Sensex, Nifty End Marginally Lower As Tata Motors, Reliance, IT Stocks Drag

Indian stocks fell, snapping a two-session win streak, as the price of crude oil jumped ahead of the start of the local quarterly earnings season later this week.

The S&P BSE Sensex ended little changed at 52,861.18, while the NSE Nifty 50 Index slipped by 0.1% to 15,818.25. Thirteen of the 19 sector sub-indices compiled by BSE Ltd. declined, led by a gauge of auto companies.

Oil prices have surged about 50% since the start of the year, fueling concerns over inflation as India and other economies try to recover from the coronavirus pandemic. Locally, companies begin reporting earnings for June quarter this week with Tata Consultancy Services scheduled to kick off the season on July 8.

“With the beginning of the earnings season, the focus would gradually shift from global markets to domestic factors,” Religare Broking said in a note. The brokerage said pick up in demand and economic activities are likely to drive growth for Indian companies for June quarter earnings.

Investors continue to gauge impact of surging crude oil on India’s economy. Retail fuel prices in India, Asia’s second-biggest consumer of oil, have already surged to new highs on rising crude prices coupled with ever-increasing government levies.

Jaguar Land Rover expects chip supply shortages in the second quarter ending Sept. 30 to be greater than in the first quarter, resulting in wholesale volumes about 50% lower than planned, the luxury carmaker’s parent Tata Motors says in an exchange filing.

• “While the present supply constraints continue, the company will continue to prioritize production of higher margin vehicles for the chip supply available as well as make chip and product specification changes where possible to reduce the impact”

  • Says chip shortage very dynamic and difficult to forecast

• JLR expects an operating cash outflow of about GBP1 billion with a negative EBIT margin in the second quarter

• Sees a “substantial” improvement in underlying operating cashflowin the second half of the financial year as chip supply improves

• In the first quarter ended June 30, 2021 JLR had about GBP3.7 billion of cash and short-term investments

  • Expects to report a cash outflow of about GBP1 billion with a negative EBIT margin for the quarter

  • Total liquidity at the end of the first quarter was over GBP5.6 billion, including a GBP1.9 billion undrawn committed credit facility

  • JLR wholesales were 84,442 units in 1Q

  • Retail sales in 1Q for JLR at 124,537 vehicles, up 68.1%

• JLR presently has about 110,000 global retail orders, a record for the company, representing three months of sales cover

Bajaj Finance reported Assets Under Management of about Rs 1.59 lakh crore as on June 30, compared with Rs 1.38 lakh crore a year earlier, according to a statement on exchanges.

• Deposit book in Q1 grew about Rs 2,200 crore; stood at about Rs 28,000 crore as of June 30

• Bajaj finance acquired 19 lakh new customers in Q1

• Capital adequacy ratio at 28.6% as of June 30; customer franchise at 5.5 crore

Shares of the Indian car maker jumped over 15% in trade, due to sharp surge in sales in the month of June.

Total auto sales (domestic & exports) more than doubled to 1,925 units in June 2021 when compared to 860 units in June 2020. There has also been a steady increase in sales over the last few months as the impact of the second wave continues to ease.

Force India: Sales Data 2021

Month Domestic Exports

January 1197 407

February 1182 452

March 1633 425

April 1094 187

May 1306 154

June 1501 424

(Numbers in units)

Source: BSE

Trading volumes have soared with over 19.33 lakh shares exchanging hands in NSE. The stock is 8.79% below the 52-week high clocked on December 8. 2020. Force Motors has now surged over 25% from the 2021 low of Rs. 1064 per share on April 26, 2021

Shares of cement companies were all trading in the green on Tuesday with Shree Cement and Ultratech Cements gaining the most among their peers on Nifty. Ambuja Cements also gained as much as 3.2%.

In a Q1FY22 result preview, ICICI Securities said the quarter will be resilient, with the industry expected to post around 45% year-on-year growth in volumes. It also expects profitability for the cement companies to be intact despite cost rise.

Key takeaways from the note:

• We expect average realisation to rise 5% quarter-on-quarter growth and 2.6% year-on-year

• Total cost per tonne to increase around 3% both quarter-on-quarter and year-on-year

• Consensus earnings are yet again likely to be upgraded given better-than-expected prices sustaining till date in seasonally weak monsoon necessitated by cost escalations.

• Our coverage universe FY22-23 Ebitda are 8-10% ahead of consensus.

• Shree Cement & Ultratech Cement remain our top picks. We also like Ambuja Cement, JK Cement and Ramco Cements.

• Key risks: Lower demand/prices and any regulatory intervention.