IT, Realty remain strong as Sensex, Nifty end in green; Infosys, HCL Tech shine

Indian shares held firm on Monday with benchmark indices gaining around 0.2% as investors awaited directions from key central bank meetings in a data-heavy week, starting with the domestic retail inflation reading later in the day.

The blue-chip Nifty 50 index was up 38 points to close at just above 18,600, at 18,601, while the benchmark S&P BSE Sensex rose 100 points to end at 18,724.

Ten of the 15 major Nifty sectoral indexes advanced, with information technology (IT) rising more than 1%. The IT index had lost nearly 2% in the past two sessions. Realty and Media indices also added almost 1.5% per cent each with Metal climbing 0.61% and Oil & gas 0.85% in today's session. Bank and Pharma ended in the flat-to-red zone.

BPCL jumped more than 3% and topped the stock charts. Infosys and HCL Tech climbed above 2% each and were major gainers in today's session. Among laggards, Powergrid shed 1.27% and L&T shed almost 1% and found themselves at the bottom of the charts.

Japan's Nikkei share average rose for a second straight day buoyed by a rally in shares of domestic drugmakers and chip-related companies, and a strong end to the week for Wall Street on Friday.

The Nikkei finished the day up 0.52%, after sharply paring gains at the start of the afternoon session only to make up most of that ground in a grind higher into the close. The broader Topix rose 0.65% nudging towards its 33-year top.

China and Hong Kong shares closed roughly flat on Monday as investors brace for fresh data this week, which will likely add to concerns over the economic health of the world's second-biggest economy.

China's blue-chip CSI300 Index closed up 0.2%, while the Shanghai Composite Index lost 0.1%. In Hong Kong, the benchmark Hang Seng Index was little changed.

European shares edged higher on Monday at the start of a week packed with major central bank policy meetings, while shares of Swiss drugmaker Novartis rose after it agreed to buy U.S.-based Chinook.

UK's main stock indexes edged up on Monday as a rebound in Croda International led the chemicals sector higher, while traders awaited a slew of domestic economic data and interest rate decisions from major central banks this week.

As per analysts at Antique Stock Broking, the food category continues to witness moderation due to extreme heat waves, while the beverage category is witnessing strong demand. While soaps, detergents and summer portfolio continue to do better, personal products are yet to witness material recovery.

Going ahead, analysts expect FY24 earnings for the FMCG sector to be led by margin recovery, while FY25 earnings will be driven by volume growth and moderate EBITDA margin expansion. (Read More)

According to a Reuters report, Rakesh Gangwal, the founder of the budget airline IndiGo, and his family are planning to sell off a stake of 5 to 8% in Interglobe Aviation.

The estimated value of this block deal is around ₹75 billion. As of March 31, Rakesh Gangwal and his wife, Shobha Gangwal, hold 13.23% and 2.99%, respectively in InterGlobe Aviation, while their Chinkerpoo Family Trust owns a 13.5% stake, as per BSE data.

As of 2:50 pm, IndiGo's shares on the BSE were down 2.51%  at ₹2,400. However, the stock has seen a year-to-date increase of 17.45%.

In a statement released on Monday, the Indian government announced that it has allocated a substantial amount of 1.18 trillion rupees ($14.31 billion) in taxes to state governments. The objective behind this transfer is to accelerate capital spending across the country.

While this transfer follows the usual monthly distribution of federal taxes to states, the allocated amount surpasses the typical monthly devolution of 591.40 billion rupees, as confirmed by the government.

In an internal memo circulated after the completion of the takeover of its former rival, UBS announced changes to the executive board of Credit Suisse AG on Monday.

Ulrich Koerner, Chief Executive of the newly formed UBS subsidiary Credit Suisse AG, stated that Chief Financial Officer Dixit Joshi and General Counsel Markus Diethelm would be among the departing executives.

The memo also mentioned a series of new appointments and confirmed that Andre Helfenstein, who currently leads Credit Suisse's domestic business, will continue in his role.

Cheaper stainless steel imports from China have flooded the Indian market, leading to small and medium enterprises operating at just 30% of their capacity because of weak demand for local products.

Small and medium enterprises producing 200 series stainless steel flat products were operating at less than a third of their 1.5 million tonne (mt) capacity as of the end of March, the lowest utilization level in the past six years, according to industry data shared with the government and reviewed by Mint. (Read More)

According to a government order seen by Reuters, India has extended the timeline for power plants reliant on imported coal to operate at full capacity until the end of September. This decision adds over three months to the previous timeline.

Several power plants in India, including those owned by Adani Power and Tata Power, depend on imported coal but were not running at maximum capacity. This situation has contributed to the challenges faced by the country in meeting its power demand, particularly during an ongoing heat wave.

JTL Industries' shares made their debut on the National Stock Exchange (NSE) on Monday, starting at ₹345 per share. This comes after the company had already been listed on the Bombay Stock Exchange (BSE) and recently obtained approval to list all of its shares on the rival exchange.

On the NSE, the stock opened 2.11% higher at ₹245. Throughout the trading day, it reached a peak of ₹345.85 and a low of ₹337.50.

In a regulatory filing dated June 9, JTL Industries announced that it had applied for the listing of its equity shares on the NSE and subsequently received approval from the exchange to commence trading.

Dayanand Mittal from JM Financials Sectoral updated on Telecom sector: In 4QFY23, ARPU was flattish QoQ for all telcos as ARPU growth due to strong MBB (Mobile Broadband) upgrades was offset by the impact of 2 lesser days in Q4FY23. Bharti continues to lead with ARPU of INR 193 followed by Jio at INR 179 (or ~INR 172 ex-FTTH) and VIL at INR 135; the Bharti management said ARPU was already INR 195, assuming the normal 91 days in the quarter. Hence, EBITDA was up only 2% QoQ for Bharti/Jio while it was up only 1% QoQ for VIL due to continued subscriber (subs) loss. However, capex intensity was high for Bharti and Jio in 4QFY23 and is likely to remain elevated in the next 2-3 quarters due to aggressive 5G rollouts; while it is muted for VIL given the delay in fund-raise. MBB upgrades are likely to continue to be the catalyst for increasing ARPU in the near term amidst likelihood of delay in tariff hike to mid-2024 (post the national elections); however, tariff hike remains the key driver for ARPU improvement in the long term amidst limited monetisation opportunities for 5G. Telcos’ management provided no clarity on the tariff hike timeline though they reiterated the need for it to earn a respectable RoCE. We maintain BUY on Bharti (TP of INR 940) as we expect a structural uptrend in industry ARPU given the consolidated industry structure and future investment needs.

During a meeting between India's trade minister, Piyush Goyal, and UAE's foreign trade minister, Thani bin Ahmed Al Zeyoudi, it was announced on Monday that India and the United Arab Emirates have reached a mutual agreement to increase bilateral trade between the two nations, excluding petroleum, to $100 billion by 2030.

In addition, the central banks of both countries were engaged in discussions regarding a rupee-dirham trade mechanism, as revealed by Minister Piyush Goyal.

Future Generali India Life Insurance announced its business and financial accomplishments, for FY23 and said that its new business premium for FY23 has touched ₹699 crore against ₹457 crore in FY22, growing by 53%.

The company said in its statement that it has demonstrated remarkable progress across several key performance indicators. In contrast to the same period last year, the company has achieved a total premium of ₹1,758 crores in FY23 with a noteworthy 23% rise as compared to FY22 at ₹1,433 crores. 

Furthermore, the statement added that the renewal premium has witnessed an 8% growth touching ₹1,059 crore. The company said that this illustrates the company's effective retention of its existing policyholders as compared to FY22 at ₹ 977 Crores.

The company also witnessed a 18% growth at ₹7,075 crores in AUM.

Indian homebuyers continue to prefer larger flat sizes, a trend seen during the Covid-19 pandemic, as people started working from home and sought bigger spaces, according to property consultant Anarock.

“Before covid-19, apartment sizes were shrinking annually to meet the demand for compact homes prevalent then," Anarock Chairman Anuj Puri said. “The central concerns were affordability and millennials‘ preference for low-maintenance homes. 2020 saw an abrupt reversal of buyer preferences." (Read More)

Prathamesh Mallya, DVP Research, Non-Agro Commodities & Currency, Angel One Ltd

GOLD Outlook: We expect gold to trade lower towards 59520 levels, a break of which could prompt the price to move lower to 59390 levels.

CRUDE Outlook: Crude prices are projected to remain low for the time being, as disappointing Chinese data and weak demand sentiment continue to cast shadow over the prices.

BASE METALS Outlook: We expect copper to trade lower towards 719 levels, a break of which could prompt the price to move lower to 721 levels.

Sahana System Ltd had a successful entry on NSE SME on Monday, with its shares being listed at a premium of more than 20% compared to the issue price. Each share of Sahana System was listed at ₹163, representing a significant 20.7% increase from the initial price of ₹135 per share.

During the period from May 31 to June 2, Sahana System's IPO garnered a total subscription of 9.99 times. The retail category saw a subscription of 12.97 times, while the QIB portion was subscribed 9.70 times. Additionally, the NII category recorded a subscription of 7.07 times. (Read More)

Puneet Pal, Head-Fixed Income, PGIM India Mutual Fund: The demand for longer duration Indian Bonds has been pretty strong since the beginning of this financial year as Indian macro-economic variables have remained stable. This is in contrast to the developed market bond yields which have inched higher close to their march highs as expectations of rate cuts got scaled down. We expect consolidation in the Indian bond yields and expect the 10yr bond yield to trade in a range of 6.95% to 7.20% over the next one month. We think it is the right time for investors to increase allocation to Fixed Income as monetary tightening is in its last phase globally with a strong possibility of rate cuts in the last quarter of CY23 in US with India following suit in early CY24.

Investors with medium to long term investment horizon can look at funds having duration of 3-4yrs with predominant sovereign holdings as they offer a better risk reward currently. Investors having an investment horizon of 6-12 months can look at money market funds as yields are attractive in the 1yr segment of the curve.

During Monday's trading session, the share price of TVS Motors reached a fresh 52-week high following news of the company's Singapore-based subsidiary acquiring an additional 25% stake in Swiss E-Mobility Group (SEMG), based in Switzerland. The shares of TVS Motors commenced trading at ₹1,362.10 per share on the BSE, marking a 1.8% increase. However, the stock experienced some profit booking thereafter. (Read More)

Sameer Bhise of JM Financials: Ujjivan SFB | Investor and Analyst meet 2023 – Key takeaways Company Update - BUY at INR 38

Ujjivan SFB at its Investor & Analyst Meet emphasized on its strategy towards building a mass market bank through a) continued focus on underserved customer segments (7.7m customers), b) creating a stable liability franchise with focus on retail deposits c) increasing share of secured loans in the portfolio to ~40% and d) further strengthening collection efficiency mechanisms to ensure strong asset quality. Incrementally, affordable housing is likely to drive the scale of secured loans and the mgmt. intends to scale up the portfolio to ~INR90bn (and additional INR10bn of micro-LAP portfolio) from current levels of INR 34bn. Mgmt is aspiring for an overall asset base growth of >25% in FY24 (with secured book likely to cross 30%). With respect to liabilities, Ujjivan SFB is targetting a 35% CASA mix with a 70% share of retail deposits (along with a 80% CD-ratio) while growing deposits at 30%+ CAGR over the next 3 years. This is likely to be led by continued multichannel approach, focus on wide range of customer segments and strengthened analytics. Ujjivan SFB also remains confident on its credit underwriting and collection efficiencies to build a high quality book with targeted credit costs of &lt;150bps on a steady state basis (and<100bps for FY24). Overall, mgmt. aspires to deliver 20%+ RoEs FY24 onwards on a steady state basis. We believe Ujjivan SFB is a key beneficiary of the upswing in the microfinance sector. Incremental rerating will be contingent on consistent growth and profitability delivery across product segments along with continued improvement in the liabilities franchise. Current valuations at 1.1 FY25e P/BV and 4.7 FY25e P/E are inexpensive given return ratios of 3.2%/26.4% RoA/RoE in FY25E. Maintain BUY.

TARSONS PRODUCTS LIMITED - Initiating Coverage - With strong growth and capex ( ₹1.9bn in FY23) , we are expecting a significant improvement in its ROCE/ROE as the company ramps up its capacities. With current RoCE/RoE of 15.3%/14.2% in FY23 (from peak of 35.3%/28.2% in FY21) we are anticipating the same to increase to 19.8%/17.4% respectively by FY25E. The company’s asset turnover will continue to remain low at around 0.8x by FY25E as it aims to double its gross block by FY25E vs FY22. At full capacity the new plant is expected to generate revenue of ₹5,000 Mn as a result along with improvement in return ratios we are expecting Tarsons Revenue/EBITDA/PAT to grow at 25.9%/28.6%/32.3% CAGR over FY23-25E with Gross/EBITDA/PAT margins gradually improving to 79.2%/47.8%/31.5% by FY25E owing to a) broadening addressable market owing to strong domestic growth, b) market share gains amidst rebound in its end-user markets (diagnostics, pharma/CROs, academia), c) enhanced product mix post capex particularly in fastest growing PCR/Cell culture segment, d) pricing and distribution advantage over large MNCs players. We initiate BUY on Tarsons Products with a one year target price of ₹770.

In early trade on Monday, the share price of Cochin Shipyard experienced a significant surge of almost 6% following the company's successful acquisition of a contract worth approximately ₹300 crore from the Ministry of Defence. The stock price soared by as much as 5.92% and reached an intraday peak of ₹572.30 per share on the BSE.

Cochin Shipyard has been declared as the L1 bidder by the Indian Navy for the MR/Mid Life Upgrade of an Indian Naval Ship.

Sequoia Capital plans to sell its stake in Go Fashion, the parent company of Indian clothing brand Go Colors, through a block deal. The stake being sold amounts to up to 10.18%. The report revealed that the floor price for this stake sale is set at ₹1,135 per share, representing a 5% discount compared to the last closing price.

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services: This week, markets will react to a flurry of important economic data. US inflation data on 13th, FOMC rate decision on 14th, ECB rate decision on 15th and India’s IIP and May CPI data today will give an indication of the likely economic and market direction. Markets are approaching these data points with cautious optimism as reflected in bullish market conditions.

An important feature of the current market trend is the outperformance of the mid and small-cap indices which are up by 17% and 20% in the last 2months. For individual investors, chasing mid and small- caps can turn out to be a risky game. Therefore, the best way for retail investors to play this trend is through SIPs in these categories.

Nifty has the potential to move to record highs. Autos have emerged as the best turnaround story this year. Apart from financials, capital goods, construction and telecom are on strong wicket. New age digital companies, which have staged a smart turnaround, are likely to remain resilient.

The Indian rupee started flat against the US dollar. This was amid weakness in Asian currencies. The local unit opened at 82.44 a dollar, 2 paise higher as compared to Friday’s close of 82.46.

Mena Mani Industries said that the board of directors is going to consider a stock split in its board meeting scheduled on 12th June 2023 i.e. today. (Read More)

In an internal memo reported by Bloomberg News, Credit Suisse CEO Ulrich Koerner shared that the emergency takeover of the bank by UBS is expected to be finalized on Monday, June 12. Koerner expressed his optimism for a bright future as the takeover enters its concluding phase.

As part of the concluding steps in the imminent takeover, UBS AG plans to enforce stringent limitations on bankers from Credit Suisse Group AG, as reported by the Financial Times.

Titagarh Rail Systems Ltd, previously known as Titagarh Wagons, has announced that its board has given approval for a proposal to raise ₹288.80 crore through preferential allotment of shares to Smallcap World Fund Inc.

Upon the completion of the share allotment, Smallcap World Fund Inc will hold an approximate stake of 5.98 percent in the wagon manufacturing company.

As per a regulatory filing, the company disclosed that during a board meeting held on Saturday, they deliberated and approved the plan to raise funds. This will be achieved by issuing up to 76 lakh equity shares with a face value of ₹2 each to Smallcap World Fund Inc, which is a part of Capital Group and is recognized as one of the largest financial investors. The allotment will be made on a preferential basis.

State Bank of India to raise up to ₹50,000 crore this fiscal year through various debt instruments, Indian Bank/ICICI Lombard/Cyient to trade ex-dividend, Allcargo Logistics acquires 30% stake in Gati-Kintetsu Express, TVS Credit raises ₹480 crores from Premji Invest, Titagarh Wagons to raise 288.8 crore via preferential allotment, Sequoia Capital plans to sell its stake in Go Fashion, L&T Finance aims for CAGR of over 25% through retail financing, founder and director of Star Health and Allied Insurance Company resigns, disinvestment plan of Container Corporation of India on hold, NCLT rejects IDBI Bank's insolvency plea against Anik Industries. (Read More)

State Bank of India (SBI) said its board has given approval to a proposal to raise up to ₹50,000 crore this fiscal year through various debt instruments.

SBI intends to raise the funds by issuing long-term bonds, Basel III-compliant Additional Tier 1 (AT-1) bonds, and Basel III-compliant Tier 2 bonds, in private placements to either Indian or overseas investors, subject to government approval, wherever required. The state-run lender’s central board approved raising the funds either in rupees or any other convertible currency, it said in an exchange filing. (Read More)

Bengaluru-based Jana Small Finance Bank will resubmit its draft prospectus later this month after an earlier attempt to launch an initial public offering (IPO) was stalled in the wake of the covid pandemic, said a person in the know.

After filing the draft papers, the bank seeks to raise ₹200 crore in a pre-IPO fundraising. It also intends to increase the size of its IPO to ₹1,500 crore. The SFB had filed draft papers for a proposed ₹1,200-crore IPO on 31 March 2021. (Read More)

Indian Bank has declared a final dividend of ₹8.6, whereas ICICI Lombard has declared a final dividend of ₹5.5. Cyient Ltd declared a final dividend of ₹16. Apart from these, Tata Investment Corporation, Reliance Industrial Infrastructure and Apcotex Industries will be also be trading ex-dividend in today's session with a declared dividend of ₹48, ₹3.5 and ₹3.5, respectively.

The sector needs blockbusters such as Pathaan to boost footfalls. Jinesh Joshi, analyst at Prabhudas Lilladher said, “Q4FY23 had Pathaan, which garnered box office collections of over ₹500 crore. So far in Q1FY24, there is no such blockbuster, though hopes are high from Adipurush. If the movie can clock say ₹500 crore, then Q1 looks good and PVR’s footfalls can breach that of Q4."

PVR intends to focus on profitable growth and plans to open 150-175 additional screens in FY24, which is slightly lower than its earlier guidance. (Read More)

Free trade talks between India and Israel have hit the skids over the movement of Indian IT professionals and the perception that Israel would stand to gain more from the mismatch in the size of the two economies, two people privy to the negotiations said.

The first disagreement stemmed from a cap on the movement of Indian IT professionals in Israel due to the country’s low labour absorption capacity. The issue assumed significance as the negotiations were largely centred around the services sector, with most goods trade having already been liberalized.

“The problem is the size difference. India expects Israel to allow Indian IT workers to work in Israel. Israel cannot allow too many because of its internal unemployment issues. Israel just gave India an allowance of 42,000 workers—34,000 for construction and 8,000 caregivers,” said one of the persons cited above. (Read More)

According to reports, Sequoia Capital plans to sell its stake in Go Fashion, the parent company of Indian clothing brand Go Colors, through a block deal. The stake being sold amounts to up to 10.18%. The report revealed that the floor price for this stake sale is set at ₹1,135 per share, representing a 5% discount compared to the last closing price. The total value of the block deal is estimated to be ₹624 crore. As of March 31, 2023, Sequoia Capital's India investment arm held a total of 54,98,875 shares, equivalent to a 10.18% stake in Go Fashion, as per the shareholding pattern shared with the BSE.

The S&P 500 closed higher on Friday but off session highs, as a Tesla rally failed to galvanize the broader market on the eve of the Federal Reserve's policy meeting and inflation data next week.

Tesla Inc shares climbed 4.06%, clinching their longest winning streak since January 2021, after General Motors Co agreed to use the company's Supercharger network. GM shares rose 1.06%.

The benchmark S&P 500 built on Thursday's 20% rise from its Oct. 12 finishing low, heralding the start of a new bull market as defined by some market participants.

"It's maybe the most hated bull market in the history of bull markets," said Tim Holland, chief investment officer of investment platform Orion OCIO.

"Sentiment was terribly depressed going into year-end and still remains on the bearish side."

The S&P 500 gained 4.93 points, or 0.11%, at 4,298.86, taking this week's advance to 0.38% and extending its winning streak to four weeks, the longest since the July-August 2022 period. The Nasdaq Composite notched its seventh straight week of gains, adding 20.62 points, or 0.16%, to 13,259.14 on the day and 0.13% on the week. The Dow Jones Industrial Average rose 43.17 points, or 0.13%, to 33,876.78, for a weekly gain of 0.33%.

A megacap stocks rally, better-than-expected earnings season and expectations that the Fed was nearing the end of its rate-hiking cycle have supported Wall Street this year despite concerns about a looming recession and sticky inflation.

Shares in tech companies including Apple Inc, Advanced Micro Devices and Nvidia Corp rose between 0.22% and 3.20% after retreating earlier this week. (Reuters)