Sensex, Nifty Snap Five-Week Winning Streak Dragged By I.T. Stocks; FPIs Turn Net Sellers
Here are the updates from equity markets on Friday
KEY HIGHLIGHTS
Infosys To Cyient: Morgan Stanley Expects 'Slower Growth Phase' For I.T. Firms Till September 2023
IDBI Bank Gains As CEO Sees Scope For Rs 19,500 Crore Recovery In Bad Loans Amid Stake Sale Report
Eicher Motors Falls As CFO Resigns To Join Crompton Greaves Consumer Electricals
RBL Bank Shares Volatile After Nearly 30% Jump In Three Days
10-Year Bond Yield Falls Amid Report JPMorgan Mulling To Add India To Bond Index
Closing Bell
India's stock benchmarks snapped five-week winning streak, dragged by losses in information technology and pharma stocks, ahead of much anticipated address by U.S. Federal Reserve Chair Jerome Powell at the Jackson Hole annual economic symposium.
Nifty PSU Bank was the top sectoral gainer while Nifty IT index fell the most.
For the second day in a row, Sensex and Nifty 50 witness a bout of volatility in the final hour, erasing most of the day's gains.
The Sensex pared most of the gains and ended over 50 points higher a 58,833.87. The 30-stock gauge rose nearly 1% to an intraday high of 59,321.65.
The Nifty also trimmed most of the gains, but ended 0.21% higher at 17,558.90. Today 35 of Nifty 50 stocks rose, while 15 fell. Grasim Industries, NTPC, JSW Steel, Titan and Adani Ports rose the most while Eicher Motors, IndusInd Bank declined.
The broader indices outperformed their larger peers with both MidCap and SmallCap measures rising over 0.35%. Sixteen of the 19 sectoral gauges gains with Metal index rising the most.
The market breadth is skewed in the favour of bulls. About 1,991 stocks rose, 1,428 fell and 148 remained unchanged.
Foreign Investors Net Sellers
Overseas investors snapped out of three days of net buying to turn net sellers on Friday.
The last buying stretch by FPIs lasted 13 days from July 28 to August 17. It was the longest period of net inflows in this year, so far.
As per data from the National Stock Exchange, foreign portfolio investors net sold equities worth Rs 51.12 crore today.
While, domestic institutional investors net bought equities worth Rs 453.59 crore today.
Institutions have net bought Rs 11,864.61 crore worth of equities so far in August and net sold equities worth Rs 36,575.08 as yet in 2022.
10-Year Bond Yield Falls
Yield on the 10-year bond fell 9bps to 7.2% during the session.
The 10-year bond yield closed 8bps lower at 7.22%. The fall in yield comes after a report by Financial Times said that JPMorgan has started talks with investors to include India's bonds in its emerging markets debt index.
Goldman Sachs, in a recent note, had expected the inclusion to happen in 2013, bring in nearly $30 billion of inflows.
Source: Bloomberg
Rupee Little Changed Against Dollar
Rupee appreciated 1 paise to close at 79.87.
Source: Bloomberg
Sequoia Trims Zomato Stake
Sequoia has reduced its stake in Zomato to 4.40% from 6.41%.
It had sold 2.01% across in two tranches between September 6, 2021 to October 14, 2021 and June 27 to August 25.
Earlier, Uber had exited the company, while Tiger Global had halved its stake.
Source: Exchange filing
Rice Shares Slide After Bloomberg Report On Possible Restrictions On Exports
Rice-linked shares fell after Bloomberg reported that India is likely to restrict some exports of the grain to managed domestic supply.
Shares of rice exporters such as KRBL, LT Foods, Chaman Lal Setia Exports declined.
Source: Bloomberg
Delhivery Says It Will Create Over 75,000 Seasonal Jobs Across India Over Next Six Weeks
The seasonal jobs are created to cater to significantly higher volume during the festive season with both parcel and express part-truckload businesses.
Delhivery will hire 10,000+ off-roll employees across gateways, warehouses and last-mile delivery centre.
It will also double down on partner programs by hiring onboarding individual bikers, local retailers, transporters and business partners.
Source: Exchange filing
DreamFolks Services IPO Subscription Status: Day 3 Updates
Retail investors bid the most for shares of DreamFolks Services Ltd. on the final day of its initial public offering.
The Rs 562.10-crore IPO of the airport service aggregator platform, that opened on Wednesday, was fully subscribed on the first day. It was subscribed 6.09 times on the second day.
Subscription Status: Day 3
The IPO subscribed 37.45 times as of 3:00 p.m. on Aug. 26.
Institutional investors: 39.29 times.
Non-institutional investors: 32.29 times.
Retail investors: 39.66 times.
Sensex, Nifty Erase Gains
Sensex, Nifty erase over 0.9% gains as markets slide in final hour for the second session in a row.
Source: Bloomberg
Zuari Agro Surges On Report Of Plans To Sell Stake In Mangalore Chemicals To Chambal Fertilisers
Shares of Zuari Agro Chemicals rose over 13%, most in three months since June 1. Trading volume is nearly eight times the 30-day average. The relative strength index is 72, suggesting that the stock may be 'overbought'.
The rise comes amid report by CNBC-TV18 that the company sought to sell its stake in Mangalore Chemicals, citing unidentified sources. According to the report, Zuari Agro is in talks to offload Mangalore Chemicals stake to Chambal Fertilisers. Chambal Fertilisers and Mangalore Chemicals shares also advanced.
Zuari Agro Chemicals held 54.03% stake in Mangalore Chemicals, as of Friday, according to Bloomberg data.
Source: CNBC-TV18, Bloomberg
European Markets Gain Ahead Of Powell's Address At Jackson Hole Symposium
Insurance Firms Extend Gains As Analysts See Benefits From IRDAI's Draft Rules
Shares of insurance companies New India Assurance, SBI Life, Start Health, ICICI Lombard, HDFC Life and LIC of India gained after analysts said that the recent draft rules announced by insurance regulator IRDAI to revamp the prevailing commission structure, a potentially beneficial for company's performance.
The draft regulations aims to incentivise agency, intermediates as commission rates are linked to persistency rate instead of current regime of policy tenure-based payout. It allows companies with expenses of management (EoM) at below 70% of allowable limits to design a customised commission structure as per approved policy.
IRDAI has proposed a cap of 20% on commission paid by life and general insurers to agents and intermediaries. It has also proposed a 2% commission rate for regular premium or limited premium payment policies with persistency and renewal after five years as variables.
In its note on Wednesday, Motilal Oswal termed the draft guidelines a 'step in the right direction' and has potential to enhance persistency, cost metrics, penetration of life insurance in the country. It also said that the draft regulations will result in greater discipline in the sale of insurance products and boost margin and VNB.
Emkay Global said that draft is a 'refinement of existing regulations'.
Source: Brokerage notes, Bloomberg
Midday Market Update: Sensex, Nifty Off Day's High; Metal, Consumer Durables Stocks Gain
India's stock benchmarks advanced, but are off day's highs, aided by gains in metal, consumer durables, power and industrials stocks, ahead of U.S. Federal Reserve Chair Jerome Powell's address at the Jackson Hole annual economic symposium.
The Sensex rose over 200 points to 58,999.94. The 30-stock gauge rose nearly 550 points to an intraday high of 59,321.65 earlier in the session. The Nifty 50 gained 0.41% to 17,594.40. Today 38 of Nifty 50 stocks rose while 12 fell. Titan, JSW Steel, Kotak Mahindra Bank, NTPC and Adani Ports and SEZ are among the top gainers.
The broader indices almost mirrored their larger peers. Barring FMCG and Telecom, all the other 17 sectoral indices advanced.
The market breadth is skewed in the favour of bulls. About 1,998 stocks rose, 1,322 fell and 166 remained unchanged.
Analysts On September F&O Series
Videocon insolvency: Supreme Court Agrees To Take Up Twin Star’s Challenge To Fresh Round Of Bidding
The top court bench has posted the case for hearing in September.
In January, the NCLAT set aside Twin Star’s resolution plan and allowed for fresh round of bidding.
Infosys To Cyient: Morgan Stanley Expects 'Slower Growth Phase' For I.T. Firms Till September 2023
Risk reward is less favourable for information technology services sector, according to Morgan Stanley, which added that the two-year earnings CAGR will moderate.
In its investor presentation on technology and telecom sectors on Thursday, Morgan Stanley assigned key 'overweight' on Infosys, Tech Mahindra and MPhasis while remaining 'underweight' on Wipro, HCL Tech and Cyient.
The estimation comes amid series of downgrades by Morgan Stanley's global macro economic team of the global growth forecasts for 2023 for both the U.S. and the European Union. A CIO survey by Morgan Stanley also pointed at downward revision of the expectations of 2022 I.T. services budgets in each of the last four quarters. Despite strong Q1 numbers, Morgan Stanley observed that the leading indicators such as book-to-bill and headcount addition have shows signs of moderation, as it expects a slower growth phase till September 2023 with possibility of recovery from second half of FY2024.
Barring Coforge, all the other nine constituents of Nifty IT index advanced.
Source: Morgan Stanley note, Bloomberg
Lupin Gets U.K. Regulator Approval For Asthma Drug
Lupin announces UK's Medicines and Healthcare products Regulatory Agency approval to market Lutio, an inhalation drug
This is the second inhalation product by Lupin Healthcare for the UK market.
Lutio is used to treat chronic obstructive pulmonary disease.
Source: Exchange filing
IDBI Bank Gains As CEO Sees Scope For Rs 19,500 Crore Recovery In Bad Loans Amid Stake Sale Report
Shares of IDBI Bank rose nearly 5.7% and are on course to gain for the third day in a row. The stock has added nearly 15% over the period.
Trading volume is more than five times the 30-day average. The relative strength index of the stock is 76, suggesting that the stock may be overbought.
The stock gained over 7.3%, most in three weeks on Thursday after a Bloomberg report which said that the government is considering divesting at least 51% in the state-backed lender.
RBI will also allow investors to buy a stake larger than 40%, Bloomberg News reported. Government and LIC of India own 94% of IDBI Bank currently.
In an interview, the company's CEO Rakesh Sharma said that the bank is likely recoup Rs 19,500 crore on soured debt. 'We are sitting on about Rs 7,800 crore of fully provided for bad loans, including written-off loans and around 25% is likely to be recovered', Bloomberg News quoted Rakesh Sharma.
Source: Exchange filing, Bloomberg
Eicher Motors Falls As CFO Resigns To Join Crompton Greaves Consumer Electricals
Shares of Eicher Motors fell over 3% during the session, most in over three weeks. Trading volume is nearly twice the 30-day average. The stock is the top loser on the NSE Nifty 50 index which surged 0.4%.
The decline comes after the company announced post market hours that its Chief Financial Officer (CFO) and Key Managerial Personnel (KMP) Kaleeswaran Arunachalam tendered resignation, which will take effect at the close of working hours of September 2. While the company gave no reasons for the exit for the erstwhile CFO, it comes as another among series of resignations since Vinod Dasari resigned as CEO of Royal Enfield in August 2021.
Kaleeswaran Arunachalam will be appointed as Chief Financial Officer of Crompton Greaves Consumer Electricals, with effect from September 5, CG Consumer Electricals said in an exchange filing post market hours on Thursday. Shares of CG Consumer Electricals jumped 3.6% and are on course to rise for the third day. Kaleeswaran Arunachalam has experience in corporate finance, financial planning and analysis, audit and risk management in a career spanning close to nearly two decades. His previous experience include roles in Future Lifestyle Fashions, Mondelez International in India and Asia, AB Fashions and TVS Motor.
Of the 48 analysts tracking Eicher Motors, 34 maintain 'buy', nine suggest 'hold' and five recommend 'sell'. The return potential of the stock is 0.8%.
Source: Exchange filing, Bloomberg
Karnataka Mining: Supreme Court Partially Relaxes Ceiling Limit On Iron Ore Mining
The mining limit for Bellary is raised to 25 MMT and for Chitradurga and Tumkur to 15 MMT.
The top court was hearing applications requesting the lifting of the ceiling limits for production of iron ore for mining leases in districts of Bellary, Chitradurga and Tumkur.
RBL Bank Shares Volatile After Nearly 30% Jump In Three Days
Shares of RBL Bank Ltd. swung shaply on Friday ranging between 4.2% loss and 4.5% gains. This comes after a three-day surge in which the stock gained 28%.
Trading volume is five times the 30-day average. The relative price index of the stock is 74, suggesting it may be overbought.
The surge over the last four days comes amid high news stock and trading action on the stock.
On August 19, the lender brought down its shareholding in Kilburn Engineering by selling an additional 2.92% through the exchanges. The bank had acquired 67,50,000 shares of Kilburn Engineering under a debt recast plan in February 2021 with a lock-in period of one year.
RBL Bank offloaded shares between May 17 and August 19, at market price. The total consideration for sale of 61,00,000 shares is Rs 27.08 crore. RBL Bank held 1.89% of share capital of Kilburn post the sale.
On Monday August 22, RBL Bank announced approval to raise Rs 3,000 crore to fund growth. The fundraise will be subject to shareholders' approval. The board also approved issuance of 1.75 crore fresh equity options exercisable into equal number of shares of Rs 10 each, in addition to options which remain ungranted under ESOP 2018. Two Directors, Gopal Jain and Sivakumar Gopalan have been approved to be appoints as directors of the company.
On Wednesday August 24, U.S.-based College Retirement Equity Fund bought 4.6 million shares of the lender, according to data released by BSE.
Of the 22 analysts tracking the company, 12 maintain 'buy', three suggest 'hold' and seven recommend 'sell'. The return potential of the stock is -5.9%.
Source: Exchange filings, Bloomberg
Syrma SGS Technology Debuts At 19% Premium To IPO Price
Shares of Syrma SGS Technology listed at Rs 262 apiece on the BSE, a premium of 19.1% to its IPO price of Rs 220.
On the NSE, the stock listed at Rs 260.
The stock extended gains to as much as 33% in early trade.
Source: BSE, NSE
10-Year Bond Yield Falls Amid Report JPMorgan Mulling To Add India To Bond Index
Yield on the 10-year bond fell 7bps to 7.22% during the session and in on course to decline after rising in each of the last six sessions.
The fall comes after Financial Times reported that JPMorgan is consulting with investors about whether to make a large portion of India's bond market eligible for GBI-EM Global Diversified index of local currency debt, citing two unidentified people familiar with the matter.
The consultations are expected to be completed by next month and as announcement of official proposal anticipated in October
JPMorgan and Finance Ministry declined to comment on the matter, said Financial Times.
The GBI-EM (JPMorgan Government Bond Index-Emerging Markets) track emerging market debt benchmarks that track local currency bonds.
Source: Financial Times, Bloomberg
Nelco Surges After Deal With Intelsat To Provide Inflight Connectivity In Indian Skies
Shares of telecom automation and control products maker Nelco surged 10%, most in at least a year. Trading volume is seven times the 30-day average. The relative strength index of the stock is 79, suggesting it may be overbought.
The rise comes a day after the company announcement an agreement with Intelsat Commercial Aviation. Intelsat launched the beginning of its inflight connectivity services in Indian skies. 'Our agreement with Nelco also opens the possibility for Intelsat to serve India's domestic airlines', according to Jeff Sare, President of Commercial Aviation at Intelsat, besides expanding service coverage area for current customer airlines.
Nelco has been offering aero IFC services for over two years with plans to introduce their services to more airlines.
Nelco will provide its services using Intelsat's IS-33e high throughput satellite, which provides C and Ku-band connectivity (the two main bands for Very Small Aperture Terminal - VSAT communications) to parts of Asia, Europe, Africa and the Middle East. It has been approved by India.
Source: Exchange filing, Bloomberg
Adani Enterprises Says RRPR Holding Is Bound To Immediately Allot NDTV Shares
Adani says prior written approval from SEBI is not required for allotment of NDTV shares to VCPL on exercise of warrants.
Warrant exercise notice has been issued by VCPL under a contract which is binding on RRPR. RRPR is therefore obligated to comply with its contractual obligations.
Adani says contentions raised by RRPR in the letter are baseless, legally untenable and devoid of merit.
RRPR Holding is bound to immediately perform its obligation and allot the equity shares as specified in the warrant exercise notice, it said.
Source: Exchange filing
Disclaimer: Adani Enterprises is in the process of acquiring a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.
Opening Bell: Sensex, Nifty Open Higher; I.T., Auto, Banking, Metal Stocks Advance
India's stock benchmarks advanced, aided by broad-based gains led by information technology, auto, banking, consumer durables, metals and power stocks. The resilience was seen across global markets as they withstood the hawkish comments from Fed officials at the annual conference in Jackson Hole, Wyoming.
U.S. Federal Reserve Chair Jerome Powell's speech today could contain key announcements and reiteration of steps to tighten monetary policy to flight surge in inflation.
The S&P BSE Sensex gained over 450 points to 59,236.87. The NSE Nifty 50 added 0.8% to 17,668.60. Today 45 of Nifty 50 stocks rose, while five fell. Coal India, Mahindra & Mahindra, Titan, Tata Steel, Hindalco Industries and information technology firms were among the top gainers.
The broader indices almost mirrored their larger peers. All 19 sectoral indices compiled by BSE Ltd. advanced with Metal index climbing 2% higher.
The market breadth is skewed in the favour of bulls. About 2,023 stocks rose, 467 fell and 93 remained unchanged.
10-Year Bond Yield Falls
Yield on the 10-year bond fell 2pbps to 7.27%, at the open.
10-year bond yield rose in each of the last six sessions.
Source: Bloomberg
Rupee Opens Little Changed
Indian currency rose 3 paise to 79.86 against the greenback, at the open.
Source: Bloomberg
Granules U.S. Subsidiary Gets VAI From U.S. FDA
Granules India's U.S. subsidiary Granules Pharmaceuticals received a 'Voluntary Action Indicated (VAI)' from U.S. FDA after inspection at the Chantilly, Virginia plant.
VAI inspection classification indicates that the U.S. FDA will not recommend regulatory action.
Source: Exchange filing
Infosys To Cyient: Morgan Stanley Expects 'Slower Growth Phase' For I.T. Till September 2023
Risk reward is less favourable for information technology services sector, according to Morgan Stanley, which added that the two-year earnings CAGR will moderate. In its investor presentation on technology and telecom sectors on Thursday, Morgan Stanley assigned key 'overweight' on Infosys, Tech Mahindra and MPhasis while remaining 'underweight' on Wipro, HCL Tech and Cyient.
The estimation comes amid series of downgrades by Morgan Stanley's global macro economic team of the global growth forecasts for 2023 for both the U.S. and the European Union. A CIO survey by Morgan Stanley also pointed at downward revision of the expectations of 2022 I.T. services budgets in each of the last four quarters. Despite strong Q1 numbers, Morgan Stanley observed that the leading indicators such as book-to-bill and headcount addition have shows signs of moderation, as it expects a slower growth phase till September 2023 with possibility of recovery from second half of FY2024.
Source: Morgan Stanley note
Trade Setup For Friday
Stocks To Watch
HDFC Bank: The bank entered into non-binding agreement with Go Digit to invest between Rs 49.9-69.9 crore worth equity capital. Go Digit proposes to carry out life insurance business in India, subject to grant of certificate of registration from IRDA.
HDFC: The company’s three subsidiaries HDFC Property Ventures, HDFC Venture Capital and HDFC Capital Advisors approved amalgamation of HPVL and, HVCL with HCAL. The combined platform shall advise/ manage approximately $4.1 billion of assets.
Eicher Motors: The chief financial officer of the company Kaleeswaran Arunachalam has resigned effective from September 2.
Indian Oil Corporation: The company plans to spend Rs 2 lakh crore to achieve carbon neutrality by 2046.
Dr. Reddy’s Laboratories: The U.S. FDA has concluded that the inspection is “closed” at the company’s formulations manufacturing facility (FTO 11) in Srikakulam, Andhra Pradesh.
Nelco: The company has partnered with Intelsat Commercial Aviation to offer inflight connectivity services in India.
Max Financial Services: The company’s subsidiary Max Life Insurance announced that receipt of the Commencement of Business certificate for its wholly owned subsidiary, Max Life Pension Fund Management. This subsidiary will manage the pension assets with investment choices under the National Pension Scheme.
Gland Pharma: The company received one observation on Form 483 from the U.S. FDA that conducted pre-market inspection at Dundigal Facility at Hyderabad.
Infibeam Avenues: Buys 50% stake in software startup Vishko22.
Steel Authority of India: Expands adoption of HPE GreenLake.
Lupin: Entered into an exclusive licensing deal with Japanese drugmaker I'rom Group to conduct clinical trials, register, distribute and market biosimilar Denosumab in Japan. Denosumab has a market size of $500 million in Japan and is available under two brands - Pralia and Ranmark.
Global Cues
U.S. Dollar Index at 108.54
U.S. 10-year bond yield at 3.03% on Thursday
Brent crude up 0.5% to $100 per barrel
Nymex crude at $93.17 per barrel
SGX Nifty up 0.35% to 17,650 as of 6:11 a.m
Bitcoin down 0.5% to $21,542
Sensex, Nifty Set To Rise; HDFC Bank, Indian Oil, SAIL, Infibeam Avenues, Cipla In Focus
Asian equities rose after gains in Wall Street, aided by U.S. gauge of Chinese shares, as markets withstood the hawkish comments from Fed officials at the annual conference in Jackson Hole, Wyoming.
U.S. Federal Reserve Chair Jerome Powell's speech today could contain key announcements and reiteration of steps to tighten monetary policy to flight surge in inflation.
Bourses in Japan, Australia and South Korea were in the green.
At 6:50 am, the Singapore-traded SGX Nifty--an early barometer of India's benchmark Nifty 50--traded 0.50% higher at 17,675.50 points. Shares of Syrma SGS Technology will start trading today after IPO.
US 10-year yield fell to just above 3%. Elsewhere, Nymex crude rose above $93 a barrel while Gold and Bitcoin declined.