Sensex plunges 709 pts, Nifty ends around 15,400; Tata Steel, Wipro, RIL sink

Indian indices on Wednesday closed sharply lower, tracking weakness in Asian markets, as investors grappled with concerns over tightening of monetary policy and recession fears.

The Sensex lost 709.54 points, or 1.35%, to close at 51,822.53, while Nifty50 declined 225.50 points to end at 15,413.30. Sectorally, all the sectors ended in the red, with metals, realty, power bleeding the most.

On the 30-stock index, only TCS and PowerGrid managed to remain in the green, while Tata Steel, Reliance, and Wipro were the biggest losers.

On the Nifty50 index, BPCL, Hero MotoCorp, and Divi's Lab registered the biggest gains, while UPL, Hindalco, Tata Steel, JSW Steel were the biggest laggards.

Thyssenkrupp and Tata Steel lost their fight on Wednesday against a European Union antitrust veto of their proposed landmark joint venture three years ago, after Europe's second-highest court rejected their arguments.

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The CBI has registered a fresh case against Kapil Wadhawan and Dheeraj Wadhawan of DHFL for allegedly cheating a consortium of 17 banks led by the Union Bank of India to the tune of ₹34,615 crore, making it the biggest banking fraud probed by the agency, officials said.

The CBI is carrying out searches at 12 locations in Mumbai at the premises of accused in the case, they said.

During its investor day, Dr Reddy's re-iterated its 25%/25% EBITDA/ROCE targets & elaborated on the levers that will help achieve these. Dr Reddy's aims for sustainable double-digit top-line growth, & plans to expand existing business and seek new opportunities such as Biologics CDMO & CGT, highlighted Jefferies in a note.

UK shares fell more than 1% on Wednesday after inflation in the country touched a 40-year-high in May, adding further pressure on the Bank of England to raise interest rates, while falling crude and metals prices sent commodity-linked stocks tumbling.

The exporter-heavy FTSE 100 index fell 1.2% despite weakness in the sterling, while the domestically-focussed mid-cap FTSE 250 index declined 1.4%, erasing nearly all of this week's gains.

Crude oil futures on Wednesday declined by 4.56 per cent to ₹8,166 per barrel as participants trimmed their positions on low demand.

On the Multi Commodity Exchange, crude oil for July delivery fell by ₹390 or 4.56 per cent to ₹8,166 per barrel with a business volume of 3,989 lots.

Globally, West Texas Intermediate crude oil was trading 5.26 per cent lower at USD 103.76 per barrel and Brent crude was 4.79 per cent down at USD 109.16 per barrel in New York.

Equities and oil prices tumbled Wednesday after a brief respite from last week's painful rout across world markets, with recession fears continuing to build as central banks hike interest rates to combat decades-high inflation.

While Asia, Wall Street and Europe all enjoyed healthy gains on Tuesday, analysts warned the downbeat mood on trading floors means the selling is unlikely to end any time soon.

Federal Reserve boss Jerome Powell's two-day testimony to Congress this week will be pored over for an idea about officials' plans for fighting runaway prices, which are being fanned by supply chain snarls, China's lockdowns and the war in Ukraine.

Most observers expect them to hike rates by three-quarters of a point several more times this year, having announced such a move this month -- the sharpest lift in almost 30 years.

Indian rupee today fell to fresh record low of 78.28 against the US dollar amid broad weakness in emerging market currencies. The dollar index hovered near two-decade highs of 104.507 as investors fretted over higher global interest rates and rampant inflation. The Sensex was down 700 points and was near day's lows.

A supply glut is set to hit India’s government bond market, and drive benchmark yields toward 8% by year-end, according to Standard Chartered Plc.

The lender estimates that excess supply of sovereign and state debt may total as much as 6.3 trillion rupees ($81 billion) this fiscal year. That’s likely to further upset a market that’s struggling to cope with rising interest rates and dwindling surplus liquidity, said Parul Mittal Sinha, head of India financial markets at the bank.

“It may keep becoming incrementally more difficult for supply to be absorbed by the market,” said Sinha, who has spent more than a decade trading currencies and rates in London, Singapore and Mumbai. “Supply worries will increase from July and with interest rates normalizing to a higher trajectory and liquidity surplus decreasing –- all these three factors can come together.”

TCPL's transformational journey continued in FY22. It achieved rapid progress in distribution expansion – 2x direct reach in FY20-22 and introduced multiple innovative products to drive premiumization and market share gains. It integrated three acquisitions (Soulfull, Nourishco, Tata Q) quickly, and plans to reap benefits in FY22-24. While adspends have increased to 6.8% in FY22 from 6.3% in FY21, they are still lower than pre-covid levels of 7.7% (avg: FY17-20). TCPL continues to gain market shares – 100bps in Tea and 400bps in Salt. In FY22, working capital increased to 71 days (from 39 days in FY21), FCF generation was Rs4.7bn (0.6% FCF yield) and core-RoE improved 80bps to 13.7% (YoY). Retain BUY; though we reckon near-term business volatility may lead to stock volatility.

India will require $223 billion of investment in order to meet its goal of wind and solar capacity installations by 2030, according to a new report by research company BloombergNEF (BNEF). The goal is part of the five decarbonization targets that had been announced by Indian Prime Minister Narendra Modi at COP26 in November 2021. Additionally, India aims to meet 50% of its electricity demand from renewable energy, thereby making renewable energy especially crucial in meeting the country’s 2030 and 2070 climate goals.

Rating: BUY | CMP: Rs4,269 | TP: Rs4,900

Dr Reddy’s (DRRD) management outlined its strategy to create new (Horizon 2) business models, while growing in existing spaces (Horizon 1) to drive sustainable growth. The company expects double digit revenue growth in the medium term, with aspiration of +25% OPM and 25% RoCE. Horzion 2 will focus on biosimilars, nutraceuticals, Immuno-oncology and new disease management. Most of these initiatives from financials perspective will be visible over next 3-5 years.

Our FY23E/FY24E estimates remain unchanged. We continue to expect steady earnings momentum and pick up in US generic business along with cost optimization. Also, strong pipeline/new launches will drive steady growth in India and RoW markets. We expect 13% EPS CAGR over FY22-24E (ex of Revlimid) and maintain our ‘Buy’ rating with TP of Rs4,900/share. At CMP, DRRD is trading at 19x P/E on FY24E adjusted for gRevlimid.

DCB share price has been in base building phase since beginning of June 2022. However, the banking stock has given some upside for last few sessions and Axis Bank Securities believe that the banking share may continue to attract buyers' interest on every fall in long term. The brokerage report says that DCB share price may go up to ₹115 apiece levels. DCB share price today is around ₹75 that means the brokerage is expecting around 55 per cent rise in this banking scrip.

Shares of Jain Irrigation Systems Ltd on Wednesday rose 17 per cent after the company said its global irrigation business will be merged with Temasek-owned Rivulis in a cash-and-stock deal, a move that will help the firm to reduce its consolidated debt.

Zydus Lifesciences' share buyback offer worth ₹750 crore will commence on Thursday, June 23, 2022 and conclude on Wednesday, July 6, 2022. The company has announced to buyback shares at ₹650 per equity share.

Multibagger stock: Pitti Engineering shares have been giving strong return to its shareholders for years. It is one of the multibagger stocks in 2021 and it has been giving strong upside in 2022 as well. However, the stock has gone through profit-taking phase in last few sessions, which Ventura Securities sees as an opportunity for positional investors. They believe that Pitti Engineering share price may go up to ₹550 in long term from current price of ₹281 apiece levels on NSE. So, if we go by Ventura Securities research report, Pitti Engineering is expected to emerge as one of the multibagger stocks for 2022.

In a letter to shareholders in its annual report for 2021-22, India's private lender HDFC Bank's chief executive officer (CEO) Sashidhar Jagdishan explained the reasons and the timing of the proposed merger with housing finance company HDFC Ltd, subject to various regulatory approvals and will take effect in about 15 to 18 months.

Indian shares fell more than 1% on Wednesday, with the metal index plunging over 4%, while global investors remained concerned over monetary tightening policy and recession fears.

The NSE Nifty 50 index fell 1.09% to 15,468.5, as of 0443 GMT, while the S&P BSE Sensex dropped 0.9% to 52,026.81. Both indexes had clocked their best session in three weeks on Tuesday.

Gold prices struggled for the fourth day in a row in Indian markets as futures on MCX fell 0.3% to ₹50,610 per 10 gram, tracking decline in global rates. Silver futures on MCX slumped 1.3% to ₹60,494 per kg. In four days, gold fell about ₹500 as the precious metal remained in a narrow range. In global markets, gold eased 0.3% to $1,827.03 per ounce as the US dollar hovered near two-decade highs. A firm dollar makes greenback-priced bullion more expensive for buyers holding other currencies.

The safe haven dollar gained ground on most peers on Wednesday as investors turned nervous again about global growth prospects, while the yen hit a fresh 24-year low as elevated bond yields in the U.S. and Europe contrasted with low Japanese interest rates.

The euro fell 0.3% to $1.0493, and sterling was down 0.4% at $1.2228 ahead of British consumer price data, as investors turned to the dollar as part of a move away from riskier assets which also saw a stock market rally fizzle out.

LIC share price: After making a new low of ₹650 per equity share on the NSE, Life Insurance Corporation of India (LIC) share price has been rising for the last three consecutive sessions. LIC shares opened upside for the third day in a row and surged on to hit an intraday high of ₹678.80 apiece levels, logging around 2 per cent rise from its yesterday's close of ₹665.20 per share.

The Central Bureau of Investigation has arrested Sanjay Gupta, managing director of OPG Securities in the matter pertaining to the NSE co-location scam.

Shares of Matrimony.com Ltd surged more than 9% to ₹840 apiece on the BSE in Wednesday's early deals after the company announced share buyback up to ₹75 crore at buyback price of ₹1,150 per share. The company has fixed Monday, July 4, 2022, as the record date for the purpose of determining the names of the equity shareholders who are eligible to participate in the share buyback and their entitlements.

Debt-ridden Future Enterprises Ltd (FEL) has defaulted on payment of interest of ₹6.07 crore for its non-convertible debentures.

The due date for payment was June 20, 2022, said a regulatory filing from FEL.

"The Company is unable to service its obligations in respect of the interest on Non-Convertible Debentures was due on June 20, 2022," it said.

The Kishore Biyani-led Future group firm has defaulted on several payments in the last few months.

Dividend paying stocks: Two public sector banking shares Punjab National Bank (PNB) and Union Bank of India are turning ex-dividend stocks today. As per the information available on official BSE website, the board of directors of PNB has announced a dividend of ₹0.64 per equity share for the financial year 2021-22 whereas Union Bank of India has announced a dividend of ₹1.90 per equity share for FY22. The Union Bank has announced dividend after a gap of 6 years while PNB has announced dividend after a gap of 7 years.

High informal share (~more than 60%) in the industry and expected growth outlook inline with the economy, keep the long-term growth prospects intact for gold loan industry. Inherent strength of branch network and established brands provide strength to incumbents. However, intense competition (especially in H2FY22) has led to lower yields and declining RoEs. The change in profitability outlook has led to lower valuation multiples. As a result, current 1-year forward P/B multiple for Muthoot/Manappuram have declined to 1.8x/0.7x respectively (vs 5-year and 10-year average of 2.2x/1.7x and 1.8x/1.4x, respectively). Our channel checks indicate some systemic improvement in yields for gold loan players and also some signs of stress for new competitors. Rising interest rates and improvement in competitive intensity can improve profits ahead.

The surge in the global bourses helped the domestic market become buoyant, wherein the benchmark index witnessed a vital move since the opening bell and uplifted the overall sentiments. The action certainly portrays the urge of the bulls of D-Street, while favorable conditions. The Nifty50 index finally concluded the day at higher grounds with gains of 1.88 percent, a tad below the 15650 level.

Technically speaking, the index has witnessed a positive crossover from the oversold region of the RSI, leading to a short-term reversal. Even the strong bullish candle on the daily chart construes to be an encouraging sign for the bulls, as the Nifty tested the historical support zone of the 15700. On the front of the level, the unfilled gap of 15380-15420 is expected to cushion any minor correction, while the 15180-15200 zone withholds the sacrosanct zone for the index. On the contrary, the 15750 zone is likely to act as a stiff resistance, followed by the sturdy wall of the unfilled gap starting from the 15900 odd level.

Hence, looking at the recent developments, the market is expected to hover within the mentioned zone until any decisive breakthrough does not take place. Meanwhile, global markets also need to be on a close radar as they might act as catalysts with their developments. We advocate having a pragmatic approach in the market by focusing more on the beaten-up frontline counters for the time being.

The rupee depreciated 4 paise to 78.17 against the US dollar in opening trade on Wednesday, tracking a muted trend in the domestic equity market and a firm American dollar.

However, lower crude prices in the international market supported the local unit and restricted its fall, forex dealers said.

At the interbank foreign exchange, the rupee opened unchanged at 78.13 against the US dollar, then inched lower to quote 78.17, registering a decline of 4 paise over the last close.

In the previous session, the rupee had closed at 78.13 against the US dollar.

Japan's Nikkei index shed early gains to trade flat by the midday break on Wednesday, as simmering worries about the risk of a recession pushed U.S. stock futures lower after big overnight gains on Wall Street.

The Nikkei share average was 0.04% higher at 26,255.95 into the recess, after rising as much as 0.82% and hitting its highest in almost a week at 26,462.83.

6 stocks to buy or sell today — 22nd June

Multiplex operators PVR and INOX Leisure on Tuesday said that they have received clearances for their merger from bourses NSE and BSE. In March, PVR and Inox Leisure announced the merger to create the largest multiplex chain in the country.

A total of two stocks have been put under the ban for trade on Wednesday, June 21, 2022 under the futures and options (F&O) segment by the National Stock Exchange (NSE). The 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.

Asian stocks slipped in volatile trade on Wednesday, failing to extend Wall Street's rally as persistent worries about interest rates and inflation remained a key focus for investors, while the Japanese yen hit a fresh 24-year low against the dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1%, but was still up 1.39% on the more than five-week low it hit on Monday. Tokyo's Nikkei gave up early gains and was flat.

Investors are continuing to assess how worried they need to be about central banks pushing the world economy into recession as they attempt to curtail red hot inflation with interest rate increases.

The main U.S. share benchmarks rose 2% overnight on the possibility the economic outlook might not be as dire as thought during trade last week when the S&P 500 logged its biggest weekly percentage decline since March 2020.

Gold eased on Wednesday, as the dollar and Treasury yields firmed, but prices were range-bound as investors awaited fresh cues on top central banks' monetary policy plans, especially from the U.S. Federal Reserve. Spot gold fell 0.3% to $1,827.69 per ounce by 0101 GMT, extending losses to a fourth straight session. U.S. gold futures dropped 0.5% to $1,830.20. The dollar strengthened, making greenback-priced bullion more expensive for buyers holding other currencies.

Oil steadied in Asia as investors weighed the odds a of slowdown in the US as the Federal Reserve tightens policy against signs global energy markets remain tight.

West Texas Intermediate traded near $109 a barrel after closing up 1% on Tuesday. With investors concerned about the impact of higher US interest rates, Fed Chair Jerome Powell is due to testify before Congress later Wednesday on his quest to reduce raging inflation.

President Joe Biden will call for gasoline tax holiday, a person familiar with the plan said, as prices at the pump keep rising. The average US retail price for the fuel topped $5 a gallon this month after surging more than 50% in 2022.

Oil is headed for a ninth straight quarterly gain as the fallout from the war in Ukraine and increased consumption offset concerns about a broad economic slowdown. Supermajor Exxon Mobil Corp. warned this week that crude markets may remain tight for another three to five years, while Vitol Group, the world’s largest independent oil trader, has flagged rising fuel demand in China.

The Federal Reserve will deliver another 75-basis-point interest rate hike in July, followed by a half-percentage-point rise in September, and won't scale back to quarter-percentage-point moves until November at the earliest, according to economists polled by Reuters.

Last week the Fed hiked the federal funds rate by three-quarters of a percentage point, its largest rate increase since 1994, after official data just a few days earlier showed inflation unexpectedly rose despite expectations it had peaked.

The latest poll results, released on Wednesday before Fed Chair Jerome Powell was due to appear before the Senate Banking Committee as part of his twice-yearly monetary policy testimony to Congress, show momentum is still behind the U.S. central bank doing more, not less, despite rising recession concerns and a steep sell-off in financial markets. Bond yields are up sharply and major Wall Street equity indexes are already trading in a bear market, defined as 20% down from their peak.

In the June 17-21 Reuters poll, nearly three-quarters of economists, 67 of 91, expected another 75-basis-point U.S. rate hike in July. That would take the fed funds rate to a range of 2.25%-2.50%, roughly the neutral level where the Fed estimates the economy is neither stimulated nor restricted.

Stocks finished broadly higher on Wall Street Tuesday, clawing back some of the ground they lost in their worst weekly drop since the beginning of the pandemic.

The rally to start the holiday-shortened week came as investors look ahead to what Federal Reserve Chair Jerome Powell will tell Congress on Wednesday, the first of two days of testimony as part of the central bank’s semi-annual monetary policy report. Last week, the Fed hiked its key short-term interest rate by the most since 1994, the central bank’s latest effort to tame the worst inflation in 40 years.

The S&P 500 rose 2.4%, recouping about 40% of its losses last week. More than 85% of the stocks in the benchmark index gained ground. The Dow Jones Industrial Average rose 2.1% and the Nasdaq climbed 2.5%.