RIL hits fresh 52-week high, crosses Rs 5 lakh crore milestone

STOCK MARKET NEWS - Reliance Industries hit its fresh 52-week high on Monday, crossing the Rs 5 lakh crore market-capitalisation for the first time in its trading history.

At 12:20 pm, the market-cap of the company stood at 5,05,970 crore.

The stock toppled Tata Consultancy Service (TCS) in terms of market-cap, gaining as much as 1.8% on the BSE. It has surged over 11% so far in July, and over 41% year-to-date.

Meanwhile, with market-cap of Rs 4,59,630 crore, TCS was trading 0.17% down at Rs 2,402 in the noon trade.

The oil-to-telecom conglomerate is slated to announce its earnings for the April-June quarter (Q1) on Thursday and hold its AGM the day after. Analysts expect the focus, both in terms of the June quarter numbers and the AGM, would be on the company’s telecom business Reliance Jio. CLICK HERE FOR THE FULL REPORT

Brokerage Motilal Oswal Securities believes RIL may report a decline in its gross refining margin (GRM) in the June quarter.

"RIL is expected to report a decline in its GRM in the quarter, led by narrowing light-heavy differential and inventory loss of ~USD1/bbl. While we expect subdued profitability in the refining segment, petchem profitability is likely to increase YoY/QoQ, led by improved deltas and increase in petchem volumes," said Motilal Oswal Securities in a June quarter preview report.

GRM is the difference between raw crude price and total value of petroleum products produced by the refinery.

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stock markets continue trading subdued in afternoon trade ahead of June CPI data

STOCK MARKET NEWS - Benchmark indices continued trading subdued but in green in the afternoon trade with Nifty above the 9,800-mark ahead of June CPI data, to be announce later in the day. Investors expected the inflation to be at record low, which will put pressure on RBI to cut rates in the coming monetary policy review meet.

Asian Markets were also trading mixed amind political controvery surrounding Donald Trump after  emails disclosed by President Donald Trump's eldest son cited Russian support for his father's 2016 election campaign. Street also watched out for US Fed Chair Janet Yellen's testimoney to get clues on timeline of further rate hikes by Fed.

At 2:12 pm, the S&P BSE Sensex was trading at 31,789, up 42 points while the broader Nifty50 was ruling at 9,809 up 23 points

In the broader market, the S&P BSE Midcap and S&P BSE Smallcap index rose 0.4% each.

"The overall trend is still positive in the short term wherein 9,900 levels is an immediate target in the short term whereas above 10,000 levels in the medium term. On the lower side, 9,740 is an immediate support and below that 9,710. The momentum indicator MACD is well in the buy mode on the daily charts which is very supportive and bullish in the short term," said Anand Rathi Technicals in a note.

ONGC, HUL, Tata Motors and RIL contributed the most to BSE Sensex while TCS, Bajaj Auto, HDFC Bank and HeroMoto Corp shed the most on the index.

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Sensex flat, Nifty hovers around 9,800 in noon deals; ONGC, HUL top gainers

STOCK MARKET NEWS - Benchmark indices pared some morning gains to trade flat in the noon deals with Nifty trading hovering around 9,800 ahead of June CPI data, to be announce later in the day. Investors expected the inflation to be at record low, which will put pressure on RBI to cut rates in the coming monetary policy review meet.

Asian Markets were also trading mixed amind political controvery surrounding Donald Trump after  emails disclosed by President Donald Trump's eldest son cited Russian support for his father's 2016 election campaign. Street also watched out for US Fed Chair Janet Yellen's testimoney to get clues on timeline of further rate hikes by Fed.

At 11:40 am, the S&P BSE Sensex was trading at 31,768, up 21 points while the broader Nifty50 was ruling at 9,800 up 14 points

In the broader market, the S&P BSE Midcap and S&P BSE Smallcap index rose 0.4% each.

"The overall trend is still positive in the short term wherein 9,900 levels is an immediate target in the short term whereas above 10,000 levels in the medium term. On the lower side, 9,740 is an immediate support and below that 9,710. The momentum indicator MACD is well in the buy mode on the daily charts which is very supportive and bullish in the short term," said Anand Rathi Technicals in a note.

ONGC, HUL, Tata Motors and RIL contributed the most to BSE Sensex while TCS, Bajaj Auto, HDFC Bank and HeroMoto Corp shed the most on the index.

Religare Enterprises extended yesterday's losses, down over 5% after ending in the 20% lower circuit on Tuesday amid speculation that lenders had sold some shares, pledged by the company’s promoters, in the open market. 

Indian IT to see margin contraction in Q1FY18 due to rupee appreciation

LATEST MARKET NEWS - The first quarter of a financial year is normally the most important one for the information technology (IT) sector; along with the second quarter, it gives the direction to the overall numbers for the concerned financial year. Given the moderate guidance for financial year 2017-18 (FY18) given by Infosys, other IT companies, and Nasscom, we believe that it will be a year of consolidation for the industry, with growth rates likely to be more or less in line with FY17 and a pick up expected by 2018.

Earlier, in its guidance for FY18, Nasscom expected the IT industry’s services exports to grow 7-8 per cent in the financial year and the domestic IT services revenue growth was pegged at 10-11 per cent.

However, on a long-term basis, the industry's growth potential can be around 10-11 per cent, given that Indian IT companies enjoy a market share of more than 50 per cent even after healthy growth over the past two decades, leaving enough room for the growth.

Further, even at the current stage, Indian IT's core competitive advantage in terms of manpower cost is still intact and hence the industry has all the levers to increase its market share in the future. However, like any other industry, Indian IT companies are going through a transition with a shift occurring towards new technologies like digital. However, we don’t see this to be a worrisome sign. Instead, it is an opportunity that companies with management skills and leadership quality will be able to cruise through.        

For Q1FY18, Indian IT companies are expected to exhibit diverse trends. Among the large-caps, Infosys, HCL Tech, and Tata Consultancy Services (TCS) are expected to post constant currency (CC) QoQ growth of 3-4 per cent. Infosys is likely to post results at the lower end of the growth band, while HCL Tech will post a CC QoQ growth at the higher end aided by its acquisitions. 

Markets continue trading near all-time highs; Nifty comfortably above 9,800

LATEST MARKET NEWS - Frontline indices extended gains to trade near all time highs in the noon trade on positive cues from the global markets.Gains were however capped as investors remianed cautious as they waited for Federal Reserve Chair Janet Yellen;s testimony for clues on when the central bank would tighten the US monetary policy.

Sensex rose as much as 131 points to hit the record high of 31,847, surpassing its previous milestone of 31768.39 hit yesterday while Nifty gained as much as 47 points to hit 9,818, surpassing the last high of 9,772 hit yesterday.

At 12:08 pm, the S&P BSE Sensex was trading at 31,844, up 128 points while the broader Nifty50 was ruling at 9,818 up 47 points

In the broader market, the S&P BSE Midcap was little changed while S&P BSE Smallcap index rose 0.4%.

"Low volumes were instrumental in yesterday’s rise. However, the vertical rise is instructive, and suggestive towards potential for similar such sharp moves. Meanwhile pull back below 9,720 sharply reduce the upside prospects," said Geojit Financial Services in a note.

Buzzing Stocks

Infosys, TCS, Tata Motors, M&M and HUL contributed the most on BSE Sensex while Cipla, Bharti Airtel, ONGC, ITC and Dr Reddy's shed the most on the index.

State Bank of India gained 1% after said its central board approved dilution of its stake in its life insurance arm through an initial public offer for which it has already secured the sectoral regulatory approval.

UK Elections 2017 end in hung parliament, but Indian markets will weather the storm

MARKET NEWS - Indian markets edged lower on Friday, in line with their Asian peers as the polls in the United Kingdom (UK) hinted a loss for the British Prime Minister Theresa May's ruling Conservative party that could result in a hung Parliament and delay Brexit talks.

Asian markets were trading mixed on Friday, with Nikkei, Straits Times and KOSPI marginally in the green, while Hang Seng, Taiwan Weighted and Jakarta Composite slipped 0.1% - 0.3% in intra-day deals. Back home, the S&P BSE Sensex and the Nifty50 indices were trading around 0.2% lower each at 31,153 and 9,618 levels, respectively.

Going ahead, the reaction by financial markets will be seen as an important gauge of how investors look at the United Kingdom’s prospects, the impact on Indian markets, however, is likely to be limited.

Though the fall seen on Friday was warranted given the global linkages, analysts say, Indian markets are expected to perform better than most other emerging and developed markets over the long run. On the contrary, the UK poll outcome that could delay Brexit talks could work in favour of global financial markets, including India.

“Brexit is a fact and the new government will have to negotiate accordingly. However, I expect these negotiations to be weaker in case May loses the election. The markets were never in favour of Brexit and to that extent, incrementally weaker Brexit negotiations and a possible delay will be appreciated by the markets. The Indian markets will weather this storm as there is not much at stake as far as India is concerned. As best, trade negotiations with the UK will have to be reworked,” explains U R Bhat, managing director, Dalton Capital Advisors.

The Indian economy with a stable macro environment and government pushing through reforms, favourable monsoon forecasts and with a banking sector undergoing an overhaul, Indian markets have enough buffers to withstand the poll outcome in the short-term, analysts say. They expect the impact to be transitory in nature with the markets likely to recover soon from any knee-jerk reaction.
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Home loan norms, interest rates: Brokerage views on RBI's policy review

LATEST MARKET NEWS - The Reserve Bank of India (RBI) kept key rates – repo and reverse repo – unchanged while reviewing the monetary Policy on Wednesday.

The central bank also sharply lowered its inflation projection for H1 FY18 (year ending March 2018) to 2.0-3.5 per cent (from 4.5 per cent earlier) and H2 FY18 to 3.5-4.5 per cent (from 5 per cent), with risks evenly balanced. It also lowered its GVA growth projection to 7.3 per cent from 7.4 per cent for FY18.

Here’s how leading brokerages and research houses interpret the RBI’s move.

NOMURA

In our view, the RBI has rightly looked through the current period of low inflation. Our longer-term models are still predicting a return of inflation to pre-demonetisation levels next year and household inflation expectations have barely budged.

We expect near-term inflation to continue to moderate. However, we expect a cyclical recovery in H2 2017, which in turn will gradually slow current disinflationary pressures on core inflation, albeit with a lag. Taking into account the recent downside surprise on food price inflation, but accounting for the house rent allowance increase, we are revising our 2017 average CPI inflation forecast to 3.6 per cent (from 4.4 per cent) and to 5 per cent in 2018 (from 5.4 per cent).

We expect the RBI to stay on hold through 2017 with an eye on the medium-term target of 4 per cent. Because of lower expected headline inflation in the next two months, we would assign a 40 per cent chance to a rate cut in August, but our base case is on hold. We are pushing out our call of a cumulative 50 basis points rate hikes to H2 2018 (vs Q2 and Q3 earlier).

BANK OF AMERICA MERRILL LYNCH

We believe that time is running out for the RBI to cut rates. If the RBI MPC cuts on August 2, it will signal a lending rate cut to banks before the busy industrial season sets in October. After all, real lending rates are running at a 20-year high at a time when the global recession is threatening to stretch beyond the Great Depression.

As 2015 showed, unduly delaying RBI rate cuts into the busy season only delay the transmission to bank lending rates into the next slack season beginning April. Should easy liquidity not drive lending rate cuts? Not really. Although banks are flush with temporary liquidity from demonetisation, M3 growth has slipped to 9.5 per cent from 10.7 per cent last year.

Markets trade flat as investors on edge ahead of major global events

LATEST MARKET NEWS - Benchmark indices were trading flat as investors stayed on edge tracking global peers ahead of a slew of global events including the UK elections, European Central Bank's policy meet and testimony from ex-FBI director James Comey.

Losses were however capped after RBI in its bimonthly policy review yesterday cut its inflation projections and delivered a less hawkish stance. The central bank yesterday kept the repo rate unchanged at 6.25%, in line with Street expectations.

In global markets, Asian shares wobbled as investors braced for any surprises from the UK election and other global events lined up for the week. MSCI's broadest index of Asia-Pacific shares outside Japan was little changed, through China edged up on unexpectedly solid trade data, while Japan's Nikkei dropped 0.4%.

At 1:21 pm, the S&P BSE Sensex was trading at 31,231, down 39 points, while the broader Nifty50 was ruling at 9,661, down 2 points.

The broader market outperformed with the S&P BSE Midcap and the S&P BSE Smallcap indices adding 0.3% and 0.4% respectively.

Dr Reddy's, Sun Pharma, Tata Steel, Cipla and GDFC gained the most on the index while TCSm GAIL, M&M and Asian Paints fell the most.

Financial stocks edged higher, with Kotak Mahindra Bank and Federal Bank leading after RBI made it easier for India's stressed banks to lend, cutting their statutory liquidity ratio by 50 basis points to 20 percent of total deposits from June 24.

BSE IT index was the biggest sectoral loser, down 1.5% dragged by TCS and Infosys. TCS fell over 3.5% becoming the top loser on BSE Sensex while Infosys was down 1.5% .

Reliance Communications continued their slide, after the embattled mobile carrier pushed back against Moody's and Fitch, disagreeing with their rating downgrades earlier on Wednesday. Shares fell as much as 2.8% to their lowest in over a week.

Petronet LNG fell as much as 4.3% to their lowest in over two weeks amid reports that GDF International sold its entire 10% stake of 75 million shares.

Sensex slips in red, Nifty tests 9,650; broader markets outperform

LATEST MARKET NEWS - The benchmark indices pared entire initial gains to slip in red as investors braced for any surprises from former FBI director James Comey's congressional appearance, the European Central Bank's policy meeting and the UK general elections.

At 12:16 pm, the S&P BSE Sensex was trading at 31,236, down 34 points, while the broader Nifty50 was ruling at 9,653, down 10 points.

The broader market outperformed with the S&P BSE Midcap and the S&P BSE Smallcap indices adding 0.2% each.

"Opening moves could possibly aim for the 9727-50 but there are not enough signs that the next push higher could unfold right away. Such constructs puts 9,640 in focus, until above which the near term uptrend prospects will be intact. Direct fall below may not unsettle the overall uptrend prospects though, but break of 9530-9500 might do that. That, though is less expected now," said brokerage Geojit Financial Services in a technical note.

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Tata Steel (up 3.6%), Dr Reddy's (up 2%) and HDFC (up 2%) were the leading gainers on the Sensex, while TCS (2.3%), Adani Ports (1.8%) and GAIL (1.7%) shed the most.

Petronet LNG slipped 3% to Rs 421 after GDF International said will sell its entire 10% stake in Petronet LNG in block trades on Thursday for up to $512 million.

UK goes to voting today

The British will vote today in a 'snap election' that Prime Minister Theresa May had called seven weeks ago. Polls had initially suggested a landslide win for her Conservative party, but now are suggesting a narrowing lead for May, with some pointing to the chance that the Tories may not win an outright majority. This will impact the negotiations on Britain leaving the European Union.

ECB to stick to stimulus

The European Central Bank is likely to stick to its aggressive stimulus policy at its meeting later today because inflation remains below its target, despite brisker economic growth in the euro zone.

The ECB is now forecasting inflation at 1.7 percent and growth at 1.8 percent this year. Its mandate is to keep inflation close to but below 2 percent, but inflation slowed to 1.4 percent in May.

Global markets

Asian shares wobbled in early Thursday trade. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.27% while Japan's Nikkei rose 0.3% thanks to the dollar's rebound against the yen.

Wall Street shares ticked up on Wednesday, despite sharp decline in energy prices, after written testimony from former FBI director James Comey did not add major revelations about an investigation into Russian meddling with last year's US presidential election.