The benchmark indices ended lower after the US Federal Reserve raised interest rates and took a more hawkish tone in forecasting a slightly faster pace of tightening for the rest of the year.
The S&P BSE Sensex ended at 35,600, down 139 points while the broader Nifty50 index settled at 10,808, down 49 points.
Among sectoral indices, the Nifty IT index ended 1.5% lower led by a fall in shares of MindTree, Tech Mahindra and Tata Consultancy Services.
Investors latched on to a change in Fed policymakers’ rates projections, which pointed to two additional hikes by the end of this year compared to one previously, based on board members’ median forecast.
The Fed has raised rates seven times since late 2015 on the back of the economy's continuing expansion and solid job growth, rendering the language of its previous policy statements outdated.
DOMESTIC ECONOMIC DATA
Back home, the Wholesale inflation spiked to 4.43 per cent in May, from 3.18 per cent in April, according to the government data released on Thursday.
Meanwhile, India's current account deficit (CAD) rose to $13 billion (Rs 878 billion and 1.9 per cent of gross domestic product, or GDP) in the fourth and final quarter (Q4 of 2017-18), compared to $2.6 billion (Rs 176 billion and 0.4 per cent of GDP) in the same period of 2016 -17.
For the full financial year (2017-18), the deficit increased to 1.9 per cent of GDP, from 0.6 per cent in 2016-17.
Globally, MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.0 per cent. Shares in South Korea and Taiwan fell over one per cent.
Japan's Nikkei dropped 0.6 per cent. In mainland China, the Shanghai composite index hit a 20-month closing low, shedding 0.4 per cent.
BSE Sensex: TCS, ICICI Bank, SBI among top losers of the day, Sun Pharma top gainer
Market at close
The S&P BSE Sensex ended at 35,600, down 139 points while the broader Nifty50 index settled at 10,808, down 49 points.
Future Supply Chain, Hindustan Aeronautics hit lowest level since listing
Shares of Future Supply Chain Solutions (FSC) and Hindustan Aeronautics (HAL) have hit their respective lowest values since their listing on the bourses. FSC, a Future Group Company, has dipped 7% to Rs 620 on the BSE. The stock made its debut on December 18, 2017, trading 7% lower against its initial public offer price of Rs 664 per share. READ MORE
Euro zone bond markets brace for ECB shift, stimulus scheme nears end
European government bond yields in the euro area edged up on Thursday as the European Central Bank prepared to debate whether to end its unprecedented stimulus scheme this year.
On Wednesday the US Federal Reserve raised interest rates as expected, and signalled two more hikes this year, citing higher inflation. READ MORE
Gold futures up by 0.31% to Rs 31,239 on global cues
Gold prices went up by 0.31 per cent to Rs 31,239 per 10 grams in futures trade today as speculators built up fresh positions, taking positive cues from overseas markets.
At the Multi Commodity Exchange, gold for delivery in August month rose by Rs 96, or 0.31 per cent to Rs 31,239 per 10 grams in business turnover of 511 lots. READ MORE
Reliance Industries hits new high, gains 10% in 3 weeks
Reliance Industries (RIL) hit a new high of Rs 1,011.70 up 1% on the BSE in noon deal, surpassing its previous high of Rs 1010.70 recorded on April 27, 2018 in intra-day trade.
In past three weeks, RIL has outperformed the market by surging 10% as compared to 4% rise in the S&P BSE Sensex. READ MORE
After 2 yrs of muted sales, United Spirits eyes double-digit growth in FY19
The United Spirits stock has shed 15 per cent from its highs earlier this year, mainly owing to regulatory uncertainty weighing on the sentiment of the liquor sector. Demonetisation, and the ban on sale of liquor near state and national highways, besides issues related to the implementation of the goods and services tax, were among the headwinds.
The company reported a sales growth of just 3.8 per cent in FY17 and a fall of 4.5 per cent in FY18. READ MORE
Alembic Pharma up 8% as USFDA approves Doxycycline Hyclate capsules
Alembic Pharmaceuticals has moved higher by 8% to Rs 530, bouncing back 11% from early morning low on the BSE after the company announced that it has received US drug regulator’s approval Doxycycline Hyclate capsules USP, 50 mg and 100 mg. The stock hit an intra-day low of Rs 478 in early morning trade.
“The company has received approval from the US Food & Drug Administration (USFDA) for its Abbreviated New Drug Application (ANDA) for Doxycycline Hyclate Capsules USP, 50 mg and 100 mg,” Alembic Pharma said in a press release. READ MORE
COMMENT Aditi Nayar, Principal Economist at ICRA on WPI
The sharp jump in the WPI inflation to 4.4% in May 2018 surpassed our expectation (4.0%), on account of a spike in inflation for non food manufactured products (core-WPI inflation), reflecting the pass through of higher input costs to wholesale prices in several sectors. Additionally, an expected uptick in the inflation for crude oil and various mineral oils contributed to the hardening of wholesale inflation.
The WPI inflation is expected to harden by up to 80 bps in the ongoing month before easing somewhat in Q2 FY2019. Key factors that would influence the inflation trajectory include the level at which global crude oil prices stabilise and the extent to which they are transmitted to domestic fuel prices, the trend in the monsoon dispersion and the extent of change in MSPs
From Amazon to Westbridge, PE firms bet on insurance due to stable rules
The last few months have seen a spurt in private equity deals in the insurance space, with investors like Westbridge Capital and Warburg Pincus buying stakes in Star Health & Allied Insurance and India First Life, respectively (see box). There have been other deals too.
Investors, however, latched on to a change in Fed policymakers’ rates projections, which pointed to two additional hikes by the end of this year compared to one previously, based on board members’ median forecast. READ MORE
May WPI Inflation spikes to 4.43% vs 3.18% in April: Govt data
WPI inflation rises to 14-month high of 4.43 pc in May on costlier fuel, veggies. Inflation based on wholesale prices shot up to a 14-month high of 4.43 per cent in May on increasing prices of petrol and diesel as well as vegetables. READ MORE
BS SPECIAL Fed hike is good for the US markets; FII outflow from India can accelerate
On the positive side, the Federal Reserve seems to think that the US economy is headed for better times. It feels that the growth is very robust and expects unemployment to fall even further. At the same time, inflation is also on the upward trajectory. Therefore, Fed believes it is important to increase interest rates, which it has done. And, it is now talking about two more interest rate hikes, which is probably a bit more than what the market expected. READ MORE
Multinational drug makers shine as domestic pharma market grows 10%
The growth of over 10 per cent in the domestic pharma market for May, according to data from AIOCD (pharma market research company), has brought cheer to all drug producers. Most of the large-cap Indian pharma companies, which are facing heat in the US market due to pricing pressures, are likely to get some respite. READ MORE
BS SPECIAL Here are the clues that RBI, others can draw from the US Fed action
The important message to be taken from the statement was the forward-looking one on future rate cuts. With the indication now of four rate hikes for the year, and with two having been announced so far, we expect the rate to now end at 2.25-2.5 per cent by the year-end READ MORE
Jagran Prakashan hits 52-week low as stock turns ex-date for buyback today
Shares of Jagran Prakashan (JPL) hit a 52-week low of Rs 145 per share, down 9% on the BSE in intra-day trade, after the stock of publishing company turned ex-date for buyback of equity shares of the company.
The board of directors of the company at its meeting held on April 27, 2018, had approved the buyback of up to 15 million equity shares representing 4.82% of the total equity capital of the Company, at a price of Rs 195 per share, for an aggregate amount of Rs 2,925 million. READ MORE
ICICI Prudential Life extends fall on promoter stake sale plan
ICICI Prudential Life Insurance Company dipped 3% to Rs 397 in early morning trade, extending its previous day’s 3% fall on the BSE after the promoter ICICI Bank proposed to sale up to 2% stake of the company through offer for sale (OFS) route, which begins today.
ICICI Prudential Life, which was trading at its lowest level since April 24, 2018, has fallen 13% from its recent high of Rs 455 on May 11, 2018. READ MORE
Legal, regulatory changes needed for foreign listing of Indian firm
The Securities and Exchange Board of India’s (Sebi) willingness to consider direct listing of Indian companies abroad will require several regulatory changes. On the tax front, the Income Tax Act and all Double Tax Avoidance Agreements would need amending.
Non-tax laws such as the Sebi Act, Reserve Bank of India Act, and the Foreign Exchange Management Act (Fema) will also need changes. Experts say tax laws would be the most sensitive matter in this context, to avoid double taxation. READ MORE
Carlsberg plans IPO for Indian operations to tap growing beer market
Carlsberg A/S is planning a local initial public offering of its Indian business, people with knowledge of the matter said, as it seeks to tap the growing middle class’s increasing thirst for foreign beer.
The Danish brewer is interviewing potential arrangers for the share sale over the next few weeks, according to the people, who asked not to be identified because the information is private. READ MORE
MARKET COMMENT Morgan Stanley on US Fed rate hike
As expected, the FOMC voted to raise its target range for the federal funds rate by 25bp, to 1.75%–2.00%. The statement and projections skewed a bit hawkish. Chair Powell and the FOMC are pleased with the robust labor market and inflation at target. For the time being, they believe continuing down a path of gradual rate hikes will be the best way to maintain these favorable conditions.
The FOMC remains roughly split on whether to hike rates 3 or 4 times this year. Only one participant revised their projection, shifting the median from 3 to 4. We continue to expect only one additional hike this year before the Fed pauses at its December meeting, as the target range aligns with our estimate of current financial conditions are tighter, and policy is no longer that accommodative.
Rupee, bonds hold steady after US Fed's expected move to hike rate
Bond yields in India have not shown any reaction to the US Federal Reserve’s move to hike the key policy rate by 25 basis points last night, as the hike was already expected and priced in.
The US Fed also indicated that there might be two more rate hikes by the end of calendar year, in line with market expectations. READ MORE
Buyback, deal win to add to TCS' earnings, stock nearing all-time high
Two important announcements after market hours on Tuesday, regarding share buyback and expansion of a mega deal, saw the Tata Consultancy Services (TCS) stock trading near its all-time high, before closing at Rs 1,824 (up 2.4 per cent) on Wednesday. The optimism is not without reason. READ MORE
Infosys trades ex-dividend; stock up 24% in CY18
Shares of Infosys opened 1% higher at Rs 1,259 per share on the BSE, also their new high adjusted to dividend, in otherwise subdued market. The stock of information technology (IT) major has turned ex-dividend for Rs 30.50 per share today. READ MORE
Govt's move to push FDI via stock exchanges fails to yield results
The central government’s move to allow higher foreign direct investment (FDI) in Indian stock exchanges has failed to take off. In 2016, it notified rules allowing a foreign entity to hold up to 15 per cent in an exchange. Earlier, this was capped at 10 per cent.
However, none has come to avail the extra legroom. Industry players say this is because it still allows only portfolio investment and does not provide any extra privilege such as control. READ MORE
Balanced funds shrink by 72% in five months to Rs 27 bn from Rs 100 bn
Balanced schemes which dabble both in stocks and debentures are losing favour with investors. Inflows into these hybrid schemes stood at Rs 27 billion in May, down 72 per cent from the peak of Rs 100 billion seen in December 2017. The May inflow tally isn’t one off. READ MORE
Stocks in news
Cabinet approves raising of additional share capital of HDFC Bank up to a maximum of Rs 24,000 crore.
ICICI Bank to sell up to 2.87 crore shares or 2% equity in ICICI Prudential Life Insurance through stock exchange mechanism.
Lupin launches generic Tobramycin Inhalation Solution USP in the U.S.
Cipla received final U.S. FDA approval for generic Isuprel injection.
The Board of Directors of Oberoi Realty has approved an issue of shares under QIP programme. The issue was opened on 13.06.2018 and the floor price for the same has been Rs. 509.29 per share. The board will meet on 19.06.2018 for finalizing the issue price.
Kansai Nerolac starts commercial production at Gujarat unit.
Hindustan National Glass to sell 11.23% stake in HNG Float Glass joint venture for $19.3 million.
Infosys partners Rhode Island School to train 1,000 designers in 2 yrs.
HCL seeks govt approval for IT SEZ in Andhra Pradesh; to invest over $4 bn.
Tata Power: It has signed a power purchase agreement with GE for 5 MW solar projects.
Adani Transmission: The firm has received a letter of intent of one Intra State Transmission Project in Uttar Pradesh.
Container Corp and Bangalore Airport Terminal Services signed MOU to work together for providing Ground Handling and various other airport related services on PAN India basis.
(Source: Nirmal Bang report)
Motilal Oswal on TCS
With multiple mega deals in the bag, TCS is set to continue on its path of gradual acceleration in growth witnessed over the past two quarters, and potential hitting double-digits in constant currency toward the latter half of the year. Currency movements will also play a key role in helping pull margins back to the aspired range of 26-28%. At 22.3x FY19E and 21.1x FY20E earnings, we remain Neutral on valuations
MARKET COMMENT Amar Ambani, head of research, IIFL
The Fed has again done what it was expected to do as it raised benchmark interest rates hinting at a little more aggression in tightening monetary policy this year. The Fed committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the committee's symmetric 2 percent objective over the medium term.
US indices closed lower and sentiment in most markets remain subdued. A quiet start is in store after the Indian indices closed flat following a swinging day. Stocks like TCS will be in focus ahead of the buyback announcement on Friday. HDFC Bank got a nod to raise additional capital of Rs 24,000 crore by selling stake to foreign investors
MARKET COMMENT Rabobank International on fed rate hike
At closer inspection the shift in the dot plot does not seem significant, and the fourth hike for 2018 is still hanging in the balance. While the change in the forward guidance of the FOMC statement is significant it reflects the fact that we have moved closer to neutral. Meanwhile, we have our doubts about the Fed’s optimism on inflation as long as the Phillips curve refuses to materialize. Therefore, for now, we stick to our call for three hikes this year (March, June, September)
BSE Sensex heatmap
Market at open
At 9:15 AM, the S&P BSE Sensex was trading at 35,644, down 95 points while the broader Nifty50 was ruling at 10,821, down 36 points.
The stock has witnessed a decent erosion from the peak of 777 and has formed a bottom formation at around 628 levels and has currently indicated a bounce to signify strength and with the RSI on the rise and also the MACD has shown a trend reversal to maintain a positive bias and we anticipate it has got the potential to rise further in the coming days. With the volume participation increasing in the recent times, we recommend a buy in this stock for an upside target of 700 keeping a stop loss of 640. Click here for more
Nifty outlook by Prabhudas Lilladher:
Nifty has surged for the past 5 days, now nearing our target of 10,900-10,920 where we would witness profit booking, also volatility index was on rise as we are nearing the Fed outcome. The support for the day is seen at 10790 while resistance is seen at 10,900. FMCG sector seems to be getting ready for yet a new high, we have a bullish view for the same & so also is the case with IT Index.
Top trading ideas for today by Tradebulls Securities
CMP: Rs 1,219
Double bottom formation on the daily scale followed by an impulse. The Occurrence of multiple dojis near the 61.8% retracement support of its prior Impulse (1,085-1,235) augurs well for a higher established base for the next impending upmove to be witnessed soon. Trading longs could be considered with a stop below 1,196 & an initial target upto 1,315. Click here for more technical calls
Nifty Outlook by Tradebulls Securties:
Post breaking out from the oscillating range Nifty has been gradually crawling higher maintains its lower shadows above its previous days low. As the index lacks the desired momentum which should have been witnessed post the breakout so far the only sigh of relief is the rising sequence of higher bottoms along with the rising RSI which is still away from its overbought state. It is likely that a sustained close above 10,855 could regenerate the bullish momentum & push the index towards 10,930 /11,060 zone.
On the flipside a breach below 10,770 could push it back into the mean reverting range of 10,770-10,630 & hence serves a trail stop for any longs so far. Traders are advised to remain cautious & aggressive positions would be warranted once a firm close is established above 10,930 or below 10,770 from here on.
Current price: Rs 376
Target price: Rs 370
Keep a stop at 379 and go short. Add to the position between 371-372. Book profits at 370.
Current price: Rs 2,231
Target price: Rs 2,195
Keep a stop at Rs 2,250 and go short. Add to the position between 2,200-2,210. Book profits at 2,195. Click here for more
WPI data to be released today
Traders and investors are closely awaiting a series of domestic and global events this week. The wholesale price index (WPI) inflation data will be announced on June 14, 2018. According to a Reuters Poll, the wholesale prices index is likely to hit a six-month high of 3.82 per cent in May.
India's CAD triples to 1.9% in Q4 year-on-year, pegged at 1.6% in FY18
The country’s current account deficit (CAD) rose to $13 billion (Rs 878 billion and 1.9 per cent of gross domestic product, or GDP) in the fourth and final quarter (Q4 of 2017-18), compared to $2.6 billion (Rs 176 billion and 0.4 per cent of GDP) in the same period of 2016 -17.
It, however, moderated marginally from $13.7 billion (2.1 per cent of GDP) in the third quarter (October to December 2017), stated the Reserve Bank of India. READ MORE
Fitch ups India's growth forecast to 7.4% for FY19
Fitch Ratings on Wednesday raised India's economic growth forecast to 7.4 per cent for 2018-19 but cited higher finance costs and rising oil prices as risks.
It also said that the rupee has been among the worst performers vis-a-vis Asian currencies this year. The global credit rating agency had earlier estimated the GDP growth at 7.3 per cent for the current financial year. For 2019-20, it projected the growth at 7.5 per cent. READ MORE
Trends on SGX Nifty indicate a negative opening for the broader index in India, a fall of 34.5 points or 0.32 per cent. Nifty futures were trading around 10,810-level on the Singaporean Exchange.
Understanding Fed policy: Some mysteries cleared, plot thickens on others
Jerome Powell gave Federal Reserve-watchers some meaningful answers on Wednesday. He also left them scratching their heads over ever-bigger questions.
The Fed lowered its outlook for unemployment this year to 3.6 per cent -- down from 3.8 per cent in the March Summary of Economic Projections -- and the median estimate now sees 3.5 per cent joblessness prevailing in 2019 and 2020. That would take the U.S. to levels last seen in the late 1960’s. Despite those near-term projections, policy makers still see 4.5 per cent unemployment as the long-run sustainable level. READ MORE
Fed-driven dollar rally fades, focus shifts to ECB meeting
The dollar slipped back from three-week highs against the yen on Thursday, quickly erasing gains made after the Federal Reserve took a slightly more hawkish policy tone in signalling two more rate hikes by year-end thanks to a solid outlook for the world’s biggest economy.
The greenback’s bounce faded as traders booked profits before the European Central Bank’s meeting later Thursday, where policy makers are seen discussing the timing of winding down the ECB’s 2.55-trillion-euro (£2.24 trillion) bond-purchase programme.
Oil prices fall
Oil prices eased on Thursday, dragged down by rising output, although strong demand and a drop in US fuel inventories provided the market with some support.
Brent crude futures, the international benchmark for oil prices, were at $76.46 per barrel, down 28 cents, or 0.4 percent, from their last close. US West Texas Intermediate (WTI) crude futures were at $66.58 a barrel, down 6 cents from their last settlement.
Fed lifts rates amid stronger inflation
The Federal Reserve raised interest rates on Wednesday, a move that was widely expected but still marked a milestone in the US central bank’s shift from policies used to battle the 2007-2009 financial crisis and recession.
In raising its benchmark overnight lending rate a quarter of a percentage point to a range of 1.75 percent to 2 percent, the Fed dropped its pledge to keep rates low enough to stimulate the economy “for some time” and signaled it would tolerate inflation above its 2 percent target at least through 2020. READ MORE
Asian shares down on Fed hike
Asian shares edged down on Thursday after the Federal Reserve raised interest rates and took a more hawkish tone in forecasting a slightly faster pace of tightening for the rest of the year, while concerns about US-China trade frictions kept investors on edge.
MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.25 per cent in early trade. South Korea's KOSPI was off 0.9 per cent, while Australia's market slipped 0.2 per cent.
Japan's Nikkei shed 0.7 per cent.
Wall Street falls as Fed signals two more hikes this year
US stocks ended a choppy session lower on Wednesday after the US Federal Reserve raised interest rates as expected and projected a slightly faster pace of rate hikes this year.
The Dow Jones Industrial Average fell 119.53 points, or 0.47 per cent, to 25,201.2, the S&P 500 lost 11.22 points, or 0.40 per cent, to 2,775.63 and the Nasdaq Composite dropped 8.10 points, or 0.11 per cent, to 7,695.70.
Welcome to market's live blog. Catch all live market action here