STOCK MARKET LIVE: Sensex recovers to some extent, Nifty resistance seen at 12,000; automobiles sector outlook negative; US-China trade issues remain sticky

Nifty closed 0.40 percent down at 11,917.30 points, while BSE Sensex ended the day 193.65 points or 0.48 percent lower at 39,756.81 points before CPI inflation for May and IIP data for April. During the afternoon session on Wednesday, Indian equity indices were trading in the negative territory. Banking, Automobiles, financial services, and pharma dragged down the indices. BSE Sensex and NSE's Nifty opened flat today. Sensex opened at 39,974.18 points, up 23.72 or 0.06 points on Wednesday ahead of the CPI and IIP data, taking cues from Asian peers. Benchmark S&P BSE Sensex rose 166 points or 0.42 percent to 39,950 on Tuesday while Nifty50 added 43 points, or 0.36 per cent to close at 11,966.

After a gain on Tuesday, Asian stock markets started on a cautious note on Wednesday as US-China trade issue remained unresolved. The investors were bracing for the latest batch of economic data from the Asian giant. Consumer and producer prices data are expected to confirm inflation. Shanghai Composite had rallied on Tuesday on news Beijing would allow local governments to use cash from special bonds to fund investment projects, stated a JM Financial report. 

Even as investors' optimism over easing trade tensions and the prospect of an interest rate cut by the Federal Reserve, US stocks fell in the afternoon trading session on Tuesday. 

3:43 pm: Alembic Pharma to raise up to Rs 300 crore via NCDs

3:31 pm: Oil prices fell more than 2% on Wednesday, weighed down by a weaker demand outlook and a rise in U.S. crude inventories.

3:21 pm: Sensex recovered substentially during the last tranche of the trading session. The benchmark BSE index  was trading at 39,762.02 points, down 188.44 or 0.47%

2:58 pm: 10-year bond yield: 

10-year bond yield falls below 7% after declining nearly 5 basis points intraday.

14:50 pm: Sensex

2:38 pm: Automobiles sector outlook: Naveen Kulkarni, Head of Research, Reliance Securities

Going forward, we expect slowdown in the automobiles sector to continue, as rural demand is not picking up due to the liquidity crisis in NBFC space and various rural markets impacted by monsoon deficit during the last year. After inventory destocking existing inventory continues to remain at higher-than-normal level for most players. Therefore, few companies also announced production cut recently. This would continue to impact the wholesale dispatches to some extent in 1HFY20, in our view.

Domestic auto volume declined by 9% YoY but increased 4% MoM to 20,86,358 units in May’19 due to lower retail demand across segments coupled with inventory correction by few players. Despite de-stocking, inventory continued to remain high due to highly weak retail demand. While all segments reported YoY decline in monthly volume, PV and CV segment witnessed the highest decline of 21% and 10%, respectively.  

LCV volume declined by 4% YoY on the back of relatively better demand situation, while M&HCV volume fell by 20% YoY. Scooter and motorcycles volume declined by 8% YoY and 5% YoY, respectively. Going forward, we expect slowdown to continue, as rural demand is not picking up due to liquidity crisis in NBFC space and various rural markets impacted by monsoon deficit during the last year. After inventory destocking existing inventory continues to remain at higher-than-normal level for most players. Therefore, few companies also announced production cut recently. this would continue to impact the wholesale dispatches to some extent in 1HFY20, in our view.

2:35 pm: During the afternoon session on Wednesday, Indian equity indices were trading in the negative territory ahead of key macro data for April. 

1:47 pm: Bank Nifty fell close to 1 percent today after yesterday's gain.

1:45 pm: Indiabulls Housing Finance stock fell close to 10 percent at Rs 609 

1:11 pm: YES Bank, ICICI Bank, SBI, HDFC Bank, and Axis Bank shares fall, among other banks.

12:54 pm: During the afternoon session, Bank Nifty and Nifty Auto fell heavily. Nifty Auto was down over 1 percent, with Maruti Suzuki, Bajaj Auto, and HeroMotoCorp falling over 1 percent.

12:33 pm: Corporate announcements today:

JUBILANT FOODWORKS LIMITED
Analysts/institutional investor meet today (June 12)

KERNEX MICROSYSTEMS (INDIA) LIMITED
Shareholders meeting today (June 12)

BHARAT WIRE ROPES LIMITED
Reply to Clarification- Financial results today (June 12)

INTRASOFT TECHNOLOGIES LIMITED
Acquisition today (June 12) 

12:30 pm: The benchmark Nifty index saw a clean move up to 12000 levels where resistance was seen once again. Despite the not-so-healthy newsflow environment, the market has been able to sustain above supports very well, which is an encouraging sign. The Bank Nifty too saw a smart move yesterday as it rallied almost 400 points from the lowest point to the highs. The Mid-cap index closed in the green and is close to an important trigger. Once confirmed a clean up trending move could be seen in the next couple of weeks, according to JM Financial.

12:09 pm: JM Financial mid-session company update
IndusInd Bank (management meet update): Maintain BUY with TP of Rs 1,860
"We recently met IndusInd Bank for an update on the bank’s evolving business environment. Management indicated that the bank’s exposure of 1.9% to stressed groups is expected to come down in the coming quarters. They also indicated that exposure to stressed HFC included in the above limit is not material."
In the NBFC space, the management believes that it is more of a ‘liquidity’ issue than a "solvency" issue and expects limited impact for other large players given their strong liquidity buffers. Management remains confident on the quality of borrowers in its RE book and expects the Tier1 developers to get through the difficult times. 

Management does not see any stress in the gem and jewellery sector, specifically the diamond financing segment (where IIB has prominent exposure) despite the industry seeing some pressure in the jewellery segment. The management is confident of achieving a 20%+ growth in the overall vehicle segment aided by market share gains from NBFCs. 

"We believe the underperformance of IIB’s share price over the last year (27% underperformance relative to SENSEX) has largely been on account of concerns pertaining to its corporate book exposures and the sustainability of its fee-line. We believe management disclosures address these concerns to a large extent."
 
"We see favourable risk-reward at CMP, given that now the merger transaction with BHAFIN has received formal approval from NCLT, with the bank quoting at 2.8x NTM P / BV – which is a 15% discount to its 5-yr average. We expect IIB (merged entity) to deliver c.2% RoA (19% RoE) by FY21E. Maintain BUY with TP of Rs 1,860."

12:05 pm: JM Financial mid-session sectoral update:
Building material companies (Challenging times persist) Maintain BUY on Somany and Greenlam; HOLD on Kajaria Ceramics, Cera Sanitaryware, Century Plyboards and Greenply. 

India’s building material companies continue to face challenging times due to weak demand (real estate), raw material and fuel cost inflation, and relentless competition from unorganised players, though the recent drop in Brent crude and US dollar-Indian Rupee has aided margin expansion in 4QFY19. 

"Our discussions with industry participants indicate a modest number of shutdowns and a slowdown in the pace of capacity additions by unorganised players in tiles and plywood segments given the weak demand, cost inflation and increased compliance costs."
 
"We believe there will be a gradual shift towards organised players in the coming years on the back of stricter GST/ e-way bill implementation, higher vigilance on tax evaders and a stable government in the centre. We maintain BUY on Somany (on expected improvement in financials) and Greenlam (on a relatively strong growth and return ratios). We maintain HOLD on Kajaria Ceramics, Cera Sanitaryware, Century Plyboards and Greenply."

11:53 am: Driven by easing crude oil prices and foreign fund inflows, Indian rupee appreciated 8 paise to 69.38 against the US dollar in opening trade on Wednesday.

11:49 am: Sensex fell 276 points around noon, while Benchmark Nifty fell 0.68 percent at 11,884.15 points.

11:28 am: Indiabulls Housing Finance: The company moves SC for listing of plea against it alleging misappropriation of funds. The share is currently trading at 628.70, down 6.81 percent.

11:20 am: DCM Shriram: (CMP 552)
Zee Business TV update: Market expert Sandeep Wagle has given a target of Rs 570 for DCM Shriram. Stop loss at Rs 528.

11:07 am: Adani Enterprises: (CMP 158)
Kunal Saraogi - CEO - Equityrush on Zee Business TV said Adani Enterprises stock may touch Rs 170 level. Should buy during the last trading hours. 

11:03 am: BSE Sensex fell over 250 points

10:55 am: Tata Global Beverages: CMP 255.10) 
Nitin Murarka of SMC Global Securities on Zee Business TV said that this stock can give a good return. It may touch Rs 280 levels by the June expiry. The immediate support level for the stock is Rs 240.

10: 25 am: Godfrey Phillips (Buy, CMP 913.90)

Kunal Saraogi - CEO - Equityrush on Zee Business TV said a big pull back is seen in this stock. He recommended stop loss at Rs 895 and the first target at Rs 935.  News in this segment: Government may ban e-cigarettes.

10:04 am: Tata Steel, Vedanta, Sun Pharma, IndusInd Bank gained on the BSE.

10:03 am: Yes Securities report on pharma stocks (US concerns persist)
*8 Pharma earnings season brought a divergent commentary on US outlook, weak India season impacting acute companies and pressure in Africa institutional business. In this report, we sift through call summaries and highlight some of the key themes evident across US and India markets. Opinion on the state of US generics environment appears divided as managements differ on the outlook. 

*While lower rate of ANDA filings and higher product discontinuations offer hope for some, base business did benefit from one-off volume opportunities due to supply disruption or player exits -  factors that may not be repeated through FY20. 

*Domestic growth was impacted by lower primary sales as trade channels stopped loading of inventories and a weak anti-infective season. We retain our negative stance on most of the large generic plays except Aurobindo; conversely, preference stays for companies with non-US focus like IPCA Labs. 

10 am: Yes Securities report on RITES Ltd (Analyst Meet Note, CMP, Rs 276)
*Reported strong set of numbers during Q4 FY19 with standalone topline growing 31% yoy (to Rs 7.1 bn or Rs 710 crore) backed by robust performance in export (up 40% yoy), leasing (up 30% yoy) and turnkey (up 216%) segments.

*At the end of FY19, RITES order book stood strong at Rs.60.1 bn aided by Rs 3300 core (33 billion) of orders inflows during FY19.

* With government's strong focus on infrastructure, we believe the company is likely to witness strong order inflows in the upcoming years.

9:55 am: Yes Securities report on Garden Reach Shipbuilders & Engineers (Positive, CMP Rs 119.10)
* Robust order book of Rs282.5bn as on FY19 (20.4x TTM sales)
* Focus on timely execution through integrated modular construction methodology
*GRSE is expected to ramp up its export of small and medium-sized warship and patrol vessels to South-East Asia, African countries and Latin America
* Focusing on improving its EBITDA margins through, 1) reduction in employee cost, 2) increasing internal manufacturing efficiency and 3) keeping control over provisions towards liquidated damages
* Strong balance sheet, healthy dividend yield and negative working capital
* Valuation looks reasonable as GRSE is trading at P/E multiple of 8.8x/6.8x to FY20E/FY21E EPS, whereas its peer Cochin Shipyard is trading at 10.2x/9.4x, implying discount of 14%/28% respectively.

9:35 am: Benchmark Nifty too was in the red at 11,920.65 points or 0.38 percent down.

9:34 am: Sensex fell to 39,791.55 points, down 158.91 points or 0.4 percent.

9:30 am: Most of the Nifty sectoral indices were in the red. Bank Nifty fell today after yesterday's gain.

9:27 am: Tata Steel, Vedanta, Asian Paints, and GAIL stocks saw moderate gains (less than 1%) on the NSE.

9:25 am: Indiabulls Housing Finance, YES Bank, HeroMotoCorp, and Infratel are the top losers in the Nifty50 index.

9: 20 am: NSE's benchmark index Nifty 50 shows bearish trend as most of its constituents are in the red. In the index, only 14 stocks advanced, 35 fell and  1 remained unchanged.

9:15 am: Sensex opened at 39,974.18 points, up 23.72 or 0.06 points, while Nifty was trading at 11,927.20, 38.4 points or  0.32 percent down on Wednesday ahead of the CPI and IIP data, taking cues from Asian peers.

9 am: Indian equity markets are expected to see a modest start on Wednesday ahead of the CPI and IIP data, taking cues from Asian peers. Benchmark S&P BSE Sensex rose 166 points or 0.42 percent to 39,950 on Tuesday while Nifty50 added 43 points, or 0.36 per cent to close at 11,966.

8:47 am: Zee Business TV stock in News: On Tuesday, Europe's anti-trust authority blocked the German conglomerate Thyssenkrupp and Tata Steel merger.

8:38 am: Zee Business TV stock in News:  There is a piece of bad  news for e-cigarettes manufacturers like Godfrey Phillips and ITC, as India’s top drugs advisory board on Tuesday approved a proposal to regulate them as “drugs” and prohibit their sale in the country.

8:31 am: Zee Business TV stock in News: The Queensland government is expected to sign off on the groundwater management plan for the Adani Group’s Carmichael coal mine project on Thursday.

8:27 am: Zee Business TV stock in News: Investors may keep a watch on ITC, as the company will invest Rs 20,000 in FMCG and other segments.

8:22 am: Zee Business TV stock in News: DHFL pays off dues on bonds

8:14 am: "The choppy trend continued in the market today and the Nifty closed the day on Tuesday on a modest gains. A high wave or a doji type candlestick pattern was formed today, which is back to back in the last two sessions. This pattern signals a weak strength in the upside bounce. Though, Nifty moved up, the market breadth was not in favour of bulls," Nagaraj Shetti said.

"The short-term trend of Nifty is positive with range movement. This weak upside bounce is not going to stay for long and one may expect higher levels weakness soon in the market. Immediate resistance to be watched at 12,000 levels." Acording to Shetti.

8:09 am: The Nifty closed the day on a modest gains on Tuesday, immediate resistance to be watched at 12,000 levels: Nagaraj Shetti - Technical Research Analyst, HDFC securities.

8 am: After climbing 1 percent on Tuesday, MSCI`s broadest index of Asia-Pacific shares outside Japan on Wednesday was slightly up (0.1%).  Japan`s Nikkei was at 21,212.18, up 0.037 percent.

7:52 am: On Tuesday, stock indice across gained across the world as investors bet on Federal Reserve interest rate cuts and optimism that US-China trade agreement could follow the US-Mexico deal.
As investors turned to stocks, oil prices also rose and gold prices came under pressure. 

7:45 am: On Tuesday, Dow Jones fell 0.05 percent or 14.17 points to 26,048.51; S&P 500 was down or 0.03 percent to 2,885.72 and Nasdaq Composite fell 0.01 percent, to 7,822.57.

7:30: Pre-market: 
SGX Nifty was flat at 11,967

7:24 am: Oil prices fell on Wednesday due to weaker demand and a rise in US crude inventories despite expectations of OPEC-led supply cuts. Brent crude futures were down 76 cents, or 1.22%, at $61.53 a barrel by 0036 GMT, while WTI crude futures were down 79 cents, or 1.3%, at $52.58 per barrel, according to Reuters.

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