MARKET WRAP: Sensex ends 284 points higher, Nifty at 10,768; midcaps shine

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The markets ended higher on Thursday after the Reserve Bank of India's (RBI's) Monetary Policy Committee on Wednesday hiked repo rate by 25 bps to 6.25%, for the first time in four years, while maintaining a neutral stance. 

The S&P BSE Sensex ended at 35,463, up 284 points while the broader Nifty50 index settled at 10,768, up 84 points.

The S&P BSE Midcap index rose 1.40% today led by a rise in shares of SAIL and IDBI Bank, while the BSE Smallcap index settled nearly 2% higher led by Unitech and Ramkey Infrastructures. Among sectoral indices, the Nifty Realty index surged nearly 3% on Thursday, led by Unitech and Prestige Estates Projects.

RBI's MONETARY POLICY

The six-member monetary policy committee (MPC) unanimously voted for a rate hike, citing the fear of inflation, partly flared by the recent spike in crude oil prices. The central bank’s April policy tone was dovish and it had actually lowered inflation forecasts for the first and second half of 2018-19. 

"We had previously expected the start of the rate hike cycle in 4Q18. However, reflecting this earlier than expected move, we now expect the rate hikes to be front-loaded. Specifically, we expect rate hikes in the August and October meetings but that the total quantum of rate hikes will remain at 75bps for this cycle," analysts at Morgan Stanley said in a note on Thursday.

GLOBAL MARKETS

Asian shares rose Thursday, with markets in Japan and South Korea notching convincing gains in early morning trade. That followed moves higher on Wall Street in the last session, which saw the Dow Jones industrial average close above 25,000.

The Nikkei 225 edged up by 0.69 perc ent in early morning trade. South Korean stocks saw similar gains, with the benchmark Kospi up 0.67 per cent.

(With inputs from agencies)

LIVE UPDATES

Nifty Realty index ends 2.97% higher. Top gainers:

COMPANY LATEST PREV CLOSE GAIN() GAIN(%)
UNITECH 4.95 4.15 0.80 19.28
PRESTIGE ESTATES 254.90 233.05 21.85 9.38
GODREJ PROPERT. 790.00 726.20 63.80 8.79
BRIGADE ENTERPR. 248.60 231.10 17.50 7.57
H D I L 22.20 20.70 1.50 7.25

Nifty sectoral gainers of the day


BSE Sensex gainers and losers of the day


Market at close
 
The S&P BSE Sensex ended at 35,463, up 284 points while the broader Nifty50 index settled at 10,768, up 84 points.
PSU banks extend gain; IDBI Bank, Canara Bank up over 4%

Shares of public sector undertaking (PSU) banks were trading higher for the second day in a row, gaining nearly 4%, after the Monetary Policy Committee (MPC) in its second bi-monthly policy for 2018-19 voted unanimously for a hike in policy repo rate of 25 bps, while retaining its neutral stance. READ MORE
 

Gold inches up as euro gains against dollar

Gold prices inched up on Thursday as the euro rose to 2-week highs against the US dollar, with investors waiting for meetings of key central banks and the US-North Korea summit all due next week.
 
Spot gold was up 0.1 per cent at $1,297.46 per ounce, while US gold futures for August delivery were largely unchanged at $1,301.50 per ounce. READ MORE

FDI inflows in India decline by 9% to $40 bn in 2017: UN report

Foreign Direct Investment to India decreased to $40 billion last year from $44 billion in 2016 while outflows from India, the main source of investment in South Asia, more than doubled, according to a new trade report by the UN. READ MORE
 
Kwality extends fall despite board mulling bonus issue, share buyback
 
Shares of Kwality have dipped 5% to Rs 31.65 per share, extending their 30% fall in past seven trading days on the BSE, despite the company today saying that its board will consider share buyback or bonus issue proposal on June 20, 2018.
 
The meeting of the board of directors of the Company will be held on Wednesday, 20th June, 2018 to consider and approve the proposal for buyback of securities and/or bonus issue of securities; and recommendation of interim dividend. READ MORE
Facing trouble, Indian public sector banks need leaders but are headless
 
India’s government-owned banks are becoming increasingly rudderless, just when they most need a firm hand at the top.
 
Four of the country’s 21 state banks have yet to appoint replacements for departed chief executive officers, and another has seen its CEO stripped of her powers due to fraud charges. Over the coming months, nine more of the lenders are due to lose their top executives, at a time when spiraling bad loans and an intensified crackdown on financial sector-corruption make the jobs less appealing than ever. READ MORE
Market Check

 
S&P BSE Sensex 35,561.56 1.09%
 
Nifty 50 10,797.05 1.05%
 
S&P BSE 200 4,670.60 1.12%
 
Nifty 500 9,313.20 1.17%
 
S&P BSE Mid-Cap 15,938.61 1.30%
 
S&P BSE Small-Cap 16,778.43 1.89%

ELSS: Smart way to save tax; here's how to pick a top performing one

Tax planning forms an indispensable part of one’s financial plans. Under Section 80C of the Income Tax Act 1961, you can claim deductions of upto Rs 1.5L and reduce your tax liability. So, to save on taxes, you just need to invest your money in investments eligible under 80C. Equity Linked Savings Scheme (ELSS) is eligible under section 80C.
 
Out of all these investments, ELSS tends to be the most popular and most efficient tax-saving instrument. READ MORE
 
Analysts give thumbs-down to Rs 70 billion sugar bailout package

Markets have given a thumbs-down to the government’s Rs 70 billion intervention package (including Rs 4,440 crore in loans to mills to expand ethanol production) for the sugar industry to address the immediate liquidity problems of the industry.
 
Most stocks, such as Dwarikesh Sugar, Dhampur Sugar, EID Parry, Kesar Enterprises and Thiru Aroon Sugar are trading lower in the range of 1 per cent to 5 per cent on the BSE on Thursday – extending their Wednesday’s fall of 3 per cent to 12 per cent. In comparison, the S&P BSE Sensex has gained around two per cent during this period READ MORE


Volume gains to offset margin pressures for Maruti Suzuki

The Maruti Suzuki stock has gained about four per cent over the last week on strong sales in May, the expectation of higher growth for FY19 and plans to launch electric vehicles by 2020. While there are headwinds such as the higher raw material costs and weak rupee which makes imports costlier, analysts believe that these will be offset by the operating leverage (higher volumes), reduction in discounts as demand in the sector improves, as well as richer product mix. READ MORE
 

Prabhudas Lilladher on Tata Motors

We welcome the increased disclosures and disinvestments from loss-making/non-core subsidiaries. Management's focus on improving the performance of the standalone entity is now clearly visible and we expect it to continue. The near-term outlook for JLR, however, remains muted both for volumes and profitability, EBIT margin target of ~7-9% (earlier 8-10%) mainly due to accelerated product development expenses.

With JLR's full product range available in EV/Hybrid variants from 2020 gives us further confidence. Given the attractive valuations and buoyant management guidance, we maintain "BUY" with a target price of Rs378, where we value JLR at 2.75x Mar'20E EV/EBITDA and Standalone entity at 10x Mar'20 EPS
Tata Motors proposes to raise ECB up to USD 250 mn

Tata Motors announced that the Company will proposing to raise external commercial borrowing up to U.S.$250,000,000 from Lenders up to a maximum of U.S.$500,000,000. All proceeds from the facility will be fully used towards refinancing a part of the principal amount of the Borrower's Notes as permitted under the ECB Master Directions.
 

Majesco gains after new contract win

Majesco rose 4.71% to Rs 489.75 on BSE after the company said it has secured a contract for Cloudlnsurer platform product. The announcement was made during market hours yesterday, 6 June 2018. READ MORE

Foreign auditors have turned skittish after Satyam, says Shankar Sharma

Why did you tweet that you will not invest in a company audited by one of the big four auditors? The market does not pay a premium valuation for a company being audited by a foreign auditor. On the other hand, if they resign it becomes a huge stigma for the company.
 
So there is zero upside and 50 per cent downside. Doesn't a resignation signal problems in a company's books? Investors don't know if something is wrong with the books of accounts of those companies, because the auditors haven't given the proper reasons. READ MORE

Markets at noon

S&P BSE Sensex 35,504.13 0.92%
 
Nifty 50 10,784.85 0.94%
 
S&P BSE 200 4,662.15 0.94%
 
Nifty 500 9,297.20 0.99%
 
S&P BSE Mid-Cap 15,900.75 1.06%
 
S&P BSE Small-Cap 16,759.92 1.78%

INTERVIEW OF THE DAY
 
'Lack of earnings growth, high valuation are biggest challenges for market'
 
The Reserve Bank of India (RBI) surprised the markets with a hike in repo rate. Satish Menon, executive director, Geojit Financial Services says that he has a one-year target of 10,400 for the Nifty50 index. Consumption related stocks should do well going ahead, he says. Read Full interview Here

Satish Menon, executive director, Geojit Financial Services

Sebi to probe leak of additional surveillance measures stock list
 
The Securities and Exchange Board of India (Sebi) on Wednesday ordered an inquiry into the leak of the names of stocks to be placed under additional surveillance measures (ASM) ahead of an official announcement.
 
On May 31, stock exchanges released a list of 109 stocks on which additional trading curbs were to be imposed. However, hectic trading was seen in some of the stocks even before exchange notification. READ MORE
Top BSE500 gainers

COMPANY PRICE() CHG() CHG(%) VOLUME
AVANTI FEEDS 1810.00 187.40 11.55 121226
UNITECH 4.64 0.46 11.00 1305489
PHILLIPS CARBON 241.60 23.65 10.85 359715
TIME TECHNOPLAST 146.45 13.35 10.03 46445
CAPLIN POINT LAB 436.55 39.65 9.99 21943
» More on Top Gainers
High base not growth deterrent for Cadila, high launches may drive earning
 
Cadila Healthcare, unlike many of its peers, seems to be a bright spot in the pharma space. The company, which has been buzzing with news on approvals of drug launches, announced on Wednesday the USFDA’s approval for its Ahmedabad-based SEZ facility.
 
The unit, which manufactures oncology injectables for regulated markets, was inspected from 28 May to June 5 and has not received observations by the drug regulator. With this, Cadila, which resolved the FDA warning letter for its Moriaya plant last year, has no regulatory overhang. READ MORE
Sebi lens on Rajiv Kochhar's Avista Advisory clients in ICICI loan case
 
Listed companies that availed of services from the Rajiv Kochhar-led Avista Advisory have come under regulatory glare. According to sources, the Securities and Exchange Board of India (Sebi) is likely to examine the end-use of funds and other securities law compliance by these companies -- including Suzlon, GTL Infra, Jindal Stainless and Sterling Biotech.
 
These companies had employed Avista Advisory—owned by Rajiv Kochhar, brother-in-law of ICICI Bank managing editor Chanda Kochhar—for loan restructuring and other corporate needs. READ MORE
Bajaj Finance shares hit new high; Infosys nears record high
 
Shares of Bajaj Finance hit a new high of Rs 2,190 per share, up 1.6% on the BSE in early morning trade. The stock of finance company surpassed its previous high of Rs 2,177 recorded on May 22, 2018 in intra-day trade.
 
Shares of information technology (IT) bellwether Infosys touched a fresh 52-week high of Rs 1,257, up 1.7%, trading close to its all-time high of Rs 1,278 hit on June 3, 2016 in intra-day trade. READ MORE
RBI policy review: Investment recovery positive, headwinds remain

Key market indices such as the Sensex and Nifty, which initially reacted negatively after the Reserve Bank of India (RBI) raised its policy rates by 25 basis points (bps), recovered soon to close the day about a per cent higher. The neutral stance (unlike general Street estimates of a hawkish one) of RBI and the regulator’s expectation of improvement in investment activity propped up investor sentiment. READ MORE
 

Market Check

 
S&P BSE Sensex 35,418.60 0.68%
 
Nifty 50 10,758.65 0.69%
 
S&P BSE 200 4,651.55 0.71%
 
Nifty 500 9,278.65 0.79%
 
S&P BSE Mid-Cap 15,866.78 0.84%
 
S&P BSE Small-Cap 16,688.11 1.34%

INTERVIEW OF THE DAY Probability of 10-12% return on Nifty over 12 months: Mahesh Patil

MAHESH PATIL, co-chief investment officer, Aditya Birla Sun Life Asset Management Co, spoke to Ashley Coutinho on the economy and the share market. CLICK HERE TO READ MORE
Mahesh Patil, co-chief investment officer, Aditya Birla Sun Life Asset Management Co

Stocks in news

McLeod Russel to sell some tea estates of the company in Assam to Luxmi Tea Company for Rs 141 crore.

Lemon Tree Hotels signs agreement for 104 room property in Madhya Pradesh.

Sadbhav Infrastructure board approves raising of fund upto Rs 3,000 crore via issue of securities.

Bhansali Engineering Polymers resumes commercial production at plant in MP following fire incident.

C&C Constructions joint venture wins contract worth Rs 145 crore from Govt of Bihar.

Aksh Optifibre receives show cause notice from SEBI in relation to GDR issue.

NCLT admits Videocon Industries under insolvency and bankruptcy code.

HCL Infosystems says deal with Apple India to distribute iPhone and other Apple products to end in Mar 2019.

Majesco gets contract for cloudinsurer platform product.

Hatsun Agro rights issue to open on June 14. Issue price fixed at Rs 555 per share.

Goldstone Infratech launches first full electric feeder bus – “eBuzz K6”, to be exported to Nepal.

Dollar Industries receives approval from BSE to list 5.67 crore equity shares with effect from June 7.

Syndicate Bank plans to raise Rs 5K cr via securities

Quess Corp approved sale of 74% equity shareholding held in Inticore VJP Advance Systems

Essel Propack - Record date for bonus issue is June 21

Hindustan Construction: Company wins Rs737 crore contract for Bangladesh nuclear power plant

Bajaj Auto cuts prices of some models to grow market

(Source: Nirmal Bang report)
Opportunities on Nifty Bank after rate hike

The immediate impact of the Reserve Bank of India (RBI) Monetary Policy Review has not been negative. The market was braced for a 25 basis hike. The policy statement projects somewhat heightened inflation, but is otherwise positive in its outlook. The central bank expects growth to stay on track. Inflation is still at acceptable levels.
 
But it is climbing. Crude oil prices are volatile and likely to rise. The rupee is taking a beating. The fact that several banks had chosen to hike rates ahead of the review tells us that the cycle has switched. READ MORE

Nomura on HUL

We attended Hindustan Unilever’s (HUL) latest post-FY18 results annual analyst meet hosted by its top management. Management’s message was quite clear that focus remains on sustaining the current growth momentum through innovation, premiumisation and new category development. The company, however, does not appear to be moving its focus away from profitability. Overall, the company’s medium- to long-term vision is now firmly in place, and it appears all set to deliver on the same.
 
We maintain our Neutral rating and target price of Rs 1,430, which implies ~8.5% downside from current levels. We value HUL on a PE multiple of 38x (unchanged) on our one-year-forward earnings estimate of Rs 37, which is in line with HUVR's historical two-year average.
MARKET VIEW Edelweiss on RBI policy

The MPC, in a unanimous decision, raised the repo rate for the first time in four years by 25bps to 6.25% versus our and consensus’ base case of a pause. The rise in input prices, especially crude oil, pick up in core inflation and closing output gap forced RBI’s hand. Importantly, the MPC explicitly stated that its stance remains neutral and it will closely monitor developments in crude oil, MSPs and fiscal deficit.

In our view, RBI is early on embarking on its tightening cycle. We are not convinced by its assessment that the output gap in the economy is closed. Even on the core inflation front, we believe, the recent rise is partly the result of low base, which should reverse in late 2018. For now, we believe, the August policy review will be a status quo, although the subsequent path will be shaped by incoming data
Nomura on RBI policy

We expect the market to continue pricing in a more-than-50% probability of a hike in August while the RBI’s neutral stance will make it difficult to reprice terminal rate expectations significantly from current levels. This supports flatter curves in our view. On bonds, we suggest maintaining a neutral to modest underweight stance.
Nifty sectoral trend


BSE Sensex heatmap


Market at open
 
At 9:15 AM, the S&P BSE Sensex was trading at 35,364, up 185 points while the broader Nifty50 was ruling at 10,742, up 58 points.
Markets at pre-open

Index Current Pt. Change % Change
 
S&P BSE SENSEX 35,271.32 +92.44 +0.26
 
S&P BSE SENSEX 50 11,207.66 +25.61 +0.23
 
S&P BSE SENSEX Next 50 32,455.32 -1.14 0.00
 
S&P BSE 100 11,000.31 +21.36 +0.19
 
S&P BSE Bharat 22 Index 3,519.85 +3.88 +0.11

(Source: BSE)
Top stock ideas from Prabhudas Lilladher for today: But ITC, SBI

BUY ITC
CMP: Rs 270.40
TARGET: Rs 292
STOP LOSS: Rs 260
 
The stock has witnessed a decent correction from the peak of 288 to bottom out at around 266 levels which is exactly at the significant 200DMA levels and has formed a higher bottom formation pattern in the daily chart. The chart looks very attractive with the risk- reward ratio very much favourable for a buy and with the RSI indicator also showing a trend reversal, the bias has turned positive with potential to rise further in the coming days. With decent volume participation witnessed, we recommend a buy in this stock for an upside target of 292 keeping a stop loss of 260. READ MORE
 

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
 
Today's picks: From Titan to Hindalco, hot stocks to watch on Thursday

Titan
Current price: Rs 900
Target price: Rs 920
 
Keep a stop at Rs 892 and go long. Add to the position between Rs 910 and Rs 915. Book profits at Rs 920.

Hindalco
Current price: Rs 248
Target price: Rs 244
 
Keep a stop at Rs 251 and go short. Add to the position between Rs 245 and Rs 246. Book profits at Rs 244. READ MORE
 

Nifty outlook by Tradebulls for today

Nifty respected the 10,550 support well & today’s rebound reconfirms the strength in the support. On the flip side the headwinds near 10,770 could remain valid for a day or so but the ongoing sequence of higher tops & bottoms on the hourly charts augur well for a breakout soon. Lately some of the key heavy weights have displayed strength & supporting the index to maintain its run while selective mid caps are forming reversal signals. Hence it’s prudent to maintain a bullish bias until 10,500 is valid & the sector rotation is healthy. READ MORE
 
Markets on Wednesday

 
S&P BSE Sensex 35,178.88 0.79%
 
Nifty 50 10,684.65 0.86%
 
S&P BSE 200 4,618.75 1.01%
 
Nifty 500 9,205.90 1.05%
 
S&P BSE Mid-Cap 15,734.19 1.28%
 
S&P BSE Small-Cap 16,467.30 1.53%

SGX Nifty
 
Trends on SGX Nifty indicate a positive opening for the broader index in India, a gain of 36 points or 0.34 percent. Nifty futures were trading around 10,731- level on the Singaporean Exchange.
Asian shares gain, rise to over 2-month high
 
Asian shares rose to 2 1/2-month high on Thursday, supported by strong economic fundamentals. MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.2 per cent to extend its gains, hitting a 2-1/2 month high for a second straight day.Japan's Nikkei rose 0.7 per cent to 22790.68 in early trade.
Wall Street rises on economic data, easing trade worries
 
Wall Street indexes rallied on Wednesday with help from financial stocks as investors eyed strong economic data and trade war fears took a back seat while the Nasdaq registered its third straight record closing high.
 
The Dow Jones Industrial Average rose 346.41 points, or 1.4 per cent, to 25,146.39, the S&P 500 gained 23.55 points, or 0.86 per cent, to 2,772.35 and the Nasdaq Composite added 51.38 points, or 0.67 per cent, to 7,689.24.
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