PremiumMarkets had been looking to US consumer price report in hopes that easing inflation would lower pressure on the Federal Reserve to hike interest rates. US inflation moderated but topped expectations at 8.3%, signaling persistent price pressures. Traders raised bets the Fed will roll out another half-point interest-rate hike in September, following similar increases in June and July
Indian shares tumbled on Thursday and the rupee hit an all-time low amid a global sell-off in equity markets following U.S. consumer price data.
The rupee dropped as much as 0.5% to 77.6313 per dollar on Thursday, hitting a new low for the second time this week before paring losses on possible central bank intervention. The Indian unit ended at 77.42 per dollar versus Wednesday’s close of 77.23.
Global stocks and U.S. equity-index futures tumbled as stubborn inflation in the world’s biggest economy bolstered the case for more aggressive monetary tightening by the Federal Reserve.
Indian benchmark stock indexes have declined more than 6% this month, weighed down by the surprise interest rate hike by the Reserve Bank, foreign fund outflows and mixed corporate results.
Today, the Sensex slumped 1,158.08 points to end at 52,930.31, while the Nifty tanked 359.10 points to 15,808.
Nifty's public sector banking index fell 5.4% and was the worst performer among the sub-indexes. All sectoral indices ended in the red, down 1-4%.
Midcap and Smallcap indices shed 2% each.
India's top gas importer Petronet LNG Ltd wants Qatar Gas to lower prices for it to renew a long-term liquefied natural gas (LNG) import deal beyond 2028, its CEO Akshay Kumar Singh said on Thursday.
The company in the immediate term is looking to tie up 0.75 to 1 million tonnes of LNG to meet the burgeoning energy demand in the country, particularly of the city gas sector.
In a call with journalists, Singh said Qatar sells 7.5 million tonnes a year of LNG to India at an indexation of 12.67 per cent of the prevailing Brent price plus USD 0.52 per million British thermal unit. (At USD 100 per barrel oil price, the LNG price comes for USD 13.19 per mmBtu).
Petronet also buys an additional 1 million tonnes of LNG at a slight variation to this price. The 8.5 million tonnes a year contract ends in 2028.
The pressure of increased inflation on corporate earnings is quite visible since the last 2 quarters and is expected to continue for another 1-2 quarters. As a result, earnings are getting downgraded more than being upgraded by markets. The mix of earnings downgrade along with a reversal of the interest rate cycle is increasing volatility in the markets. We believe that we are in the consolidation phase after the big bull run in the last two years, a much-needed breather.
Profit booking alongside revisions in asset allocation will drag the markets down while fresh flows will push the markets up during this phase. The consolidation phase shall continue for a few more months depending to a large extent on how inflation plays out globally. Thus this phase can be anytime from 3 more months to 3 more quarters from hereon. During this phase we expect the benchmark indices to be range-bound within 15-20% of the lifetime highs observed a few months back. Fresh highs will be seen at the end of this consolidation phase.
India's economic growth rate is likely to slow if the central bank hikes interest rates, Finance Secretary TV Somanathan told CNBC TV18 on Thursday.
India's central bank is likely to raise its inflation projection for the current fiscal year at its June monetary policy meeting and will consider more interest rate hikes, a source said on Wednesday.
The central bank hiked its repo rate by 40 basis points (bps) to 4.40% following a emergency meeting earlier this month.
Disney+, the video streaming service owned by Walt Disney, added around 8 million new subscribers globally in the January to March quarter, with over half of those coming from Disney+ Hotstar, as the service is known as in India and other Asian countries such as Malaysia, Thailand and Indonesia. (Read more here)
Byju’s, India’s most valuable startup, is in talks with lenders to raise more than $1 billion in acquisition financing as the online education provider looks to expand its business rapidly, people familiar with the matter said. (Read here)
Kalyan Jewellers India Ltd’s shares touched a new 52-week low on NSE on Wednesday. This was after the company announced its results for the fourth quarter of the financial year 2022 (Q4FY22). Consolidated revenue fell by 7% year-on-year (y-o-y) to Rs2,857 crore. Kalyan’s operations in Q4 were hindered due to the impact of the Omicron wave. Further, the geopolitical conflict resulted in volatility in gold prices, which dented demand as consumers tend to postpone their purchases awaiting stable prices. (Read here)
European natural gas prices jumped as disruptions to a key transit route through Ukraine and a move by Moscow to retaliate against sanctions ramped up the risk of supply cuts.
Dutch front-month gas, the European benchmark, was 12% higher at 105 euros per megawatt-hour.
Indian Bank expects to grow its loan book by 8-10% in the financial year 2022-23 on the back of higher retail as well as corporate loan demand, chief executive S L Jain said on Thursday
The Supreme Court on Thursday refused to grant any interim relief and stay the Life Insurance Corporation (LIC) IPO share allotment on a batch of pleas filed by some policy holders.
A bench of Justices DY Chandrachud, Surya Kant and PS Narasimha said that the court should be reluctant to grant any interim relief in matters of commercial investments and IPO.
“We are not inclined to grant any interim relief", the bench said as it issued notice to the Centre and LIC on the batch of pleas seeking their response within eight weeks.
The LIC IPO opened on May 4 for retail and other investors and is set to be allotted on Thursday.
Regular price hikes drive earnings
We lower our FY23/24E estimates by 22%/16% to factor lower volumes (-6% each) and lower margins (Rs8.8/Rs9.5 vs earlier Rs10.2 earlier). Q4 results were ahead due to higher than expected margins supported by reduced spot LNG purchase and lower volumes.
MGL remains a play on increased gas usage from rising vehicles and PNG penetration. We like the business because of its dominating share in growing markets of Mumbai and its suburbs. Reiterate ‘BUY’ with a TP of Rs1,103 (Rs1,187 earlier).
LIC IPO: SC issues notice to Centre on pleas challenging constitutional validity of provisions of Finance Act, 2021 & sections of LIC Act
Britain's economy shrank by 0.1% in March but expanded by 0.8% for the first quarter of 2022 as a whole, official figures showed on Thursday in what is likely to have been a high point for 2022 as the cost of living crisis increasingly bites.
Economists polled by Reuters had on average expected gross domestic product (GDP) to be flat in March and to have grown 1.0% over the first three months of this year, compared with the final quarter of 2021.
Japan's SoftBank Group on Thursday logged a record annual net loss after a bruising period that saw assets hit by a US tech-share rout and a regulatory crackdown in China.
The investment giant reported a net loss of 1.708 trillion yen ($13.17 billion) in the year to March 2022 -- a vertiginous plunge from its 4.99 trillion yen net profit the previous year, when results were boosted by huge market rallies.
India's financial crime fighting agency asked a court on Thursday to re-instate a freeze of $725 million in the Indian bank accounts of Xiaomi Corp as it investigates fund transfers by the Chinese smartphone giant.
The enforcement directorate had seized the money saying Xiaomi had illegally transferred funds abroad to three entities, including one in the Xiaomi group, describing them as payments "in the guise of royalty".
But a court put that decision on hold after Xiaomi challenged it.
Going forward, key support for the Nifty is at 15600. We expect the Nifty to hold the 15600 mark and gradually stage a pullback rally towards 17100 in coming months. Thus, dips should be attributed to construct a portfolio by accumulating quality stocks in a staggered manner based on following observations: a) Past four week’s corrective move hauled daily and weekly stochastic oscillator in extreme oversold territory (currently at 8 and 16, respectively). In earlier occasions, during CY18-20, after approaching such lower reading below 20, markets have witnessed technical pullback. b) over past two decades, in a secular bull market, barring two instances average intermediate correction in Dow Jones, Nasdaq indices have been around 15% and 25%, respectively. In the current scenario, we expect both indices to stage a bounce from oversold territory as they have already corrected 14% and 28%, respectively, c) The empirical evidence displays that in last 3 cycles of Fed rate hike, despite initial knee jerk reaction post interest rate hike US and Indian equities have rallied over medium term
Birla Corp. reported Volume/Revenue growth of 2%/6% YoY due to better demand in its operating region. It reported a volume of 4.24 mtpa, up 5% than our expectation of 4.02 mtpa. Capacity utilization during Q4 stood at 108% and blended realization was at ₹5071/tonne, up 4% YoY. The company reported a blended EBITDA/tonne of ₹653( ₹940/tonne in Q4FY21), down 31% YoY owing to elevated costs. The cost/tonne on a YoY basis rose 12% to ₹4,688.
We expect the company to register a Revenue/EBITDA/APAT CAGR of 12%8%/9% over FY21- FY24 driven by a volume CAGR of 8% due to new greenfield capacity and consistent realization improvement of 3% over the same period. We roll over our estimate to FY24 and value the company at 7.5x FY24E EV/EBITDA to arrive at a target price of ₹1,300/share, (1,500 earlier), implying an upside of 35% from the CMP.
Bitcoin resumed its slide on Thursday, continuing to fall alongside risk assets such as tech stocks, and also dragged down by the collapse of TerraUSD, the so-called stablecoin which lost its dollar peg this week.
The world's largest cryptocurrency dropped around 2% to as low as $28,379.26.
Insights
Bank Nifty has seen increase in Open Interest of 24.80% with decrease in price of -1.48% indicating Short Build Up.
Nifty has seen decrease in Open Interest of -0.59% with a decrease in price of -3.09% indicating Long Unwinding.
BANK NIFTY Strategy : - CALL Spread
View: Moderately BULLISH.
Rationale: - Traders could initiate this spread strategy to make modest returns with limited risk and reward. The spread suggested consists of buying one lot of 34,800 strike CALL option and simultaneously selling one lot of 35,300 strike CALL Option.
Gujarat Gas impresses on margins in Q4; outloLower than anticipated gas costs have helped Gujarat Gas Ltd beat Street expectations on earnings before interest, taxes, depreciation and amortization (Ebitda) in the three months ended March (Q4FY22). Standalone Ebitda was ₹697 crore, surpassing Bloomberg consensus estimate of about ₹490 crore.ok improves. (Read here)
The technical structure looks very disruptive, with all indicators signifying the trend southwards. Any breach below the 16000 mark could open the possibility of re-testing the previous swing low of 15700 odd levels. Wednesday’s recovery from the psychological level of 16000 in Nifty, led by the banking space, bodes well for the bulls. Also, the midcap index saw some relief in the latter half of the day, indicating a further recovery in the coming session. However, the downward trend remains intact till the time the unfilled gap of 16480-16650 on the higher end is not taken over. Since the macro factors have weighed down heavily on the global front, it would be important to have a regular tab on these developments.
Oil prices dropped more than 1% on Thursday in a volatile week as economic concerns and recession fears dogged global financial markets, outweighing supply concerns and geopolitical tensions in Europe.
Brent crude futures slipped $1.25, or 1.2%, to $106.26 a barrel. WTI crude futures fell $1.24, or 1.2%, to $104.47 a barrel.
Oil prices are under pressure this week, along with global financial markets, on jitters over rising interest rates, the strongest U.S. dollar in two decades, concerns over inflation and possible recession. Prolonged COVID-19 lockdowns in world's top crude importer China have also impacted the market.
The markets are likely to see gap down opening, SGX nifty is down ~203 points compared to Wednesday’s spot Nifty closing. Asian Markets trading in red as Nikkei is down 0.8%, while Hang Seng is down 0.7%.
Bitcoin fell to its lowest in 16 months on Thursday, continuing to fall alongside risk assets such as tech stocks, and also dragged down by the collapse of TerraUSD, the so-called stablecoin which lost its dollar peg this week.
The world's largest cryptocurrency dropped around 2% to as low as $28,379.26, its lowest since January 2021.
North Korean leader Kim Jong Un called for nationwide lockdowns after the nuclear-armed country confirmed its first-ever case of Covid-19, state media said Thursday.
Kim "called on all the cities and counties of the whole country to thoroughly lock down their areas," the official KCNA news agency said.
Factories, businesses and homes should be closed down and reorganised "to flawlessly and perfectly block the spread vacuum of the malicious virus," it added.
Bengaluru-based electric-two wheeler major Ola Electric's chief marketing officer and key spokesperson, Varun Dubey, has quit the company. (Read here)
Shares of L&T, Tata Motors, PNB, Vodafone Idea, Hindalco, UltraTech, among others will be in focus today.
Larsen & Toubro, Tata Motors, RBL Bank, Aditya Birla Capital, Anupam Rasayan India, Apollo Tyres, Gujarat State Petronet, Honeywell Automation India, Poonawalla Fincorp, Ujjivan Small Finance Bank, CreditAccess Grameen are among the companies scheduled to announce their results today
Oil prices eased in early Asian trade on Thursday, taking a pause after rising more than 5% in the previous session following new Russian sanctions on some European gas companies.
On Wednesday, Russia sanctioned 31 companies based in countries that imposed sanctions on Moscow after Russia invaded Ukraine in February.
That created unease in the market at the same time that Russian gas flows to Europe via Ukraine fell by a quarter. It was the first time exports via Ukraine have been disrupted since the invasion.
Brent crude futures fell 9 cents to $107.42 a barrel in Asian deals. WTI crude futures fell 13 cents to $105.58 a barrel.
Nifty futures on the Singapore Exchange fell 147 points, or 0.9%, at 16,020 in early deals on Thursday, indicating a weak start for Indian benchmarks.
On Wednesday, the benchmark Sensex fell 276.46 points to end the day at 54,088.39, while the Nifty was down 72.90 at 16167.10.
Asian stocks fell Thursday after high US inflation bolstered the case for aggressive monetary tightening and sparked a slide on Wall Street.
An Asian share gauge declined amid drops in Hong Kong and Japan and mixed performance in China. US futures stabilized after the S&P 500 hit the lowest since March 2021 and the tech-heavy Nasdaq 100 shed about 3%.
US inflation moderated but topped expectations at 8.3%, signaling persistent price pressures. Traders raised bets the Fed will roll out another half-point interest-rate hike in September -- following similar increases in June and July. Russia’s war in Ukraine and China’s Covid lockdowns are creating shortages and stoking costs.
S&P 500 futures rose 0.6%, Nasdaq 100 futures added 0.8%, and Euro Stoxx 50 futures fell 1.5%.
Japan’s Topix index fell 0.3%, Australia’s S&P/ASX 200 Index lost 0.7%, South Korea’s Kospi index fell 0.1%, Hong Kong’s Hang Seng Index retreated 0.7%, while China’s Shanghai Composite Index rose 0.2%.
Overnight, US stocks ended sharply lower, with the Nasdaq dropping more than 3% and the Dow falling for a fifth straight day after inflation data did little to ease investor worries over the outlook for interest rates and the economy. The Dow Jones Industrial Average fell 326.63 points, or 1.02%, to 31,834.11, the S&P 500 lost 65.87 points, or 1.65%, to 3,935.18 and the Nasdaq Composite dropped 373.44 points, or 3.18%, to 11,364.24.
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