MARKET WRAP: Financials propel Sensex 996 points up; Nifty reclaims 9,300

Stock brokers react to the movement share prices on BSE Sensex in Mumbai (Photo: Kamlesh Pednekar)
Benchmark indices shot up over 3 per cent on Wednesday, propelled by banks and financials, ahead of the upcoming derivative contract expiry.

The S&P BSE Sensex jumped 996 points to 31,605, and the Nifty50 index reclaimed the 9,300 zones, settling 286 points higher at 9,315. Axis Bank (up 13 per cent) and ICICI Bank (up 9 per cent) were the top Sensex gainers. Besides, HDFC Bank, IndusInd Bank, Bajaj Finance, and Kotak Mahindra Bank were all up 5 per cent.

The Nifty sectoral indices were largely in the green, led by the Nifty Bank index, up over 7 per cent.

Broader indices, however, underperformed compared to their frontline peers. The S&P BSE MidCap index ended the session 0.54 per cent higher and the S&P BSE SmallCap index was up 0.28 per cent.

Buzzing stocks

Shares of Axis Bank soared 13.46 per cent to Rs 387.35 on the BSE on reports that private equity (PE) firm Carlyle was looking to pick around 8 per cent stake in the lender.

Bajaj Finance and Bajaj Finserv recovered from multi-year lows closed 5 per cent and 3 per cent higher on the BSE. Earlier, the Bajaj twins had hit an over two-year low on the BSE amid concerns that the current April-June quarter (Q1FY20) will be a wash-out quarter for Bajaj Finance. 

Global markets

Unrest in Hong Kong over Beijing’s proposed national security laws weighed on global shares and oil prices on Wednesday, offsetting optimism about the re-opening of the world economy. MSCI’s ex-Japan Asia-Pacific index fell 0.4 per cent, as Hong Kong and mainland China shares extended declines.

Hong Kong's Hang Seng fell 1 per cent and mainland shares were down 0.8 er cent, amid fears the protests would worsen tensions between the United States and China.

Still, European shares remained buoyed by hopes for a post- COVID-19 recovery. The STOXX 600 added 0.4 per cent to reach its highest level since March 10. Britain's FTSE gained 1 per cent and the domestically focused FTSE 250 hit an 11-week high as thousands of retailers prepared to re-open on June 1 from a months-long shutdown.

In commodities, oil prices fell amid U.S.-China tensions. Brent crude futures dropped 1.5 per cent to $35.62 a barrel.


Market closing comment :: Vinod Nair, Head of Research at Geojit Financial Services

The benchmark indices staged an intra-day rally in sync with global cues, as some pockets of value buying emerged. Inspite of rising number of infections, markets expect slow return to normalcy, when lockdown 4.0 ends this week. All sectoral indices, except Nifty IT and Pharma, were in the green and Institutional buying in banking stocks helped the bank index gain by over 7 per cent. The volatility is expected to continue, ahead of tomorrow’s F&O expiry

Market Breadth in favour of advances

Nifty IT index top loser on NSE

Nifty snapshot | Nifty Bank zooms over 7%

Sensex Heatmap at Close | 24 of 30 constituents end in the green

CLOSING BELL | Indices surge 3%

>> The benchmark S&P BSE Sensex surges 995.92 points, or 3.25 per cent, to settle at 31,605.22. The Sensex hit an intra-day high of 31,660.60.

>> NSE's Nifty50 breached psychological level of 9,300 to settle at 9,314.95, up 286 points or 3.17 per cent.

JSPL's all-round beat in Q4 leaves investors happy

Rally in shares of JSPL was its all-round better-that-expected results for the March quarter (Q4), which were announced on Monday evening. This was enabled by continued benefits from expanded steel capacities at Angul (leading to economies of scale) and increasing usage of cheaper coal from captive Sarda mines. READ MORE

Earnings Alert | Dabur Q4

>> Net profit at Rs 281.2 crore

>> Revenue at Rs 1,865.4 crore

>> EBITDA at Rs 352.3 crore ; margin at 18.9%

Earnings Alert | Sun Pharma Q4

>> One time loss at Rs 260.4 cr

>> Net profit at Rs 399.8 cr

>> Revenue at Rs 8,184.9 cr

>> EBITDA at Rs 1,363 cr; margin at 16.7%

Agrochemical stocks rally; Bayer Crop hits new high, Dhanuka Agri soars 17%

Dhanuka Agritech touched a 52-week high of Rs 578, rallying 17 per cent on the BSE today. Besides, UPL, Rallis India and Sumitomo Chemical India were up 5 per cent each, as compared to a 2.6 per cent rise in the S&P BSE Sensex at 02:17 pm. READ MORE

Algos find relief as volumes that had fallen due to Covid-19 bounce back

Algorithmic trading typically refers to the use of electronic systems programmed with trading rules designed to exploit the smallest opportunities to make a profit in the market. Algorithms can execute thousands of trades in the time it takes a human being to blink but they need counter-parties to these orders, especially in lesser traded stocks. Many counterparties had been out of the market as indices crashed because of Covid-19 and logistical difficulties created due to the lockdown. READ MORE

MARKET CHECK | IT stocks rally

Axis Bank soars 15% on report PE firm Carlyle could pick 8% stake

Shares of Axis Bank soared 15 per cent to Rs 392.5 in the intra-day trade today on the BSE on Wednesday on reports that private equity (PE) firm Carlyle was looking to pick around 8 per cent stake in the lender. The stock trades in the future & option (F&O) segment, which has no circuit limits. READ MORE  

BUZZING STOCK | Shipping Corp zooms 14%

Sensex zooms 1,000 pts :: HDFC twins, ICICI Bank top index contributors

Rupee Closing

Rupee ends near day's low at 75.72 per US dollar vs Tuesday's close of 75.66/$


MARKET UPDATE | Sun Pharma trades 0.5% higher ahead of March quarter results

Global energy investment may see a record fall in 2020 over Covid-19: IEA

The Paris-based IEA said this could have serious repercussions for energy security and the transition to clean energy as the global economy recovers from the pandemic.
Governments are easing restrictions put in place to curb the spread of the virus after the confinement of around 3 billion people brought the global economy to a near standstill. READ MORE

MARKET UPDATE :: Nifty tops 9,200-mark

MARKET UPDATE:: Sensex extends gains, surges 600 points

This Pidilite Industries-promoted stock has rallied over 100% in one month

In the past one month, the stock of the firm engaged in chemical business has zoomed 111 per cent from a level of Rs 51.66, as against 2.3 per cent decline in the S&P BSE Sensex. It rallied 50 per cent in the past week. The stock had hit an all-time high of Rs 136 on May 2, 2018. READ MORE

BROKERAGE VIEW:: HDFC Securties on Torrent Pharma

Rating: ADD | Target Price: Rs 2,605

Torrent’s Q4 Adj. PAT came ahead of expectations driven by higher margins and lower tax. Torrent’s EBITDA margin (27.3% in FY20, +100bps YoY) are best among peers and are further set to expand led by improving MR productivity and price led growth in India business. We expect FCF generation of ~Rs 47bn over next two years to lower net debt/EBITDA to ~0.3x by FY22e from ~1.8x in FY20. We increase our EPS estimates by 4-7% for FY21/22e on account of resilient margins aided by cost control efforts. We revise our TP to Rs 2,605 based on 16x EV/EBIDTA based on FY22 estimates.

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

Sensex Heatmap at this hour :: Axis, ICICI Bank surge over 5%

Europe trades largely higher in early deals

BROKERAGE VIEW:: Edelweiss Securities on Just Dial

We believe that Q4FY20 results and management commentary thereof on cost control demonstrate JD’s ability to strengthen the business in adversity. The company is using employee resources to enrich content on its platform, particularly in the B2B vertical. This would help JD garner a higher market share once the economy recovers. Considering the stock’s current reasonable valuation (9.9x FY22E EPS) and the company’s ability to improve margin, in spite of low revenue growth, we maintain ‘BUY/SO’ with a revised TP of Rs 575.

GSK Pharma: Near term headwinds may keep stock prices under pressure

The GlaxoSmithKline Pharma (GSK Pharma) stock has dipped 7 per cent from its May highs, on worries that lower incidence of acute infections could lead to a fall in sales. Some brokerages have downgraded the stock due to a weak near-term outlook. READ MORE

NEWS ALERT :: Axis Bank clarifies on reports of fund infusion by PE firm Carlyle

>> Says, news item is speculative and the Bank has not taken any such decision in this regard


SECTOR WATCH:: Nifty Private Bank index up 3%

BUZZING STOCK | Birla Corp jumps 17%

MARKET UPDATE:: BPCL trades near day's high

NEWS ALERT | Air India cancels 92 flights between May 28-31 which includes some flights for Chennai, Mumbai & Kolkata: CNBC TV18

-- Cancellations due to unavailability of slots at major airports

Torrent Pharma slips 6% on profit-booking; outlook remains a concern

The management said Q4 margins expansion was largely from the synergies of the acquired Unichem portfolio, incremental productivity, and cost control. Revenues; however, grew in single digit by 5 per cent to Rs 1,946 crore from Rs 1,856 crore in the year-ago quarter. READ MORE

Cash holdings of PMS schemes dip in April as markets rebound, data shows

Cash holdings for 13 PMS schemes, however, rose in April over the previous month. “This could be due to fresh investments by investors who wanted to deploy more cash to take advantage of the prevailing situation and fund managers playing it safe in anticipation of a further fall,” said PMS Bazaar in a note. READ MORE

MARKET UPDATE:: Berger Paints slips over 2%

NEWS ALERT :: Tata Steel terminates contract with Fitch Ratings

>> Tata Steel Limited has terminated the contract with Fitch Ratings in early May 2020 and has not engaged in any ratings related discussions with their representatives. Hence, any recent revision in ratings announced by them in respect of the Company are on an unsolicited basis and do not warrant any disclosures from the Company.

>> The Company is in compliance with the applicable disclosure requirements under the Listing Regulations. Accordingly, we request you to treat this matter as closed.

(Via BSE filing)

Bata: Despite subdued Q4, hope of faster recovery may keep sentiment intact

There is no doubt that businesses across industries will take at least a couple of quarters to recover, but the ones that show promise of faster recovery will grab investor attention. Bata could be such an example.
Though the company’s March 2020 quarter (Q4) earnings — announced on Monday, a market holiday — were below expectations, its stock ended Tuesday with 0.8 per cent gains even as leading indices slipped marginally. READ MORE

ED charge sheet: Franklin Templeton in a fix over YES Capital loans

Franklin Templeton MF’s investments in YES Capital, a Rana Kapoor firm, have come under regulatory glare. Schemes among the six wound up by the fund house had given a loan of Rs 518 crore against non-convertible debentures (NCDs) to the firm in March 2019, according to the Enforcement Directorate’s (ED’s) charge sheet in the YES Bank fraud case. READ MORE

Bajaj Finance, Bajaj Finserv hit over 2-year lows, recover later

Shares of Bajaj Finance slipped 2.6 per cent at Rs 1,783, its lowest level since April 2, 2018, while Bajaj Finserv slipped 3 per cent to Rs 3,986, its lowest level since July 28, 2017 on the BSE. Thus far in the calendar year 2020, these stocks have fallen 58 per cent, as compared to 26 per cent decline in the S&P BSE Sensex. READ MORE

NEWS ALERT :: Future Retail approves raising up to Rs 650 cr via NCDs

>> Co says Board approved resolution to issue secured /unsecured redeemable non-convertible debentures (NCDs) on private placement basis for an amount aggregating upto Rs. 650 crore in one or more tranches from time to time mainly to replace its existing high cost current or near term maturity debts requirements.

MARKET CHECK :: Indices stage recovery

Birla Tyres, Alok Ind: 41 penny stocks zoom over 100% from March lows

Given the run-up seen since March, analysts have now become cautious on the small-cap segment and suggest investors use the rally to book profit. Instead, they suggest taking exposure to companies that have a strong balance-sheet and are not sitting on a large debt pile. READ MORE

Share sales in listed firms at record high of $4.4 billion this month

A $3.3-billion sell-down of GlaxoSmithKline’s stake in Unilever’s Indian unit, Hindustan Unilever, and a $1.1-billion placement of Bharti Airtel shares by its parent take May’s total follow-on offerings in the country to $4.4 billion, the most for a month on record, data compiled by Bloomberg shows. READ MORE

BUZZING STOCK:: Sharp surge in Axis Bank; stock up over 3%

Titan dips 2% as Co gives biz update, defers launch of jewellery collection

Sharing its business update amid the Covid-19 pandemic, the jewellery-to-watches maker said that increase in mark-to-market cash outflow on gold hedge due to rising gold prices and committed costs being incurred also contributed to the negative cash flow. However, it expects this cash outflow to be recovered when sale of jewellery restarts. “Thus, the Covid-19 situation is expected to adversely affect the profitability during the first half of this year,” Titan said. READ MORE

Rupee Opening

Rupee opens little changed at 75.67 per US dollar vs Tuesday's close of 75.66/$

IPO market forecast remains moribund despite market regulator's concessions

The initial public offering (IPO) market is expected to remain moribund even as share sales in large listed firms rake in billions of dollars. Investment bankers say the IPO market freeze could extend till the end of this year despite several concessions given by market regulator Securities and Exchange Board of India (Sebi). On the other hand, there is healthy appetite for shares in listed companies with leadership position in their respective sectors, they add. READ MORE  

JP Morgan chief economist forecasts 'strong rebound' in Indian markets

"India is going to be going through a very difficult first half of the year. We have GDP down in the second quarter, 35 per cent annualised pace but we have a very strong rebound in the second half of the year, but one that still doesn't get you back to where you were," said Bruce Kasman, chief economist at JP Morgan, news agency IANS reported. READ MORE

SECTOR ALERT :: Nifty Auto index slides 0.8%

Deepak Nitrite rises over 5% on strong March quarter nos, pares gains later

Shares of Deepak Nitrite gained as much as 5.49 per cent to Rs 528.70 apiece on the BSE on Wednesday, a day after the company reported an 88 per cent jump in its consolidated net profit at Rs 172.30 crore for the quarter ended March 2020. The company had logged profit of Rs 91.46 crore in the year-ago period. READ MORE

Coronavirus to trigger fresh consolidation across sectors, says BofA

BofA Securities analysed 1,125 listed companies across sectors such as consumer, financials, real estate, communication services and energy. Broadly, the top five players in each sector accounted for less than 60 per cent market share before 2016. Currently, the share of the top five players has increased to 62 per cent, and is expected to rise further as Covid-19 triggers a fresh round of disruption. READ MORE

Coromandel Int'l rallies 8%, hits 52-week high on strong Q4 results

Shares of Coromondel International rallied 8 per cent to hit a 52-week high of Rs 700 on the BSE on Wednesday after the company’s consolidated profit before depreciation, interest, taxes and exceptional item (EBITDA) for the quarter ended March 31, 2020 (Q4FY20) increased by 51 per cent to Rs 391 crore as against Rs 259 crore clocked during the corresponding quarter last year. EBITDA margins expanded 380 basis points to 13.6 per cent from 9.8 per cent in Q4FY19. READ MORE

Broader market check :: Midcaps take deeper cut

MARKET CHECK :: Sensex erases morning gains

Result Impact | Coromandel International hits 52-week high

>> Co posted consolidated net profit at Rs 234 crore, up 112% YoY from Rs 110 crore in Q4FY19

Hindalco gains 3%

Result Impact | Praj Industries tanks over 3%

>> Co's Quarterly Net Profit came in at Rs. 24.86 crore in March 2020, down 25.48%, from Rs. 33.36 crore in March 2019.

>> Besides, Praj Industries Board has decided to cancel Share Buy-Back proposal

Titan slides 2% post biz update

>> Due to the lockdowns and restrictions imposed on economic activities to prevent Covid-19 spread, jewellery-to-watches maker Titan has deferred the launch of two of its jewellery collections till a time that most of the stores are re-opened.

RIL trades mildly higher

>> An overseas listing may be on the cards for Jio Platforms, the digital and telecommunications subsidiary of Reliance Industries (RIL). According to sources aware of the development, work in this regard may commence soon after RIL sells 20-25 per cent in Jio Platforms and the government issues direct listing guidelines.

Result Impact | Deepak Nitrite surges 3%

>> Deepak Nitrite Ltd on Tuesday reported a 88 per cent increase in consolidated net profit at Rs 172.3 crore for the quarter ended March. Total income rose to Rs 1,057.74 crore in the quarter under review from Rs 1,016.63 crore in the corresponding period of previous year.

Sectoral trends on NSE at open

Sensex Heatmap at Open

Opening Bell

Opening Bell

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

Market at Pre-open

Market at Pre-open

BROKERAGE VIEW :: Motilal Oswal Financial Services on Torrent Pharma

Maintains 'Neutral'; Revised target price: Rs 2,350 from Rs 2,214

>> The COVID-19-led impact was visible in the 4QFY20 performance of the Domestic Formulations (DF) segment (lower revenue growth and higher working capital needs). The situation is gradually improving with the easing of the lockdown. The near-term revenue outlook would be subdued in Brazil/Germany/US. However, cost reduction is expected to offset this for TRP to some extent. The readiness for the USFDA inspection at Dahej is a sentiment positive.

>> We cut our EPS estimate for FY21 by 6% to factor the COVID-19-led slowdown in India/Brazil sales, offset (to some extent) by cost rationalization. We continue to value TRP at 23x 12M forward earnings.

BROKERAGE VIEW :: Motilal Oswal Financial Services on Titan

Maintains 'Neutral'; Target price: Rs 1,085

>> Titan has comfortable liquidity position due to adequate banking limits and enjoys highest rating in both short term and long term borrowings.

>> The company has successfully issued INR10b of Commercial Papers (CP) at attractive rates during Apr-May’20. 

>> With the Covid-19 led disruption, severe impact on business performance was anticipated, especially due to Titan having extensive presence in malls, which were closed even before the lockdown. 

>>  The economic fallout of the lockdown is weighing down consumer sentiment. This should impact discretionary demand in the near term.
>> The stock trades at 52.5x/37.1x FY21E/FY22E EPS of INR17/INR24.1. While our rating on the stock is Neutral, its longer-term top line and earnings opportunity
remains attractive.

Stocks to watch: Deepak Nitrite, RIL, Sun Pharma, Titan, Tata Motors, Dabur

Deepak Nitrite: Deepak Nitrite Ltd on Tuesday reported a 88 per cent increase in consolidated net profit at Rs 172.3 crore for the quarter ended March. Total income rose to Rs 1,057.74 crore in the quarter under review from Rs 1,016.63 crore in the corresponding period of previous year.
Reliance Industries (RIL): An overseas listing may be on the cards for Jio Platforms, the digital and telecommunications subsidiary of Reliance Industries (RIL). According to sources aware of the development, work in this regard may commence soon after RIL sells 20-25 per cent in Jio Platforms and the government issues direct listing guidelines. READ MORE

BROKERAGE VIEW :: Credit Suisse on Financials

>> Rising risk aversion and rating downgrades could put pressure to asset quality

>> Rs 2.5 trillion debt already downgraded which could make refinancing tough

>> Despite liquidity surplus, banks are risk averse

>> In the last one year, 90 per cent of lending has gone to A-rated corporates

>> NBFC, bond market liquidity now contraints 70 per cent lending capacity

>> PSU banks, except SBI, are yet to recover from NPA issues

BROKERAGE VIEW :: Morgan Stanley on Titan

Maintains 'underweight'

>> Says, sales below normal despite 43% stores resuming work

>> Given business headwinds, demand recovery will take time

>> Says, co needs to have higher activation programmes to attract customers

NEWS ALERT :: Biocon Biologics receives DCGI nod for use of CytoSorb to treat critical COVID-19 patients

>> Biocon's subsidiary - Biocon Biologics - has received the Drugs Controller General of India’s (DCGI) approval for an extracorporeal blood purification (EBP) device CytoSorb to reduce pro-inflammatory cytokines levels in confirmed COVID-19 patients admitted to the intensive care unit (ICU) with confirmed or imminent respiratory failure.

>> Biocon Biologics has been granted licence for emergency use of CytoSorb in public interest by the Indian health regulator to treat COVID-19 patients who are 18 years of age or older.

(Via BSE filing)

Nifty view and stock picks by HDFC Securities

Nifty in consolidation; Breakdown below 8,950, Breakout above 9,300
For the last five trading sessions, Nifty has been consolidating and has not been able to catch up with the bullishness witnessed in the global markets. Any level below 8,950 would result into trend line breakdown on the short term charts, while level above 9,280 would give bullish confirmation. READ MORE

Bulk deals on NSE as on Tuesday

Bulk deals on BSE as on Tuesday

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

Rupee check

Source: Bloomberg

Oil slips on demand worries, Hong Kong tensions

Oil prices fell on Wednesday on revived concerns over how quickly fuel demand will recover even as coronavirus lockdowns begin to ease in many countries, while US-China tensions added to negative sentiment.

Brent crude futures fell 21 cents, or 0.6%, to $35.96 by 6:50 am. US West Texas Intermediate (WTI) crude futures were down 31 cents, or 0.9%, at $34.04 a barrel.

(Via Reuters)

SGX Nifty update

>> At 8:17 am, the index was at 9,041 level, up 40 points, indicating a mildly higher opening for the markets.

Asian stocks pull back as Hong Kong uncertainty weighs

Source: Reuters

S&P 500 rises on economic recovery and vaccine hopes, pulls back from highs

Source: Reuters

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