News and Impact
Expect market to open on a strong note on account of global cues. US Dow Jones climbed up over 1% and approached all-time highs on optimism that President Donald Trump will de-escalate his trade war with China, adding to gains sparked by the ECB’s signal it is ready to cut interest rates if warranted.
Sentiment boosted in the global market after the US President Trump tweeted earlier that he will meet with Chinese President Xi Jinping at the Group of 20 summit next week. Trade tensions have weighed on stocks since Trump escalated his trade war in early May.
European market like FTSE, CAC and DAX Index gained 2% after the European Central Bank President Mario Draghi said that officials are ready with stimulus if needed, adding to expectations for easier monetary policies.
US Fed interest rate decision will be announced mid-night (ISD). Expectation of 25bps interest rate cut by US FDA. Other global countries policy meeting this week - Bank of Japan and Bank of England all set monetary policy, along with central banks in Norway, Brazil, Taiwan and Indonesia.
Asian market opened on a strong note. Nikkei, Hong Kong and China Index gained 1-2%. SGX Nifty is up over half percent (up 58 points).
Sentiment is positive in the market on account of strong micro and macro factors. Among the Macro factors like reduced trade tension between US-China, European central bank announced further stimulus to the Euro Zone area. Among the macro factors like USDINR fell to below 70, 20-month low 10-Year G-Sec Yield, hope of GST council to cut GST rate and favourable Union Budget on 5th July.
Nifty slipped nearly 300 points in the last few days. Short covering may not be ruled in the market on account of strong global cues.
Market summary – US Fed interest rate decision today, GST Council meeting tomorrow, 10-Year Yield 20-month low, Brent Crude spiked nearly 5%, US President tweeted to meet China President, JET Airways NCLT verdict today, Canara Bank approved Can Fin Home stake sale.
Brokers Radar – Titan TGT raised BY UBS from 1250 to 1600, CLSA Cut Bharat Forge TGT from 420 TO 390, Goldman BUY Tata Steel TGT 570 and Morgan Stalely BUY IndiGo TGT 2132.
Sector to watch - Banking, Cement, Auto and Metal
Actionable - Buy SBI, Maruti, Hindalco and LIC Housing
Brent crude surged by 4% to $62.5/bbl surged to its biggest gain in five months as OPEC and its allies moved closer to a meeting to extend supply cuts and reduced trade tension – increased oil price may negative on oil marketing stocks like HPCL, BPCL, IOC.
Watch on PSU Banks - 10-year yield declined sharply by 12bps to close at 20-month low at 6.80%. The RBI uses open market operations (OMO) worth Rs125bn for injecting liquidity into the system through the purchase of government bonds on 20th June. Significant fall in 10-year G-Sec Yield will be positive for PSU Banks and NBFC stocks. SBI, BoB, LIC Housing, L&T Finance will be positive
Watch on metal stocks - Further stimulus on euro zone area lifted base metal price on LME 1-2% on expectation of improve demand. Expects positive for Hindalco, Tata Steel, Jindal Steel
Canara Bank disinvestment of bank's stake in Canfin Home - Bank’s board approved initiating the process of stake sale in Can Fin Homes in part or full. Says stake sale to be conducted at “appropriate time depending on the market conditions and available options” Canara Bank had a 30% stake in Can Fin Homes (CMP Rs343). It will be a win win on Canara Bank to stake sale on Can Finance Home. Can Fin home is trading at attractive valuation. Stake sale will be positive on Canara Bank.
Traders avoid any bargain hunting – Avoid on highly speculative, poor fundamental, asset quality and higher debt oriented company. Nearly 34 stocks expected to discontinue from the June F&O segment. It may negative on 34 stocks. Jain Irrigation, Reliance Infra, Reliance Capital, J&K Bank, Dewan Housing, Jindal Stainless, Jet Air, PC Jeweeler are poor fundamental - Avoid any bargain hunting.
Reliance Industries will invest ₹20,000 crore in its telecom business, Reliance Jio Infocomm Ltd, to fuel its broadband and e-commerce play and enter 5G services in the future – It will be long term positive on Reliance Industries.
RBI fines HDFC Bank ₹1 crore for violation of KYC norms – Any decline will be a buying opportunity.
Surya Roshni wins orders from Bharat Gas resources worth Rs1.52bn - Positive for Surya Roshni
Jain Irrigation – India Ratings has downgraded Jain Irrigation Systems Ltd’s (JISL) National Long-Term rating to ‘IND BB+’ from ‘IND BBB’ and placed it on Rating Watch Negative (RWN). – Negative for Jain Irrigation. – Avoid.
Watch on NMDC – NMDC production has increased significantly to 30mn tons from 21mn tons – Positive for NMDC.
SEBI has allowed exchanges to launch futures trading in commodity indices. The move will further facilitate mutual fund and institutional participation in commodity exchanges – Positive for MCX and BSE.
Watch on M&M – Market expectation that the GST Council may cut EV rate from 18% to 5% - Positive for M&M
Adani Gree and Adani Enterprises – promoters removed pledge share on Adani Green and Adani Ent nearly 15-19 lkah share – Positive
Watch on Siemens - As water to cool thermal power plants or supply sufficient hydro-power resources becomes less accessible, demand will rise for equipment makers to provide low-water-use power technologies, such as wind, solar and air-cooled gas turbines. Siemens Gamesa and First Solar may be well-placed to supply these needs based on market presence and suitable technology - Positive for Siemens.
TCS Bancs gets deal from Taiwan's KGI Banks - Positive for TCS
Canara Bank plans to raise up to Rs60bn via share sales in FY20 - Canara Bank has decided to raise equity capital via options including qualified institutional placement, rights issue or preferential allotment during the financial year to March 2020 - Positive for Canara for long term.
VaTech wins contract for sewage treatment in Agra, Ghazibad worth Rs14.77bn - Positive for Va Tech
Trent approves allotment of Rs9.5bn of shares to founder company Tata Sons - Positive
Moody's affirms Adani Ports at 'BBB-': outlook stable - Positive
Federal Bank plans up to Rs5bn 10 year tier 2 bond - Positive for Federal Bank for issue on tier 2 capital
Hatsun Agro commissions Cattle feed plant at Solapur - Positive for Hatsun Agro
Watch on Jet Air - Court to hear SBI's Jet Air insolvency plea today - Avoid Jet Air
Hudco gets Rs31.57bn total bids for July 2022 bonds at 7.62% - Positive for Hudco
Traders is looking for GST Meeting (20th June), US Fed policy meeting outcome (tomorrow) and Union Budget (5th July). Expectation of favourable outcome in the policy meeting.
Vedanta Credit Profile May weaken on Volcan Funding: Moody’s - Vedanta Resources’s $561mn investment in a structured product issued by its parent Volcan Investments in Dec. indicates willingness to deploy funds to its parent, and if repeated could weaken its credit profile, says Kaustubh Chaubal, vice president and senior credit officer at Moody’s Investors Service.
Watch on Cement stocks - GST Council meeting will be held tomorrow. Expect long pending issue on GST cut on Cement may reduce. Currently GST rate on Cement at 28%. Market expectation of GST rate cut to 18%.- Positive for Cement stocks like UltraTech, ACC
Star Cement to consider share buy-back on June 21 - Positive for Star Cement
Dividends – Deepak Nitrite, ICICI Lombard General Insurance, Rallis India, Securities and Intelligence India, Shriram Transport. Board Meetings – Federal Bank