Financials lead in Sensex's 522-pt rally; Nifty ends 153 pts up at 9,979

Topics Markets | Coronavirus | Moody's

NSE's Nifty ended at 9,979, up 153 points or 1.56 per cent.
Shrugging off Moody's downgrade of India's long-term sovereign rating, the domestic equity market ended with decent gains on Tuesday, though the session remained rangebound. Moreover, strong global cues and reassurance by Prime Minister Narendra Modi, in an address to India Inc at the CII's 125th annual session, that India will return to growth, boosted sentiment further. 

The benchmark S&P BSE Sensex rallied 522 points or 1.57 per cent to 33,825.53 levels, thanks to buying in financial counters such as HDFC, HDFC Bank, ICICI Bank, Bajaj Finance, Axis Bank.

NSE's Nifty ended at 9,979, up 153 points or 1.56 per cent. Volatility index, India VIX, slipped nearly 2.5 per cent to 29.99 levels. 

Sectorally, barring Nifty FMCG index, all the indices on the NSE ended in the green. Nifty Realty index gained the most - up nearly 5 per cent to 194.75 levels while Nifty Media ended at 1,259.40, up 3.28 per cent. Nifty FMCG index, on the other hand, slipped over 0.7 per cent to 29,360 levels. 

In the broader market, the S&P BSE MidCap index ended at 12,303, up over 1 per cent while the S&P BSE SmallCap index climbed 1.83 per cent to 11,428.41 levels.

Global markets

World stocks climbed towards three-month highs on Tuesday as the global coronavirus recovery effort won out over US-China tensions and the worst civil unrest in the United States in decades.

In Asia, Japan’s Nikkei rose 1.2 per cent to its highest since late February in Asia and markets in Seoul, Taipei and Hong Kong also gained.

European stocks hit their highest levels since early March, with German stocks outperforming as carmakers rallied on hopes of stimulus and Lufthansa gained after its board approved a state bailout.

In commodities, oil prices rose on expectations that major producers would agree to extend output cuts that have shored up prices, during a video conference likely to be held this week.

Gold prices, on the other hand, held on to last session’s more than one-week high. 

(With inputs from Reuters)


4:06 PM IST Indian markets shrugged off news regarding Moody’s credit rating downgrade, which was trumped by the expectation of the economy opening up. The government has again reiterated its commitment to continued reforms to strengthen the economy. The uptrend in most major sectoral indices continued while the broader markets have also participated. Inspite of many possible negative triggers, positive sentiment still drives the markets and would advise to stick to quality stocks.  

3:42 PM IST

3:36 PM IST The S&P BSE Sensex rallied 522 points or 1.57 per cent to end at 33,826 while Nifty settled at 9,979, up 153 points or 1.56 per cent.

3:27 PM IST With 127 stocks in Nifty500 index trading above the 200-day moving average (DMA), the positive momentum is likely to continue as Nifty50 moves towards 10,000 levels. Of 127 stocks, 15 have shown extreme bullishness hitting a new lifetime high in the recent sessions. The list includes names such as Deepak Nitrite, which showed reversal at the 50-weekly moving average. Coromandel International has a double bottom formation on the monthly chart, while Dixon Technologies (India) and J B Chemicals and Pharmaceutical exhibited strong buying around 200-DMA. READ MORE  

3:19 PM IST

3:12 PM IST

3:07 PM IST AT1 bonds are hybrid instruments and pay a slightly higher rate of interest compared to similar non-perpetual bonds. Banks have the right but not the obligation to pay back the principal after exercising a call option.   AT1 bonds fell out of favour in March when YES Bank when the central bank took control of the private lender. The rise in risk-off sentiment and concerns that such bonds could be written off led individual and institutional investors to dump such bonds. This led to a spike in yields. State Bank of India AT1 bonds, for instance, traded at close to 10 per cent in April. READ MORE

3:01 PM IST According to MFIs, the recoveries from rural areas in May were higher by 10-20 per cent compared to that in urban areas.   A majority of MFI borrowers have the option to avail moratorium till the end of August. READ MORE

2:55 PM IST -- The list includes Shoppers Stop, IFCI, Maharashtra Scooters, Bombay Dyeing, GHCL, KEI Industries, HEG, KRBL, and Delta Corp, among others

2:52 PM IST

2:49 PM IST >> Puts long-term ratings of Bank of Baroda, Canara Bank, United Bank, Bank of India under review for downgrade (As reported by CNBC TV18)

2:43 PM IST COMPANY PRICE(rs) 52 WK HIGH CHG(%) ADANI GREEN 273.20 273.20 5.00 AUROBINDO PHARMA 731.50 757.10 0.81 BIOCON 385.05 395.90 -0.16 BRITANNIA INDS. 3458.70 3479.55 0.67 CIPLA 640.70 658.25 -0.21 » More on 52 Week High

LIVE UPDATES

MARKET COMMENT:: Vinod Nair- Head of Research- Geojit Financial Services

Indian markets shrugged off news regarding Moody’s credit rating downgrade, which was trumped by the expectation of the economy opening up. The government has again reiterated its commitment to continued reforms to strengthen the economy. The uptrend in most major sectoral indices continued while the broader markets have also participated. Inspite of many possible negative triggers, positive sentiment still drives the markets and would advise to stick to quality stocks.
 

MARKET AT CLOSE:: Gainers and losers on the S&P BSE Sensex


CLOSING BELL

The S&P BSE Sensex rallied 522 points or 1.57 per cent to end at 33,826 while Nifty settled at 9,979, up 153 points or 1.56 per cent.

TCS, Pidilite, MCX, EID Parry: 42 stocks that are 10% away from 52-wk highs

With 127 stocks in Nifty500 index trading above the 200-day moving average (DMA), the positive momentum is likely to continue as Nifty50 moves towards 10,000 levels. Of 127 stocks, 15 have shown extreme bullishness hitting a new lifetime high in the recent sessions. The list includes names such as Deepak Nitrite, which showed reversal at the 50-weekly moving average. Coromandel International has a double bottom formation on the monthly chart, while Dixon Technologies (India) and J B Chemicals and Pharmaceutical exhibited strong buying around 200-DMA. READ MORE  


BUZZING STOCK:: Ramco Cements gains 5.5%


BUZZING STOCK:: Tata Motors up 8%


AT1 bonds are risky but back on investor radar after YES Bank episode

AT1 bonds are hybrid instruments and pay a slightly higher rate of interest compared to similar non-perpetual bonds. Banks have the right but not the obligation to pay back the principal after exercising a call option.
 
AT1 bonds fell out of favour in March when YES Bank when the central bank took control of the private lender. The rise in risk-off sentiment and concerns that such bonds could be written off led individual and institutional investors to dump such bonds. This led to a spike in yields. State Bank of India AT1 bonds, for instance, traded at close to 10 per cent in April. READ MORE

Despite moratorium, rural recoveries on rise for microfinance institutions

According to MFIs, the recoveries from rural areas in May were higher by 10-20 per cent compared to that in urban areas.
 
A majority of MFI borrowers have the option to avail moratorium till the end of August. READ MORE

MARKET UPDATE:: 411 stocks locked in upper circuit on the BSE today

-- The list includes Shoppers Stop, IFCI, Maharashtra Scooters, Bombay Dyeing, GHCL, KEI Industries, HEG, KRBL, and Delta Corp, among others

NEWS ALERT :: Affirms PNB's rating at Ba1, outlook revised fom positive to stable


NEWS ALERT :: Moody's downgrades HDFC Bank, SBI to Baa3 from Baa2

>> Puts long-term ratings of Bank of Baroda, Canara Bank, United Bank, Bank of India under review for downgrade

(As reported by CNBC TV18)

Stocks that hit 52-week high on BSE today

COMPANY PRICE(rs) 52 WK HIGH CHG(%)
ADANI GREEN 273.20 273.20 5.00
AUROBINDO PHARMA 731.50 757.10 0.81
BIOCON 385.05 395.90 -0.16
BRITANNIA INDS. 3458.70 3479.55 0.67
CIPLA 640.70 658.25 -0.21
» More on 52 Week High

INDEX LOSER:: Maruti slips nearly 2.5%


MARKET UPDATE:: Nifty gains 143 points, near 10,000 levels


Rupee Closing

Rupee settles at day's high of 75.36 per US dollar compared to Monday's close of 75.55/$
 

VST Tillers freezes at 20% upper circuit ahead of May sales numbers

VST Tillers Tractors had posted strong sales in April 2020 with the company's total sales climbing 51 per cent year-on-year (YoY) to 1,089 units from 721 units in April 2019.
 
Besides, power tillers sales jumped to 761 units in April 2020, up 163 per cent YoY, from 289 units sold in April 2019. Tractor sales, however, contracted by 24.07 per cent to 328 units in April 2020 from 432 units in April 2019. READ MORE

MARKET CHECK:: Top 5 losers on the BSE at this hour


MARKET CHECK:: Welspun Enterprises trades 5% higher


SECTOR WATCH:: Barring Nifty FMCG, all the indices end in the green


Oil prices increase ahead of Opec+ meeting on extended output cuts

"The whole story is very much based around the supply cuts and the demand recovery," said Commonwealth Bank commodities analyst Vivek Dhar.
 
OPEC+ producers are considering extending their output cut of 9.7 million barrels per day (bpd), about 10 per cent of global production, into July or August, at an online meeting likely to be held on June 4. READ MORE

INDEX GAINERS:: Vedanta gains nearly 3%


BUZZING STOCK:: Bajaj Finance at day's high; top Sensex gainer at this hour


NEWS ALERT :: Temenos, HCL Tech sign agreement to market Temenos’ Multiexperience Development Platform

>> Companies announced the signing of an exclusive strategic agreement for non-financial services enterprises

>> As part of this agreement, HCL has been granted a license to develop, market and support Temenos multiexperience development platform (MXDP) for non-financial services enterprises.

>> The agreement is exclusive for seven years.

(Via BSE filing)

NEWS ALERT :: PNB cuts retail term deposit rate by 25-125 bps

Europe opens higher


Analysts ride two-wheeler stocks for gains as India eases Covid-19 lockdown

“Covid-19 should impact the rural economy relatively less than the urban economy as the spread is largely in the latter, and agriculture should suffer less from the lockdown. Covid-19 should also trigger a shift towards personal mobility, where a section of public transportation users should switch to 2Ws, especially in urban,” wrote Nitij Mangal, equity analyst at Jefferies India, along with Sagar Sahu in a co-authored report. READ MORE

EXPERT COMMENT:: Dr Niranjan Hiranandani - President – NAREDCO & Assocham

The Indian economy in the backdrop of the Coronavirus lockdown will be facing an imminent contraction of its growth, so it is hardly a surprise that the rating agency has downgraded India’s ratings to negative from Stable, stated Dr. Niranjan Hiranandani.
 
According to Moodys, the decision to downgrade India's ratings reflect Moody's view that the country's policymaking institutions will be challenged in enacting and implementing policies which effectively mitigate the risks of a sustained period. “This would put additional pressure on the central government to kick-start the economy which has been severely impacted by the COVID lockdown,” he explained.

Earnings Alert | Motherson Sumi Systems Q4

>> Consolidated net profit at Rs 183.4 crore

>> Revenue at Rs 15,159 crore

>> EBITDA at Rs 1,391.6 crore; margin at 9.2%


IndiGo Q4 preview: Analysts see loss up to Rs 2,600 cr amid Covid-19 outbreak

With suspension of international air travel for two weeks, and domestic air travel for about 10 days due to the lockdown in the March quarter of FY20 (Q4FY20) on account of Covid-19 pandemic, analysts expect InterGlobe Aviation-run IndiGo to report net loss up to Rs 2,600 crore, compared to net profit of Rs 589.6 crore in Q4FY19. That apart, seasonal slowdown and pricing pressure during the period under review is also likely to dent performance, analysts say. The airline had reported profit of Rs 496 crore in the December quarter of FY20. READ MORE

BUZZING STOCK:: Bajaj Finance climbs 4.66%


Corporation tax rate cut may save the day for Britannia in Q4, say analysts

Fast-moving consumer goods (FMCG) major Britannia Industries is expected to report a weak set of numbers for the quarter ended March 2020 (Q4FY20), owing to disruptions caused by Covid-19-induced lockdown. The company, according to analysts, may see up to 7 per cent volume decline in domestic business while revenue is likely to dip up to 4 per cent year-on-year (YoY). Reduction in corporate tax, however, is expected to drive up the net profit. READ MORE

BROKERAGE VIEW:: Emkay Global Financial Services on United Spirits

TP: Rs 650 | Rating: BUY
  • UNSP’s performance was weak with a 20% decline in P&A volumes. Besides the lockdown impact, sales decline was steeper at 15% due to sales loss in AP, inventory correction in key brands before relaunch and reduction in credit to trade, some of which should reverse.
     
  • While Q1 will be significantly impacted by the shutdown in April, volume recovery post reopening in some markets has been encouraging. These are short-term trends and may include benefits of upstocking, but category has bounced back post previous disruptions.
     
  • The worst of the margin pressure is behind and management shared a benign input cost outlook going ahead. This, coupled with increased cost-saving focus this year, should drive further margin expansion. We forecast EBITDA growth of 13% with 200 bps expansion over FY21-23 (FY20 adjusted EBITDA of Rs14.1bn and margins of 15.9%).
     
  • While steep tax increases in Karnataka/Telangana/WB pose risk of downtrading, we see some long-term positives in increased acceptance toward online/home delivery. We cut estimates by 7-8% and maintain Buy with a revised TP Rs650, based on 40x Jun-22 EPS.

MARKET UPDATE:: Bharti Airtel up 1.5%


Nifty Pharma gains 2.5%, crosses 10K mark for the 1st time since Oct 2018

Shares of pharmaceutical companies continued their northward journey on Tuesday with Nifty Pharma index crossing 10,000 mark after a gap of 19 months as Aurobindo Pharma, Biocon, Cipla and JB Chemicals & Pharmaceuticals hit their respective 52-week highs on the National Stock Exchange (NSE). Glenmark Pharmaceuticals, Cadila Healthcare, Sun Pharmaceutical Industries, Aurobindo Pharma and Lupin were up in the range of 2 per cent to 5 per cent today. READ MORE

BUZZING STOCK:: Vodafone Idea rallies 10%


NEWS ALERT:: Need to focus on 5 things to bring the economy on growth path

  • Intent;
  • Inclusion;
  • Investment; 
  • Infrastructure;
  • Innovation

NEWS ALERT:: PM Modi addresses CII Annual Session

>> PM speaks on "Getting Growth Back" at the session

MARKET CHECK:: Top 5 gainers on the BSE at this hour


Adani Green surges 5%, hits record high on no material impact of Covid-19

Shares of Adani Green Energy hit an all-time high of Rs 273 and were locked in the 5 per cent upper circuit band on the BSE on Tuesday after the company said that there will be no material impact on the company’s profit due to the Covid-19 pandemic. READ MORE 


Top gainers on BSE today

COMPANY PRICE(rs) CHG(%)
SHOPPERS ST. 196.30 19.99
IFCI 6.80 19.93
CHALET HOTELS 143.00 18.38
TRIDENT 5.80 16.70
IDBI BANK 26.85 10.27
» More on Top Gainers

BROKERAGE VIEW:: Edelweiss Securities on MCX

Multi Commodity Exchange’s (MCX) Q4FY20 PAT of Rs 572mn came broadly in line with our estimate largely on tax write-back, even as EBITDA belied estimate. Overall `operating income grew >33% in step with ADTV growth (up >37%) with some pressure on realisation. Revenue growth was restricted due to lower other income, which along with elevated opex, dented EBITDA margin (down ~4ppt QoQ). Stepping into FY21, initial ADTV trend has been soft due to restricted exchange time on account of COVID-19—needs to be monitored. Structural growth levers—options trading, institutional participation, introduction of intangibles—are still in the slow lane. Moreover, regulatory risk (universal exchange norms) challenging MCX’s market leadership (despite >90% share) and concentration of a few commodities in volumes could cap valuation upside. Maintain ‘HOLD’ with TP of Rs 1,250 (25x FY22E P/E).

BROKERAGE VIEW:: Edelweiss Securities on Coal India

The May-2020 operational numbers reported by Coal India (CIL) are broadly unchanged from April-2020. Despite economic activity picking up, offtake remained subdued as inventory at power plants continues to be high. That said, CIL has regulated production in line with muted offtake, resulting in only a marginal inventory build-up. Our FY21E sales volume already factors in a 23% YoY dip; hence, we are keeping estimates unchanged. Despite CIL’s burgeoning receivables, we like the company owing to its sizeable cash balance (Rs 370bn). Maintain ‘BUY’ with a TP of Rs 165 (exit 7.2x FY22E EPS).

EXPERT COMMENT:: Nirmal Jain, Chairman, IIFL Group on Moody's downgrade of India's ratings

I can’t understand the rationale. Covid is a global problem and relatively India has been conservative fiscally. Unless they are downgrading the whole world? They have also downgraded many good companies in India as well. 
NIRMAL JAIN, chairman, IIFL

BROKERAGE VIEW:: YES Securities on Voltas

Rating: Reduce | Target Price: Rs 492 | Downside: 8.9%
  • Cooling products business margins would be under pressure as competition heats up and players cut prices to liquidate inventory to benefit from the recent spurt in demand.
     
  • We maintain our Reduce rating on the company with a revised SOTP target price of Rs 492
Valuation: We believe current price is already building in a sharp recovery in FY22 earnings.

Risk to our call: Faster recovery in consumer discretionary spending , Higher capex by Central and State Governments

BUZZING STOCK:: Glenmark Pharma zooms 5%


Rupee opening

Rupee opens lower at 75.56/$ vs Monday's close of 75.54 against the US dollar

Tata Power gains nearly 7% as it completes 51% stake buy in Odisha's TPCODL

Praveer Sinha, CEO & MD, Tata Power said, “Our tie-up with CESU is a huge development for Tata Power. We are thankful to the Odisha Government and OERC for giving us this opportunity. We are committed to providing reliable, affordable, and quality power supply along with superior customer service, backed by innovative technology. We constantly strive to become the most preferred distribution company in the country. The success of our Delhi, Mumbai, and Ajmer Distribution businesses are a testament to this fact.” READ MORE


Mahindra & Mahindra rallies 10% in 2 days on healthy tractor sales in May

Shares of Mahindra & Mahindra (M&M) were up 4 per cent to Rs 477 on the BSE on Tuesday, having rallied 10 per cent in the past two trading days, after the company sold 24,017 tractors in domestic market in May 2020 despite Covid-19 induced lockdown. It had sold 23,539 units during the same month last year. The timely relaxation of the lockdown for the agricultural sector helped ensure speedy recovery of tractor demand during May. READ MORE

Most active stocks by volume

COMPANY PRICE(rs) CHG(%)
KOTAK MAH. BANK 1334.80 6.85
COROMANDEL INTER 628.80 -3.45
VODAFONE IDEA 6.73 2.59
DISH TV 4.71 4.90
SUZLON ENERGY 2.99 1.36
» More on Most Active Volume

MARKET UPDATE:: Nifty reclaims 9,900


MARKET CHECK | Sensex sees sharp upmove, up 300 pts


Indraprastha Gas up over 1% as CNG prices have been increased in Delhi

>> The company on Monday informed on Twitter that CNG retail price in Delhi has been revised from Rs 42 per kg to Rs 43 in Delhi.


Hero MotoCorp rises 2%


Wipro slides 1% on fears of Covid-19 denting margin

>> IT services firm Wipro on Monday said its overall financial performance is likely to be adversely affected owing to ongoing Covid-19 crisis with gross profit margins coming under pressure in the current financial year.


RIL gains 0.6%

>> Rights issue closes tomorrow, June 3.


Bajaj Auto slips in trade post may auto sales nos


Sectoral trends on NSE at open


Sensex Heatmap at Open


FIRST TRADE


FIRST TRADE


Moody's downgrade: Expect bouts of correction; sell-off in markets unlikely

The downgrade came after market hours, so one wonders if this might lead to a sell-off on Indian bourses on Tuesday, after a stupendous four-day rally taking the Nifty closer to the 10,000 level. I don’t think Moody’s downgrade will have a major effect on markets, as the new rating is on a par with the S&P’s and Fitch ratings of India at BBB-. However, the outlook labelled as “negative” could sway the sentiment in the short term. READ MORE
Ambareesh Baliga, Independent Market Analyst

Covid-19 Update


May Auto Sales | Bajaj Auto's domestic CV sales plunge 97% YoY


Top gainers and losers on S&P BSE Sensex at Pre-open


Market at Pre-open


Market at Pre-open


Moody's rating downgrade unlikely to rattle markets, say experts

But there can be some kneejerk reaction in the spot markets, which the Reserve Bank of India (RBI) can take care of. “It was expected that Moody’s would align back India’s rating with the other two rating agencies (Fitch and S&P). India continues to remain investment grade, and this downgrade should not materially impact the markets,” said Harihar Krishnamurthy, head of treasury at First Rand Bank. READ MORE

Stocks to watch: RIL, IndiGo, Britannia, Hero Moto, Wipro, Coal India, NCC

Earnings today: A total of 18 companies, including the likes of Britannia, Indigo, and Motherson Sumi, are scheduled to announce their results today which will induce individual stock reactions.
 
RIL: Reliance Industries’ Rs 53,125-crore rights issue has garnered fully subscription, data provided by stock exchanges on Monday showed. The 422.6-million share offering had attracted bids for 460.5 million shares. The rights issue closes on June 3. READ MORE

BROKERAGE VIEW :: Motilal Oswal Financial Services on United Spirits

Maintains 'Neutral'; Target price: Rs 543

>> Outlook on earnings growth is weak for alcohol companies, leading to a significant slowdown in earnings growth (from >30% growth in the 5 years ending FY20).
Weak results have led to further EPS cuts of 6.4%/4.0% for FY21/FY22E. 

>> Impact of extremely sharp excise increases across states would only exacerbate the pressure on FY21 profitability. Further, we believe profitability is already sharply impacted by (a) the absence of any sales until 3rd May, and (b) absence of sales from on-trade channel (20-25% of sales), which is expected to last for a significantly large part of the year after the latest MHA guidelines.

>> Our DCF-based TP leads to an 8% downside to CMP (effective target multiple of 41x Mar’22E EPS).

BROKERAGE VIEW :: Credit Suisse on United Spirits

Downgrades to 'Neutral'; Target price: Rs 615

>> Co faces severe challenges this fiscal due to Covid-19

>> Tax increase, hit to on-premise sale, slowdown outweighs long-term positives

>> Cut FY21/22 earnings by 13%/14%

Bulk deals on NSE as on Monday

Bulk deals on BSE as on Monday

FII/FPI & DII trading activity on NSE, BSE and MSEI


Rupee check

Source: Bloomberg


Oil check

>> At 8:27 am, Brent Crude future was at $38.5 per barrel, up 0.47 per cent

>> US WTI, meanwhile, was at $35.5 per barrel, up 0.17 per cent.

SGX Nifty update

>> At 8:25 am, the index was at 9,816 level, down 18 points.

Asian market check

Source: Reuters


Wall Street closes higher as recovery signs soothe protest, pandemic worries

Source: Reuters


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