PremiumRisk appetite returned to the Dalal Street on Tuesday as Indian indices roared with both the Sensex and Nifty surging more than 2.5% on a day when Life Insurance Corporation listed at a discount and WPI inflation for April stood at 15.08%, the highest in almost 2 decades. The Indian rupee also touched its record low on Tuesday, before gradually recovering as RBI intervened to check the decline. Oil also hit its highest in seven weeks as the European Union pushed for a ban on Russian oil. Brent crude was trading above $115. However, the markets were supported by positive trends in Asian markets on hopes that China will ease its Covid restrictions and crackdown on tech firms. Investors, however, still remain nervy about rising inflation and monetary policy. In Asia, shares rose in Japan, Hong Kong, South Korea, Australia, and Shanghai.
Indian indices on Tuesday recorded gains for the second straight session led by solid rally in metal stocks and market heavyweights Reliance, ITC, and ICICI Bank, among others.
The Sensex surged 1344.63 points, or 2.54%, to close at 54,318.47, while Nifty50 added 417 points to end at 16,259.30. Sectorally, all the sectors ended in the green with metal, oil & gas, and energy stocks posting the biggest gains.
On the 30-stock index, the most gains were made by Tata Steel, Reliance, ITCM Wipro, among others. All the 30 stocks ended in the green.
On Nifty50, Hindalco, Tata Steel, Coal India, JSW Steel made the most gains. All the stocks in the NSE Nifty 50 index also ended in the green.
The value of foreign portfolio investors' (FPI) holdings in domestic equities reached $612 billion in the March quarter, down 6% from the preceding quarter, according to a Morningstar report.
This was largely on the back of a massive sell-off by foreign investors and correction in the Indian equity markets.
At the end of March quarter, the value of FPI investments in Indian equities fell to $612 billion, which was lower than $654 billion recorded in the previous quarter, a fall of around 6%, the report noted.
In March 2021, the value of FPI investments in Indian equities was at $552 billion.
Consequently, FPIs' contribution to Indian equity market capitalisation also fell during the quarter under review from 18.3% to 17.8%.
Bajaj Electricals on Tuesday reported a 28.73 per cent decline in consolidated net profit at ₹38.67 crore for the fourth quarter ended March 2022.
The company had posted a net profit of ₹54.26 crore for March quarter of the previous fiscal year, Bajaj Electricals said in a regulatory filing.
However, total revenue from operations was up 6.02 per cent at ₹1,334.32 crore during the quarter under review as against ₹1,258.47 crore in the year-ago period.
The muted debut of the much-awaited and India's biggest initial public offering Life Insurance Corporation of India (LIC) on the stock market was due to unpredictable market conditions, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said on Tuesday.
Shares of BLS International Services Ltd surged about 2% to ₹169 apiece on the BSE in Tuesday trading session on the record date of its bonus shares issue. The stock started trading ex-bonus on Monday, ahead before the record date.
Porinju Veliyath portfolio: Dividend paying stock Taneja Aerospace & Aviation Ltd shares are one of the multibagger stocks in 2021 as it has surged around 280 per cent in last one year. The multibagger stock today surged around 10 per cent and hit upper circuit at ₹129.70 per share levels. The BSE-listed company announced 40 per cent interim dividend on Saturday for FY20021-22. The Board of Directors of the company proposed and approved interim dividend announcing the record date for dividend payment as well. 21st May 2022 has been fixed for record date of dividend payment.
Prices of London copper, often used to gauge global economic health, rose to a nearly one-week high on Tuesday as top metals consumer China's decision to ease some COVID-19 restrictions fuelled expectations of a recovery in demand.
Benchmark three-month copper on the London Metal Exchange (LME) was up 0.8% at $9,313.50 a tonne by 0710 GMT, after hitting its highest since May 11 at $9,342.50.
The most-active June copper contract on the Shanghai Futures Exchange ended daytime trading up 1% at 71,790 yuan ($10,622.97) a tonne.
Stocks in Europe rose Tuesday along with US equity futures as a measure of risk appetite returned to markets roiled by concerns about global economic growth, surging prices and policy tightening.
Travel and energy stocks led a broad-based advance of the Stoxx Europe 600, setting the gauge on course for a third day of gains. The technology sector outperformed following a rally in Chinese tech stocks on optimism Beijing may ease up on a yearlong clampdown. Contracts on the S&P 500 bounced back after a Wall Street drop, while futures on the tech-heavy Nasdaq 100 jumped more than 1%. Treasury yields rose and the dollar retreated.
Bond yields across Europe jumped, with the 10-year U.K. rate surging as much as 10 basis points as traders added tightening bets after data showed employers added 121,000 jobs last month, more than double the forecast.
A challenging global economic outlook amid elevated food and fuel costs and tightening monetary settings continues to shape sentiment, although one bond-market measure -- the five-year breakeven rate -- is signaling inflation may have peaked. Oil has jumped to about $114 a barrel and an index of agricultural prices is at a record high.
Amid Indian stock market reeling under the heavy sell-off in recent sessions, Adani Green Energy's market cap has further went southward. Now, the Adani group company is no more in the list of most valuable top 10 Indian companies. As per the latest BSE data, Adani Green Energy ended on Monday with a market cap of ₹3,56,986 crore, figuring at 11th spot in the list of India's most valuable companies by market cap. Kotak Mahindra Bank ended last session with a market cap of ₹3,59,670, figuring at 10th spot in the list of most valuable Indian companies, ousting Adani Green Energy from the big boys club.
State-run insurer Life Insurance Corporation of India (LIC) shares plunged as much as over 9% to ₹860 as compared to IPO price of ₹949 in its trading debut after a record initial public offering (IPO) that priced at the top of the range and was oversubscribed nearly three times.
India's annual wholesale price inflation accelerated to a 15.08%% in April from the previous month's 14.55%, remaining in double-digits for the 13th month in a row, government data showed on Tuesday.
April's figure was highest since at least April 2005 according to Refinitiv data, and higher than 14.48% forecast in a Reuters poll of analysts.
Fuel prices, a big component of the increase, were up 38.66% on the year versus 34.52% in March.
Brokerage Prabhudas Lilladher expects Nazara Technologies' revenue/profit after tax (PAT) CAGR of 28%/52% respectively over FY22-24E and the growth story remains intact despite near term challenges.
WPI inflation spikes to record high of 15.08 per cent in April against 14.55 per cent in March: Government data
Tata Power has entered into a strategic partnership with Hyundai Motor India Limited (HMIL) to build a robust EV charging network and accelerate the adoption of EVs across India.
With better demand environment on the back of govt infra spending, low cost and affordable housing, PLI schemes for manufactuirng and real estate and industrial demand, we expect both Ambuja and ACC to do well moving ahead. We value Ambuja Cements at 14xCY23 EV/EBITDA to arrive at target price of ₹405 implying an upside of 10% from CMP and hence change our rating from HOLD to BUY as we see better opportunities for the company moving ahead. We continue to maintain our BUY rating on ACC with changed target price of ₹2680/ valuing it at 11.5x CY23 EV/EBITDA implying an upside of 22% from CMP.
While LIC debuted at a slight discount to its issue price, investors should not look to exit at current levels and hold the stock from a medium to long-term perspective. We believe LIC continues to be a solid bet in the long run as it is a play on the growth story of the under-penetrated life insurance industry. Its sustained market leadership position, robust pan-India distribution network, and shifting focus towards profitable products, thus supporting margins and improving persistency ratios, will collectively make LIC an attractive pick from a long-term perspective.
Gold prices firmed on Tuesday, as a pullback in the dollar supported demand for greenback-priced bullion and countered pressure from a recovery in U.S. Treasury yields. Spot gold was up 0.2% at $1,826.95 per ounce, by 0542 GMT. U.S. gold futures gained 0.6% to $1,824.40. The dollar fought for a footing after falling from near 20-year highs while the tumbling Chinese yuan found a floor, as investors trimmed bets on whether U.S. interest rate hikes will drive further gains. A weaker dollar makes gold more attractive for buyers holding other currencies. However, benchmark U.S. 10-year Treasury yields climbed, limiting demand for zero-yield gold.
Tokyo shares ended higher Tuesday with investors cheered in part by the news of a gradual easing of lockdown in pandemic-battered Shanghai.
The benchmark Nikkei 225 index edged up 0.42 percent, or 112.70 points, to end at 26,659.75, while the broader Topix index added 0.19 percent, or 3.45 points, to 1,866.71.
We continue to value the company at 18x on FY24E EPS of Rs13 (revised downwards), arriving at a target price of Rs237 (previous Rs252). We maintain our BUY rating on the stock.
A selloff in cryptocurrency prices resumed, with Bitcoin hovering below and above $30,000 with global equity markets remaining under pressure. The world's largest and most popular fell over a percent and was trading at $30,176. It is down 37% so far this year, and trading far below the peak of $69,000 it hit in November 2021.
Rating: BUY | CMP: Rs1,248 | TP: Rs1,747
We cut our EPS estimates by 6%/18% for FY23E/FY24E respectively as subscriber acquisition continues to remain a challenge in Kiddopia. While management is exploring additional marketing channels and has ear-marked a higher sum of US$1.5-1.6mn per month for 1QFY23E; achieving pre-Apple policy era’s subscriber addition figures will be difficult in near term. Though Kiddopia is facing growth headwinds, E-Sports and Real Money Gaming (RMG) is expected to grow at a strong pace due to consolidation of OML and OpenPlay respectively. Overall, we expect revenue/PAT CAGR of 28%/52% respectively over FY22-24E and the growth story remains intact despite near term challenges. Consequently, we retain our BUY rating on Nazara with a DCF based TP of Rs1,747 (earlier Rs2,550). The stock currently trades at EV/sales multiple of 3.9x/3.2x our FY23/FY24 estimates and post recent correction, valuation is now more in sync with global peers like Electronic Arts and Zynga which trade at 1 year forward multiple of 3-4x.
Life Insurance Corporation of India (LIC) shares made a dull listing today on Indian bourses by opening at discount at ₹867 apiece on the BSE around 8.60 per cent lower from its upper price band of ₹949 per equity share.
Shares advanced in Asia on Tuesday after another wobbly day on Wall Street extended a losing streak for markets.
Hong Kong advanced nearly 2.5% and other regional benchmarks were moderately higher. Oil prices slipped.
Signs of progress in China's effort to bring outbreaks of coronavirus under control appeared to be outweighing concern over weaker than expected Chinese economic data for April.
Investors also are watching for comments by Federal Reserve officials that might provide insight into the US economic outlook and future policy moves.
Rating: BUY | CMP: Rs663 | TP: Rs900
BHFC reported a strong 4QFY22 performance with shipment tonnage growing 8% QoQ to 57.5k, owing to recovery in domestic CV. CV export remains impacted due to semiconductor shortage in Class-8 trucks. EBITDA margin at 25.8% expanded 30bps QoQ. Industrial segment almost doubled in FY22 owing to increasing contribution from O&G – outlook remains healthy as well. Demand outlook robust for CV domestic (underperformance over the last few years), PV exports (aluminum forging and EV) and industrial segment. Management expects Sanghvi forging revenue to increase by 50% in FY23.
We remain positive on the stock led by (1) multiple growth levers in domestic & export automotive segment with cyclical turnaround in CV industry and easing of the chip shortage going ahead, (2) strong double-digit growth in high margin non-auto business (3) rising traction in E-mobility segment and (4) potential revenue contribution from defense & renewable segment. Turnaround of Sanghvi Forging will further add to the bottom line. Maintain BUY with a TP of ₹900 at 30x FY24E EPS.
Trading for the week started on a pleasant note despite sluggish global cues. In the initial hour, the gains extended to move towards the 16000 mark. Similar to the recent trend, the profit booking took place at higher levels to erase all gains around the midsession. Although the market recovered slightly thereafter, the overall movement was quite choppy to conclude the day around 15850 with nearly four-tenths of percent gains.
The last three sessions’ lows are precisely the same and hence, the selling seems to have reduced a bit as we approached the key support zone 15700 – 15600. However, this does not mean we are completely out of the woods. For a time being, 15700 – 16100 has become a trading range for Nifty and only a sustainable move beyond 16100 would see some convincing rebound in the market. On the flip side, as of now, we do not expect a major downside below 15700 – 15600 as markets are extremely oversold and hence, any breach of lower levels would probably give some false breakdown.
Hence, traders are advised not to trade aggressively on the short side here. Rather a small relief globally would provide a much-needed bounce-back rally in so many beaten-down counters. It’s better to take one step at a time and keep a close tab on global developments, which are likely to influence our markets in the near term.
State-run insurer Life Insurance Corporation of India plunged early in its Mumbai trading debut after a record initial public offering that priced at the top of the range and was oversubscribed nearly three times.
The shares fell as much as 9.4% to 860 rupees in Mumbai, versus their IPO price of 949, before paring about half of the losses. The offering raised $2.7 billion, with buyers including sovereign funds in Norway and Singapore to millions of small-time Indian investors.
The sale of equity in the 65-year-old behemoth, which is synonymous with insurance in India, was oversubscribed nearly three times, riding on the enthusiasm of policyholders who received a 60-rupee discount and bid multiple times for the shares on offer.
A poor listing is set to disappoint millions of small-time investors who bid enthusiastically for the issue because of their long and emotional association with LIC and its products.
A fact finding committee set up by he Directorate General of Civil Aviation (DGCA) to probe IndiGo for denying boarding to a differently abled child earlier this month has found the airline to be at fault for not complying with regulations.
Multibagger stocks: Despite reeling under the sell-off heat for more than two months, some Indian stocks have managed to deliver stellar return in last two years, especially after the market made its bottom on 23rd March 2020. Shares of Tata Steel and Tata Consultancy Services (TCS) are one of them. In recent bear-hit markets, these two Tata group shares have recently come close to its 52-week lows. However these two stocks have still managed to double its shareholders money in last two years.
Indian shares rose for a second consecutive session on Tuesday, with investors focused on the market debut of state-owned Life Insurance Corp, while the rupee weakened to an all-time low.
The NSE Nifty 50 index was up 0.75% at 15,961.20, as of 0352 GMT, with most major sub-indexes in positive territory, while the S&P BSE Sensex rose 0.59% to 53,284.31.
State-owned insurance behemoth Life Insurance Corp (LIC) is likely to see a lacklustre debut when it lists later in the day despite the $2.7 billion initial public offering being oversubscribed, analysts said. Its IPO was priced last week at 949 rupees, the top of the indicated range.
The Indian rupee weakened on Tuesday, to touch a record low of 77.73 versus the dollar, tracking broad gains in the U.S. currency alongside weakening in offshore markets, with traders watching the domestic share market for clues to fund flows.
The partially convertible rupee was trading at 77.73/74 to the dollar by 0358 GMT, versus Friday's close of 77.45. The 1-month non-deliverable forward was trading at 77.96/97 to the dollar.
Indian share markets were trading up 0.7% with all eyes on the listing of state-run Life Insurance Corp, the country's biggest IPO, set for later in the session.
Traders will also watch for central bank intervention if the currency racks up sharper losses during the session.
Rupee falls 14 paise to 77.69 against US dollar in early trade.
U.S. equities ended mixed with Dow Jones rose 0.1%, the S&P 500 fell 0.4% while the technology-heavy Nasdaq Index dropped 1.2%. The yield on the benchmark 10-year U.S. Treasury note declined to 2.877%. In addition to supply disruptions, the Russia-Ukraine war and Covid-19 lockdowns in China, continue to affect stocks, government bonds and cryptocurrencies, causing discontent among the investors.
Domestic equities ended higher after registering losses in the previous week. Nifty gained 0.4%, while broader markets outperformed the main indices as Nifty Mid-Cap and Nifty-Small Cap rose 1.6% and 1.1% respectively. Most sectoral indices ended in green. Nifty PSU Bank gained the most at 3% followed by Nifty Reality which was up, 2.6%. Nifty IT was the major laggard which plummeted 0.8%. Moreover, investors digested another batch of corporate earnings whilst following the news on Russia-Ukraine crisis and rising COVID cases in China. On Monday, 16th May 2022, FII sold net Rs1,789 crores while DII purchased Rs1,428 crores worth of equity.
The markets would watch out for listing of LIC very closely as one of the big upcoming events. The rupee hitting an all-time low, Fed’s tightening policy and continuous FPI sale, are likely to have economic ramifications in the near-term. Rising inflationary pressure has compelled FED and other central banks across the world to begin raising interest rates in the coming months which has in-turn led investors to believe that an economic recession is looming. India is apprehensive, as a tumbling rupee and imminent rate hike signifies a hit to the operating margins and profitability. However, the Indian economy is running strong, primarily on account of a positive corporate earnings momentum. Despite rising costs, asset quality of banks has improved and the country is witnessing a gradual resurgence of manufacturing, owing to the PLI scheme and other government reforms. Globally, the Russia-Ukraine crisis and supply disruptions continue to jeopardize global and Indian equities.
The markets are likely to see gap up opening, SGX nifty is up ~30 points compared to its yesterday's spot Nifty closing. Asian Market trading in green as Nikkei is up 0.2%, while Hang Seng is up 1.75%
Prudent Corporate IPO: After closure of three days bidding of the public issue worth ₹538.61 crore, all focus has now shifted on Prudent Corporate IPO allotment date, which is most likely on 18th May 2022. Meanwhile, after getting out of trade in grey market on weekend, Prudent Corporate shares have once again become available in grey market. According to market observers, shares of Prudent Corporate are available at a premium of ₹12 in grey market today.
Should you subscribe to the issue? GMP, key details
Venus Pipes IPO: After closure of three days bidding of the public issue worth ₹165.42 crore, all focus has now shifted on Venus Pipes IPO allotment date, which is most likely on 19th May 2022. Meanwhile, shares of Venus Pipes are available at a premium of ₹20 in grey market today. They said that Venus Pipes IPO GMP has remained steady this week.
Three stocks have been put under the ban for trade on Tuesday, May 17, 2022 under the futures and options (F&O) segment by the National Stock Exchange (NSE). These securities have been put on ban under the F&O segment as they have crossed 95% of the market-wide position limit (MWPL), as per the NSE.
M&M (CMP Rs.903)
In view of the strong product pipeline, sizable presence in high margin tractor segment and improving return ratio, we have a BUY rating on MM with a SOTP-based Target Price of Rs1,180, valuing core business at 7.5x FY24E EBITDA at Rs844 and subsidiary at Rs336 post 30% discount to market capitalization.
Intraday Pick
MUTHOOTFIN (PREVIOUS CLOSE: 1139) BUY
For today’s trade, long position can be initiated in the range of ₹1120- 1130 for the target of Rs. 1165 with a strict stop loss of ₹1105.
ICICIGI (PREVIOUS CLOSE: 1298) BUY
For today’s trade, long position can be initiated in the range of ₹1280-1290 for the target of Rs. 1330 with a strict stop loss of ₹1265.
SIEMENS (PREVIOUS CLOSE: 2300) SELL
For today’s trade, short position can be initiated in the range of ₹2320- 2340 for the target of Rs.2360 with a strict stop loss of ₹2270.
Industrial metals prices gained on Tuesday, as optimism over lockdowns ending in top consumer China lifted prospects of strong demand, while a slight pullback in the dollar added to the upbeat mood.
Benchmark three-month copper on the London Metal Exchange (LME) was up 0.9% at $9,320 a tonne, as of 0204 GMT.
Oil traded near the highest close in almost eight weeks on strength in products markets, with US gasoline at unprecedented levels.
West Texas Intermediate was little changed above $114 a barrel after a four-day advance to the highest close since March 23. With just a couple of weeks to go before the start of the US summer driving season, gasoline has surged to a record on rising demand coupled with restrained refining capacity.
WTI, the US oil benchmark, has been rising at a faster pace than Brent in recent sessions, eking out a gain last week while the global marker fell. That’s eroded its usual discount to Brent, and the pair now trade near parity.
Oil has rallied by more than 50% this year in extremely volatile trading as the war in Europe tightened supplies, while demand outside of virus-hit China picked up. At the same time, the Organization of Petroleum Exporting Countries and allies including Russia have been restoring output at only a modest pace.
Gold prices were steady on Tuesday as a pullback in the dollar supported demand for greenback-priced bullion, although the metal's strength was partially offset by a recovery in U.S. Treasury yields.
Spot gold held its ground at $1,825.66 per ounce, as of 0046 GMT. U.S. gold futures gained 0.6% to $1,825.00.
Life Insurance Corporation of India will make its stock market debut on Tuesday. Shares are likely to get listed below their issue prices, grey market data indicates.
In the grey market on Monday, LIC shares were quoted at mild discounts. In the intra-day it was also quoted for at par listing.
This means the share price of LIC is likely to be listed at the stock exchanges around the issue price of ₹949 or below that.
In the grey market, LIC shares were quoted at a discount of ₹15 to 20 per share. The grey market is an unofficial market. The data is used for trend prediction.
The recent volatility has led to a sharp drop in the grey market premium of LIC shares. At its peak grey market premium of LIC shares stood at ₹95 per share. This was before the IPO opened for public subscription.
The initial public offering of LIC has been subscribed 2.95 times. The IPO opened for public subscription on May 4 and closed on May 9.
Tokyo shares rose in morning trade on Tuesday despite Wall Street stocks finishing mostly lower on weak Chinese economic data.
The benchmark Nikkei 225 index opened in negative territory but soon climbed 0.20 percent, or 51.97 points, to 26,599.02, while the broader Topix index added 0.26 percent, or 4.90 points, to 1,868.16.
"The market is expected to fluctuate today. Shares are likely to be bought thanks to affordability but also likely to be sold on the back of the fall in US tech stocks," Mizuho Securities said in a note.
Asian stocks advanced Tuesday as investors evaluated the economic outlook amid elevated food and fuel costs, tightening monetary settings and China’s push to stamp out Covid.
A climb in Japan helped an Asian-Pacific share index rise for a third session. US and European futures bounced back after Wall Street shares ended lower.
In China, Shanghai reported three days of zero community transmission, a milestone that could lead officials to start unwinding a punishing lockdown.
Key commodity costs continue to climb: oil has jumped to about $114 a barrel and an index of agricultural prices is at a record high.
Treasury yields edged up and a dollar gauge held a drop. Cryptocurrencies weathered the latest turbulence in the stablecoin sector, leaving Bitcoin hovering around $30,000.
US data showed New York state manufacturing activity unexpectedly shrank in May for the second time in three months. That followed Chinese figures revealing a collapse in economic activity due to Covid-linked curbs.
While the US dollar typically strengthens when a recession is looming, all bets are off once it hits.
That’s according to Goldman Sachs Group Inc. strategists including Zach Pandl, co-head of global FX and EM strategy, who cited historical data showing a more mixed performance for the greenback during an economic contraction.
Investors have pivoted to the greenback this year as a go-to haven, with Bloomberg’s dollar index swelling for each of the last six weeks and hitting a two-year high last Thursday. However, with Bloomberg economists ramping up the probability of a recession this year to 30%, that dollar strength could soon be threatened.
Big Oil has enjoyed an easier ride at shareholder meetings so far this year compared with last year's punishing run of hostile investor votes tied to climate concerns, as those issues have been eclipsed by tight oil supplies.
Major oil companies have handily defeated several high-profile climate resolutions brought by shareholder activists in the current run of annual general meetings.
Investors' more supportive stance coincides with a surge in energy prices in the wake of Russia's invasion of Ukraine and follows the efforts of many companies to speed up plans to transition to a low-carbon economy after years of pressure.
Stocks on Wall Street were mixed on Monday as downbeat Chinese and New York state data kindled recession fears, but the 10-year Treasury note's yield remained firmly under 3%, spurring hopes the Federal Reserve will refrain from further interest rate hikes.
Chinese retail and factory activity fell sharply in April as COVID-19 lockdowns severely disrupted supply chains while New York's factory output slumped in May for the third time this year amid a collapse in new orders and shipments.
The Chinese data cast a long shadow over the world's second-largest economy while the steep drop in New York manufacturing could be an early signal of the impact of the Fed's plans to tighten monetary policy to tap down inflation.
MSCI's gauge of stocks across the globe shed 0.01% and Treasury yields fell, with the benchmark 10-year note down 4.7 basis points at 2.886%, which some see as a sign the market has priced in all the Fed's rate hikes.
According to preliminary data, the S&P 500 lost 15.24 points, or 0.38%, to end at 4,008.65 points, while the Nasdaq Composite lost 140.81 points, or 1.19%, to 11,664.19. The Dow Jones Industrial Average rose 39.07 points, or 0.12%, to 32,235.73.
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