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US markets fall after US reports historically high inflation data! Can Nifty continue the bull run?

Good Morning Everyone, Equity benchmark Sensex climbed nearly 500 points while the Nifty reclaimed the 17,600-mark after the RBI left repo and reverse repo rates unchanged but retained its accommodative policy stance to boost growth. Rally in the global market, stable oil price, cool down in G-Sec Yield, and fall in US bond Yield from the recorded boosted market sentiment.

The action was shifted to large-cap counters as banking, metal, and IT stocks witnessed a smart rally while mid-cap and small-cap stocks underperform compare to large-cap counters.

The Nifty index opened positive and despite slight dullness in the initial tick, it picked up to touch 17639 levels during the day. It went northwards for the most part of the day and closed with gains of around 142 points. It formed a Bullish candle on a daily scale with a long lower shadow indicating buying was visible at declines. Now it has to continue to hold above 17500 zones for an up move towards 17777 then 17900 zones where on the downside support exists at 17350 and 17250 zones.

ONGC was the top gainer in the Nifty pack, climbing 3 percent, followed by Tata Steel, Infosys, HDFC Bank, HDFC, Kotak Bank, M&M, and Grasim. In contrast, Maruti, BPCL, IOC, Ultratech Cement, and Shree Cement were laggards.

RBI Governor said the monetary policy committee has decided to keep the benchmark repo rate unchanged at 4%. The reverse repo rate has also been left unchanged at 3.35% and the central bank has decided to stay the course on its accommodative stance "as long as necessary". The MPC is projecting FY23 GDP growth at 7.8%. Inflation is projected at 4.5% for FY23. As a result, 10-Year G-Sec Yield fell to 6.73% from the recent high of 6.94%.

The global market witnessed a smart rally as the selloff in bond markets eased, ahead of the release of US inflation data later in the day that could have a huge bearing on the Federal Reserve's rate hike plans. Oil was steady at $91/bbl after a surprise drop in U.S.crude inventories tightened the market further amid signs of strong demand in the world’s biggest economy.

Nifty metal stocks witnessed the biggest gainer today and surged by 1.3%. Nifty IT, Bank, and Realty index gained 1% each. Nifty mid-cap, small-cap, and FMCG Index gained half percent each. Nifty 500 stocks advance-decline ratio was 1.4%: 1. India Vix slipped 5% to close at 17.71.

Banking stocks recorded a smart rally after the RBI kept unchanged report and reverse repo rate. Moreover, the fall in the 10-Year G-Sec Yield boosted banking stocks. Private bank major HDFC Bank surged by 2% to close at Rs1525. Kotak Bank, AU Bank, Federal Bank, Axis Bank, and SBI gained 1-2%.

RBI Monetary Policy: Repo Rate, Reverse Repo Rate Unchanged; Accommodative Stance To Continue - RBI Governor Shaktikanta Das said the monetary policy committee has decided to keep the benchmark repo rate unchanged at 4%. The reverse repo rate has also been left unchanged at 3.35% and the central bank has decided to stay the course on its accommodative stance "as long as necessary". The MPC is projecting FY23 GDP growth at 7.8%. Inflation is projected at 4.5% for FY23.

Govt. Said To Weigh 5% Stake Sale In The LIC IPO - The government is considering selling about 5% of the shares it holds in a state insurer as it prepares to file documents for the country's biggest initial public offering, according to people familiar with the matter. The government plans to offer 316 million shares of the 6.32 billion shares it owns in Life Insurance Corp. of India, and no fresh stock will be issued - Media report.

Metal stocks recorded a smart rally on account of increased base metal price on LME amid rising global demand. Aluminum price surged to a 13-year high at $3266/ton on LME. Hindalco gained 1% to close at Rs547. The company announced impressive Q3 results. Jindal Steel climbed up by 6% to close at Rs441. Nmdc, Tata Steel, Nalco, Vedanta, and JSW Steel gained between 1-2%.

Tech stocks witnessed bargain hunting. Tech Major Infosys surged 2% to close at Rs1770. Mphasis, LTTS, Tech Mahindra, Wipro, and HCL Tech gained between 1-2%. Auto stocks witnessed a mixed bag. M&M gained nearly 2% to close at Rs853 after announcing impressive Q3 results. Maruti declined nearly 2% to close at Rs8805 due to profit booking. However, Bharat Forge slipped over 2% to close at Rs730 after announced Q3 results.

Global Market:

US stocks tumbled Thursday, erasing gains from the day before as the benchmark government bond yield topped 2% after annual inflation surged to a 40-year high in January. The 10-year US Treasury yield jumped 12 basis points to 2.05%, the highest since July 2019. Dow Jones, Nasdaq, and S&P 500 nosedived nearly 2% each.

·         Stocks and bonds fell in Asia Friday after Treasuries and Wall Street shares sank on a jump in U.S. inflation to a fresh four-decade high that stirred hawkish comments from a Federal Reserve official. U.S. equity futures, Australian shares, Taiwan, and South Korean stocks slid. 1% each. Japan market is shut today.

·         European equities fell for the first time in four days on Thursday as a bigger-than-expected rise in U.S. inflation sent bond yields higher and fanned concerns of aggressive policy tightening by the Federal Reserve. France Index declined half percent while Germany and UK Index gained.

·         Brent Crude declined 1% to $91/bbl as a flurry of diplomacy increased the chance of an Iranian nuclear deal being revived, paving the way for a resumption in official flows from the nation.

Indian Market:

RBI Allows Banks to Trade in Offshore Rate Swap Market - Banks in India have been allowed to undertake transactions in the offshore foreign currency-settled Overnight Indexed Swap market with non-residents and other market makers. As a result, 10-Year G-Sec Yield fell to 6.73% from the recent high of 6.94%.  - Positive for large banks like HDFC Banks, SBI, Axis Bank, and ICICI Bank.

Expect the market to open on a negative note on account of the sharp decline in global markets. Sentiment may dampen on account of US Bond yield spiked to 2-year high of above 2% (up 8bps to close at 2.02%) after US Inflation (CPI) reported to 4 decades (40-years) high at 7.50% while expectation 7.3%. The market expectation is that the US Fed may significantly hike interest rate in the next policy meeting. Moreover, rising oil prices and continued FIIs selling may have negative sentiment in the market.  FIIs were net sellers of nearly Rs10000cr during the month of February while yesterday were net sellers worth Rs1733cr. SGX Nifty shed 160 points or 0.8%. US Dow Future fell 150 points or 0.5%.

Brokers Radar - Endurance Tech TGT by Philips Securities at 1720, Nomura TGT on IGL 550, Nomura TGT on Gujarat Gas at 875

Events – LIC Board meeting to decide on proposed IPO, Ashok Leyland board meeting for fundraising plan, and ex-dividend on Balrampur Chini (Rs2.50)


Ashok Leyland, Chola Finance, Divi’s Lab, Glenmark Pharma, Godrej Industries, HUDCO, IDFC, ITD Cementation, IFCI, ITI, MOIL, MSTC, Oil India, Sobha, Voltas, Ujjivan Finance, Suprajit, TN News Print, UCAL Fuel.

Stock Specific News:

·         LIC IPO - The government is considering selling about 5% of the shares it holds in a state insurer as it prepares to file documents for the country’s biggest initial public offering. The government plans to offer 31.6cr shares of the 6.32 billion shares it owns in LIC and no fresh stock will be issued – Media report. - Positive for Insurance stocks like SBI Life, ICICI Prudential Life

·         Strides Q3 Ebitda and Ebitda margin below expectation - Net loss Rs122cr vs profit Rs35.1cr - expectation loss Rs53.4cr, Ebitda Rs4cr (down 98% YoY) - expectation profit Rs44.7cr,  Ebitda margin at 0.20% vs 19.2% (YoY) - expectation  5.6%  and Income Rs794cr (down 4.5% YoY) - Expectation Rs798cr

·         Lalpath Labs Q3 net profit Rs58.2cr (down 39% YoY), Ebitda Rs109 (down 23% YoY), Ebitda margin 22% vs 30.7% and Income Rs497cr (up 10% YoY) - poor results

·         BEML Q3 -Net profit Rs78.6cr (up 184% YoY), Ebitda Rs74.3cr (up 73.5% YoY), Ebitda margin 6.6% vs 5.9% (YoY) and Income  Rs1133cr (up 56% cr

·         Bharat Forge Q3 – Ebitda and Ebitda margin marginally below estimates - Net profit Rs337.3cr (up 248% YoY) - expectation Rs241cr, Ebitda Rss407.7cr (up 75% YoY) - expectation Rs409.3cr, Ebitda margin 25.4%  vs 20.7% (YoY) - expectation 27% and Income Rs1602cr (up  55% YoY) - expectation Rs1515cr

·         MRF Q3 – Poor Ebitda margin - Net profit Rs149.3cr (down 71% YoY), Ebitda margin at 10% vs 21% (YoY), Income Rs4920 (up 6% YoY)

·         Page  Industries Q3 net profit Rs174.6cr (up 13.6% YoY) - expectation Rs159cr, Ebitda Rs251cr (up 11% YoY) - expectation Rs234.2cr, Ebitda margin21.1% vs 24.4% - Expectation 21.5% , dividend Rs100 per share and income Rs1190cr (up 28% YoY)- expectation Rs1089cr

·         M&M announced inline with expected Q3 results - Revenues up 8.4% at Rs 15,239 crore  - Estimate: Rs 15,088 crore, Net profit (after exceptional items) up 155% at Rs 1,353.07 crore -estimate: Rs 1,017 crore, Ebitda down 24.3% at Rs 1,805.82 crore -Estimate Rs 1,833 crore and Ebitda margins at 11.9% vs 17% - estimate at 12.2%

·         Hindalco Q3 Net profit Rs3680cr (up 96% YoY) - Bloomberg expectation Rs3334cr, Ebitda Rs7620cr (up 38% YoY) - Bloomberg estimates Rs7329cr, Ebitda margin 14.5% vs 15.8% (YoY) and Income Rs50270cr (up 44% YoY) - Bloomberg estimates Rs47200cr

·         Tata Chemical Q3 net profit Rs310cr (up 93% YoY) - expectation Rs216cr, Ebitda margin 17.4% - expectation 16.7%, Ebitda up 16% at Rs 545.14 crore – expectation Rs524cr and Income Rs3140cr (up 20% YoY) - expectation Rs3142cr

·         Sun TV Q3 net profit Rs457cr (up 3.4% YoY), dividend Rs2.5 a share, other income Rs42cr (down 32% YoY), ebitda Rs722cr (up 20.5 YoY) and income Rs10.33cr (up 6.3% YoY)

·         Alembic Q3 Net profit Rs176cr (down 40% YoY) - expectation Rs158cr, Ebitda Rs269cr (down 33% YoY) - expectation Rs248cr, Ebitda margin 21% vs 27.8% - expectation 19.3%, Ebitda margin 69.8% and Income Rs1270cr (down 3.1% YoY) - expectation Rs1035cr

·         PEL Q3 net profit Rs 855cr (up 9.7% YoY) - expectation Rs187cr and Income Rs3816cr (up 20.4% YoY) - expectation Rs3142cr

·         Amaraja Q3 net profit Rs145cr (down 25% YoY) - expectation Rs179cr  and income Rs2370cr (up 21% YoY)- expectation Rs2313cr

·         Zomato Q3 net loss Rs63.2cr vs loss Rs352.6crr  and income Rs1112cr (up 82.5% YoY) – impressive results

·         Hero Motocorp announced inline with expected Q3 results - Revenue down 19.36% at Rs 7,883.27 crore – expectation Rs7744cr,  Net profit down 36.73% at Rs 686.13 crore – expectation Rs702cr, Ebitda down 32.09% at Rs 960.01 crore – expectation Rs939cr and Ebitda Margin at 12.2% Vs 14.5% - expectation 12.1%

·         G R Infraprojects: 3Q FY22 results - Weak operating performance - Revenues declined by 18% YoY to Rs1820cr during 3QFY22 (+7% QoQ). EBITDA margins came at 14.0% (812 bps down YoY). EBITDA fell by 48% YoY to Rs250cr, Adjusted PAT fell 59% YoY to Rs130cr.

·         Tata Steel Long Products: The company has approved fundraising from Tata Steel by way of issuance of unlisted Non-Convertible Redeemable Preference shares for Rs 13,300 crore to meet the financial requirements for the acquisition of Neelachal Ispat – positive

·         Burger King: The company launched its QIP issue on Thursday and approved the floor price of Rs 136.05 per share (CMP 138). The floor price is at a discount of 0.18% to Thursday's closing price.

·         Torrent Power: The company will acquire Visual Percept Solar Projects which operates 25MW solar power, from Blue Diamond Properties and Balrampur Chinni Mills at Rs 163 crore. - positive

·         Prestige: The company has concluded a Phase II assets deal of Rs 1,016.4 crore with Blackstone Group reducing its debt by Rs 340.9 crore.- positive

·         CCL Products - The company has approved the proposal for expansion of the installed manufacturing capacity of Instant Coffee at Ngon Coffee Company – Positive

·         Karur Vyasa: The company has appointed Ramshankar R as chief financial officer. – Positive

·         Sterling and Wilson: Shapoorji Pallonji and Khurshed Daruvala have sold 1,53,80,904 and 42,86,846 equity shares of the company to Reliance New Energy – positive

·         Manali Petrochemicals: The company has approved the proposal for setting up a new entity in Germany by AMCHEM Speciality Chemicals, Singapore, as part of its future plans for Notedome, a step-down subsidiary. - Positive

·         Olectra Greentech: The company has acquired 2,600 equity shares representing a 26% stake at Rs 101 each in Evey Trans (Blr). – positive

·         Quess Corp: The company has appointed Guruprasad Srinivasan as Group CEO. The company has also increased its equity stake in Heptagon Technologies from 49% to 60.67% through a subscription of 6,342 equity shares for Rs 15,768 per share. Further, it will also receive 1,902 shares at the same price for a loan agreement signed in September 2018. – Avoid

·         SpiceJet - Supreme Court asks Kalanithi Maran to consider SpiceJet's proposal to pay Rs600cr to settle the dispute - positive

·         ACC has bagged the limestone block at Kannur in Wadi, Karnataka through an e-auction and announced a dividend of Rs58 a share - positive

·         Laurus Labs received purchase orders from a leading global life sciences company. The supplies will commence from March 2022. The company has not shared the size of the order. - positive

·         Godawari Power unit resumed operations at solar power plant - positive

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