The market reaction is likely to evolve as investors digest the US Fed’s commentary. A global wave of monetary tightening and commodity-fueled price pressures could yet hurt economic growth. Russia is also continuing its war in Ukraine and China’s Covid lockdowns are snarling global supply chains.
Hero MotoCorp sees a bumpy ride in Q4
Automakers are facing the double whammy of rising input costs and subdued demand. In response higher commodity costs, automakers have been resorting to price hikes, but this has weighed on demand. Hero MotoCorp Ltd in its March quarter (Q4FY22) earnings call said it raised prices by ₹1,000 per unit in April which is over and above the significant price hike taken in FY22.
Note that in FY22, even as net realization rose by 11.2% year-on-year (y-o-y), it could only partially offset the y-o-y volume decline of 14.6% in FY22 with standalone revenue from operations falling by 5% y-o-y to ₹29,246 crore. (Read here)
LIC IPO: Day 2 subscription update
Axis Securities maintains BUY on Tata Steel
The stock is currently trading at an attractive valuation of 4.4x 12MF EV/EBITDA, below its 10Y average of 6.3x. We reiterate our BUY rating and value the company using SoTP by assigning a 1-year forward EV/EBITDA based on its geographical segments. We ascribe 6.0x, 5.0x and 3.5x multiple to India standalone, other operations (excl standalone) and Europe on FY24E EBITDA to arrive at a 1-year forward TP of ₹1,700/share (unchanged from our previous TP), implying an upside potential of 35% from the CMP.
Global LNG imports up 4.5% on post-COVID demand surge in 2021: Reuters
Global imports of liquefied natural gas (LNG) grew 4.5% in 2021 from the previous year, supported by a surge in post-COVID industrial demand, especially in China, according to the Paris-based International Group of LNG Importers (GIIGNL).
Global LNG import volumes reached 372.3 million tonnes, a rise of 16.2 million tonnes from 2020, the GIIGNL said in an annual report.
The industry grew only by 0.4% during 2020 due to the COVID-19 pandemic, but the recovery in 2021 still lagged pre-pandemic growth of 13% growth in 2019 and 8.3% in 2018, according to GIIGNL’s previous annual reports.
Auto retail sales grow 37% YoY in April on low COVID-hit base effect: PTI
Automobile retail sales in India rose 37% in April on a low base of COVID-hit year-ago period, automobile dealers’ body FADA said on Thursday.
Total sales across categories rose to 16,27,975 units in April from 11,87,771 units a year ago.
On a year-on-year basis, all vehicle categories including passenger vehicles and two-wheelers were up as compared with April last year.
Passenger vehicles registrations stood at 2,64,342 units last month, up 25% on year.
India Turns to Expensive Foreign Gas to Ease Its Power Crisis: Bloomberg
Sweltering heat and ongoing blackouts are forcing India’s liquefied natural gas importers to top up with expensive shipments.
Torrent Power Ltd. and GAIL India Ltd. bought LNG for May delivery in the last week, with the fuel set to be used to help power plants boost generation, according to traders with knowledge of the matter. The utilities paid about triple the normal spot rate for this time of year, as Russia’s invasion of Ukraine exacerbates a global supply crunch.
The purchases are unusual for India’s cost-sensitive power generators, which tend to avoid buying LNG at such high rates. They illustrate how a domestic coal shortage is forcing the South Asian nation to look for alternative fuels no matter the price, further elevating international demand.
GAIL is seeking at least one more shipment for late-May, the traders said, adding that several other Indian firms are inquiring about cargoes in the bilateral market.
ICICI Bank hikes external benchmark lending rate by 40 bps to 8.10%: reports
Equities should brace for higher and faster rate hikes
Global equity markets heaved a sigh of relief after the US Federal Reserve raised key interest rates by 50 basis points (bps), lower than the feared 75bps increase. One basis point is one hundredeth of a percentage point.
Post the meeting, Federal Reserve Chair Jerome Powell said US central bank officials were not actively considering a 75bps rate hike at coming monetary policy meetings. In reaction, the US equity market saw a relief rally on Wednesday. On Thursday, the Asian markets were largely higher.
Nonetheless, with inflation wrecking a havoc and global central banks determined to tame it, equity markets have to get used to more and quicker rate hikes.
According to James Knightley, chief international economist at ING, the possibility of a 75bps hike at the June meeting is still open. (Read here)
S&P Global India Services Purchasing Managers’ Index rose to 57.9 in April from 53.6 in March
Activity in India’s dominant services sector grew at its fastest pace in five months in April on strong demand, prompting firms to add jobs for the first time since November, a private survey showed, but sky-rocketing inflation remained a major concern.
The S&P Global India Services Purchasing Managers’ Index rose to 57.9 in April from 53.6 in March, its highest since November and surpassing the 54.0 estimate in a Reuters poll.
While the index remained above the 50-mark separating growth from contraction for a ninth straight month, it was the best start to a fiscal year for the sector since 2011/12.
Bank of Baroda hikes repo-linked lending rate by 40 bps to 6.90%: reports
Indian shares climb higher led by auto, IT, banks, metal stocks
Indian equities were higher on Thursday, tracking Asian peers that rose as the Federal Reserve’s less hawkish tone boosted investor sentiment.
Benchmark indexes had closed over 2% lower on Wednesday, having posted their biggest intraday percentage loss since 7 March earlier in the session, after India’s central bank hiked benchmark rate in a surprise move.
At 10am, Sensex was up 502.10 points at 56171.13, and Nifty rose 156.20 points to 16833.80. About 1,996 shares advanced, 822 declined, and 86 were unchanged.
Nifty view: Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One
Nifty breached the support zone around 16800 on Wednesday and plunged downwards in a decisive manner. In a normal scenario, we would have interpreted this as a ‘Pennant’ breakdown and expected much lower levels; but on this occasion, we refrain from this approach. The rationale behind this is the overall oversold positioning of the market and the move has come after a surprising event. In addition, the global event US Fed meeting is slated and it would be important to see how the market reacts to it as well. Since such developments can be deceptive at times, we would rather hold our horses for a day or two and would assess the overall situation before arriving at any directional view.
For the coming session, 16800 – 16900 have now become immediate hurdles; whereas it would be interesting to see how Nifty behaves around 16600 – 16500.
Yes Securities maintains BUY on Hero MotoCorp
Yet to make inroads into growth segments
With expectation of strong demand recovery in 2Ws (4Q retails for HCML surpassing wholesale), should result in op leverage benefits for the company against near term RM headwinds. This coupled with company’s cost cutting efforts through LEAP savings should result in ~260bp margins expansion over FY22’s B24E. We upgrade our EPS estimate by 1.9%/0.4% for FY23/24 to factor in higher spares and accessories sales. We maintain BUY with revised TP of Rs2,833 (Rs2,825 earlier. Any success on HMCL’s EV strategy can be a key re-rating trigger.
Top gainers/losers on Sensex in opening deals
Nifty opens above 16,800
Sensex opens nearly 500 points higher
Nifty jumps over 1% in pre-open
Sensex jumps over 600 points in pre-open
Market view: Mitul Shah, Head Of Research at Reliance Securities
The markets are likely to see gap up opening, SGX nifty is up 170 points compared to Yesterday’s spot Nifty closing. Nikkei is closed due to holiday while Hang Seng is up 0.3%.
Cognizant reports 11.5% rise in Q1 net profit, posts highest quarterly revenue
Nasdaq-listed Cognizant Technology Solutions Corp’s March quarter net profit rose 11.5% year-on-year to $563 million, on the back of an 11% increase in revenue in constant currency to $4.8 billion – its highest-ever quarterly revenue and fourth consecutive quarter of revenue growth. The company follows a January to December accounting year.
In comparison, for the March quarter, Tata Consultancy Services Ltd’s (TCS) dollar revenue grew 14.3% in constant currency from a year earlier to $6.7 billion, while that of Infosys Ltd grew 20.6% to $4.3 billion. (Read here)
Pfizer makes big R&D push in India
Pfizer Inc. on Wednesday opened a global research centre in Chennai, which will develop and support drugs for the drugmaker’s manufacturing centres worldwide. The facility, located at the Indian Institute of Technology (IIT) Madras Research Park, is Pfizer’s first such centre in Asia and will employ more than 250 scientists and technicians from different specialities. (Read here)
Policy holders, retail investors make a dash for LIC IPO on Day One
India’s biggest initial public offering received a robust response, with retail investors placing bids for nearly two-thirds of the life insurer’s shares on offer on the first day of the share sale despite a stocks selloff.
On Wednesday, Life Insurance Corp. (LIC) of India policyholders, who are eligible for a discount on the sale price, employees and other retail investors subscribed to 67% of the shares on sale. (Read here)
Stocks to Watch
Shares of SBI, Kotak Mahindra Bank, Dabur, Marico, Adani Power, among others, will be in focus today.
Adani Power, Adani Transmission, Dabur India, Marico, Exide Industries, TVS Motor Company, Voltas, Computer Age Management Services, CEAT, Firstsource Solutions, Intellect Design Arena, Procter & Gamble Health, PNB Gilts, are among the companies scheduled to release earnings today
Gold gains 1% as dollar dips after Powell flags inflation risks
Gold prices climbed on Thursday, as the Federal Reserve expectedly raised interest rates by 50 basis points to tackle inflation, which the U.S. central bank highlighted as a risk to the economy while also ruling out larger hikes for the year.
Spot gold was up 0.9% at $1,898.06 per ounce, after rising 1% earlier in the session. U.S. gold futures rose 1.4% to $1,894.20.
The Federal Reserve on Wednesday raised its benchmark overnight interest rate by half a percentage point, the biggest jump in 22 years, and Fed Chair Jerome Powell made an appeal to Americans struggling with high inflation to be patient while officials take the hard measures to bring it under control.
Oil edges up on EU’s proposed Russian oil ban, but weak China data weighs
Oil prices edged higher on Thursday, extending gains from the previous session, as a European Union proposal for new sanctions against Russia, including an embargo on crude in six months, offset concerns over Chinese demand.
Brent crude futures had climbed 35 cents, or 0.3%, to $110.49 a barrel in Asian deals, while U.S. West Texas Intermediate crude futures rose 25 cents, or 0.2%, to $108.06 a barrel.
Both benchmarks jumped more than $1 a barrel earlier in the volatile session after gaining more than $5 a barrel on Wednesday.
The sanctions proposal, which was announced by European Commission President Ursula von der Leyen and needs unanimous backing by the 27 EU countries to take effect, includes phasing out supplies of Russian crude in six months and refined products by the end of 2022.
It also proposes to ban in a month’s time all shipping, brokerage, insurance and financing services offered by EU companies for the transportation of Russian oil.
SGX Nifty up nearly 1%
Nifty futures on the Singapore Exchange rose 152 points, or 0.91%, to 16,852 in early deals on Thursday, indicating a positive start for Indian indices.
Indian stock markets tanked on Wednesday after the Reserve Bank of India stunned the market with an increase in policy rates, citing inflationary pressures.
The central bank’s monetary policy committee, in an off-cycle meeting, raised key lending rate by 40 basis points.
Sensex slumped 1,306.96 points to end the day at 55,669.03 after the RBI rate hike, while Nifty tanked 391.50 points to 16,677.60.
Asian shares advance on less hawkish Fed stance; oil rises
Stocks climbed in Asia, bonds jumped and the dollar fell amid a bout of investor relief after the Federal Reserve raised interest rates as expected to tackle inflation while countering fears of super-sized hikes.
An Asian share gauge was up about 1%, bolstered by Hong Kong. Chinese equities were mixed after reopening from a holiday. U.S. futures fluctuated following a 3% advance in the S&P 500 index, the biggest since 2020.
Fed Chair Jerome Powell said a 75 basis points hike is “not something that the committee is actively considering,” spurring the market rally. The Fed raised rates a half point and signaled similar moves for the next couple of meetings.
Crude hit $108 a barrel on a European Union plan to ban Russian barrels over the next six months. Wheat rose on the possibility of export curbs by major grower India.
S&P 500 futures shed 0.1%, Nasdaq 100 futures dropped 0.1%, and Euro Stoxx 50 futures climbed 2.2%.
Australia’s S&P/ASX 200 Index rose 0.6%, Hong Kong’s Hang Seng Index added 1.5%, and China’s Shanghai Composite Index rose 0.4%.
Early moves in Asia followed a U.S. rally overnight where the Dow Jones Industrial Average rose 2.81%, the S&P 500 gained 2.99%, and the Nasdaq advanced 3.19%.
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