Sensex Clocks Worst Four-Day Fall In Over A Month; Nifty Settles Below 11,700

The central government is considering selling controlling stakes in some of the smaller state-run banks in a bid to raise funds to boost spending on programs for the poor, Bloomberg reported quoting people with knowledge of the matter.

Read the full story here.

The markets are possibly taking a signing of relief, catching up its breadth with profit booking, Geojit Financial Services’ Senior Vice President Gaurang Shah said.

“The markets are expected to see further correction ahead of the upcoming events including the Union Budget. These are great times to look at sectors and stocks which have earnings visibility, corporate governance and visibility of investment created in the long-term view,” Shah told BloombergQuint in an interaction.

Apollo Tyres

• Stock rose as much as 9.6 percent to Rs 202.45.
• About 3.3 percent equity changed hands in multiple block deals.

Yes Bank

• Stock rose as much as 2.9 percent to Rs 118.35.
• Warburg, Blackstone and Apax look to invest up to $750 million in the bank, according to a Mint report.

Himatsinga Siede

• Stock rose as much as 6.9 percent to Rs 184.70.
• Promoter released all pledge shares.

Dr. Lal Path Labs

• Stock rose as much as 5.9 percent to Rs 1,147.70.
• The scrip is set to close at its highest levels in over a year.

The NSE Nifty 50, today, witnessed a selling procedure and the immediate support levels is seen at around 11,700, according to Choice Broking’s Executive Director Sumeet Bagadia.

The 50-stock index is expected to decline to 11,600-11,550 levels if the benchmark closes below the immediate support zone, Bagadia told BloombergQuint in an interaction.

Shriram Transport

• Stock fell as much as 7.8 percent to Rs 1,005.
• Trading volume was more than 20 times its 20-day average.

Apollo Tyres

• Stock rose as much as 8.8 percent to Rs 200.95.
• Trading volume was more than 16 times its 20-day average.

Poly Medicure

• Stock rose as much as 14.9 percent to Rs 194.15.
• Trading volume was more than 20 times its 20-day average.

Shares of ITC fell as much as 1.1 percent to Rs 275.05.

Brokerage and research firm CLSA cut the stock’s price target to Rs 365 from Rs 400, according to its research report.

Here’s what CLSA had to say about ITC:

• Maintained ‘Buy’ rating on the stock
• See a decline in free cash flow and marginal improvement in return ratios in 2018-19.
• Concern about tobacco remains but FMCG ramps-up well.
• Lower cigarette business valuation multiple given lack of earnings growth visibility.

TRACOM Stock Brokers' Director Parthiv Shah suggests investors to look for quality stocks which have lower valuations, good corporate governance and good balance sheet with a three-to-five year view.

“Indian equity benchmarks are currently being supported by the top 10 stocks. However, about 70 percent of the stocks in the broader market are trading at a five-year lower average valuation,” TRACOM Stock Brokers' Director Parthiv Shah told BloombergQuint in an interaction.

“This shows the sign that Indian stocks headed to enter bear market, where valuations are gradually declining,” Shah said.

Shares of Apollo Tyres rose as much as 8.8 percent to Rs 200.95.

About 3.25 percent equity of the company changed hands in a block deal, Bloomberg data showed. Buyers and sellers were not known immediately.

Shah suggests investors to look for quality stocks which have lower valuations, good corporate governance and good balance sheet with a three-to-five year view.

Food has emerged as the latest growth driver for Hindustan Unilever Ltd. even as personal care continues to dominate the top line of India’s largest seller of shampoos to staples.

The company, a bellwether for consumption, has about 40 brands across home care, beauty and personal care, and foods and refreshment categories, according to its annual report.

Click here to read more about the brands that are driving HUL:

Jain Irrigation Systems Ltd.’s $200 million 7.125 percent notes due declined for the fifth straight day and fell 4.2 cents on the dollar to 87.2 cents, according to a Bloomberg report.

This the biggest drop since the notes were issued in January 2017, the report added.

The NBFC space is full of worries and the regulators are acting on it to ensure that there is an orderly conduct in it, Dimensions Corporate Finance Services’ Managing Director Ajay Srivatsava told BloombergQuint in an interaction.

Here are the key highlights form the conversation:

On Current Market Scenario

• Given the events happening in the economy, index should not be anything close to that.
• Dichotomy between small, mid and mid cap still exists; 10 large caps lift the markets.
• Companies where the competitors are fragmented such as Titan, Bata will do well as their market share is changing dramatically.
• In sectors like cars and two-wheelers, share prices tend to fall because there are only 3-4 large players in sectors splitting the demand.

On NBFC Crisis and Piramal-Shiriram Transport Exit

• NBFC space is full of worries.
• There is action from regulators to ensure there is orderly conduct in the affairs.
• Piramal exit is not a big move as at the end of the day. Piramal Enterprises is also an NBFC trying to bring money to their own system.
• There is no reason for them to hold a portfoilio investment after their merger talks failed.
• There is no dearth of capital for quality deals- that's the silverlining.
• The problem is promoter funding has dried up hence capital investments, expansion plans are put on halt.

On Auto Space

• People have a lot of hope in Maruti but that's doubtful as competition has gone up and June numbers are expected to be worse than May.
• Also, new players like Mahindra have come in with their JV with Ford.
• Motorcycles is also not only about volumes but also competition.
• We have to be ready for a downward rerating for the company.
• Q1 Earnings will not be not so happy because of discounts.

On Pharma Correction

• Some of the companies are dirt cheap today.
• Uncertain about the period for turnaround happening for them.

Bharti Airtel Ltd.’s Africa unit set its IPO price range at 80-100 pence per share while the company plans to list in London, Bloomberg reported quoting the terms it had obtained.

Brent crude extended gains as Saudi Arabia expressed hope that OPEC and its allies will agree to extend production cuts into the second half at a meeting that will probably take place early next month.

The Asian crude benchmark rose 0.24 percent to $62.16 a barrel after gaining 0.58 percent intraday.

Indian equity benchmark S&P BSE Sensex traded near day’s low.

The 31-share index traded 185 points lower after falling over 200 points intraday and the NSE Nifty 50 hovered around 11,750. The broader market index represented by the NSE Nifty 500 Index fell 0.56 percent.

Shriram Transport Finance, NDTV and S Chand remained in focus today after they were trading on the back foot.

Shares of M&M fluctuated between gains and losses to trade little changed at Rs 637.25.

Mahindra & Mahindra signed share agreement to acquire 11.25 percent stake in Switzerland based Gamaya SA for Rs 30 crore, according to its notification to the bourses. The company said that this acquisition is expected to support the company’s business by developing technology solution’s the Group’s farm division.

The stock declined 29.6 percent over the past year compared to a 11.4 percent advance in the Sensex.

Shares of the media company declined as much as 4.5 percent to Rs 33.25.

Securities and Exchange Board of India barred the media firm’s three key promoters Prannoy Roy, Radhika Roy and their holding firm form capital markets for two years and also restrained the two individuals from holding any board or top management role at the company in this period, according to an exchange filing. This was done by the regulatory as violations were seen regarding interests of minority shareholders.

The trading volume was almost five times the 20-day average for this time of the day, according to Bloomberg data.

Foreign investors remained net buyers for the fourth consecutive month in May after Narendra Modi-led Bharatiya Janata Party returned to power with a bigger mandate.

Overseas investors funnelled $1.13 billion into Indian equities last month, National Securities Depository Ltd. data showed.

Click here to read where foreign investors parked their money last month

Nifty’s 11,900 call option contract was among the most active Nifty option contracts on National Stock Exchange.

Premium on the contract fell 56.4 percent to Rs 16.05. Over 6.3 lakh shares were added to the open interest which stood at over 28.22 lakh shares.

Indian equity benchmarks extended their opening losses.

The S&P BSE Sensex fell as much as 213 points or 0.54 percent to 39,239 and the NSE Nifty 50 traded below 11,800, down 0.6 percent.

Shriram Transport Finance was in focus after the stock fell nearly 8 percent as Piramal Enterprises sold 9.96 percent of the shares in the company.

Shares of the drugmaker rose as much as 3.6 percent to Rs 350.80.

The pharmaceutical company received two observations from the inspection of Active Pharmaceutical Ingredients facilities in Andhra Pradesh by the U.S. Food and Drug Administration.

The company stated that the observations are procedural in nature and it is a regular surveillance audit by the U.S. FDA and no data integrity issues was observed.

Trading volume was more than seven times its 20-day average, Bloomberg data showed. The stock fell 9.6 percent so far this year and declined 31 percent in the past 12 months.

Shares of Bharat Heavy Electricals rose as much as 1.9 percent to Rs 69.95.

The state-run firm won Rs 800 crore Engineering, Procurement and Construction orders for 200 MW solar power plants from NTPC Ltd. and Gujarat State Electricity Corporation Ltd.

The stock traded at 16 times its estimated earnings per share for the coming year, according to Bloomberg data.

Shares of Shriram Transport fell as much as 7.8 percent to Rs 1,000, the lowest in a month.

About 2.26 crore shares or 10 percent equity of the company changed hands in two block deals, Bloomberg data showed.

Piramal Enterprises, today said that it sold 9.96 percent equity of Shriram Transport Finance Company Ltd. to third party investors, according to its stock exchange filing.

Trading volume was 2,529 times its 20-day average, according to Bloomberg data. Of the shares traded, 42 percent were at the ask price and 54 percent were at the bid.

Indian equity benchmarks are set to open higher in today’s trade. The S&P BSE Sensex rose over 100 points during the pre-market trade and the NSE Nifty 50 traded near 11,900.

In the currency market, the Indian rupee opened lower against the U.S. dollar. The home currency depreciated as much as 0.1 percent to 69.80 against the greenback.

Larsen & Toubro plans to make an open offer to acquire 5.1 crore shares or 31 percent equity in Mindtree from its shareholders at Rs 980 each open. The offer opens today till June 28.

CLSA on Mid Caps

• Lease accounting change to have large impact on reported financials.
• AS-116 to impact companies with long leases (eg, retailing, multiplexes, hotels).
• Expected to balloon balance sheets, reduce net profit, impact RoCE and increase leverage.

Morgan Stanley on Oil & Gas

• Flattish petroleum product demand in May.
• Trends in auto fuel demand remain quite robust.
• ATF saw growth despite headwinds in the airline sector.
• Cheaper alternative fuels like gas and coal drove the industrial fuel sales weakness.

CIMB on Hexaware Technologies

• Maintained ‘Add’ with a price target of Rs 400.
• Acquisition of Mobiquity Inc will strengthen digital offerings.
• Believe acquisition is a good fit as it will boost Hexaware's customer experience services.
• See improving earings visibility and reasonable valuations.

Citi on Jindal Steel And Power

• Maintained ‘Buy’ with a price target of Rs 250.
• On track for 6.5mnt steel volume in India in 2019-20.
• On track to deliver cost-savings in 2019-20.
• On track to pay down further Rs 4000-5000 crore debt from cash flows in 2019-20.

Morgan Stanley on Biocon

• Maintained ‘Overweight’ with a price target of Rs 393.
• Biocon expects the first half to be modest, followed by strong second half.
• New launches will have a full-year impact in 2020-21.
• Expect meaningful margin expansion.

BofAML on HDFC Bank

• Maintained ‘Buy’ with a price target of Rs 2,750.
• See significant upside from semi-urban push.
• See opportunities in both sides of balance sheet.
• If HDFC Bank gains 10 percent market share, it would mean 30 percent deposit growth.

JPMorgan on Reliance Industries

• Maintained ‘Neutral’ with a price target of Rs 1,300.
• Refining and petchem weakness persists.
• See 15 percent downside to earnings estimate if GRMs and oil prices do not improve.
• E-commerce, stake sale and Jio tariff hike key events to watch.

CLSA on ITC

• Maintained ‘Buy’; cut price target to Rs 365 from Rs 400.
• See a decline in free cash flow and marginal improvement in return ratios in 2018-19.
• Concern about tobacco remains but FMCG ramps-up well.
• Lower cigarette business valuation multiple given lack of earnings growth visibility.

Earnings Reaction To Watch

Reliance Infra (Q4, YoY)

• Revenues up 30 percent at Rs 4,012 crore
• Ebitda up 235 percent at Rs 889 crore
• Ebitda margins at 22.2 percent versus 8.6 percent
• Net loss of Rs 3,301 crore, compared with a profit of Rs 134 crore
• Booked largest quarterly loss on account of impairment, write-offs worth Rs 8,481 crore

Alok Industries (Q4, YoY)

• Revenues down 9 percent at Rs 770 crore
• Ebitda gain of Rs 15 crore, versus loss of Rs 197 crore
• Profit of Rs 6,106 crore, versus loss of Rs 1,306 crore
• Profit on account of interest derecognised, hence reversed worth Rs 7,045 crore
• Interest derecognised on account of resolution plan approved by adjudicating authority

• Adani Enterprises promoter group Gautam Adani revoked pledge of 62.06 lakh shares on June 12.
• JSW Energy promoter group Indusglobe Multiventures pledged 72.5 lakh shares on June 11.
• Apollo Tyres promoter group pledged 34.5 lakh shares on June 12.
• Emami promoter pledged 2 lakh shares and revoked pledge of 15.3 lakh shares from June 10-12.
• Himatsingka Seide promoters revoked pledge of 1 crore shares on June 14.
• Adani Transmission promoter group Adani Transmission revoked pledge of 2 lakh shares on June 13.
• Indiabulls Housing’s promoters released pledge on 42 lakh shares (0.98 percent) on June 14 on full repayment of loan.
• Indiabulls Real Estate’s promoters released pledge on 3 crore shares (6.63 percent) on June 14 on full repayment of loan.

• Reliance Capital: Axis Trust Services sold 34.74 lakh shares or 1.37 percent equity at Rs 79.76 each.

Gruh Finance

• Housing Development Finance Corporation sold 3.6 crore shares or 4.91 percent equity at Rs 290.9 each
• Societe General acquired 41.9 lakh shares or 0.57 percent equity at Rs 290 each.

• Mahindra and Mahindra signed share agreement to acquire 11.25 percent stake in Switzerland based Gamaya SA for Rs 30 crore. The company said that this acquisition is expected to support the company’s business by developing technology solution’s the Group’s farm division.
• Laurus Labs received two observations from the inspection of Active Pharmaceutical Ingredients facilities in Andhra Pradesh by the U.S. Food and Drug Administration. Company stated in their press release that the observations are procedural in nature and it is a regular surveillance audit by the U.S. FDA and no data integrity issues was observed.
• Bharat Financial Inclusion completed direct assignment of Rs 1545.93 crore. Company says it has cumulatively completed direct assignment worth Rs 2653.33 crore in financial year 2020.
• Dewan Housing Finance paid interest and principal of non-convertible debemtures worth Rs 125.5 crore which was due on June 14.
• Indiabulls Housing Finance paid interest and principal of NCDs whose due date is on June 17.
• New Delhi Television Ltd.: Securities and Exchange Board of India barred its three key promoters Prannoy Roy, Radhika Roy and their holding firm form capital markets for two years and also restrained the two individuals from holding any board or top management role at the company in this period. This was done by the regulatory as violations were seen regarding interests of minority shareholders.
• S Chand & Company: SEBI fined company’s Chief Financial Officer Saurabh Mitta for violation of insider trading norms. Penalty of fine amounts to Rs 1.29 lakh.
• United Bank reduced Marginal Cost of Funds based Lending Rate across various tenors by 5 basis points. One Year MCLR at 8.75 percent and one month MCLR at 8.3 percent.
• Bharat Heavy Electricals Ltd. wins Rs 800 crore Engineering, Procurement and Construction orders for 200 MW solar power plants from NTPC Ltd. and Gujarat State Electricity Corporation Ltd.
• Cadila Healthcare’s Ahmedabad facility Alidac Pharma receives Establishment Inspection report from the U.S. Food and Drug Administration. Alidac Pharma is 100 percent subsidiary of Cadila Healthcare.

• Federal Reserve, the Bank of Japan and the Bank of England all set monetary policy, along with central banks in Norway, Brazil, Taiwan and Indonesia.
• Fed meeting begins Tuesday with a decision and press conference the next day. Bank officials are expected to debate a rate cut to shelter the U.S. economy, in part, from the fallout caused by Trump’s trade disputes.
• In the U.K. Tuesday there will be a second ballot on the leadership contest to choose Theresa May’s successor.
• Thursday brings the BOJ policy decision.

London Metal Exchange

• Copper ended 0.61 percent lower.
• Zinc ended lower for the second day, down 0.97 percent.
• Nickel halted a two-day fall, closed 0.24 percent higher.
• Aluminium ended lower for the second day, down 1.3 percent.
• Lead ended lower for the third day, down 1.3 percent.
• Tin ended a two-day gains, closed 0.75 percent lower.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded little changed at 11,823.50 as of 7 a.m.

Asian stocks began Monday on the back foot ahead of a big week for central-bank policy.

Japanese shares saw modest losses alongside equities in South Korea and Australia. S&P 500 Index futures ticked higher after the U.S. shares dipped Friday.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell podcast.