Indian indices look set for a volatile start on Wednesday, even as Asian markets exuded broadly steady vibes. The Japanese Nikkei was up, while the Hang Seng and Shanghai Composite Index pared gains, pointing to the uncertainty erupting from the tussle between economic revival and rising inflation. Earlier, US indices pared gains, after factory data indicated recovery despite rising input costs.
Sun Pharma , Ferring ink license deal for obstetric drug Caritec
Sun Pharmaceutical Industries Ltd announced that one of its wholly owned subsidiaries has entered into a license agreement with Ferring Pharmaceuticals Pvt. Ltd, a unit of Switzerland-based biopharmaceuticals MNC Ferring Pharmaceuticals, to commercialize a Room Temperature Stable formulation of obstetric drug, Caritec (Carbetocin RTS) in India. Caritec is indicated for the prevention of excessive bleeding in women after vaginal or caesarean child birth. The condition is commonly known as post-partum hemorrhage (PPH).
RBI’s MPC begins deliberations amidst expectations of status-quo in policy rate
The Reserve Bank’s rate-setting panel, Monetary Policy Committee (MPC), began its three-day deliberations on Wednesday amid expectations of a status quo on benchmark rate mainly on account of uncertainty over the impact of the second wave of covid-19 pandemic.
Moreover, the fears of firming inflation may also refrain the MPC from tinkering with the interest rate in its bi-monthly monetary policy outcome to be announced on Friday.
The RBI had kept key interest rates unchanged at the last MPC meeting held in April. The key lending rate, the repo rate, was kept at 4% and the reverse repo rate or the central bank’s borrowing rate at 3.35%.
Aramco said to plan bond sale to help fund $75 bn dividend
Saudi Aramco is preparing to return to global capital markets with a bond that would help fund a $75 billion dividend commitment, according to people with knowledge of the plan.
The world’s biggest energy company has picked around 15 banks to manage a sale of Islamic debt, or sukuk, that could happen this month, according to people with knowledge of the matter. The state-controlled firm may seek to raise around $5 billion, one of the people said.
Aramco is considering a sale of both dollar and local-currency sukuk, the people said. No decision has been made and the firm may put off the deal if market conditions deteriorate. Aramco declined to comment.
Pandemic makes PSU banks starve for loan growth
Public sector banks have been losing their share in both deposits and loans to their private sector peers for several years now. The pandemic has made this even more acute. Data from the Reserve Bank of India (RBI) shows that public sector banks saw their credit growth drop to a 13-quarter low in the March quarter of FY21. Year-on-year credit growth was a mere 3.6% for public sector lenders while their private sector peers saw a robust 9.1% loan growth. It is clear that the sharp deceleration of loan growth in FY21 was led by public sector banks. To be sure, foreign banks reported a 3.3% contraction in their loan book, adding to the overall loan growth deceleration. (Read more)
Motherson Sumi Q4 net profit surges to ₹713.6 cr
Motherson Sumi Systems on Wednesday reported a consolidated net profit of ₹713.6 crore for the quarter ended March, which is a 289% increase from ₹183.4 crore profit posted in the same quarter last year. The company’s board recommended ₹1.5 dividend. (Read here)
Gold prices may continue rally towards ₹51,000: report
Gold prices rallied last month, supported by a softer US dollar and growing inflationary pressures. MCX gold has an immediate support at around ₹48,800 and as long it sustains above this level, the prices may target ₹51,000 level, according to an ICICI Direct Research report. (Read here)
HDFC twins, Infosys top drags
Trade deficit narrows to eight-month low in May
India’s trade deficit touched an eight-month low in May at $6.3 billion as rising external demand kept exports robust while the second wave of the pandemic dented domestic demand with a dip in imports.
Preliminary trade data released by the commerce ministry on Wednesday showed merchandise exports remained above the $30 billion mark for the third month in row, at $32.2 billion while merchandise imports fell steeply to its lowest level in six months at $38.5 billion.
IT stocks top drags
India logs 1.32 lakh fresh covid cases, 3,207 new fatalities
India added 1,32,788 new coronavirus infections taking the country’s tally of COVID-19 cases to 2,83,07,832, while the daily positivity rate has further dropped to 6.57 per cent, according to the Union Health Ministry data updated on Wednesday.
The COVID-19 death toll climbed to 3,35,102 with 3,207 fresh deaths.
The active cases were recorded below 20 lakh for the second consecutive day, the data updated at 8 am showed.
Phoenix Mills, GIC to set up investment platform in India
Retail mall developer Phoenix Mills Ltd and Singapore’s sovereign wealth fund GIC have partnered to establish a $733 million (approx ₹5,362 crore) investment platform for retail-led mixed-use assets in India, the company said in a regulatory filing on Wednesday.
GIC will acquire a significant minority stake in a $733 million portfolio of retail-led mixed-use developments, located in the prime consumption centres of Mumbai and Pune, the company added. The transaction is subject to relevant regulatory approvals, the filing said.
In a separate filing, Phoenix Mills said GIC will initially acquire an equity stake of 26.4% in Phoenix Mills’ subsidiaries by investing an aggregate amount of approximately ₹1,111 crore by way of a combination of primary infusion and secondary purchase of equity shares.
Mumbai’s data center capacity to grow 2.65x to 529 MW by ’23: report
Data center capacity in the country’s financial capital, Mumbai, is likely to grow 2.65 times to 529 megawatt (MW) by 2023, according to a report by global real estate services firm JLL’s India arm.
The city is expected to add 330 MW in the next two years and Navi Mumbai is expected to account for 83% of these additions in the Mumbai region.
With a 199 MW IT load, Mumbai is the leading data center hub of the country with nine internet cable landing and an assured power supply. (Read here)
Trading community faced ₹15tn in losses in the last two months: CAIT
India’s domestic trading community including small and large retailers have suffered an estimated loss of ₹15 lakh crore over the last two months, as the second wave prompted states to consider restrictions, the Confederation of All India Traders (CAIT) said in a note on Wednesday.
CAIT, which represents scores of traders pan-India, said this is prompting small businesses to consider job cuts and cut back on other overheads.
CAIT estimates that traders could look at an estimated 30% job cuts if restrictions continue and no financial assistance is provided to traders. (Read here)
Lockdowns hit large and small state economies alike, Gujarat shows best progress
India’s economy began the month of May with a cloud of uncertainty: by April’s last week, most states had gone under fresh covid-19 lockdowns. The second wave has since peaked but the fear factor kept curbs in place throughout the month. The economic cost is now clear across the country, rich and poor states alike, several high-frequency indicators show in the latest monthly update to Mint’s state recovery tracker. (Read here)
Urban Company raises USD 255 mn, valuation crosses USD 2.1 bn
Home services marketplace Urban Company on Wednesday said it has raised USD 255 million (about ₹1,857 crore) in funding led by Prosus Ventures, Dragoneer and Wellington Management.
The series F round – which also saw participation from Vy Capital, Tiger Global and Steadview – takes Urban Company’s valuation to $2.1 billion.
The latest round includes a primary capital infusion of $188 million and a secondary sale of approximately $67 million by select angels and early investors, Urban Company chief executive and co-founder Abhiraj Singh Bhal told PTI.
ITC’s Q4 results fail to fire its shares, but there are some bright spots
Cigarette-maker ITC Ltd’s March quarter results (Q4FY21) are in-line with analysts’ expectations and that’s not exciting enough for investors. Post results, the stock was trading around 2% lower in early deals on Wednesday on the National Stock Exchange.
Even so, certain aspects of the recovery are encouraging to say the least. Take the cigarettes business for instance, ITC’s largest profit contributor. The company has said cigarette volumes recovered to nearly pre-Covid levels towards the close of the financial year 2021. “The much-feared structural damage to smoking habits has not really manifested so far, despite prolonged problems relating to ease of product-access, etc during the lockdowns,” said analysts from JM Financial Institutional Securities Ltd in a report on 1 June.
Bajaj Finance surpasses Kotak Mahindra Bank in terms of mcap
Bajaj Finance Ltd has surpassed Kotak Mahindra Bank in terms of market capitalisation, following a surge in its share price, which hit a 52-week high on Wednesday.
At 10am, Bajaj Finance’s valuation stood at ₹3.52 trillion which was higher than that of Kotak Mahindra Bank’s ₹3.51 trillion market cap.
Shares of Bajaj Finance gained 0.4% to ₹5,844 on BSE while Kotak Mahindra Bank fell 1.2% to ₹1,771.30 a share. (Read here)
‘Opportunity open’, tweets Radhika Gupta as Edelweiss US Tech Fund falls 7.40% in 3 months
Radhika Gupta, CEO, Edelweiss Mutual Fund suggested that investors should buy into a correction in Edelweiss AMC’s US Technology Fund in a tweet yesterday. The scheme invests in tech stocks in the US indirectly by feeding into the JP Morgan US Technology Fund. The JP Morgan fund counts Alphabet, Facebook and Advanced Micro Devices Inc as its top 3 holdings. (Read here)
Single-dose Sputnik Light could be first single-dose vaccine launched in India
There is a possibility of a speedy launch of single-dose Covid-19 vaccine Sputnik Light in India, and an application seeking regulatory approval for the jab is expected to be filed soon, the sources said on Tuesday.
According to the sources Dr. Reddy’s in talks with the Government of India to bring Russia’s Sputnik Light vaccine to India. (Read here)
IT, banks, financials drag
Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments on the Nifty’s trajectory
“The [Nifty50] index has started on a soft note this morning. It has had a good rally up and perhaps there could be marginal profit booking and offloading of positions. However the trend continues to remain positive and we should be heading to 15,900-16,000 as the next potential target. Since there is a good support at 15,300, every dip or intra day correction can be utilized to accumulate long positions.”
Adani Ports, JSW, Tata Steel drive gains
HDFC twins, Infosys, ITC top drags
ITC trades lower
The FMCG-to-cigarette conglomerate shed 2.40% at market open on Wednesday. The FMCG-cigarette-to-hotel major reported a year-on-year net profit of ₹3,748.41, down 1.29%, in the quarter ended 31 March, 2021. The company had posted a net profit of ₹3,797.08 crore in the year-ago period. The FMCG major posted a consolidated net profit of ₹3,755 crore in the said quarter.
Petrol, diesel prices stay at record highs
After witnessing a continuous rise in the last few days, petrol and diesel prices were unchanged on Wednesday as the oil marketing companies decided to keep rates on pause.
In Delhi, a litre of petrol will cost ₹94.49 and a litre of diesel will cost ₹85.38. In Mumbai, the petrol price remained at ₹100.72 per litre on Wednesday while the cost of diesel at ₹92.69 a litre. (Read here)
Coal India’s $5 billion wage bill set to rise as profits slide
Coal India Ltd, the world’s biggest miner of the fossil fuel, is about to enter negotiations with trade unions over potentially hefty pay hikes at a time when the global push for clean energy is putting the industry’s future into doubt.
The Indian coal giant is expected to begin talks this month that could result in paychecks climbing 20% or more, bloating its more than $5 billion annual wage bill. The Kolkata-based company revises salaries of non-executive staff every five years, and the next change is due starting in July. (Read here)
Stocks to Watch
Auto stocks, Nestlé, ITC, DHFL, Infosys, and other stocks are expected remain in focus today. (Read more)
Oil prices rise on Opec+ discipline, strong demand outlook
Oil prices rose on Wednesday after Opec and its allies stuck to their plan to cautiously return oil supply in June and July while expecting fuel demand to rebound strongly during the US summer.
US West Texas Intermediate (WTI) crude futures rose 32 cents, or 0.5%, to $68.05 at 02:01 GMT, extending a 2.1% gain following the Memorial Day holiday in the US on Monday. Prices rose to their highest since October 2018.
Brent crude futures climbed 37 cents, or 0.5%, to $70.62 a barrel, after jumping 1.3% overnight, when it hit its highest since 8 March.
The Organization of the Petroleum Exporting Countries (Opec) and its allies, together called Opec+, agreed on Tuesday to keep to their plan to gradually ease supply curbs through July.
Fifteen million workers lost jobs in May, reversing gains
At least 15.33 million Indians lost their jobs in May, erasing gains achieved since July 2020, a situation that may adversely affect consumer spending and economic revival.
The number of people employed fell to 375.45 million in May from 390.79 million in April, according to the Centre for Monitoring Indian Economy (CMIE). In April and May, the number of people employed in salaried and non-salaried jobs fell by almost 23 million as the second wave of the pandemic infected millions of Indians, and states imposed lockdowns to stem the spread of the virus. (Read more)
Markets are likely to be volatile on Wednesday while trends in SGX Nifty indicate a soft opening of Indian benchmark indices. On Tuesday, the Nifty closed at 15,574.85, down 7.95 points or 0.05%. The BSE Sensex ended at 51,934.88, down 2.56 points. (Read here)
Nykaa eyes IPO at $4.5 bn valuation
Nykaa plans to go public later this fiscal at a valuation of $4.5 billion, a sharp rise from its earlier valuation of more than $3 billion, as the beauty retailing startup gains from a marked shift towards online sales during the pandemic.
Nykaa, founded by former investment banker Falguni Nayar, will keep unchanged the size of the public offering at between $500 million and $700 million, said two people directly aware of the internal discussions. Both declined to be named as the talks are private. (Read here)
ITC profit down by 1.3% to ₹3,748 cr in March quarter
ITC Ltd, India’s largest cigarette maker, on Tuesday reported a 1.3% drop in its fiscal fourth-quarter profit because of higher tax outgo.
Net profit fell to ₹3,748.41 crore from ₹3,797.08 crore a year earlier, the company said in a filing to the stock exchanges on Tuesday. Revenue from operations at the maker of Bingo chips and Gold Flake cigarettes rose 24% from a year ago to ₹14,156.96 crore. A Bloomberg survey of 15 analysts estimated the company to report a net profit of ₹3,778 crore, while 12 analysts estimated revenue of ₹12,085.90 crore. ITC said it isn’t facing any material supply-chain bottlenecks because of the state-specific lockdowns, but it “continues to monitor the developments closely”.
Asian markets steady
Asian stocks were broadly steady Wednesday after U.S. equities inched lower as the tussle between economic optimism and inflation concern continues to play out in markets. Treasury yields edged up.
Japanese stocks led modest regional gains, while Hong Kong and China slipped. U.S. equity contracts were flat after the S&P 500 and Nasdaq 100 closed with small losses. U.S. manufacturing data overnight topped estimates but also signaled supply shortages and labor constraints.
S&P 500 futures rose less than 0.1% changed as of 10:46 a.m. in Tokyo. The index fell less than 0.1%
Nasdaq 100 contracts were flat. The gauge fell 0.2%
Japan’s Topix index added 0.8%
Australia’s S&P/ASX 200 rose 0.6%
Hong Kong’s Hang Seng index shed 0.1%
China’s Shanghai Composite index fell 0.2%
SGX Nifty fell 0.10%
US indices witness mixed close as factory data points to recovery
US stocks pared gains after manufacturing data showed expansion amid rising commodity prices and shortages of materials, while oil rose and global equities hit a record high as markets rode concerns of rising inflation. The S&P 500 and the Dow rose, with the benchmark S&P 500 within 0.5% of its record high as investors cheered signs of an improving economy ahead of a week packed with major data they hope to cast light on the economic recovery.
The Dow Jones Industrial Average rose 54.63 points, or 0.16%, to 34,584.08, the S&P 500 lost 1.32 points, or 0.03%, to 4,202.79 and the Nasdaq Composite dropped 8.92 points, or 0.06%, to 13,739.82.
US manufacturing activity picked up in May, the Institute for Supply Management (ISM) said on Tuesday as its index of national factory activity increased to a reading of 61.2 last month from 60.7 in April.
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