Market Highlights: Sensex, Nifty end in green; IT, Pharma, PSU Bank gain; Metal, Pvt Bank shed

Indian markets rallied in the final hour after remaining in the red for most of the session on Wednesday after a surge in domestic retail inflation triggered caution, adding to market jitters brought by worries about China's economic recovery.

The Nifty 50 index gained 30 pts to close at 65,539, S&P BSE Sensex added 137 points to end at 65,539.

The morning slide came after data showed that domestic annual retail inflation rose to a 15-month high of 7.44% in July, predominantly due to rising vegetable and cereals prices.

Ultratech Cement, Apollo Hospitals, Infosys and NTPC led the stock charts, while Tata Steel, HDFC Life, Bharti Airtel and Hindalco were among the biggest laggards.

Among sectoral indices, Metal, Consumer Durable Finance, and Pvt Bank indices dropped the most. IT, Media and PSU Bank gained in today's session.

Global shares were trading mixed Wednesday amid worries over discouraging data on China, as well as over the future of the U.S. economy.

Japan's Nikkei share average ended at a more than two-month low as China's economic outlook weighed on risk appetite, while banking shares slid after a report on a possible downgrade of U.S. major banks. The Nikkei index fell 1.46% to its lowest close since June 8 and its biggest daily decline since Aug. 3. The broader Topix slipped 1.29%.

European stocks fluctuated as fears deepened over China’s economy and traders awaited further clues on the path of interest rates from the US Federal Reserve. The pound strengthened after UK inflation data remained faster than expected.

The FTSE 100 index continued its sell-off on Wednesday after data showed that underlying inflation remained high, building a case for more interest rate hikes by the Bank of England (BoE), while Marshalls fell on lower half-year profit.

As economic risks related to the COVID-19 outbreak have decreased and lenders have put in place adequate stress-testing measures, the operational environment for Indian banks strengthened, said Fitch Ratings on Wednesday, according to a Reuters report

"A number of prudential indicators for the sector have also improved compared with pre-pandemic levels, though growing risk appetite in a relatively benign OE (operating environment) highlights the importance of appropriate buffers against potential stress," the rating agency said in a note, reported Reuters. (Read More)

Amid visa woes, Germany has earmarked an investment of 5 million euros, or about ₹4.5 crore, on marketing activities in India, to showcase itself as the preferred destination for Indian tourists. Last year, too, it had earmarked a similar amount but spent less than anticipated.

Germany is also working to speed up the visa process, which is still taking up to eight weeks, said Georg Enzweiler, deputy head of mission, German Embassy.

“Visa is an important issue and getting better with application times is important, but sometimes bureaucracy takes time. To cope with an increased number of applications, we have increased our staff in Mumbai. It still roughly takes eight weeks right now to get a visa and we are hoping this will get better, But bureaucracy takes time," he said. (Read More)

Sylph Technologies Ltd, classified as a small-cap stock with a value below ₹5, has recently received approval from its board of directors for a preferential issue. The total value of this issue is set at a maximum of ₹83.20 crore. In this offering, the company has made available 26 crore company shares. This issuance is open to both non-promoters and public category investors.

The price set for each equity share in this preferential issue is ₹3.20.

hina's Tencent Holdings posted a smaller-than-expected 11% rise in second-quarter revenue on Wednesday, as the country's sputtering economic recovery weighed on the social media and gaming giant's recovery from last year's record downturn. The world's largest video game company and operator of the WeChat messaging platform said revenue reached 149.20 billion yuan ($20.45 billion) for the three months ended June 30. That compared with the 151.73 billion yuan average of 21 analyst estimates compiled by Refinitiv.

Revenue growth was little changed from a 10.7% rise in the first quarter. Tencent posted a 1% revenue drop in the same period last year, when it reported its first ever sales decline, hit by Beijing's bruising regulatory crackdown on its sprawling tech sector.

Regulatory concern has eased this year for China's tech giants, including Tencent, with Chinese authorities keen to boost private sector confidence. But the world's second-largest economy failed to surge after it lifted COVID-19 restrictions late last year. (Reuters)

Religare Enterprises saw a significant surge in its share price, rising over 10% to reach a 52-week high of ₹242.55 per share on the BSE on Wednesday. This boost comes in response to various media reports suggesting that the Burman family has potentially acquired a stake in the company through a block deal, estimated to be within the range of 5% to 7%.

The Burman family already possesses a stake of more than 14% in the diverse financial services firm through various entities. According to a report by ET NOW, the family is believed to have acquired an additional 7.6% stake in Religare Enterprises. It's important to note that the Burman family holds a controlling stake in Dabur Ltd.

Religare Enterprises operates as a financial services company, offering a range of services encompassing SME loans, insurance, retail broking, and affordable housing finance. (Read More)

Mohit Ralhan, Chief Executive Officer TIW Capital: Inflation in July reached 7.4% YoY, the highest since April 2022. Food inflation led to a sharp jump. Vegetables, spices, pulses and milk registered double-digit inflation. However, on the positive side services inflation remained broadly unchanged. Fuel inflation and housing inflation came in at 3.7% YoY and 4.5% YoY respectively. Even though the headline number is higher, it is mainly because of temporary factors like a 37% jump in vegetable prices. The RBI will see through this print and will likely keep rates on hold at its next meeting.

Pen maker Cello World Ltd has filed its draft red herring prospectus (DRHP) with capital markets regulator Securities and Exchange Board of India (Sebi) to raise funds through its initial public offering (IPO), according to a regulatory filing. The IPO with a face value of ₹5 is a complete offer for sale (OFS) of up to ₹1,750 crore.

The offer includes a reservation of up to ₹10 crore for subscription by eligible employees.

It comprises up to ₹300 crore by promoter Pradeep Ghisulal Rathod, and up to ₹670 crore by promoters Pankaj Ghisulal Rathod. (Read More)

Mukesh Ambani's Reliance Industries Ltd. (RIL) has issued a letter of guarantee of ₹7,706 crore in favour of Samsung India Electronics for extending credit to its subsidiary Reliance Jio for supply of telecom equipment, the company said on Wednesday.

“The guarantee issued by the company is a continuing guarantee until all obligations are fulfilled by RJIL (Reliance Jio Infocomm Ltd.). RJIL is in complete compliance with all its obligations towards SIEPL (Samsung India Electronics Private Limited), and accordingly, the guarantee does not have any adverse impact on the company," RIL said in a statement. (Read More)

GoFirst airline, which has been inoperational since the beginning of May, has revealed an additional extension of flight cancellations, this time until August 18. The announcement was made through a tweet on Wednesday.

The airline's tweet stated, due to operational reasons, Go First flights until 18 August 2023 are cancelled. 

Go First has further released a statement accompanying the tweet, disclosing that the company has submitted an application for swift resolution and the reestablishment of operations. The statement expressed optimism about the prospect of resuming bookings in the near future. (Read More)

Hyundai Motor Co said on Wednesday its unit, Hyundai Motor India, signed an asset purchase agreement to acquire General Motors' Indian plant.

Hyundai said manufacturing operations at the plant are planned to commence in 2025.

Analysts believe this reinforces that the current surge in inflation is transitory and will correct in 2-3 months.

Amid a wide perception that the high inflation would not last long and is just transitory, economists and analysts believe the RBI’s Monetary Policy Committee (MPC) will not hike interest rates in its next meeting, but the hopes of a rate cut has further pushed to early FY25.

Prasenjit Basu, Chief Economist, ICICI Securities thinks the MPC will be reassured by the moderation in core inflation, and thus will see no further need for monetary tightening to deal with this unexpectedly-large spurt in headline inflation. (Read More)

Maharashtra, Uttar Pradesh, Gujarat, Rajasthan, and West Bengal are the top 5 states, constituting 48 percent of the total income tax returns filed in AY23. A research report by the State Bank of India has assessed the emerging trends from the recently-closed ITR filing process. The report revealed that a significant number of taxpayers have left the lower-income strata and migrated upwards.

Overall, there have been 64 lakh more ITRs filed in AY23 over AY22, with the maximum increase registered in Maharashtra followed by Uttar Pradesh, Punjab, Gujarat, and Rajasthan, the report said. (Read More)

Praful BOHRA and Kashish THAKUR on InCred Equities views on of Divi's Laboratories: Margin recovery likely to continue

HOLD - Maintained | INR3,731 tp:INR3,754

■ 1QFY24 EBITDA missed estimate on lower revenue although margins were in line. Margins to improve further with higher CCS business & lower input costs.

■ Revenue growth to pick up pace from FY25F. Structurally, Divi’s Laboratories expects margins to come back to the 35-40% range, and we largely concur.

■ Valuation largely factors in the recovery. Await a better entry point. Retain HOLD on the stock with a higher target price of Rs3,754.

UK inflation remained higher than expected last month, adding to the case for the Bank of England to raise interest rates again.

The Consumer Prices Index rose 6.8% in July, slower than the 7.9% increase the month before, the Office for National Statistics said Wednesday. It exceeded the 6.7% rate economists had expected, the fifth time in six months the figures surprised on the upside.

The core rate of inflation, excluding food and energy prices, held at 6.9% in July instead of ticking down as economists had expected. Energy and food helped bring the headline inflation rate lower, but transportation costs were rising.

Coupled with a record surge in wages reported on Tuesday, the figures strengthen the sense that Britain is suffering the worst inflationary spiral in the Group of Seven nations. Investors have revived speculation the BOE will deliver a quarter point rate hike or more next month. (Bloomberg)

Earlier this month, Honor provided a hint about its comeback to the Indian smartphone market. Former CEO of Realme, Madhav Sheth, also confirmed his involvement in this venture. Now, Honor Tech India has officially declared its intention to re-enter the Indian smartphone market. The company is preparing to unveil their initial device in the country after a hiatus of over three years.

“Exciting News Alert! Honor Smartphones will be launched soon in India. Join us on this incredible journey as we empower the future with Honor Tech," reads a tweet by Madhav Sheth. (Read More)

Apollo Hospitals Enterprises Ltd reported a nearly 47% year-on-year decline in consolidated net profit during the June quarter due to one-off factors. Nonetheless, strong performance in the healthcare services (hospitals) division helped maintain a positive outlook, analysts said.

The hospital segment remains robust with average revenues per operating bed (ARPOB) at ₹57,760, up 11% year-on-year, and segment's profits at ₹264 crore, up 19% year-on-year. Overall occupancy was 62% and the company plans to achieve more than 70% over the next two years, Group CFO Akhileswaran Krishnan said. (Read More)