Stock Market Highlights: Indian equity indices, Sensex and Nifty ended flat on Friday dragged by losses in IT and banking stocks amid weak global cues. Broader markets outperformed the benchmarks as the midcap and smallcap indices closed higher each. Among sectors, Nifty IT, Nifty Bank and Nifty Financial Services declined, while pharma, metal, realty and FMCG indices ended in the green.
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Joseph Thomas, Head of Research, Emkay Wealth Management
The equity markets trended higher for a major part of the week, barring a flattish closing on the last trading session of the week. The market strength was well supported by IT, Metal and Pharma stocks. The healthy set of earning numbers from IT majors buoyed sentiments. Even as the FIIs remained net sellers, the markets received support from DIIs. Overall the sentiment is positive as there has been a robust start to the earnings season by the IT companies. For the coming week as well the focus would remain on earnings and this factor may dictate the market direction. On the global front, the factors to monitor would be macro-economic data coming out of the US, such as Housing Starts and Jobless claims.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The range-bound action continued in the market and the Nifty failed to show a decisive upside breakout on Friday. At the same time the weakness from the highs has not negated the bullish sentiment of the market. A display of strength above 15,960 could only open the next upside levels of 16,100-16,200 in the short term. Any weakness below 15,850 is likely to trigger a broad-based downward correction in the market.
Ajit Mishra, VP - Research, Religare Broking
Markets traded lacklustre and ended almost unchanged, taking a breather after the recent up move. The outperformance continued from the broader indices which kept the traders busy. We reiterate our positive yet cautious stance on the market and suggest using dips to add quality stocks. In absence of any major event, we suggest keeping a close watch on earnings and performance of the global markets for cues.
Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities
On a weekly basis, the market formed a complete reversal formation by closing above the highest level of the previous week. Also during the week, the market tested lower boundaries and crossed the upward barrier under the leadership of financials and technology companies. In the coming week, based on its technical formation, the Nifty has scope to move towards 16,100 without much effort. However, for that, support from banks and the FMCG sector will hold the key. We feel the technology sector has delivered its best and now it's the turn of the FMCG sector to support the market. The strategy should be to buy if Nifty corrects to 15,900-15,850 without hitting the levels of 16,100. Traders should keep a final stop loss at 15,750 for the same. On the higher side, 16,000-16,100 and 16,150 would be resistance levels.
Manish Shah, Founder, Niftytriggers.com
Nifty closed in a positive territory gaining about 1.5% over the close of the previous week. Nifty seems to be emerging out of a range that we see since the beginning of June 2021. After three weeks of tight closes, Nifty now seems to be emerging out of a trap. The sideways action is more of a time correction of April to June 2021 rally. It was an average range candle for the week; which did not show any major bull domination. On the daily time frame, it was a pause after four days of markets moving up. Nifty has managed to hold above the resistance at 15,900-15,950 and this is a bullish development. As long as the Nifty holds around 15,900-15,950 Nifty’s bullish undertone remains intact. Nifty should not trade below 15,850-15,825 if the rally has to continue. On the higher expect the index to move towards 16,200-16,300 over the course of the month. MACD line has hooked up and directional movement index has buy signal. The mechanical buy signals have begun to kick in. That is one up for the bulls.
Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services
The fx market focus will be on tonight's US retail sales data and consumer confidence data for any reading on inflation and the strength of the recovery. Any solid pace of US economic recovery will underpin the rumours of earlier than expected rate hikes/QE tapering keeping USDINR afloat till the July FOMC outcome. So in the USDINR spot until the support of 74.40 doesn’t break, the trend will remain positive towards 75. Only a break of 74.40 will push prices towards the 74.00 zone.
Deepak Jasani, Head of Retail Research, HDFC Securities
Nifty has found it difficult to breach 16,000. Sectoral rotation could continue while select stocks could attract buying based on news and developments. On a weekly basis, Nifty has ended with a 1.49% gain after two weeks of losses. The coming week will witness more Q1 results (key among them being ACC, HCL Tech, Asian Paints, Bajaj Finance, Bajaj Auto, HUL, JSW Steel, ICICI Bank, ITC) and the stocks could react to these announcements. The indices could continue to edge upwards in the coming week which is a truncated week with a holiday on Wednesday. Retail investors could do a bit of reshuffling from the smallcaps into mid and largecaps.
Nirali Shah, Head of Equity Research, Samco Securities
Nifty 50 index closed positive for the week, however, the market is now constrained within a small range of 400 points and is struggling to take a decisive direction. Markets are trading overbought in the short term and majority of this rally has come on a slowed-down momentum as compared to the major uptrend. 15,600 zone has been established as a strong support and until that breaks we suggest traders to maintain a cautiously bullish outlook. A decisive close above 15,950 may trigger a test of 16,200 on the higher side.
Quarterly results are likely to gather pace and be fully up and running by the close of this week. Given that India Inc. was under severe lockdown in Q1 last year, it might not be wise to compare results on a year-on-year basis given the low business activity back then. As a result, a sequential comparison combined with the outlook given by management will give more clarity on future prospects. Investors should not buy aggressively at these levels, despite the benchmark index returning 7% in Q1FY22 and broad-based indexes shooting one way up with valuations blowing through the roof.
Rupee At Close | The Indian rupee slipped 3 paise to settle at 74.57 against the US dollar on Friday, amid volatility in the domestic equity market. The local unit opened at 74.53 against the previous close of 74.54 and traded in the range of 74.51 to 74.66 during the session.
Market This Week | Sensex & Nifty regain losses of last two weeks, up over 1% each this week
Market At Close | Sensex & Nifty slip From record highs to close with a minor cut
Ashis Biswas, Head of Technical Research at CapitalVia Global Research
The market witnessed some lacklustre movement and an attempt to hold the support level around the Nifty50 Index level of 15,900 While sustaining above 15,900 is the key factor from a short-term perspective, maintaining above this level is important for the market to gain momentum and extend the rally until 16,200. The momentum indicators like RSI and MACD to stay positive and market breadth to improve, further strengthening a short-term bullish outlook.
Here’s how market performed this week
- Sensex & Nifty Regain Losses Of Last Two Weeks, Up Over 1% Each This Week
- Nifty Bank Gains For 2nd Straight Week, Up Nearly 2%, Led By ICICI & Axis
- Midcap Index Up 1.7%, Realty Index Over 8%, IT & Infra Over 2% Each
- Wipro, L&T, UltraTech, Tech Mahindra, Grasim, Hindalco Top Nifty Gainers
- Adani Ports, Eicher, BPCL, Maruti, Bajaj Auto, Titan Top Nifty Losers
Market At Close | Here are the highlights of today’s trading session
- Sensex & Nifty Slip From Record Highs To Close With A Minor Cut
- Midcaps Mildly Outperform Benchmark Indices; Market Breadth Neutral
- Sensex Ends 19 Points Lower At 53,140 & Nifty 1 Point Lower At 15,923
- Midcap Index Rises 96 Points To 27,851 While Nifty Bank Slips 156 Pts To 35,752
- IT Stocks See A Profit Booking After A Recent Run-up; HCL Tech Top Nifty Loser
- Bharti Airtel & Vodafone Idea Gain Ahead Of AGR Hearing At SC On Monday
- HDFC AMC Slips 6% From Highs After Q4 Earnings
- IRCTC, Nippon Life, Nalco, Glenmark Amongst Top Midcap Gainers
- USL & United Breweries Rise After ED Sells Stake Worth `700 Cr In USL
- L&T Info Falls Nearly 3% Despite Reporting A Strong Set Of Earnings In Q4
- Bandhan Bank Down 3% After Reporting A Decline Of Nearly 8% In Loan Growth QoQ
Closing Bell | The Indian equity benchmark indices ended flat on Friday dragged by losses in IT and banking stocks amid weak global cues. The Sensex fell 18.79 points, or 0.04 percent, to end at 53,140.06, while the Nifty closed flat at 15,923.40. Broader markets outperformed the benchmarks as the Nifty Midcap100 and Nifty Smallcap100 indices closed 0.35 percent and 1.10 percent higher, respectively.
Among sectors, Nifty IT, Nifty Bank and Nifty Financial Services declined, while pharma, metal, realty and FMCG indices ended in the green. On the Nifty50, Divi's Laboratories, Bharti Airtel, UltraTech Cement, Tata Steel and PowerGrid Corporation were the top gainers, while HCL Technologies, Eicher Motors, Infosys, Bajaj Finserv and Adani Ports & SEZ led the losses.
Tatva Chintan Pharma IPO subscribed 3.21 times so far on day 1
The initial public offering (IPO) of specialty chemical company Tatva Chintan Pharma Chem has been subscribed 3.21 times so far on July 16, the first day of bidding as it received bids for 1.04 crore equity shares against the IPO size of 32.61 lakh equity shares, according to the data available on the exchanges. The portion set aside for retail investors is subscribed 6.16 times, while that for non-institutional investors is subscribed 61 percent. The qualified institutional buyers have placed bids for one percent of the total shares reserved for them.
Zomato IPO: Issue subscribed 29.6 times on Day 3 so far
The initial public offering (IPO) of the online food delivery platform Zomato has been subscribed 29.6 times so far on July 16, the last day of bidding. The offer has received bids for 2,129.22 crore equity shares against the IPO size of 71.92 crore equity shares. The portion reserved for retail investors has been subscribed 7.05 times, while that of non-institutional investors' 23.95 times, as per the subscription data available on the exchanges. The portion set aside for employees is subscribed 53 percent, and that of qualified institutional buyers have been subscribed 40.43 times.
Yash Gupta Equity Research Associate, Angel Broking
Paytm has filed DRHP with SEBI to raise Rs 16,600 crore through initial public offer (IPO), which will be the biggest IPO in India’s stock market history. In 2010 Coal India IPO was the biggest IPO in India with IPO size of Rs 15,200 crores and in 2008 Rpower with IPO size of Rs 11,700 was the 2nd biggest IPO. Paytm parent company One97 Communication filed DRHP with SEBI today. One97 communication is a digital payment platform backed by Softbank. The company will issue fresh issues of Rs 8,300 crore and offer for sale of Rs 8,300 crore by its shareholders. The company will use proceeds from fresh issues to strengthen its payment ecosystem and for the new business. 10% of the IPO will be reserved for the retail participants. In the unlisted market, shares of Paytm is in high demand, the company share price has increased from Rs 1,000 before the news of IPO to Rs 2,500 as per the market reports. We have a positive outlook for the Paytm IPO.
Fitch affirms Indian Oil Corporation at 'BBB-'; outlook negative
Fitch Ratings has affirmed Indian Oil Corporation Ltd's (IOC) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-'. The Outlook is Negative. The agency has also affirmed IOC's senior unsecured rating and the ratings on its outstanding senior unsecured debt at 'BBB-'.
Paytm DRHP shows Berkshire Hathaway, Ratan Tata to sell shares; Paytm is 'foreign-owned' company
Ratan Tata, the chairman emeritus of Tata Sons, is looking to sell some shares in Paytm as a part of its IPO, the draft red herring prospectus (DRHP), filed by the payments company on Friday showed. Paytm has filed a DRHP for an initial public offering (IPO) of up to Rs 16,600 crore. The total issue size of Rs 16,600 crore consists of a fresh issue and an offer for sale (OFS) of up to Rs 8,300 crore each. Large investors ANT, Alibaba, Softbank, Berkshire Hathaway and Elevation Capital are set to sell shares through the OFS, as per the document. The DRHP also mentions RNT Associates of Mr Ratan Tata as a selling shareholder. RNT Associates holds 75,000 equity shares in Paytm. It is not clear what percentage of stake Tata will sell, and CNBC TV 18 has sent queries to his team. Read here.
MetLife looking to raise stake to 74% in PNB MetLife
CNBC-TV18 has learnt that MetLife is looking at raising its stake in PNB MetLife all the way to 74 percent. As far as the insurance sector is concerned, they were very keenly looking forward to that foreign direct investment (FDI) raise, which the government allowed as a part of their previous Union Budget. After that, of course, a lot of companies were exploring ways in which they could raise their stake to whatever extent, the latest is MetLife, which is a foreign insurance partner, in PNB MetLife. MetLife has met the insurance regulator to discuss the proposal of raising its stake in PNB MetLife, all the way till the FDI limit of 74 percent. Read full report here.
Emkay Global on Bandhan Bank
Bandhan Bank's AUM grew at a lower-than-expected rate of 8 percent YoY (down 8 percent QoQ). We believe that this could be primarily due to lower disbursements in the MFI and small business loan segment on account of Covid-led disruptions in Eastern India, which is still reeling under extended lockdowns. Ujjivan, a relatively close peer, has also reported 2 percent YoY/7 percent QoQ decline in AUM, while the impact on growth was relatively moderate for Equitas SFB, with its AUM up 15 percent YoY/down 0.5 percent QoQ on lower dependence on the MFI book.
Notwithstanding near-term asset-quality risk, we have a buy rating (target: Rs 390) on the stock, given its strategy of diversifying asset portfolio away from MFI in terms of both products and geography, enviable liability profile, superior return ratios (RoA/RoE of 2.5-3.4 percent/17-25 percent over FY22-24E) and reasonable valuations (2.2x FY23E ABV/1.7x FY24E ABV).
Market Watch: Hemen Kapadia, KRChoksey Securities
- JSPL is a buy with a stop loss of Rs 390 and a target of Rs 435
- Lupin is a buy with a stop loss of Rs 1,145 and a target of Rs 1,235
- Bharti Airtel is a buy with a stop loss of Rs 528 and a target of Rs 564
CLSA on Wipro
Wipro reported 12% QoQ constant currency (CC) revenue growth in 1Q22, well above its guidance and our estimate, led by stronger-than-expected growth from both the Capco acquisition and organic business. However, this is likely to normalise as the 5%-7% QoQ revenue growth guidance for 2Q22 implies 1.8%-3.8% organic growth, excluding the incremental impact of Capco (CLSA). Also, margin management has been a tight-rope walk with the 1Q22 Ebit margin adjusted for one-time gains 50 bps below our estimate.
Thus, while we like the aggressive stance of the new management, we remain cautious given multiple moving parts (acquisitions and large deals) that limit extrapolation, along with the stock’s elevated valuation. We adjust our FY22 and FY23 EPS estimates for 1Q22 actuals. We maintain our Underperform rating on a new Rs 560 price target (Rs 540 earlier).
L&T Tech Services earnings: Cost optimisation measures aided all-time high EBIT, says management
L&T Tech Services’ stock surged over 13 percent on Thursday on the back of a strong set of numbers for the quarter. It is currently trading at around Rs 3,372 on the NSE. The engineering services arm of the Larsen and Toubro Group, on Wednesday, reported an 84 percent jump in its net profit to Rs 216.2 crore for the quarter ended June 30, 2021. Its revenue from operations grew 17 percent to Rs 1,518 crore in the first quarter of FY22 from Rs 1,294.7 crore in the year-ago period. The company has also raised its FY22 guidance to 15-17 percent growth from 13-15 percent earlier. Read here.