PremiumAll eyes are now on the US inflation data for March, which is expected at more than 8%. There are fears that price pressures will remain elevated, with the Ukraine war disrupting flows of essential commodities, and China’s lockdowns are straining supply chains.
Domestic equity indices closed lower for the second straight day on Tuesday, dragged by losses in metals, auto, and IT stocks. Negative cues from overseas markets also weighed.
Global stocks and Wall Street futures sank Tuesday as investors waited for U.S. inflation data amid unease about higher interest rates, Chinese efforts to contain coronavirus outbreaks and Russia's war on Ukraine.
London, Frankfurt, Tokyo and Seoul fell. Shanghai and Hong Kong advanced. Oil prices rose more than $3 per barrel.
Back home, the Sensex fell 388.20 points to end the day at 58,576.37, while Nifty was down 144.70 points at 17,530.30. About 1,146 shares advanced, 2,193 declined, and 90 were unchanged.
Barring bank, all sectoral indices ended in the red with IT, metal, realty, oil & gas and capital goods indices down 1-3 percent. Midcap and small cap indices fell over a percent each.
Bitcoin recovered to above $40,000 on Tuesday, gaining back some ground after dropping for seven days out of the past eight.
The largest cryptocurrency rose 0.8% to $40,160, gaining steam around midday in Hong Kong after dropping earlier in the session. Ether also strengthened at around the same time, rising to just above $3,000. Some smaller coins posted larger gains, with Avalance rising 3.8% and Polkadot advancing 2.3%.
Tata Realty and Infrastructure Ltd (TRIL) and Canada Pension Plan Investment Board (CPP Investments) on Tuesday said they have entered into a joint venture to develop and own commercial office space across India. The joint venture will target stabilized and development assets, with a total equity value of ₹5300 crore.
CPP Investments will invest around ₹2600 crore into the platform.
Weekly Chart Analysis
The index breached the important support level of 16500 in the month of March and made a bottom at around 15700. From those levels, the index has rebounded sharply towards 18000-18100 levels. The index is currently finding resistance near the level of 18000-18100. Any break above the resistance zone of 18000-18100 is likely to move the index towards 18400-18600 levels. On the contrary, a close below 17400 levels may signal some caution for the bulls.
Monthly Chart Analysis
We have seen some profit booking at higher levels but the current under tone of the market still remains bullish. However, for the past 6-8 months, the index continues to consolidate within 18400-15800 levels representing a short term pause to the prior up trend. We expect an upward breakout and the index may scale towards 18400-18600 levels in the near term.
Expected Trade Range
Nifty: 18400-17400 | Sensex: 62000-58000
Gold prices inched higher on Tuesday as appetite for risk weakened ahead of U.S. inflation data that could support the Federal Reserve's aggressive policy stance to contain rising pricing pressures.
Spot gold was up 0.2% at $1,956.78 per ounce, after hitting its highest in nearly a month on Monday. U.S. gold futures rose 0.6% at $1,960.30.
Europe's major stock markets sank Tuesday in opening deals after losses elsewhere before key US inflation data.
London's FTSE 100 index dipped 0.8% to 7,557.61 points compared with Monday's closing level.
In the eurozone, the Paris CAC 40 shed 1.7% to 6,441.86 points and Frankfurt's DAX slid 1.8% to 13,939.06.
The Indian airline industry has seen a sharp revival since Feb’22. Average daily domestic traffic stood at 338k/323k in Mar’22/Apr’22-TD vs 395k in CY19 (pre- covid); PLFs are also beyond 85% on higher capacity, and international travel has resumed to/from almost 38 cities outside India as per the current summer schedule. However, fuel cost will remain an overhang, in our view. Gross spread (RASK - fuel per ASK) for IndiGo stood at Rs2.7 in Q3FY22 (five-quarter high). To be able to maintain the same spread in Q4FY22, there needs to be 6%-7% QoQ growth in RASK, as per our estimates.
Indian Oil Corp (IOC) has excluded several high-sulphur crude grades, including Russian Urals, from its latest tender, trade sources said on Tuesday.
India's top refiner informed market participants that Das, Eugene Island, Thunder Horse and Urals crude were no longer on the list of grades under its latest tender, which closes on Tuesday, the sources said.
IOC imports crude for itself and on behalf of its Chennai Petroleum subsidiary.
U.S. President Joe Biden had told Indian Prime Minister Narendra Modi late on Monday that buying more oil from Russia was not in India's interest and could hamper the U.S. response to the war in Ukraine.
Ethnic wear fashion label Biba Fashion, which is backed by Warburg Pincus and Faering Capital, has filed draft papers with the Securities and Exchange Board of India (Sebi) to raise funds through an initial public offering (IPO).
The IPO comprises fresh issuance of equity shares worth ₹90 crore and an offer for sale (OFS) of 2.77 crore equity shares by promoter and existing investors, according to the draft red herring prospectus (DRHP).
As a part of the OFS, promoter Meena Bindra will offload up to 37.52 lakh equity shares and private equity investors, Warburg Pincus-backed Highdell Investment and Faering Capital India Evolving Fund will sell up to 1.84 crore and 55.86 lakh equity scrips, respectively.
Tata Motors Group global wholesales in Q4 FY22, including Jaguar Land Rover, were at 3,34,884 units, up 2% on year.
Global wholesales of all Tata Motors' commercial vehicles and Tata Daewoo range in Q4 FY22 were at 1,22,147, rising 12% year-on-year.
Global wholesales of all passenger vehicles in Q4 FY22 were at 2,12,737, down 4% on year.
Global wholesales for Jaguar Land Rover were 89,148 vehicles (**JLR number for Q4 FY22 includes CJLR volumes of 12,622 units). Jaguar wholesales for the quarter were 19,570 vehicles, while Land Rover wholesales for the quarter were 69,578 vehicles.
South African scientists have discovered two new sublineages of the omicron coronavirus variant, said Tulio de Oliveira, who runs gene-sequencing institutions in the country, said.
The lineages have been named BA.4 and BA.5, he said by text message and in a series of tweets. Still, de Oliveira said, the lineages have not caused a spike in infections in South Africa and have been found in samples from a number of countries.
Oil marketing companies (OMCs) kept petrol and diesel prices unchanged for the sixth straight day on Tuesday.
In Delhi, petrol is priced at ₹105.41 per litre and diesel sold for ₹96.67 a litre, with the last price hike of 80 hike on 6 April.
Consistent performance with record order intake
Overall, the performance was inline with broad estimates. While, revenue grew by 3.5% QoQ in INR terms, margin was flat sequentially. The growth remains broadbased across verticals. We remain positive on the stock as the robust demand environment would help it to sustain growth momentum in FY23. Deal booking remains strong across vertical led by multi‐year tech upcycle. Employee addition has been robust over last 1few quarters and provides robust revenue growth visibility. We maintain BUY Rating on the stock with revised target price of ₹4,336/share at 32x on FY24E EPS.
IT sector giant Tata Consultancy Services (TCS) Ltd kick started the March quarter earnings season with decent results.
In constant currency terms, revenue grew 3.2% sequentially and Ebit margin was flat sequentially at 25% due to supply-side pressures. Both these numbers were in-line with analysts' expectations.
While TCS earnings met expectations on key parameters, shares of the company were trading flat on the NSE in Tuesday's opening trade. The lukewarm response is due to some near-term margin headwinds that investors in the stocks need to be watchful of.
Asian Paints (BUY) - Aggressive strategy to fortify leadership position. Current market price ₹3,157/share; 12-month target ₹3,715.
Berger Paints (ADD) – Industry runner‐up with bright prospects. Current market price ₹732/share; 12-month target ₹790.
At present, the index placement on the daily chart depicts the lost traction due to the truncated week followed by the earning season. However, the market undertone is likely to remain in favor of the Bulls, till the 17500 levels remain intact. Looking at the recent price action in the index, 17600 is expected to act as the cushion to any fall, followed by the sacrosanct support zone of the 17500 mark. On the contrary, the bullish momentum could be seen once the critical resistance zone of 17900-18000 breached decisively.
Some traction was seen in the midcaps and selective banking counters that kept the traders active throughout the day. Going forward, the market is expected to remain volatile amid the earning season, and thus traders are advised to keep following the stock-centric approach for obtaining better trading opportunities.
Skymet expects the upcoming monsoon to be ‘normal’ at 98%, with an error margin of +/- 5%, of the long period average of 880.6mm for the June to September period.
The 1st half of the season is expected to fare better than the latter. Monsoon is likely to make a decent start during the onset month of June.
Rainfall to be subdued in key monsoon month of August.
India's retail inflation likely sped up to a 16-month high of 6.35% in March, well above the Reserve Bank of India's upper tolerance band for a third straight month, in part due to a sustained rise in food prices, a Reuters poll found.
The full effect of the spike in crude oil and global energy prices following Russia's invasion of Ukraine in late February is not expected to appear in consumer prices until April as the pass-through to consumers at fuel pumps was delayed.
The April 4-8 Reuters poll of 48 economists suggested inflation, as measured by the consumer price index (CPI), rose to 6.35% in March on an annual basis, from 6.07% in February. That would be the highest reading since November 2020.
US president Joe Biden and Indian prime minister Narendra Modi held a candid discussion Monday about how to counter the fallout from Russia’s invasion of Ukraine, a senior U.S. administration official said.
White House Press Secretary Jen Psaki said Biden conveyed that the U.S. stands ready to help India diversify its energy imports, which would make it less reliant on Russia.
“The president has made clear that he does not believe it’s in India’s interest to accelerate or increase imports of Russian energy and other commodities," Psaki told reporters Monday.
Tata Consultancy Services Ltd (TCS) reported a 7.4% rise in quarterly profit from a year earlier, slightly below analysts’ estimate, as rising employee costs squeezed earnings even as demand remained robust.
Net profit rose to ₹9,926 crore in the quarter ended 31 March from ₹9,246 crore in the year earlier.
The telecom regulator on Monday recommended a 36% cut in the base price of 5G spectrum band (3300-3670MHz band) to ₹317 crore on a pan-India basis from the ₹492 crore it suggested in 2018, offering major relief to telcos and setting the stage for them to secure prized airwaves in a government auction.
The Telecom Regulatory Authority of India (Trai) has also suggested a reduction in reserve prices in the 700MHz band, where base prices have been cut by as much as 58% and 45% in the key circles of Mumbai and Delhi, at ₹470 crore and ₹509 crore, respectively, for paired spectrum for a duration of 20 years. (Read here)
Godrej Capital, which will house the group’s non-banking arm and housing finance business, announced a series of measures to become a world class retail financial services business and to build a ₹30,000-crore balance sheet by 2026. GIL will invest ₹5,000 crore in Godrej Capital over the next four years. In an interview, Pirojsha Godrej, chairman, and Manish Shah, chief executive, Godrej Capital, said while the group is a late entrant, it sees significant growth opportunities. (Read here)
Shares of TCS, telcos, ZEE Entertainment, Ruchi Soya, Adani Green, among others, could be in focus on Tuesday.
Anand Rathi Wealth, GM Breweries, Hathway Cable & Datacom, Tinplate Company of India, Evexia Lifecare, and Gayatri Bioorganics will announce their fourth quarter earnings on Tuesday
Oil futures rose early on Tuesday, reversing sharp losses from the prior day, as the market weighed the potential for more sanctions on Russia's energy sector and OPEC warned it would be impossible to increase output enough to offset lost supply.
Brent crude futures were up 85 cents, 0.9%, to $99.33 a barrel, and U.S. West Texas Intermediate contracts were up $1.04, or 1.1%, to $95.33 a barrel.
Both contracts had settled down around 4% on Monday amid concerns that coronavirus lockdowns in China would dampen demand for fuel and ahead of a massive oil reserve release by International Energy Agency (IEA) members.
India's HDFC Bank and some foreign banks have stopped offering trade credit for oil imports to Nayara Energy, a Russian-backed refiner, and some suppliers are seeking payment upfront to avoid potential problems resulting from western sanctions against Moscow, four banking and industry sources said.
Nayara has not been sanctioned as part of the international response to Russia's invasion of Ukraine, but Russian energy giant Rosneft, which owns 49% of the Indian refiner, has been.
To avoid the need for credit to fund overseas trade, the Mumbai-headquartered company is selling more of its refined fuels in India, two of the sources said.
Nifty futures on the Singapore Exchange traded 174 points, or 0.98%, lower at 17,568, indicating a weak start for Indian benchmarks on Tuesday.
On Monday, Sensex tumbled 483 points, dragged down by losses in IT, banks, and capital goods stocks, to close at 58,964.57. The Nifty declined 109.40 points to end the day 17,674.95.
Stocks in Asia dipped Tuesday and bonds extended a selloff -- leaving the 10-year Treasury yield at the highest since 2018 -- as economic threats from high inflation, tightening monetary policy and China’s Covid lockdowns ripple across markets.
Equities fell in Japan, Australia and South Korea, while U.S. futures edged lower.
The benchmark Nikkei 225 index lost 0.8% to 26,607.29, while the broader Topix index slid 0.45%. The S&P/ASX 200 index was down 0.42%.
Hong Kong contracts earlier bucked the gloom, potentially reflecting China’s approval of the first batch of new video game licenses since July. That step may ease some of the worst concerns about Beijing’s gaming-sector curbs.
Overnight, technology companies led a broad slide for stocks on Wall Street as investors look ahead to the upcoming company earnings reporting season and what it will reveal about the impact inflation is having on corporate profits. The S&P 500 fell 1.7%, adding to its recent losses. The Dow Jones Industrial Average fell 1.2% and the tech-heavy Nasdaq slid 2.2%. Both the benchmark S&P 500 and the Nasdaq are coming off their first weekly losses in four weeks.
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