PremiumIndian indices on Thursday declined sharply with both the Sensex and Nifty plunging over 2.6% as investors dumped riskier assets on fears that soaring inflation would hurt corporate earnings and spark an economic slowdown. The move was in line with Asian peers, which traded sharply lower after a brutal selloff on Wall Street sent the S&P 500 down by the most since June 2020. Shares fell in Japan, South Korea, Australia, and Hong Kong, while it gained marginally in Shanghai.
Indian indices on Thursday tanked massively, tracking extremely weak trends, with heavy losses recorded in market heavyweights Reliance, SBI, TCS, Infosys, among others. High crude prices and foreign fund outflows further ruined already sluggish market sentiments.
The Sensex lost 1416.30 points, or 2.61%, to close at 52,792.23, while Nifty50 declined 430.90 points to end at 15,809.40. Sectorally, all the sectors ended in the red, with metal and IT stocks slipping the most.
On the 30-stock index, only ITC and DRL managed to post gains, while Wipro, HCL, Infosys, and TCS were among the biggest losers.
On Nifty50, ITC, DRL, and PowerGrid ended in the green, while HCL, Wipro, TCS, Infosys, and TechM were among the biggest laggards.
Shares of Lupin Ltd fell around 7% on Thursday on the National Stock Exchange. Investors are visibly displeased with the company’s March quarter results announced late on Wednesday.
Many Indian companies continue to struggle in the environmental, social, and governance (ESG) space, although there is marked improvement in the corporate space. According to Crisil’s ESG risk assessment of 586 Indian companies for fiscal 2022, only 14 were placed in the leadership category, with 73 in the ‘below average’ and ‘weak’ categories.
Multibagger stock: The Board of Directors of Steel Exchange India Ltd has recommended subdivision of shares into 1:10, which is subject to approval of the members of the company in General Meeting. Steel Exchange India Ltd informed about the stock split approval by the Board of Directors in its exchange communication. Steel Exchange shares are one of the multibagger stocks that Indian secondary market has produced in recent years. In last one year, Steel Exchange share price has shot up from around ₹66 to ₹145 levels, logging near 120 per cent rise in this period.
The euro edged up on Thursday as investors price in the chance of an aggressive near-term tightening path by the European Central Bank, while the safe-haven dollar took a breather after significant gains in the previous sessions.
Money markets are currently pricing in 106 basis points (bps) of ECB rate hikes from around 95 bps on Tuesday before ECB official Klaas Knot signalled a 50-basis-point rate increase was possible in July.
U.S. money markets, meanwhile, are still discounting around 200 bps of Fed rate hikes by December 2022.
While announcing its quarterly earnings for Q4FY22, pharmaceutical company Dr Reddy's Laboratories on Thursday announced that its board has recommended a final dividend of ₹30 per share for the financial year 2021-22.
Global brokerage Morgan Stanley has upgraded Container Corporation of India shares' rating to equalweight on more favorable risk reward. Its upgrade is driven by rail continuing to gain share medium term on higher diesel prices, more reasonable valuations, expanding domestic container TAM.
Speciality chemicals company Aether Industries' has fixed a price band of ₹610-642 per share for its initial public offering (IPO), reported news agency PTI. The issue will open for public subscription next week on Tuesday, May 24 and conclude on May 26. The bidding for anchor investors will open on May 23.
We maintain our BUY rating, valuing IGL at ₹520/sh on SOTP basis, (IGL-SA: ₹500/sh MNGL: ₹14.6/sh; CUGL: ₹6.5/sh). Our TP is premised upon an earnings CAGR of ~10% (FY21-30e), for IGL-SA, driven by a ~11% CAGR(FY21-30e) in gas sales and EBITDA per unit of ~6.5/unit.
IRB Infrastructure is one of the largest BOT toll operators in the country having market share of ~20% in the total Golden Quadrilateral projects, with over 3,700km of total projects successfully executed. Deal with GIC alongwith arbitration awards with respect to Pathankot Amritsar Toll project and Goa tollway project amounting to Rs7.9bn has further strengthen the balance sheet and reduce the debt level. Since most of the projects have received PCOD and new projects are yet to receive AD, we have revised our construction revenue from Rs51.8bn to Rs48.2bn in FY24. We expect IRB to report revenue/EBITDA CAGR of 13%/13% over FY22/FY24E and ROE of ~14% in FY24E. We maintain with a BUY with a revised SOTP of Rs328/shares, implying an upside potential of 54% from the current levels.
Europe's main stock markets opened sharply lower Thursday, after heavy losses in Asia and on Wall Street.
London's benchmark FTSE 100 index of major blue-chip companies fell 0.8 percent to 7,376.16 points compared with Wednesday's close.
In the eurozone, Frankfurt's DAX index lost 1.5 percent to 13,800.02 points and the Paris CAC 40 shed 1.4 percent to 6,262.72.
"Sentiment ... is highly negative as traders and investors are largely concerned about an economic downturn and soaring inflation," said AvaTrade analyst Naeem Aslam.
Shares in Chinese tech giants plunged on Thursday morning after Tencent reported lacklustre profits, fuelling wider concerns for a grim earnings season as China's economic outlook worsens.
Tencent's Hong Kong-listed shares plunged more than eight percent in early trading before paring losses slightly, a day after it posted its slowest revenue gain since going public in 2004.
Tech behemoth Alibaba dropped more than six percent, while Baidu and Xiaomi were both down.
Ethos IPO (Initial Public Offering) opened for subscription on 18th May 2022 and it will remain open for bidding till 20th May 2022. The largest luxury and premium watch retailer aims to raise ₹472.29 crore from its public offer where ₹375 crore would come through fresh issues while ₹97.29 crore would be raised via offer for sale (OFS). The public issue has been offered at a price band of ₹836 to ₹878 per equity share. Meanwhile, Ethos shares have made debut in the grey market after day one of bidding. According to market observers, shares of Ethos are available at a premium of ₹10 in grey market today.
Growth momentum in the global economy is slowing down due to liquidity tightening by Central Banks. Russia – Ukraine conflict is also not showing any signs of easing with newer categories of weapons introduced in the conflict, which will keep Energy and Food prices high. Both these variables point to a stagflation kind of scenario globally, which can lead to discretionary spending going down. This is fueling greater volatility in global equity markets, including in India. We expect markets to remain volatile in the near term but expect better market conditions in the second half of the financial year once markets price in the impact of global slowdown and higher rates. So sectors which we like are good quality private sector banks, Oil Refiners and exploration companies, Agri linked companies including tractor manufacturers, Hospitality, Film Exhibitors and Hospitals.
We cut earnings estimates significantly for FY23/24 by assuming much lower growth in Gold AUM (due to structural competition and stoppage of low rate scheme), slower growth in Microfinance portfolio (challenges with quality and capital), gradual recovery in gold portfolio yield and likely continuance of elevated credit cost in microfinance. However, we retain ADD rating on the stock in the light of estimated 4%/16% RoA/RoE delivery in FY23-24 and that stock/valuation (0.8x/5x FY24 PABV/PE) seems to be largely discounting headwinds in gold and MFI businesses. Key risks to our view would be re-introduction of teaser/lower rate schemes by market/competition and capital call at Asirvad Microfinance (given abs. PAR net of ECL is nearly equal to NW). Manappuram’s dilemma of choosing between growth and profitability is structural, given its weak customer acquisition engine and borrower stickiness.
Shares of ITC Ltd. hit a fresh 52-week high of ₹279.25 apiece in opening deals on Thursday, a day when broader markets tanked. This jump in the company's shares was due to margin expansion across segments at a time when many consumer companies have been facing acute margin pressure due to higher costs.
Dividend paying stock: After Board of Directors of JK Lakshmi Cement Limited recommending 100 per cent dividend for FY2021-22, JK share price surged over 14 per cent in early morning deals on Thursday. JK Lakshmi Cement shares opened upside around ₹27 per share and went on to make intraday high of ₹448 apiece levels. The Board of Directors of JK Lakshmi Cement Limited had recommended 100 per cent dividend in financial year 2021-22 on Wednesday i.e. 18th May 2022.
In April, inflows into systematic investment plans (SIPs) of mutual funds fell around 3.8% month-on-month to ₹11,863 crore. A SIP is a mode of investment primarily into equity mutual funds. In that sense, an investor investing through the SIP route is largely buying stocks indirectly. In fact, in the seven-month period from October 2021 to April 2022, total investments made through the SIP route stood at Rs79,975 crore.
Gold prices were flat on Thursday, as an elevated U.S. dollar and rising Treasury yields weighed on greenback-priced bullion, with the metal's outlook already dampened by an aggressive Federal Reserve stance on inflation.
Spot gold held its ground at $1,813.96 per ounce, as of 0512 GMT. U.S. gold futures were flat at $1,813.40.
Gold's daily closing price is effectively hugging the trendline projected from the March 2020 (pandemic) low, and intraday volatile spikes either side of that key trendline have lacked conviction to prompt a sustainable move, City Index's senior market analyst Matt Simpson said.
Multibagger stock: After Covid-19 fueled sell-off in 2020, Indian stock market made its bottom on 23rd March 2020. After making its bottom, Indian market rebounded strongly in pull-back rally. In this post-Covid rally, the Dalal Street produced a good number of multibagger stocks. Tata Power shares are one of such multibagger stocks produced by the Dalal Street in post-Covid rally. In last two years after market bottom, this Tata Power share price has risen from around ₹30 to ₹237.50 levels, logging near 700 per cent return in this period. The multibagger stock has managed to give this much of return to its shareholders despite heavy sell-off in last few months after the outbreak of Russia-Ukraine war.
Oil marketing companies (OMCs) have raised prices of liquified petroleum gas (LPG) by ₹3.5, pushing up the cost of a 14.2 kg cylinder of cooking gas to ₹1,003 in the national capital. This is the second hike in LPG prices this month.
Stock market today: Shares of Chennai Petroleum Corporation Limited hit upper circuit on fifth straight session today. Chennai Petroleum share price today opened downside at ₹305 apiece on NSE but soon started ascending and hit new 52-week high of ₹329.45 levels. Despite weakness and high volatility in the secondary market, the NSE listed multibagger stock has been hitting upper circuit since 13th May 2022.
A total of four stocks have been put under the ban for trade on Thursday, May 19, 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.
DLF has seen strong traction in its residential business with FY22 sales bookings of Rs72.7bn in FY22 vs. Rs30.8bn in FY21 driven by the Dec’21 launch of the One Midtown Delhi project and new launches across plots/independent floors in Gurugram and Chennai. With 7.6msf of new launches lined up in FY23E, we model for sales bookings of Rs75.6bn in FY23E and Rs79.3bn in FY24E. Further, with office re-openings and mall consumption picking up, we model for DCCDL rental EBITDA of Rs41.3bn in FY23E and Rs44.2bn in FY24E vs. Rs33.3bn achieved in FY22. We retain our BUY rating with a revised SoTP based target price of Rs446/share (earlier Rs434) as we roll forward to Mar23E NAV. Key risks are weakness in office leasing and residential demand
Bharti’s FCF generation has grown to Rs58.5bn in Q4FY22, and if we adjust for negative working capital (seasonality), it has reached quarterly run-rate of Rs70bn. This should help deleverage in coming quarters; near-term bump includes 5G spectrum auction. However, Bharti has cash infusion pending from Google and partly paid rights issue. We have marginally tweaked our EBITDA estimate and our SoTPbased target price now works out to Rs812 (earlier: Rs850). Maintain BUY.
Sustained improvement in GRMs, attractive valuations, bonus issue (1:2 declared with Q4 result) and robust dividend yield (@>10% for FY22) coupled with our assumptions of some normalcy returning to marketing margins over the next 12 months, make IOCL an attractive play at current prices. Re-initiating coverage on IOCL with BUY rating, TP of Rs165/sh, ~~40% upside from CMP.
Indian IT stocks have underperformed the benchmark Nifty by 15% in year-to-date (YTD) terms as the earnings outlook has worsened over the current earnings season. Global brokerage JPMorgan sees peak revenue growth behind and EBIT margins trending down from inflation, mean reversion.
Direct links to check application status
Venus Pipes IPO: Share allocation of Venus Pipes & Tubes Ltd can be announced any time today as tentative Venus Pipes IPO allotment date is 19th May 2022. Those who have applied for the public issue worth ₹165.42 crore would be able to check their application status online once the finalisation of share allotment is announced. Bidders can check Venus Pipes share allotment status online buy logging in at BSE website or at the official website of the registrar of Venus Pipes IPO. The official registrar of the public issue is KFin Technologies Limited.
Treasury Secretary Janet Yellen said that it’s understandable the dollar has appreciated amid rising US interest rates, and that these gains have posed a concern for some other countries.
India has expressed its concern over global food insecurity and urged to work collectively together to alleviate the sufferings of the most affected.
Shares of ITC rose in Thursday's opening deals after the FMCG major posted 12% growth in net profit to ₹4,195 crore for the January-March period, compared with ₹3,755 crore a year ago. The Kolkata-based company's revenue from operations rose 15% to ₹17,754 crore as against ₹15,404 crore in the last year period.
The rupee extended its losses and slipped 12 paise to 77.74 against the US dollar in early trade on Thursday, weighed down by a muted trend in domestic equities and unabated foreign fund outflows.
At the interbank foreign exchange, the rupee opened at 77.72 against the American dollar, then lost ground to quote at 77.74, registering a fall of 12 paise from the last close.
On Wednesday, the rupee declined by 17 paise to close at its fresh lifetime low of 77.61 against the US dollar.
The rupee opened weaker against the US dollar on Thursday as global equities plunged on concerns that high inflation and monetary policy tightening will fuel an economic slowdown, said Sriram Iyer, Senior Research Analyst at Reliance Securities.
Indian shares dropped 2% on Thursday, weighed down by a broader market selloff, as investors dumped risky assets on worries over stubborn inflation and economic slowdown.
The NSE Nifty 50 index was down 1.95% at 15,924, as of 0353 GMT, with all its major sub-indexes in the negative territory, while the S&P BSE Sensex fell 2.11% to 53,067.39.
Broader Asian equities tumbled after a sell-off in U.S. indexes overnight, with the Nasdaq and the S&P 500 dropping 3% as a rally in growth shares faded amid slowdown concerns.
MSCI's broadest index of Asia-Pacific shares outside Japan snapped its four-day winning streak to slump 2.3%.
Cooking gas LPG price hiked by ₹3.50 per cylinder, now costs ₹1,003 in Delhi: Oil company price notification (PTI)
6 stocks to buy or sell today — 19th May
One of the members of the Reserve Bank of India’s monetary policy committee pressed for an immediate repo rate hike of more than 100 basis points, while others favoured less aggressive rate action in future, minutes of the rate-setting panel’s last meeting showed. While all of them voted for an off-cycle policy rate hike in May, some felt that it was necessary to avoid stronger rate action going forward.
Britain's inflation rate has surged to a 40-year high on soaring energy costs, official data showed Wednesday, sparking calls for an emergency government budget to combat a worsening cost-of-living crisis.
Annual inflation soared to 9.0 percent in April from 7.0 percent in March, the Office for National Statistics said, delivering another heavy blow to Britons whose wages were already failing to keep pace with surging prices.
April's headline figure marked the highest inflation rate since 1982, the ONS added.
JSW Infrastructure Ltd., a unit of tycoon Sajjan Jindal’s steel-to-cement conglomerate, is planning an initial public offering by March 2024.
The Mumbai-based company, which operates seaports and terminals, will soon start the process of engaging investment bankers and professional agencies to facilitate the listing, Joint Managing Director Arun Maheshwari said in an interview. The firm will take a “balanced view" on geopolitical risks and inflationary pressures among other factors while deciding on the timing for the listing, he said.
London copper prices were flat on Thursday, as mounting worries over a global economic slowdown amid aggressive policy tightening by the U.S. Federal Reserve and ongoing lockdowns in China dented investors' risk appetite.
* Benchmark three-month copper on the London Metal Exchange (LME) was steady at $9,236.50 a tonne, as of 0213 GMT, after dropping 1.4% in the previous session.
* The most-active June copper contract on the Shanghai Futures Exchange was down 0.5% at 71,380 yuan ($10,556.36) a tonne.
* China has policy room to cope with challenges, as the downward pressure on China's economy increases, state media quoted Premier Li Keqiang as saying on Wednesday.
Safe-haven currencies, including the dollar, eased on Thursday, pausing for breath after big gains the previous session as Wall Street stocks tumbled amid mounting concerns that aggressive tightening by the Federal Reserve and other global central banks could choke growth.
The dollar index, which tracks the greenback against six major peers, edged 0.05% lower to 103.74, after a 0.55% jump overnight that ended a three-day losing streak.
The yen slipped, with the dollar adding 0.21% to 128.495 yen after a 0.86% tumble on Wednesday.
The Swiss franc continued to strengthen, with the dollar losing a further 0.13% to 0.9869 franc, following a 0.6% slide.
The benchmark 10-year U.S. Treasury yield was steady around 2.89% in Tokyo trading after dropping from as high as 3.015% in the prior session.
The pandemic vastly changed the way Americans spend money and now as they return to pre-pandemic behavior, they’re tripping up retailers again.
That dynamic has only been intensified in recent months as inflation jumps sharply, and the latest financial report from Target underscores the challenges.
Target reported Wednesday that its profit tumbled 52% compared with the same period last year in an environment of rising costs for things like fuel, and also a lightening quick return by consumers to more normalized spending. Purchases of big TVs and appliances that Americans loaded up on during the pandemic have faded, leaving Target with a bloated inventory that must be marked down to sell.
Target's quarterly financial report comes a day after shares of rival Walmart tumbled about 17% for similar reasons after it posted quarterly results. Both companies missed profit expectations by a wide margin. Shares of Walmart fell another 8% Wednesday.
Gold prices were flat on Thursday, as an elevated dollar weighed on greenback-priced bullion and countered support from lower Treasury yields, with the metal's outlook already dulled by an aggressive Federal Reserve stance on inflation.
* Spot gold held its ground at $1,816.63 per ounce at 0047 GMT. U.S. gold futures edged 0.1% lower to $1,814.10.
* The U.S. dollar rose on Wednesday, snapping a three-session losing streak, as concerns about the outlook for global economic growth and rapid inflation knocked sentiment a day after Fed Chair Jerome Powell struck a more hawkish tone.
Three weeks after Wells Fargo Investment Institute cut its view on the S&P 500, it did this again, saying a mild recession is now its base-case view.
The investment advisory firm slashed its year-end target by 300 points Wednesday, on top of the 200-point cut it made late April. The advisory arm of Wells Fargo & Co. now sees the gauge trading in the 4,200-4,400 range by Christmas. That represents a drop of as much as 7.7% for the full year, but a gain of up to 12% from current levels.
“We have noted a growing recession risk since early this year," Wells Fargo Investment Institute’s strategists wrote in a note to clients. “As we weigh the latest monthly and weekly data, the economy has crossed a probability level that makes a mild and short-lived recession our base case."
Hong Kong stocks were down by more than three percent Thursday, after Wall Street suffered one of its worst batterings in two years.
The Hang Seng index was down 3.03 percent, or 625.84 points, at 20,018.44.
Yesterday’s massive rally was followed by yet another gap up opening with modest gains. We clearly shrugged off the global cues as the SGX Nifty was indicating a sluggish start in the morning. In the initial trades, Nifty extended its gains towards 16400, but failed to sustain at higher levels. Around the midsession, Key indices pared down all gains and slipped marginally in the red. Fortunately, a smart recovery immediately after the midseason pulled Nifty back to 16350, which again got sold into to conclude the choppy session on a flat note.
Since the overall global picture has not changed yet, our market was unable to keep up the same momentum as we witnessed during yesterday’s short covering move. Traders chose to take some money off the table after reaching the key resistance zone of 16400 – 16500. Now although we have seen some sluggish moves today, we expect buying to emerge at lower levels till the time Nifty holds its sacrosanct support zone of 16100 – 16000. Traders can certainly take a punt as close as possible to 16150 – 16100 on the expiry session. On the flipside, it’s advisable to lighten up longs around the higher range of 16400 – 16500. The real strength will come back in our market only after surpassing the sturdy wall of 16500 – 16600, till then it would be a prudent strategy to adopt ‘One step at a time’ strategy.
Today, there wasn’t much sectoral participation seen in the market; but the FMCG space stood out and some of the heavyweights like, HINDUNILVR are poised for some decent moves. Also, one can focus on banking and metal counters which are likely to perform well if there is no aberration globally.
Oil prices fell 2.5% on Wednesday, reversing early gains as traders grew less worried about a supply crunch after government data showed U.S. refiners ramped up output, and as crude futures followed Wall Street lower.
Brent crude futures for July settled down $2.82, or 2.5%, at $109.11 a barrel. U.S. West Texas Intermediate (WTI) crude for June fell $2.81, or 2.5%, to $109.59 a barrel.
Both benchmarks gave up early gains of $2-$3 a barrel following a change in risk sentiment as equity markets fell, said UBS analyst Giovanni Staunovo.
Asian stocks tracked a steep Wall Street selloff on Thursday, as investors fretted over rising global inflation, China's zero-COVID policy and the Ukraine war, while the safe-haven dollar held most of its strong overnight gains.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 2% in early Asian trading hours, the first daily decline in a week. Japan's Nikkei tumbled 2.4%.
Pulling it lower was a 1.5% loss for Australia's resource-heavy index, a 2.6% drop in Hong Kong stocks and a 1% retreat for blue chips in mainland China .
Overnight on Wall Street, earnings reports from retail giants soured sentiment, with Target Corp warning of a bigger margin hit due to rising fuel and freight costs as it reported its quarterly profit had halved. One day earlier, Walmart Inc warned of similar margin squeezes.
Target's shares plunged 24.88%, the biggest one-day percentage drop since the "Black Monday" stock market crash on Oct. 19, 1987. On Wednesday, the Nasdaq fall almost 5% while the S&P 500 lost 4%.
A slump in stocks extended into Asia Thursday and US equity futures retreated after mounting fears of an economic downturn hit Wall Street shares and spurred a flight to havens including sovereign bonds.
Equities slid in Japan, Australia and South Korea in the wake of a 4% plunge in the S&P 500 index, the biggest daily drop in almost two years, and a more than 5% tumble in the technology-heavy Nasdaq 100 index.
Earnings reports from consumer stalwarts stoked worries that high inflation is weighing on margins and consumer spending. Target Corp. plunged the most since Black Monday in 1987, a day after Walmart Inc. also spiraled lower.
Federal Reserve officials reaffirmed that sharply tighter monetary policy lies ahead to cool economic activity and get price pressures under control. Chicago Fed President Charles Evans said raising interest rates somewhat above the neutral level and stopping there should help bring inflation down.
Treasuries climbed amid fraying risk appetite. The dollar pared an advance. Bonds in Australia and New Zealand jumped in the slipstream of the US session.
China’s Covid lockdowns amid a persistent omicron outbreak are also buffeting markets. Oil sank below $109 a barrel on concerns about demand.
The challenge from inflation for bellwether retailers weakens the argument that corporate earnings can help stem this year’s rout in stocks. Instead, global equities are sliding toward a bear market as recession fears mount.
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