MARKET WRAP: Sensex ends 276 points higher; RBI hikes repo rate by 25 bps

Markets ended higher after the RBI maintained neutral stance in its second policy decision of FY19. The central bank hiked repo rate by 25 bps to 6.25%, in line with market expectations. This is the first rate hike in over four years, reverse repo rate adjusts to 6%. All six members on the rate panel voted for an increase.

The S&P BSE Sensex ended the day at 35,179, up 276 points, while the broader Nifty50 index settled at 10,685, up 91 points

RBI also revised its retail inflation estimate for 2018-19 to 4.8-4.9 per cent for the first half, and 4.7 per cent for the second. The MPC said that a sharp and durable increase in global crude oil price was seen as a key risk to retail inflation. The central bank retained its gross domestic product (GDP) growth projection at 7.4 per cent for 2018-19.

The MPC decision was in line with a Reuters poll, where an increasing number of economists expected the RBI to raise interest rates, even as some said the rate might be held for now in preparation for an August hike.

Shares of rate sensitive sectors such as bank, real estate and automobiles are trading firm after RBI monetary policy decision. Nifty PSU Bank, Nifty Realty and Nifty Auto were up more than 1% each. 

Amomg individual stocks, State Bank of India (SBI), Bank of India and Allahabad Bank from the banking, Indiabulls Real Estate, Godrej Properties and Oberoi Realty from real estate and Tata Motors, Eicher Motors, Bosch and Bharat Forge from auto sector were up more than 2% on the NSE.

GLOBAL MARKETS

 
Globally,  Asian stocks edged up on Wednesday after tech sector strength lifted Wall Street shares, while concerns about Italy’s debt prompted investors to move into lower-risk government debt elsewhere, pushing US Treasury yields down from recent highs.

MSCI’s world equity index, which tracks shares in 47 countries, was up 0.24 percent, mainly as a result of a strong showing from Asian stocks. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.63 per cent.


3:54 PM IST RBI's repo rate hike: Two factors that took the market by surprise   The decision to raise the repo rate by 25 bps is surprising for two reasons. The first is that it is being done in expectation of inflation increasing in the coming months, though the targeted rate at 4.8-4.9% is still below the 6% upper band. This was not the stance taken earlier, even as inflation increased and expectations were in the upward direction. The second is that the decision was unanimous, which has rarely been the case in past policies where not more than 2 members spoke of rate hikes or assumed a hawkish tone. READ MORE

3:47 PM IST MARKET COMMENT Dheeraj Singh – Head of Investments & Fund Manager – Fixed Income, Taurus Mutual Fund The decision on interest rate hike was generally expected ever since the release of the last monetary policy committee meeting minutes indicated that the committee members were leaning towards a hike in policy rates. The markets will probably take solace in the fact that the central bank continues to maintain a neutral stance and has not moved towards a removal of accommodation stance. This suggests that, unless further inflation prints are significantly higher, the August committee meeting may keep policy rates unchanged. Higher inflation in the immediate future could however increase the probability of a further increase in policy rates

3:46 PM IST MARKET COMMENT Motilal Oswal, chairman & managing director, Motilal Oswal Financial Services RBI Governor changed the rate little higher, as at this juncture that was the best thing to do. India is in a situation where anything sharp can hurt economy. If we raise the Interest rates too fast & too sharp and try tightening the money supply, it can hurt the corporate earnings that are just about on cusp of expanding. Lowering of interest further was not the case at all, as global volatility due to crude oil prices and rate tightening never offered that option.   At the current levels, markets are looking little expensive but for a reason of expectation of earning momentum kicking in. We think even the correction in the mid-caps is overdone and they should start stabilising. It would be a good idea to commit some capital into well-managed mid-cap mutual funds, as the recovery in earnings will bring the quick buoyancy. Broad markets are currently holding well and we think have a case to move higher towards 11,000 Nifty mark in the short term

3:42 PM IST MARKET COMMENT Shishir Baijal, Chairman & Managing Director, Knight Frank India The RBI’s stance of increasing the policy rate by 25bps is in line with our expectation considering that the crude oil flared inflation level and the interest rates in the broader economy have been marching higher for some time now. However, this increase in policy rate will delay the revival of the country’s housing market, which after suffering a prolonged period of slump has just begun to show early signs of improvement on account of uptick in affordable housing

3:42 PM IST Nifty Realty index gained 1.5% COMPANY LATEST PREV CLOSE GAIN() GAIN(%) VOLUME INDBULL.REALEST. 177.95 172.15 5.80 3.37 8607447 GODREJ PROPERT. 726.20 706.35 19.85 2.81 111348 PHOENIX MILLS 664.90 649.15 15.75 2.43 73821 OBEROI REALTY 509.15 501.55 7.60 1.52 208971 UNITECH 4.15 4.10 0.05 1.22 9894359

3:38 PM IST Nifty PSU Bank index gains 2.5% post RBI policy COMPANY LATEST PREV CLOSE GAIN() GAIN(%) VOLUME ALLAHABAD BANK 43.30 39.75 3.55 8.93 10478877 INDIAN BANK 347.95 330.20 17.75 5.38 1892339 UNION BANK (I) 90.60 87.00 3.60 4.14 7594762 ORIENTAL BANK 78.60 75.85 2.75 3.63 2654392 SYNDICATE BANK 48.65 47.15 1.50 3.18 2665106

3:38 PM IST Nifty PSU Bank index gains 2.5% post RBI policy COMPANY LATEST PREV CLOSE GAIN() GAIN(%) VOLUME ALLAHABAD BANK 43.30 39.75 3.55 8.93 10478877 INDIAN BANK 347.95 330.20 17.75 5.38 1892339 UNION BANK (I) 90.60 87.00 3.60 4.14 7594762 ORIENTAL BANK 78.60 75.85 2.75 3.63 2654392 SYNDICATE BANK 48.65 47.15 1.50 3.18 2665106

3:37 PM IST Sectoral Trend

3:36 PM IST Top Sensex gainers and losers

3:35 PM IST Markets at Close The S&P BSE Sensex ended the day at 35,179, up 276 points, while the broader Nifty50 index settled at 10,685, up 91 points

3:24 PM IST MARKET COMMENT Ramesh Nair, CEO & Country Head, JLL India The hike may seem to dampen sentiments in the market but in terms of real estate may have little or no impact. As almost all home loans these days are on floating rates, the rise and fall in home loan rates does not impact the performance of residential real estate sector much and tends to balance each other out over long term.  As buying decisions are generally not taken based on fluctuations in home loan rates, there will be very little effect on the real estate market. Though for some home buyers looking towards making a very low ticket size purchase decision, there may be some tentativeness in the decision making, overall we will see minimal impact on the end-user in the housing sector

3:15 PM IST Rate sensitive shares trade firm after RBI hikes repo rate by 25 bps   Shares of rate sensitive sectors such as bank, real estate and automobiles are trading firm after the Reserve Bank India (RBI) hiked repo rate by 25 bps to 6.25%. This is the first rate hike since January 2014. The central bank maintained neutral stance in the second policy decision of FY19.   Nifty PSU Bank (up 2%), Nifty Realty (1.4%) and Nifty Auto (up 1.5%) were up more than 1% as compared to 0.88% rise in the benchmark Nifty 50 index at 02:57 pm. Nifty Bank and Nifty Private Bank index however, up 0.42% and 0.37%, respectively. READ MORE

LIVE UPDATES

RBI's repo rate hike: Two factors that took the market by surprise
 
The decision to raise the repo rate by 25 bps is surprising for two reasons. The first is that it is being done in expectation of inflation increasing in the coming months, though the targeted rate at 4.8-4.9% is still below the 6% upper band. This was not the stance taken earlier, even as inflation increased and expectations were in the upward direction. The second is that the decision was unanimous, which has rarely been the case in past policies where not more than 2 members spoke of rate hikes or assumed a hawkish tone. READ MORE


MARKET COMMENT Dheeraj Singh – Head of Investments & Fund Manager – Fixed Income, Taurus Mutual Fund

The decision on interest rate hike was generally expected ever since the release of the last monetary policy committee meeting minutes indicated that the committee members were leaning towards a hike in policy rates. The markets will probably take solace in the fact that the central bank continues to maintain a neutral stance and has not moved towards a removal of accommodation stance. This suggests that, unless further inflation prints are significantly higher, the August committee meeting may keep policy rates unchanged. Higher inflation in the immediate future could however increase the probability of a further increase in policy rates
MARKET COMMENT Motilal Oswal, chairman & managing director, Motilal Oswal Financial Services

RBI Governor changed the rate little higher, as at this juncture that was the best thing to do. India is in a situation where anything sharp can hurt economy. If we raise the Interest rates too fast & too sharp and try tightening the money supply, it can hurt the corporate earnings that are just about on cusp of expanding. Lowering of interest further was not the case at all, as global volatility due to crude oil prices and rate tightening never offered that option.
 
At the current levels, markets are looking little expensive but for a reason of expectation of earning momentum kicking in. We think even the correction in the mid-caps is overdone and they should start stabilising. It would be a good idea to commit some capital into well-managed mid-cap mutual funds, as the recovery in earnings will bring the quick buoyancy. Broad markets are currently holding well and we think have a case to move higher towards 11,000 Nifty mark in the short term
MARKET COMMENT Shishir Baijal, Chairman & Managing Director, Knight Frank India

The RBI’s stance of increasing the policy rate by 25bps is in line with our expectation considering that the crude oil flared inflation level and the interest rates in the broader economy have been marching higher for some time now. However, this increase in policy rate will delay the revival of the country’s housing market, which after suffering a prolonged period of slump has just begun to show early signs of improvement on account of uptick in affordable housing
Nifty Realty index gained 1.5%

COMPANY LATEST PREV CLOSE GAIN() GAIN(%) VOLUME
INDBULL.REALEST. 177.95 172.15 5.80 3.37 8607447
GODREJ PROPERT. 726.20 706.35 19.85 2.81 111348
PHOENIX MILLS 664.90 649.15 15.75 2.43 73821
OBEROI REALTY 509.15 501.55 7.60 1.52 208971
UNITECH 4.15 4.10 0.05 1.22 9894359

Nifty PSU Bank index gains 2.5% post RBI policy

COMPANY LATEST PREV CLOSE GAIN() GAIN(%) VOLUME
ALLAHABAD BANK 43.30 39.75 3.55 8.93 10478877
INDIAN BANK 347.95 330.20 17.75 5.38 1892339
UNION BANK (I) 90.60 87.00 3.60 4.14 7594762
ORIENTAL BANK 78.60 75.85 2.75 3.63 2654392
SYNDICATE BANK 48.65 47.15 1.50 3.18 2665106

Nifty PSU Bank index gains 2.5% post RBI policy

COMPANY LATEST PREV CLOSE GAIN() GAIN(%) VOLUME
ALLAHABAD BANK 43.30 39.75 3.55 8.93 10478877
INDIAN BANK 347.95 330.20 17.75 5.38 1892339
UNION BANK (I) 90.60 87.00 3.60 4.14 7594762
ORIENTAL BANK 78.60 75.85 2.75 3.63 2654392
SYNDICATE BANK 48.65 47.15 1.50 3.18 2665106

Sectoral Trend


Top Sensex gainers and losers


Markets at Close

The S&P BSE Sensex ended the day at 35,179, up 276 points, while the broader Nifty50 index settled at 10,685, up 91 points
MARKET COMMENT Ramesh Nair, CEO & Country Head, JLL India

The hike may seem to dampen sentiments in the market but in terms of real estate may have little or no impact. As almost all home loans these days are on floating rates, the rise and fall in home loan rates does not impact the performance of residential real estate sector much and tends to balance each other out over long term. 

As buying decisions are generally not taken based on fluctuations in home loan rates, there will be very little effect on the real estate market. Though for some home buyers looking towards making a very low ticket size purchase decision, there may be some tentativeness in the decision making, overall we will see minimal impact on the end-user in the housing sector
Rate sensitive shares trade firm after RBI hikes repo rate by 25 bps
 
Shares of rate sensitive sectors such as bank, real estate and automobiles are trading firm after the Reserve Bank India (RBI) hiked repo rate by 25 bps to 6.25%. This is the first rate hike since January 2014. The central bank maintained neutral stance in the second policy decision of FY19.
 
Nifty PSU Bank (up 2%), Nifty Realty (1.4%) and Nifty Auto (up 1.5%) were up more than 1% as compared to 0.88% rise in the benchmark Nifty 50 index at 02:57 pm. Nifty Bank and Nifty Private Bank index however, up 0.42% and 0.37%, respectively. READ MORE
RBI Policy Decision

RBI Deputy Governor, NS Vishwanathan says decided to permit core investment cos to invest in invITs as sponsors
RBI Policy Decision
 
RBI Deputy Governor, Viral Acharya says food inflation has remained benign, typical seasonal pick up delayed; hardening has resulted in higher inflation projections for next year
RBI Policy Decision
 
RBI Deputy Governor, Viral Acharya says inflation excluding food & fuel has hardened sharply
RBI Policy Decision

RBI Deputy Governor, Viral Acharya says liquidity remained in neutral zone in March-April
RBI Governor
Price of Indian crude basket provides uncertainty
RBI Policy Decision

Economic revival is now on sound footing, liquidity conditions in June is comfortable, rise in currency circulation has been above trend: RBI Deputy Governor Viral Acharya 
RBI Governor

Both rural & urban consumption remains healthy, is expected to improve
RBI Governor
Financial markets mainly driven by monetary policy expectations globally
Nifty Bank trim losses to turn positive

MARKET COMMENT Mahesh Singhi, Founder & MD, Singhi Advisors

I believe rate hike view of RBI is against the backdrop of market uncertainties, liquidity and imbalances in the bond market. While domestic macro factors are the primary concern for RBI, the global backdrop has become more important in recent months.
 
Emerging market economies are choosing to interest rate hikes to defend their currencies at a time of strong portfolio outflows. India, too, has seen outflows with foreign investors selling. RBI has thus weighed higher rates as a buffer for the currency markets & as a caution of increasing possibility of a ‘sudden stop’ for the global economic recovery. I believe these rate hikes will provide some support to the Indian currency
RBI Governor

To remain vigilant on how actual inflation unfolds
RBI Policy Decision: CPI and GDP projections

Sector watch: Banks

COMPANY LATEST CHG(RS) CHG(%) FREE FLOAT
MKT CAP
(RS CR)
WEIGHT IN
INDEX (%)
ST BK OF INDIA 267.95 4.45 1.69 95653.86 10.29
PUNJAB NATL.BANK 83.90 1.10 1.33 8801.18 1.32
BANK OF BARODA 129.30 1.25 0.98 14024.59 2.17
KOTAK MAH. BANK 1314.15 9.90 0.76 165302.67 12.22
FEDERAL BANK 82.75 0.40 0.49 16324.92 1.39
INDUSIND BANK 1905.60 3.95 0.21 97234.19 6.84

RBI Policy Decision

RBI says to ease norms for participation of gilt short sale
RBI Policy Decision

RBI Governor says financial markets mainly driven by monetary policy expectations globally 
RBI Policy Decision
 
RBI allows 2% more SLR carve out to meet liquidity cover ratio
RBI Policy Decision

RBI says mulling norms to prevent abuse in markets regulated by RBI
RBI Policy Decision

RBI Governor says investment activity is expected to remain robust
RBI Policy Decision

Margin requirements for gilts to be 0.5-4% range for LAF
Margin requirement for state bonds at 2.5%-6% under LAF
Margin requirement for rated state bonds at 1.5%-5% under LAF
RBI policy

The MPC notes that domestic economic activity has exhibited sustained revival in recent quarters and the output gap has almost closed. Investment activity, in particular, is recovering well and could receive a further boost from swift resolution of distressed sectors of the economy under the Insolvency and Bankruptcy Code. Geo-political risks, global financial market volatility and the threat of trade protectionism pose headwinds to the domestic recovery
RBI Policy Decision
 
RBI allows 2% more SLR carve out to meet liquidity cover ratio
Urjit Patel on RBI's stance

The MPC decided to increase the policy repo rate by 25 basis points and keep the stance neutral. The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 per cent on a durable basis
RBI on crude oil & inflation

Major upside risk to the baseline inflation path in the April resolution has materialised, viz., 12 per cent increase in the price of Indian crude basket, which was sharper, earlier than expected and seems to be durable. Crude oil prices have been volatile recently and this imparts considerable uncertainty to the inflation outlook – both on the upside and the downside.

Several other risks remain. First, global financial market developments have emerged as another important source of uncertainty. Second, the significant rise in households’ inflation expectations as gathered in the May 2018 round of the Reserve Bank’s survey could feed into wages and input costs in the coming months.
Market check

Index Current Pt. Change % Change
 
S&P BSE SENSEX 35,107.77 +204.56 +0.59
 
S&P BSE SENSEX 50 11,160.00 +73.68 +0.66
 
S&P BSE SENSEX Next 50 32,310.13 +335.37 +1.05
 
S&P BSE 100 10,953.23 +78.51 +0.72
 
S&P BSE Bharat 22 Index 3,511.07 +37.81 +1.09

RBI on industrial growth

Industrial growth also strengthened, reflecting the robust performance of manufacturing, which accelerated for three consecutive quarters in Q4. Capacity utilisation by manufacturing firms increased significantly in Q4:2017-18 as revealed in the latest round of the Reserve Bank’s order books, inventories and capacity utilisation survey (OBICUS). The output of eight core industries accelerated in April on account of a sharp expansion in coal production, which reached a 42-month peak
RBI Policy Decision

Risks tilted upside for Apr-Sept, Oct-Mar CPI projections
RBI on financial markets

Financial markets have been driven mainly by monetary policy expectations and geo-political developments. Equity market performance has varied across regions with modest gains in the AEs on strong Q1 earnings and abating of trade tensions, while stocks in major EMEs have faced sell offs on a rising dollar and expectations of further rate hikes by the Fed.

The 10-year sovereign yield in the US crossed 3 per cent in mid-May on strong economic data as well as expectations of tighter monetary policy and fiscal expansion, but softened subsequently on safe haven demand; yields softened in other key AEs as well
RBI on GDP growth

CSO’s provisional estimates have placed GDP growth for Q4:2017-18 at 7.7 per cent – 70 basis points higher than that in Q3 – given the sharp acceleration in investment and construction activity. With improving capacity utilisation and credit offtake, investment activity is expected to remain robust even as there has been some tightening of financing conditions in recent months
RBI Policy Decision
 
GDP growth projected at 7.5-7.6% in April-September
 
GDP growth projected at 7.3-7.4% in October-March
RBI on inflation

Projected CPI inflation for 2018-19 is revised to 4.8-4.9 per cent in H1 and 4.7 per cent in H2, including the HRA impact for central government employees, with risks tilted to the upside (Chart 1). Excluding the impact of HRA revisions, CPI inflation is projected at 4.6 per cent in H1 and 4.7 per cent in H2.
RBI Policy Decision
 
Retains GDP growth aim at 7.4% for FY19
RBI Policy Decision
 
Pick-up in core CPI made FY19 forecast more persistent
RBI Policy Decision

Apr-Sep CPI seen 4.8-4.9% including rent allowance impact
Nifty Bank index turms negative post RBI Policy

Nifty Auto index trades higher post RBI Policy

Market Check

Index Current Pt. Change % Change
 
S&P BSE SENSEX 35,048.11 +144.90 +0.42
 
S&P BSE SENSEX 50 11,147.12 +60.80 +0.55
 
S&P BSE SENSEX Next 50 32,231.45 +256.69 +0.80
 
S&P BSE 100 10,938.43 +63.71 +0.59
 
S&P BSE Bharat 22 Index 3,504.54 +31.28 +0.90

RBI Policy Decision

MSF, Bank rate adjusted to 6.5%
RBI Policy Decision

MPC keeps stance neutral despite repo rate hike
RBI Policy Decision

RBI hikes repo rate by 25 bps to 6.25%. First Repo Rate hike since January 2014

Reverse repo rate adjusted to 6% from 5.75%



Ahead of RBI Policy

Index Current Pt. Change % Change
 
S&P BSE SENSEX 35,121.07 +217.86 +0.62
 
S&P BSE SENSEX 50 11,159.82 +73.50 +0.66
 
S&P BSE SENSEX Next 50 32,264.74 +289.98 +0.91
 
S&P BSE 100 10,950.69 +75.97 +0.70
 
S&P BSE Bharat 22 Index 3,504.38 +31.12 +0.90

Fed's next rate hike may further rock US bond market
 
The Federal Reserve's next interest rate increase will mark a key milestone as the era of cheap dollars draws to a close, further unsettling a U.S. bond market already rattled by rising inflation and government debt supply.
 
Next Wednesday the U.S. central bank will likely raise key overnight borrowing costs to roughly match its target for inflation, meaning that for the first time in almost a decade the cost of borrowing dollars will no longer be essentially free. READ MORE
Market Check

S&P BSE Sensex 35,115.15 0.61%
 
Nifty 50 10,657.80 0.61%
 
S&P BSE 200 4,605.16 0.71%
 
Nifty 500 9,172.65 0.68%
 
S&P BSE Mid-Cap 15,649.38 0.74%
 
S&P BSE Small-Cap 16,373.73 0.95%

IndiGo stock continues to languish despite a hike in airfares
 
Despite a hike in air fares through a fuel surcharge, shares of InterGlobe Aviation (IndiGo) continue to languish, falling 23 per cent from its 52-week highs over a month ago. While the move to hike prices by Rs 200-400 based on route length is positive it is not enough to overcome the steep yield declines witnessed in the March quarter.
 
Yields in the March quarter fell 5.5 per cent over the year-ago quarter and 10.5 per cent over the December quarter. READ MORE
NEWS FLASH Cabinet okays package to bail out sugar mills, sugar MSP at Rs 29/kg

NEWS IMPACT


COMPANY LATEST PREV CLOSE LOSS() LOSS(%) VOLUME
SIR SHADI LAL 34.85 38.85 -4.00 -10.30 1043
KESAR ENTERPRISE 31.10 33.65 -2.55 -7.58 25
EMPEE SUGARS 1.72 1.81 -0.09 -4.97 14823
MONNET PROJECT 12.00 12.55 -0.55 -4.38 108
INDIAN SUCROSE 16.05 16.70 -0.65 -3.89 1370
SIMBHAOLI SUGAR 10.20 10.43 -0.23 -2.21 2600
BALRAMPUR CHINI 70.80 72.20 -1.40 -1.94 1122776
 
PSU banks trade firm ahead of RBI policy decision
 
Shares of public sector undertaking (PSU) banks were trading higher by up to 7% on the National Stock Exchange (NSE) ahead of the Reserve Bank of India (RBI) monetary policy decision, due later in the day today.
 
Allahabad Bank, Union Bank of India, Andhra Bank, Oriental Bank of Commerce, Punjab National Bank (PNB), Syndicate Bank, Bank of India, Canara Bank, Bank of Baroda and State Bank of India (SBI) were up in the range of 1% to 7%. READ MORE
Govt may need to infuse about Rs 600 bn in PCA banks to shore capital base
 
The markets celebrated when the government approved a capital infusion plan for weak banks last October. Especially, the share prices of those under the Reserve Bank’s (RBI’s) ‘prompt corrective action’ (PCA) ambit rose 15-34 (except for Dena Bank). Of the ~2.1 trillion proposed, the government infused ~900 billion in public sector banks (PSBs) during FY18; a little over 60 per cent was for PCA banks.
 
However, with the recent developments in the sector, these efforts seem insufficient. The 11 PCA bank stocks have been under pressure. READ MORE
Biocon stock: Rich valuations, regulatory news flow may add to volatility
 
Biocon’s second biosimilar approval, pegfilgrastim (Neulasta), for launch in the US market with partner Mylan, is being seen as a booster dose for the medical industry. However, what came as a shock was the nearly 12 per cent fall in Biocon’s stock price in intra-day trade on Tuesday, in the aftermath of the news of the approval coming in. READ MORE
WhatsApp leak: Sebi to take action against mkt operators of blue-chip firms
 
Sebi will soon take action against some market operators and senior staff members of about a dozen listed blue-chip firms for their alleged involvement in leak of price-sensitive information through WhatsApp.
 
The companies may also face censure action by the market watchdog for alleged lapses in safeguard mechanism to check leak of unpublished price sensitive information (UPSI), including financial results before they were made public for all investors, regulatory sources said. READ MORE
Select stocks under ASM framework recover after falling for two days
 
Shares of select companies which are under additional surveillance measures (ASM) recover from their respective intra-day lows after declining in past two straight trading sessions on the BSE.
 
The BSE on Monday decided to bring 109 companies, including HEG, Graphite India, Reliance Naval and Engineering, Amtek Auto, GVK Power & Infrastructure under enhanced surveillance measures. READ MORE
Markets at noon

S&P BSE Sensex 35,103.67 0.57%
 
Nifty 50 10,656.00 0.59%
 
S&P BSE 200 4,602.61 0.66%
 
Nifty 500 9,168.10 0.63%
 
S&P BSE Mid-Cap 15,639.16 0.67%
 
S&P BSE Small-Cap 16,355.09 0.84%


Renuka Sugars to use network of Adani Wilmar to revive Madhur brand
 
After taking over the management of Shree Renuka Sugars (SRSL), multinational company Wilmar International plans to utilise the distribution network of Adani Wilmar Ltd (AWL) to make ‘Madhur’ a leading sugar brand.
 
Wilmar has a joint venture (JV) with Adani Enterprises in AWL, which makes and distributes the ‘Fortune’ brand of edible oil — it has 21 per cent of market share in the branded segment. Recently, it hired actress and beauty queen Lara Dutta to promote its rice bran edible oil. Despite increasing consumer demand for quality products, branded sugar has so far failed to gain a large market share. READ MORE
Europe's new market rules to pinch Rs 200-billion Indian broking industry
 
The nearly Rs 200-billion Indian broking industry is feeling the heat and its roots can be traced all the way to Europe. The European Union (EU) has introduced new rules, which are already taking a bite into the revenues.
 
This, in turn, is changing how research and execution services are offered to some of India’s largest foreign investors. The resulting pressure on earnings for the domestic market is likely to mirror the tumult that has been seen across the world, according to experts. READ MORE
Gruh Finance trades ex-bonus today; stock up 3%
 
Shares of Gruh Finance, a subsidiary of HDFC, was up 3% to Rs 351 on the BSE in early morning trade after the stock turned ex-bonus on Wednesday.
 
The board of housing finance company at their meeting held on April 14, 2018 had announced a 1:1 bonus i.e. one new bonus equity share of Rs 2 each for every one existing equity share of Rs 2 each for its shareholders. It has set June 7 as the record date for determining the entitlement of members to receive bonus equity shares of the Company. READ MORE
Anand Rathi on Mirza International

In FY18 branded footwear revenue grew 38% and its share in Mirza’s revenue rose to ~42% in FY18 (from ~31% the year before). An export slowdown, however, constrained revenue growth. Ahead, we expect the growth momentum to persist. We expect revenue growth to recover as the share of the non-branded footwear dips and the share of the faster-growing branded footwear rises. We maintain our Buy rating on the stock, with a target price of Rs 148.
Nomura sees Nifty at 11,380 by December 2018; HDFC Bank, RIL among top bets

Global research house Nomura sees a limited upside for the markets from here on. Their recent India Strategy report co-authored by Saion Mukherjee, Neelotpal Sahu and Sanjay Kadam, pegs the Nifty50 target at 11,380 levels by December 2018 READ MORE
MUST READ Rout on in small, mid caps: Experts blame negative news flow, Q3 earnings
 
Small- and mid-cap stocks are witnessing a carnage due to unwinding of speculative bets amid regulatory curbs. On Tuesday, the Nifty Smallcap 100 and Nifty Midcap 100 indices extended their sixth day of declines to 8 per cent and 4.5 per cent, respectively.
 
The widely tracked Nifty50 index was down just 1 per cent, hiding the pain the broader market is going through. In absolute terms, the decline in market cap of small and mid cap stocks, listed on the National Stock Exchange, during this period is Rs 2.88 trillion. READ MORE
Top BSE500 Gainers

COMPANY PRICE() CHG() CHG(%) VOLUME
AVANTI FEEDS 1480.75 127.05 9.39 42621
SOLAR INDS. 1156.30 69.40 6.39 189
MINDA INDS. 1198.10 66.85 5.91 9025
PARAG MILK FOODS 312.10 16.65 5.64 39393
PRAJ INDS. 89.80 4.75 5.58 96655
» More on Top Gainers
RBI monetary policy: Calm bond market suggests status quo on rates
 
The bond market seems to be expecting interest rates to remain unchanged in the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) meeting on Wednesday as the yield on benchmark 10-year paper softened by 5 basis points (bps) to close at 7.83 per cent.
 
Economists said the panel may wait till the next policy review in August for any decision on rate hike, awaiting data on spread of monsoon. READ MORE
Market Check

S&P BSE Sensex 35,026.24 0.35%
 
Nifty 50 10,619.40 0.25%
 
S&P BSE 200 4,594.78 0.49%
 
Nifty 500 9,141.95 0.35%
 
S&P BSE Mid-Cap 15,651.33 0.75%
 
S&P BSE Small-Cap 16,370.30 0.93%

INTERVIEW OF THE DAY
 
Unfair to blame RBI for missing forecast, says Chetan Ahya
 
CHETAN AHYA, global co-head of economics and chief Asia economist at multinational financial services entity Morgan Stanley, answers questions on the Reserve Bank’s (RBI’s) ongoing review of monetary policy and allied issues. Click here for full interview


Motilal Oswal Currency Report on RBI policy deciion
 
The brokerage expects the central bank would maintain a status quo approach as it has many things to monitor in the backdrop. Starting with rising crude oil prices, fund outflows by FIIs from equity and debt segment, balance sheet normalization by the Federal Reserve, strength in the dollar against its major crosses and rising 10-year yields.
Tata Motors: Long way ahead for domestic business – BUY
CMP (Rs) 285, 12-mts Target (Rs) 400, Upside 40%
 
Tata Motors at its Investor Day for its India business laid out a roadmap for increasing market share in both passenger car and CV segments, improve profitability through various measures, plans to adopt electric vehicle technology across both divisions, alternate fuel technologies and many more initiatives. The company shared its aspiration of becoming the third largest player in the domestic passenger car market and regain its lost market share in the CV segment.

The company is aiming for a profitable growth and maintained its guidance of 3-5% EBIT margins for the standalone entity during FY19-21 and 5-7% over the longer term. Also, the company has lined up its divestment plan for exit out of non-core investments. The company has named the overall plan as Turnaround 2.0. Considering the successful implementation of Turnaround 1.0, we believe there exists high probability of company achieving the set goals in the new plan. We retain our estimates and maintain our BUY rating on the stock.

(Source: IIFL report)
 
Nomura on SBI

We maintain our positive outlook on corporate banks (with adequate capital levels) with the asset quality cycle nearing its end now, and within PSUs SBI remains our preferred pick given management stability, its strong liability franchise and adequate capital levels. Current valuations at 0.7x FY20F adjusted book seems reasonable for a 12-13% normalised ROE by FY20F and hence we maintain Buy with a price target of Rs 350/share implying 1x FY20F adjusted book.
Ahead of RBI Policy



Stocks In News

Corporation Bank to consider raising of capital by way of issuance of fresh equity shares and/or by issuance of additional Tier – I or Tier – II capital

Bank of Baroda has raised lending rates by 5 bps.

NMDC: The company’s iron ore output is at 4.5 MT in 2 months of FY19

Hindustan Copper: Company gets nod to carry own exploration, FY19 capex at Rs 700 crore

Karur Vysya Bank ties up with Aditya Birla Health as bancassurance channel

Bajaj Finance raises fixed deposit rates by 30 bps

Ram Vilas Paswan says Cabinet will consider up to Rs 8,000 crore package for the sugar industry.

United Spirits receives shareholders’ approval for 5:1 stock split.

Mcleod Russel to sell certain tea estates of the company in Assam to MK Shah Exports for Rs 331 crore.

ADF Foods to buyback 10 lakh equity shares (4.71 percent equity) at Rs 300 each.

Kirloskar Oil Engines to hike prices of power generator sets by 5-8 percent due to rising raw material costs.

Nalco sets a capex target of Rs 1,100 crore for 2018-19.

(Source: Nirmal Bang report)
MARKET COMMENT Amar Ambani, head of research, IIFL

The carnage in several counters continued even as the main indices closed with modest losses amidst volatile trade on Tuesday. Sensex fell below 35,000 and Nifty closed below 10,600 mark. Ahead of the Reserve Bank of India's second bi-monthly policy meeting outcome expected today, investors will remain cautious.

There is widespread consensus of a status quo on interest rates, but the commentary of the Monetary Policy Committee is expected to take a hawkish stance. A rate hike, if it happens could spook the market. The market will also focus on MPC's view on rising crude oil prices, inflation and US Federal Reserve's rates. The Nikkei Services Purchasing Managers' Index, contracted to 49.6 in May from 51.4 in April, for the first time in three months, though business sentiment improved. Asian shares are trading mixed. Wall Street ended lower.
 
Sectoral Trend


Top Sensex gainers and losers



Markets at Open

At 9:17 am, the S&P BSE Sensex was trading at 34,917, up 14 points while the braoder Nifty50 index was ruling at 10,598, up 5 points
Top trading ideas by Prabhudas Lilladher:
 
BUY BAJAJ FINANCE
 
CMP: Rs 2,100.60
TARGET: Rs 2,260
STOP LOSS: Rs 2,030
 
The stock has had a decent run outperforming many of the front liners and in recent times has been consolidating at around 2100 maintaining good support at around 2050 levels gaining strength and potential to rise further in the coming days. The indicators like RSI has shown improvement with a trend reversal and a positive bias is maintained and with decent volume participation witnessed, we recommend a buy in this stock for an upside target of 2260 keeping a stop loss of 2030. Click here for more
Markets at pre-open

Index Current Pt. Change % Change
 
S&P BSE SENSEX 34,953.03 +49.82 +0.14
 
S&P BSE SENSEX 50 11,086.32 -38.10 -0.34
 
S&P BSE SENSEX Next 50 31,974.76 -270.10 -0.84
 
S&P BSE 100 10,874.72 -45.42 -0.42
 
S&P BSE Bharat 22 Index 3,473.26 -27.86 -0.80

Nifty outlook Prabhudas Lilladher:
 
Ahead of the RBI policy, Nifty and Bank Nifty witnessed volatility with the former making an intraday low of 10550 and this zone at around 10,520-10,530 levels, technically we anticipate a good support and if that is broken, the sentiment would be weakened and further downside movement would be initiated with 10,400 as the next support level to watch for. However, the support for the day is seen at 10530 while resistance is seen at 10,640.
Top trading ideas by HDFC Securities
 
SELL TVS MOTORS
 
CMP: Rs 565
Stop Loss: Rs 585
Target: Rs 535
 
Stock has been making lower tops and lower bottoms on the daily charts. Stock price is currently placed below 50,100 and 200 DMA, indicating positional downtrend. Oscillators also indicates bearish trend for the stock on daily and weekly charts We recommend Selling Tvs Motos for the downside target of 535, keeping SL at 585. Click here for more
Nifty outlook by HDFC Securities
 
Sell Nifty below 10,530; Target: 10,360
 
The recent high 10,770 has now become strong resistance in Nifty. Any level below 10,530 would result in to the fresh breakdown in Nifty, which could push the index towards next support of 200 DMA, currently placed at 10,360. The Support of 10,530 is derived from the upward sloping trend line adjoining daily bottoms of 23rd Mar 2018(9,951) and 23rd May 2018(10,417). Nifty Midcap and Small cap indices have broken down on the charts and have reached at the lowest levels for last 8 to 10 months, respectively.
Today's picks
 
Tata Motors
 
Current price: Rs 285
Target price: Rs 277
 
Keep a stop at Rs 289 and go short. Add to the position between Rs 279 and Rs 280. Book profits at Rs 277. 
 
Reserve Bank of India to hold rates, but August hike now close call: Poll
 
An increasing number of economists expect the Reserve Bank of India (RBI) to raise interest rates on Wednesday, a Reuters poll found, but most still think the central bank will stay on hold and use this week’s meeting to prepare for an August hike.
 
In a snap poll of 56 economists taken after gross domestic product data on Thursday, 26 of those respondents, or about 46 percent, expect the RBI to take the repo rate higher at the June 6 meeting. The GDP data showed Asia’s third-largest economy grew at its fastest pace in nearly two years in the January-March period. READ MORE


Markets on Tuesday

S&P BSE Sensex 34,903.21 -0.31%
 
Nifty 50 10,593.15 -0.33%
 
S&P BSE 200 4,572.52 -0.53%
 
Nifty 500 9,110.50 -0.71%
 
S&P BSE Mid-Cap 15,534.67 -1.20%
 
S&P BSE Small-Cap 16,219.58 -2.43%

SGX Nifty
 
Trends on SGX Nifty indicate a negative opening for the broader index in India, a fall of 20 points or 0.19%. Nifty futures were trading around 10,587-level on the Singaporean Exchange.
Asia stocks gain
 
Asian stocks edged up on Wednesday after tech sector strength lifted Wall Street shares, while concerns about Italy’s debt prompted investors to move into lower-risk government debt elsewhere, pushing US Treasury yields down from recent highs.
 
MSCI's broadest index of Asia-Pacific shares outside Japan  rose 0.1%, while Japan's Nikkei edged down 0.1%.
US stocks edge up as tech extends gains
 
US stocks mostly edged higher on Tuesday as technology shares extended recent gains while US Treasury yields fell on safe-haven buying after Italy’s new prime minister outlined new economic policies that could add to the nation’s debt.
 
The Dow Jones Industrial Average fell 12.51 points, or 0.05%, to 24,801.18, the S&P 500 gained 1.63 points, or 0.06%, to 2,748.5 and the Nasdaq Composite added 25.81 points, or 0.34%, to 7,632.27.
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