Deepak Jasani, Head of Retail Research, HDFC Securities
Nifty rose for the third consecutive day on July 08 ending the third week of gains.Among sectors Power and Capital Goods rose the most while Metals was the main loser. Focus remained on largecaps and Midcap and Smallcap indices underperformed vis-à-vis the Nifty although advance decline ratio remained positive.
Equity mutual fund schemes saw a 16.3 percent decline in net investor flows in June to Rs 15,497 crore as volatility in stock markets hammered market sentiment. The number of new SIP accounts opened stood at 17.92 lakh. The SIP contribution dipped marginally over the last month to Rs 12,275 crore in June.
Asian shares inched up on Friday, tracking Wall Street gains overnight and as fears of an economic slowdown cooled somewhat. European stocks were subdued on Friday after two days of gains as investors awaited the release of U.S. non-farm payroll data for June later in the day.
Nifty filled the downgap of 16,173 convincingly and closed above it. Nifty now enters a crucial resistance band of 16293-16610. On downmoves 16026 could offer support. Nifty has not gained for more than three weeks in a row since mid January 2022. It will be interesting to see whether this pattern sustains or breaks in the coming week.
Vinod Nair, Head of Research at Geojit Financial Services:
The Indian rally got stronger as crude prices corrected halving FIIs selling when compared to last week. However, this rally can fizzle out as correction in commodities prices & tightening monetary policy are negative for global economy, limiting earnings growth & valuation expansion. Q1 earnings season will be the prime focus of the market, in the near-term.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities:
Positive momentum continued in the markets as investors are buying selectively with caution and not going overboard. Most of the negative news has the potential to make a comeback anytime and could trigger a broader sell-off in the markets.
Technically, on weekly charts the Nifty has formed a long bullish candle and has also surpassed the short term resistance of 16000.
In the short term now, 16000 and the 50-day SMA (Simple Moving Average) would be the key support levels to watch out for. The short term texture of the market is positive but slightly overbought. Hence strong possibility of range bound activity is not ruled out in the near future.
On the higher side, 16300/54800 and 16450 would be the key resistance zone, whereas 16100 and 16000 could be the sacrosanct support levels for the market.
Palak Kothari, Senior Technical Analyst at Choice Broking
Nifty continued the upside rally for 3rd consecutive day as Index opened on a positive note and managed to trade in green note and closed the session at 16220.60 level with a gain of 87.70 points.
On the technical front, the Nifty has been sustaining above the upper band of rising wedge formation which suggests strength for next day. Furthermore, the index has formed a bullish candle on a weekly time frame which suggests an upside rally.
Nifty has given closing above 21 & 50-DMA which points out strength for next trading session.
The Nifty may find support around 16100 levels while on the upside 16350 may act as an immediate hurdle crossing above the same can show upside rally. Overall, stock specific moment has been observed sustained above 16200 level can open the gate for 16500 levels.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas
The Nifty witnessed a smart recovery in the last week. On the way up, it crossed short term hurdles including the psychological mark of 16000. It filled up a gap area that was created during the June decline.
The index has now reached a crucial junction. It has reached its daily upper Bollinger Band as well as upper end of a rising channel.
In terms of the Fibonacci retracement, it has done little more than 61.8% of the June fall. Thus sustainability at this level will be crucial to determine further extension in the up move.
If the Nifty crosses July 08 high of 16275 then it can head towards 16500 in the short term. On the flip side, failure to hold above 16200 will allow a dip towards 16050-16000.
Rupee Close:
Indian rupee ended lower at 79.25 per dollar on Friday against Thursday's close of 79.17.
Market Close
Benchmark indices ended on positive note on July 8 with Nifty above 16,200.
At close, the Sensex was up 303.38 points or 0.56% at 54,481.84, and the Nifty was up 87.70 points or 0.54% at 16,220.60. About 1859 shares have advanced, 1352 shares declined, and 146 shares are unchanged.
Larsen and Toubro, Power Grid Corporation, Tata Motors, NTPC and Coal India were among the top Nifty gainers. While losers included HDFC Life, ONGC, Tata Steel, JSW Steel and Maruti Suzuki.
On the sectoral front, except Metal all other indices ended in the green with Capital Goods and Power indices rose 1-2 percent.
BSE midcap and smallcap indices ended with marginal gains.
CLSA On Hindalco Industries:
Broking house CLSA has maintained buy rating on Hindalco Industries but cut target price to Rs 525 from Rs 580 per share.
The stock underperformance is overdone given relatively resilient earnings with Novelis saw stable growth even during low global growth, mainly in cans segment.
The production costs globally remain high, which could support LME.
CLSA see limited downside assuming sharp corrections in Novelis’ profitability & volumes, reported CNBC-TV18.
BSE Power index rose 1 percent supported by the Power Grid, Tata Power, NTPC
Kotak Mahindra Bank acquires DLL India’s agri and healthcare equipment financing portfolio
Kotak Mahindra Bank has acquired the Agri and Healthcare Equipment financing portfolio of De Lage Landen Financial Services India
Private Limited (DLL India), a subsidiary of De Lage Landen International B.V., owned by Rabobank.
Kotak Mahindra Bank was quoting at Rs 1,745.90, up Rs 6.75, or 0.39 percent on the BSE.
US R-134a Dumping Duty Review:
Sunset review finds revoking duty will lead to recurrence of dumping, reported CNBC-TV18.
Market at 3 PM
Benchmark indices erased most of the intraday gains but still trading with higher in the volatile session.
The Sensex was up 220.85 points or 0.41% at 54399.31, and the Nifty was up 64 points or 0.40% at 16196.90. About 1702 shares have advanced, 1363 shares declined, and 157 shares are unchanged.
Motilal Oswal Financial Services View On ICICI Lombard General Insurance Company
ICICI Lombard General Insurance Company has corrected by 31% over the past 18 months, even as the Nifty remained flat. The steep correction has been on account of: 1) shift in the management's focus to growth from profitability earlier, and 2) expected reduction in ICICIBC's stake to sub-30% levels by Sep'23 as per RBI regulations from 48% at present.
After the correction, the stock is trading near at all-time low one year forward valuation. The stock should re-rate towards its historic valuation as it delivers profitable growth and clarity emerges on the stake sale.
We initiate coverage on ICICI Lombard with a buy rating and a one-year target price of Rs 1,500 (35x FY24E P/E).
ICICI Lombard General Insurance Company was quoting at Rs 1,273.50, down Rs 3.90, or 0.31 percent on the BSE.
BSE Metal index fell 1 percent dragged by the Jindal Steel, Vedanta, Hindalco Industries
Tata Motors Global Wholesales Data:
Tata Motors' Q1 global wholesales were up 48% YoY at 3.16 lakh units and JLR global wholesales were at 82,587 units.
Tata Motors was quoting at Rs 440.50, up Rs 9.70, or 2.25 percent on the BSE.
Current account deficit pips inflation as India’s major challenge at the moment: Analysts
Current account deficit poses a bigger challenge to the Indian economy than does the inflation, according to analysts.
Speaking to CNBC-TV18, Sonal Varma of Nomura Financial Advisory & Securities (India) and Chetan Ahya of Morgan Stanley said that the slowdown in developed economies such as the United States and European Union will lead to India’s export numbers coming down, resulting in an increase in the country’s current account deficit.
“The broader view is that the current account deficit for the next six months remains around 4 percent of GDP and 3.3 percent for the full financial year,” said Varma.
The decline in consumption in the US since the pandemic will have a negative impact on India. “What we had seen during the pandemic is that there was an excessive growth in demand for goods from US consumers specifically. That is going to come back to haunt us with much weaker demand for exports,” said Ahya.
Tapan Patel, Senior Analyst (Commodities), HDFC Securities
:
Crude oil prices traded weak with benchmark NYMEX WTI crude oil prices were trading 0.70% down near $102 per barrel. Crude oil prices pared early gains on dollar recovery and demand growth worries despite of tight supplies. Bans on Russian oil and gas output have driven global energy prices, while other producers are not able to boost significantly to supplies. Data from US Energy Information Administration (EIA) showed on Thursday that US crude oil inventories rose by 8.2 million barrels in the week ended July 1.
We expect crude oil prices to trade sideways to down with resistance at $98 per barrel with support at $95 per barrel. MCX crude oil July contract has important support at Rs 7680 and resistance at Rs 8010 per barrel.
European Markets Updates
IDFC First Bank hikes lending rate by 10-15 bps across loan tenures
Market update at 2 PM: Sensex is up 178.89 points or 0.33% at 54357.35, and the Nifty added 50.10 points or 0.31% at 16183.
Buzzing
Tata Motors rises more than 2% intraday as Tata Group looking to IPO of Tata Technologies.
Tata Motors holds little more than 74 percent stake in Tata Technologies, according to the former’s 2022 annual report. Interestingly, in early 2018, Tata Motors had called off the sale of a significant minority stake ( 43 per cent) in Tata Technologies to private equity major Warburg Pincus for $360 mn
Auto major Tata Motors is in value unlocking mode as its subsidiary Tata Technologies, a global product engineering and digital services company, has initiated preliminary steps to evaluate an initial public offer ( IPO) on the back of accelerated demand in the electric vehicles and the aviation segment, multiple industry sources with knowledge of the matter told Moneycontrol. Click to Read More
Buzzing
Vakrangee has clocked profit at Rs 4.53 crore in quarter ended June 2022, down significantly from Rs 23.33 crore in corresponding quarter last year as gross margins impacted primarily due to the launch of additional franchisee incentive schemes.
It said profit margins have bottomed out and it is confident to deliver improved profitability & sustainable growth in the subsequent quarters.
However, revenue from operations increased sharply to Rs 226.03 crore in Q1FY23 as against Rs 154.02 crore in same period last year.
Vakrangee was quoting at Rs 26.25, down Rs 1.30, or 4.72 percent on the BSE.
Kalpataru Power arm acquires remaining stake in Swedish EPC company
Kalpataru Power Transmission' subsidiary Kalpataru Power Transmission Sweden AB (KPT Sweden) has completed the acquisition of remaining 15% equity stake of Linjemontage i Grastrop AB, a Swedish EPC company (LMG) headquartered in Grastrop, by paying $11.5 million. LMG also has two subsidiaries.
Kalpataru Power Transmission was quoting at Rs 358.80, up Rs 1.05, or 0.29 percent on the BSE.
Anand James - Chief Market Strategist at Geojit Financial Services
With the week’s objective of 16200 expected to be fully achieved today, the question now is on sustainability of the uptrend. We had indicated earlier that beyond 16200, rejected trades could re surface. But, as noted yesterday, with several signs of a shift from an oscillating trend to a directional one, the prospects of rejection trades or pause in upsides need to be played with caution. For the day, we would see inability to float above 16235 as an opportunity towards the same. If such moves do not extend past 16050 region, expect steady rise to 16340shortly and 16500-17000 in the coming days.
Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC:
These trends reflect sign of maturity in Investors mindset. SIP contribution remaining above Rs 12,000 indicates better awareness among retail investors about long term orientation of equity investments and understanding of current volatility as a part and parcel of equity investing.
Instead of reading too much into net equity inflow dipping, the heartening thing to note is that both net equity inflow and net inflow into hybrid funds remained resilient despite relentless selling by FPI’s and market correction during the year so far.
Equity MFs see Rs 15,498 crore inflow in June:
Equity mutual funds witnessed a net inflow of Rs 15,498 crore in June amid heightened volatility in the stock market and consistent selling by Foreign Portfolio Investors (FPIs). Equity mutual funds witnessed positive momentum for the 16th straight month in June.
Inflows into equity mutual funds in June was much lower compared to the net inflow of Rs 18,529 crore seen in May, data from the Association of Mutual Funds in India (AMFI) showed on Friday.
Market at 1 PM
Benchmark indices were trading higher with Nifty around 16200.
The Sensex was up 260.65 points or 0.48% at 54439.11, and the Nifty was up 67.80 points or 0.42% at 16200.70. About 1786 shares have advanced, 1209 shares declined, and 140 shares are unchanged.
BSE Realty index slipped 0.5 percent dragged by the Indiabulls Real Estate, Phoenix Mills, Macrotech Developers
JLR sales volumes drop 37% YoY
Tata Motors' UK-based Jaguar Land Rover reported sales volumes at 78,825 units for three-month period ended June 2022, down 37% YoY and flat compared to previous quarter.
Despite a record order book of 2 lakh units, sales continued to be constrained by the global chip shortage, compounded by the run out of the prior model Range Rover Sport, with deliveries just starting, and the impact of Covid lockdowns in China.
Alkem Laboratories receives Form 483 with one observation
The USFDA had conducted a GMP and Pre-Approval inspection at Alkem Laboratories' manufacturing facility located at Indore from 01st July, 2022 to 07th July, 2022.
At the end of the inspection, the company has received Form 483 with one (1) observation with respect to ANDA filed for the products to be manufactured at the said plant. There is no data integrity observation.
This GMP and Pre-Approval Inspection is part of the routine business operations and the company shall submit to US FDA within the stipulated timeline, a detailed response to close out the said observation.
CLSA View On TVS Motor
Broking house CLSA has maintained buy rating on TVS Motor and raised the target to Rs 922 per share.
Ronin launch marks entry into cruiser motorcycle segment, which has latest features to attract young buyers.
CLSA raises volume & earnings estimates on back of this launch, as company is gaining market share on back of strong launches, reported CNBC-TV18.
Market at 12 PM
Benchmark indices were trading higher with Nifty around 16200.
The Sensex was up 181.02 points or 0.33% at 54359.48, and the Nifty was up 45.60 points or 0.28% at 16178.50. About 1723 shares have advanced, 1197 shares declined, and 165 shares are unchanged.
Nifty Bank index added 0.4 percent led by the Axis Bank, HDFC Bank, ICICI Bank
USFDA completes pre-approval inspection at Dr Reddy's facility
The United States Food & Drug Administration (USFDA) completed a Pre Approval Inspection (PAI) at company's formulations manufacturing facility FTO 11 in Srikakulam, Andhra Pradesh.
The inspection was conducted from 30th June, 2022 to 7th July, 2022. We have been issued a Form 483 with two observations, which we will address within the stipulated timeline, company said in its release.
Dr Reddy’s Laboratories was quoting at Rs 4,362.90, up Rs 24.55, or 0.57 percent.
TCS to declares Q1 earnings today
IT services provider Tata Consultancy Services (TCS) to announce its Q1 earnings later today.
Experts look forward to a healthy on-year revenue growth for the Indian IT services sector that was aided by a secular demand environment, healthy deal wins, and mergers and acquisitions. They expect a steady sequential USD-reported revenue growth but it may be affected by adverse cross-currency and seasonality for a few companies in the sector. Click to Read More
Telecom Q1 revenue growth expected to be muted as inflation bites
The Indian telecom sector is expected to report a muted revenue growth in the quarter ended June due to higher costs for consumers. Brokerages expect revenues of the three major telecom operators— Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea—to grow 3-4 percent from the previous quarter.
Brokerage firm Emkay Global Financial Services said it expects telecom operators to see muted addition of new subscribers in the reporting quarter due to inflationary scenario and the sustained impact of consolidation of users.
BNP Paribas is of the opinion that industry can afford one more hike in tariffs after the previous increase in November 2021. The higher likelihood of Reliance Jio coming onboard for a tariff hike after completion of the consolidation of its user base will result in a tariff hike later this year.
Motilal Oswal Financial Services on ICICI Lombard
The stock has corrected by 31% over the past 18 months, even as the Nifty remained flat. The steep correction has been on account of shift in the management's focus to growth from profitability earlier, and expected reduction in ICICIBC's stake to sub-30% levels by Sep'23 as per RBI regulations from 48% at present. After the correction, the stock is trading near at all-time low one year forward valuation. The stock should re-rate towards its historic valuation as it delivers profitable growth and clarity emerges on the stake sale. We initiate coverage on the stock with a buy rating and a one-year target of Rs 1,500 (35x FY24E P/E).
June Mutual Fund data
Net equity inflow at Rs 15,480 crore against Rs 17,669 crore (MoM). Hybrid fund outflow at Rs 2,279.4 crore against Rs 5,123.2 crore inflow (MoM). Liquid fund outflow at Rs 15,783 crore against Rs 1,777 crore inflow (MoM). ETF inflow at Rs 5,359 crore against Rs 6,056 crore inflow (MoM). Credit risk outflow at Rs 482 crore against Rs 730 crore outflow (MoM). Total debt scheme outflow at Rs 92,248 crore against Rs 32,722 crore outflow (MoM). Corporate bond fund outflow at Rs 9,086 crore against Rs 2,147 crore outflow (MoM). Total assets under management at Rs 35.64 lakh crore against Rs 37.22 lakh crore (MoM).
Market update at 11 AM: Sensex is up 287.34 points or 0.53% at 54465.80, and the Nifty added 77.60 points or 0.48% at 16210.50.
Nifty Metal index shed 0.5 percent dragged by the Jindal Steel, Tata Steel, SAIL India
Follow our LIVE blog for the latest updates on M&M EV announcement
BSE Information Technology index rose 0.7 percent supported by the Nucleus Software Exports, RateGain Travel Technologies, Cyient
AAV Ranga Raju acquires 2.87% stake of NCC via preferential allotment, reported CNBC-TV18.
Sharekhan View on Titan Company
Titan is aiming to generate revenue CAGR of over 20% revenue during FY2022-FY2027 on back of its ambitious growth plan in the medium term. This along with consistent margin improvement will help cash flows to improve strongly in the coming years.
FY2023 will be a strong year for the company due to low base in core businesses. The stock has corrected by ~15% in the past three months, in-line with substantial correction in the broader indices. The company’s strong growth outlook, industry tailwinds in the medium term, and strong balance sheet make it a best play in the retail space. Hence, we maintain our Buy recommendation on the stock with an unchanged price target (PT) of Rs 2,900.
Pritam Patnaik, Head - Commodities, HNI and NRI Acquisitions, Axis Securities:
Gold prices had a brief respite from the massive drubbing the prices have witnessed in the last few weeks . A softening dollar, lower bond yields and a strong technical support at $1730 have facilitated stabilization in gold prices.
Additionally, a rather poor US jobs data, further facilitate in stalling the falling gold prices. The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, with layoffs surging to a 16-month high in June.
As the Fed continues with its aggressive monetary policy, pushing economy towards recession, the macro numbers are going to come in weak, which in turn could be supportive for gold bargain hunters.
