Strong opening seen for Sensex, Nifty; Zomato, Adani Enterprises, Axis Bank, Dr. Reddy’s shares eyed

The Indian equity benchmarks, the BSE Sensex and the NSE Nifty, are set to start the week on a strong note, following firm cues from Asian peers and a strong finish on Wall Street on Friday. The strong trends on SGX Nifty also indicated a gap-up opening for the domestic bourses, with SGX Nifty futures trading 180 points, or 1.15%, higher at 15,881 on the Singapore Stock Exchange at 7:50 AM. This week is going to be action-packed as some key events are lined up which could affect the mood of the market. Globally, investors will keep a close eye on the U.S. quarterly GDP numbers, while on the domestic front GST monthly collection, auto and cement sales figures will be eyed. Adding to it, crude oil movement, foreign institutional investments, and monthly derivatives expiry will also impact the stock market.

Snapping a two-week losing streak, the Indian share market ended higher in the week ended June 24, thanks to the recovery in the auto sector amid softening in commodity prices due to correction in crude oil prices from the recent peak and good progress in monsoon which eased inflation concerns. The BSE benchmark Sensex added 1,367 points, or 2.66%, during the week to settle at 52,727 levels, and the broader Nifty gained 406 points, or 2.64%, to 15,699. On Friday, the domestic benchmarks ended higher for the second straight session, with Sensex rising 462 points and Nifty gaining 142 points. The market cap of BSE-listed firms surged to ₹242.21 lakh crore against ₹239.64 lakh crore in the previous session.

Stocks to watch

Zomato: The food delivery platform on Friday received its board approval to acquire e-grocery startup Blinkit (formerly Grofers) for ₹4,447 crore ($569 million) in an all-stock deal. As per the deal, Zomato will acquire 33,018 equity shares of Blinkit for ₹4,447 crore at a price of ₹13.47 lakh per share. It will also issue up to 62.9 crore shares, equivalent to an equity stake of 6.88% on a fully-diluted basis, at an allotment price of ₹70.76 per share.

Adani Enterprises: Kutch Copper, a subsidiary of the company, has proposed to set up a greenfield copper refinery project to produce one MTPA (million tonnes per annum) in two phases. A consortium of banks, led by State Bank of India (SBI), has sanctioned and signed an agreement for the entire debt requirement of ₹6,071 crore for Phase 1 of the project.

Axis Bank: The Reserve Bank of India has approved the re-appointment of Rajiv Anand as the deputy managing director of Axis Bank for a period of three years.

Hindustan Copper: The state-owned firm’s board will meet next week to consider a proposal to raise up to ₹500 crore by issuing debentures.

Dr Reddy's Laboratories: The pharma major has acquired branded and generic injectable product portfolio from the U.S.-based Eton Pharma for an upfront payment of approximately $5 million in cash, plus contingent payments of up to $45 million.

Future Enterprises Ltd (FEL): The debt-ridden company has defaulted on interest payment of ₹4.10 crore for its non-convertible debentures. The due date for payment was June 24, 2022.

Federal Bank: The board of the private sector lender will meet on June 30 to consider proposals for raising of funds through issuance of securities.

Welspun Corp: The company has bagged slew of orders worth around ₹600 crore, including supply of onshore coated pipes and bends for a pipeline project in Australia.

Kiri Industries: The company has acquired 81% equity stake in Indo Asia Copper. As a result, Indo Asia Copper has become a wholly-owned subsidiary of the company.

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

Wall Street mints strong gains

The U.S. stocks rallied on Friday and registered gains for the week as a recent fall in commodity prices, especially crude oil, shrugged off concerns about inflation and the interest rate hike. The S&P 500 surged 3.1%, to notch its biggest daily percentage gain since May 2020, while the Dow Jones Industrial Average and the Nasdaq Composite soared 2.68% and 3.34%, respectively. The market sentiment was lifted after data showed marginal improvement in inflation outlook, thanks to sharp drop in crude prices last week, which ease rate hike concerns.

Asian stocks follow Wall Street higher

Shares in the Asia-Pacific region started the week on a positive note, following strong cues from Wall Street. Investors seems to have shrug-off worries about policy tightening as commodity prices cooled down, easing concerns about soaring inflation.

Regional heavyweight Japan’s Nikkei 225 rallied 1.2% in early trade, while the Hang Seng index in Hong Kong gained 1.7%.

South Korea’s Kospi was the best performer in the regional market with a 1.9% gain, followed by Taiwan Weighted index, which rose 1.8%.

Similarly, the Straits Times Index in Singapore added 0.4%, and Australia’s ASX 200 jumped 1.6%.

Markets in mainland China were also up in early trade, with the Shanghai Composite and the Shenzhen Component rising 0.7% and 0.6%, respectively.

Crude prices edge lower

The price of Brent and U.S. crude edged lower in early trade on Monday amid bleak demand outlook due to looming recession fears. Investors also kept an eye on the Group of Seven (G7) rich nations meeting this week for possible decisions on Russian oil exports and Iran nuclear deal talks. In Asian trading hours, the Brent oil for August delivery was flat at $109.1 per barrel, while the U.S. West Texas Intermediate (WTI) crude August futures were down 0.2% at $107.4 a barrel.

The global benchmark Brent crude has witnessed a significant fall recently amid growing fear that the global recession and fresh Covid-19 outbreak in China would impact demand for fuel. It has fallen around $15 a barrel, from a high of $125 a barrel in intraday trade on June 14, amid persistent fear that aggressive rate hikes by the U.S. Federal Reserve and other central banks would push the global economy into recession.

FPIs pull out ₹46,000 cr from Indian equities in June so far

The foreign portfolio investors (FPIs) continued their selling spree in the Indian equity market and have withdrawn ₹45,841 crore in June so far, which is the highest monthly outflow in 2022. The FPIs have been relentlessly pulling out money from Indian equities since October 2021 as monetary policy tightening by the Reserve Bank and US Federal Reserve, the Russia-Ukraine crisis, high crude oil prices, and volatile rupee spooked their sentiments.

However, domestic institutional investors (DIIs), led by mutual funds and insurance companies, continued their support to the market, with net investments of ₹41,983 crore in June so far. According to stock exchange data, FPIs have pulled out ₹3,54,285 crore in the last eight months, which has been largely absorbed by DIIs, which invested ₹2,88,167 crore in the domestic stock market since November 2021.

FIIs continue selling spree

The foreign institutional investors (FIIs) continued their selling spree in the Indian equity market on June 24, while domestic institutional investors (DIIs) continued to support the market. As per the exchange data, FIIs net sold shares worth ₹2,353.77 crore, while DIIs net purchased shares worth ₹2,213.44 crore.