Sensex Snaps Three-Day Losing Streak; CDSL Surges

India's stock benchmark snapped a three session losing streak as investors assessed positive economic data and the ongoing earnings season.

The S&P BSE Sensex rose 0.76% to 52,769.73, and the NSE Nifty 50 Index advanced 0.76% to 15,812.35. ICICI Bank Ltd. contributed the most to the index gain and had the largest move, increasing 2.9%.

The broader markets underperformed their larger peers. The S&P BSE MidCap was little changed while the S&P BSE SmallCap advanced 0.46%. Fifteen of the 19 sectoral indices climbed, led by the S&P BSE Bankex index, up 1.41%.

The market breadth was skewed in favour of the bulls. About 1,863 stocks advanced, 1,352 declined and 140 remained unchanged on the BSE.

India’s consumer prices rose slower-than-expected in June, which allows the country’s inflation-targeting central bank to stay focused on supporting economic growth. With earnings season underway, investors will turn their attention to Infosys’s results that are expected to be posted on Wednesday.

India approved the sale of shares in state-run insurer Life Insurance Corp. of India, a key step in moving ahead with the mega-listing.

The cabinet committee on economic affairs cleared the initial public offering proposal, according to Disinvestment Secretary Tuhin Kanta Pandey. A group of ministers will now decide on various issues related to the proposed offering, he said.

The mega-IPO of the country’s biggest insurer is expected to happen as soon as March 2022. The government, which owns 100% in LIC, will next determine the embedded value of the company to determine the stake sale details, including the amount and price band.

Shares of Brightcom Group were locked in 5% upper circuit ahead of today’s board meeting on preferential issue of equity shares.

Shares of the India-based digital marketing company have gained nearly 172% over the past month with the stock being frozen in upper circuit for 17 successive sessions on the BSE.

Brightcom Group also announced the signing of Letter of Intent to acquire a domestic digital marketing services company on July 9. The details of the company targeted for acquisition are yet to be revealed.

The company’s board will discuss the LoI of the acquisition as well as the preferential issue of shares to select individuals and entities in the meeting scheduled later today.

• NTPC options volume 2.6x the 20-day average, with 28,477 calls changing hands vs 4,683 puts

  • Stock up 1.8%, volume 1.2x the 20-day average for this time of day

• Sun Pharma options volume 2.3x the average, with 22,975 calls vs 6,867 puts

  • Stock up 2.6%, volume 1.8x the average

• ICICI Bank options volume 1.8x the average, with 41,496 calls vs 19,429 puts

  • Stock up 2.6%, volume 1.1x the average

• Grasim options volume 1.7x the average, with 11,383 calls vs 3,873 puts

  • Stock up 1.4%, volume 1.2x the average

• Nifty 50 options volume 0.5x the average, with 4.2 million calls vs 3.78 million puts; gauge up 0.7%

  • Cost of hedging as measured by the 90/110, one-month skew ranks in the 15th percentile over the past year

• Nifty Bank index options volume 0.5x the average, with 7.99 million calls vs 6.9 million puts; gauge up 1.2%

  • 90/110, one-month skew in the 64th percentile

• India VIX Index down 2.5%

Shares of the tyre maker gained as much as 4.9%, the most in nearly two weeks.

The company announced partnership with Ki Mobility Solutions Private Ltd., (KMS to enhance its reach in the aftermarket segment.

Ki Mobility is one of the country’s largest digital platforms for auto parts and is a part of My TVS venture which has more than 1000 outlets across the country.

Dinesh Dasani, vice president - replacement sales at JK Tyre & Industries said the strategic partnership would not only help JK Tyre & Industries to provide 24-hours customer support but also act as a catalyst to strength service portfolio range. "With this, we are confident to develop a large service network to drive the next phase of growth and deliver best practices in the aftermarket tyre service business," he said.

JK Tyre & Industries’ shares have held firm amid the second wave of Covid infections with the stock rallying steadily since the Union Budget and have gained over 95% so far this year. Analyst consensus price target (Rs 141.67) is 4.6% below current price, according to Bloomberg data.

The S&P BSE SmallCap index rose as much as 0.7% to 26,263.03, a record high for the benchmark.

The index has risen for a third straight session today.

Shares of Central Depository Services (India) Ltd. gained as much as 14.9%, the most since Sept. 02 of last year to Rs 1244.70 - a new all-time high for the stock.

• The stock has risen for the last four sessions in a row.

• The shares are up 18% in the past 5 days and rose 24% in the past 30 days.

• Trading volume was more than eight times the 20-day average for this time of day.

• The relative strength index on the stock was 85, indicating it may be overbought.
  

On July 8, CDSL said it has become the first depository to open four crore plus active demat accounts. "CDSL is pleased to announce it becomes the first depository to open four crore plus (40 million) active Demat accounts. It is currently the largest depository in the country in terms of active Demat accounts," the depository said in a statement on July 8.

Equity investors in India face the risk of earnings disappointment after a rally that’s propelled the local stock benchmark to successive records this year, according to JPMorgan Chase & Co.

As business activity resumes following one of the world’s deadliest coronavirus outbreaks, consensus earnings estimates may end up being overdone, said Sanjay Mookim, head of India equity research at JPMorgan.

“Valuations in India are looking extended,” Mookim said in a video interview. “There is an expectation or belief that reopening equals growth. We see many reasons that, even if we open up, we may not be in a very strong economic growth path.”

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Indian sovereign bonds rise after data showed retail inflation for June and core inflation were below estimates.

• Yield on 5.63% 2026 bond drops 5bps to 5.7%, while that on 6.64% 2035 bond falls 3bps to 6.74%

• USD/INR down 0.2% to 74.4425

• Consumer price inflation accelerated 6.26% in June y/y, the Statistics Ministry said in a statement on Monday after close of market hours.

  • That’s slower than the median forecast of a 6.59% gain in a Bloomberg survey, although well above the upper limit of the Reserve Bank of India’s 2%-6% target band

• Softer-than-expected CPI inflation along with broad-based moderation in core inflation is expected to provide relief to the MPC to continue with the pro-growth policy guidance in the near term, according to a Kotak Mahindra Bank note

• While much depends on the incoming data, we expect the onset of gradual policy normalization towards the end of FY2022

Shares of the antivirus software maker rose as much as 7.4% to Rs 308.90, the highest since June 13, 2018.

This after the company reported a consolidated revenue from operations of Rs 333 crore in FY21, up 16% from Rs 286 crore in FY20.

It said the recovery is “commendable” since business was severely impacted during the initial part of the year because of the lockdown restrictions.

The recovery in the retail segment was stronger with 24% increase in revenue, while the enterprise segment grew by 9%, according to its annual report on exchanges. In the enterprise segment in the first two quarters of the year, the company said the government spending was less, and the SME segment also faced some liquidity pressure.

Stock Insight

• The shares are up 3.9% in the past 5 days and rose 23% in the past 30 days.

• Total return is 75.5% year-to-date vs 10.9% for Sensex Index

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

Indian equity benchmarks climbed, along with Asian peers, as investors assessed positive economic data and the ongoing earnings season.

The S&P BSE Sensex rose as much as 0.7% at 52,716.83, while the NSE Nifty 50 Index gained by a similar magnitude at 15,796.25. ICICI Bank Ltd. contributed the most to the index gain and had the largest move, increasing 1.8%. Seventeen of the 19 sector sub-indexes compiled by BSE Ltd. advanced, led by the S&P BSE Realty Index, which surged to close at a decade high.

Investors are looking ahead to Infosys’s results on Wednesday, after rival Tata Consultancy Services posted an earnings miss last week.

The outlook for rainfall may weigh on the economy, with India receiving 242 millimeters of rains during this monsoon season, which runs through September, compared with the typical 261.8 millimeters. The season waters more than half of India’s farmland.

“Progress of monsoon, Q1FY22 corporate earnings and Covid-19 positivity rates will be in focus in the near term,” said Binod Modi, head of strategy at Mumbai-based Reliance Securities Ltd. Investors must focus on quality stocks with robust earnings visibility and margins of safety, he said.

A block of 34.3 lakh shares in Shree Renuka Sugars Ltd., equivalent to 0.4% of float, traded at a market value of Rs 13.99 crore at 9:15 a.m. Mumbai time.

• The price was Rs 40.75 per share, a premium of 4.6% from Monday's close; Shree Renuka rose 4.9% Monday and is up 236% this year

• The block represents 14% of the 20-day average volume

Indian bonds may be supported after data Monday showed retail inflation grew at a slower-than-estimated pace. Traders will also look forward to a Rs 17,950 crore ($2.4b) sale of state bonds.

• Consumer price inflation accelerated 6.26% in June YoY, the Statistics Ministry said in a statement on Monday after close of market hours. That’s slower than the median forecast of a 6.59% gain in a Bloomberg survey, although well above the upper limit of the Reserve Bank of India’s 2%-6% target band

• May industrial production rose 29.3% YoY, est, 32%, separate data showed

• Softer-than-expected CPI inflation along with broad-based moderation in core inflation is expected to provide relief to the MPC to continue with the pro-growth policy guidance in the near term, according to a Kotak Mahindra Bank note

  • While much depends on the incoming data, we expect the onset of gradual policy normalization towards the end of FY2022

• USD/INR down 0.1% to 74.5775 on Monday

  • Implied opening from forwards suggest spot may start trading around 74.52

• Yield on 6.64% 2035 bond rose 1bp to 6.77% on Monday; new 6.1% 2031 bond yield up 1bp to 6.11%

Asian stocks advanced Tuesday after their U.S. counterparts notched yet more all-time highs as investors awaited second-quarter earnings season.

An MSCI gauge of the region’s stocks rose for a second day, with modest gains across the board.

India's SGX Nifty 50 Index futures for July delivery rose 0.8% to 15,817.50, while MSCI Asia Pacific Index gained0.8%. The NSE Nifty 50 Index was little changed Monday at 15,692.60.

U.S. futures fluctuated after the S&P 500 and tech-heavy Nasdaq 100 closed at new highs. Investors are also focusing on the U.S. inflation report and Federal Reserve Chair Jerome Powell’s testimony this week as policy makers prepare to discuss tapering stimulus as the economy recovers from the pandemic.

Elsewhere, oil was steady after dipping for the first time in three days as traders grappled with the demand implications of a Covid-19 resurgence in several regions and slowing economic growth in China.

Back home, Tata Metaliks is scheduled to report earnings Tuesday. Adani Power, Adani Green, Adani Transmission, Mindtree are among companies holding their annual shareholders’ meeting. Foreign investors sold net Rs 1,000 crore of stocks on June 9, according to NSDL website.