MARKET WRAP: Sensex, Nifty end flat with negative bias; PSBs, IT slip

BSE Sensex
Markets ended flat on Thursday with gains being capped by banking and auto stocks. Weak global cues and rising retail inflation, too, contributed to a lackluster trade.

The S&P BSE Sensex ended 15 points, or 0.04 per cent, lower at 39,741 levels dragged by select blue-chip counters like IndusInd Bank, Reliance Industries, YES Bank and Infosys. While PowerGrid and M&M were the top gainers, YES Bank and IndusInd slipped the most.

The broader Nifty50 settled just above the psychological level of 11,900 at 11,914 mark, up a modest 8 points, or 0.07 per cent. Among sectoral indices, public sector banks, metals and IT stocks lost ground.

The S&P BSE Sensex touched an intra-day low of 39,461 levels while the Nifty50 drifted to 11,817 levels during the day before staging a limited recovery. The broader market, S&P BSE Mid-Cap index settled 49 points lower at 14,873 levels, while the S&P BSE Small-Cap index lost 72 points to close at 14,476 levels, taking deeper cuts than benchmark indices.

Bad loan risk from related firms likely: UBS

A recent report by global research and brokerage house, UBS, suggests that the next level of risk could appear from leveraged corporates' inter-related companies (their network). 

"We believe the market is not pricing in the structural opportunity available to ICICI Bank, Axis Bank and SBI due to near-term issues. NPL risk for YES Bank and IndusInd does not seem to be fully priced in," the report said. YES Bank and IndusInd Bank were among the top losers in the Nifty Bank index on Thursday, slipping nearly 13.5 per cent and 5 per cent, respectively by close.

UBS, which expects the NPL cycle to be extended due to the emergence of new stressed accounts, studied 5,600 companies and their links to around 200 large corporates with an aggregate debt of about $250 billion. READ MORE

Buzzing stocks

Shares of Jet Airways (India) slipped 15 per cent to Rs 93 apiece during the morning deals on Thursday to hit a fresh lifetime low on the BSE and National Stock Exchange (NSE). The fall comes on the back of the exchanges' decision to switch deals on the stock to ‘trade-to-trade’ segment with effect from June 28, 2019 till further notice.

Shares of Indiabulls Group companies soared up to 16 per cent from their respective intra-day lows on the BSE on Thursday after Abhay Yadav, the petitioner who had filed a public interest litigation (PIL) against the housing finance major for siphoning off funds worth Rs 98,000 crore, withdrew the writ petition in the Supreme Court.

Click here to read on more buzzing stocks 

Global cues

Shares in Asia Pacific were mixed on Thursday on an intractable US-China trade war and oil prices that soared during the afternoon session.

Hong Kong’s Hang Seng index closed fractionally lower at 27,295 while Japan’s Nikkei 225 slipped 0.46% to close at 21,032. South Korea’s Kospi shed 0.27% to close at 2,103.

 


4:05 PM IST Though the benchmark index is somehow holding around its record high, broader indices are under tremendous pressure. It shows lack of buying interest among the participants, citing uncertain global markets and not so encouraging domestic cues. We maintain cautious view on markets and suggest focusing on trade management. Nifty has immediate support at 11,800 and its breakdown could trigger fresh fall else consolidation will continue

4:04 PM IST Nifty showed upside bounce from the lows and closed on a minor gains today. A small positive candle was formed today with lower shadow, which indicates a minor comeback of bulls from the lows. The overall chart pattern now suggests a broader range movement around 11,780 to 12,000 levels and the Nifty is expected to move within this range for the next one - two sessions. Expect selling near 12,000 mark

3:47 PM IST

3:46 PM IST

3:44 PM IST

2:48 PM IST UBS, which expects the NPL cycle to be extended due to the emergence of new stressed accounts, studied 5,600 companies and their links to around 200 large corporates with an aggregate debt of about $250 billion.   The 200 corporates have aggregate debt of around $250 billion, of which only 25 per cent is investment grade. In other words, 75 per cent of this sample is either rated below investment grade (BB or below), with an interest coverage ratio (EBIDTA/Interest) of less than 1.5x, or where no recent credit rating data has been found. CLICK TO READ FULL REPORT

2:29 PM IST Shares of Indiabulls Group companies soared up to 16 per cent from their respective intra-day lows on the BSE on Thursday after Abhay Yadav, the petitioner who had filed a public interest litigation (PIL) against the housing finance major for siphoning off funds worth Rs 98,000 crore, withdrew the writ petition in the Supreme Court. READ MORE

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Market View :: Jayant Manglik, President - Retail Distribution, Religare Broking

Though the benchmark index is somehow holding around its record high, broader indices are under tremendous pressure. It shows lack of buying interest among the participants, citing uncertain global markets and not so encouraging domestic cues. We maintain cautious view on markets and suggest focusing on trade management. Nifty has immediate support at 11,800 and its breakdown could trigger fresh fall else consolidation will continue

TECHNICAL CHECK :: Nagaraj Shetti - Technical Research Analyst, HDFC Securities

Nifty showed upside bounce from the lows and closed on a minor gains today. A small positive candle was formed today with lower shadow, which indicates a minor comeback of bulls from the lows. The overall chart pattern now suggests a broader range movement around 11,780 to 12,000 levels and the Nifty is expected to move within this range for the next one - two sessions. Expect selling near 12,000 mark

Top gainers and losers on S&P BSE Sensex


MARKET AT CLOSE


MARKET AT CLOSE


NPL risks from associated firms likely; IndusInd, YES Bank vulnerable: UBS

UBS, which expects the NPL cycle to be extended due to the emergence of new stressed accounts, studied 5,600 companies and their links to around 200 large corporates with an aggregate debt of about $250 billion.
 
The 200 corporates have aggregate debt of around $250 billion, of which only 25 per cent is investment grade. In other words, 75 per cent of this sample is either rated below investment grade (BB or below), with an interest coverage ratio (EBIDTA/Interest) of less than 1.5x, or where no recent credit rating data has been found. CLICK TO READ FULL REPORT


Indiabulls Housing up 10% on withdrawal of PIL in fund siphoning off case

Shares of Indiabulls Group companies soared up to 16 per cent from their respective intra-day lows on the BSE on Thursday after Abhay Yadav, the petitioner who had filed a public interest litigation (PIL) against the housing finance major for siphoning off funds worth Rs 98,000 crore, withdrew the writ petition in the Supreme Court. READ MORE

Market check | Nifty50 crosses 11,900


Market check | S&P BSE Sensex turns green for the first time during the day


NEWS ALERT | Week-to-Wednesday rainfall 15.8 mm, 49% below normal: Met Dept

NEWS ALERT | Tata Sponge board approves rights issue of up to Rs 1,800 crore

- Board approves rights entitlement ratio of 15:7 at issue price of Rs 500/Sh

- Record date for rights issue set at June 25

Lakshmi Vilas Bank soars 9%


Indiabulls Real Estate soars over 4% after petitioner withdraws PIL against Indiabulls Housing Fin


Rana Kapoor denies seeking board position

Rana Kapoor tweets

NEWS IMPACT | Indiabulls Housing Fin stock climbs 8% after writ petitioner withdraws fund siphoning case


Indiabulls Housing | Petitioner, Abhay Yadav withdraws writ petition in SC: CNBC-TV18

- Yadav had accused Indiabulls Housing Fin of siphoning off Rs 98,000 cr

Alert: SC had agreed to hear case in July

Elara Capital on Zensar Technologies

Rating: BUY
 
Target Price : INR 340
 
Upside : 33%
 
CMP : INR 256 (as on 12 June 2019)

We maintain our estimates. We have not taken into account the divesture of the non-core multi-vendor support (MVS) segment that accounted for 4.8% of revenue in FY19 due to uncertainty regarding timing of the divesture. With increased confidence in management’s ability to improve lagging parts of the portfolio, we change our rating to Buy from Accumulate with a new TP of INR 340 from 280 based on 13x (from 15x FY20E) FY21E P/E. We assign a lower multiple as we look at earnings further out into the future.
 

Sector review | UBS on Banks and Financials

Private sector banks could outgrow industry peers, in our view. NBFC funding troubles could allow better pricing/higher loan growth for banks in the near term. We expect the revenue pool for the financial services industry (ex-SOE banks) to grow around 14% over FY17-22. We expect NIMs to improve slightly over FY19-21 due to mix change.

We expect new NPL formation to fall in FY20; however, new risks from sponsors' leverage, non- banking financial companies (NBFCs), and the real estate segment remain. YES and INDUSIND appear most vulnerable to the new risks than current market expectations. Considering the disruption in NBFCs, we believe ICICI, AXIS, SBI, HDFC Bank and Kotak Mahindra Bank (Kotak) are well placed in the emerging competitive landscape, given their strong presence in most financial
products.

 

Rupee at Day's low

Source: Bloomberg

IndusInd Bank dips 8% to hit 3-week low after UBS downgrades scrip to sell

Shares of IndusInd Bank hit three-week low of Rs 1,441 per share, slipping 8 per cent intra-day on Thursday after foreign brokerage UBS downgraded the stock to ‘sell’ from ‘neutral’ on expectations of higher credit costs.
 
The brokerage firm also lowered its price target to Rs 1,400, drawing inference from the lending cost of the bank, which it believes, could rise to 150 basis points (bps) as against the lender's guidance of 65 bps in FY20. READ MORE

Tyre stocks under pressure as rubber prices rise; Ceat hits 52-week low

Shares of tyre makers were trading weak with Ceat hitting a 52-week low of Rs 921, down 4 per cent on the BSE, on concerns of margin pressure due to rise in raw material costs, particularly natural rubber.
 
MRF, Balkrishna Industries, Goodyear India, JK Tyre & Industries and Apollo Tyres were down in the range of 1 to 2 per cent on the BSE. In comparison, the S&P BSE Sensex was down 0.54 per cent at 39,541 points at 11:19 am. READ MORE

Adani gets go ahead to start long delayed coal mine project in Australia

The go-ahead comes after Queensland's Department of Environment and Science said it had approved Adani's Groundwater Dependent Ecosystem Management Plan following a rigorous assessment "based on the best available science." READ MORE

Canara Bank trading near day's low


NMDC skids 7% after protests halt iron ore production at Chhattisgarh unit

Tribals’ agitation against the allotment of an iron-ore mine to NMDC entered the sixth day on Wednesday, also affecting production at the company’s Bacheli-Kirandul complexes in Chhattisgarh. The two complexes in Dantewada district, with 25 million tonne per annum (mtpa) capacity, contribute a lion’s share to NMDC’s total output, the Business Standard reported. READ MORE

Maybank on Sterlite Technologies

Share Price: Rs 192
 
12m Price Target: Rs 340 (+77%)

Recommendation: Buy


Swing Factors

Upside
- New order wins in network design segment.
 
- Faster than expected commissioning of new OF capacity.
 
- Demand pick-up in optic fibre cables volume in India.
 
Downside
- Slowdown in global demand for OF and OF cable.
 
- Delay in commissioning of capacity.
 
- USD/INR appreciation to impact earnings owing to increasing exports dependence.

EXPERT VIEW ON IIP | Sujan Hajra, Chief Economist, Anand Rathi Shares

IIP growth came ahead of expectations. But given the inherent volatility of monthly numbers, this substantially does not change the subdued outlook for H1FY20. We think government would continue to focus on growth through different measures including tax cuts and increased welfare related spending. RBI, too, would maintain accommodative liquidity and interest policy stance.
 

PwC auditor observations 'baseless and unjustified': Reliance Capital

Reliance Capital Ltd said on Thursday the observations of PricewaterhouseCoopers (PwC) about its fiscal accounts were "completely baseless and unjustified", a day after the auditor withdrew from assessing the shadow bank's fiscal year 2018/19 accounts.
 
In a letter to Reliance Capital, PwC said it felt compelled to withdraw from the audit of the company's fiscal year 2018/19 accounts after not receiving "satisfactory response" to its queries on certain observations in its assessment, Reliance Capital said in a statement on Wednesday.

 

Momentum Picks by ICICI Securities


Jet Airways tanks 15% after BSE, NSE put trading restrictions w.e.f June 28

Shares of Jet Airways (India) slipped 15 per cent to Rs 93 apiece during the morning deals on Thursday to hit a fresh lifetime low on the BSE and National Stock Exchange (NSE). The fall comes on the back of the exchanges' decision to switch deals on the stock to ‘trade-to-trade’ segment with effect from June 28, 2019 till further notice. Under this category, delivery of shares is compulsory. READ MORE

Market check


Market check


Kotak Securities on KNR Constructions

KNR CONSTRUCTIONS LTD
 
LAST CLOSING PRICE: RS 281

TARGET PRICE: RS 312

RECOMMENDATION: ADD


KNR has track record of generating positive operating cash flows which would help it in meeting capital for future growth. We have maintained our estimates for FY20E and FY21E. The EPC business (adjusted for BOT/HAM value Rs 42/share) is available at a PE of 13.2x/11.5x based on FY20E/FY21E EPS of Rs 18.1/Rs 20.8, respectively. We maintain ADD on the stock with SOTP based target price of Rs 312, valuing standalone business at 13xFY21E EPS.

YES Bank declines 6% to hit 40-month low as brokerages downgrade stock

Shares of YES Bank hit a 40-month low of Rs 126, down 6 per cent on the BSE in the early morning trade on Thursday after UBS cut the target price of private sector lender to Rs 90 from Rs 170.

The stock hit its 52-week low of Rs 121.8/share on the NSE today. READ MORE


NMDC slips over 4% during morning deals


J&K Bank skids 6%


SREI Infrastructure Fin tanks 9%


DHFL tumbles nearly 8%


PNB slips nearly 4% in trade


Infosys is trading over 1% lower


S&P BSE MidCap index is trading in line with the benchmark Sensex

- Index is trading 0.24% lower at 14,506


S&P BSE MidCap index is trading in line with the benchmark Sensex

- Trading 0.27% lower at 14,882


NEWS ALERT | Adani Enterprises zooms over 2%

- Adani Enterprises gets final nod for new coal mine from Queensland govt, Australia

- Queensland govt signs off on plan to manage groundwater around Galilee Basin



Asian Paints trading mildly higher on weak crude oil prices


S&P BSE Oil & Gas index trading in the green on 4% dip in oil prices


Indiabulls Housing Fin dips nearly 3%


Reliance Capital slips over 2%


IndusInd Bank slips over 3%


Jet Airways slips 11%


Yes Bank dips over 5% in early trade


Sectoral trends on NSE


Top gainers and losers on S&P BSE Sensex at opening


Market at open


Market at open


Top loser on BSE Sensex during Pre-Open


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


RUPEE ALERT

Rupee opens unchanged against Wednesday's close of 69.34

Market at pre-open


Market at pre-open


Stocks to watch: DHFL, Tata Sponge, Music Broadcast and Tiger Logistics

Here's a look at some of the companies whose shares are expected to trade actively in Thursday's session -
 
DHFL: The promoters of Dewan Housing Finance Corporation (DHFL) are willing to share control of the embattled company by selling half their stake to a "strategic investor", said a Business Standard report. Kapil Wadhawan is also open to stepping down as managing director (MD), the report added. 
 
Tata Motors: The Tata Motors Group global wholesales in May 2019, including Jaguar Land Rover, slipped 23 per cent over May 2018.
 
Tiger Logistics: CARE Ratings has revised the outlook of credit rating to the company as under - Long term bank facilities - CARE BBB; Negative (Rating reaffirmed; outlook revised from Stable) Long term / short term bank facilities - CARE BBB; Negative / CARE A3 (Rating reaffirmed; outlook revised from Stable).  READ MORE

All you need to know about bid-ask spreads and its importance while trading

When you trade stocks the price / volume screen will show you the bid price and the ask price. The bid price shows the best price at which the other party is willing to buy the stock. That will be the best price at which the trader on the screen can sell the stock. The ask price shows the best price at which the other party will sell the stock. It is the best price at which the trader on the screen can buy the stock. The extent to which the ask price on the screen is greater than the bid price on the screen represents the bid-ask spread of the stock. Look at the bid-ask chart below. READ MORE

Nifty view | Metal and Realty sector

The short term trend of Nifty is down and more weakness could be in store for the near term. One may expect Nifty to retest the key lower support of 11,760 levels in the next 2-3 sessions. Immediate resistance is placed at 11,960 levels.

(Source: HDFC Securities)



Funding for NBFCs should accompany RBI's liquidity management rules: FIDC

The non-banking finance companies, most of whom are cash strapped, want the Reserve Bank of India (RBI) to implement liquidity risk management rules only in tandem with an arrangement for making available much needed funds. Else, RBI should defer the roll out of risk management rules until liquidity situation become normal. CLICK HERE FOR MORE

Nifty Derivatives by Kotak Securities


Market review | Nagaraj Shetti – Senior Technical & Derivative Analyst, HDFC Securities

Nifty slipped into weakness today, next down side levels to be watched at 11820-800

After showing a lacklustre type of up movement in the last couple of sessions, the Nifty slipped into weakness on Wednesday and closed the day lower. A small negative candle was formed with minor lower shadow, which signals a reversal pattern at 12K mark, after a small upside bounce.  Last sessions swing high of 12,000 could now be considered as a new lower top formation. As per this pattern, one may expect further weakness in Nifty in the coming sessions.
 
Hence, the next down side levels to be watched at 11,820-11,800, in the next few sessions.

India Inc presses fund houses for more AAA-rated firms in portfolios

Corporate India has stepped up due diligence of its mutual fund investments and is pressing fund houses to tweak their portfolios to include more AAA-rated companies and sovereign public sector undertakings, even if it means sacrificing returns. Institutional investors had gravitated towards bigger fund houses that were perceived as safer after the IL&FS crisis. READ MORE

PwC quits as RCap, RHFL auditor over their unsatisfactory response in audit

PwC had noted certain observations and transactions as part of the ongoing audit. The audit firm was of the view that these — if not resolved satisfactorily — might be significant or material to the financial statements, according to the exchange disclosures by the two firms. READ MORE

DHFL promoters may sell half their stake; Wadhawan could give up MD post

The promoters of Dewan Housing Finance Corporation (DHFL) are willing to share control of the embattled company by selling half their stake to a "strategic investor". Kapil Wadhawan, who represents the promoters in the board, is also open to stepping down as managing director (MD) and keeping only the chairman’s position so that the company can be run jointly with the new partner. READ MORE

Sebi moves SC against NCLT order on IBC overriding regulators' laws

The Supreme Court on Wednesday agreed to hear a plea by the Securities and Exchange Board of India (SEBI) against an order by the National Company Law Tribunal (NCLT), which had held that the laws of Insolvency and Bankruptcy Code (IBC) would reign over the markets regulator’s laws. The top court, while agreeing to hear the case, asked that the present status quo be maintained in the case. CLICK HERE TO KNOW MORE

Mindtree directors' panel finds L&T offer price 'fair & reasonable'

“The IDC is of the opinion that as on the date of the public announcement, the offer price of Rs 980 offered by the acquirer, is in accordance with the regulations prescribed under the Sebi (SAST) regulations, and appears to be fair and reasonable,” the committee observed, said a regulatory filing by Mindtree to the exchanges. READ MORE

India, Russia, China uniting on rising protectionism, WTO reforms at SCO

After focusing on terrorism and defence in 2018, Modi is expected to discuss the ongoing trade war and pitch for greater economic cooperation with Russia and China in the Kyrgyz capital Bishkek on June 13-14, senior government officials said. READ MORE

YES Bank shareholders flag governance issues, but back new management

Shareholders of private lender YES Bank on Wednesday raised issues of corporate governance at its annual general meeting (AGM) — the first since Ravneet Gill took over as managing director and chief executive officer. Most investors were also hopeful of better performance because of the change in senior management. READ MORE

Sugar output in India may drop to a 3-year low next season on dry weather

Production in India, which vies with Brazil as the world’s top grower, may slide to 28 million to 29 million tons in the year that begins Oct. 1 from 33 million tons this year, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd. READ MORE

Despite reasonable valuation, BHEL stock could give investors a shock

The good news for Bharat Heavy Electricals (BHEL) is that analysts are turning positive on the stock. The optimism is also backed by fundamentals — largely attributable to improved order execution and cost optimisation — which are, in turn, perking up operating profit margins for the coal-fed power plant maker. READ MORE

YES Bank research on IIP

India’s industrial production registered a sharp pickup to 3.4% YoY in April from an upwardly revised print of 0.4% in March (earlier: -0.1% YoY), albeit supported by a favorable base. The print was markedly higher than consensus and our expectation of 0.6% and 1.0% respectively. On sequential basis, the headline index contracted by 9.9% MoM, which is an improvement over the average run rate of -11.4% seen in April over the last five years.
 
Domestic demand pick up is likely to remain gradual amidst an anticipation of slow recovery in rural and urban demand. With election related uncertainty behind us we expect to see improvement in consumer and business sentiments. However, liquidity constraints faced by NBFCs and housing finance corporations continue to weigh on consumption and investment demand. Amidst an accommodative policy environment, RBI’s OMO purchases and FX swap arrangements is providing the necessary liquidity support to the system, nevertheless, it is only with a lag that a complete pass through of this support will be visible on the real goods and services markets.  

 While we look at India’s GDP to grow at 7.0% in FY20, marginally better than FY19 GDP growth of 6.8%, we expect it to be back-loaded in H2

ICICI Bank on CPI inflation

CPI for May increased to 3.05% YoY compared to previous print of 2.99% YoY in April, in line with our expectations. The rise was driven by the continued uptick in food inflation (largely due to vegetables, pulses and meat and fish). Meanwhile, core inflation trimmed its pace as it increased by 4.2% YoY vs 4.53% YoY in the previous month. Although, all components in core inflation showed a sequential increase, the favorable base effect kept core inflation under control.

Going ahead, we expect the trajectory of headline inflation to remain benign until H1 FY2020 after which we see the base becoming unfavorable. For the whole year we expect CPI to average 3.9% YoY. However, our forecasts especially for H2 is substantially higher than that expected by the RBI.

Today's picks: From TCS to Bharti Infratel, hot stocks to watch on Thursday

TCS
 
Current price: Rs 2,261
 
Target price: Rs 2,300
 
Keep a stop at 2,240 and go long. Add to the position between 2,285-2,295. Book profits at 2,300. READ MORE

Buy and sell ideas by Sacchitanand Uttekar of Tradebulls Securities

Nifty continues to consolidate post attaining new lifetime highs as profit-booking at higher levels have kept upside capped on immediate basis. 20-DEMA (Double Exponential Moving Average) continues to act as immediate support on the downside currently placed at 11,810. Weekly derivative data indicates sustained put writing at 11,800 strike which also coincides around the support zone of its 20-DEMA. READ MORE

Bulk deal on NSE as on Wednesday

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


Rupee check

Source: Bloomberg


Oil check

At 7:39 am, Brent Crude Futures were trasding at $60.10 per barrel.

SGX Nifty

At 7:38 am, SGX Nifty was trading 19 points lower at 11,906.5 levels

Asian Markets check

Source: Reuters


US Market check

Source: Reuters


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