Sensex snaps 5-day winning streak on S&P warning
11 June 2012
Bulls were brought back to earth with a thud after rating agency Standard & Poor's cautioned that India could lose its investment grade status because of its worsening economic fundamentals. If India does get downgraded, it would become the first BRIC nation to suffer this humiliation. Benchmark indices snapped a five-day winning streak, with the 30-share Sensex crashing 226 points from the day's high to close at 16,668, down 50.86 points over its previous close. The 50-share Nifty closed at 5054.10, down 14.25 points over its previous close.
Big losers were from the capital goods, auto, banking, realty and healthcare sectors.
"In our view, setbacks or reversals in India's path toward a more liberal economy could hurt its long-term growth prospects and, thus, its credit quality. How India's government reacts to potentially slower growth and greater vulnerability to economic shocks may determine, in large part, whether the country can maintain its investment-grade rating, or become the first "fallen angel" among the BRIC nations," S&P analysts Joydeep Mukherji and Takahira Ogawa wrote in their report titled Will India Be The First BRIC Fallen Angel?.
The S&P report says nothing new, but reminded investors of the structural problems in the economy that made a sustainable upswing in the stock market look difficult if not impossible.
"One third of the Sensex companies continue to show a decline in profits and over half the companies in our (coverage) universe disappointed. Margins continue to disappoint and fell to 7 year lows of 16.3%," brokerage house Bank of America Merrill Lynch wrote in its report on fourth quarter earnings. Merrill Lynch has downgraded its estimate of earnings per share for Sensex companies for FY13 to Rs 1240 from Rs 1290 earlier, and warned that the figure could be further lowered to Rs 1200.
Earlier in the day Finance Minister Pranab Mukherjee said that slowdown would not be as sharp as widely feared, and that the economy would grow closer to 7% this fiscal. Most analysts are expecting the growth to be anywhere between 5.8-6.5%.
Falling crude prices and lower gold imports have provided some respite on the current account deficit (CAD) front. Hopes of RBI cutting benchmark rates have risen following persistently dismal GDP and industrial output data.
But economists have warned that these alone would not be enough fix the government's balance sheet. So far, the government has shied away from tough decisions like hiking diesel prices and foreign direct investment in sectors like retail, insurance and pension, which are key to resolving India's fiscal and current account deficit problems.
The Indian rupee depreciated quite sharply after the S&P statement. It fell 37 paise to 55.79 as against the US dollar, which gained more than 30 paise at one point of time today.
Oil & gas producers Reliance Industries and ONGC fell 1% each. Capital goods majors Larsen & Toubro and ONGC tanked 2% each.
Country's largest lenders State Bank of India and ICICI Bank slipped 0.7% and 0.4%, respectively whereas rival HDFC Bank was up 0.23%.
Among auto stocks, Tata Motors, Maruti Suzuki, M&M and Hero Motocorp were down over 1% while Bajaj Auto gained nearly 2%.
Even healthcare stocks were under pressure - Cipla tanked over 2%. Dr Reddy's Labs was down 1.2% and Sun Pharma fell 0.7%.
However, technology majors TCS and Infosys were marginally higher. Private power producer Tata Power rallied over 2%.
FMCG major HUL surged 1.6%. Gas transportation services provider GAIL and mining company Coal India were up 1.5%.
Advancing shares outnumbered declining by 745 to 679 on the National Stock Exchange.
Global markets stayed strong after European Union agreed to lend euro 100 billion to Spanish banks. Asian markets closed 1-2.5% higher while European markets gained 1-2%.
At 14:54 hours IST: Sensex, Nifty erase gains on S&P statement; Rupee falls too
The BSE Sensex and NSE Nifty erased gains after rating agency Standard & Poors' says India may become the first country among BRIC (Brazil, Russia, India and China) to lose investment grade rating.
The BSE benchmark was up just 21.24 points to 16740.11 and the NSE benchmark rose 6 points to 5,074.60.
Even the Indian rupee depreciated 19 paise to 55.61 as against the US dollar. It had appreciated by around 30 paise at one point of time today.
According to recently released report by Standard & Poor's Ratings Services, titled "Will India Be The First BRIC Fallen Angel?", the Indian government's reaction to potentially slower growth and greater vulnerability to economic shocks could largely determine whether the country can maintain an investment-grade rating or become the first "fallen angel" among the BRIC nations (which also comprise Brazil, Russia, and China). The 'BBB-' long-term sovereign credit rating on India is currently one notch above speculative grade.
"Setbacks or reversals in India's path toward a more liberal economy could hurt its long-term growth prospects and, therefore, its credit quality," said Standard & Poor's credit analyst Joydeep Mukerji.
Oil & gas producers Reliance Industries and ONGC were down 0.7% and 1.6%, respectively.
Capital goods majors Larsen & Toubro and BHEL too were under pressure, losing over 0.6%.
Even healthcare sector (defensive sector) lost ground. Sun Pharma, Cipla and Dr Reddy's Labs dropped 1-2%.
Auto stocks turned negative; Hero Motocorp, M&M and Maruti Suzuki were marginally lower. Top commercial vehicle maker Tata Motors was flat.
However, private sector lenders HDFC Bank and ICICI Bank were up 1% and 0.6%, respectively while rival State Bank of India rose just 0.3%.
Shares of Sterlite Industries, Tata Power, Coal India and GAIL shot up 2-3%.
FMCG major HUL rallied 1.5%. Housing finance company HDFC, top telecom operator Bharti and software services exporter TCS were marginally higher.
At 13:44 hours IST: Volatile Nifty at one-month high; broader mkts outperform
The 50-share NSE Nifty stayed above the 5100 level amid volatility, led by support from banks, infrastructure, metals and technology stocks. Index heavyweight Reliance Industries too was quite supportive.
The BSE benchmark was up 146 points at 16,864.76 and the NSE benchmark rose 46.85 points to 5,115.20 (at one-month high). The broader markets continued to outperform benchmarks; the BSE Midcap and Smallcap indices gained over 1%.
IBEX Index (Spain) shot up 4% after European Union said it would provide upto euro 100 billion aid to Spanish banks. France CAC and Germany's DAX surged 2% each while Britain's FTSE rose 1.6%.
Back home, country's largest lenders State Bank of India, ICICI Bank, HDFC Bank, and housing finance company HDFC climbed 1% each.
Software services exporter Infosys and engineering and construction major by sales Larsen & Toubro too were up 1% each.
Shares of Sterlite Industries, JP Associates, Reliance Infrastructure and Tata Power topped the buying list, rising 4% each. Bajaj Auto and Coal India rallied more than 2.5%.
Index heavyweight Reliance Industries, top software services exporter TCS, top commercial vehicle maker Tata Motors and country's largest telecom operator were up 0.5% each.
However, state-owned oil & gas producer ONGC declined 0.7%. Healthcare stocks too were under pressure - Cipla and Sun Pharma lost 0.6-1.2%.
In the second line shares, GVK Power shot up 18%.
At 12:41 hours IST: Sensex up nearly 1%; European markets open strong
The BSE Sensex and NSE Nifty maintained morning gains following rally across the globe. France's CAC, Germany's DAX and Britain's FTSE opened 1.5-2.5% higher on Monday after European Union agreed to lend euro 100 billion to Spanish banks.
The BSE benchmark rose 166.35 points or 0.99% to 16,885.22 and the NSE benchmark went up 52.20 points or 1.03% to 5,120.55.
Rate sensitives continued to support market since last week, especially ahead of RBI policy that schedule to be announced on June 18. Market experts feel the RBI may cut repo rate by 50 basis points instead of 25 bps.
Private sector lender ICICI Bank jumped 1.5% while rivals State Bank of India and HDFC Bank were up 1% each. Housing finance company HDFC rose 1.4%.
Shares of Sterlite Industries and Tata Power retained top position in the buying list, with gain of 4-4.6%.
Software services exporter Infosys and FMCG major HUL moved up 1.4%. Index heavyweight Reliance Industries rose 0.8%.
Nippo Batteries Company has touched a 52-week high of Rs 515, rising 4.5%. Its trading volumes spiked 28,085% to 12,99,968 shares as compared to its 5-day average of 4,612 shares.
Videocon Industries and BPCL gained 7% and 3%, respectively after new natural gas discovery in offshore Mozambique.
In the smallcap space, SKS Microfinance, Shristi Infra, ITI, Hindustan Media and GTL shot up 7-10% whereas Parekh Aluminex, Sagar Cement, Sayaji Hotels, Plethico Pharma and Chromatic India fell 4-5%.
About three shares advanced for every share declining on the National Stock Exchange. Brent and NYMEX crude gained 2% each.
At 11:46 hours IST: Sensex stays up over 100 pts; DAX, FTSE futures gain 2-3%
Indian equity benchmarks continued to hold early gains amid somewhat volatility. The news of European Union agreed to lend euro 100 billion to Spain helped markets globally.
The BSE benchmark climbed 156 points or 0.93% to 16,874.78 and the NSE benchmark was up 51.05 points or 1.01% to 5,119.40. The broader markets outperformed benchmarks; the BSE Midcap Index moved up 1.12% and Smallcap up rose 1.25%.
FTSE, CAC and DAX futures shot up 2-3%, indicating strong opening of European markets at 12:30 hours IST. Dow Jones and Nasdaq futures gained over 1%.
Back home, all sectoral indices were in green barring healthcare. The BSE Realty Index surged over 2% while Metal and Power gained 1.8% each. Bankex and Auto went up over 1%.
Shares of Sterlite Industries, Reliance Infrastructure, Jaiprakash Associates, Tata Power and BPCL were top gainers among largecaps, rising 3-4%.
Country's largest private sector lender ICICI Bank rose 1.9% while its rivals State Bank of India and HDFC Bank gained 1% each. Housing finance company too was up 1%.
Infosys, India's No. 1 software services exporter rose 1%; TCS and Wipro were marginally higher.
Index heavyweight Reliance Industries, top telecom operator Bharti Airtel and top cigarette major ITC were up around 0.5%.
Among metals and minings, Coal India, Hindalco and Tata Steel moved up 1.5-2%.
Country's second largest two-wheeler maker Bajaj Auto surged nearly 3% and top commercial vehicle maker Tata Motors was up over 1%.
In the second line shares, Anant Raj Industries, Videocon Industries, Bajaj Electricals, Sintex Industries and IFCI shot up 5-9% whereas S Mobility, Marico, Edelweiss Capital, Pidilite Industries and Bayer Cropscience fell 1.5-2.5%.
At 10:26 hours IST: Nifty holds 5100; Sterlite, Tata Power top gainers
The BSE Sensex and NSE Nifty shed some gains due to somewhat profit booking, but Asian markets remained strong. The market had rallied 5% last week, so traders may be booking some profits.
Banks, metals, power, auto and capital goods stocks were quite supportive. The market breadth too was strong - About four shares advanced for every share falling on the National Stock Exchange.
The BSE benchmark was up 118 points at 16,837 and the NSE benchmark went up 37.75 points to 5,106. The BSE Midcap and Smallcap indices rose 1% each.
Sudarshan Sukhani of s2analytics.com says, he is upbeat and bullish on the market now. "We should be on the long side of the market," he asserts.
The current rally, he says, has a target of 5,200.
Country's largest lenders State Bank of India, ICICI Bank and HDFC Bank climbed 1-1.7%. Housing finance company HDFC was up 0.66%.
Sterlite Industries topped the buying list for third consecutive session, rising nearly 4%.
Private power producer Tata Power rallied 3.5% and state-owned power producer NTPC gained 1.4%.
Index heavyweights Infosys, Reliance Industries, Larsen & Toubro and Bharti Airtel were up around 0.5%.
However, shares of TCS, Cipla and ONGC underperformed.
The Indian rupee gained 17 paise to 55.24 as against the US dollar.
Asian markets like Straits Times, Kospi and Taiwan Weighted were up 1.5%. Hang Seng rose 2% and Nikkei was up 1.8%. Shanghai too bounced back with moderate gains.
At 9:20 hours IST: Sensex, Nifty up 1% as Spain gets EU aid for banks
The BSE Sensex and NSE Nifty opened 1% higher on Monday on the back of positive developments in euro zone over the last weekend. The Indian rupee appreciated 27 paise to 55.15 as against the US dollar.
The BSE benchmark gained 164.19 points at 16,883.06 and the NSE benchmark went up 53.30 points to 5,121.65.
European Union has been agreed to lend up to 100 billion euro to Spanish banks after Spain's request on Saturday. The Dow Jones and Nasdaq futures gained over 1%, indicating positive opening of US markets today.
Asian markets too rallied quite smartly after this news. Hang Seng and Nikkei rose 2%. Straits Times and Kospi were up 1.5%. Taiwan Weighted moved up 1.2% while Shanghai was flat due to weak inflation data. China's inflation for May declined at 3% as against 3.4% in previous month.
Back home, Sterlite, JP Associates, Hindalco, JSPL, Tata Steel, Sesa Goa, Cairn India (on rising crude oil prices), Maruti, Bajaj Auto, L&T, ICICI Bank, SBI, BHEL, Coal India, Reliance Infrastructure, Asian Paints and PNB were on buyers' radar.
FMCG majors HUL and ITC were marginally higher.
However, Sun Pharma and HCL Tech were flat.
The CNX Midcap Index rose 68 points to 7,102. About five shares advanced for every share declining on the National Stock Exchange.
In the second line shares, Shanthi Gears shot up 8% as The Economic Times reported that Bharat Forge is in talks to acquire significant stake in the company.
Infrastructure space was quite strong as The Economic Times reported that the government is working on mechanism to quickly release dues of infrastructure companies. GVK Power, IVRCL, Lanco Infratech and Adani Power were up more than 2%.
HDIL gained 2.5%. ITI surged 8% on huge volumes. PFC and REC gained 1.5%.
Videocon Industries climbed 3% after The Economic Times reported that the gas reserves in Mosambique are expected to rise dramatically with the giant new discovery.
However, Jet Airways was up 0.5% on profit booking.
Commodities too rallied. Copper and Brent crude rose 1.6%. NYMEX crude oil gained 2.25% to USD 86 a barrel. Gold was up 0.5% at USD 1599 an ounce.