PremiumStocks are primed to drop if the US fails to raise the debt limit and delays government payments. Meanwhile, markets continue to be buffeted by tension between China and the US and its allies. President Joe Biden said on Sunday he expected ties with China to improve “very shortly" after a spat over an alleged spy balloon earlier this year derailed relations.
India's benchmark indices ended higher for the second straight session, led by gains in IT, pharma and metal shares. A rise in global equities also helped.
Global shares largely ticked higher as investors awaited the resumption of talks on US debt ceiling. Markets are closely watching a pivotal meeting set for later in the day at the White House between President Joe Biden and House Speaker Kevin McCarthy on the debt talks. A default on the U.S. debt would almost surely cause a recession in the American economy, which would have damaging effects on global economies.
Back home, the Sensex rose 234 points to end the day at 61,963.68, while Nifty climbed 100.55 points to 18,303.95.
Adani Enterprises, Adani Ports, Divis Laboratories, Apollo Hospitals and Tech Mahindra were the top gainers on Nifty, while Nestle India, Hero MotoCorp, Eicher Motors, Axis Bank and Tata Motors fell the most.
Metal index rose over 3%, IT index rose 2%, while pharma and healthcare indexes rose 1% each.
Tata Consultancy Services (TCS), India’s largest information technology (IT) services firm by market cap, on Monday announced the launch of TCS Generative AI — a suite of applications that it will offer its clients. The company is partnering with Google to deploy its generative artificial intelligence (AI) services for clients, and will use the latter’s generative AI tools such as Vertex and Model Garden alongside its own tools for offering the service.
In a press statement, TCS said that it will use “client-specific contextual knowledge" to jointly build generative AI applications for clients. These collaboration efforts will be offered in five of TCS’ global innovation hubs in the US, Canada, The Netherlands and Japan.
In a relief for Go First airline, the National Company Law Appellate Tribunal has upheld the National Company Law Tribunal's order on the Wadia Group-backed airline, thus keeping the moratorium in place for the airline's aircraft.
In the petition filed by one of the lessors, SMBC Aviation Capital, the tribunal has asked the lessors to approach NCLT to further appeal on the order dated 10 May.
In its petition before the appeals court, SMBC had alleged that the initiation of voluntary insolvency by Go First was, in fact, a ‘fraudulent exercise’.
Engineering behemoth Larsen & Toubro (L&T) on Monday said it has bagged large orders worth over ₹2,500 crore in the domestic and offshore markets.
L&T classifies projects worth ₹2,500 crore to ₹5,000 crore as large orders.
The power transmission & distribution (PT&D) business of its arm Larsen & Toubro Construction has secured large orders to be set up on engineering, procurement and construction (EPC) basis, it said in a statement.
In Saudi Arabia, the business has secured two orders to establish 380kV overhead power transmission lines connecting prominent cities situated on the Red Sea coast. Another order is to design, supply, and construct a 380kV substation in the central region of Saudi Arabia, the company said.
India's flagship overseas oil firm ONGC Videsh has got a new partner in Oil India Ltd to replace a reluctant IndianOil (IOC) for the potential acquisition of a 50% stake in Tullow Oil Plc's $3.4 billion oilfield project in Kenya, according to people with knowledge of the matter.
But the OVL-OIL duo now faces competition from super-aggressive Chinese energy giant Sinopec which has entered the fray taking advantage of the delay on the Indian part in finalising the deal.
Originally, ONGC Videsh, the overseas arm of state-owned Oil and Natural Gas Corporation (ONGC), was interested in buying out half of the stakes that Tullow, Africa Oil Corp and TotalEnergies SE held in the Lokichar oilfield in Kenya.
Oil prices slipped on Monday as caution around U.S. debt ceiling talks and concerns about demand recovery in China offset support from lower supplies from Canada and OPEC producers.
Brent crude futures fell 73 cents, or 0.97%, to $74.85 a barrel, while U.S. West Texas Intermediate (WTI) crude for July delivery, the more actively traded contract, slipped 73 cents, or 1.02%, to $70.96.
The June WTI contract, which expires later on Monday, fell 87 cents to $70.68 a barrel.
European stocks were largely unchanged at open on Monday, as concerns about a U.S. debt ceiling deal and outlook for U.S. and European monetary policies weighed on sentiment after a strong run in several of the region's markets.
The pan-European STOXX 600 index was flat after touching a more than one-year high on Friday.
Banks and miners were among the biggest sectoral decliners, while healthcare stocks rose.
Germany's blue-chip DAX slipped 0.1% after hitting an all-time high in the prior session.
European chip stocks came under pressure after China's cyberspace regulator said that products made by U.S. memory chipmaker Micron Technology Inc had failed its network security review and it would bar operators of key infrastructure from buying from the company.
Shares of gold loan provider Muthoot Finance Ltd surged over 7% on Monday, largely driven by a rebound in gold loan assets under management (AUM) in the March quarter. The surge comes after a period of flat growth over three successive quarters. The quarter's growth can be attributed to the escalating gold prices, pushing the sequential gold AUM growth to 9%.
The management stated that demand revival and reduction in the competitive intensity, especially banks, have come down, aiding AUM growth in the March quarter (Q4FY23). Further, Muthoot managed to increase its net interest margin (NIM) by 40 basis points, bringing it to 12.26% in Q4. This upswing was achieved while maintaining control over the cost of funds. (Read here)
Suzlon Enegry on Monay said it has bagged a significantly large order for its 3 MW series of wind turbines from Serentica Renewables, a decarbonization platform that seeks to accelerate the energy transition for energy‐intensive industries.
Suzlon will install 68 wind turbine generators (WTGs) with a Hybrid Lattice Tubular (HLT) tower and a rated capacity of 3 MW each for Serentica’s 204 MW wind power project coming up at Koppal in Karnataka.
The project is expected to commission by early 2024.
This is the fifth order for the Suzlon 3 MW series in less than a month and as part of the agreement, Suzlon will supply the wind turbines (equipment supply) and execute the project including erection and commissioning. Suzlon will also provide comprehensive operation and maintenance services post-commissioning.
CCAvenue, a payments aggregator in the Middle East and brand of Avenues World FZ LLC, a subsidiary of Infibeam Avenues, has partnered with PayPal to offer global payment acceptance for businesses in Middle East & North Africa (MENA) region. This allows MENA businesses the convenience of a single partner for all their payment requirements and streamlines processes for a seamless payment experience.
This partnership enables entrepreneurs and businesses across the MENA region to sell their products in 200+ countries globally to over 435 million worldwide active PayPal accounts, broadening their global reach. With the inclusion of PayPal payment option, recent research has shown that businesses can see approximately a 30% increase in sales, and customers who use PayPal spend an average of 43% more money at the retailer overall.
PhonePe, the digital payments and financial services company, has secured an additional $100 million investment from General Atlantic, a leading global growth equity firm, as part of its ongoing fundraise. This latest tranche brings the total investment from General Atlantic and its co-investors to $550 million. The investment reaffirms General Atlantic’s conviction in PhonePe's business and growth potential.
With this latest primary infusion from General Atlantic, PhonePe has now raised a total of $850 million of primary capital in the current round.
PhonePe is valued at an estimated $12 billion and among the country's most highly-valued startups.
OPEC Secretary General Haitham Al Ghais said on Monday that underinvesting in the oil and gas sector could cause market volatility in the long term and imperil growth.
He also said the world needs to focus on reducing green house gas emissions rather than replacing one form of energy with another, stressing that major investments were needed in all energy sectors.
"That is the truth that needs to be spoken," Al Ghais told at the Middle East Petroleum and Gas Conference in Dubai.
OPEC estimates that the world needs $12.1 trillion in investments to meet rising oil demand in the long term.
With global oil demand growth at around 8 million barrels per day (bpd), the world could face a supply problem as Western sanctions on Russian oil curtail production growth, Fereidun Fesharaki, chairman of the FGE Consultancy, said at the same event.
The Reserve Bank of India’ s (RBI) move to withdraw the highest denomination currency note from circulation may improve systemic liquidity and is likely to be short-term positive for both banks and NBFCs, economists and analysts said.
The central bank on Friday had announced that it will withdraw the ₹2,000 denomination banknotes from circulation and advised banks to stop issuing these banknotes with immediate effect. However, but these notes will continue to remain as legal tender and the general public can deposit or exchange them from banks by September 30, 2023.
“The policy move to withdraw ₹2,000 denomination notes will likely result in a temporary spurt in system liquidity owing to a higher deposit base – part of which may find its way to a durable deposit base/liquidity addition," said Madhavi Arora, Lead Economist at Emkay Global. (Read full story here)
On better asset quality, profitability and growth, Bandhan Bank had a strong quarter. Key positives were: 1) a sharp increase in margins, 2) moderation in provisions, 3) strong growth in loans, driven by its EEB book, 4) strong traction in CASA, 5) normal collection efficiency and 6) drop in the overall stress pool. With strong credit growth expected and normal credit costs, earnings would improve.
We retain our Buy rating, with a 12-mth TP of Rs325, valuing the stock at 1.9x P/ABV on the FY25e book.
Shares of Adani Group companies, led by the flagship Adani Enterprises, surged for the second straight day on Monday after a Supreme Court panel said it has found no regulatory failure on price manipulation of the stocks.
Adani Enterprises surged, and was the top gainer on the Nifty. The stock was at ₹2,147 apiece, up 9.76% from previous close.
Adani Ports traded 7.16% higher at ₹737.4, while Adani Power was at ₹248.00, up ₹11.80.
Adani Green Energy Limited traded at ₹942.40, up 5%, and Adani Total Gas was at ₹721.35, also up 5%.
Adani Transmission rose 5%, Adani Wilmar was up 8.9%.
Credit Suisse AG staff are preparing to sue the Swiss financial regulator over $400 million of bonuses that were canceled after the troubled lender's rescue by UBS Group AG, the Financial Times reported on Monday.
Quinn Emanuel and Pallas, law firms which are already suing Swiss regulator Finma on behalf of investors who owned AT1 bonds, have received multiple requests from senior managers at Credit Suisse to take legal action on their behalf, the report said.
Credit Suisse declined to comment, while Law firms Quinn Emanuel, Pallas and Finma did not immediately respond to Reuters' request for comment.
The near-term uncertainty in the global equity markets is likely to continue since there is no resolution yet on the US debt ceiling issue. A strong rally will happen only after this impasse is out of the way.
The undercurrent of the market is bullish. Bank Nifty is likely to gain more traction since the ₹2000 note withdrawal is positive for banks. It will add to the deposits of banks and increase their CASA thereby boosting their bottom line.
An important message for investors is that interest rates have peaked, globally as well as in India, and this is positive for equity markets in the second half of CY 2023. Rate sensitives like financials, real estate/construction and autos will benefit from a probable rate cut by end 2023.
From the valuation perspective, IT stocks are good value buys now.
The board of directors of Siemens has approved the sale and transfer of the company’s low voltage motors and geared motors businesses including the respective customer service business to Siemens Large Drives India Private Ltd, as a going concern on a slump sale basis.
The company has signed definitive agreements for acquisition of Electric Vehicle division of Mass-Tech Controls Private Limited on a going concern basis by way of slump sale, subject to fulfilment of condition precedents as agreed between the parties and receipt of requisite regulatory, statutory, and other approvals / consents.
Prabhudas Lilladher has an ACCUMULATE rating on the stock, with target price at ₹4,018/shr.
In Q4, Muthoot Finance (MUTH) reported NIM expansion of ~40bps QoQ to 12.3%, as yields seem to have bottomed out (18.48% vs 18.22% in Q3FY23). PAT at ₹9.0bn (up .1%QoQ and down 6.0% YoY) came below our estimates of ₹9.3bn, on account of higher opex and provisions. Asset quality deterioration came as a negative surprise, because Stage-3 assets rose sharply to 3.79% vs 2.58% in Q3FY23 as an accommodation was given to customers for few more months on back of high collateral value. Gold AUM, on the other hand, will continue to see 15% YoY growth in FY24 and FY25, as MUTH managed to post its highest ever quarterly gold disbursement of Rs518.50bn.
Given strong gold AUM growth of 8.9% QoQ amid heavy competition from banks and new age fintech players we maintain our ‘BUY’ rating and TP at ₹1,315 on (2.2x Sep’24E PABV). Re-rating can happen if company sustains this growth momentum and shows improvement in asset quality.
A consortium led by Tata Consultancy Services Ltd has received an advance purchase order valued over ₹15,000 crore from BSNL for the deployment of a 4G network across India, the company said in a filing to the stock exchanges.
PM Narendra Modi wrapped up his time at the G7 Summit in Hiroshima after meetings with British Prrme Minister Rushi Sunak and Brazil’s President Lula Inacio da Silva.
“The two leaders reviewed their Comprehensive Strategic Partnership, including taking stock of progress in India-UK FTA negotiations. Leaders agreed to deepen cooperation across a wide range of areas, such as trade & investment, science & technology, higher education, and people to people relationship," the Ministry of External Affairs said, in a press release detailing the Prime Minister’s meeting with Sunak.
Modi and Sunak first met on the sidelines of the G20 Summit in Bali last year and also held bilateral talks in November 2022.
India’s Prime Minister also met with Lula Inacio da Silva, Brazil’s President who took office for a third term at the start of this year.
Shares of Vodafone Idea, Shree Cements, BPCL, Zomato, JSW Steel, among others, will be in focus today.
Shree Cements, BPCL, PB Fintech, and Aditya Birla Fashion are set to announce their fourth quarter results today.
Markets regulator Securities and Exchange Board of India (Sebi) is pitching for anti-avoidance provisions which will enable the regulator to go after corporates devising innovative arrangements to avoid compliance with the share market rules.
In submissions made to the Supreme Court appointed committee to look into the Adani saga, the market regulator said no matter how strict the laws are, there will always be market participants who would look to comply with laws in letter but not in spirit. Hence, the markets regulator urged the committee to recommend creation of anti-avoidance provisions that give Sebi powers to go after entities looking to avoid complying with the law, the committee report showed. (Read here)
On Friday, after the gap-up opening, Nifty traded below 18,100 after making a day high of 18,180 & after making a day low of 18,073 it again recovered & closed above the 18,200 level in the morning session. Nifty formed a positive hammer candle on the daily chart. Till the index can hold at 18,000 level, the index can be expected to bounce back.
While on the downside, if Nifty traded below 18,000, followed by 17870. Intraday traders can look for long opportunities only above 18,270 if the closing comes above 18,270 in 15 min chart. Traders can look for fresh shorts only if Nifty breaks the 18,000 level & remains below for 15 min to ensure short.
Government bond yields are set to open lower on Monday as the Reserve Bank of India's decision to withdraw the country's highest value currency notes could lead to an increase in banking system liquidity and improved appetite for fixed income assets.
The 10-year benchmark 7.26% 2033 bond yield is aeen in the range of 6.95% to 7.01% after closing at 7.0106% in the previous session. The yield ended higher on a weekly basis last week, after easing in the previous four.
The Securities and Exchange Board of India (Sebi) has proposed drastic changes to price band formulation for stocks traded on the derivatives segments of the National Stock Exchange (NSE) and BSE to strengthen volatility management and minimise information asymmetry among market participants. The proposal comes in the wake of heightened volatility in Adani Group stocks like Adani Enterprises and Adani Ports which were battered after US short-seller Hindenburg Research alleged price manipulation and fraud against the ports-to-renewable-energy conglomerate in a 24 January report. The group has denied the allegations. (Read here)
SGX Nifty futures on the Singapore Exchange were down 19.5 points at 18,218.50 in early deals on Friday, hinting at a weak start for Indian equities.
On Friday, the Sensex had risen 298 points to close at 61,729.68, while Nifty rose 73.40 points to 18,203.40.
Asian stocks and Wall Street futures fell on Monday as U.S. debt ceiling negotiations approached crunch time after stalling last week. Lingering worries around the banking industry and fresh geopolitical worries capped sentiment.
U.S. President Joe Biden and House Republican Speaker Kevin McCarthy will meet to discuss the debt ceiling on Monday, less than two weeks before the June 1 deadline after which Treasury expects the federal government will struggle to pay its debts.
A failure to lift the debt ceiling would trigger a default, sparking chaos in financial markets and a spike in interest rates.
In early trade on Monday, S&P 500 futures lost 0.1% while Nasdaq futures were flat.
MSCI's broadest index of Asia-Pacific shares outside Japan was last flat, struggling for direction. Japan's Nikkei was also mostly unchanged and Australia's resources-heavy shares slipped 0.2%.
On Friday, US stocks had ended lower as negotiations to raise the US debt ceiling were put on hold.
The Dow Jones Industrial Average fell 109.28 points, or 0.33%, to 33,426.63, the S&P 500 lost 6.07 points, or 0.14%, to 4,191.98 and the Nasdaq Composite dropped 30.94 points, or 0.24%, to 12,657.90.
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