Sensex feeble, Nifty falls 60 points; Tata Steel, BHEL losers
12 September 2013
3:30 pm Update: The government will decide on raising the retail prices of diesel and cooking gas (LPG) in a few weeks, oil secretary Vivek Rae said on Thursday, in a bid to cut the biggest item in its import bill and support the rupee.
A recent sharp recovery in the rupee, which had hit a record low of 68.85 to the dollar on August 28, and a fall in global crude prices following an easing of geopolitical tensions -- with an attack on Syria appearing less imminent -- have taken off some pressure from the government finances, Rae said.
Indian equities are hammered down in trade today as bears take charge of Dalal Street. Dragged by banks, metals and auto stocks the Sensex is down 240 points or 1.20 percent at 19758.30, and the Nifty is down 70.15 points or 1.19 percent at 5843.00. About 1106 shares have advanced, 1136 shares declined, and 154 shares are unchanged.
Tata Steel , BHEL , Hero MotoCorp, Hindalco and Coal India are top losers in the Sensex.
The rupee is at 63.92 per dollar in late afternoon trade. Agam Gupta of Standard Chartered Bank believes that rupee may appreciate to 61.5 against the dollar if the Fed tapering is on the lighter side. "If tapering meets the expectation of being lighter than what was previously expected, rupee can continue to consolidate with a slight chance of appreciation from here," he says in an interview to CNBC-TV18.
2:51 pm Market check: The Sensex is down 291.11 points or 1.46 percent at 19706.34, and the Nifty slips 88.40 points or 1.49% at 5824.75. About 1081 shares have advanced, 1159 shares declined, and 153 shares are unchanged.
2:30 pm Opinion: Nikhil Vora, Managing Director & Head - Research, IDFC Securities strongly believes that change in management will not only rerate United Spirits (USL) but the scale of business also will look dramatically different over the next three years.
"Our sense is that USL with the new management and new promoters on board will be in a position to repay at least Rs 1000 crore of incremental debt over the next one year and then post that, the entire balance sheet will undergo a significant change. So we are fairly positive on the way the business will move." says Vora. USL right now operates at Rs 7000 crore of debt.
Diageo has completed the share purchase agreement and is now the single largest shareholder with 25% stake in United Spirits.
It is quiet, rangebound trade on Dalal Street with the indices lower on the back of profit booking. The Sensex is down 197.54 points or 0.99 percent at 19799.91, and the Nifty is down 55.30 points or 0.94 percent at 5857.85.
Meanwhile, Sebi warned MCX-SX that it's license will be withdrawn if it fails to comply with guidelines and granted renewal of recognition for one year starting the September. It has also issued directions to strengthen governance. Financial Technologies stock in up 16 percent on the BSE
Traders are cautious ahead of IIP and August retail inflation numbers expected today. The range is narrow and there is not much index movement. The Sensex is down 205.56 points or 1.03 percent at 19791.89, and the Nifty slips 57.75 points or 0.98 percent at 5855.40. About 1199 shares have advanced, 935 shares declined, and 149 shares are unchanged.
Telecom stocks are in focus today. The Bombay High Court grants interim relief to Idea Cellular in the Rs 1500 crore tax case and bars I-T department from initiating recovery proceedings for now.
Oil & gas, metals, IT, auto and banking stocks are under pressure. However, realty stocks are on investors' radar.
Tata Power , GAIL , Cipla , NTPC and Dr Reddy's Lab are top gainers in the Sensex. Top losers include Hero MotoCorp, Coal India , ONGC , Sesa Goa and TCS .
12:30 pm Outlook: Some Indian companies could see the quality of their debt decline as higher global borrowing costs and a sharply weaker rupee take their toll , Moody's Investors Service said on Thursday. Companies such as Indian Oil Corp , Tata Steel and Tata Power Company will remain highly leveraged over the next 12 months because of weak industry dynamics and resulting constraints on cash flows, it said, reports Reuters
"We believe they will be able to refinance their maturing debt, but possibly at higher credit spreads than on existing debt," the agency said.
But while the rupee has slumped as much as 20 percent this year, it said rated Indian non-financial companies should be able to meet their USD 32.8 billion in debt coming due through March 2014, more than half of which is denominated in foreign currency, as they will continue to have access to offshore and onshore funding sources.
The market is still struggling with the bears in noon trade with the Sensex down 118.32 points or 0.59 percent at 19879.13. The Nifty is at 5879.50, down 33.65 points or 0.57 percent. About 1096 shares have advanced, 816 shares declined, and 138 shares are unchanged.
Banks are among the top losers yet again. All eyes are on the IIP data which will be released later today.
Asian markets are trading mixed on fears of the looming QE tapering by the Fed. Nikkei is weak, Kospi is flat while the Australian index hits 5-year highs.
11:50 am Rupee outlook: Mark Matthews of Bank Julius Baer & Co is surprised by recovery seen in battered emerging market (EM) currencies. However, he cautions that this recovery is not sustainable. Speculation about US tapering its QE programme has whacked most emerging markets currencies out of shape. The Indian rupee breached the 68-mark on August 28, hitting a record low of 68.70 against the dollar. He feels that the Indian currency is undervalued at current levels.
The next key event for global markets is the FOMC maeeting scheduled on September 20. Matthews feels tapering will be on the lighter side. He says, the Federal Reserve tapering program will not be more than USD 10 billion this month. Meanwhile, he is upbeat on Europe, US & Japan markets.
11:35 am Buzzer: Shares in Housing Development Finance Corporation are off lows after falling as much as 2.3 percent as FTSE increased its "investability weight" to 100 percent from 74 percent in its global equity index series, as per its website. Analysts expect nearly USD 200 million, or around 16 million shares, of foreign institutional buying flows in HDFC on increased weight in the FTSE index series.
Investors seem to be interested in selling off today taking the Sensex down 104.17 points or 0.52 percent at 19893.28. The Nifty falls 30.15 points or 0.51 percent at 5883.00. About 1069 shares have advanced, 658 shares declined, and 106 shares are unchanged.
Shares in IDFC surge 6 percent after the Reserve Bank of India lifted restrictions placed on foreign investors purchasing shares of the company as their shareholding in IDFC fell below the prescribed limit. The company had reduced the limit that foreign investors can own in the infrastructure lender to 54 percent from 74 percent without giving a reason in August.
MTNL is up 15 percent ahead of the Group Of Ministers meet this evening where revival of MTNL and BSNL will be considered. Instead of simply sanctioning a bailout package for the two there may be a long term revival plan that may be considered.
Other stocks that are gainers in the Sensex are Tata Power, GAIL, Cipla, NTPC and Dr Reddy's Labs. Sesa Goa, Hero MotoCorp, ICICI Bank, HUL and Tata Motors are major laggards. The rupee opened higher and moved to three week highs on the back of strength in euro and Asian currencies. Asian markets trade mixed on fears of Fed tapering next week.
In currencies, the dollar fell to near two-week lows as some traders pared back bets on a reduction in fed stimulus. Crude prices trade moderately higher with Brent above USD 111/bbl levels recovering from two days of losses. Gold is nearing three-week lows under pressure as easing of geo-political tensions have dented the metal's safe-haven appeal.
10:50 am Market outlook: Despite the recent run up seen in Indian equities, Ambareesh Baliga of Edelweiss Financial Services feels given the level of volatility in the market, this is not a good time to invest. "We never really expected a 600-700 points rally from those lower levels. It has caught a number of market players on the wrong foot.
Because of that there was short covering, which actually added to the momentum and the momentum is still there," he told CNBC-TV18 in an interview. He cautions that volatility here to stay and suggests investors to hold some cash in their portfolio to buy at better levels, which may come up in a couple of months.
Baliga recommends staying away from the banking sector. He says that core issues of high non-performing assets (NPAs), no credit growth etc. are not solved yet.
The market seems to be taking a breather today after the spectacular rally seen in last few days. After a gap up opening, the Sensex is down 155.33 points or 0.78 percent at 19842.12, and the Nifty is down 40.90 points or 0.69 percent at 5872.25. About 876 shares have advanced, 394 shares declined, and 59 shares are unchanged.
Mid and smallcap stocks are outperforming the market. Banking, tech and auto stocks are very weak. Tata Power , GAIL , Cipla , Dr Reddy's Labs and NTPC are major gainers in the Sensex. On the losing side are Hero MotoCorp, ICICI Bank , HDFC Bank , Sesa Goa and M&M.
The company had reduced the limit that foreign investors can own in the infrastructure lender to 54 percent from 74 percent without giving a reason in August. Dealers say the FII investment limit was reduced earlier to comply with RBI's bank licence guidelines as the company has applied for a banking licence.
9:50 am Market outlook: Anup Bagchi, MD and CEO, ICICI Securities says lot of exchange traded funds (ETFs) are investing in the Indian market . "They are increasing exposure to India and most of the flows come through global allocation, emerging market allocation and that is driving the prices up. This is why the top 10-20 stocks are moving up much more rapidly than the others but it is a very good sign," he told CNBC-TV18 in an interview.
9:35 am Movers and gainers: Tata Power, GAIL, BHEL, Jindal Steel, Dr Reddy's Labs are top gainers in the Sensex. On the downside are ICICI Bank, HDFC twins, Sesa Goa and Hindalco. JP Associates falls 4.5 percent as Jaypee group has sold its Gujarat cement unit to Ultratech Cement for Rs 3,800 crore.
UltraTech will pay Rs 150 crore in stock, Rs 1,650 crore in cash and assume debt worth Rs 2,000 crore. Jaypee Group has said that the deal will help JP Associates reduce it's outstanding debt by 15 percent. Kumar Mangalam Birla, the chairman of Aditya Birla Group said that the deal, which has been in the making for the better part of a year, will increase UltraTech's production capacity significantly. Ultratech Cement is up 2 percent on the BSE.
The market manages to maintain its uptrend in the opening. The Sensex up 54.60 points or 0.27 percent at 20052.05, and the Nifty is at 5931.15, up 18.00 points or 0.30 percent. About 299 shares have advanced, 64 shares declined, and 23 shares are unchanged. The Indian rupee opened higher by 19 paise at 63.19 per dollar versus 63.38 Wednesday. Just in the initial trade, rupee went up to 62.93 per dollar. Himanshu Arora, Religare said, "Dollar is likely to weaken against rupee in the coming session as investors are seeking high-yielding assets.
Further positive sentiment generated after recent steps taken by India's new RBI governor may underpin rupee. Moreover strong FII inflows may continue and may strengthen rupee against a dollar. The range for the day is seen between 62.80-63.70/USD." All eyes will be on the industrial output (IIP) data for the month of July, which is due today.
One can expect a mild contraction this month. A CNBC-TV18 poll sees it coming in at -0.2 percent versus -2.2 percent seen in the previous month. The range though is varied owing to the strong core sector growth in July versus the disappointing Q1 GDP and latest PMI reading. August CPI may ease a tad to 9.6 percent (M-o-M) In the US, the Dow and S&P 500 finished near session highs with the S&P logging its seventh-consecutive session in positive territory.
European markets also closed narrowly higher. Asian markets opened little changed amidst taper fears. Crude prices traded moderately higher with Brent at USD 111/barrel levels. Nymex inched towards USD108/barrel as the market recovered from two days of losses. From precious metals space, gold hit a three-week low on Wednesday, under pressure as speculation that a US military strike against Syria could be averted dented the metal's safe-haven appeal.