After a substantial slump in the previous session, domestic equity benchmark indices opened on Thursday on a positive note. Major US stock indexes ended down slightly in the overnight session, losing early gains tied to remarks by Federal Reserve Chair Jerome Powell that the US central bank is “strongly committed” to bringing down inflation, while sharply lower oil prices weighed on energy shares. In Asia on Thursday, shares fell in Japan and South Korea, while it rose in Hong Kong, Shanghai, and Australia.
Midcap pharma stock falls on record date of bonus shares issue
Shares of Ajanta Pharma plunged about 2% to ₹1,197 apiece on the BSE in Thursday’s trading session on the record date of its bonus shares issue. The pharma stock started trading ex-bonus on Wednesday, June 22.
Corporate profit to GDP ratio at decade high in 2022: Motilal Oswal
The corporate profit to Gross Domestic Product (GDP) ratio rebounded to a decade high of 4.3 per cent and 4.5 per cent for the Nifty-500 universe and listed India companies, respectively, brokerage house Motilal Oswal Financial Services said in a report.
The recovery was driven by the expansion in the economy, after a Covid-led contraction in 2021, while corporate profit rose at a faster rate of 48 per cent year-on-year for the Nifty 500 companies.
“The growth in profit, however, was hardly broad-based and driven only by three sectors: BFSI, oil and gas (O&G), and metals. More than half of the incremental growth was steered by BFSI, underpinned by a modest revival in credit growth and improvement in asset quality trends,” it said.
Notably, India’s corporate profit, listed and unlisted companies combined, to GDP ratio fell to 2.2 per cent from 7.8 per cent during 2008-20 period, the report said.
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Tokyo stocks close flat
Tokyo stocks closed flat on Thursday as investors eyed signs of growing economic activity in Japan after the easing of pandemic restrictions.
The benchmark Nikkei 225 index ended up 0.08 percent, or 21.70 points, at 26,171.25, while the broader Topix index was down 0.05 percent, or 0.91 points, at 1,851.74.
Although the Tokyo market started with gains led by blue-chip exporters, market sentiment “lacked the appetite for further active buying”, said Mamiko Katayama, a Daiwa Securities strategist.
Markets fluctuate, oil falls again as recession warnings build
Asian markets mostly rose Thursday on bargain buying after the previous day’s battering, though oil extended losses after US Federal Reserve boss Jerome Powell admitted the economy could tip into recession as the bank hikes interest rates to fight runaway inflation.
Soaring prices and the battle by central banks to rein them in have sent a chill through global trading floors this year, while investors are also having to deal with the uncertainty wrought by the Ukraine war and patchy pandemic recovery.
Commentators have warned for some time that the world economy could be heading for another contraction owing to the sharp increase in borrowing costs and rampant inflation, which is at decades highs in several countries.
Oil falls as investors eye recession risks
Oil prices continued to retreat on Thursday as investors reassessed the risks of recession and the impact of interest rate hikes in major economies on fuel demand.
U.S. West Texas Intermediate (WTI) crude futures fell $1.4, or 1.3%, to $104.78 a barrel by 0643 GMT. Brent crude futures fell $1.3, or 1.2%, to $110.40.
Both benchmarks tumbled by as much as $3 a barrel in early morning Asian trade, after plunging around 3% in the previous session. They are at their lowest levels since mid-May.
Australian shares end higher as banks, tech gain
Australian shares ended higher on Thursday as gains in financial and technology stocks outweighed losses in mining and energy sectors, while investors assessed the risk of a global recession amid a string of rates hikes to stamp out inflation.
The S&P/ASX 200 index ended 0.31% higher at 6,528.4.
Prabhudas Lilladher on P.I. Industries
Rating: BUY | CMP: Rs2,485 | TP: Rs3,340
We interacted with senior management of PI Industries (PI) to take an update on the business and outlook ahead. Key highlights: (a) The company remains confident on achieving growth guidance of 18-20% YoY for FY23 in both exports and domestic segment (supported by lower base of last year); (b) remunerative commodity prices bode well for domestic market; (c) delayed monsoons have an impact on placements; however, remains hopeful of monsoon revival; (d) to launch 5-6 products in domestic market in FY23; (e) CSM business continues to be the shop stopper with mix changing to 80:20 for Agri and non-agri, going forward; (f) Pharma acquisition still in evaluation stages; likely to be done in next couple of quarters.
Going forward, PI remains confident on the core business and its growth guidance with margins likely to improve from current levels, primarily led by strong enquiries in CSM business and new launches in domestic segment. We believe, the stock has corrected ~35% from its recent highs, thus providing a good entry point with strong earnings visibility in its core business. We broadly maintain FY23/FY24 EPS. We expect PI to report revenue/PAT CAGR of 18%/ 23% (FY11-22, 20%/26%) over FY22-24E. Maintain ‘BUY’ with unchanged TP of INR3,340 based on 40xFY24 EPS.
India aims to keep FY2023 fiscal deficit at last year’s level – sources
India’s government will not be able to cut its budget deficit this fiscal year as previously projected, officials said, but will seek to cap the shortfall at last year’s level to prevent a major deterioration in public finances.
Efforts to maintain some fiscal discipline reflect New Delhi’s concern around risks to its sovereign credit rating but will likely limit the government’s firepower to contain inflation and provide relief to households and businesses.
In February, Prime Minister Narendra Modi’s government set a fiscal deficit target of 6.4% of gross domestic output (GDP) for the year that started on April 1, compared with a deficit of 6.7% last year.
The sources said that while increased spending to provide relief from inflation meant the government would miss this year’s target, policymakers would seek to limit the deviation to 30 basis points.
European stocks fall as oil, metal prices extend losses
European shares fell on Thursday, dragged down by energy and mining stocks due to sliding commodity prices on worries about slowing economic growth, with several broker calls also spurring big moves in stocks.
The continent-wide STOXX 600 index dropped 1.1% by 0724 GMT, with oil & gas stocks slipping 1.8% as crude prices fell almost 2%.
Miners shed 2.2% as copper and other metals extended recent declines on growing fears about a recession.
Gold dips after US Fed chief pledges to keep up inflation fight
Gold prices eased on Thursday, pressured by expectations of aggressive interest rate increases after the U.S. Federal Reserve chief doubled down on the central bank’s fight against inflation.
Spot gold fell 0.2% to $1,834.33 per ounce by 0733 GMT. U.S. gold futures eased 0.1% to $1,835.60.
Cryptocurrency Polygon’s price rallies 27% in 24 hours. Here’s why
Cryptocurrency Polygon (Matic) price today rallied over 27% to $0.50 in the last 24 hours, as per CoinGecko, with the digital token up 15% in the past seven days. Polygon, which had hit an all time high of $2.92 on Dec 27, 2021, has fallen about 80% in 2022 (YTD) so far.
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GST Council to consider rate change on only a handful of items in meet next week
The GST Council, which is scheduled to meet next week, will take up changes in tax rates on only a handful of items where the fitment panel has recommended a revision, as per the agenda document reviewed by Mint.
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