Sensex slips 151 points on Fed tapering; Bankex dips 2.4%
19 December 2013
The market gave up some of previous day's gains on Thursday on fears that Fed tapering, which will begin in January, may impact inflow of overseas money. However, it rallied 158 points in opening trade to surpass the 21,000-mark on the Sensex following strong upmove in global peers, but immediately that rally washed out.
The Sensex slipped 151.24 points to close at 20,708.62, and the Nifty lost 50.50 points to 6,166.65.
Federal Reserve's decision to scale back US fiscal stimulus by USD 10 billion a month to USD 75 billion may strengthen dollar and may also have an impact on foreign money inflow to India, feel experts.
Foreign institutional investors have bought more than Rs 1 lakh crore worth of equity shares in India so far in 2013.
As the two events (RBI policy and FOMC meet) behind us, experts see the market may move sideways with a negative bias in near term due to lack of trigger and will start taking take cues from currency movement and October-December quarter earnings that will kick off in January.
''Post all these events the market certainly looks quite vulnerable at the moment, because on the upside definitely triggers are missing,'' Dilip Bhat, joint managing director of Prabhudas Lilladher said.
''Possibly on the upside the Nifty can see 6300-6350 over next one or two months, but the downside appears to be a little more conspicuous now. So maybe something below 6000 possibly is very much on the cards,'' he added.
Banks, capital goods, oil & gas, power and FMCG stocks saw selling pressure while technology, healthcare and metals stocks bucked the trend.
BSE Bankex dropped 2.4 percent as country's largest lenders State Bank of India , ICICI Bank and HDFC Bank fell between 2-3 percent while top housing finance company HDFC lost nearly 3 percent.
Among others, Larsen and Toubro and ONGC tumbled 3 percent followed by Tata Power , Hero Motocorp and Bajaj Auto with around 2 percent loss.
However, Maruti Suzuki topped the buying list today, rising 3 percent and also touched a life high of Rs 1,796.45 after source-based reports indicated that Suzuki Motor Corporation is looking at hiking stake in Maruti.
03:30pm Market Update
The market closed lower on Thursday post two big events - Federal Reserve meeting and RBI policy.
The Sensex lost 151.24 points or 0.73 percent to 20,708.62, and the Nifty fell 50.50 points or 0.81 percent to 6,166.65, weighed down by banks, capital goods, power, oil & gas and FMCG stocks.
03:10pm Dish TV under pressure
Shares of Dish TV plunged nearly 4 percent to Rs 59.50 on the BSE as Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has barred company's on-request offering of IndiaCast UTV channels.
TDSAT said Dish TV can offer IndiaCast UTV channels on A-la-carte basis. (Disclaimer: TV18 Broadcast and Moneycontrol both are part of the Network18 Group)
02:59pm Maruti Suzuki hits record high
Shares of Maruti Suzuki rallied as much as 3.9 percent intraday to touch a life-time high of Rs 1,796.45 on the BSE.
Suzuki Motor Corporation is looking at hiking stake in Maruti Suzuki, reports CNBC-TV18 quoting sources.
It is learnt that Suzuki Motor is considering various options including open offer and preferential issue to hike stake in Maruti, but it is yet to take final decision on hiking stake.
02:45pm Aurobindo hits life-time high
Aurobindo Pharma rallied 3.5 percent intraday to touch a record high of Rs 390 on the BSE. The stock has been buzzing since the biginning of this week, rising nearly 30 percent in five-sessions.
Ventura Securities has initiated a buy coverage on the stock with a target price of Rs 466 apiece. At the current market price of Rs 377, the stock is trading at 12.5x and 9.7x its estimated earnings for FY15E and FY16E, respectively, representing a potential upside of around 24 percenet over a period of 24 months, Ventura report said.
According to report, given the strong product pipeline (+100 general injectables by FY16E, around 4 penems by FY15, +20 controlled substances in FY15, 25 oncology products and 10 hormonal product by FY17) targeting the largest generic market (US), ARBPL will be a key beneficiary of the increased generic opportunities.
Ventura expects Aurobindo Pharma revenues and earnings to grow at a CAGR of 24.2 percent and 57.2 percent to Rs 11,214 crore and Rs 1,131 crore over the forecasted period of FY13-16 expected. "Further, timely approvals for ready to market products can be a game changer for the company and further accelerate the pace of growth," it adds.
02:31pm Equity benchmarks pared losses in last hour of trade with the Nifty inching towards 6200 level supported by Reliance Industries and Tata Motors . Even the cut in losses of banks and capital goods stocks also helped the market recover from day's low.
The Sensex slipped 71.91 points to 20,787.95, and the Nifty fell 23 points to 6,194.15. The broader markets are flat.
Petrochemical major Reliance Industries gained 0.6 percent and commercial vehicle maker Tata Motors rose 0.4 percent.
Maruti Suzuki and Wipro extended gains to 3 percent and 2 percent, respectively. IT majors TCS and Infosys rose over 1.4 percent.
However, top private sector lender ICICI Bank dropped 2.6 percent while its rivals HDFC Bank and State Bank of India declined 1.5 percent each.
Engineering and construction major Larsen and Toubro and state-run oil & gas explorer ONGC slipped 2.4 percent each. FMCG majors ITC and Hindustan Unilever fell over 0.5 percent while index heavyweights HDFC plunged nearly 2 percent.
01:50pm Persistent Systems talks to CNBC-TV18
Persistent Systems has invested USD 150,000-250,000 in a US-based life sciences start-up called DxNow through Persistent Venture Fund. More than 85 percent of the company's business comes from the US markets.
As the demand trends for the IT industry is looking strong, the company believes it can beat NASSCOM guidance for FY14.
Anand Deshpande, CMD & CEO, Persistent Systems, says though the December quarter is typically a weak quarter for the IT industry, he believes H2FY14 growth will be stronger than H1FY14.
01:40pm Bafna Pharma under pressure
Bafna Pharmaceuticals plunged 9 percent intraday as source-based reports indicated that the company will sell UK Regulator-approved Chennai unit.
It is learnt that the company is seeking Rs 150 crore for Chennai unit and will use that sale proceeds to cut debt.
The stock is trading at Rs 24, down 4.57 percent on the BSE.
01:30pm Wockhardt up 7%
Shares in Wockhardt rose 7 percent, heading towards their third consecutive day of gains, ahead of the listing of unit Wockhardt Bio AG on the Berne Stock Exchange in Switzerland later in the day.
Wockhardt raised 11.86 million swiss francs in the initial public offering by selling 5 percent in its European unit, as per an announcement to the Indian exchange, reports Reuters.
01:20pm Experts bet on developed market currencies post Fed move
After US Federal Reserve announced its plan to pullback monetary stimulus by USD 10 billion starting from January , global experts are betting big on developed markets (DMs) and their currencies. According to Callum Henderson, Standard Chartered Bank , the Asian and emerging market (EM) currencies are likely to be under pressure in the first half of 2014 whereas the developed market currencies will outperform, starting with the dollar.
Echoing Henderson's view, Richard Gibbs of Macquarie Securities picks developed markets for allocation of fresh equities rather than Asian markets or EMs. He believes removal of taper terror by outgoing Fed chairman Bernanke has added to enthusiasm to bet big on developed markets, including Eurozone and Japan.
However, Henderson expects Asian and emerging market currencies to do better in the second half of 2014. ''The global economy will be doing pretty well next year and that is not just for the developed markets, but also parts of Asia. So look for a recovery in the second half,'' he says in an interview to CNBC-TV18.
01:02pm Indian market is in bear grip as after Federal Reserve's decision on Wednesday to scale back monthly US fiscal stimulus by 10 billion from January may impact inflow of foreign money.
Foreign institutional investors have bought more than Rs 1.05 lakh crore worth of equity shares in India in 2013 so far.
The Sensex fell 157.84 points or 0.76 percent to 20,702.02, and the Nifty dipped 49.65 points or 0.80 percent to 6,167.50. About 957 shares have advanced, 1104 shares declined, and 158 shares are unchanged.
Banks and capital goods stocks hit quite hard today with the BSE Bank and Capital Goods indices falling 2.6 percent and 2 percent, respectively.
Country's largest lenders State Bank of India , ICICI Bank and HDFC Bank lost 2-3 percent while home financing company HDFC declined 2 percent.
Capital goods majors Larsen and Toubro and BHEL slipped 3 percent and 1.6 percent, respectively.
State-run oil and gas explorer ONGC , private power producer Tata Power and telecom operator Bharti Airtel dropped 2-3 percent.
However, shares of Infosys , TCS , Sun Pharma , Wipro , Sesa Sterlite, Maruti Suzuki, Cipla and Jindal Steel gained 1-2 percent.
12:54pm NSE VIX near 7-month low
NSE's volatility index , or the domestic equivalent of the VIX fear gauge, marked its lowest level since May 7 after the RBI kept interest rate unchanged in its policy review.
Fears of strengthening USD after Fed started unwinding its USD 85 billion bond buying program are also aiding fears of some foreign outflows.
Overseas investors have made net purchases of over USD 18 billion so far this year, making India the number one recipient of foreign stock investment in emerging Asia, data from Deutsche Bank showed earlier.
The low level in the VIX denotes a more stable outlook for markets in the remainder of the month, reports Reuters.
12:44pm AMP Capital neutral on India
Shane Oliver of AMP Capital is relieved that the Federal Reserve taper is finally out of the way. He is overweight on equities in general, with particular focus on North Asia, China, Korea, Europe and Japan.
He believes valuations on Indian shares are not all that attractive. "The PE on the Indian share is about 14 times forward earnings, whereas in China it is about 9 times. So I think there is better value elsewhere," he adds.
12:34pm Power Grid in focus
Power Grid Corporation of India plunged as much as 4 percent intraday to Rs 96.15 on Thursday as its shares issued through follow-on public offer listed on bourses.
State-run electric utilities company's 78.7 crore shares follow-on public offer, which was opened for subscription during December 3-6, was subscribed nearly 7 times on large support from qualified institutional investors.
The issue had been comprised of fresh issue of 60.2 crore shares (representing 13 percent of existing paid up capital) and offer for sale of 18.5 crore (4 percent of existing paid up capital) as a disinvestment by Government of India.
The company had approved the issue price for follow on public offer at higher end of price band of Rs 85-90 per share. It also offered a discount of Rs 4.50 per share to retail investors and eligible employees on the issue price.
The stock is down 1 percent to Rs 99 apiece on the BSE.
12:24pm Gainers and Losers
Shares of Wipro , Sun Pharma , TCS , Jindal Steel , Sesa Sterlite and HCL Technologies rallied between 2-4 percent while ICICI Bank , Bharti Airtel , HDFC , Larsen and Toubro , ONGC , NMDC , Kotak Mahindra Bank , IndusInd Bank and PNB lost 2.5-3.5 percent.
Power Grid Corporation, Wockhardt , Aurobindo Pharma , Risa International , SBI , ICICI Bank and Infosys are the most active shares on bourses.
12:14pm Equity benchmarks continued to reel under pressure on profit booking after it opened with a gap up of 140-point on the Sensex. The rupee lost 23 paise to 62.32 as dollar strengthened post Federal Reserve started scaling back its fiscal stimulus by 10 billion per month.
The Sensex lost 144.60 points or 0.69 percent to 20,715.26, and the Nifty fell 48.20 points or 0.78 percent to 6,168.95.
Madhu Kela of Reliance Capital said the RBI has taken a sensible call by keeping rates unchanged on Wednesday. He sees a bottom up market and is not so optimistic on headline indices in the near term.
Meanwhile, Federal Reserve chairman, Ben Bernanke on Wednesday announced the taper of their aggressive bond-buying program by USD 10 billion a month to USD 75 billion starting January. Global markets reacted positively with the US markets rising 1.5 percent to 2 percent while in Asia, Nikkei touched 7-month high.
Commenting on Fed's tapering announcement, brokerages like Macquarie, Goldman Sachs and Barclays said the tapering was widely expected, but tapering is offset by qualitative enhancement to forward guidance.
US dollar rose to a 5-year high against the yen. Emerging market currencies such as the Brazilian real and South African rand managed to end of the day's low. However, the Indonesian rupiah depreciated to levels last seen in December 2008.
Back to home, the rupee slipped in step with other Asian currencies as the Fed taper is seen as likely reducing the incremental flows into Asia. FIIs and PSU banks were seen buying dollars.
Bonds continued to rise after the RBI did not deliver an expected rate hike.
11:59am Eicher Motors talks to CNBC-TV18
Eicher Motors has been seeing a terrific performance on the bourse, helped by the overall earnings performance of the company. The stock has been up 80 percent since the start of 2013.
Buoyed by the positive reaction on the launch of its Royal Enfield Continental GT, Siddharth Lal, CEO, Eicher Motors, says the company expects a better business going forward.
''The motorcycle business is trending towards 20 percent EBITDA margin. We expect production of 2.5 lakh units in the motorcycle segment next year,'' he said on CNBC-TV18.
Asked about the slowdown that the company witnessed in its commercial vehicle segment (CV), he said they are not overly worried about the CV business as it has been able to maintain positive margins and expects a recovery in 2014. The company is looking to invest Rs 700 crore in the next 12-18 months, and is planning to invest heavily into new products, including new engines.
11:50am Bank of America Merrill Lynch downgrades Unitech
Bank of America Merrill Lynch (BoAML) has downgraded rating on Unitech from neutral to underperform and reduced target price from Rs 27 to Rs 14.
The brokerage house expects pre-sales momentum to remain slow and EBITDA margin that compressed to single digits is expected to sustain in FY15, it adds.
BoAML also cut FY14 earnings in half and expects negative operational cash flow.
Unitech is trading at Rs 14.95, down 1.97 percent on the BSE.
11:40am Strides under pressure
Shares of Strides Arcolab plunged 60 percent intraday on Thursday, ex-date for dividend payout of Rs 500 apiece.
The pharmaceutical firm on December 10 approved dividend of Rs 500 apiece that will be paid on or after December 27, 2013. It fixed December 20 as the record date for determining the eligibility of shareholders for payment of special dividend.
The dividend payout decision of the company was after it received USD 1.5 billion by selling Agila Specialties division to US-based Mylan Inc.
The deal with Mylan actually was signed for total consideration of USD 1.75 billion, but USD 250 million out of that total deal size will be received by Strides when the USFDA issue gets resolved.
11:30am Finance Minister says the market alreay priced in Fed move
India is better prepared to deal with any consequences of the US Federal Reserve's move to reduce monetary stimulus, Finance Minister P Chidambaram said in a statement on Thursday, that has supported inflows of cash to emerging markets.
After agonising investors for months, the Fed decided on Wednesday to trim its bond buying by USD 10 billion to USD 75 billion a month as a modest step and one the U.S. economy could well withstand. Crucially, the US central bank softened the blow by making its forward guidance even more dovish.
"(The) government is of the view that the markets had already factored in the US Federal Reserve's decision and therefore is not likely to be surprised by these moderate changes," Chidambaram said in a written statement released by his office, reports Reuters.
11:10am The fall in rate sensitive stocks dragged the Sensex nearly 300 points from its intraday high of 21,017.45 after two central banks annnounced their policies on Wednesday.
The Sensex plunged 162.40 points to 20,697.46, and the Nifty fell 51.80 points to 6,165.35, but the broader markets outperformed benchmarks as the BSE Midcap and Smallcap indices declined just 0.2 percent.
Share of ICICI Bank , HDFC , Larsen and Toubro , State Bank of India , ONGC and Bharti Airtel dropped 2-3 percent while Infosys , TCS , Jindal Steel and Sun Pharma gained 2 percent each.
David Kelly of JPMorgan Funds and Adrian Mowat of JPMorgan are in no mood to change asset allocation because of Fed tapering. Steve Brice, chief investment strategist, Standard Chartered Bank is also optimistic about emerging markets, but he wants to wait and watch, especially the emerging market currency moves.
Mowat believes India can outperform going forward and feels the current account deficit adjustments will continue, while Kelly extends the same sentiment to the whole emerging markets pack. Kelly believes Fed will reduce bond purchase at every meeting unless something goes wrong with the economy.
10:59pm Rupee Update
The rupee is trading at an over two-week low against the dollar reacting to the Fed decision and in line with weakness in other emerging market currencies.
The domestic currency is down 37 paise to 62.46 per dollar while Indonesian rupiah and South Korean won too are under pressure.
10:53am JSW Steel in focus
JSW Steel said its 10 million-tonne-per-year plant in Karnataka will not operate at more than 80 percent capacity in the near future as mining restrictions have stifled the supply of iron ore, a key feedstock.
Difficulty in sourcing iron ore has forced the company to go slow on plans to nearly triple annual capacity to 40 million tonnes in the next decade, which, along with ArcelorMittal SA and Posco recently pulling out of projects, could derail India's steel production ambitions.
"After having invested here there is no way you can plan to get iron ore from outside of Karnataka (on a long term basis)," Seshagiri Rao, joint managing director of country's largest private steel producer, told Reuters on Wednesday.
10:43am Market Expert
Ambareesh Baliga, Edelweiss Financial Services believes the next stop for Nifty is 6,400-6,450 which can be achieved in the next two-three weeks. He suggests investors to continue buying, and utilise every correction as an opportunity to buy.
Baliga, atleast from a medium-term look, recommends buying industrials, cyclicals as they are likely to outperform.
10:33am Sugar stocks sweeten
The cabinet will mull Rs 7,200 crore loans to sugar mills today and also post comments from agricultural minister Sharad Pawar that the committee is considering some incentives for sugar mills.
Shares of Bajaj Hindusthan , Balrampur Chini , Dhampur Sugar , Dharani Sugars , Rana Sugars, Sakthi Sugars, Shree Renuka and Triveni Engineering gained between 1-5 percent.
10:23am The market loses ground today post both the central banks, RBI and FOMC, announced their policies. Reserve Bank of India surprised the street on Wednesday by keeping policy rates unchanged while Federal Open Market Committee reduced bond buying purchases by USD 10 billion to USD 75 billion.
The Sensex dropped 158.43 points or 0.76 percent to 20,701.43, and the Nifty fell 48.95 points or 0.79 percent to 6,168.20.
The losers are financials, FMCG, oil & gas, capital goods, realty and telecom stocks while technology and metal stocks see buying interest.
Shares of ICICI Bank , HDFC , Larsen and Toubro , ONGC , Bharti Airtel and Hero Motocorp falls 2-2.5 percent while TCS , Sesa Sterlite, Jindal Steel and Hindalco Industries gain 1-2 percent.
09:55am Market Update
The market extended its weakness in morning trade with the Sensex falling 200 points weighed down by rate sensitive stocks.
The Sensex fell 190.36 points or 0.91 percen to 20,669.50, and the Nifty slipped 57.35 points or 0.92 percent to 6,159.80.
The rupee declined 33 paise to 62.42 against the US dollar as Federal Reserve started cutting monthly fiscal stimulus by USD 10 billion to USD 75 billion.
09:45am Nomura maintains buy on Lupin
Nomura says, "Lupin has one of the best US generics pipeline that can present upside risk to estimates. This has been a key argument for positive view on the stock."
The brokerage house highlighted three developments in the recent past that validate its view:
- Lupin on Wednesday announced a favourable court decision and the launch of its anti-HIV drug Trizivir under exclusivity. Nomura believes this can be a USD 30 million annual sales opportunity in the near-term as competition is likely to be limited;
- Cymbalta (USD 4 billino brand sales) has faced much lower competition than anticipated, in the initial phase of genereciation. Nomura thinks the product can present significant near-term upside and await for the competitive landscape to emerge before factoring in the upside, and
- Lupin will get a head start of 100 days over competition in Niaspan. Lupin would not only benefit from higher pricing during this semi-exclusive period but can also gain and retain above average market share, Nomura estimates.
Hence, Nomura raises FY14-16 expected earnings by 3-5 percent as it factors in these developments. It resets target price to Rs 1,053 based on 20 times (unchanged) December'15 expected EPS of Rs 52.7.
09:30am Fed tapering
The Federal Reserve announced Wednesday it would start to taper its aggressive bond-buying program to USD 75 billion a month beginning in January, propelling the market to a record close.
The FOMC also announced it would lower its monthly long-term Treasury bond purchases to USD 40 billion and mortgage-backed securities to USD 35 billion a month, both reductions of USD 5 billion, reports CNBC.
09:15am The market opened nearly 150 points higher on positive global cues post Fed began tapering by 10 billion, but it could not sustain those gains for long with the Nifty falling below the 6200 level.
The Sensex fell 75.85 points to 20,784.01, and the Nifty lost 24.80 points to 6,192.35. About 474 shares have advanced, 292 shares declined, and 40 shares are unchanged.
Shares of ICICI Bank , State Bank of India , HDFC , ONGC and Hero Motocorp declined more than a percent while Reliance Industries and Larsen and Toubro slipped 0.7 percent each.
However, metals shares outperformed others with the Sesa Sterlite and JSPL gaining 2-3 percent. Tata Steel rose 0.8 percent and Hindalco advanced 1.6 percent.
TCS, Infosys, Tata Motors , Maruti and Mahindra and Mahindra are other gainers.
Strides Aroclab is quoting ex-dividend today; hence the stock tanked 57.64 percent to Rs 374 apiece. The company had declared dividend of Rs 500 apiece to its shareholders after it received money from selling subsidiary Agila Specialities for USD 1.75 billion to Mylan
Out of total amount, it received only USD 1.5 billion while the rest of the amount of USD 250 million will be received if the company solves USFDA issues related to injectible facilities.
Indian rupee opened lower by 15 paise at 62.24 against the US dollar on Thursday versus previous day's closing of 62.09.