PremiumIndian equity markets failed to hold on to opening gains as a post-Fed relief rally fizzled out. An Asian share gauge flat-lined, European contracts fell, and S&P 500 and Nasdaq 100 futures reversed gains, hit by the prospect of sustained rate hikes by the US Fed to rein in runaway inflation
After four days of back-to-back losses, benchmark equity indices rose in Thursday's session in a relief rally following the US Fed’s rate hike action and a dovish commentary by Fed chair Jerome Powell. But soon sentiments turned negative and benchmark indices slumped, tracking global peers.
Globally, equities tumbled after the Federal Reserve raised its key interest rate by three-quarters of a point and signalled more rate hikes were in the offing to rein in runaway inflation. European benchmarks and U.S. futures slipped.
Back home, Sensex slumped 1,045.60 points to end at 51,495.79, while the broader Nifty tumbled 331.55 points to 15,360.60. About 607 shares advanced, 2680 declined, and 97 were unchanged.
All sectoral indices ended in the red, with metal index worst hit, down over 5%. Midcap and smallcap indices also ended deep in the red.
The government is gearing up to increase coal stocks at power plants to 40 million tonne (MT) during the monsoon season, Union power minister R K Singh said.
As of now, there are reserves of around 22.9 MT at power plants.
"On April 1, our reserve stock at power plants was at 24 MT. On April 30, it came down to 19 MT and on May 15, it came down to 15 MT. However, because of (coal) imports, it has gone up to about 22.9 MT again," the minister said, replying to a question related to coal availability.
A slow progress of the monsoon in India so far could slightly delay sowing of major crops such as paddy, but the rainfall activity will gather pace and compensate for any shortfall, according to the weather department.
Rains have been 32% below normal so far in the June-September rainy season, Mrutyunjay Mohapatra, director general of the India Meteorological Department said. However, the situation is improving and the monsoon is expected to cover major parts of central and eastern India in the next three days, he said on Thursday.
Nifty 50 has corrected more than 17% from its recent highs of 18,604, we have seen a border market correction in the last 3 months on the back of domestic as well as global issues. In global markets, there are concerns regarding the inflation in the USA, the Russia-Ukraine war, Crude prices, etc we have seen corrections of more than 32% in NASDAQ 100 and 20% in S&P 500.
Indian markers continue to see selling pressure from the Fii's as rate hikes in the USA market makes emerging markets less attractive for the foreign investors, along with this domestic issue like higher inflation, increase in the crude oil prices, and rate hike by RBI. Currently Nifty is trading at a price to earnings of 19.1x which is in the lower range of the last 5 years' average and the dividend yield is also attractive at 1.5%. Along with this Nifty midcap 100 is trading at a price to earnings of 20.8x which is in the lower range of the last 5 years.
We believe that the market is in a consolidation zone now due to global as well as domestic issues but all the near negatives have been priced in the market at this point in time, valuations are attractive for the long-term investors.
Dutch and British wholesale gas rose on Thursday as gas flows from Russia to Europe via Nord Stream 1 fell after Gazprom curbed the pipeline’s capacity.
The Dutch front-month contract was up 15.00 euros at 129.00 euros per megawatt hour (MWh) by 0843 GMT, having earlier touched 132.00 euros MWh, its highest level since the beginning of April.
The day-ahead contract was up 11.70 euros at 128.25 euros/MWh.
Gazprom said flows through the Nord Stream 1 pipeline would be curbed to up to 67 million cubic metres (mcm) a day from 1.30 am Moscow time on Thursday (2230 GMT on Wednesday) due to issues with Siemens made equipment at the Portovaya compressor station near St Petersburg.
The cut means the pipeline is now running at around 40% of its full capacity.
European shares fell as investors weighed risks to growth from surging inflation after the Federal Reserve went ahead with the biggest rate increase since 1994.
The Stoxx Europe 600 Index was down 1.5%, with all sectors lower. Retail stocks were the biggest decliners, with online retailers slumping after Asos Plc cut its forecast for full-year sales and Boohoo Group Plc recorded the first UK sales decline in its history.
Contactless payments’ contribution to total face-to-face (F2F) transactions grew more than six times to 16% in December 2021 from less than 2.5% in December 2018, according to a whitepaper released by Visa and Worldline India.
The whitepaper, ‘India taps into a Contactless Future’, analyses India’s journey with digital payments infrastructure and contactless payments, highlighting the rapidly growing adoption across regions and sectors.
According to the paper, less-touch payments in stores ensured consumer safety, a necessity since the pandemic.
Shares of ITC Ltd. shares have put up a good show in 2022, rising 20.6% so far this calendar year compared to a 2.2% drop in the Nifty FMCG index. Note that the stock had underperformed prior to this, which had rendered valuations lower. Amidst the broader market turmoil, investors are now valuing companies that generate good cash flows and were beaten down. ITC is a case in point.
Moreover, ITC’s flagship cigarettes business is recovering faster. The company has said that its cigarette volumes in the March quarter have surpassed pre-pandemic levels. (Read here)
The leaders of France, Germany, Italy and Romania arrived in Kyiv on Thursday in an apparent show of collective European support for Ukraine as it tries to resist Russia's invasion.
The French president's office said President Emmanuel Macron, German Chancellor Olaf Scholz and Italian Premier Mario Draghi had traveled to Kyiv together, and Romanian President Klaus Iohannis will join them in the Ukrainian capital.
The European leaders are expected to meet with Ukraine’s President Volodymyr Zelenskyy in the highest-profile Western visit to Kyiv since Russia sent in troops to Ukraine Feb. 24.
The visit comes as EU leaders prepare to make a decision June 23-24 on Ukraine's request to become a candidate for EU membership, and ahead of an important NATO summit June 29-30 in Madrid.
Revlon Inc. filed for Chapter 11 bankruptcy, unable to manage its heavy debt load amid the supply chain crunch and steep inflation.
The cosmetics giant owned by billionaire Ron Perelman sought court protection in the Southern District of New York, and listed assets totaling $2.3 billion as of late April. That stands in contrast to total debts of $3.7 billion, which include its 6.25% senior notes due in 2024, according to court papers dated June 15. (Read here)
Glenmark Pharmaceuticals on Thursday said it has launched a novel fixed-dose combination (FDC) drug--Indacaterol Mometasone--in the country for patients.
Luanched under the brand name Indamet, the drug will be available in three strengths with a fixed dose of Indacaterol 150 mcg and variable doses of Mometasone 80 mcg, 160 mcg and 320 mcg to be taken once daily.
The Tata Group-owned Air India has decided to procure its maiden batch of wide-bodied A350 aircraft of Airbus and the first plane is likely to be delivered to the airline by March 2023, sources have said.
However, it was not immediately clear how many A350 aircraft will be purchased by Air India.
Air India has not bought a single aircraft since 2006 when it had placed orders for purchasing 111 aircraft -- 68 from the US-based aircraft manufacturer Boeing and 43 from European aircraft manufacturer Airbus.
A wide-bodied plane like Airbus A350 has a bigger fuel tank that allows it to travel longer distances such as India-US routes.
The Tata Group took control of Air India on 27 January after successfully winning the bid for the airline on 8 October last year.
Infosys’s deal-wins for FY22 remained strong with 94 large deals totalling $9.5 Bn, manifesting Infy’s deep client engagement throughout the year. The company reported industry-leading revenue growth of 21% in FY22. It also reported healthy expansion in its operating margins driven by higher offshoring, efficient utilization, lower attrition, and superior service mix. · In view of robust deal wins, the Infy management has issued guidance of strong revenue growth of 13%-15% (CC terms) in FY23. It has also guided for an operating margin of 21%- 23% in FY23, aided mainly by higher offshoring and a richer service mix.
The management has guided for double-digit growth in FY23 in the backdrop of robust deal wins. Additionally, higher offshoring, better utilization, and lower attrition are likely to expand the company’s operating margin moving forward. We recommend a BUY rating on the stock and assign a 26 x P/E multiple to its FY24E earnings of ₹71.1/share to arrive at a TP of ₹1,850/share, implying an upside of 25% from the CMP.
Oil prices recovered on Thursday from a steep drop in the previous session, supported by tight oil supply and peak summer consumption, after a U.S. rate hike sparked fears of slower economic growth and less fuel demand.
Brent crude futures rose 77 cents, or 0.7%, to $119.28 a barrel, while U.S. West Texas Intermediate (WTI) crude futures climbed to $116.33 a barrel, up $1.02, or 0.9%.
Prices slipped more than 2% overnight after the Federal Reserve raised interest rate by three-quarters of a percentage point, the biggest hike since 1994.
The sharp increase in aviation turbine fuel (ATF) prices and the depreciation of the rupee have left the domestic airlines with no choice but to immediately raise airfares, said Ajay Singh, Chairman and Managing Director, SpiceJet, on Thursday.
A minimum 10-15% increase in air fares is required to ensure that cost of operations are better sustained, Singh said in a statement.
The short-term trend of Nifty continues to be weak with rangebound action. Such lack of strength at the important support signal chances of false downside breakout or one leg of downside before showing sharp upside bounce from the lows of around 15,500 levels in the short term. Immediate resistance for Nifty is placed at 15,780 levels.
Prices of aviation turbine fuel (ATF), or jet fuel, surged to a record high of ₹1.4lk/litre in the national capital after oil marketing companies raised prices by 16%. Prices of the fuel have risen 91% in the last six months.
India's petrol consumption jumped 54% and that of diesel soared 48% in the first fortnight of June from a year earlier with continuing demand recovery from a relatively low base in 2021 when the world's third-biggest oil user was in the grip of the second wave of COVID-19.
Petrol sales by state-owned fuel retailers, which control roughly 90% of the market, at 1.28 million tonnes during 1-14 June rose 54.2% on year.
Month-on-month sales were up 0.8%, preliminary industry data showed on Wednesday.
Diesel, the most-used fuel in the country, saw sales jumping 47.8% year-on-year to 3.4 million tonnes during the first 14 days of June. This was 12% higher on month.
Shares of HDFC, SBI, Yes Bank, UPL, Zomato, telcos, among others, will be in focus today.
Indiabulls Housing Finance, RBL Bank, and Delta Corp remain under the NSE F&O ban for 16 June.
Foreign institutional investors (FIIs) have net sold ₹3,531.15 crore worth of shares, whereas domestic institutional investors (DIIs) remained net buyers, to the tune of ₹2,588 crore worth of shares on June 15, as per provisional data available on the NSE
Viresh Joshi, Axis mutual fund’s fund manager and dealer was sacked on 18 May with a ‘bare bones statement’ stating it was ‘further to their ongoing investigation and his conduct’. However, documents accessed by Mint suggest that he was sacked on multiple grounds including violation of the company’s code of conduct and ethics. (Read here)
Nifty futures on the Singapore Exchange rose 145.50 points, or 0.93%, to 15,816 in early deals on Thursday, hitting at a positive start for domestic indices.
On Wednesday, sliding for the fourth straight day, the Sensex shed 152 points in choppy trade to close at 52,541.39, an over 10-month low. The broader Nifty50 declined 39.95 points to end at 15,692.15.
Stocks and US equity futures climbed Thursday after Federal Reserve Chair Jerome Powell said super-sized interest-rate hikes will be rare following the central bank’s biggest increase in borrowing costs since 1994.
An Asian share gauge added about 1%, led by Japan, while Hong Kong and China fluctuated. US contracts increased about 0.5% in the wake of a Wall Street rally that halted a five-day, 10% rout in the S&P 500.
The Fed raised rates 75 basis points Wednesday, stepping up the fight against inflation. Powell signaled another big hike in July but added “today’s 75 basis-point increase is an unusually large one and I do not expect moves of this size to be common." That leans against the risk of a string of jumbo moves.
S&P 500 futures rose 0.6% and the Nasdaq 100 futures climbed 0.7%. The Nasdaq 100 rose 2.5%
Japan’s Topix index increased 1.6%, Australia’s S&P/ASX 200 Index added 0.5%, South Korea’s Kospi index rose 1.6%, while Hang Seng Index fell 0.3% and Shanghai Composite Index dropped 0.1%.
Overnight, Wall Street stocks rallied following the Federal Reserve's sharpest hike to interest rates since 1994, and its later assurance that such mega-hikes would not be common.
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