Market Highlights

---

Get the latest Indian stock / share market highlights, BSE/NSE stock news, business research reports & details - updated daily by Money Times.

---

June 21, 2023

• *Very Good Morning!!!*
• *US Markets in Detail...*
• *SGXNifty: 18,883: +2: +0.01%*
• *In Ashes*: Aus bt Eng by 2 wkts (27 balls left)..thanks to a captain innings knock by Pat Cummins.
• *IDEA FORGE*
• Issue Price around 750/-, last heard gmp 565-575…
• *Provisional Cash Rs. In Crs. (20th June)*
• FIIs -1,942 (11,734 – 13,676)
• DIIs +1,972 (9,851 – 7,879)
• Sensex: 63,328: +159: +0.25%
• Nifty: 18,817: +61: +0.33%
• BankNifty: 43,767: +133: +0.30%
• NiftyIT: 28,931: +223: +0.78%
• MIDCAP: 35,329: +171: +0.49%
• Dow: 34,054 (-245) (-0.71%)
• S&P: 4,389 (-21) (-0.47%)
• Nas: 13,667 (-22) (-0.16%)
• Brazil: 119,622 (-235) (-0.20%)
• Ftse: 7,569 (-19) (-0.25%)
• Dax: 16,111 (-90) (-0.55%)
• Cac: 7,294 (-20) (-0.27%)
• MOEX: 2,804 (-11) (-0.40%)
• WTI Oil: $70.5 (-1.78%)
• Brnt: $75.48 (-0.8%)
• Natural Gas: 2.49 (-5.32%)
• Gold: $1,948 (-1.19%)
• Silver: $23.45 (-3.67%)
• Copper: $389 (-0.13%)
• Cotton: $80.70: +0.75%
• Copper (LME): $8,546 (-9) (-0.11%)
• Alluminum (LME): $2,197 (-34) (-1.52%)
• Zinc (LM): $2,422 (-56) (-2.25%)
• Tin (LME): $28,260: +17: +0.06%
• Eur-$: 1.0913
• GBP-$: 1.2762 (-0.2%)
• Jpy-$: 141.46: +0.4%
• Re: 82.1163: +0.21%
• USD-RUB: 84.36 (-0.4%)
• US10yr: 3.72% (-1.08%)
• GIND10YR: 7.059: +0.09%
• $ Index: 102.527 (%)
• US Vix: 13.88 (-2.18%)
• India Vix: 11.13 (-0.89%)
• BalticDry: 1,065 (-11) (-1.02%)
• *ADR/GDR*
• Cogni (-0.68%)
• Infy (-1.20%)
• Wit (-0.86%)
• IciciBk (-1.09%)
• HdfcBk (-0.38%)
• DrRdy: +0.23%
• TatSt: +0.73%
• Axis: +0.68%
• SBI (-0.29%)
• RIGD (-0.32%)
• INDA (-0.28%) (IShares MSCI INDIA ETF)
• INDY (-0.11%) (IShares MSCI INDIA 50 ETF)
• EPI (-0.09%) (Wisdom Tree India Earning)
• PIN(-0.13%) (Invesco India Etf)
• U.S. stock futures were near flat on Tuesday evening as investors took a breather from last week’s market rally.
• Futures tied to the Dow Jones Industrial Average slipped 21 points, or 0.06%. S&P 500 futures inched down by 0.06% and Nasdaq 100 futures lost 0.03%.
• Asian equity markets were poised to open lower Wednesday following declines in the US, with investors growing cautious ahead of the Federal Reserve chief’s congressional testimony. The dollar rose with Treasuries in a sign of demand for havens.
• *U.S. stocks softened on Tuesday, closing in negative territory as investors began the holiday-shortened week by taking profits in the wake of a sustained rally amid signs of weakening global demand.*
• *The S&P 500 notched its first two-day losing streak in four weeks as the U.S. equities benchmark traded off recent 14-month highs. The Nasdaq 100 ended the session little changed as shares of Tesla Inc. buttressed the tech-heavy gauge from deeper losses. Economic bellwether FedEx Corp. tumbled 5 per cent in afterhours trading after 2024 outlook fell short of analysts’ highest estimates on weakened demand.*
• *Investors await testimony on Wednesday from Federal Reserve chair Jerome Powell to Congress this week as data suggests the economy remains healthy.*
• Investors caught between fear of missing out and concerns markets have run too far, too fast are contending with overblown valuations and hawkish signals from the Federal Reserve.
• The AI frenzy which has been driving much of the recent gains, is sure to be a topic during second-quarter conference calls. “The issue is going to be: to what degree does that show up in fundamentals?” Scott Chronert, global markets strategist at Citigroup, told Bloomberg Television.
• “What we’re going to run into is this disconnect with how hard the market has run versus where earnings expectations are,” he said.
• On Friday, the Dow Jones Industrial Average fell 109 points, or 0.32%, to 34299, the S&P 500 declined 16 points, or 0.37%, to 4410, and the Nasdaq Composite dropped 93 points, or 0.68%, to 13690.
• *Volume on U.S. exchanges was 11.15 billion shares, compared with the 11.36 billion average for the full session over the last 20 trading days.*
• *What drove markets*
• Investors pulled back from equities on Tuesday, following the U.S. long weekend in honor of the Juneteenth federal holiday. The S&P 500 gained 2.6% last week, its fifth week in a row of gains, as the tech-heavy Nasdaq Composite took its winning run to eight weeks.
• *Investors now look to Powell's two-day testimony before Congress, starting with the U.S. House Financial Services Committee on Wednesday, which will be scrutinized for clues regarding how long the central bank will keep its restrictive policy in place.*
• *The path of U.S. monetary policy is another wild card. Federal Reserve Chair Jerome Powell will give his semi-annual report to Congress on Wednesday. Policymakers at the Fed kept interest rates unchanged at their latest meeting but warned of more tightening ahead. Investors also await the outcome of policy meetings in Turkey, the UK and Switzerland.*
• “Powell seemed to meander between the need to restore price stability, but also suggesting that the Fed could wait to see how the economy responds to the unfolding of the 500 basis points working their way into the broader economy,” Krosby said.
• With sentiment upbeat and markets “overbought,” “Powell could provide a modicum of support to the market’s advance, but if he suggests that he’s in the hawkish camp, markets may need to continue to unwind gains until a more viable catalyst emerges,” Krosby added.
• “Our skepticism around the sustainability of the rally in U.S. market-cap weighted indexes stems primarily from continued investor belief that the Fed is bluffing on holding rates higher for longer,” Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, wrote in a note.
• *The Fed decision last week came with forecasts for higher borrowing costs of 5.6 per cent in 2023, implying two additional quarter-point rate hikes or one half-point increase before the end of the year.*
• *That contrasts with market pricing for some 20 basis points of tightening in the remainder of the year.*
• U.S. Treasuries yields traded lower after an earlier bounce amid an unexpected surge for housing starts in May, the most since 2016. The yield on the 10-year fell 4 basis points to 3.72 per cent while the policy-sensitive two-year was at 4.68 per cent.
• “I think what happened is that, investors are optimistic for the longer term, but believe that we have gotten ahead of ourselves in terms of market performance and sector leadership,” Sam Stovall, chief investment strategist at CFRA Research said in a phone interview.
• Investors may be thinking hard about whether the market’s recent pushes higher are for real, according to Kent Engelke, chief economic strategist and managing director at Capitol Securities Management. “How do we substantiate this rally? … In the immediacy, the market has rallied based on the belief of lower short-term interest rates by year end.”
• Last week, investors learned of cooling inflation data for May and a pause on Fed rate hikes for now, but they also had to gauge the Fed’s hints that still more rate hikes could be coming this year, despite the skip in June.
• “Powell’s comments may help shape how the market—and especially the tech sector, which has led this year’s rally—reacts to Fed policy in the near term,” according to Chris Larkin, managing director, trading and investing at E*TRADE from Morgan Stanley.
• Homebuilding stocks bucked the downtrend on Tuesday after the latest data on housing starts and building permits came in stronger than expected. The iShares U.S. Home Construction ETF (ITB) added 1%.
• *Tuesday’s U.S. economic data included housing starts data, which showed a 21.7% surge in May after a revised 2.9% drop in April. Building permits also climbed 5.2% in May. The numbers — led by a surge in the midwest — reflect strong demand and short supply in the existing home sales market.*
• “With the labor market less tight, supply chains functioning better, and lumber cheaper than in 2021 and 2022, homebuilders are catching up on their huge backlog of planned projects,” said Bill Adams, chief economist for Comerica Bank in Dallas.
• “Looking across housing starts, permits, and the backlog of permitted but unstarted projects, homebuilding is likely to be a net tailwind to economic growth in the second half of 2023,” according to Adams.
• *Earlier, China cut its 1- and 5-year lending rates by 10 basis points, which investors viewed to be modest, particularly after a Friday state council meeting didn’t result in other concrete measures. According to Societe Generale, there were expectations the 5-year rate, the benchmark for mortgages, would be cut by 15 basis points.*
• There’s waning consumer confidence in China, according to Grant Feng, a Vanguard senior economist.
• “As pent-up demand fades and external headwinds intensify, growth will be contingent upon improvement in the labor market and income growth and a gradual recovery of household and business confidence, as well as additional policy support,” Feng said. The Hang Seng index HSI, -1.54% fell 1.5%.
• *Alibaba* the Chinese internet giant, also was in the spotlight after announcing that its CEO and chairman will step down to focus on the cloud division, with Brooklyn Nets owner Joseph Tsai becoming chairman.
• *Gold and oil retreated after disappointment over China’s stimulus measures. U.S.-listed Chinese stocks also tumbled with Alibaba Group Holding Ltd. dropping about 4.2 per cent following the surprise replacement of its chief executive and chairman.*
• *European stock markets closed lower Tuesday as investors remained cautious over the outlook for the global economy, particularly following recent data from China.*
• Investors will be monitoring the U.K. this week, with inflation data due Wednesday and a monetary policy announcement Thursday. A 25 basis point hike is widely expected after the European Central Bank hiked and the Federal Reserve paused last week.
• U.K. grocery price inflation hit its lowest level this year at 16.5% in the four weeks to June 11, research company Kantar said Tuesday, down from the 17.2% rate observed in the four weeks to 14 May.
• German producer prices rose 1% year-on-year in May, logging the slowest rate since January 2021, official statistics data showed.
• The hike follows a 4.1% annual increase in April. Prices in May were 1.4% lower than the prior month.
• *In Geo Political news:*
• Russia on Tuesday struck military and infrastructure targets in Ukraine's capital Kyiv and across other parts of the country, including western areas far from the front lines, Ukrainian officials said.
• President Volodymyr Zelenskiy praised Ukraine's air defences for downing more than 30 drones and defiantly said that Ukraine's forces were destroying Russian forces in the two main theatres of the conflict, the east and south.
• *Companies in focus*
• • *Alibaba Group Holding Ltd*. shares finished down 4.5% after the Chinese e-commerce said Daniel Zhang will step down from chairman and chief executive officer roles. He will stay on to lead the cloud business, due to be spun off.
• • Nio Inc. , the Chinese EV maker, fell 0.5%, as U.S.-listed stocks played catchup with two days of weakness for China markets. Goldman Sachs cut its growth forecasts for the country and the People’s Bank of China on Tuesday announced cuts in lending rates, the extent of which which disappointed some.
• • WeWork Inc. dropped 9.2% as shareholders voted overwhelmingly for a reverse stock split, according to a Securities and Exchange Commission filing on Friday.
• • Virgin Galactic Holdings Inc. shares ended 27.1% higher, continuing a rally from last week. The space travel company is preparing for its first commercial flight later this month.
• *Key events this week:*
• # Federal Reserve Chair Jerome Powell delivers semi-annual congressional testimony before the House Financial Services Committee, Wednesday
• # Federal Reserve Bank of Chicago President Austan Goolsbee speaks, Wednesday
• # Eurozone consumer confidence, Thursday
• # Rate decisions in UK, Switzerland, Indonesia, Norway, Mexico, Philippines, Turkey, Thursday
• # US Conference Board leading index, initial jobless claims, current account, existing home sales, Thursday
• # Federal Reserve Chair Jerome Powell delivers semi-annual testimony to Congress before the Senate Banking Committee, Thursday
• # Cleveland Fed’s Loretta Mester speaks, Thursday
• # Eurozone S&P Global Eurozone Manufacturing PMI, S&P Global Eurozone Services PMI, Friday
• # Japan CPI, Friday
• # UK S&P Global / CIPS UK Manufacturing PMI, Friday
• # US S&P Global Manufacturing PMI, Friday
• # Federal Reserve Bank of St. Louis President James Bullard speaks, Friday
• *Currencies*
• # The Bloomberg Dollar Spot Index rose 0.1 per cent
• # The euro was little changed at US$1.0913
• # The British pound fell 0.2 per cent to US$1.2762
• # The Japanese yen rose 0.4 per cent to 141.46 per dollar
• *Cryptocurrencies*
• # Bitcoin fell 0.2% to $28,126.39
• # Ether fell 0.4% to $1,777.74
• *Bonds*
• # The yield on 10-year Treasuries declined three basis points to 3.73 per cent
• # Germany’s 10-year yield declined 11 basis points to 2.40 per cent
• # Britain’s 10-year yield declined 15 basis points to 4.34 per cent
• *Commodities*
• # West Texas Intermediate crude fell 1.8 per cent to US$70.50 a barrel
• # Gold futures fell 1.1 per cent to US$1,949.90 an ounce
• N.B.: The above information is sourced from the various sites on the internet
• *Sunidhi-Himanshu*
• *Consumer Cos Slash June Output to Clear Inventory: AMID LOWER DISCRETIONARY SPENDING SINCE 6-7 MONTHS…*
• Apparel, electronics & phone sellers look to offload record high stocks before Diwali, by when they see sales reviving
• Companies in segments such as apparel and fashion, electronics and smartphones have chosen to steeply reduce production and supplies by up to 50% this month because of low demand and high unsold inventory, which they want to clear before the festive season.
• Most chief executives have predicted a demand revival by Diwali and, based on inventory clearance by then, indicated to manufacturers festive season orders higher than last year. Companies said inventory levels are currently at record highs due to slowerthan-expected demand in the past six to seven months.
• Godrej Appliances business head Kamal Nandi said that since summer season sales of air-conditioners and refrigerators failed to pick up this year, production was slashed up to 50% in the industry, compared to the earlier planned cut of 30%. “Most companies were running production at peak capacity till last month, hoping demand will pick up, which didn't happen,” he said.
• *Slowing Supply, Piled Up Inventory*
• “Festive season production will also start late — from around August-September since Diwali is late this year — to allow the inventory to be sold out,” said Nandi of Godrej Appliances.
• Pardeep Jain, managing director of Jaina Group — which manufactures smartphones for several companies, besides retailing its own Karbonn brand — said the mobile phone market was down 30% and companies have adjusted production accordingly.
• Apparel brands, retailers and manufacturers too said stocks have piled up.
• Aditya Birla Fashion and Retail Ltd managing director Ashish Dikshit told analysts recently that inventory has been high as sales were below expectations, and that ABFRL has curtailed some purchases for fresh inventory. He said the lower end of the market was more affected till recently but itnow “appears that it is a more widespread sort of slowdown.”
• Page Industries, which sells the Jockey brand, told analysts recently that inventory was at an alltime high of 120 days, against 92 days last year. Managing director VS Ganesh said the company has tuned its “supply chain in such a way that going forward, supplies are going to be lower than what we are going to sell so we can bringthe inventory levels down.”
• *DOWNWARD TREND*
• Consumers started reducing non-essential spending such as that on apparel, lifestyle products, electronics and dining out since Diwali last year due to inflation, increase in interest rates, job losses in some sectors such as startups and IT, and an overall slowdown in the economy.
• Companies had not seen such a sudden slowdown that piled up inventory. Summer in the North and several other parts of the country was also muted this year, which further impacted sales of seasonal products.
• Retailers have planned earlier ‘end of season’ sales to clear stock.
• “There has been a demand constraint and we have tightened our buying accordingly. In select categories, such as denims, we are cutting orders by 10%,” said Satyen Momaya, chief executive of French apparel brand Celio.“We also have a 10-15% ‘open to order’ strategy, which we generally implement after assessing the market. This time, we don’t think we will opt for it.”
• ICRA has said revenue growth of listed retail entities will moderate to 10% this fiscal, after reporting a stellar 51% year-on-year growth in FY23 due to demand pressures.
• Market researcher IDC India, in a recent report, said the Indian smartphone market declined by 16% year-on-year in JanuaryMarch, while the computer market dropped a steeper 30%. IDC said inventory levels are high, and it estimates flat growth for the smartphone market this calendar year.
• However, all leading listed consumer-facing companies have forecast a revival in discretionary spending by Diwali this year, led by improvement in the inflation and macroeconomic scenario. Companies are also placing higher festive orders than last year.
• *Sunidhi-Himanshu*
• *GLOBAL-MARKET INSGHITS