PremiumThe Indian stock market's benchmark Sensex was trading 257 points higher in the afternoon session on Thursday led by strong buying support in the heavyweights Reliance Industries and Tata Consultancy Services. In Asia, indices opened weak tracking losses on Wall Street. Shares declined in Japan, South Korea, Hong Kong, Australia, and Shanghai.
The shareholders of Varun Beverages and NINtec SYSTEMS should watch the stocks next week as both scripts are going to turn ex-bonus while G G Engineering shareholders should be aware of a stock split that will take place next week. These three corporate actions are signalling how the stocks will react in the second week of June.
Shares of Delhivery Ltd rose to its highest level of ₹617 apiece since listing on the BSE in Thursday's trading session. The stock, which made its market debut last week on Tuesday, May 24, 2022 on the domestic stock exchanges, has risen more than 13% in over a week.
PDS Multinational Fashions is a worldwide customer-centric textile company that serves 22 nations and serves the world's largest brands and retailers. The company is a small size company in the sector, with a market valuation of ₹4,460.63 Cr.
Shares of Delta Corp plunged about 2% on the BSE in Thursday's trading session after Indian ace investor and stock market trader pared his stake in the company from 27 May to 31 May, 2022. The stock has fallen more than 21% in a month.
Traders are rushing to price in a higher peak to the rate cycle in emerging Asian markets, as they anticipate that central banks will have to hike faster and more aggressively.
Central banks raising rates from India to Malaysia have spurred bets in swap markets, with traders raising terminal rate expectations in the South Asian nation by more than 75 basis points in recent weeks. Even countries in the region, like New Zealand, which have been ahead of others in policy normalization, are raising the peak rate forecasts.
Those who have bet that rate hikes have been largely priced in are increasingly at risk of being proven wrong. Inflationary pressures are refusing to ebb across the globe as oil trades near a three-month high while European inflation data for May topped economists’ forecast.
Royal Enfield posted sales of 63,643 motorcycles in the month of May against the sale of 27,294 motorcycles for the same month last year. The company registered a growth of over 133% in sales over the pandemic affected May last year. The company sold its highest ever 10,118 motorcycles in overseas markets, marking a YoY growth of over 40%. Royal Enfield continued its stable performance in the domestic market and posted an improvement over April 2022.
Asian equities continued to witness foreign outflows for a fifth consecutive month in May, hit by concerns over monetary tightening measures by major central banks and supply chain disruptions due to strict lockdowns in China.
Overseas investors withdrew $3.69 billion out of Asian equities, data from stock exchanges in Taiwan, India, South Korea, the Philippines, Vietnam, Indonesia and Thailand showed. However, the outflows were the smallest in the last five months.
Shares of Lemon Tree Hotels Ltd have risen around 15% since the company announced its Q4FY22 earnings on 27 May. The rise has come despite a poor earnings performance in the quarter gone by. Omicron-led disruption in the initial part of the March quarter weighed on its operations. The company has around 86% inventory in the business segment and nearly 40% old inventory in Gurgaon, Hyderabad and Bangalore, the management said. Consequently, it disappointed on key parameters as occupancy dropped 967 basis points year-on-year and stood at 46.1% in Q4FY22. One basis point is 0.01%.
Shanghai copper prices gained on Thursday as the lifting of COVID-19 curbs in top metals consumer China buoyed hopes of demand recovery, although a stronger U.S. dollar limited the upside.
The most-traded July copper contract in Shanghai was up 0.5% at 71,990 yuan ($10,742.53) a tonne, as of 0531 GMT, in tepid trade as the London Metal Exchange was shut for a public holiday.
Shanghai sprung back to life after two months of bitter isolation under a ruthless COVID-19 lockdown, with shops reopening and people going back to offices, parks and markets, hoping to never go through a similar ordeal again.
SBI Research has projected the Indian economy to grow at 7.5 per cent in 2022-23, an upward revision of 20 basis points from its earlier estimate.
As per official data, the economy grew by 8.7 per cent in FY22, net adding ₹11.8 lakh crore in the year to ₹147 lakh crore, the report said, adding this was however only 1.5 per cent higher than the pre-pandemic year of FY20.
"Given the high inflation and the subsequent upcoming rate hikes, we believe that real GDP will incrementally increase by ₹11.1 lakh crore in FY23. This still translates into a real GDP growth of 7.5 per cent for FY23, up by 20 basis points over our previous forecast," SBI chief economist Soumyakanti Ghosh said in a note on Thursday.
Nominal GDP expanded by ₹38.6 lakh crore to ₹237 lakh crore, or 19.5 per cent annualised. In FY23 also, as inflation remains elevated in the first half, nominal GDP will grow 16.1 per cent to ₹275 lakh crore, he said.
Shares of Greaves Cotton surged about 8% on the BSE in Thursday's early deals after the company announced that Saudi Arabian firm Abdul Latif Jameel International will invest in the firm's electric vehicle (EV) arm, Greaves Electric Mobility (GEM).
Tokyo stocks closed lower on Thursday as falls on Wall Street weighed on the market, with investors focused on inflation ahead of US jobs data due later this week.
The benchmark Nikkei 225 index slipped 0.16 percent, or 44.01 points, to 27,413.88, while the broader Topix index ended down 0.63 percent, or 12.25 points, at 1,926.39.
Asian share markets slipped on Thursday on widespread investor concern over high inflation and the threat of recession, while oil prices slumped following a report of reassurances from Saudi Arabia over production.
In Europe, shares were set to nudge higher at the open after regional indexes notched two days in the red. Euro Stoxx 50 futures were up 0.16% and German DAX futures added less than 0.1%, while FTSE futures were flat.
Global benchmark Brent crude was down about 2% at $114.02 per barrel ahead of a meeting of oil producing countries later in the day, which is expected to pave the way for output increases.
U.S. crude also dipped around 2% to $112.97.
The fall in oil prices gathered pace after the Financial Times reported that Saudi Arabia may be prepared to raise oil production in the event of a sharp drop in Russia's output.
Shares of specialty chemical firm Aether Industries are expected to list on Friday, June 3, 2022. Its three day initial public offer (IPO) was subscribed 6.26 times by the end of its subscription, helped by a strong interest from institutional buyers. Stock market analysts expect Aether Industries' shares listing to be moderate.
Modest growth in 2W and tractor despatches signals rural market revival expectations from OEMs. PV OEMs are gradually ramping-up production with improving chip supply as volume rebound continues with focus on launches of CNG variants and refreshes of popular models, even as acceptance of new brands gets reflected in improved overall volumes of XUV700, Tata Punch. Continued price hikes (~10% across segments since Jan’21) and recent price hike of 1-2% in Apr’22, coupled with incremental risk of rising fuel costs could impact the focus on hygienic personal mobility as offices/schools resume.
Hero Motocorp (HMCL) reported wholesale volumes of ~487k units, up 16% MoM and 2.7x YoY. Motorcycle segment volumes grew 15% MoM while scooter volumes rose 33% MoM. We believe with marriage season approaching and improvement in rural consumer sentiment reflected in improving tractor sales, HMCL is preparing for higher potential sales apart from inventory build-up.
Bajaj Auto (BAL) sales were down 11% MoM at ~276k units. Domestic sales were up 10% MoM to ~112k units while exports were down 22% MoM to ~164k units. On a segment level, motorcycle sales were down 11% MoM (domestic: 3%, exports: -19%) to ~250k units while 3Ws fell 9% MoM to ~26k units. Exports got impacted due to chip shortage and management expects exports to revive July onwards.
TVS Motors (TVSM) reported 3% MoM volume growth in 2Ws at ~287k units, up 86% YoY. Domestic 2W volumes grew 6% MoM, rose 3.7x YoY, at 191k units while 2W exports fell 4% MoM at ~95k units. Overall 3W volumes at 16k units were up 4% MoM (up 28% YoY) with 14.7k units exported (up 19% YoY). On a sub-segment basis, motorcycle volumes grew 7% and scooter fell 3%, MoM. Moped volumes were flat 1% MoM to 40k units. Overall, sales were resilient in an adverse demand situation in domestic 2Ws, although premium models continue to be partly impacted by chip shortage.
Royal Enfield reported 2% MoM growth in sales volumes to ~69k units (up 2.4x YoY) with highest-ever exports at 10.1k units, up 22% MoM (up 40% YoY). Motorcycle sales in 350cc segment were up ~4% MoM to ~54k units and that in >350cc segment were down 7% to ~9.8k units. Overall, with chip-supply easing gradually, RE was able to push wholesales post weak sales since Jan’22.
Bank credit sectoral deployment data for Apr’22 suggests YoY uptick across all verticals –14.7% in retail credit, 11.1% in services, 10.6% in agri portfolio and 8.2% in industry. Overall, non-food credit stood at Rs119.55trn, up 11.1% YoY / 0.5% MoM; YoY credit growth settled in double digit after a long hiatus. However, YoY growth will also be optically higher due to lower base in Apr’21 on account of covid second wave. Key trends include: 1) Incremental bank credit accretion in the past 12 months was Rs11.2trn, of which 50% was contributed by three components, viz., housing (18%), MSME (18%) and NBFC (14%). 2) For Apr’22, incremental credit offtake was Rs760bn, of which 75% was towards retail, 23% towards agri, 2% towards services and industry was flat MoM. 3) Industry credit MoM growth was flat in Apr’22, post average MoM growth of 2.4% during Dec’21-Mar’22. On a low base, industry credit surpassed 8% YoY growth mark (highest in 7 years). 4) Vehicle loans saw another strong month wherein after an average MoM growth of 19.6% in the past two months, it further rose 2.7% MoM in Apr’22. 5) Small-ticket loans are trending with 4.6% MoM uptick in consumer durables and credit card portfolio was also up 4.0% MoM. This shows not only normalisation in spending, but also a rise in revolver and EMI facilities. 6) Home loans portfolio, post a robust 6.7% MoM uptick in Mar’22, further gained 1.3% MoM in Apr’22. Thereby, YoY growth stood at 13.7%, highest in the past 24 months.
We believe India Inc, after undergoing a phase of deleveraging over the past few years, is now better positioned to embark on re-leveraging. Recovery in economic activity, derivative effect of increased investments and spending on consumption may sustain the momentum of >12% growth over FY22-FY25E.
According to a Reuters poll of analysts, the Reserve Bank of India (RBI) will focus on interest rate hikes in the coming months as part of a relatively brief tightening cycle, with the repo rate expected to reach its terminal level early in 2023. Following a surprise rate hike on May 4, several members of the Monetary Policy Committee (MPC) advocated for even more in upcoming sessions this year to keep sticky price pressures under control, which reached an eight-year high in May. The central bank is expected to hike its benchmark policy rate by at least 100 basis points during the next four MPC meetings, according to a Reuters poll.
Rating: BUY | CMP: Rs1,395 | TP: Rs1,740
We recently attended the HDFC Bank analyst meet where the strategy and outlook across business verticals was laid out while further issues relating to the merger were also clarified by the MD&CEO, Mr. Jagdishan. Some key takeaways were (i) post-merger balance sheet might double every 5 years and liability growth would outpace that of assets. (ii) RBI may approve the holding company structure and a NOHFC may would not be required. (iii) CRB would remain the growth engine while retail could surpass corporate. (iv) More aggression would be seen in Government businesses (assets and liabilities) which could intensify competition for SBI and other PSU Banks. On the flipside, acquisition strategy of a PSU bank customer would be the key. We maintain our estimates for FY23/24E and Retain BUY with TP of Rs1,740 based on 3.2x FY24 ABV.
We believe volatility in input cost to continue & though company will take price hikes, the same will be implemented with a lag‐impact.
However, with better product mix & no further plant closures, EBITDA margins should not contract further. Hence, we expect EBITDA margins to come in at 13.3%/14.2% in FY23E/FY24E.
At CMP, GRLM is trading at 32.7x/25.1x on FY23E/FY24E EPS of Rs9.8/12.8 respectively. We continue to value the company at 25x on FY24E EPS & maintain our target price of Rs320 on the stock. We have assigned an ADD rating to the stock.
Oil prices fell on Thursday as investors cashed in on a recent rally ahead of a key producers meeting later in the day, with some speculation that Saudi Arabia may boost oil production in response to urging by the United States.
Brent crude was down $2.08, or 1.8%, at $114.21 a barrel at 0410 GMT, having risen 0.6% the previous day.
U.S. West Texas Intermediate (WTI) crude dropped $2.25, or 2.0%, to $113.01 a barrel, after a 0.5% rise on Wednesday.
Indian Bank, a public sector lender, has raised interest rates on domestic term deposits of less than ₹2 crore. The bank announced the change on June 1, 2022, and as a result of the revision, the bank has raised interest rates on various tenors, promising 2.80 per cent to 5.35 per cent on deposits of 7 days to 5 years and above.
The prices of petrol and diesel remained steady on Thursday for nearly two weeks since Finance Minister Nirmala Sitharaman announced a cut in excise duty on petrol by 8 per litre, and 6 rupees per litre on diesel.
Gold held its ground on Thursday, with greeenback-priced bullion caught between support from slightly lower U.S. Treasury yields and pressure from a firm dollar.
Spot gold was steady at $1,844.57 per ounce, as of 0305 GMT. U.S. gold futures were down 0.1% to $1,846.80.
Gold has been in a narrow range between $1,828 and $1,864, for about a week, hovering around $1,850 overall, and prices are consolidating now, GoldSilver Central MD Brian Lan said, adding that (trading in) this range could continue with some investors sitting on the sidelines due to an absence of major news.
The rupee slipped 12 paise to 77.62 against the US dollar in early trade on Thursday, tracking the strength of the American currency in the overseas market.
At the interbank foreign exchange, the rupee opened at 77.61 against the American dollar, then lost ground to quote at 77.62, registering a fall of 12 paise from the last close.
On Wednesday, the rupee recovered from its record low to close 21 paise higher at 77.50 against the American currency.
The Indian rupee opened weaker against the dollar on Thursday, weighed down by a recovery in the US dollar and strengthening bond yields, said Sriram Iyer, Senior Research Analyst at Reliance Securities.
However, a sell-off in the crude oil prices on Thursday morning could cap the depreciation bias, Iyer noted.
Global oil benchmark Brent crude futures fell 1.57 per cent to USD 114.46 per barrel.
Indian shares inched lower early on Thursday, dragged by losses across the board as global sentiment soured and investors moved away from riskier assets due to concerns over high inflation and the risk of recession.
The NSE Nifty 50 index was down 0.23% at 16,485.65 by 0353 GMT, while the S&P BSE Sensex fell 0.12% to 55,315.87.
In the previous session, both indexes swung between gains and losses for most of the day and settled slightly lower as pharma and technology stocks fell.
On Thursday, automaker Hero MotoCorp and Oil and Natural Gas Corporation fell 2.6% and 1.9%, respectively, and were the top percentage losers on the Nifty 50 index.
A 1% gain in index heavyweights Tata Consultancy Services and Reliance Industries limited losses on the Nifty 50.
Speciality chemicals company Aether Industries' three day initial public offer (IPO) was subscribed 6.26 times on the final day of its subscription, helped by a strong interest from institutional buyers. The issue was open from May 24 to May 26, 2022.
Bitcoin, the world's biggest and best-known cryptocurrency, closed down 5.2% at $30,121.82 on Wednesday, losing $1,657.93 compared to its previous closing price.
It was down 37.6% from the year's high of $48,234 hit on March 28.
Ether, the coin linked to the ethereum blockchain network, dropped 6.21% to close at $1,820.05, losing $120.5 from its previous closing price.
The dollar hit a three-week high against the yen in early trade on Thursday and was holding firm against other majors, supported by rising U.S. Treasury yields, which hit two-week peaks overnight.
The dollar rose as far as 130.23 yen, its highest since May 11, extending Wednesday's 1.1% gain and heading back towards its 20-year peak of 131.34 hit in May.
The euro was at $1.0654, having fallen 0.81% to a 10-day low overnight, and sterling was at $1.2485 after losing 0.96% on Wednesday. This left the dollar index on the front foot at 102.53.
A swift jump in Treasury yields rattled Wall Street on Wednesday, pulling stocks broadly lower at the start of another month in what's been a turbulent year for the market.
The S&P 500 ended 0.7% lower after an early morning gain quickly gave way to choppy trading. The Dow Jones Industrial Average slid 0.5% and the Nasdaq fell 0.7%.
Asian share markets fell on Thursday on widespread investor worries over high inflation and the threat of recession, while oil prices slumped following a report of reassurances from Saudi Arabia over production.
Global benchmark Brent crude was last down more than 2% a barrel at $113.86 ahead of a meeting of oil producing countries later in the day, which is expected to pave the way for output increases.
U.S. crude also dipped more than 2% to $112.55 per barrel.
Major oil producers led by Saudi Arabia and Russia hold talks Thursday on whether to adjust output, hard on the heels of an EU ban on Russian oil imports.
Analysts had expected OPEC producers to likely stick to their policy of only increasing output modestly, as they have done since May 2021.
However, a Wall Street Journal report on Monday that said OPEC was considering suspending Russia from the output deal has sown doubts.
"Such a move would effectively bring a premature end to the group's supply agreement and pave the way for an unrestricted increase in output," Stephen Brennock, an analyst at PVM Energy, said.
India's largest carmaker Maruti Suzuki said on Wednesday its exports more than doubled to touch a record high of 27,191 units in May 2022 as compared to 11,262 units in the same month last year.
Total vehicle sales of Maruti Suzuki stood at 161,413 units in May 2022.
The company's total sales in the month included domestic sales of 128,000 units and sales to other original equipment manufacturer (OEM) of 6,222 units and its highest ever monthly exports of 27,191 units.
The shortage of electronic components had a minor impact on the production of vehicles, mainly on domestic models. The Company took all possible measures to minimise the impact, Maruti Suzuki said in a regulatory filing to the stock exchanges.
he country's largest two-wheeler maker Hero MotoCorp on Wednesday said its total sales stood at 4,86,704 units in May.
The company had sold 4,18,622 units in April this year and 1,83,044 units in May 2021 when the sales were impacted due to the second wave of COVID-19.
Domestic sales stood at 4,66,466 units last month. The company had dispatched 1,59,561 units in the domestic market in May 2021.
The two-wheeler major also announced postponement of its first electric vehicle unveil, which was earlier scheduled to take place in July, to the festive season later this year.
Vedanta Ltd on Wednesday said a committee of its directors will meet this week to consider raising up to ₹4,100 crore via debentures.
"The company proposes to offer rated, secured, redeemable, non-cumulative, non-convertible debentures aggregating up to ₹4,100 crore in one or more tranches and in this regard, is holding a meeting of its duly constituted Committee of the Directors on Saturday, June 4," Vedanta Ltd said in a BSE filing.
The above issuance is pursuant to the board of directors' resolutions passed at their meetings on May 7, 2019 and October 3, 2020.