PremiumBenchmark Indian indices were higher on Monday in a choppy session. Markets in Tokyo and Shanghai ended in the green, while Seoul and Hong Kong settled lower. European bourses were trading in the positive zone in mid-session deals. The US markets would remain closed for a holiday.
Key Indian share indices ended higher on Monday after a choppy trading session. Sensex and Nifty saw selling pressure in the morning, but turned positive later in the day helped by good buying support in FMCG, and banking and financial stocks. Sensex ended 327 points higher at 53,234.77, before hitting a high of 53,301.99 and a low of 52,674.81. Nifty rose 0.5% higher to cross the crucial level of 15,800.
ICICI Bank, HUL, Indusind Bank were the prominent gainers in trade today, while TCS, Tata Steel were the biggest laggards. Nifty FMCG surged 2.6% today. The BSE midcap index gained 0.8% while BSE Smallcap jumped 0.6%. On the 30-share Sensex, 24 stocks closed in the green. Markets in Asia settled mixed while European bourses were trading in the positive zone
Traders' body CAIT on Monday said the decision to levy 5 per cent GST on pre-packed and labelled food items will cause loss of business to foodgrain traders, increase compliance burden and raise the prices of unbranded everyday essentials.
Confederation of All India Traders (CAIT) said it will appeal to Union Finance Minister Nirmala Sitharaman and the GST Council to reconsider the decision.
The government intends to continue with the top GST slab of 28 per cent for luxury and sin goods, but is open to discuss narrowing down the three slabs of 5, 12 and 18 per cent into two, Revenue Secretary Tarun Bajaj said on Monday.
Credit Suisse Group AG is cutting more than two dozen front line roles at the investment bank in Asia as the Swiss lender grapples with losses and a weakening outlook for the global economy, people familiar with the matter said.
Betting big on green technologies, Maruti Suzuki India plans to have strong hybrid technology across its model range in the next 5-7 years, a senior company official told PTI.
The auto major aims to have strong and mild hybrid technologies as part of an initiative to have environment-friendly technology elements in each of its models, enabling better fuel efficiency and reduced carbon footprint.
SBI Card has announced the launch of 'Aditya Birla SBI Card', a highly rewarding lifestyle credit card, in a strategic partnership with Aditya Birla Finance Ltd (ABFL), the lending subsidiary of Aditya Birla Capital Ltd
European shares rose on Monday, led by shares of oil and gas companies, with investors awaiting eurozone inflation data after a red-hot consumer price report last week cemented the case for rate hike by the European Central Bank (ECB).
The continent-wide STOXX 600 index was up 0.8% after falling last week on worries about a potential global economic slowdown.
Vauld, a Singapore-based crypto exchange, said it has suspended all tradings, withdrawals, and deposits on its platform due to “volatile market conditions" and “financial difficulties" that its business partners are facing, which is now impacting it too.
- Cross currency headwinds of 100-200bps QoQ to impact USD revenue growth.
-Margins to decline ~100-200bps QoQ led by wage hikes, higher retention costs and increased travel costs.
-Key things to monitor for Q1FY23E – 1) impact of weak macro environment on deal pipeline & tech budgets and 2) commentary on hiring and attrition.
We estimate healthy revenue growth of 2.7-4.5% QoQ CC (avg: 3.4%) for Tier-1 and 2.5-5.8% QoQ CC (avg: 3.7%) for Tier-2. However, USD revenue growth will be lower due to cross currency headwinds of 100-200bps QoQ. We anticipate margins to decline by 100-200bps QoQ led by wage increments, higher retention costs, increased travel costs and drop in utilization levels. We expect healthy deal wins in Q1. Further management may reiterate strength in near term demand. We expect Infy and HCLT to maintain their revenue and margin guidance for FY23. Commentary on health of consumer facing verticals and reprioritization of client spends would be key points to monitor.
We shift from DCF based valuation to PE multiple based relative valuation and tune our target multiples factoring risk of slowdown in technology spends, given worsening global macro. We reduced our revenue estimates by 3-5% baking in moderation in IT demand. We prefer INFY & TCS among Tier 1 given strong growth momentum on a high base and best in class operating metrics. Among Tier-2 we prefer Coforge, Mindtree & LTI.
Fifty-five per cent of IndiGo's domestic flights were delayed on Saturday as a significant number of cabin crew members took sick leave. Aviation regulator DGCA said it is looking into this.
Shares were mixed in Asia on Monday while U.S. futures fell ahead of the July 4 holiday in the U.S.
Tokyo's Nikkei 225 rose 0.8% to 26,153.81 on Monday while the Shanghai Composite index added 0.3% to 3,396.70. Australia's S&P/ASX 200 climbed 1.1% to 6,609.20.
Hong Kong's Hang Seng index lost 0.3% to 21,791.36 and the Kospi in Seoul declined 0.4% to 2,207.4.
--Gross Advances grew strong at 21% YoY/6.7% QoQ to Rs.1376bn seeing strong traction from Retail & Commercial Business.
-- Retail Loan growth was primarily led by Home Loans which grew by 31.9% YoY.
--The chunkier exposure to Infra books continues to decline further by 35% YoY. (Infra book constitutes 4.9% of total book vs 9.1% as on June 30,2021)
--Customer Deposit grew at 20.6%YoY/9.8% to Rs. 1023bn
-- Led by strong growth in Deposits, CASA Ratio improved to 50.3% up 186bps QoQ though declined 98bps, with growth of 11% YoY & 22.3% QoQ.
--Prabhudas Lilladher has an 'under review' rating on the stock. “At CMP stock is trading at 1.3x/1.2x FY23E/FY24E," the brokerage said.
Oil prices reversed losses and edged up on Monday as concerns of tight supply amid lower OPEC output, unrest in Libya and sanctions on Russia outweighed fears of a global recession.
Brent crude futures for September rose 55 cents, or 0.5%, to $112.18 a barrel, after falling over $1 in early trade. U.S. West Texas Intermediate (WTI) crude futures for August delivery gained 44 cents, or 0.4%, to $108.87 a barrel, after also falling $1 earlier.
Indian metal stocks have underperformed Nifty by 12-34% in June quarter (Q1) as metal prices fell sharply amid rising risk of global slowdown and imposition of steel export duty. Metal stocks have high correlation to consensus earnings trajectory, and global brokerage Jefferies believes that the earnings cycle is inflecting down.
“We cut FY23-24 EPS for JSTL/Hindalco/Tata Steel by 2-34% and are 10-31% below Street. We believe it's still early to turn constructive as PB valuations remain above historical troughs, earnings visibility is poor, and consensus downgrades will continue," Jefferies in a note stated.
In line with the government's COP26 commitments, the Ministry of Steel has asked the stakeholders to develop a time-bound action plan to lower emissions in the steel industry.
According to a ministry document, the iron and steel industry globally accounts for around 8 per cent of total carbon dioxide (CO2) emissions on an annual basis, whereas in India, it contributes 12 per cent to the total CO2 emissions. Thus, the Indian steel industry needs to reduce its emissions substantially in view of the commitments made at the COP26 climate change conference. (PTI)
BSE Ltd. resolved 453 investor complaints against 196 listed companies in June. Of the complaints resolved, a majority--429--were against active companies. The remaining 24 were against suspended companies.
Of the total complaints resolved, 31% pertained to non-receipt of corporate benefits/entitlements such as dividend, bonus, rights form, buyback letter of offer, delisting letter of offer and annual report
Wholesale dispatches for June 2022 came in steady with most segments reporting neutral to positive MoM growth. CV space continues to witness secular MoM growth trend and outperformed the OEM pack with encouraging double digit recovery in the M&HCV segment. In the 2-W pack it was largely flat performance MoM with Bajaj Auto being an exception, with the company reporting ~27% MoM growth albeit on a low base (impacted by supply side issues). PV space also witnessed flat MoM performance with Tata Motors leading the pack. Tractor space reported muted prints i.e. double digit YoY decline amid wheat export ban imposed around May 2022 end and channel stuffing in previous months.
In the CV segment, market leader Tata Motors (TML) reported volumes of 37,265 units, up 13.6% MoM. Ashok Leyland posted 9.5% growth to 14,531 units while VECV volumes rose 11.9% to 6,307 units. With private and public capex on the anvil, we expect CV sales volume to witness a thriving rally going forward. In the 3-W space, sales volume was a mixed bag but MoM performance was led by exports with domestic witnessing a decline. In the tractor space, M&M's tractor sales dipped 13.2% YoY to 41,848 units, with Escort’s witnessing a decline of 19.8% to 10,051 units.
--Loan growth was a bit soft at 1.9% QoQ to Rs13.95trn. While YoY growth may not be as relevant it was 21.5%.
-- Retail growth was healthy at 5.0% QoQ/21.5% YoY. Corporate advances were flat QoQ while CRB grew by 3% QoQ/29% YoY.
--Deposit growth was 2.9% and 19.3% YoY to Rs16.1trn. CASA growth was 2.2% QoQ and 20% YoY. CASA Ratio declined 216bps QoQ.
-- LDR also slightly reduced QoQ from 87.8% to 86.9%
Our view
--While Q1 is generally weak for the lending space, HDFC bank QoQ growth was a tad softer leading to lower LDR which could be a drag on NIM.
--However, retail share improved QoQ from 38.5% to 40% which could may NIM.
--This also suggests that in Q4FY22 some part of current quarter growth was up-fronted which would have been lower yielding.
--We had an BUY rating on the stock with a TP of Rs.1740 (3.2x FY24 ABV). At CMP stock is trading at 2.8x/2.5x FY23E/FY24E.
India will only withdraw its windfall tax introduced last week for oil producers and refiners if global prices of crude fall as much as $40 a barrel from present levels, Revenue Secretary Tarun Bajaj told Reuters on Monday.
The tax on firms that have increased product exports to gain from higher overseas margins took effect on July 1, as the government moves to boost domestic supply and revenue. (Reuters)
State-run power giant NTPC Ltd on Monday said it has registered a 21.7 per cent growth in electricity generation at 104.4 billion units (BU) in the April-June quarter of this financial year.
NTPC group of companies recorded a generation of 104.4 BU in the April to June quarter of 2022, registering an increase of 21.7 per cent from 85.8 BU generated in the corresponding quarter last year, a company statement said.
While Indian corporates have seen a only marginal impact from the rupee’s slide so far, experts warned that the risks are building up, and any further weakening of the currency may start hurting companies.
The rupee continued to remain under pressure in the past week. On Friday, it closed 6 paise lower at 79.04 against the dollar, hitting a new low. Year to date, the rupee has depreciated 5.95% against the dollar, and many brokerages expect it to weaken further in the near term.
Government of India has imposed additional excise duty of 13/litre on diesel exports. Also, excise duty on petrol and ATF exports was raised by of | 6/litre
· RIL has total refining capacity of 68 MMTPA and one of the refineries is export focused
· Product cracks of diesel, petrol and ATF continue to trade at elevated levels. While the company is expected to report a sharp surge in profit in Q1FY23E, excise duty on product exports is likely to limit gains in the refining segment, going ahead, as per our understanding
· The government will review the excise duty for recalibration every 15 days. The strategy of the company regarding export volume and global refining scenario will be the key monitorable in the near term
Key triggers for future price performance
· Increment value accretion from the ‘digital ecosystem’ that will be captured at the Jio Platforms (JPL) level
· Steady FCF generation in the retail segment would enable the company to maintain debt at lower levels and improve its ability to invest in future inorganic opportunities
· Steady cash flow in O2C segment is expected to continue amid favourable global scenario and will enable RIL to invest in new energy verticals
According to the exchange filing, the lender clocked a 21.5% growth in advances in June quarter to reach ₹13.95 lakh crore. HDFC Bank’s deposits aggregated to approximately ₹16.05 lakh crore as of June 30, 2022, a growth of around 19.3%
India logged 16,135 new covid case, taking the total tally ofinfections to 4,35,18,564. Active cases increased to 1,13,864, according to the Union Health Ministry data updated on Monday.
The death toll climbed to 5,25,223 with 24 new fatalities.
Gold prices today extended gains in India, with the yellow metal rising to 2-month highs. On MCX, gold futures were up 0.4% to ₹52,117 per 10 gram. On Friday, gold prices in India had surged nearly 3% or ₹1,500 per 10 gram after government in a sudden move hiked import duty on the precious metal.
On Friday, markets felt some tremors initially from the major global peers; but it has managed to withstand it successfully and in fact, due to a smart V-shaped recovery in the latter half, the Nifty managed to reclaim 15700 with some authority.
In our previous intra-week commentary, we had mentioned how 15700 is to be considered a sacrosanct level. On Friday, we did see this key point getting thrashed in the initial trades and due to a massive sell-off in a few heavyweights (mainly RELIANCE), we saw Nifty hastening towards 15500 at one point. But bulls had other plans this time as they not only defended this level but went on to regain strength in the latter half to confirm a weekly close above 15700. So, for this week, 15700 followed by 15500 is to be seen as an immediate as well as a strong support zone. On the flip side, the sturdy wall remains around 15900 – 16000 and it’s a daunting task going past this for the bulls. Also one of the observations in our previous weekly commentary was the Quarterly close of Nifty above ‘5-EMA’ i.e. 16000 – 16100 would be crucial for our markets. Although the quarterly close panned out slightly lower, it would be a pragmatic ploy to give some buffer in such kind of challenging environment.
We continue to remain hopeful and if there is no aberration on the global front, we will not be surprised to see the Nifty crossing 15900 – 16000 this week itself. For this, banking certainly needs to step forward and it has already given some hints in the last couple of sessions. Also, the broader market did extremely well towards the fag end of the week, which again is an encouraging sign for the market.
The combined market valuation of three of the 10 most valued domestic firms eroded by ₹73,630.56 crore last week, with Reliance Industries Limited taking the biggest hit.
While HUL and ICICI Bank were the other laggards from the top-10 pack, TCS, HDFC Bank, Infosys, LIC, SBI, HDFC and Bharti Airtel were the gainers.
The government may fail to meet its asset-sales target again as a combination of reasons, including poor market sentiments and legal challenges, has delayed planned disinvestments of state-run companies.
Disinvestments of Shipping Corp. of India, BEML Ltd, NMDC Ltd’s Nagarnar plant, Central Electronics Ltd (CEL), Pawan Hans, and Concor have been either delayed or held back, people aware of the developments said, adding that the challenges faced in completing ongoing strategic sales were also delaying those in the pipeline. (Read more)
ICICI Bank, Bajaj Auto, Tech Mahindra, Maruti Suzuki India, State Bank of India, Bharti Airtel, Cipla, Federal Bank, Varun Beverages, Ashok Leyland, Astral Ltd (India), Bata India, APL Apollo Tubes, HealthCare Global Enterprises, Praj Industries, CCL Products (India).
The government has asked electric-scooter makers, including Ola Electric, Pure EV and Okinawa, to explain why they should not be penalized for a spate of scooter fires—some of them deadly—caused by faulty batteries.
The companies have been given 30 days till July-end to respond to the notices, an official familiar with the development said. The government may, however, extend the time as they have been asked to give a detailed response. (Full report)
Here is the list of top 10 stocks that will be in focus on Monday
US equity futures retreated and Asian stocks trimmed gains Monday as slowing economic growth and sticky inflation continued to cast a shadow across markets.
Japanese shares added 1% but China and Hong Kong were on the back foot. S&P 500 and Nasdaq 100 contracts shed more than 0.5%. US stock and bond markets will be closed Monday for the Independence Day break.
U.S. manufacturing activity slowed more than expected in June, with a measure of new orders contracting for the first time in two years, signs that the economy was cooling amid aggressive monetary policy tightening by the Federal Reserve.
The ISM survey's index of national factory activity dropped to 53.0 last month, the lowest reading since June 2020, when the sector was rebounding from a COVID-19 slump. That followed a reading of 56.1 in May. The index would need to decline to 43.1 to signal a recession.
The dollar kept trade-sensitive currencies pinned near multi-year lows on Monday and the euro was under pressure as investors sought safety due to worries about slowing global growth.
While the common currency was steady at $1.0435 on Monday, it is barely above May's five-year trough of $1.0349 and highlights the market's preference for dollars as gloom clouds the outlook.
Gold prices edged lower on Monday, as an elevated U.S. dollar hurt demand for greenback-priced bullion and also outweighed support from weakening Treasury yields. Spot gold was down 0.2% at $1,807.19 per ounce, after hitting a five-month low of $1,783.50 on Friday. U.S. gold futures fell 0.5% to $1,809.50.
Oil retreated as investors weighed concern a global slowdown will erode demand and China reported widening Covid-19 outbreaks.
West Texas Intermediate declined toward $107 a barrel after jumping 2.5% on Friday to cap a weekly gain. Trading volumes will likely be weaker than usual on Monday with a holiday in the US for the Fourth of July break.
Asian stocks rose Monday, providing some relief from the worries about slowing economic growth and sticky inflation that continue to cast a long shadow across markets.
The gains included advances of more than 1% in Japan and Australia. S&P 500 and Nasdaq 100 contracts dipped after Wall Street ended in the green Friday. US stock and bond markets will be closed for the Independence Day break.
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