News and Impact

Expect market to open on a flat note on account of global cues. U S. stocks rallied for a third day (Dow Jones gained 0.2%) after the US Federal Reserve struck a dovish tone in its latest policy statement, kept unchanged interest rate (2.25% -2.5%). However, US Fed indicated to cut interest rate in the next policy meeting and expects a strong labor market and inflation to be near its goal. The yield on the U.S. two-year note fell by as much as 12 basis points to 1.74%.

As many of the world’s biggest central banks signal a shift to easier policy, traders are weighing that against trade war fears and signs of cooling global growth. U.S. President Donald Trump said Tuesday that he had a “very good” phone conversation with Chinese President Xi Jinping. The two leaders will hold an “extended meeting” at the G-20 summit on June 28-29 in Osaka.

Asian market open on a mixed bag. Nikkei and Hong Kong Index gained quarter percent each. China and South Korea Index declined marginally. SGX Nifty is up 31 points (0.3%)

Sectors watch – Auto, Banking and NBFC

Actionable – BUY Maruti, ICICI, SBI

Major events to be watch – Prime Minister Modi will meet Finance Minister and other financial delegate ahead of Union Budget, Nifty and Bank Nifty weekly expiry, and hearing on Jet Airways today on NCLT.

Brokers Radar – Asian Paints SELL – CLSA TGT 1285, Nomura BUY Adani Ports TGT raised from 380 to 460, Goldman TGT on Vodafone TGT 12, UBS BUY on Oil & GAS stocks – Reliance TGT 1500, HPCL TGT 445, IOC TGT 200, BPCL TGT 600, Chennai Petro TGT 375.

Higher leveraged balance sheets, liquidity crunch have impacted lot of companies in terms of higher cost of borrowings and poor asset quality. Going forward, the near-term movement is likely to be driven by monsoon progress as well as global indicators.

Yesterday, Nifty declined nearly 2% from intra-day high despite across global market recorded smart rally. Nifty 500 stocks advance-decline ratio was 1:3. HEG, BEML, Wockhardt, IndusInd Bank, Yes Bank, Indiabulls Housing slipped between 5-10%. Moreover, some stocks also lost ground as NSE will exclude 34 stocks from June 28 from F&O trading; some of these stocks are Jain Irrigation, Reliance Infra, HDIL, Arvind, Reliance Capital, J&K Bank, Dewan Housing, Jindal Stainless, Jet Air, PC Jewellers (down 10-20%).

It is interesting that the FIIs were marginally net sellers worth Rs970mn yesterday but many small and mid-cap stocks fallen by 10-30%. Market expectation that the funds cautions about pledge shares and take a defensive to offloaded pledges shares.

Traders apply caution in the market. Avoid highly speculative and high beta stocks. Buy good quality and strong fundamental stocks. HDFC, HDFC Bank, ICICI, Maruti, UltraTech, ACC, Infosys, Tech Mahindra buy for delivery. Positive factor that the 10-Year G-Sec Yield 20-month low, fall in USDINR and stable oil price.

Watch on PNB - State-owned Punjab National Bank (PNB) recovered Rs 20,000 crore of bad loans during the financial year ended March 2019, almost double the recovery amount in the preceding year, its Chairman Sunil Mehta has said – Positive for PNB.

Watch on Tech stocks – Reuters news that the US Government may restricted on HI B Visa rules – It may negative on Tech stocks

HDFC to Acquire 51.2% Stake in Apollo Munich Health For Rs13.5bn - HDFC signs an all-cash deal to buy up to total 51.2% stake in Apollo Munich Health Insurance from Apollo Hospitals Group. Merged entity would have combined market share of 6.4% of non-life insurance industry with 308 branches in India – It will be positive on Apollo Hospital. Company to repay its debt. We are long term positive on HDFC

Watch on Cement stocks – Cement stocks expected to be momentum ahead of GST Council meeting tomorrow. Market expectation that the GST Council may cut GST rate from 28% to 18%. It will be positive on UltraTech (96mn capacity), Shree Cement and Birla Corp if GST Council cut GST rate.

Monsoon rainfall is 44% below normal - IMD, It may negative impact in the market

Bharat Financial : July 4 effective date for merger with IndusInd Bank - Positive for IndusInd Bank

Rating agency India Ratings maintains negative outlook on J&K Bank - Avoid J&K Bank

Adani Green award for 600 MW wind solar projects - Positive for Adani Green

Asian Oilfield says Seismis contracts won for Block -2 in Iraq, Iraq contracts valued at total $37mn - Positive for Asian oilfield

Rajesh Exports bagged orders worth Rs 9.42bn - Positive for Rajesh Exports

Jain Irrigation USD bond falls 13.6 cents to record low of 60.4 - negative for Jain Irrigation, rating agency also cut rating - Avoid

Tata Capital Financial to sell Rs3.62b 2-Part Bond - Positive for Tata Investment

HCL Technologies and Cricket Australia (CA) have today announced a multi-year partnership, with HCL being chosen as the Digital Technology Partner of CA. HCL, a leading global technology company, will help the Australian cricket's governing - Positive for HCL Tech. Expect positive on tech stocks in the volatile market.

Shriram Transport has managed funding pressure amid tough operating conditions through a combination of cautious growth, and use of alternate funding channels and higher securitization, according to S&P Global Ratings - We are long term positive on Shriram Transport

Reliance Power long term rating cut to C from BB by rating agency ICRA - Avoid on Reliance Power

Ashok Leyland to Close Pantnagar Plant by June 24-29 - Ashok Leyland says plant closure is part of its “strategy to align with the production and sales requirements,” - It is a normal course - any decline will be a buying opportunity.

NCLT to hear Jet Airways insolvency case today - Avoid Jet Airways

M&M announces price increase for personal range vehicles from July 1. Price increase by up to Rs36000 across models - Price increase is due to the implementation of AIS 145 Safety Norms across all passenger vehicles in India - Positive for M&M

Blue Star awarded order from Mumbai Metro Rail Corp valued at Rs2.53bn for tunnel ventilation and AC - Positive for Blue Star, we are positive on Voltas

Airtel files application to list Nigeria stock exchange - Market expect that the valuation over $3bn on Airtel Africa unit after IPO issue. We are positive on Bharti Airtel

L&T has secured orders from prestigious clients in Sri Lanka and from within India. Water and Effluent Treatment : An EPC order has been bagged from the National Water Supply & Drainage Board - Positive for L&T

BHEL commissions Chhukha Hydro Electric projects in Bhutan - Positive for BHEL

Dividends – Bandhan Bank, Graphite India, HDFC Bank, Hindustan Unilever, Nilkamal Ltd, Shankara Building, Board meetings – AU Small Finance, Federal Bank, AGM – Indian Hotel, SBI, EGM – India Bull Real Estate