MARKET WRAP: Indices end marginally lower; Nifty tests 10,800; metals drag

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Markets ended marginally lower on Monday amid weak global cues.

The Nifty Metal index, however, lost  nearly 2 per cent in intra-day trade amid rising global  trade war fears.

US President Donald Trump on Friday said he was pushing ahead with hefty tariffs on $50 billion of Chinese imports, and the smouldering trade war between the world's two largest economies showed signs of igniting as Beijing immediately vowed to respond in kind.

Back home, foreign investors have pulled out more than Rs 55 bn from capital markets this month so far due to global trade war worries coupled with hawkish commentary by the US Federal Reserve. This comes following a net outflow of over Rs 450 bn from capital markets (equity and debt) in the last two months. Prior to that, foreign portfolio investors (FPIs) had pumped in Rs 26 bn in March.

GLOBAL MARKETS

Asian shares retreated on Monday after US President Donald Trump cranked up trade tensions with China by going ahead with tariffs on Chinese imports, prompting Beijing to immediately respond in kind.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.2 per cent in early trade, near its lowest level since May 31. Financial markets in China and Hong Kong will be closed on Monday for Dragon Boat festival holiday. Japan's Nikkei slid 0.7 per cent as fears of growing protectionism overshadowed stronger-than-expected export data.

4:09 PM IST COMMENT Abhijeet Dey, Senior Fund Manager – Equities, BNP Paribas Mutual Fund In the absence of any strong cues, stock markets in India traded on a lacklustre note today. Risk appetite in the global markets abated after US President Donald Trump gave a fillip to trade tensions by imposing a 25% tariff on a list of 818 items of Chinese goods worth around $34 billion. Beijing immediately responded with its own set of tariffs on US goods, making this a game of one up-manship. Benchmark indices traded weak to finally close the day marginally in the red. Sectoral performance on the National Stock Exchange (NSE) was mixed. While the auto, healthcare and private banking indices eked out marginal gains, the metals and IT indices lost 1.78% and 0.77%, respectively

3:37 PM IST Nifty Metal index falls nearly 2%: Top losers in the pack COMPANY LATEST PREV CLOSE LOSS() LOSS(%) VOLUME WELSPUN CORP 130.65 134.85 -4.20 -3.11 298307 VEDANTA 232.05 238.60 -6.55 -2.75 15086578 HINDALCO INDS. 231.00 237.40 -6.40 -2.70 6473259 JINDAL STEEL 229.05 234.00 -4.95 -2.12 6104157 HIND.ZINC 298.20 304.30 -6.10 -2.00 2462078

3:35 PM IST Sectoral Trend

3:34 PM IST Top Sensex gainers and losers

3:33 PM IST Markets at close The S&P BSE Sensex ended the day at 35,548, down 74 points while the broader Nifty50 index settled at 10,799 down 18 points

3:20 PM IST Bata India nears record high; stock up 5%   Shares of Bata India have rallied 5% to Rs 817, hitting seven month high on the BSE, on back of heavy volumes. The stock of footwear firm trading close to its record high of Rs 833 touched on November 1, 2017 in intra-day trade.   Driven by various initiatives, Bata India reported a healthy performance in FY18. Revenues grew 7% year on year (YoY) to Rs 26.29 billion (adjusting for the GST impact, growth would be around 12%) in FY18. Furthermore, controlled fixed overheads led to EBITDA margin expansion to the tune of 220 bps YoY to 13.5%. READ MORE

3:15 PM IST BofA on electical utility companies In a move to prevent liquidation of stressed thermal power plants, the Finance Ministry has proposed the idea of an asset reconstruction company (ARC) or a ‘Bad Bank’ – that would take-over stressed assets from banks (after a haircut), manage the projects in the interim & sell it off when power cycle recovers. The idea of a ‘Bad Bank’ is not new & makes sense if it reduces the quantum of haircut that banks may have had to take in case the assets were liquidated/ referred to National Company Law Tribunal (NCLT). The power ministry has identified 40-45GW of stressed projects vs. BofAMLe of 81GW in time, these projects may be transferred to ARC. Regardless of whether stressed assets go to NCLT or ARC, the current scenario is likely to consolidate the powergen sector & present inorganic growth opportunities for NTPC. Buy.

3:10 PM IST Jubilant FoodWorks hits new high ahead of 1:1 bonus   Jubilant FoodWorks hit a new high of Rs 2,796, up 1%, extending its past two days 3% gain on the BSE, ahead of record date for 1:1 bonus issue. The stock will turn ex-bonus on Thursday, June 21, 2018.   The Capital Issue Committee has fixed Saturday, June 23, 2018 as the record date, for the purpose of determining the list of equity shareholders who will be entitled for issue and allotment of bonus equity shares in the proportion of 1 equity share of Rs 10 each for every 1 equity share of Rs 10 each of the Company. READ MORE

3:00 PM IST MUST READ RITES IPO opens for subscription on June 20. Should you invest?   The initial public offer (IPO) of RITES – a government-owned railway consultancy firm and a Miniratna (Category – I) Schedule ‘A’ Public Sector Enterprise – opens for subscription on June 20. The price band for the issue has been fixed at Rs 180-185 a share (discount of Rs 6 per share for retail shareholders and employees), and the government aims to raise up to Rs 460 crore via this sale. The issue closes on June 22.   So, should you subscribe to this IPO? Here's what leading brokerages across the country suggest. Click here to know Representative Image

2:45 PM IST Top BSE500 gainers COMPANY PRICE() CHG() CHG(%) VOLUME INDO COUNT INDS. 77.35 9.40 13.83 236798 JP ASSOCIATES 15.60 1.15 7.96 9598387 H P C L 322.60 16.40 5.36 622086 GHCL 287.25 14.30 5.24 42693 VAKRANGEE 43.25 2.05 4.98 4408524 » More on Top Gainers

2:35 PM IST NSE-SGX licensing pact to continue beyond August   An arbitrator appointed by the Bombay High Court has directed the National Stock Exchange (NSE) to extend the agreement of Nifty-licensed products to the Singapore Exchange (SGX) until the arbitration concludes. The licensing agreement was to end in August 2018, which could now extend till early 2019.   In an interim order released on Thursday, Justice S J Vazifdar asked the SGX to abide by the high court’s injunction against the launch of new India derivative products. The injunction will remain in effect for four weeks from the date of the final order. READ MORE

2:28 PM IST Anand Rathi on KEC International Execution on the T&D front, both domestic and internationally, is expected to grow at a robust pace. Civil and Railways are expected to show strong growth. Margins are expected to remain at current levels due to lower profitability in railways and civil. However, we feel that most of the optimism has already been priced in. We do not see much potential from current levels. Further, it will be difficult for the company to maintain order inflow growth due to relatively lower domestic T&D capex. Hence, we maintain a Hold and lower our rating to 15x FY20e earnings, resulting target price of Rs 414 (earlier Rs 432).

LIVE UPDATES

COMMENT Abhijeet Dey, Senior Fund Manager – Equities, BNP Paribas Mutual Fund

In the absence of any strong cues, stock markets in India traded on a lacklustre note today. Risk appetite in the global markets abated after US President Donald Trump gave a fillip to trade tensions by imposing a 25% tariff on a list of 818 items of Chinese goods worth around $34 billion. Beijing immediately responded with its own set of tariffs on US goods, making this a game of one up-manship. Benchmark indices traded weak to finally close the day marginally in the red. Sectoral performance on the National Stock Exchange (NSE) was mixed. While the auto, healthcare and private banking indices eked out marginal gains, the metals and IT indices lost 1.78% and 0.77%, respectively
Nifty Metal index falls nearly 2%: Top losers in the pack

COMPANY LATEST PREV CLOSE LOSS() LOSS(%) VOLUME
WELSPUN CORP 130.65 134.85 -4.20 -3.11 298307
VEDANTA 232.05 238.60 -6.55 -2.75 15086578
HINDALCO INDS. 231.00 237.40 -6.40 -2.70 6473259
JINDAL STEEL 229.05 234.00 -4.95 -2.12 6104157
HIND.ZINC 298.20 304.30 -6.10 -2.00 2462078

Sectoral Trend

Top Sensex gainers and losers


Markets at close

The S&P BSE Sensex ended the day at 35,548, down 74 points while the broader Nifty50 index settled at 10,799 down 18 points
Bata India nears record high; stock up 5%
 
Shares of Bata India have rallied 5% to Rs 817, hitting seven month high on the BSE, on back of heavy volumes. The stock of footwear firm trading close to its record high of Rs 833 touched on November 1, 2017 in intra-day trade.
 
Driven by various initiatives, Bata India reported a healthy performance in FY18. Revenues grew 7% year on year (YoY) to Rs 26.29 billion (adjusting for the GST impact, growth would be around 12%) in FY18. Furthermore, controlled fixed overheads led to EBITDA margin expansion to the tune of 220 bps YoY to 13.5%. READ MORE
BofA on electical utility companies

In a move to prevent liquidation of stressed thermal power plants, the Finance Ministry has proposed the idea of an asset reconstruction company (ARC) or a ‘Bad Bank’ – that would take-over stressed assets from banks (after a haircut), manage the projects in the interim & sell it off when power cycle recovers. The idea of a ‘Bad Bank’ is not new & makes sense if it reduces the quantum of haircut that banks may have had to take in case the assets were liquidated/ referred to National Company Law Tribunal (NCLT).

The power ministry has identified 40-45GW of stressed projects vs. BofAMLe of 81GW in time, these projects may be transferred to ARC. Regardless of whether stressed assets go to NCLT or ARC, the current scenario is likely to consolidate the powergen sector & present inorganic growth opportunities for NTPC. Buy.
Jubilant FoodWorks hits new high ahead of 1:1 bonus
 
Jubilant FoodWorks hit a new high of Rs 2,796, up 1%, extending its past two days 3% gain on the BSE, ahead of record date for 1:1 bonus issue. The stock will turn ex-bonus on Thursday, June 21, 2018.
 
The Capital Issue Committee has fixed Saturday, June 23, 2018 as the record date, for the purpose of determining the list of equity shareholders who will be entitled for issue and allotment of bonus equity shares in the proportion of 1 equity share of Rs 10 each for every 1 equity share of Rs 10 each of the Company. READ MORE
MUST READ RITES IPO opens for subscription on June 20. Should you invest?
 
The initial public offer (IPO) of RITES – a government-owned railway consultancy firm and a Miniratna (Category – I) Schedule ‘A’ Public Sector Enterprise – opens for subscription on June 20. The price band for the issue has been fixed at Rs 180-185 a share (discount of Rs 6 per share for retail shareholders and employees), and the government aims to raise up to Rs 460 crore via this sale. The issue closes on June 22.
 
So, should you subscribe to this IPO? Here's what leading brokerages across the country suggest. Click here to know

Representative Image

Top BSE500 gainers

COMPANY PRICE() CHG() CHG(%) VOLUME
INDO COUNT INDS. 77.35 9.40 13.83 236798
JP ASSOCIATES 15.60 1.15 7.96 9598387
H P C L 322.60 16.40 5.36 622086
GHCL 287.25 14.30 5.24 42693
VAKRANGEE 43.25 2.05 4.98 4408524
» More on Top Gainers
NSE-SGX licensing pact to continue beyond August
 
An arbitrator appointed by the Bombay High Court has directed the National Stock Exchange (NSE) to extend the agreement of Nifty-licensed products to the Singapore Exchange (SGX) until the arbitration concludes. The licensing agreement was to end in August 2018, which could now extend till early 2019.
 
In an interim order released on Thursday, Justice S J Vazifdar asked the SGX to abide by the high court’s injunction against the launch of new India derivative products. The injunction will remain in effect for four weeks from the date of the final order. READ MORE
Anand Rathi on KEC International

Execution on the T&D front, both domestic and internationally, is expected to grow at a robust pace. Civil and Railways are expected to show strong growth. Margins are expected to remain at current levels due to lower profitability in railways and civil. However, we feel that most of the optimism has already been priced in.

We do not see much potential from current levels. Further, it will be difficult for the company to maintain order inflow growth due to relatively lower domestic T&D capex. Hence, we maintain a Hold and lower our rating to 15x FY20e earnings, resulting target price of Rs 414 (earlier Rs 432).
Angel Broking on Bata India (BIL)

We expect BIL to report net revenue CAGR of ~16% to ~Rs 3,555 crore over FY2018-20E mainly due increasing brand consciousness amongst Indian consumers, new product launches, higher number of stores addition in tier – II and III cities and focus on women’s segment (high growth segment).

Further, on the bottom-line front, we expect CAGR of ~19% to Rs 311 crore over the same period on the back of margin improvement (increasing premium product sales). Thus, we initiate coverage on Bata India with BUY recommendation and target price of Rs 896.
SECTOR WATCH Automobiles

Capital expenditure (capex) by automobile original equipment manufacturers (OEMs), comprising commercial vehicles (CVs), passenger vehicles (PVs) and two-wheelers, is set to increase by 30% to ~Rs 58,000 crore over fiscals 2019 and 2020, compared with the preceding two fiscals. A study of 18 OEMs (of which 10 are rated by CRISIL), covering ~90% of current industry volume indicates PV makers will account for almost 70% of this capex. This will be supplemented by CV manufacturers with 20% share and the balance by two-wheeler manufacturers

(Source: CRISIL report)
COMMENT

Led by consumer-oriented sectors, the non-infra corporate sector has witnessed some revival in growth and profitability indicators over last 2-3 quarters of FY2018. As per an ICRA note on “Indian Corporate Sector, Credit Outlook for FY2019,” the sectors that have witnessed a pick-up in demand are Automobiles, FMCG, Consumer Durables and Retail - aided by low demonetisation base and improved consumer demand on back of the benefits of seventh pay commission, rural recovery and GST rate cuts. Further good tidings are expected to continue the back of improved rural sales coupled with favourable outlook driven by expectations of normal monsoons, hike in MSPs and overall thrust on agri-economy ahead of elections
Rupee pares losses, rises 1 paisa against dollar amid greenback selloffs
 
The rupee pared morning losses and was trading 1 paisa higher to 68 against the American currency in late morning deals amid bouts of dollar-selling by banks and exporters, despite strength in the greenback. READ MORE
Market Check

INDEX LATEST PREVIOUS CHANGE CHANGE(%)
BSE SENSEX 35586.46 35622.14 -35.68 -0.10
BSE 500 14789.07 14813.40 -24.33 -0.16
BSE MID-CAP 15961.42 16001.20 -39.78 -0.25
BSE SMALL-CAP 16842.77 16961.16 -118.39 -0.70
S&P BSE LARGECAP 4204.37 4207.19 -2.82 -0.07
> More on BSE Indices
HPCL, BPCL, IOCL gain on fall in global oil prices
 
Shares of oil marketing companies (OMCs) like Indian Oil Corporation (IOCL), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) were trading higher by up to 6% in otherwise subdued market after Brent crude prices fell in the international market. READ MORE
Bitcoin has shortcomings, could break internet: Global banking body
 
The Bank for International Settlements just told the cryptocurrency world it’s not ready for prime time -- and as far as mainstream financial services go, may never be.
 
In a withering 24-page article released Sunday as part of its annual economic report, the BIS said Bitcoin and its ilk suffered from “a range of shortcomings” that would prevent cryptocurrencies from ever fulfilling the lofty expectations that prompted an explosion of interest -- and investment -- in the would-be asset class. READ MORE
Mid- and small-caps continue to give positive returns despite sharp fall
 
It has been turbulent times for mid- and small-cap stocks. With the Nifty Mid-cap 100 and Nifty Small-cap 100 slipping as much as 11 per cent and 16.1 per cent since the beginning of 2018, there is palpable fear among many investors about the prospects of their holdings in such stocks and mutual fund schemes.
 
These sharp falls have been for several reasons. For one, the valuations of many of these stocks have risen very sharply. READ MORE
ICICI Bank up 4% on reports that board is mulling top management reshuffle
 
ICICI Bank was trading 4% higher at Rs 294 on the BSE in otherwise range-bound market after the media reports suggested that the board of private sector lender is discussing a reshuffle of its top management.
 
The BSE said the Exchange has sought clarification from ICICI Bank Ltd with respect to news article appearing on The Economic Times - June 18, 2018 titled "ICICI board mulls reshuffle of top management - ICICI Prudential Life chief Bakhshi may be named ICICI Bank interim Chief Executive Officer (CEO)". READ MORE


Adani Green Energy gains 5% on debut
 
Adani Green Energy, the renewable power arm for Adani Enterprises, has locked in upper circuit of 5% at Rs 29.40 on the BSE on first day of its listing. The stock recovered 9% from its intra-day low of Rs 27, after opening at Rs 28 on the BSE.
 
On the National Stock Exchange (NSE), the stock trading at Rs 31, after opening at Rs 30. The stock hit a high of Rs 31.50 and a low of Rs 28.50 so far. READ MORE
Most of the BSE-500 stocks trade 20% or lower than their 52-week highs
 
The BSE benchmark Sensex ended the week with its longest stretch of weekly gains since April. But, most of the BSE-500 stocks still trade 20 per cent or lower than their 52-week highs.
 
While large-caps have more or less remained resilient during the recent market-wide sell-off, small-caps had to bear the brunt. In fact, this was the first week the BSE SmallCap index closed in the green after six weeks of back-to-back selling. Brokerages say that recent headwinds on account of rising crude oil prices, a weaker rupee, higher interest rates and a surge in bad loans. READ MORE
Vedanta hits 52-week low; stock down 26% in three months
 
Shares of Vedanta hit a 52-week low of Rs 229, down 4% on the BSE in intra-day trade, after the media reports suggested that the company is facing Sterlie-like crisis in Orissa.
 
The BSE said the Exchange has sought clarification from Vedanta with respect to news article appearing on The Free Press Journal - June 14, 2018 titled "Vedanta faces another Sterlite like crisis in Orissa". The reply is awaited. READ MORE
Markets at noon
INDEX LATEST PREVIOUS CHANGE CHANGE(%)
BSE SENSEX 35602.32 35622.14 -19.82 -0.06
BSE 500 14790.41 14813.40 -22.99 -0.16
BSE MID-CAP 15975.58 16001.20 -25.62 -0.16
BSE SMALL-CAP 16854.54 16961.16 -106.62 -0.63
S&P BSE LARGECAP 4204.15 4207.19 -3.04 -0.07
> More on BSE Indices
Oil slumps near $64 as OPEC clash looms, US-China trade war escalates

Oil fell near $64 a barrel as Saudi Arabia and Russia prepared for a clash with allied crude producers over whether to lift output and as China and the US exchanged threats over trade. Futures in New York dropped as much as 2.3 per cent, on course for the lowest close since April 9 after a 2.7 per cent decline Friday. Iran says Venezuela and Iraq will join in blocking a proposal to increase production that’s backed by Saudi Arabia and Russia when OPEC and its allies meet in Vienna this week. China said it would impose tariffs on a variety of US goods, including crude and gasoline, in response to President Donald Trump’s $50 billion levy on Chinese imports READ MORE
DoT may clear Voda-Idea merger today; seeks Rs 21 bn bank guarantee

The telecom department is likely to approve the merger of Vodafone India and Idea Cellular today that will create the country's largest mobile service operator with proposed name of Vodafone Idea Ltd. "DoT is expected to clear the Vodafone-Idea merger on Monday. The certificate will be handed to them," said an official source. READ MORE
Gold prices inched higher on Monday after falling to a 5-1/2-month low in the previous session, as a trade dispute between the world's two largest economies triggered safe-haven buying, but a strong dollar put a cap on the upside. Spot gold edged up 0.1 per cent to $1,279.70 per ounce by 0255 GMT. The yellow metal touched its weakest since late December at $1,275.01 an ounce on Friday. CLICK HERE FOR MORE
BS Special Vajpayee's NDA versus Modi's NDA: What it means to stock markets?
 
Since the NDA formed a government under the leadership of Prime Minister Narendra Modi in 2014, the Sensex has jumped over 54 per cent from May that year to above 35,000 in 2018. The performance of the domestic stock markets during the present NDA government seems far superior to that of the previous one. In contrast to the 54 per cent jump so far, the Sensex almost stagnated around 5,000 points during the previous NDA government. It was at 5,033 in mid-October 1999 and fell down marginally to 5,006 in May 2004 when the government ended its term. READ MORE


DMart's lower same store sales, margins keep analysts on the sidelines
 
The Avenue Supermarts stock is a favourite of investors. So much so that its market capitalisation is higher than the next ten listed multi-brand retailers. While investor demand has led to the doubling of the stock since its listing, barring a few names such as Goldman Sachs and HSBC, most brokerages are now cautious. Of the 15 analysts who track the stock as per Bloomberg, about two-thirds have a sell or a hold rating. Their average target price is Rs 1,336 for the stock trading at Rs 1,538. READ MORE
Top Nifty50 losers

COMPANY LATEST PREV CLOSE LOSS() LOSS(%) VOLUME
VEDANTA 229.90 238.60 -8.70 -3.65 4971619
HINDALCO INDS. 231.75 237.40 -5.65 -2.38 2076447
TATA STEEL 553.55 566.00 -12.45 -2.20 2694405
KOTAK MAH. BANK 1319.10 1340.00 -20.90 -1.56 480533
COAL INDIA 275.35 279.05 -3.70 -1.33 364536


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Eicher Motors' volume growth visibility improves on high rural demand
 
The street sentiment on Eicher Motors, which has been subdued due to falling volume growth over the last few quarters, could improve given recovery in key domestic markets, launch of new models, capacity expansion and improving share of higher-margin variants.
 
Further, with the entry-level motorcycle segment facing severe competition, especially with players cutting prices to gain market share, Eicher Motors, the maker of Royal Enfield bikes, has become the top pick of analysts within the two-wheeler pack. READ MORE
India-focused offshore funds and ETFs pull out $1.9 billion in 4 months
 
The mood among long-term overseas investors is turning sour. In the last four months ending May, India-focused offshore funds pulled out $966 million from Indian equities, with rising crude oil prices, the rate hike by the US Federal Reserve and volatility ahead of the general elections spooking investors.
 
This is the highest sales since last January. These funds had bought into Indian stocks every month in the calendar year (CY) 2017, pumping in $5.76 billion. READ MORE
TCS, Infosys push BSE IT index to new high; IT index rallies 24% in CY18
 
Shares of information technology (IT) companies were in focus on Monday with the S&P BSE IT index hitting record high. The raly comes on the back of a surge in prices of sector majors - Tata Consultancy Services (TCS) and Infosys - that hit a new high on the BSE in intra-day trade.
 
TCS hit a new high of Rs 1,871, up 1.6% on Monday, extending its Friday’s 2.7% gain the BSE after the company’s board approved a proposal to buy back up to 76 million equity shares worth about Rs 160 billion. The buyback price has been fixed at Rs 2,100 a share, a 14 per cent premium over its Friday’s closing price of Rs 1,841 market price. The promoters’ holding in the company now stands at 71.92%. READ MORE
SECTOR WATCH: Information Technology

EPAM Systems (EPAM) and Luxoft Holding (Luxoft)—Central and Eastern European (CEE) IT companies—yet again reported a strong set of numbers (up 30.6% and >20% (ex-two clients), respectively) for Q4FY18. The key positive was back-to-back robust 35% plus spurt in BFSI (from <10% growth), which contributes ~40% to Indian IT companies. Key highlights: 1) digitisation, wealth & asset management and regulatory work driving BFSI (up 35% plus YoY); 2) paucity of talent in America & Western Europe will enable pricing power; and 3) strong revenue growth in non top-10 clients—up 36.5%/18.5% YoY for EPAM/Luxoft.

The upgrade in guidance by EPAM riding robust demand and positive commentary on pricing reiterates our bullish stance on Indian IT sector. Moreover, spurt in BFSI growth rates led by improvement in demand and deal flows implies potential spurt in growth rates of Indian IT companies versus estimates. We prefer large caps Infosys, TECHM and HCLT on valuation and execution comfort.

(Source: Edelweiss Research)
Market Check

S&P BSE Sensex 35,544.88 -0.22%
 
Nifty 50 10,803.50 -0.13%
 
S&P BSE 200 4,669.75 -0.22%
 
Nifty 500 9,327.15 -0.18%
 
S&P BSE Mid-Cap 15,989.04 -0.08%
 
S&P BSE Small-Cap 16,867.44 -0.55%

Street signs: MFs turn cautious on ICICI
 
MFs turn cautious on ICICI Bank The ICICI Bank stock has fallen over 7 per cent in the last month as investors have turned cautious after allegations of corporate governance lapses at the private sector bank. Several domestic mutual funds (MFs) have trimmed their exposure to the stock.
 
According to data, ICICI Prudential Asset Management Company sold 21 million shares of ICICI Bank during May while Birla Sun Life has sold nearly 9 million shares in the same month. READ MORE
Stocks in news

U.S. court restrains Dr Reddy’s from selling generic variant of Suboxone.

ICICI Bank Board may name Sandeep Bakshi as ICICI Bank Interim CEO.

NTPC: The firm has inked pact with Noida Authority to use treated sewage water at Dadri plant.

PNC Infratech : The Uttar Pradesh government has cancelled the on-going bidding process of Purvanchal Expressway Project that comprises eight individual packages and decided to go for fresh bidding. The company was earlier declared as L1 bidder for the fourth package of the above project.

Panacea Biotech along with partner Apotex settle patent dispute with Celgene Corp.

HCL Infosystems concludes sale of entire stake in HCL Services to Karvy Data Management Services.

Kanoria Chemicals and Industries to set up Formaldehyde plant with 1 lakh tonne per annum in Andhra Pradesh.

SMS Lifesciences India has received Establishment Inspection Report from the US Food and Drug Administration for manufacturing facility - Unit-I, Kazipally, Hyderabad, after its inspection in April.

Globalspace Technologies acquires strategic stake of 70.80% in Miljon Medi App.

Shreyas Shipping & Logistics' associate company Avana Logistek filed its draft red herring prospectus with the Securities and Exchange Board of India for its initial public offering. The issue consists of a fresh issue of Rs 300 crore and an offer for sale of up to 43 lakh equity shares by Transworld Holdings, Mauritius, the promoter of Avana.

Andhra Bank raises MCLR by 0.05% for various tenors

Punjab & Sind Bank raises one-year MCLR to 8.6% from 8.5% with effect June 16.

(Source: Nirmal Bang report)
NEWS ALERT

YES BANK, India’s 4th largest private sector Bank, has received final approval and registration from Securities and Exchange Board of India (SEBI) for acting as Custodian of Securities. “Custodian of Securities” is a license granted by SEBI to eligible entities allowing them to offer custodial services to financial market participants including Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs).
Fund facts

 After rising by 6.7% in the previous month, domestic mutual funds’ (MF) equity AUM declined marginally by 0.3% MoM to Rs 7.98t in May.
 
 The fall in equity AUM was driven by a flattish performance of the markets (Nifty). While equity scheme sales were up 4.6% MoM to Rs 282b, redemptions rose 10.9% MoM to Rs 161b. Consequently, net inflows declined from Rs 124b in April to Rs 121b in May.
 
 Total AUM of the MF industry fell 2.8% MoM to Rs 22.6t in May, primarily led by a decrease in AUM of liquid funds (down by Rs 584b), income funds (down by Rs 52b), balanced funds (down by Rs 33b) and equity funds (down by Rs 21b).
 
 Net inflows for the MF industry in CY18YTD stand at Rs 1.5t, 41% of which is contributed by equity funds. All categories of funds – except income, GILT, gold ETFs and FOF – witnessed positive inflows.

 Equity AUM, as a percentage of India’s market capitalization, is at an all-time high of 5.4% (+80bp YoY, +20bp MoM).

(Source: Motilal Oswal report)
(Image source: IIFL report)



MARKET COMMENT

We do not expect major acceleration in the exports momentum due to moderating global trade, although an improvement due to a low base is likely. This along with higher imports (especially oil) would keep the trade deficit elevated. Given FDI flows are now insufficient to fund the CAD and global liquidity is tightening, and INR has outperformed the EM peers so far, a depreciating bias on USDINR is likely. We revise our FY18/19 USDINR average to 68/69 (from 66/66 previously)

(Source: Edelweiss Research)
Sectoral Trend

Top Sensex gainers and losers

Markets at Open

At 9:17 am, the S&P BSE Sensex was trading at 35,599, down 22 points while the broader Nifty50 index was ruling at 10,808, down 9 points
Markets at pre-open

Index Current Pt. Change % Change
 
S&P BSE SENSEX 35,735.86 +113.72 +0.32
 
S&P BSE SENSEX 50 11,368.54 +45.64 +0.40
 
S&P BSE SENSEX Next 50 33,045.47 +133.78 +0.41
 
S&P BSE 100 11,164.09 +44.52 +0.40
 
S&P BSE Bharat 22 Index 3,485.10 +20.45 +0.59

MARKET COMMENT G Chokkalingam, founder & MD, Equinomics Research

US imposed hefty tariffs on $50 billion of Chinese imports on Friday and added that it will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on US goods, services, or agricultural products; raising non-tariff barriers or taking punitive actions against American exporters or American companies operating in China. China retaliated to US tariffs- China will impose tariffs with “equal scale, equal intensity” on imports from the US and all of the country’s earlier trade commitments are now off the table, the Commerce Ministry said in a statement.
 
Rising trade war at this magnitude is a major risk to the global economy and the equity markets including Indian economy and the equity markets. These moves could lead to slowly rising deflationary conditions (like the one we saw in early 2016). Global commodity markets reacted to these developments on last Friday. Crude oil and metals fell around 3.5% on Friday
Nifty outlook by Devang Shah
 
Short-term outlook for the market remains positive till Nifty trades above 10417 levels and expecting targets in the range of 10,900-11,000 levels in short term. Medium term outlook for the market remains positive till Nifty trades above 8,968 levels and expecting targets in the range of 120,00-12,200 levels in medium term. READ MORE
F&O Cues

Nifty Index futures closed flat at 10814.65 compared to previous day's close of 10813.9. Open interest rose by 7.7 lakh contracts and cost of carry slipped to a discount of 3.05 from a premium of 5.85. Put writing seen at the ATM strike and deep OTM strikes elevated PCR OI from 1.55 to 1.57. India VIX closed marginally down at 12.07 against previous day's 12.09. Continuous decline in VIX may be an indication of the weakening volatility expectation in the market.

Addition of Call shorts in the OTM strikes and concurrent unwinding of Put longs from the OTM strikes indicates indecision in the market. But, short built up seen at the 10800 Put strikes suggeststhat major falls are not expected for the time being. Maximum Put - Call open interest accumulation continues to be at the 10700 - 11000 strikes.

(Source: Geojit Financial report)
Interview of the day JAN DEHN, head of research at Ashmore Investment Management
 
Policy meetings of major central banks — the US Federal Reserve (US Fed), the European Central Bank (ECB) and the Bank of Japan (BOJ) — along with the Trump-Kim summit in Singapore kept markets on tenterhooks last week. Emerging markets (EMs), in particular, have seen some pullback recently.
 
London-based JAN DEHN, head of research at Ashmore Investment Management, tells Puneet Wadhwa that he expects fund flows into EMs to resume by the third quarter of 2018. India, he says, will get a share of the pie READ MORE

Jan Dehn, head of research at Ashmore Investment Management

Top trading ideas by Prabhudas Lilladher:
 
BUY DIVIS LAB
CMP: Rs 1,100.95
TARGET: Rs 1,220
STOP LOSS: Rs 1,040
 
The stock has given a decent correction from the peak of 1220 to bottom out at around 1020 levels where also the 200 DMA moving average lies and currently has recovered significantly to maintain a positive bias. The RSI has also recovered strongly from the oversold zone and has made a steep rise to signify strength and has potential to rise further in the coming days. With rising volume activity seen, we recommend a buy in this stock for an upside target of 1220 keeping a stop loss of 1040.
 
Nifty outlook by Prabhudas Lilladher:
 
For Nifty, on the higher end 10,900 level has been capped while the bottom support remains at around 10,680 -10,700 levels. As for Bank Nifty, it has been hovering around a very narrow range for some time and currently the sentiment has somewhat turned bearish below the 26,450 levels. However, the support for the week is seen at 10,650 while the resistance is seen at 10,940. Pharma stocks and IT pack continue to maintain a positive bias which would support the index in the coming days.
NSE-SGX licensing pact to continue beyond August

An arbitrator appointed by the Bombay High Court has directed the National Stock Exchange (NSE) to extend the agreement of Nifty-licensed products to the Singapore Exchange (SGX) until the arbitration concludes. The licensing agreement was to end in August 2018, which could now extend till early 2019.
 
In an interim order released on Thursday, Justice S J Vazifdar asked the SGX to abide by the high court’s injunction against the launch of new India derivative products. The injunction will remain in effect for four weeks from the date of the final order READ MORE
Markets on Friday

S&P BSE Sensex 35,622.14 0.06%
 
Nifty 50 10,817.70 0.09%
 
S&P BSE 200 4,679.88 -0.13%
 
Nifty 500 9,343.70 -0.14%
 
S&P BSE Mid-Cap 16,001.20 -0.40%
 
S&P BSE Small-Cap 16,961.16 -0.46%

SECTOR WATCH: Pharma

Beleaguered by regulatory clampdowns, channel consolidation in the US and increased competition, earnings of US-focused Indian pharma companies dropped 30% over FY18. Despite the all-too-visible business challenges, they persisted with higher R&D activity (related to complex generics and specialty business), which aggravated the pain. As a result, the NIFTY Pharma index has corrected ~30% over three years (after 30% CAGR over FY11-15).
 
We believe FY19 may see a gradual comeback for large cap pharma companies, driven by (1) Actual and likely regulatory resolutions, (2) Moderating price erosion and (3) Several product launches across generic and specialty categories in 2HFY19. We believe earnings have bottomed out, while the base is favourable. Upgrade Sun Pharma to BUY.
MARKET COMMENT Amar Ambani, head of research, IIFL

With US rejecting India's plea to exempt it from the 25 pc steel and aluminium tariffs, the country is set to impose tariffs worth USD 240 mn on US goods it imports. China will impose additional 25 pc tariffs on 659 US goods worth USD 50 billion in response to the US announcement that it will levy tariffs on Chinese imports. The outlook is a weak start.

Dr Reddy’s Laboratories will replace Vedanta in the Sensex. Asian stocks have slipped due to the escalating trade tensions between US and China. US markets too ended lower on Friday. The dollar is nearing a seven-month high against its peers. India’s trade deficit widened to four-month high of USD14.62 billion in May as imports rose almost 15 pc. Prime Minister Narendra Modi has expressed his desire to lift the country’s economic growth rate to double digits.
 
SGX Nifty
 
Trends on SGX Nifty indicate a negative opening for the broader index in India, a fall of 46.5 points or 0.43 percent. Nifty futures were trading around 10,779-level on the Singaporean Exchange.
Dollar approaches 7-month high
 
The dollar edged up toward a seven-month high against a basket of its peers on Monday after the market digested a flurry of news, although US-China trade tensions slowed its gains. The dollar index versus a basket of six major currencies crept up 0.1 percent to 94.882.
 
The index was in reach of 95.131, a seven-month peak scaled on Friday when it soared more than 1 percent last week after the US Federal Reserve gave a hawkish signal on interest rates while the European Central Bank struck a dovish tone.
China to impose 25% tariffs on 659 US goods worth $50 bn
 
China wiil impose additional 25 per cent tariffs on 659 US goods worth USD 50 billion in response to the US announcement that it will levy tariffs on Chinese imports, the Chinese commerce ministry said.
 
Tariffs on $34 billion of US goods including agricultural products such as soybeans will take effect from July 6, the ministry said. Soybeans are China’s biggest import from the United States by value.
Asian shares fall as Sino-US trade spat intensifies
 
Asian shares retreated on Monday after U.S. President Donald Trump cranked up trade tensions with China by going ahead with tariffs on Chinese imports, prompting Beijing to immediately respond in kind.
 
MSCI’s broadest index of Asia-Pacific shares outside Japan  dropped 0.2 per cent in early trade, near its lowest level since May 31. Financial markets in China and Hong Kong will be closed on Monday for Dragon Boat festival holiday.
 
Japan's Nikkei slid 0.7 per cent as fears of growing protectionism overshadowed stronger-than-expected export data.
US markets end lower on trade jitters
 
Wall Street stocks ended lower on Friday, capping a day of heavy trading with investors mostly pulling back from initial concerns over an escalating trade dispute between the United States and China.
 
The Dow Jones Industrial Average fell 84.83 points, or 0.34 per cent, to 25,090.48, the S&P 500 lost 3.07 points, or 0.11 per cent, to 2,779.42 and the Nasdaq Composite dropped 14.66 points, or 0.19 per cent, to 7,746.38.
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