Sensex, Nifty Close At Record High As Investors Shift Focus To Earnings

Indian stock benchmarks closed a volatile session in the green as investors shrugged weak global cues and shifted focus to the upcoming earnings season.

The S&P BSE Sensex gained 0.4% to 53,054.76, recovering from a 0.2% intraday loss. The NSE Nifty 50 too rose 0.4% to 15,879.65. Both the indexes changed direction at least 20 times during the session before closing at new record highs.

Housing Development Finance Corp. contributed the most to the index gain, increasing 1.3%. Tata Steel Ltd. had the largest increase, rising 4.4%.

The broader markets too performed in line with their larger peers. The S&P BSE MidCap rose 0.6% while the S&P BSE SmallCap advanced 0.4%. Fourteen of the 19 sectoral indices climbed, led by the S&P BSE Realty index, up 1.9%.

The market breadth was skewed in favour of the bulls. About 1,789 stocks advanced, 1,409 declined and 148 remained unchanged on the BSE.

Strong May core sector data, healthy traction in overall economic momentum in June indicate healthy corporate earnings for Q1, according to Binod Modi, Head Strategy at Reliance Securities. This is also evident from the GST collections. "Investors must focus on quality stocks with robust earnings visibility and margins of safety," Modi wrote in a note.

Oil prices have surged about 50% since the start of the year, fueling concerns over inflation as India and other economies try to recover from the coronavirus pandemic. Locally, companies begin reporting earnings for June quarter this week with Tata Consultancy Services scheduled to kick off the season on July 8.

Shares of Redington India jumped as much as 7.9% after the board of the company has approved bonus issue in the ratio of 1:1. The stock has gained for a sixth consecutive session,

The record date for reckoning the eligible shareholders entitled to be allotted bonus shares has been fixed as August 20. The bonus issue is subject to shareholders and other approvals.

The company said that the bonus equity shares will be issued out of free reserves and/or securities premium account and/or capital redemption reserve account of the company available as at March 31, 2021. It added that the bonus shares once allotted shall rank pari-passu in all respects and carry the same rights as the existing equity shares.

Redington also announced the revision of record date for final dividend of FY 2020-21. The company said, ''on account of the above bonus issue and in order to comply with the regulations, the record date of final dividend (including one–time special dividend) of FY2020-21 fixed as Aug. 4, 2021, is now advanced to July 19, 2021, by the board.''

Natco Pharma falls as much as 5.8%, in its biggest drop since Dec. 21, after an injunction filed by U.S. agricultural-sciences company FMC Corp against the Indian firm’s plan to produce insecticide Chlorantraniliprole was accepted by the court.

• Trading vol. > 1.1x 3-month full-day avg

• India’s Delhi High Court allowed the injunction application filed by FMC today, Natco Pharma said in an exchange filing; the co. also said it will review options after the full judgment in the matter will be available

• NOTE: In February, Natco said its Indian registration for the Chlorantraniliprole product was successful and the company would be the first indigenous manufacturer of the product

  • Natco said sales of Chlorantraniliprole or CTPR containing products in India are estimated to be 20b rupees; the company also informed India’s exchanges about its pending litigation against FMC related to use of CTPR

  • CTPR is an active ingredient used in products commercialized by FMC under brands Coragen & Ferterra, Natco said in Feb. filing

Shares of Tata Motors Ltd. fell to the lowest in two months after the automaker’s luxury arm said it expects chip shortages to worsen in the ongoing second quarter, hurting sales. Still, that didn’t deter most analysts from staying bullish on the company.

Jaguar Land Rover on Tuesday said chip shortages in the quarter ending September are expected to be greater than in the preceding three months, resulting in wholesale volumes about 50% lower than planned during the period.

Chip shortage is very dynamic and difficult to forecast, Tata Motors said in an exchange filing. “Some level of shortages will continue through to the end of the year and beyond.” The company, however, will prioritise production of higher margin vehicles using the available chip supply, and expects the situation to start improving in the second half of the ongoing financial year.

Analysts, too, expect Tata Motors to start to turn around by the next fiscal, defying the near-term pressures. Of the 34 analysts tracking the stock, 21 have a ‘buy’ rating, seven suggest a ‘hold’ and six recommend a ‘sell’, according to Bloomberg data. The average of 12-month consensus price targets implies a upside of 16.2%.

To read what analysts had to say, click here

Morgan Stanley rated ONGC Ltd. as its least preferred stock, citing the company’s lack of volume growth, slow monetisation of reserves and limited clarity on decarbonisation plans.

Key takeaways from the note:

1. We’re bullish on oil, but not ONGC as it remains most leveraged among peers to oil prices, but allocates the cash generated less efficiently.

2. Over the past decade, volumes and earnings have been flattish despite $80 billion in investments. A majority of it was spent to maintain production from mature domestic fields and expand overseas.

3. Oversupplied energy markets have meant no growth in earnings. Since 2010, ONGC's production has declined 1.2% per annum and we see limited clarity for improvement even in 2021 and 2022.

4. Higher oil and potentially gas prices too are tailwinds, but we prefer GAIL and refiners to play the upside.

The research firm maintained its underweight rating on the stock, but increased its target price from Rs 120 to Rs 126.

Tata Consultancy, Asia’s largest software outsourcing provider, is scheduled to kick start India’s earnings season for the quarter ended June, with its results due after the market closes tomorrow. Technology stocks were among the biggest drags on the Sensex.

Motilal Oswal Financial Services Ltd. rose 6.2%. Trading volume was 11 times the average for this time of day.

• The stock was the best performer among its peers.

• Trading volume was 863,147 shares, 11 times the 20-day average of 79,185 shares for this time of day.

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

• Analysts have four buy, no hold, and no sell recommendations on the stock.

• The price target of Rs 833.33 represents a 10% decrease from the last price

Indian equity benchmarks fluctuated between gains and losses in opening trade as demand concerns weigh on shares of consumer durables and energy companies.

The S&P BSE Sensex gained as much as 0.2% to 52,983.30, paring a 0.2% drop in the first 15 minutes of trade. The NSE Nifty too gained by a similar magnitude at 15,846.60. Housing Development Finance Corp. contributed the most to the index gain, increasing 1.8%, followed by UPL Ltd. ONGC Ltd. and Titan were the worst performers on percentage term.

Eight of the 19 sectoral indices compiled by the BSE Ltd. climbed led by a gauge of real estate companies. The S&P BSE Energy index was the worst performer, down 1%.

Indian bond traders will await the results of a Rs 17,000-crore ($2.3b) sale of Treasury bills after a sell-off in bonds Tuesday drove the benchmark 10-year yields to the highest in nearly three months.

• 10-year yields rose 9bps to 6.18% on Tuesday after RBI’s choice of purchase papers disappointed traders; RBI plans to buy Rs 20,000 crore of bonds Thursday

• “We need to prepare ourselves for a rise in interest rates, starting with a rise in the reverse repo rate,” says Arun Srinivasan, head of fixed income at ICICI Prudential Life, one of India’s top private life insurers

• USD/INR rose 0.3% to 74.5500 on Tuesday

  • Implied opening from forwards suggest spot may start trading around 74.75

Asian stocks fell Wednesday and Treasuries held an advance as concern over the economic recovery from the pandemic, virus variants and China’s scrutiny of the technology sector sapped sentiment.

Equities fell in Hong Kong, Japan and China but Australia rose despite an extension of Sydney’s lockdown. India’s SGX Nifty 50 Index futures for July delivery fell 0.4% to 15,777, while MSCI Asia Pacific Index slipped 0.4%. The NSE Nifty 50 Index fell 0.1% Tuesday to 15,818.25.

U.S. contracts fluctuated after the S&P 500 dipped, led by energy and financials, and the Nasdaq 100 reached a record. Ten-year U.S. Treasury yields hit February lows overnight amid slower-than-expected service-sector expansion. Australian and New Zealand sovereign bonds rallied.

China’s cybersecurity probe into ride-hailing giant Didi Global Inc. sparked a 20% plunge in its shares. The nation issued a sweeping warning to its biggest firms, vowing to tighten oversight of data security and overseas listings, signaling a broader crackdown on the corporate sector.

Oil dropped toward $73 a barrel. The fallout of an OPEC+ crisis that stymied efforts to raise production has buffeted prices this week.

Traders are looking ahead to the Federal Reserve minutes Wednesday for more clues on when the U.S. central bank may begin tapering the substantial asset purchases that have bolstered financial markets.

Back home, Neuland Laboratories is holding their annual shareholders’ meeting. The IPO boom continues with offer for sale from GR Infra and Clean Science & Technology opening for bidding. Foreign investors bought net Rs 439 crore of stocks on Monday, according to NSDL website.