifty is hovering around 10,700 levels while the Nifty Midcap index fell nearly half a percent.
ITC, TCS, Infosys and L&T are among top contributors to the Nifty's fall while the buying in HDFC and Reliance Industries capped those losses.
The Sensex fell 50.67 points to 35,327.93 and the Nifty slipped 18 points to 10,681.90.
Market Outlook by Abhishek Mondal of Guiness Securities:
Indian equity benchmark Nifty-50 ended the trading session with a subtle gain of around half a percent at 10,699.90 on Tuesday due to global cues. However, the market remained range-bound throughout the day as traders remained cautious ahead of Q1 earnings.
The Nifty-50 index continues to oscillate back and forth in a broader range indicating range bound going on currently. The upper end of the range is placed at around 10,850 levels and the lower end of the range is placed at 10,550.
The next trending move will be seen on a breakout from this range. If it manages to breach 10,850 levels on the upper side on a closing basis, then it can resume the uptrend, taking it to higher levels of 10,930 and 11,014.
However, a trade below 10,550 can trigger a correction to levels around 10,440 and then 10,360. The RSI is also oscillating between the range of 37 and 62, which indicates that the bias could remain sideways in short term.
Buzzing: Shares of GE Power India gained 2 percent intraday Wednesday as company received an order worth Rs 468 crore from BHEL.
The company has been awarded twin boiler equipment orders by BHEL (Bharat Heavy Electricals) for supercritical thermal power projects in Patratu and Udangudi worth approximately Rs 467.9 crore exclusive of taxes.
The company will supply pressure parts equipment for the Patratu project at an order value of approximately Rs 341.5 crore and to Udangudi thermal power projects at a value of approximately Rs 126.4 crore.
BHEL is executing EPC contract for a phase-I expansion of Patratu Vidyut Utpadan Nigam (PVUNL) 2.400-MW (800 MW X3) supercritical thermal power station at Patratu and for the first stage of a proposed 1,320-MW supercritical thermal power plant at Udangudi by Tamil Nadu Generation and Distribution Corporation (TANGEDCO).
Market Opening: Benchmark indices as well as broader markets are flat in opening trade as investors await June quarter earnings season that will begin next week.
The Sensex rose 38.76 points to 35,417.36 and the Nifty gained 6.80 points at 10,706.70.
Tata Motors, Maruti Suzuki, Tata Steel, Titan Company, Cipla, Lupin, Bajaj Auto, Bajaj Finance, Bajaj Finserv, Power Grid and Reliance Industries are early gainers.
Vedanta, Hindalco Industries, Infosys, HCL Tech and TCS are under pressure.
Nifty Midcap index fell 32 points and Nifty Bank declined 14 points.
Shriram Transport shares plunged 11 percent as the group company provides guarantee against non-convertible debentures.
8K Miles Software, Taj GVK, GVK Power, Graphite India, Kiri Industries and Reliance Communications gained up to 13 percent.
Fortis, Vakrangee, VST Tillers, Tata Coffee and Federal Bank are under pressure.
Rupee Trade: The Indian rupee opened higher by 6 paise at 68.52 per dollar on Wednesday versus previous close 68.58.
The USD-INR pair seems to be losing steam for further up move as the dollar lost some of its gains against its major crosses. Volatility in global crude oil prices continue to remain high as supply constraints from Libya and Canada kept prices supported on lower levels, said Motilal Oswal.
Yesterday, crude rose to the highest level since November,2014 after API inventory showed drawdown of 4.5mbpd. On the domestic front, no major economic data is expected to be released and the rupee could determine its trend from the move in the dollar. Today, USD-INR pair is expected to
quote in the range of 68.50 and 69.05, it added.
Market Pre-Opening: Benchmark indices are mixed in pre-opening trade despite weakness in Asian peers amid global trade tensions.
The 30-share BSE Sensex fell 73.63 points to 35,304.97 and the 50-share NSE Nifty gained 42.50 points at 10,742.40.
Pre-Market: The Nifty50 is likely to open flat with a negative bias on Wednesday tracking muted trend seen in other Asian markets. The index closed 42 points higher at 10,699 on Tuesday.
Wall Street dipped on Tuesday, weighed down by Apple, Facebook and other technology stocks, in a trading session ending early ahead of the US July 4 holiday, said a Reuters report.
The Dow Jones Industrial Average declined 0.54 percent to end at 24,174.82 points, while the S&P 500 lost 0.49 percent to 2,713.22. The Nasdaq Composite dropped 0.86 percent to 7,502.67.
Asian stocks are on shaky ground on Wednesday while the Chinese yuan stood near 11-month lows. MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent in early trade, a day after it hit a nine-month low. Japan's Nikkei lost 0.5 percent.
Oil prices edged up on Wednesday, lifted by a report of declining US fuel inventories amid the ongoing crude supply outage at Syncrude Canada in Alberta, which usually supplies the United States.