MARKET WRAP: Sensex ends 209 pts up, Nifty at 10,843 post Trump-Kim meeting

The markets ended higher on Tuesday, following the US-North Korea summit in Singapore which ended on a positive note.

The S&P BSE Sensex ended at 35,693, up 209 points while the broader Nifty50 index settled at 10,843, up 56 points.

Among sectoral indices, the Nifty Pharma index ended over 2.5% higher led by a rise in the shares of Lupin, Dr. Reddy's Laboratories and Glenmark Pharmaceuticals.
 

United States President Donald Trump on Tuesday said his one-on-one meeting with North Korean leader Kim Jong-un was "very, very good" and they have an "excellent relationship", according to media reports.

Trump and Kim signed a “comprehensive” document following a historic summit in Singapore aimed at the denuclearisation of the Korean peninsula.

Before signing what Trump described as a “comprehensive letter”, Kim said the two leaders had a historic meeting “and decided to leave the past behind. The world will see a major change.”

Trump said he had formed a “very special bond” with Kim and that relationship with North Korea would be very different.

The two leaders met at the resort island of Sentosa along with their respective translators earlier in the day and shared a historic handshake as they met for the first time.

Post this summit, investors will now focus on policy meeting of the US Federal Reserve, which is expected to raise rates. The outcome of the policy meeting is likely to be announced late on Wednesday, June 13, 2018.

OTHER CUES

Back home, investors will await domestic macro data like IIP and CPI, due later in the day today. India’s retail inflation jumped further in May to a four-month high, primarily driven by a surge in energy prices, according to a Reuters poll of economists, suggesting more policy tightening from the central bank is coming.

The poll of more than 30 economists taken 4-8 June showed annual consumer price inflation likely increased to 4.83% last month, the highest since January and above April’s 4.58%.

In global markets, dollar hovered near 3-week highs on Tuesday and Asian shares gained. Japan's Nikkei paring early gains to close 0.3 per cent higher after earlier rising as much as 0.9 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan seesawed between positive and negative territory, and was last up 0.15 per cent. South Korean shares were a tad weaker while Chinese shares were buoyant after starting in the red. The blue-chip CSI 300 index jumped about 1.3 per cent.

(with Reuters inputs)

4:09 PM

MARKET COMMENT Jayant Manglik, President, Religare Broking

After some consolidation, the Indian equity benchmark indices ended Tuesday’s session on a strong note, with the Nifty closing at 10,843 levels, up 56 points or 0.5%. Amongst the broader market indices, BSE Midcap outperformed, with gains of 0.9%, whereas BSE Smallcap closed in-line with benchmark. Barring Metals and Telecom, all the other sectoral indices ended in green with Banks, Capital Goods, FMCG and IT being the top performers. Amongst the global indices, European markets were trading lower, while Asian markets closed on a mixed note.

 

Going forward, market participants would be actively tracking global developments, progress of monsoon, currency movement and crude oil prices. Furthermore, FOMC meet outcome scheduled tomorrow will be crucial and it would dictate further course of market. We expect volatility to remain high in the near term and hence would advise investors to stick to only fundamentally sound companies

3:43 PM

Nifty Pharma index ends 2.58% higher. Top gainers:

COMPANY	LATEST	PREV CLOSE	GAIN( )	GAIN(%)
LUPIN	855.00	809.50	45.50	5.62
DR REDDY'S LABS	2190.65	2083.20	107.45	5.16
GLENMARK PHARMA.	588.05	564.40	23.65	4.19
DIVI'S LAB.	1064.15	1024.60	39.55	3.86
AUROBINDO PHARMA	595.55	576.45	19.10	3.31

3:39 PM

Nifty sectoral gainers of the day

3:35 PM

BSE Sensex: Dr. Reddy's, SBI among top gainers of the day; Bharti Airtel top loser

3:31 PM

Market at close

 

The S&P BSE Sensex ended at 35,693, up 209 points while the broader Nifty50 index settled at 10,843, up 56 points.

3:24 PM

HIGHLIGHTS BofA Merrill Lynch June Fund Manager Survey 

·       Average cash balance ticks down to 4.8% in June, from 4.9% in May, but still above the 10-year average of 4.5%

 

·       Allocation to US equities climbs 16ppt to net 1% overweight, the first time investors surveyed have gone overweight in 15 months

 

·       64% of respondents think the US has the most favorable outlook for profits, a 17-year high; all other regions have net negative profit outlooks

 

·       A record 42% of investors surveyed say companies are over levered, far exceeding the 32% peak in 2008; overall an all-time high of net 34% think corporate balance sheets are overleveraged 

 

·       June rotation shows investors are selling cyclical plays (banks, emerging markets and Eurozone equities) in favor of defensive sectors and US equities

 

·       When asked what catalyst is most likely to stop Fed tightening, 69% of investors surveyed state domestic reasons (lower inflation, higher unemployment, Fed independence); 23% cited emerging market contagion or a debt crisis in the peripheral EU

 

·       This month, the most commonly cited tail risk to the markets is a trade war (31%), followed by a Fed/ECB hawkish policy mistake (26%) and a Euro/EM debt crisis (23%); trade tensions have been the dominant macro concern for investors in 2018

 

·       Allocation to commodities hits a new 8-year high, rising 1ppt to net 7% overweight, the highest since April 2012 when WTI was $105/bbl

 

·       “Long FAANG+BAT” remains the most crowded trade identified by investors for the fifth straight month and most crowded trade outright since “Long USD” in January 2017; the top three in June are rounded out by “Short US Treasuries” (16%) and “Long USD” (9%) 

 

·       Expectations for faster global growth hold steadywith just net 1% of investors indicating they think the global economy will strengthen over the next 12 months, barely above the boom/bust threshold and still at their lowest level since February 2016

 

3:22 PM

BGR Energy surges 18% post Rs 4.3 billion order win from Nuclear Power Corp

Shares of BGR Energy Systems have surged 18% to Rs 108 per share on the BSE on back of heavy volumes after the company announced that it has secured two orders worth of Rs 4.31 billion from Nuclear Power Corporation of India for Kudankulam Nuclear Power projects – 3 & 4. READ MORE

 

3:20 PM

RBI guv faces house panel, grilled on bad loans, bank frauds, cash crunch

RBI Governor Urjit Patel Tuesday faced tough questions from a parliamentary panel on bad loans, bank frauds, cash crunch and other issues even as he assured the members that steps were being taken to strengthen the system, sources said.

 

Sources present at the meeting of the Parliamentary Standing Committee on Finance said the RBI Governor expressed confidence of tiding over the crisis regarding non-performing assets (NPAs) READ MORE

Urjit Patel, Governor, RBI during a press conference announcing the RBI monetary policy in Mumbai on Wednesday | Photo: Kamlesh Pednekar

3:16 PM

With US rate hike in the bag, focus turns to Fed's policy language

With the Federal Reserve virtually guaranteed to raise interest rates this week, investors are focused on how the US central bank characterises its monetary policy as borrowing costs return to more normal levels amid an ongoing economic expansion. READ MORE

 

3:13 PM

SBI hits over three-month high; stock up 15% post Q4 results

Shares of State Bank of India (SBI) hit an over three-month high of Rs 281 per share, up 2% on the BSE, extending their 2% gain in past two days, after a media report suggested that the country's largest lender is looking at recovering more than Rs 400 billion of its stressed assets in the current fiscal. READ MORE

 

3:09 PM

Jyothy Labs, TAKE Solutions, Tata Elxsi hit new high

Shares of Jyothy Laboratories, TAKE Solutions, Tata Elxsi, Bajaj Finance, United Breweries, VIP Industries, Astec Lifesciences and MM Forgings were eight stocks from the S&P BSE 500 and Smallcap index that hit their respective new highs on the BSE in intra-day trade on Tuesday.
 

Jyothy Labs rallied 11% to Rs 487, surpassed its previous high of Rs 470 recorded on May 17, 2018 in intra-day trade. READ MORE

3:04 PM

DCM Shriram gains 7% as board mulls share buyback

Shares of DCM Shriram were up 7% at Rs 290 on the BSE in intra-day trade, after the company announced that board will meet on Monday, June 18, to consider share buyback proposal. READ MORE
 

2:58 PM

Why arbitrage funds score over debt schemes in the medium term

With debt funds remaining volatile for the past eight months now, arbitrage funds stand out. While medium- to long-term debt funds have seen periods of negative returns, arbitrage funds have been stable with consistent returns.

 

Sample this: In the past one year, the average returns from arbitrage funds have been 6.24 per cent. One year returns for the short-term debt funds category are at 4.83 per cent, credit opportunities funds are at 5.43 per cent, income funds are at 2.33 per cent, and dynamic bond funds category returns stand at 0.86 per cent READ MORE

2:56 PM

NEWS ALERT

RBI Governor Urjit Patel to Parliamentary Panel: RBI does not have enough powers to monitor PSBs, RBI's supervisory power doesn’t constitute the power of audit banks

2:52 PM

Investors ready to resuscitate Johnson & Johnson's ailing stock

Johnson & Johnson shareholders have endured a painful year amid worries about prospects for its many businesses, but investors capitalising on the stock's relatively cheap valuation may be set to apply a Band-Aid to the declines READ MORE

Johnson & Johnson said its product was safe. Photo: Reuters