Sensex slips 86 pts, Nifty ends below 16,250; TCS, Airtel tank, Tata Steel gains

Indian indices ended in the red on Monday dragged down by major tech stocks amid weak global market trends.

The Sensex lost 86.61 points, or 0.16%, to close at 54,395.23, while Nifty50 declined 4.60 points to end at 16,216.00. Sectorally, Power, banks, energy, and metals performed well, while IT stocks tumbled.

On the 30-stock index, Tata Steel, DRL, and M&M were the top performers, while Bharti Airtel, TCS, and HCL were among the biggest losers.

On the Nifty50 index, Eicher Motors, ONGC and Tata Steel posted the biggest gains, while Bharti Airtel, TCS, HCL, and Infosys were the biggest laggards.

Oil prices fell on Monday in volatile trade, reversing some gains from the previous session as markets braced for new mass COVID testing in China potentially hitting demand, a concern that outweighed ongoing concerns about tight supply.

Brent crude futures fell $1.29, or 1.2%, to $105.73 at 0900 GMT, after climbing 2.3% on Friday. U.S. West Texas Intermediate (WTI) crude futures declined by $1.78, or 1.7%, to $103.01, paring a 2% gain from Friday.

The market was rattled by news that China had discovered its first case of a highly transmissible Omicron subvariant in Shanghai and that new cases had jumped to 63 in the country's largest city from 52 a day earlier.

Two of India’s biggest money managers are turning bullish on bonds of riskier companies, lured by the value in higher yields after the central bank tightened monetary policy.

They also see corporate credit worries fading after companies took advantage of easy liquidity during the pandemic to clean up their balance sheets.

ICICI Prudential Asset Management Co., India’s second-largest money manager, is on the hunt, even as credit markets from the US to Asia show the worst signs of stress in more than two years. It sees a potential entry point to add high-yield credit as spreads widen over the next few months.

Nippon India Mutual Fund, backed by Japan’s biggest private life insurer, expects the yield gap to government bonds to increase by as much as 30 basis points, creating value for investors.

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State-owned miner Coal India on Monday reported a 65% year-on-year jump in its capital expenditure (capex) to ₹3,034 crore during the April-June quarter. This was the ninth consecutive month of capex growth, the company said in a statement.

DMart owner Avenue Supermarts shares surged to the tune of a1.50 per cent on Monday trade session as the company reported strong Q1FY23 results on Saturday. Avenue Supermarts share price today opened upside and went on to rise further and hit its intraday high of ₹4,087.85 apiece levels on NSE, logging near 1.50 per cent rise in Monday morning deals.

China’s auto sales rose by a lackluster 3.4% over a year earlier in the first half of 2022 as anti-virus controls kept buyers away from dealerships, but demand in the industry’s biggest global market rebounded in June, an industry group reported Monday.

Sales in January-June rose to 10.4 million, according to the China Association of Automobile Manufacturers. June sales jumped 41.2% over a year earlier to 2.2 million after controls that shut down Shanghai and other industrial centers were eased.

Total vehicle sales, including trucks and buses, fell 6.6% over a year earlier in the first half to 12.1 million, CAAM reported. Total sales in June rose 23.8% to 2.5 million.

The decline in total sales was less severe than an estimate of a 7.1% contraction released Friday by CAAM based on data from major brands. Growth in June sales was stronger than the earlier 20.9% estimate.

European stocks dropped along with US equity futures Monday as the risk of more Covid curbs in China exacerbated overarching worries about the global economic outlook. The dollar jumped and bonds gained.

The Stoxx Europe 600 index shed about 1%, with carmakers and raw materials among the wort-performing sectors. Contracts on the S&P 500 and Nasdaq 100 were lower before the US earnings season gets underway. Twitter shares fell more than 8% on Germany’s Tradegate versus its US closing level, after Elon Musk terminated his $44 billion takeover approach of the social media company.

A dollar gauge was back around the highest level since 2020, and the euro weakened closer toward parity with the greenback. Yields on US Treasury yields and European bonds ticked lower.

Asian markets and oil prices mostly fell Monday with a fresh Covid flare-up in Shanghai fanning fears of another economically painful lockdown in China's biggest city.

The news came after a forecast-busting US jobs report last week indicated the world's top economy was coping so far with the Federal Reserve interest rate hikes, giving it room for more as it battles soaring inflation.

Traders are also keeping tabs on developments in Washington as President Joe Biden weighs removing some of the Donald Trump-era tariffs on Chinese goods worth hundreds of billions of dollars.

The buildings & factories vertical of L&T Construction has secured “significant" contracts, the engineering major said on Monday. The company defines orders worth ₹1,000 crore to ₹2,500 crore as significant.

A healthy pickup in credit demand may raise the securitisation volumes, originated largely by non-banking financial companies and housing finance companies to about ₹33,000 crore in Q1 FY2023, according to ratings agency Icra.

With India transitioning to renewable energy, Tata Power joins the race to become India’s largest renewable energy company.

Tata Motors Ltd’s UK-based subsidiary, Jaguar Land Rover Automation PLC, continues to be plagued by semiconductor shortages.

The Supreme Court on Monday sentenced fugitive businessman Vijay Mallya to four months imprisonment and imposed a penalty of ₹2,000 for contempt of court. It also said that failure to pay such a fine will lead to an extension of imprisonment by two months.

Shares of Tata Consultancy Services (TCS) on Monday fell nearly 5 per cent, wiping out ₹54,830.89 crore from its market valuation in morning trade, after the company's June quarter earnings failed to meet market expectations.

The stock slipped 4.71 per cent to ₹3,111 on the BSE.

At the NSE, it declined 4.76 per cent to ₹3,110.

Its market capitalisation (mcap) fell by ₹54,830.89 crore to ₹11,39,794.50 crore in early trade on the BSE.

The country's largest software exporter TCS on Friday reported a 5.2 per cent rise in the June quarter net profit to ₹9,478 crore, restricted by the impact of annual wage hikes and promotions that took operating profit margins to multi-quarter lows.

India’s drone industry is taking wing on the back of favourable policies and emerging ways of using such unmanned aircraft, attracting investments to the fledgling sector.

Rupee vs dollar: On account of rising dollar index and economic worries, Indian National Rupee (INR) weakened to a fresh record low against the US dollar (USD) on Monday as investors continue to favour greenback as safe-haven.

Gold price today on Multi Commodity Exchange (MCX) dipped over ₹100 per 10 gm and hit ₹50,709 levels in early morning deals. However, spot gold price held its ground at $1,742.08 per ounce at 0221 GMT. After easing on Friday, dollar index bounced back strongly and regained the psychological 107 levels in early morning session.

The rupee depreciated 7 paise to 79.33 against the US dollar in early trade on Monday as a muted trend in domestic equities and risk-averse sentiments weighed on the local unit.

However, sliding crude prices in the international market restricted the rupee's fall, according to forex traders.

At the interbank foreign exchange, the rupee opened weak at 79.30 against the American dollar and slipped further to quote at 79.33, a decline of 7 paise over its last close.

In initial trade, the local currency witnessed a high of 79.24 and a low of 79.35 against the US dollar.

In the previous session, the rupee had closed at an all-time low of 79.26 against the dollar.

Asian markets and oil prices mostly fell Monday with a fresh Covid flare-up in Shanghai fanning fears of another economically painful lockdown in China's biggest city.

The news came after a forecast-busting US jobs report last week indicated the world's top economy was coping so far with the Federal Reserve interest rate hikes, giving it room for more as it battles soaring inflation.

Traders are also keeping tabs on developments in Washington as President Joe Biden weighs removing some of the Donald Trump-era tariffs on Chinese goods worth hundreds of billions of dollars.

Shanghai recorded more than 120 virus cases at the weekend, having seen its first case of the highly contagious BA.5 Omicron strain, forcing officials to launch another mass testing drive.

Oil prices fell around $1 on Monday in volatile trade, reversing some gains from the previous session, as worries about a recession and China's COVID-19 curbs hitting demand outweighed ongoing concerns about tight supply.

Brent crude futures fell 82 cents, or 0.8%, to $106.20 at 0314 GMT, after climbing 2.3% on Friday.

U.S. WTI crude futures declined by $1.04, or 1%, to $103.75, paring a 2% gain from Friday.

Trading was thinned by a public holiday in parts of Southeast Asia, including oil trading hub Singapore.

Both contracts posted weekly declines last week as the market was dominated by worries that rising interest rates to curb inflation would spark a recession and dent oil demand.

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India's retail inflation likely held steady in June, but well above the Reserve Bank of India's tolerance limit for a sixth month as lower fuel and cooking oil prices offset higher services and food costs, a Reuters poll found.

Despite a substantial recent increase in food prices, rising at the fastest pace in nearly two years, overall inflation was partly contained after the government cut taxes on petrol and diesel and imposed restrictions on food exports.

But most economists warned the near-term outlook was highly uncertain as a heatwave last month pushed up vegetable prices. The government has also cut estimates of wheat production because of dry spells in northern India.

The July 4-8 Reuters poll of 42 economists showed inflation as measured by the consumer price index (CPI) was steady at an annual 7.03% in June, versus 7.04% in May.

Forecasts for the data, due at 1200 GMT on Tuesday, July 12, were in a 6.45%-7.70% range.

Indian shares fell on Monday, dragged by technology companies after top IT services provider Tata Consultancy Services missed estimates for June-quarter profit.

The NSE Nifty 50 index was down 0.4% at 16,153.05, as of 0348 GMT, while the S&P BSE Sensex fell 0.42% to 54,250.60.

Shares of TCS fell 2.3%, after it missed quarterly profit estimates by a wide margin as employee-related expenses soared. The index heavyweight also pulled down tech index by 2%.

Supreme Industries (CMP Rs.1,860)

Considering the expected higher revenue from value-added products, higher capex, rising market share, lean working capital and high return ratios, we have a BUY rating on the stock with 1-year Target Price of Rs2,958.

Intraday Picks

DALBHARAT (PREVIOUS CLOSE: 1434) SELL

For today’s trade, short position can be initiated in the range of ₹1440-1450 for the target of Rs.1405 with a strict stop loss of ₹1464.

GAIL (PREVIOUS CLOSE: 137) BUY

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IRCTC (PREVIOUS CLOSE: 589) BUY

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Key things to know before stock market's Opening Bell today

8 stocks to buy or sell today — 11th July

Foreign investors continue to desert Indian equity markets and have pulled out over ₹4,000 crore this month so far amid steady appreciation of the dollar and rising interest rates in the US.

However, the pace of selling by foreign portfolio investors (FPIs) has been declining over the last few weeks.

"With oil prices breaching the USD 100 a barrel mark, and refining margins cracking across markets, hopes for lower inflation helped improve market sentiments. RBI's measure to help stem the sliding rupee added to the building bullish momentum," said Vijay Singhania, Chairman at TradeSmart.

Trading activity in the domestic equity market this week will be influenced by a host of macroeconomic data announcements, including inflation number for June, first quarter earnings from companies, global trends and foreign funds movement, analysts said.

Besides, other key factors like rupee-dollar trend and Brent crude oil price will also guide market sentiments, they added.

"This week, participants will first react to TCS numbers. Besides, macroeconomic data viz. IIP and CPI on July 12 and WPI on July 14 will be in focus. Apart from domestic factors, global cues like performance of the US markets, crude movement etc will remain on the radar," said Ajit Mishra, VP - Research, Religare Broking Ltd.

With commodity prices peaking out, major FMGC players, including Parle Products, Godrej Consumer Products and Dabur expect a recovery in demand in both rural and urban markets going forward aided by price stability.

Moreover, FMCG makers can look forward to better gross margins by the last month of Q2FY23 on a year-on-year basis, as there is a lag of around two months in their inventory coupled with forward contracts, experts say.

Prices of commodities have now peaked out and there has been a 15-20 per cent decline from peak prices in most commodities, according to Parle Products Senior Category Head Mayank Shah.

Information technology stocks are likely to remain under pressure in the near-term amid headwinds emanating from the worsening economic situation in key global markets and financial market volatility, according to analysts.

While the country's largest software exporter TCS reported a 5.2 per cent rise in June quarter net profit on Friday, kicking off the latest earnings cycle, IT shares have been sliding, with the BSE Information Technology index tumbling nearly 24 per cent so far this year.

Cross-currency headwinds and large scale talent churn resulting in higher wage hikes could also add to the challenges, especially in terms of the impact on operating margins, analysts opined.

Most Asian stocks dropped along with US equity futures Monday and the dollar jumped as the risk of more Covid curbs in China exacerbated overarching worries about the global economic outlook.

An Asian equity gauge fell amid declines in Hong Kong and China. Japan was the one bright spot, buoyed by the prospect of administrative stability after the ruling coalition expanded its majority in an upper house election.

A dollar gauge was back around the highest level since 2020. The yen was the weakest performer in the Group-of-10 basket. Commodity-linked currencies were also under pressure. Raw materials including oil were on the back foot.

Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant Sunday and warned of “very high” risks, stoking fears of more lockdowns given China remains wedded to stamping out the virus. Casino shares sapped Hong Kong after Macau announced the closure of almost all business for a week from Monday due to a virus outbreak.

Treasuries edged lower, taking the US 10-year yield toward 3.1%. Inversions along the yield curve are potential signs of economic retrenchment ahead.

Bitcoin bulls beware: Wall Street expects the cryptocurrency’s crash to get a whole lot worse.

The token is more likely to tumble to $10,000, cutting its value roughly in half, than it is to rally back to $30,000, according to 60% of the 950 investors who responded to the latest MLIV Pulse survey. Forty percent saw it going the other way. It was around $21,850 late Friday afternoon, ending the week up over 12%.

The lopsided prediction underscores how bearish investors have become. The crypto industry has been rocked by troubled lenders, collapsed currencies, and an end to the easy money policies of the pandemic that fueled a speculative frenzy in financial markets.

Some $2 trillion has vanished from the market value of cryptocurrencies since late last year, according to data compiled by CoinGecko.

The dollar was on the front foot at the start of a week in which U.S. and Chinese data and European energy security were top of mind, as investor concerns about global economic growth offered support to the safe haven currency.

The euro languished at $1.01475, having lost 2.3% last week and briefly falling to its lowest since late 2002.

The greenback gained 0.37% on the yen to 136.63 in early trade, not far from a 20-year peak hit last month, leaving the dollar index at 107.29.

Tokyo stocks opened higher on Monday after Japan's ruling bloc secured a strong win in Sunday's upper house election, held just days after the assassination of former premier Shinzo Abe.

The benchmark Nikkei 225 index was up 1.55 percent, or 411.63 points, at 26,928.82 in early trade, while the broader Topix index advanced 1.41 percent, or 26.62 points, to 1,914.06.

Prime Minister Fumio Kishida's Liberal Democratic Party (LDP) and partners won more than 75 of the 125 upper house seats up for grabs, according to local media.

Asian shares started cautiously on Monday as investors braced for a U.S. inflation report that could force another super-sized hike in interest rates, and the start of an earnings season where profits could be under pressure.

An upbeat U.S. June payrolls report already has the market wagering heavily on a hike of 75 basis points from the Federal Reserve this month, and sending bond yields higher.

Underlining the global nature of the inflation problem, central banks in Canada and New Zealand are expected to tighten further this week.

While Wall Street did eke out some gains last week the market mood will be tested by earnings from JPMorgan and Morgan Stanley on Thursday, with Citigroup and Wells Fargo the day after.

Oil prices were unsteady on Monday, with Brent trading higher on supply concerns while West Texas Intermediate (WTI) dipped, as traders balanced supply concerns against worries about a recession or China's COVID-19 curbs hitting demand.

Brent crude futures were up 11 cents, or 0.1%, at $107.13 a barrel at 0102 GMT, adding to a 2.3% gain on Friday.

U.S. WTI crude futures however slipped 15 cents, or 0.1%, to $104.64 a barrel, paring a 2% gain from Friday.

Trading was thinned by a public holiday in parts of Southeast Asia.

Both contracts posted weekly declines last week as the market was dominated by worries that rising interest rates to curb inflation would spark a recession and dent oil demand.