Sensex, Nifty jump to record close; end 1.39 per cent higher

Closing bell

Shares rose about 1.5 per cent to record close, as weak economic growth data raised prospects of a rate cut by the central bank at its policy meeting scheduled later this week.

Both the broader NSE index and the benchmark BSE index gained 1.39 per cent each, settling above the 12,000 and 40,000 levels, respectively, for the first time ever. Sensex closed 553.42 points higher at 40,267.62 and the Nifty ended 165.75 points higher at 12,088.55

Hero MotoCorp Ltd advanced about 6 per cent and was the top gainer on both the indexes. The Nifty Auto index rose over 2 per cent.

The top gainers in the Sensex pack were Hero MotoCorp, Bajaj Auto, IndusInd Bank, Asian Paints and Hindustan Unilever while the laggards were ICICI Bank, NTPC and ITC.

Meanwhile, in the broader index, the major gainers were Hero MotoCorp, Bajaj Auto, Asian Paints, Britannia and IOC while the losers were ONGC, ITC, Eicher Motors, Tech Mahindra and GAIL.

Bank fraud touches unprecedented ₹ 71,500 cr in 2018-19

Over 6,800 cases of bank fraud have been reported in 2018-19. Represetative image

Over 6,800 cases of bank fraud involving an unprecedented Rs 71,500 crore have been reported in 2018-19, the Reserve Bank of India has said. In the last 11 fiscal years, a total of 53,334 cases of fraud were reported by banks involving a massive amount of Rs 2.05 lakh crore, the central bank’s data said. Click here to read more on the bank fraud cases reported

Automakers hopeful of a turnaround

Positive of bouncing back

The continuing slowdown across automobile segments due to higher base, liquidity constraints and higher cost of finance resulted in subdued sales in May. However, the companies are hopeful of a sales turnaround with a stable government at the Centre and forecast of a normal monsoon. Read more

The stocks of the auto index 1.93 per cent higher at 18,802.78

TVS Motors sales fall

TVS Motor Company on Monday posted 0.89 per cent fall in total sales at 3,07,106 units in May. The company sold 3,09,865 units in the same month last year, TVS Motor said in a regulatory filing. Three-wheeler sales grew 9 per cent last month to 12,780 units compared to 11,730 units in May 2018. The stock of TVS Motors was trading 4.27 per cent higher at Rs 499.50.

Opinion | SEBI manhandles NSE co-location case

Co-location Losing the plot?

The move by the Securities and Appellate Tribunal (SAT) to grant an interim stay on SEBI’s strictures against the National Stock Exchange (NSE) and the 12 key accused, which include brokers, in the ‘preferential access’ scandal shows the market regulator in poor light. The seeming lack of thoroughness in the investigation stands out. Read our Opinion on why SEBI did not conduct any investigation into collusion and fraud at the NSE.

ONGC regains most-profitable PSU tag

ONGC, India’s top oil and gas producer, has toppled Indian Oil Corp (IOC) to regain the crown of being the country’s most profitable public sector company. According to earnings statements of the listed companies, Oil and Natural Gas Corp (ONGC) reported a 34 per cent jump its in 2018-19 fiscal net profit at ₹26,716 crore. The stock of ONGC was trading flat at Rs 171.85

Stock Analysis | Just Dial

The short- and medium-term outlook is positive for Just Dial (₹765.60) though the long-term outlook is still negative. If the current trend sustains, Just Dial could test resistance at ₹852, while it finds immediate support at ₹663. A maximum profit of ₹18,060 is possible if Just Dial closes at or above ₹760 at the time of expiry. We advice traders to hold the position till expiry of June contracts. Read our stock analysis of Just Dial here

Commodity Analysis: Gold

Gold rallied sharply towards the end of last week after trading subdued in the initial part of the week. The global spot gold was threatening to fall to $1,270-1,265 per ounce as it fell below the key support level of $1,280. The MCX-Gold futures contract was up 1.8 per cent and closed at ₹32,098 per 10 gm. More on the bullion market , read here

Sensex, Nifty rally over 1 per cent

The 30-share BSE index Sensex surged 463 points or 1.17 per cent to 40,177.20, while the Nifty zoomed 121.70 points or 1.02 per cent to 12,044.50.

The top gainers in the Sensex pack were Hero MotoCorp, Bajaj Auto, Asian Paints, Hindustan Unilever and IndusInd Bank while the laggards were ICICI Bank, ITC and L&T.

In the broader index, the stocks rallying in green were Hero MotoCorp, Bajaj Auto, Asian Paints, Britannia and Indian Oil Corporation while the scrips trading in negative were ONGC, ITC, Eicher Motors, Tech Mahindra, and GAIL

What commodity markets can tell investors

Notwithstanding the very recent correction associated with renewed trade tensions between the US and China, a strong start to the year for the global equity and commodity markets suggest a strong macroeconomic backdrop and a high risk appetite among investors. But digging into individual commodity sectors’ performance, it is clear the situation is much more nuanced. Click here to read more

Bajaj Auto sales

Bajaj Auto on Monday reported a three per cent increase in total sales in May at 4,19, 235 units as against 4,07,044 units in the same month previous year. Commercial vehicles sales declined by 16 per cent to 54,167 units during the month compared to64, 449 units in the year-ago period.

The stock of Bajaj Auto was trading 3.92 per cent higher at Rs 3,039.85.

Hero MotoCorp rises

Shares of  Hero MotoCorp  jumped 5.5 per cent after the company reported 13.5 per cent rise in sales in May over the previous month. The scrip was the top gainer among the front-line companies on both key indices during morning trade. More on the stock activity of Hero MotoCorp, read here

The stock of Hero MotoCorp was trading higher by 5.14 per cent to Rs 2,819.35

Stock analysis: Zee Entertainment

Zee Entertainment has put up a good show in the latest March quarter. The company’s total revenue grew about 17 per cent Y-o-Y to ₹2,019.27 crore, while profits grew 27 per cent Y-o-Y to ₹292.53 crore.  More on the stock activity and Q4 performance of Zee Entertainment, read here

Gold and precious metals market

Gold prices rose to their highest in more than two months.

Gold prices rose to their highest in more than two months as heightened Sino-US trade tensions and Washington's threat of tariffs on Mexico stoked worries of a global recession and drove investors to seek refuge in safe-haven bullion. In other precious metals, silver edged up 0.6 per cent to $14.65 per ounce; platinum rose 1 per cent to $799.73 per ounce. Click here to read more on the prices of gold and other precious metals

Shares rally

Benchmark 10-year bond yield dropped to a more than one-and-half-year low while shares and the rupee gained as a sharp decline in economic growth in the March quarter firmed expectations for at least a quarter-point rate cut on June 6.

India's economy grew at its slowest pace in more than four years in the January-March period, lagging China's growth pace for the first time in nearly two years, raising the chances the central bank will cut rates for a third straight meeting. Asia's third-largest economy grew at a much slower-than-expected 5.8 per cent in the last quarter, compared with 6.4% in China, government data showed on Friday. Read the global economy report here

The continued drop in global crude oil prices amid concerns about a global slowdown as trade war tensions heat up, also aided market sentiment.

The benchmark 10-year bond yield was at 6.97 per cent at 0641 GMT, after falling as much as 9 basis points to 6.94 per cent versus Friday's close, at which point it was at its lowest since Nov. 22, 2017.

“A 25-basis-point cut is the base case that the market is expecting. Now with the GDP figures, we are also looking at something more,” a senior trader at a private bank said, referring to a possible change in policy stance or a bigger rate cut.

Two-thirds of 66 economists predicted the Reserve Bank of India would cut its repo rate by 25 basis points at its June 4-6 meeting, bringing it to 5.75 per cent - the lowest since July 2010. It is then expected to keep policy on hold at least until the end of next year.

“There are a lot of mixed cues for India; the GDP data is making a strong case for a rate cut by the RBI,” said Siddhartha Khemka, head of retail research at Motilal Oswal Securities. “Everyday there is a different news flow. Earnings season has ended and there is no volatility from that end; generally the trend this week looks positive.” More on the experts' opinion on RBI's policy meet and repo rate , read here

The broader NSE index was up 0.80 per cent or 95.45 points at 12,018.25 while the benchmark BSE index rose 0.81 per cent or 321.08 points to 40,032.08.

Many economists and officials expect the government to push long-pending reforms in the next parliamentary session, beginning on June 17, after its landslide election victory. The partially convertible rupee was at 69.43/44 per dollar versus its Friday close of 69.7050.

Commodities market

Oil prices fell more than 1 per cent, extending losses of over 3 per cent from Friday, when crude markets racked up their biggest monthly losses in six months amid stalling demand and as trade wars fanned fears of a global economic slowdown. The drops followed price slumps of more than 3 per cent on Friday, which made May the worst-performing month for crude futures since last November. More on the Commodities market report, read here

Results round-up: Auto sector

Results of the January–March 2019 quarter of leading auto manufacturers bear testimony to the pressure on volumes that the industry has been facing in the last few months. The overall sales of leading auto manufacturers, which stood at a robust 18.1 per cent in the June 2018 quarter (Y-o-Y growth), tapered to single-digit growth in the September and December quarters and dropped by 1.3 per cent in the quarter ended March 2019. Read more on the Q4 results and performance of auto manufacturers here

Global economy

China Caixin PMI 50.2, but official gauge 49.4. File Photo

Factory activity contracted in most Asian countries last month as an escalating trade war between Washington and Beijing raised fears of a global economic downturn and heaped pressure on policymakers in the region and beyond to roll out more stimulus. Some economists predict a world recession and a renewed race to the bottom on interest rates if trade tensions fail to ease at a Group of 20 summit in Osaka, Japan. More on the global economy and US-China trade war , read here

PMI index

A slowing global economy and a protracted trade war between the US and China could add to India’s trouble at home

Indicating a recovery in the industrial sector, the Purchasing Managers’ Index (PMI) for manufacturing sector expanded in May and rose to 52.7 as against 51.8 in April. This shows strongest improvement in the health of the manufacturing sector during last three months. The index is prepared by IHS Markit and released along with a detailed report. Read the PMI manufacturing report here

Shares climb following PMI data

Shares rose, despite weak gross domestic product (GDP) data, as investors pinned hopes on a possible rate cut to bolster the economy at the Reserve Bank of India's (RBI) policy meeting later this week.

Data showed that the economy grew at its slowest pace in nearly two years and lagged China, as Prime Minister Narendra Modi took office for a second term and surprised the markets by naming former defence minister Nirmala Sitharaman as the new finance minister.

The broader NSE index was up 0.54 per cent or 64.75 points at 11,987.55, while the benchmark BSE index rose 0.63 per cent or 248.23 points to 39,962.43.

“There are a lot of mixed cues for India; the GDP data is making a strong case for a rate cut by the RBI,” said Siddhartha Khemka, head of retail research at Motilal Oswal Securities. “Everyday there is a different news flow. Earnings season has ended and there is no volatility from that end; generally the trend this week looks positive.”

RBI is expected to reduce interest rates at its June 4-6 policy meeting. Many economists and officials expect the government to push long-pending reforms in the next parliamentary session, beginning on June 17, after its landslide election victory.

Hero MotoCorp Ltd was the top gainer on the NSE index, rising as much as 3.61 per cent. The motorcycle maker, on Saturday, posted a 14 per cent rise in monthly sales sequentially. Asian Paints' shares rose as much as 2.8 per cent, its highest in four weeks, while Britannia Industries Ltd rose over 2 per cent to its highest since April 26.

Meanwhile, auto names such as Mahindra and Mahindra Ltd dropped 1.37 per cent to over a week's low, Tata Motors Ltd fell 2.43 per cent, while Maruti Suzuki India Ltd slipped up to 1.6 per cent, dragging the Nifty Auto Index to its lowest since May 17.

All three auto companies, on Saturday, posted weak monthly sales; Tata Motors also said that the market sentiment continued to be muted.

Tata Motors share fall

Shares of  Tata Motors Ltd slip 2.4 per cent to Rs 168.40, its lowest since May 15, after disappointing monthly sales. The automaker’s domestic sales in May fell 26 per cent from a year earlier as market sentiment continued to be muted. The monthly sales from exports plunged 58 per cent. The stock of Tata Motors was trading 0.64 per cent higher at Rs 173.60

Forex market

The yen brushed a more than four-month high against the dollar as US President Donald Trump's hard stance on trade broadened to countries beyond China, forcing investors to safe-haven assets, including government bonds. The yen was last steady at 108.23 yen per dollar, paring gains after briefly hitting 108.17, its highest since Jan. 15. Click here to read more on the forex market report

Auto stocks support the index

The 30-share BSE index Sensex surged 154.06 points or 0.39 per cent to 39,868.26 led by financial and auto stocks. The top gainers were Hero MotoCorp, Bajaj Auto, Asian Paints, Maruti and Hindustan Lever while the laggards were Mahindra & Mahindra, ONGC, State Bank of India, IndusInd Bank and ITC.

Among the sectoral indices, consumer durable stocks emerged the biggest gainer, trading higher by 0.98 per cent, followed by auto stocks.

The NSE index Nifty was trading higher by 51.25 points or 0.43 per cent at 11,974.05. The stocks leading the positive pack were Hero MotoCorp, Bajaj Auto, Asian Paint, Britannia, and Indian Oil Corporation while the scrips trading in red were ONGC, Mahindra & Mahindra, Hindalco, State Bank of India, and ITC.

RBI likely to cut repo rate

Growth pangs A counter cyclical monetary policy is the need of the hour

With GDP growth slowing down to a 20-quarter low in the January-March 2019 period and retail inflation well within the median 4 per cent mark, the likelihood of the Reserve Bank of India (RBI) cutting its policy repo rate by 25 basis points (bps) has increased substantially, say experts. RBI Govenor Shaktikanta Das will announce the MPC’s decision on the policy repo rate on June 6. More on the experts' opinion on RBI's policy meet and repo rate

Currency market

Rupee-Dollar

The rupee appreciated by 31 paise to 69.39 against the US dollar in opening trade, driven by easing crude prices and higher opening in domestic equities. The rupee opened strong at 69.48 at the interbank forex market then gained further ground and touched 69.39 amid a positive opening in domestic equities, displaying gains of 31 paise over its last close. Read more on the local currency market here

Investors eye RBI policy meet

The benchmark BSE Sensex rallied over 200 points in early trade driven by gains in financial stocks ahead of the Reserve Bank’s bi-monthly policy review.

The 30-share index was trading 167.86 points, or 0.42 per cent, higher at 39,882.06. Similarly, the broader NSE Nifty spurted 43.40 points, or 0.36 per cent, to 11,966.20.

Top Sensex gainers in early session include Hero MotoCorp, Asian Paints, Bajaj Auto, HUL, HDFC twins, PowerGrid, TCS and Bajaj Finance, rising up to 3 per cent. While, ONGC, Yes Bank, Tata Motors, SBI, M&M and RIL fell up to 1.77 per cent.

In the previous session on Friday, the Sensex settled 117.77 points, or 0.30 per cent, lower at 39,714.20, and the Nifty settled lower by 23.10 points, or 0.19 per cent, at 11,922.80.

The Reserve Bank of India’s Monetary Policy Committee (MPC) is slated to announce its bi-monthly policy on June 6. The central bank had cut the short-term lending rate (repo rate) by 25 basis points each in its last two policy reviews.

The MPC headed by RBI Governor Shaktikanta Das will meet for three days beginning June 3 to firm up the second bi-monthly monetary policy of the fiscal.

According to experts, the Reserve Bank may go for another round of rate cut, third in a row, on Thursday to prop up the economic growth which dropped to a five-year low in the final quarter of 2018-19.

Meanwhile, foreign institutional investors bought equity worth Rs 676.15 crore on Friday, and domestic institutional investors purchased shares to the tune of Rs 394.09 crore, provisional data available with stock exchanges showed.

Elsewhere in Asia, bourses in China, Japan and Korea were trading on a weak note in their respective early sessions.

On the currency front, the rupee also appreciated 24 paise to 69.45 against the US dollar. Brent crude futures, the global oil benchmark, were trading 1.13 per cent lower at 61.29 per barrel.

Global markets

File Photo

US stock futures, Asian share markets and oil prices slipped to multi-month lows on worries intensifying US-China tensions and Washington's new tariff threats against Mexico could tip the global economy into a recession. MSCI's broadest index of Asia-Pacific shares outside Japan was little changed in early trade, but held barely above last week's four-month low. Read the global markets report here

Stocks in focus

The board meeting of Triveni Engineering & Industries will be held on Monday (June 3) to consider a proposal for buyback of equity shares of the company. Shareholders would like to know the buyback size, the price and the number of shares to be bought back. Besides, the mode of buyback, whether it would be through open market purchase or via tender offer route on proportionate basis. Besides, promoters’ intention to participate in the buyback will also be followed by shareholders.

Automobile majors such as Maruti Suzuki, Tata Motors, Ashok Leyland, Mahindra & Mahindra, Hero MotoCorp, Bajaj Auto and TVS Motor will reveal their sales figures for the month of May in the next few days. Analysts tracking the automobile sector expect the sales figures to remain dull, reflecting the overall slowdown. While sales figures may drive the share price of respective companies, market players will look out for any policy announcements by the new government.

Opening bell

The 30-share BSE index Sensex opened 92.66 points higher at 39,806.86 against the previous close of 39,714.20. The 50-share NSE index Nifty opened higher by 22.15 points at 11,944.95 against the previous close of 11,922.80.

Weekly Trading Guide

SBI (₹352.5)

The resistance at ₹362 has been holding well for SBI. The stock made a high of ₹362.2 and has come-off in the past week. A strong break and a decisive close above ₹362 are needed for SBI to gain fresh momentum and resume the uptrend. Such a break will take the stock higher to ₹390 and ₹395 in the short term. But as long as SBI trades below ₹362, there is a strong likelihood of it seeing a corrective fall to ₹335. A break below ₹350 will trigger this fall. However, a bounce from ₹335 can trigger an up-move to ₹350 and ₹355. A break below ₹335 will then increase the likelihood of the fall extending to ₹328 and even ₹320. The region around ₹320 is a strong long-term resistance-turned-support for the stock. As such, a further fall below ₹320 is less likely. Fresh buyers are likely to emerge around ₹320 and limit the downside. The moving average indicators on the charts are also bullish, suggesting that the downside could be limited. So a fall to ₹320 will be a good buying opportunity from a medium-term perspective.

ITC (₹278.6)

ITC tumbled for the second consecutive week. The stock was down 3.9 per cent last week and has plummeted over 7 per cent in the last two weeks. ITC is now poised in the crucial ₹280-275 long-term support region. A break below ₹275 will drag the stock lower to ₹260 and ₹255. However, the presence of the 100-week moving average and a couple of long-term trend lines makes this ₹280-275 region a strong support. Indeed the 100-week moving average (currently at ₹275) has been limiting the downside over the last three years consistently. So a break below ₹275 looks less probable. But a strong bounce from the ₹280-275 support zone will signal the beginning of a new leg of an uptrend, which can take ITC higher to ₹300 and ₹310 levels again. But this bounce-back move could happen at a slow pace because of the steep fall seen over the last two weeks. An eventual break above ₹310 will then increase the likelihood of the stock targeting ₹330 and ₹345 over the long term. As such, investors with a long-term perspective can consider buying ITC at current levels.

Infosys (₹736.8)

Contrary to an expectation, Infosys rose last week. The stock surged 3.8 per cent per cent. Technically, it is sustaining above the psychological level of ₹700 and is keeping the broader ₹695-775 sideways range intact. The stock has been stuck in this range since the second week of January this year. An immediate support is in the ₹730-725 region, which can limit the downside in the near term. Intermediate dips to this support region are likely to see fresh buyers coming into the market. As long as the stock trades above ₹725, there is a strong likelihood of it moving up to ₹750 and ₹755 in the near term. An intermediate pull-back to ₹740 from ₹755 cannot be ruled out. Thereafter, a break below ₹740 can drag the stock lower to ₹715-710. But such a fall looks less likely. As such, an eventual break above ₹755 will then increase the likelihood of the stock targeting ₹775 — the upper end of the range over the short term. Whether Infosys manages to surpass ₹775 or not will decide the next move.

RIL (₹1,329.7)

RIL sustained above the psychological level of ₹1,300 last week. The stock was stuck in a narrow range. The price action indicates lack of strength in the stock. However, as long as RIL sustains above ₹1,300, the outlook will remain positive. An immediate resistance is at ₹1,345. A strong break above this hurdle can boost the momentum. Such a break can take the stock higher to ₹1,400 and ₹1,430 in the short term. However, as mentioned last week, RIL has to rise past ₹1,430 decisively to gain fresh bullish momentum and surge to fresh highs. The targets above ₹1,430 are ₹1,485 and ₹1,500. But a pull-back from ₹1,430 can trigger a corrective fall to ₹1,350 and ₹1,300 levels again. In that case, a range-bound move between ₹1,300 and ₹1,430 is possible for some time. The outlook will turn negative for the stock only if it declines below ₹1,300. In such a scenario, RIL can target ₹1,280 and ₹1,250 on the downside. Such a fall will also increase the likelihood of the stock declining towards 1,200 over the medium term.

Tata Steel (₹487.9)

Tata Steel began the week on a strong note and surged over 7 per cent. However, it failed to sustain higher and has come-off sharply from the high of ₹518.1, giving back almost all the gains. The stock has to sustain above the immediate support level of ₹480 to reverse higher again. A bounce from ₹480 can take Tata Steel higher to ₹510 and ₹515 levels again. A strong break above ₹515 is needed to ease the downside pressure. Such a break can take the stock higher to ₹530. A rise past ₹530 will then increase the likelihood of the upmove extending to ₹560. On the other hand, if Tata Steel declines below ₹480, the downside pressure could increase. In such a scenario, the stock can fall to test the crucial support levels of ₹460 and ₹445. The price action around these supports will need a close watch as a break below ₹445 can see the stock tumbling towards ₹410 and ₹400.

Index Outlook

With the global markets ending in deep red, the domestic indices could see some selling pressure and profit-booking in the truncated week ahead. Also, the second bi-monthly meeting of the RBI, scheduled on June 6, can bring in some volatility. Read our Index Outlook for the week here

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