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End Session Commentary

Market corrects on profit selling; Nifty ends below 15,800; IT, FMCG stocks shine

(16:54, 16 Jun 2021)

The domestic equity benchmarks ended with modest losses on Wednesday as firm crude oil prices and negative Asian stocks spoiled investors sentiment. FMCG and IT stocks bucked weak market trend.

The barometer index, the S&P BSE Sensex, fell 271.07 points or 0.51% to 52,501.98. The Nifty 50 index lost 101.70 points or 0.64% to 15,767.55.

Power Grid Corporation of India (down 2.18%), Reliance Industries (down 1.69%), Larsen & Toubro (down 1.34%) and HDFC (down 0.9%) were major drags. Infosys (up 0.51%) and TCS (up 0.43%) supported the indices.

Shares witnessed some bit of profit taking as investors awaited the U.S. Federal Reserve's monetary policy statement due later today. In the past four sessions, the Nifty and the Sensex advanced 1.5% and 1.6%, respectively.

Selling was broad based. The BSE Mid-Cap index fell 0.95% and the BSE Small-Cap index lost 0.68%.

The market breadth was negative. On the BSE, 1,441 shares rose and 1,790 shares fell. A total of 124 shares were unchanged.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 17,66,42,863 with 38,22,685 global deaths. India reported 8,65,432 active cases of COVID-19 infection and 3,79,573 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India.

Union Health and Family Welfare Ministry has said that pre-registration for vaccination through online registration and prior booking of appointment is not mandatory to avail COVID-19 vaccine. It said, anyone aged 18 years and above can directly go to the nearest vaccination centre wherein the vaccinator performs the on-site registration and provides vaccination.

Economy:

India's exports in May 2021 were $32.27 billion, as compared to $19.05 billion in May 2020, exhibiting a positive growth of 69.35%. In rupee terms, exports were Rs 2,36,426.16 crore in May 2021, as compared to Rs 1,44,166.01 crore in May 2020, registering a positive growth of 64%. As compared to May 2019, exports in May 2021 exhibited a positive growth of 8.11% in dollar terms and 13.53% in rupee terms.

Imports in May 2021 were $38.55 billion (Rs 2,82,453.56 crore), which is an increase of 73.64% in dollar terms and 68.15% in rupee terms over imports of $22.20 billion (Rs 1,67,977.68 crore) in May 2020. Imports in May 2021 have registered a negative growth of (-) 17.42% in dollar terms and (-) 13.28% in rupee terms in comparison to May 2019.

Taking merchandise and services together, overall trade deficit for April-May 2021 is estimated at $5.85 billion as compared to the surplus of $4.06 billion in April-May 2020.

Numbers to Watch:

The yield on 10-year benchmark federal paper rose to 6.048% as compared with 6.040% at close in the previous trading session.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 73.3225, compared with its close of 73.3175 during the previous trading session.

MCX Gold futures for 5 August 2021 settlement rose 0.13% to Rs 48,489.

The US Dollar index (DXY), which tracks the greenback's value against a basket of currencies, fell 0.03% to 90.51.

In the commodities market, Brent crude for August 2021 settlement rose 9 cents at $74.08 a barrel. The contract rose $1.13, or 1.55% to settle at $73.99 a barrel in the previous trading session.

India is heavily dependent on oil imports for satisfying its domestic demand. A high crude price directly maps into a high trade deficit and in turn a high current account deficit (CAD). At the same time, being an important input for the aggregate economy, a crude price shock also leads to a spike in domestic inflation.

Foreign Markets:

Most European shares rose while most Asian stocks declined on Wednesday, 16 June 2021 as investors awaited a policy decision from the US Federal Reserve.

Japan's exports rose at the fastest pace since 1980 in May and a key gauge of capital spending grew. Ministry of Finance data on Wednesday showed exports grew 49.6% year-on-year in May 2021, led by U.S.-bound car shipments.

US stocks fell slightly on Tuesday with the S&P 500 and the Nasdaq Composite slipping from their respective records, as investors awaited the key Federal Reserve monetary policy meeting.

On the data front, the final demand index for producer prices advanced 6.6% for the 12 months ended in May 2021, the largest increase since 12-month data were first calculated in November 2010. On a monthly basis, the producer price index for final demand rose 0.8%. Meanwhile, May 2021's retail sales data fell 1.3%.

The Fed's two-day policy meeting started on Tuesday, 15 June 2021. Although the central bank is not expected to take any action, its forecasts for interest rates, inflation and the economy could move the markets. Fed Chairman Jerome Powell will speak to the press after the central bank issues its statement on Wednesday.

Buzzing Index:

The Nifty FMCG index rose 0.58% to 36,131.25. The index has added 1.36% in three sessions.

Tata Consumer Products (up 2.11%), Nestle India (up 1.51%), Jubilant FoodWorks (up 1.42%), Emami (up 0.98%), Dabur India (up 0.90%), Hindustan Unilever (up 0.61%), Procter & Gamble Hygiene & Health Care (up 0.36%) and ITC (up 0.19%) climbed.

Stocks in Spotlight:

RITES fell 2.04%. On a consolidated basis, the company posted a 1.65% decline in net profit to Rs 141.55 crore on 11.4% rise in revenue from operations to Rs 635.87 crore in Q4 FY21 over Q4 FY20.

LIC Housing Finance slumped 5.15%. The housing financer's consolidated net profit declined by 9.3% to Rs 384.93 crore on 1.6% rise in total income to Rs 4,979.91 crore in Q4 March 2021 over Q4 March 2020.

Separately, the company's board has approved preferential allotment of 4.54 crore shares to LIC. Post-issue, LIC's stake in LIC Housing would rise to 45.24% from 40.31% as on 31 March 2021.

Lemon Tree Hotels added 0.48%. On a consolidated basis, the company reported a net loss of Rs 26.72 crore in Q4 FY21, higher than net loss of Rs 19.02 crore reported in Q4 FY20. Net sales tumbled 46% YoY to Rs 95.1 crore in Q4 FY21. EBITDA margin slipped to 31.4% in Q4 FY21 from 36.5% in Q4 FY20.

Larsen & Toubro Infotech (LTI) added 0.97%. LTI has signed a definitive agreement to acquire Cuelogic Technologies, a Pune-based digital engineering company with a 100% subsidiary in US, Cuelogic Technologies, Inc. The acquisition is being done for a cash consideration of $8.4 million on a cash-free, debt-free basis excluding working capital adjustments and will be paid as a combination of upfront consideration, retention bonus and performance-based earn-outs.

Dr. Reddy's Laboratories shed 0.17%. The International Center for Dispute Resolution, an international arbitrator has ordered a subsidiary of Dr. Reddy's Laboratories to pay nearly $46.25 million (towards milestones, interest and fees) to Hatchtech, in relation to the asset purchase agreement entered into between the parties in 2015.

KEC International gained 2.31%. The company said it secured new orders worth Rs 937 crore across its various businesses.

Jubilant Pharmova advanced 0.95%. The company said that its step down subsidiary, Jubilant HollisterStier, has entered into a manufacturing partnership with Ocugen, Inc., for manufacturing of vaccine candidate COVAXIN for the US and Canadian markets.