Indian indices witnessed a positive start on Monday. The indices this week will be largely driven by global trends, economic outlook, WPI inflation data for April and the ongoing quarterly earnings of corporates. The investors will also keep an eye on the foreign institutional investors who are on a selling spree. Globally, inflation and monetary policy concerns will have an impact on the equity markets, but experts believe some respite for the bulls are on the cards as they look oversold and due for a pullback rally. In Asia, shares rose in Japan and Australia, while that in Hong Kong, South Korea, and Shanghai wavered.
Company results today: Bharat Forge, Raymond, VIP Industries, Omkar Speciality Chemicals, Fino Payments Bank, Glaxosmithkline Pharmaceuticals, Greenply Industries are among the companies that will announce their financial results on 16 May.
Bharat Forge gains almost 3% ahead of Q4 results
ACC, Ambuja Cements rally after Holcim India deal
Shares of ACC and Ambuja Cements were in huge demand on Monday after Gautam Adani’s group clinched a deal to acquire a controlling stake in Holcim Ltd’s businesses in India for USD 10.5 billion.
The stock of ACC rallied 7.79 per cent to ₹2,288.15 on the BSE.
Shares of Ambuja Cements gained 4.13 per cent to ₹373.65.
Gautam Adani’s group on Sunday said it has clinched a deal to acquire a controlling stake in Holcim Ltd’s businesses in India for USD 10.5 billion, marking the ports-to-energy conglomerate’s entry into the cement sector.
Base metals report: Angel One
The base metals pack ended the week on a mixed note, with aluminum being the only metal to gain 1.2 percent for the week.
Copper prices rose on Friday after falling to 7-month lows as a slowing global economy will have little to no demand for metals. However, the prices were still on track for their sixth week of losses due to rising fears of a worldwide economic slowdown dampening demand.
In the short term, however, metals may stay under pressure, owing to COVID-19 limitations in top customer China, which have slowed metal demand and disrupted supply networks.
Another hindrance for base metals was a stronger US dollar, which traded around two-decade highs, lowering demand for dollar-backed commodities. For other currency holders, a stronger dollar raises the cost of acquiring these goods.
Outlook: We expect copper to trade lower towards 737 levels, a break of which could prompt the price to move lower to 718 levels.
Stock recommendations by Reliance Research
Bharat Forge (CMP Rs.629)
In view of better business visibility, improving economic situation, healthy demand outlook for CV segment and foray into high-margin segments, going forward, we recommend BUY on Bharat Forge with 1-Year TP of Rs1,000, valuing the stock at 30x FY24E. .
DLF (PREVIOUS CLOSE: 319) BUY
For today’s trade, long position can be initiated in the range of ₹313- 316 for the target of Rs. 327 with a strict stop loss of ₹310.
JUBLFOOD (PREVIOUS CLOSE: 475) BUY
For today’s trade, long position can be initiated in the range of ₹466- 471 for the target of Rs. 485 with a strict stop loss of ₹463.
TCS (PREVIOUS CLOSE: 3415) BUY
For today’s trade, long position can be initiated in the range of ₹3380- 3410 for the target of Rs. 3500 with a strict stop loss of ₹3330.
Reliance Securities on Tech Mahindra
TechM reported a mixed 4QFY22 performance. Margins were below our expectations while PAT was above our expectation. We expect both telecom and enterprise verticals to witness a healthy growth on the back of step-up in 5G capex and mid-term resiliency in technology demand. We believe TechM will be the key beneficiary of the medium-term themes such as software defined network (SDN) and telecom IT modernization. In view of healthy deal wins, strong deal pipeline and 5G rollout benefiting profitability, we maintain our BUY rating on the stock with a Target Price of Rs1,890, valuing the stock at a P/E multiple of 23x on FY24E earnings.
Top BSE losers in early trade: Amber Enterprises, Privi Speciality Chemicals, Minda Corporation
BSE top gainers in early trade: Black Box, ACC, ELGI Equipments
Bajaj Finance top Sensex gainer in early trade, adds over 2%
BSE Sensex rises 441 points in early trade
LIC IPO: What GMP signals ahead of shares listing tomorrow
Life Insurance Corporation of India (LIC) will list on the stock exchanges tomorrow, following the initial public offer (IPO) which was oversubscribed nearly three times the issue size. The government has fixed the issue price of LIC shares at ₹949 apiece, the upper end of the IPO price band, fetching the exchequer around ₹20,557 crore.
Venus Pipes IPO: GMP, share allotment listing date details
The initial public offer of Venus Pipes and Tubes was subscribed 16.31 times on the last day of subscription on Friday. The issue received bids for 5,79,48,730 shares against 35,51,914 shares on offer. The issue had a price range of ₹310-326 per share.
Risk reward favourable at current valuation; Upgrade to BUY: Reliance Research on Apollo Tyres
In view of the strong volume growth ahead, regular price hikes, healthy export potential, structural positives in European operations and comfortable valuation, we turn positive on APTY. Post recent price correction, risk reward is favourable at current valuation of 10.6x FY24E earnings. Therefore, we upgrade APTY to BUY with a revised Target Price of Rs235 (vs. Rs220 earlier).
Faith of millions of Small Investors Put to Test With LIC Debut
Millions of Indians investing in the country’s biggest listing could turn sour on the equity market if the stock follows the poor performance of its state-run predecessors.
Prime Minister Narendra Modi’s government raised $2.7 billion by selling shares in Life Insurance Corporation of India, including to millions of families nationwide that hold LIC policies. The stock starts trading Tuesday at a time when markets worldwide are being roiled by the fallout of Russia’s invasion of Ukraine and rising interest rates.
While deep-pocketed global funds can withstand volatility, small investors — especially first-time shareholders such as the ones created by by LIC’s listing — risk being burned if the stock underperforms. Of the 21 Indian state-run companies that debuted in the stock market since 2010, half are still trading below their issue price.
Adani to become India’s second-biggest cement maker with $10.5 billion Holcim deal
India’s Adani Group acquired a controlling stake in Holcim AG’s cement businesses in India in a $10.5 billion deal to become the second biggest cement producer in the country, Adani Group said in a statement on Sunday.
Asia’s richest person Gautam Adani’s conglomerate acquired 63.19% of Ambuja Cements Ltd and its subsidiary ACC in fierce bidding with local companies.
The divestment is the latest move by Holcim as it seeks to reduce its reliance on cement production, an industrial process which produces high levels of carbon emissions and has therefore deterred many environmentally-conscious investors.
Healthy return ratios and strong cash flow command premium valuation: Reliance Research on Escorts
Despite the near-term volatility in demand in tractor sales, we expect tractor industry to continue growing going forward on account of the changing industry dynamics, increasing mechanization, rising affordability, and widening alternate usage of tractors. In view of the sizable presence in a relatively better-placed tractor segment, strong positive cash flow, healthy return ratios and attractive valuation, we reiterate our BUY rating on the stock, and maintain the Target Price of Rs2,250.
Nifty50 at open: Jumps 90 points; Eicher Motors, JSW Steel, Tata Steel top gainers, Ultratech Cement, Shree Cement top drags
Sensex at open: Trades over 250 points higher; Tata Steel, Maruti top gainers in early trade; Ultratech Cement drags
Nifty50 at pre-open: Opens 63 points higher; Eicher Motors, JSW Steel, Hindalco top gainers, TechM top loser
Sensex at pre-open: Rises 150 points; Tata Steel, Titan up over 2%, Airtel drags
Sharp correction an entry opportunity, Upgrade to BUY: Prabhudas Lilladher on Avenue Supermarts
Rating: BUY | CMP: Rs3,231 | TP: Rs4,651
We cut FY23/24 EPS estimates by 10.8% and 13.5% and DCF based target price to Rs4651 (5345 earlier) even as we upgrade to the stock to Buy post sharp correction. We believe increased capex following accelerated store openings, higher inventory due to inflation and assuming higher WACC (rising interest rates). D’Mart reported strong growth despite higher inflation while growing the share of general merchandise and apparel by 50bps in FY22 vs FY21 (still lower than 27.3% share in FY20). 4Q margin expansion of 15bps shows the robust business model despite deterioration in sales mix and operating cost of 21 new stores opened in 4Q (other expenses up 18.9% YoY and 3.7% QoQ versus just 9.2% increase YoY in 9MFY22).
Gold up from 3-month lows as U.S. bond yields weaken
Gold edged up on Monday from a more than three-month trough hit in the previous session, as lower U.S. Treasury yields kept demand for zero-yield bullion afloat above the key psychological support level of around $1,800 per ounce. Spot gold was up 0.1% at $1,812.15 per ounce, as of 0227 GMT. U.S. gold futures gained 0.1% to $1,809.80.
Day trading guide for Monday
8 stocks to buy or sell today — 16th May
Bitcoin trades near $30,000 as markets digest TerraUSD fallout
Bitcoin staged a modest recovery to trade at around $30,000, extending a period of relative market calm after the collapse of a closely watched stablecoin roiled digital assets in the past week.
The largest cryptocurrency advanced 3.4% n Sunday to $30,350 as of 4 p.m. in New York. Ether, the second-biggest token, rose 5% while coins like Avalanche and Cardano posted even larger gains.
Bitcoin dipped to a low of $25,425 on Thursday after the TerraUSD algorithmic stablecoin unraveled, throwing the entire ecoystem that supports it into disarray. At its height, the market panic engulfed the $76 billion stablecoin Tether, a key cog in cryptoassets that briefly dipped from its dollar peg.
Goldman Sachs cuts US growth forecasts for 2022 and 2023
Goldman Sachs Group Inc. economists cut their forecasts for US growth for this year and next to reflect the shake-out in financial markets amid the Federal Reserve’s tightening of monetary policy.
In a report Sunday, the economists led by Jan Hatzius said they now expect the economy to grow 2.4% this year and 1.6% in 2023, down from 2.6% and 2.2% previously.
China’s economy contracts sharply as Covid Zero cuts output
China’s economy contracted in April, with Covid outbreaks and lockdowns dragging the industrial and consumer sectors down to the weakest levels since early 2020 as millions of residents were confined to their homes and factories were forced to halt production.
Industrial output fell 2.9% in April from a year ago, worse than the median estimate of a 0.5% increase in a Bloomberg survey of economists. Retail sales contracted 11.1% in the period, weaker than a projected 6.6% drop. The unemployment rate climbed to 6.1%, higher than the forecast of 6%.
China’s economy has taken an enormous toll from the government’s stringent efforts to keep the virus at bay. Beijing has insisted on sticking with its Covid Zero strategy to curb infections, even though the high transmissibility of omicron puts cities at greater risk of repeatedly locking down and reopening compared to earlier strains.
China keeps key interest rate unchanged despite sharp economic slowdown
China’s central bank refrained from cutting interest rates despite mounting evidence of a sharp slowdown in economic growth, suggesting policy makers may be concerned about the currency’s depreciation and capital outflows.
The People’s Bank of China kept the rate on its one-year medium-term lending facility at 2.85% on Monday. Economists had been split on the decision, with 13 of the 25 surveyed by Bloomberg expecting no change, and the rest predicting a reduction between 5 basis points and 15 basis points.
The PBOC also rolled over the maturing 100 billion yuan ($15 billion) of medium-term lending facility loans without providing additional liquidity.
Dollar firm as traders mull scope for stock bounce
The dollar was firm Monday while equity futures pointed to the possibility of stock market gains in Asia following a bounce in US shares.
Contracts rose for Japan, Australia and Hong Kong after a technology-led jump on Wall Street Friday in a tumultuous week in markets.
The risk of an economic downturn amid high inflation and rising borrowing costs is the major worry for markets, alongside Russia’s war in Ukraine and China’s growth-sapping Covid lockdowns.
Bond traders reel as inflation hits world’s emerging local debt
As spiraling inflation spreads across the globe, emerging-market bonds from Turkey to Thailand are feeling the brunt.
Local-currency debt from developing nations — which is far more sensitive to a country’s domestic inflationary pressures than dollar denominated equivalents — has slumped almost 9% this year, the most since at least 2008, according to a Bloomberg index. There’s unlikely to be any relief soon as central bankers around the world attempt to control surging prices by raising interest rates even more aggressively — potentially risking growth in doing so.
Wheat soars in risk to food inflation as India restricts exports
Wheat jumped by the exchange limit after India’s move to restrict exports, exposing just how tight global supplies are after the war in Ukraine and threatening to drive up food prices even more.
The government will suspend overseas sales to manage its food security, according to a notification dated May 13. This drew criticism from the agriculture ministers of the Group of Seven nations, who said that such measures make the world’s crisis worse.
Benchmark futures rose as much as 5.9% to $12.47 1/2 a bushel in Chicago, the highest in two months. Prices have surged about 60% this year, increasing the cost of everything from bread to cakes and noodles.
The surprising thing is that India isn’t even a prominent exporter on the world stage. The fact that it could have such a major impact underscores the bleak prospect for global wheat supplies. War has crippled Ukraine’s exports, and now droughts, floods and heat waves threaten crops in most major producers.
Oil swings as investors weigh Russian ban; Gasoline hits record
Oil fluctuated at the start of a new week as investors weighed plans by Germany to ban Russian crude imports, while US gasoline futures rallied to top $4 a gallon for the first time ever.
West Texas Intermediate crude swung between gains and losses near $111 a barrel after posting a third weekly gain. Germany plans to stop importing Russian imports by the end of the year even if the European Union fails to agree on co-ordinated action, according to government officials.
The market has been gripped by a tumultuous period of trading since Russia’s late-February invasion of Ukraine and a Covid-19 resurgence in China. The war has boosted the cost of food and fuels, with surging US retail gasoline and diesel prices helping fan the fastest inflation in decades.
Stocks rise with US futures as sentiment steadies
Stocks in Asia climbed with US equity futures Monday amid a steadier mood in global markets following a Wall Street bounce.
Equities rose in Japan, Australia and South Korea, while Nasdaq 100 and S&P 500 contracts pushed higher, signaling some relief from this year’s stock market rout. A gauge of the dollar was little changed.
Sentiment may be getting a boost from the People’s Bank of China, which effectively cut the interest rate for new mortgages over the weekend, seeking to bolster an ailing housing market.
Meanwhile, Shanghai partially loosened its Covid lockdown by announcing a phased reopening of shops. Virus curbs are squeezing China’s economy and some analysts expect a cut in the rate on one-year policy loans Monday.
In the bond market, a key question is whether economic worries will help stem 2022’s Treasury selloff, which has been driven by inflation and tightening US monetary settings. The 10-year US yield increased to 2.94%.
Tokyo shares open higher after US gains
Tokyo shares opened higher on Monday after Wall Street rebounded, backed by gains among high-tech stocks.
The benchmark Nikkei 225 index gained 1.23 percent, or 325.72 points, to 26,753.37 at the open, while the broader Topix index rose 1.03 percent, or 19.13 points, to 1,883.33.
Wall Street stocks rallied on Friday, finally managing to score gains at the end of a week beset by worries over inflation, the Ukraine war and the global economic outlook.
The tech-rich Nasdaq Composite Index led the major US indices, jumping 3.8 percent. The Dow Jones Industrial Average climbed 1.5 percent, while the broad-based S&P 500 rose 2.4 percent.
“The Dow rebounded for the first time (after a six-day losing streak) and Nasdaq continued to grow significantly. This will be a tailwind for Japanese stocks,” Okasan Online Securities said.
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