Rupee at close
Rupee ends at 77.71 per US dollar against June 6 close of 77.63 per US dollar
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities
:
Investors are in a wait and watch mood ahead of the RBI's credit policy announcement, although several economists believe the MPC will hike rates further to tame inflation. The market has simply borne the brunt of unabated FII selling, which continues to desert Indian equities amid weakening rupee and strengthening dollar.
Technically, Nifty broke the important support level of 16450 and closed below the same which is largely negative. In addition, the index has also formed a bearish candle indicating short-term weakness. For traders, as long as the index is trading below 16500 the short term texture remains weak, below which the correction wave is likely to continue till 16300. Any further correction could drag the index up to 16225. On the other hand, above 16500, there are chances the index could hit 16600-16650.
Deepak Jasani, Head of Retail Research, HDFC Securities
:
Nifty fell in line with most global markets for the third day in a row on June 7. The index opened gap down and fell in the morning to make an intra day bottom at 1125 Hrs. It later tried to bounce up and later went sideways. At close, Nifty was down 0.92% or 153.2 points at 16416.4.
We expect 40bps rate hike in the upcoming policy meet on June 8 and expect the RBI raising policy rates to reach 5.15% by Aug/Oct. The recent measures by the government will aid in keeping the rate hike relatively shallow, though determination of terminal rate will be much more data dependent given the flux in global conditions.
Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities
:
Nifty Bears took control once again leading to a fall in the index towards the crucial support zone 16,400-16,350. The volatility is likely to continue ahead of the RBI policy and a clear-cut direction will be visible post the outcome. The upside resistance is placed at the 16,600-16,800 zone where heavy call writing is visible
Bank Nifty index continues to witness selling pressure ahead of the RBI policy and ends on a negative note. The index is stuck in a broad range between 34,500-36,000 levels and a break on either side will lead to further trending action. The undertone remains weak as long as it stays below the level of 36,000 where the highest open interest is built up on the call side.
Vinod Nair, Head of Research at Geojit Financial Services
:
The volatility in the market is forcing investors to stay sidelined ahead of the RBI’s policy announcement. The market has factored a hike up to 50bps of repo rate & CRR, but any further stricter measures to clamp liquidity due to lingering inflation will have ramifications on the market trend. Apart from the monetary measures, the RBI’s guidance on growth and inflation forecast will determine the market trend.
Ashwin Patil, Senior Research Analyst at LKP Securities on defence stocks
:
These companies are the front runners to gain from any positive moves from the government as it is their one of the most important sources of business. Such a move from the government entails higher revenues and order book for the coming years. It gives higher visibility of numbers going forward and comfort to investors. Given the geopolitical tensions seen on the global front, the Centre has increased its defence CAPEX outlay, which augurs well for the defence bellwether. We remain positive on Bharat Electronics Limited.
Market at close: Benchmark indices closed in the red with Sensex down 567.98 points or 1.02% at 55107.34, and the Nifty falling 153.20 points or 0.92% at 16416.30. About 1261 shares have advanced, 1954 shares declined, and 126 shares are unchanged.
Among the sectors, realty, IT and capital goods shed over a percent each while buying was seen in oil & gas and power names. The midcap and smallcap indices shed over half a percent each.
L&T Infotech fixes July 1,2022 as the record date for payment of final dividend
L&T Infotech fixes Friday, July 1,2022 as the record date for determining entitlement of members to the final dividend for the financial year ended on
March 31, 2022,
Market at 3.00 PM
Indices trade low, Sensex trading lower by around 600 points, Nifty around 16,400
The Sensex was down 616.46 points or 1.11% at 55,058.86 and the Nifty was down 174.5 points or 1.05% at 16,395.05. About 1195 shares have advanced, 2066 shares declined, and 123 shares are unchanged.
Source: BSE
Sharad Chandra Shukla, Director, Mehta Equities Ltd.
Markets expect further tightening in the monetary policy to tackle inflation. A likely 40-50 bps increase in key rates is expected on account of higher commodity prices, high food and core inflation. With CPI hovering at highs, we expect RBI will think of revising inflation target to a more realistic based on ground realities which can be beyond 6-7% this would be attributed to the ongoing war after effects and impacts on input costs as well as disturbance on supply chain management. We assume RBI will be more focusing on controlling inflation and growth won’t be the priority at this juncture and likely to keep the GDP forecast unchanged.
HDFC Bank hikes lending rates by 0.35%; 2nd hike in two months
The country's largest private sector lender HDFC Bank on Tuesday announced a 0.35 percent hike in lending rate. The hike, which comes a day ahead of the RBI's scheduled policy review, is the second such move from the lender in as many months, taking the cumulative hike to up to 0.60 percent. HDFC Bank increased its Marginal Cost of funding based Lending Rate by 0.35 percent from June 7, as per the new rate structure published on its website.The one-year MCLR, on which a bulk of consumer loans are pegged, will be 7.85 percent after the newest review as against 7.50 percent earlier. The overnight MCLR will be 7.50 percent against 7.15 percent, while the three-year MCLR will be 8.05 percent compared to 7.70 percent.
Market update at 2 PM: Sensex is down 661.64 points or 1.19% at 55013.68, and the Nifty shed 184.40 points or 1.11% at 16385.10.
HG Infra bags order worth Rs 4,971 crore from Adani Transport
Government appoints Alok Kumar Choudhary as MD of SBI
Dhananjay Sinha ,MD & Head –Strategist , JM Financial Institutional Securities
:
Two risks on external balance are pronounced, a) widening trade deficit and b) continues portfolio retrenchment due to tightening global financial conditions. The sequence of correction in global commodity prices and recent restrictions on exports (steel, iron ore, agri produce) would imply a deceleration in exports while oil imports continue to remain elevated in the foreseeable future. This will continue to see widening trade deficit.
The combination of external vulnerabilities and higher fiscal deficits will complicate matters for RBI as it juggles between multiple objectives of inflation control, orderly currency and Gsec yield scenario. Our assessment indicates that RBI’s currency management in the face of rising US rates and strong dollar has translated into rising exchange rate rigidity and it reflects in decline in RBI’s forex reserve by USD 42bn from the peak to USD 600bn. Thus, in the context of continued rate and quantitative tightening by the US Federal Reserve will result in both liquidity moderation in India along with further rate hikes.
Separately, inflation management is tricky as the real repo rate is deeply negative at -3.4% (4.4%-headline CPI at 7.8%) and -2.6% assuming core inflation of 7%. Thus, to arrive at a neutral real rate of 1% RBI will have to substantially increase the repo rate and tighten liquidity. Assuming that core inflation softens to 6% in the next 12 months the short term rates will have to be at 7% from the current level of ~4% (overnight call money rate). This would ideally call form about 200-250bp addition repo rate hike. Over the next 12 months RBI can be expected to hike rates by 150bp at least and a 40-50bp hike on Jun 8th.
What can change the medium term scenario is the possibility of a global recession or a hard landing translating into an early financial market capitulation and collapse in global commodity prices.
Market at 1.00 PM
Indices off day's low, Sensex trading lower by around 600 points, Nifty below 16,400
The Sensex was down 653.24 points or 1.17% at 55,022.04 and the Nifty was down 186.6 points or 1.13% at 16,382.95. About 1168 shares have advanced, 1995 shares declined, and 133 shares are unchanged.
Source: BSE
Nifty Realty falls 1.88 percent, the biggest loser among sectoral indices
Source: NSE
Goldman says Oil needs to rally further to solve market deficit
Oil prices are likely to extend gains as global crude stockpiles need to be rebuilt in the face of rebounding Chinese demand and reduced production from Russia, according to Goldman Sachs Group Inc.
Brent crude will need to average $135 a barrel in the 12 months from July, up $10 from the bank’s previous forecast, for global inventories to normalize by late 2023, analysts including Damien Courvalin and Jeffrey Currie said in a note dated June 6. The global benchmark was trading at about $120 on Tuesday, and has risen more than 50% this year.
Recovering demand after the pandemic and sanctions on Russia over its invasion of Ukraine, which disrupted global flows of energy, lifted oil prices and led nations to tap strategic reserves to ease the pain on consumers. Yet commodities are continuing to rally and further demand destruction is needed to rebalance the market next year along with a slowdown in global growth and increased production from OPEC members including Saudi Arabia and Iran, according to Goldman.
Market update at 12 PM: Sensex is down 631.00 points or 1.13% at 55044.32, and the Nifty shed 178.80 points or 1.08% at 16390.70.
Aurobindo Pharma arm Eugia Pharma receives USFDA Approval for Leuprolide Acetate Injection
Aurobindo Pharma announced that its wholly owned subsidiary company, Eugia Pharma Specialties has received a final approval from USFDA to manufacture and market Leuprolide Acetate Injection, 14 mg/2.8 mL MDV (Kit). Leuprolide Acetate Injection, 14 mg/2.8 mL (1 mg/0.2 mL), Multiple-Dose Vials, to be bioequivalent and therapeutically equivalent to the reference listed drug (RLD), Lupron Injection, 14 mg/2.8 mL (1 mg/0.2 mL), of AbbVie Endocrinology Inc.
Ashish Khandelia, Fouder ,Certus Capital
:
We expect the repo increase to be between 40-50bps in upcoming MPC meeting with future increases leading to ~5.75% (where we were exactly 3 years ago) or upwards by the end of FY23. Last 40 bps increase in May caused homes loans to move in to 7% +/- range from ~6.5% earlier. And by the end of this financial year, home loan rates will likely touch ~8%. This is unlikely to derail the housing momentum but its will certainly soften it. Coupled with increasing prices, the growth may slow down a bit in FY23, after a record FY22.
Indranil Pan - Chief Economist, YES Bank
:
Not an easy job for the central banker. Recently released GDP data showed a sliding y-o-y growth for private consumption expenditure, an indication that economic activity remains slow. On the other hand, the inflation surprise has brought to the fore the need for the RBI to tighten monetary policy. The government has also joined the RBI in an attempt to contain inflationary pressures in the economy. We see the RBI extending its 40bps repo hike of May with a 35bps increase in June, followed by 25bps each in August and September. By this time, we expect the global growth to have softened enough to pull down commodity prices and thus provide some comfort to the domestic inflation cycle too. We thus factor in the RBI to press the pause button again after a 15bps insurance hike in the repo rate in December and analyze the implications of its rate hike cycle of 140 bps on growth before taking any further decision.
Ashoka Buildcon receives Letter of Acceptance for a project worth $106,383,954.52 in Guyana
Ashoka Buildcon receives Letter of Acceptance for a project worth $106,383,954.52 from the Government of theco-operative Republic of Guyana. The project is for Procurement of Phase 1: East Bank-East Coast Road Linkage Project (Ogle to Haags Bosch,Eccles) and the construction period is 730 days from the date of commencement.
Market at 11.00 AM
Indices near day's low, Sensex trading lower by around 600 points, Nifty below 16,400
The Sensex was down 610.3 points or 1.1% at 55,064.96 and the Nifty was down 172.75 points or 1.04% at 16,396.8. About 1159 shares have advanced, 1844 shares declined, and 139 shares are unchanged.
Source: BSE
S&P BSE Healthcare falls 1.41 percent, Dr Reddy's drags the most
Source: BSE
Pranjul Bhandari, Chief India Economist, HSBC sees FY23 average inflation at 6.8 percent
Pranjul Bhandari, Chief India Economist, HSBC sees FY23 average inflation at 6.8 percent while she expects FY24 average inflation at 5.5 percent. She is of the opinion that there is a need to take repo rate to 6 percent which according to her should happen by mid of 2023. She cautioned RBI that it should not get carried away by the YoY numbers.
Asian Paints promoter to buy additional 0.31% stake (30.55 lakh shares) at average Rs 2.839.84 per share on June 9
Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities
:
NYMEX crude trades higher near $119/bbl but well off the 3-month high set yesterday. Crude remains supported by China’s lifting of virus related restrictions, Saudi’s move to raise price for Asian buyers and EU’s ban on Russian crude. Crude is however struggling amid increased volatility in equity markets amid monetary tightening concerns. Market players are also trying to assess if Russian supply loss can be compensated by higher exports from countries like Venezuela and Iran who are under economic sanctions. Crude may remain volatile however tightness concerns may keep prices supported.
Market update at 10 AM: Sensex is down 623.34 points or 1.12% at 55051.98, and the Nifty fell 178 points or 1.07% at 16391.50.
Vedanta promoters release pledge on entire 69.69% equity
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services
:
Two crucial numbers coming this week are significant - RBI's rate hike tomorrow and the inflation rate in the US expected on Friday. RBI's rate hike is a foregone conclusion; the only unknown is the quantum of the rate hike. Even if the rate hike is by a steep 50bp, the market is unlikely to be impacted much since frontloading of the rate hike will be more effective in anchoring inflation expectations.
The market direction is likely to be influenced more by the inflation in the US, which, in turn, will decide how far the Fed will go in raising rates. This will be the key determinant of possible 'risk on' or 'risk off' in equity markets globally. A rising rate scenario will improve the margin of the banking sector since deposit rates lag lending rates. The most attractively valued segment in the market now is financials, particularly banking
PB Fintech large trade: 38.34 lakh shares (0.85% equity) worth Rs 235.74 crore change hands.
Market alert
: Traders say, NSE F&O rates are not updating.
Market at Open: Sensex is down 366.97 points or 0.66% at 55308.35, and the Nifty shed 116.10 points or 0.70% at 16453.40.
Rupee opens
Rupee opens at 77.72 per US dollar against June 6 close of 77.63 per US dollar
Reserve right to terminate deal: Elon Musk in fresh letter to Twitter
Billionaire Elon Musk on June 6 said he "reserves the right" to terminate the deal to take over Twitter, as he accused the social media giant of “resisting and thwarting" his request for data related to spam accounts. The Tesla chief executive had, in a shock announcement made last month, said he was putting the $44-billion acquisition deal on "temporary hold" till it is ascertained whether fake users on the microblogging site account for less than five percent of the total userbase. While Twitter has maintained that the spam accounts on its platform are up to an estimated five percent, Musk has sought an independent analysis to verify the claim.
Deepak Jasani, Head of Retail Research, HDFC Securities
:
Indian markets could open lower in line with largely negative Asian markets today and despite mildly higher US markets on Monday. All three major US stock indexes finished higher on Monday, but trimmed earlier gains as the 10-year Treasury yield breached 3% ahead of the next big inflation report later this week. US stocks ended a choppy session slightly higher on Monday, helped by gains in Amazon.com and other mega-cap growth shares, while persistent worries over inflation and interest rates kept a lid on the market.
Nifty has consolidated on Monday after falling from higher levels on Friday. Having taken support from 16443, the index rose and closed higher than the low, though minorly in the negative. We think Nifty could remain in the 16353-16696 band for the next few sessions.
Oil prices
Oil prices inched higher on Tuesday on expected demand recovery in China as it relaxed tough COVID curbs and doubts a higher output target by OPEC+ producers would ease tight supply.
Brent crude futures were up 19 cents, or 0.2%, at $119.70 barrel at 0050 GMT. US West Texas Intermediate (WTI) crude futures were up 25 cents, or 0.2%, at $118.75 a barrel. The benchmark hit a three-month high of $120.99 on Monday.
Asian Markets Updates
FII and DII data
: Foreign institutional investors (FIIs) have net sold Rs 2,397.65 crore worth of shares, whereas domestic institutional investors (DIIs) remained net buyers, to the tune of Rs 1,940 crore worth of shares on June 6, as per provisional data available on the NSE.
SGX Nifty
Trends on SGX Nifty indicate a gap-down opening for the broader index in India with a loss of 140 points. The Nifty futures were trading around 16,432 levels on the Singaporean exchange.
US Markets
US stocks ended a choppy session slightly higher on Monday, helped by gains in Amazon.com and other mega-cap growth shares, while persistent worries over inflation and interest rates kept a lid on the market. Shares of Amazon.com Inc rose 2% and were the biggest positive for the S&P 500 and Nasdaq after the online retailer split its shares 20 for 1.
The Dow Jones Industrial Average rose 16.08 points, or 0.05%, to 32,915.78, the S&P 500 gained 12.89 points, or 0.31%, to 4,121.43 and the Nasdaq Composite added 48.64 points, or 0.4%, to 12,061.37. Twitter Inc shares slipped 1.5% after billionaire Elon Musk said he might walk away from his buyout offer if the social media company fails to provide data on spam and fake accounts.
