Sensex, Nifty to fall; TCS, Avenue Supermarts, Spicejet, Tata Motors, Dr Reddy's shares eyed

The Indian equity benchmarks, the BSE Sensex and the NSE Nifty, are poised to open lower on Monday, following soft cues from Asian peers and a flat finish on Wall Street on Friday. The weak trends on SGX Nifty also indicated a gap-down opening for the domestic bourses, with SGX Nifty futures trading 97 points, or 0.6%, lower at 16,130 levels on the Singapore Stock Exchange at 8:15 AM. This week is going to be action-packed as a slew of macroeconomic data are lined up, including inflation and industrial output numbers, which could set tone for the market. Investors will also track first quarter earnings reports from companies, while global trends and foreign funds movement will also be on the radar. Among others, the rupee-dollar trend and Brent crude oil price will also guide market sentiments. On the global front, the highly-anticipated U.S. inflation numbers and the jobless claims data will be keenly watched.

The Indian share market ended on a positive note for the third straight week ended July 8, supported by softening in commodity prices due to a correction in crude oil prices from the recent peak and fund inflows by foreign investors. The BSE benchmark Sensex added 1,574 points, or 3%, during the week to settle at 54,482 levels, and the broader Nifty gained 468 points, or 2.97%, to 16,221. The top five performers on the Nifty50 pack were Titan Company, Hindustan Unilever, ICICI Bank, Larsen & Toubro, and UPL.

Stocks to watch

TCS: The IT major has reported a 5.2% year-on-year growth in consolidated net profit at ₹9,478 crore for the quarter ending June 30, 2022, compared to ₹9,008 crore in the year ago period. The revenue from operations rose 16.2% YoY to ₹52,758 crore during the April-June quarter of FY23. However, the operating profit margins fell to 23.1% due to wage hikes and the continued rationalisation of employee costs amid high attrition.

IT stocks: Brokerage firm Jefferies has downgraded six major IT companies – Wipro, Tech Mahindra, HCL Technologies, Coforge, Larsen & Toubro Infotech, and Mindtree amid fear of a recession in the U.S., one of the largest markets for these companies.

Tata Motors: The auto major has raised prices of passenger vehicles by 0.55% across variants in the backdrop of the rising input costs.

HDFC, HDFC Bank: The Pension Fund Regulatory and Development Authority (PFRDA) has given nod to the proposed merger of HDFC with its banking subsidiary, HDFC Bank. It has also approved the merger of subsidiaries HDFC Investments Limited and HDFC Holdings Limited, with HDFC.

Avenue Supermarts: The D-Mart chain operator has reported 490% year-on-year growth in profit at ₹680 crore for the quarter ended June 2022, on a low base as earnings in the same period last year were impacted by the Covid-19 pandemic. The revenue from operations jumped 95% YoY to ₹9,807 crore in the first quarter ended June 2022.

Adani Group: Billionaire Gautam Adani-led group has unveiled a plan to participate in the 5G spectrum auction along with Reliance Jio, Airtel, and Vodafone Idea.

Dr Reddy's Laboratories: The pharma company has launched Fesoterodine Fumarate extended-release tablets in the U.S. market, which are used in the treatment of certain bladder-related problems.

Dilip Buildcon: The company’s subsidiary, Bangarupalem Gudipala Highways, has received the financial closure letter from the National Highways Authority of India for Bangalore-Chennai Expressway in Andhra Pradesh. The project cost is ₹1,060 crore.

Power Grid Corporation of India: The state-run company has emerged as a successful bidder for the inter-state transmission system in Madhya Pradesh. The contract includes establishing an inter-state transmission system for "transmission system for evacuation of power from Neemuch SEZ" on build, own operate and transfer (BOOT) basis.

SpiceJet: The company has reportedly received approval from banks and shareholders to hive off cargo and logistics company SpiceXpress from SpiceJet airline. The process will be completed by the first week of August.

Zydus Lifesciences: The drug maker has launched the molecule Sitagliptin in India under the brand names Sitaglyn and Siglyn, which is used in the treatment of Type 2 diabetes.

Here are the key things investors should know before the market opens today:

Wall Street ends flat ahead of inflation data

On Friday, the U.S. stocks ended flat as strong-than-expected macro data reignited prospects of an aggressive rate hike by the Federal Reserve. Investors also remained on edge ahead of the consumer price index (CPI) numbers of June, which is expected to remain elevated due to high commodity prices. The data from the U.S. Labor Department showed that non-farm payrolls rose by 372,000 jobs in June, while the unemployment rate held steady at 3.6%, clearing the way for the central bank to deliver another interest rate increase later this month. The Dow Jones Industrial Average ended 0.2% lower, while the S&P 500 fell 0.1%, and the Nasdaq Composite rose 0.1%.

Asian stocks mixed

Shares in the Asia-Pacific region started the week on a mixed note as investors were concerned about surging inflation and prospects of interest rate hike by the U.S. central bank after strong macro numbers. Investors kept a close eye on the U.S. market this week ahead of the release of the June consumer price index on Wednesday for more clarity on the Federal Reserve’s future policy action.

Regional heavyweight Japan’s Nikkei 225 was up 0.9% in early trade, while South Korea’s Kospi dropped 0.3%.

The Hang Seng index in Hong Kong was the worst performer in the region with a sharp decline of 2.5%. Markets in mainland China were also down, with the Shanghai Composite and the Shenzhen Component plunging 1.3% and 1.5%, respectively.

Among others, Australia’s ASX 200 fell 0.6%, Taiwan Weighted index slipped 0.7%, while Jakarta Composite in Indonesia was trading flat with marginal gains.

Crude prices edge lower

The price of Brent and U.S. crude were marginally down in early trade on Monday amid concerns about global economic growth and potential lockdowns in China could hit oil demand. Last week, Brent fell 4.1% and the U.S. West Texas Intermediate (WTI) declined 3.4% amid bleak demand outlook due to uncertain global environment.

In Asian trading hours on Monday, the Brent oil for September delivery was down 0.4% to $106.6 per barrel, while the U.S. West Texas Intermediate (WTI) crude August futures were down 0.65% at $104.1 a barrel.

FPIs selling spree slow, withdraw ₹4,418 cr in July so far

The foreign portfolio investors (FPIs) continued their selling spree in the Indian equities in the month of July, albeit at a slower pace, due to ease in commodity prices and recovery in the domestic market. In July, so far, FPIs have withdrawn ₹4,418 crore from the Indian equity market. In the first six months of 2022, FPIs have pulled out ₹2,27,290 crore from the market, while it flushed out ₹1,10,628 crore in the April-June quarter of the current fiscal.

FIIs continue selling spree

The foreign institutional investors (FIIs) continued their selling spree in the Indian equity market on July 8, while domestic institutional investors (DIIs) continued to support the market. As per the exchange data, FIIs net sold shares worth ₹109.31 crore, while DIIs net purchased shares worth ₹34.61 crore.

Corporate results

The companies which will release their June quarter earnings include Mishtann Foods, Nakoda Group of Industries, Sahara One Media & Entertainment, Star Housing Finance, 5paisa Capital, and Spandana Sphoorty Financial.