Sensex ends 160 points lower amid volatile trade
25 November 2014
3:30 pm: After starting flat and losing about 1 percent in late afternoon trading, Indian equities staged a smart recovery to recover about half the losses towards the end.
At close, the Sensex was down 161 points, or 0.57 percent, to 28,338 while the Nifty ended at 8,463, down 67 points, or 0.79 percent.
The sharp swing saw plenty of stocks being sent into a tizzy. Mid-cap stocks such as Man Infra (recovered 21 percent from day's low), Monnet Industries (climbed 18 percent intraday) and Digjam (recovered 17 percent) saw wild swings.
BHEL, HUL and Cipla were the top Sensex gainers with a rise between 1.5 percent and 3.1 percent while ITC, Tata Steel and NTPC were the worst decliners, off 2.2 percent to 4.6 percent.
Stocks that made 52-week highs today included AIA Engineering, Amrutanjan, Atul Auto, Castrol, Dr Reddy's, HDFC, HDFC Bank, JK Tyre, Ricoh, Torrent Pharma and Zee Entertainment.
Some analysts have expressed caution that valuations have run ahead of fundamentals. The Sensex is trading at about 19 times FY15 expected EPS of Rs 1490, higher compared to the historical average of 15-16 times.
''My sense is that the prices have definitely run-up ahead of the fundamentals,'' Sanjay Dutt of Quantum Securities told CNBC-TV18. ''The probability that we have touched the high for the year for this calendar year is about 70-80 percent. I think from now on we probably would see a reasonably good correction before December 31 or the first week of January because a lot of ifs and buts [with respect to earnings making a recovery] still remain.''
3:15 pm: The recovery is further gaining ground. The Sensex is down about 160 points. At its lowest point, it was down about 250 points.
3:oo pm: Indian stocks continued to trade lower albeit making up for some losses, with realty, manufacturing and utility shares continuing to trade particularly weak.
At the time of this writing, the Sensex is down 200 points, or 0.7 percent, to 28,302 while the Nifty was off 77 points, or 0.9 percent, to 8,452.
The biggest loser in the Nifty is tobacco major, an index heavyweight, which has slumped 5.5 percent amid reports the government may ban sale of loose cigarettes in a bid to curb smoking.
Other losers include NMDC (of f 3.9 percent), DLF (down 3.6 percent) and Power Grid (trading 3.1 percent lower).
About 17 stocks among the Nifty 50 are in the green, though, with the gainers' list topped by BHEL (up 2.6 percent following a positive brokerage call) and ONGC (up 1.6 percent) after reports said the government would divest stake in it by January 2015.
The market breadth continued to remain negative with declines (2,206) topping advances (735) among the BSE traded scrips.
2:30 pm: Meanwhile, last week's mega merger between Kotak Mahindra Bank and ING Vysya could witness a minor spanner being thrown in the works in the form voting rights.
Kotak is down 3.1 percent, while ING is off 2.7 percent.
2:00 pm: Indian equities are now trading at the lowest point of the day, with the Nifty losing over 1 percent. At the time of this writing, the Sensex is at 28,282 down 216 points while the Nifty is at 8,440, down 91 points.
It is red across the screen with every single sector on the Moneycontrol Market Map trading in the red. The worst-hit are metals and capital goods, down over 2 percent while IT and pharmaceuticals have outperformed, down only about 0.8 percent. Stocks buzzing in trade include Bajaj Corp, Tata Steel, Reliance Capital and Max India with each losing between 1 percent and 6.1 percent. To know why these stocks are moving the way they are, watch this video of today's top buzzing stocks compiled by CNBC-TV18 analysts .
Meanwhile, tobacco heavyweight ITC has sunk 4 percent amid reports the health ministry has accepted a committee's proposal to ban sales of loose cigarettes in a bid to curb smoking and will take up the decision with the Cabinet. Analysts, however, have wondered how the government would be able to implement the ban given that cigarettes are sold by as many as 1.5 million small, or ''mom-and-pop'', stores through the country. The advances-declines ratio on the BSE stands at 631:2,232, indicating poor market breadth.
1:30 pm: European markets have opened mildly in the red while Indian equities are holding on their losses. But even as the consolidation continues, here's some good news: in 2015, India's growth rate could overtake China's and it could become Asia's fastest-growing economy, analysts at Nomura have written. The global financial services major is optimistic about "productivity-enhancing reforms" in the country and estimated the GDP growth for 2015 at 6.4 percent, adding that a "Goldilocks scenario of period of lower inflation and higher growth lies ahead."
1:00 pm: The market remained under pressure in afternoon trade with the Sensex falling 120.41 points to 28379.13 and the Nifty declining 57.30 points to 8472.85. The broader markets saw major selling pressure compared to benchmarks. The BSE Midcap and Smallcap indices dropped 1.9 percent and 2.5 percent, respectively. About 626 shares have advanced while 2150 shares declined on the Bombay Stock Exchange.
Though the market fell half a percent amid consolidation, Rahul Arora, CEO, Nirmal Bang Institutional Equities does not see Nifty breaching 8000 levels before December end. According to him, the FIIs are aggressively investing in India and the market is still about buying on dips. Tata Steel topped the selling list, falling more than 3 percent followed by ICICI Bank, L&T, Axis Bank, Tata Motors, TCS, ONGC, Bajaj Auto, Sesa Sterlite, Dr Reddy's Labs, Maruti, Hindalco, Cipla and Tata Power with 1-2 percent loss. However, BHEL outperformed, up 2 percent after Citi upgraded the stock to buy from sell earlier and raised target price by 90 percent to Rs 335 from Rs 176 earlier. Shares of HDFC, ITC, Infosys, Bharti Airtel, HUL and Gail gained 0.5-1.6 percent.
12:55pm Interview V Kumaraswamy, CFO, JK Paper expects the operating margins to inch back to 14-15 percent levels over the near to medium-term on back of the new capacity expansion in Odisha which has now begun to stablise. The new unit will also help them maintain costs efficiently, he adds. He also expects the company to start making profits by the end of this fiscal. In the Q2 the company did much better in terms of utilisations and the efficiencies too started kicking in, he adds. Volumes in the last quarter were around 98000 but they intend to do better in the coming quarters but realisation would differ from segment to segment, he says. Volume growth was around 31 percent in Q2 on back of new capacity expansion, says Kumaraswammy.
12:45pm Market Expert Considering the persistent bullish mood in the market, Rahul Arora, CEO, Nirmal Bang Institutional Equities does not see Nifty breaching 8000 level before December end. According to him, the FIIs are aggressively investing in India and the market is still about buying on dips.
12:30pm Gainers and Losers Shares of DLF, Power Grid Corporation, NMDC, Tata Steel, IDFC, Hindalco Industries, ICICI Bank, Larsen & Toubro and Axis Bank lost 2-4 percent. However, Zee Entertainment bucked the trend, up 3.71 percent followed by BHEL, Bharti Airtel, HDFC, M&M and Infosys with 0.5-2 percent. In the midcap space, DCM Shriram, Dish TV, JK Lakshmi Cement, Alstom T&D and PS IT Infra gained 2-4 percent whereas India Cements, Vaibhav Global, HCC and Indiabulls Real fell 7-10 percent.
12:00pm Market Check The market remained under pressure on the second day of Winter session in parliament. The Sensex declined 134.98 points to 28364.56 and the Nifty fell 58.95 points to 8471.20. The broader markets extended losses in noon trade with the BSE Midcap and Smallcap indices falling 2 percent and 2.4 percent, respectively. Four shares declined for every share advancing on the Bombay Stock Exchange.
Jagdish Malkani, member, BSE & NSE says the recent fall in the market is on the back of the stonewalling in the Parliament on the issue of blackmoney. He adds that investors should be cautious of the midcap space. Kotak Mahindra Bank received the approval from Reserve Bank of India to form the subsidiary to enter general insurance business. The bank says it will have to complete registration process with IRDA. The stock declined nearly 2 percent on profit booking.
11:55am Siemens earnings today Siemens India is expected to report a 12.9 percent decline in profit after tax at Rs 130 crore in the quarter ended September 2014 compared to Rs 149 crore in the year-ago period impacted by higher tax rate, according to the average of estimates of analysts polled by CNBC-TV18. In Q4FY13, profit after tax included an exceptional gain of Rs 52 crore. Hence after adjustment, profit after tax stands at Rs 97 crore in that quarter.
Total income from operations is seen rising 1 percent to Rs 3,290 crore during the fourth quarter of FY14 from Rs 3,259 crore in same quarter last year. The slow growth in topline may be because of flat or stagnant order backlog at the start of the year and the company has been facing client related issues in specific projects. Analysts feel the company may continue to report weak traction in energy and industrial segments. The company follows October-September period as its financial year. Operating profit (earnings before interest, tax, depreciation and amortisation) may jump 36.4 percent year-on-year to Rs 239 crore and operating profit margin may expand 190 basis points to 7.3 percent in Q4 on the back of a low base and the provisioning in the year-ago period.
11:30am Ricoh India in News Shares of Ricoh India rallied as much as 10.9 percent intraday after the office automation company bagged big order from the Department of Posts, Government of India. Currently the stock gained 4 percent. "Ricoh India has got an order worth Rs 1,370 crore from Department of Posts, Government of India towards five year project of Rural Information and Communication Technology (ICT)," said the company in its filing.
Meanwhile, the company had reported a loss of Rs 2.83 crore in the quarter ended September 2014 compared to profit of Rs 2.76 lakh in a year-ago period but the loss during the quarter was reduced significantly compared to loss of Rs 15.3 crore in June quarter. Net sales jumped 26.2 percent (up 65.2 percent quarter-on-quarter) to Rs 373.83 crore from Rs 296.23 crore on yearly basis.
11:00am Market Check The market is in correction mode after the spectacular rally seen on Monday. The Sensex is down 117.89 points at 28381.65 and the Nifty is down 53.25 points at 8476.90. About 551 shares have advanced, 1901 shares declined, and 60 shares are unchanged. Banks, infra, metals, metals and auto have seen the sharpest decline while only FMCG index outperforms. Tata Steel, Hindalco, Tata Power, L&T and Sesa Sterlite are major laggards while BHEL, Bharti, HDFC, ITC and Wipro are gainers in the Sensex.
Sustained foreign fund inflows in anticipation of further push to economic reforms by the government in the ongoing winter session of Parliament boosted sentiments, brokers said, adding a mixed trend at other Asian bourses following overnight gains on the US markets also helped the cause. Globally, Asia is mostly firm with the Shanghai composite rallying to a three-year high and Nikkei plays catch up. Brent crude is below USD 80 a barrel and is being closely watched ahead of the OPEC meet on Thursday.
10:45am Market Corrects Equity benchmarks declined further with the Sensex falling 148.74 points to 28350.80 and the Nifty losing 64.45 points to 8465.70. About 567 shares have advanced, 1783 shares declined, and 62 shares are unchanged. Sanjay Dutt, director, Quantum Securities is not bearish on the Indian market; however he cautions that prices have run up ahead of fundamentals and Indian stocks look very over-owned at the moment. According to him, there is a 80 percent probability that this is the peak for market this year and recommends market participants to brace for a good correction before January 31. He sees base for Nifty at 7600-7700 level. Those looking to bet on the market should keep adding on to stocks when there is a pullback, he says.
10:20am Divestment The ONGC and Coal India divestments could be within days of each other as the government is keen to conclude the divestment by December 15, say sources. The international road shows for ONGC and Coal India are done with and the domestic road shows are now underway. The government is expected to decide as early as next week which issue it will launch first, ONGC or Coal India.
Sources also say that foreign investors have sought a steep discount for the ONGC OFS issue. It is important to note that the cabinet had approved the ONGC OFS and had provided for a discount of upto 10 percent. Sources say investors have sought a steep discount as there is no clarity on the subsidy-sharing mechanism and that foreign investors are keen to participate in the Coal India stake sale. The government is hoping to lap up between USD 4-5 billion by divesting stake in both those companies.
10:00am Market Check Equity benchmarks slipped into red in morning trade led by profit booking in metals, banks and auto stocks. The 50-share NSE Nifty broke the 8500 level, falling 31.10 points to 8499.05 while the 30-share BSE Sensex declined 54.38 points to 28445.16. The broader markets lost ground too. The BSE Midcap and Smallcap indices fell 0.8 percent each. Advancing shares outnumbered declining ones by a ratio of 1306 to 687 on the Bombay Stock Exchange. Among banks, ICICI Bank, State Bank of India and Axis Bank slipped nearly a percent. In the metal space, Tata Steel and Hindalco Industries dropped over 2 percent while Sesa Sterlite declined over a percent.
Engineering and construction major Larsen & Toubro and power producer Tata Power declined 1.5 percent each. However, state-run power equipment maker BHEL climbed over 2 percent as brokerage house Citi upgraded the stock to buy from sell earlier and raised target price by 90 percent to Rs 335 (from Rs 176 earlier), implying 26 percent upside from current levels. Telecom operator Bharti Airtel gained a percent as company and American Tower Corporation signed an agreement for sale of Nigeria tower portfolio. Bharti's Nigeria portfolio has 4,800 towers. HDFC, HDFC Bank, Infosys, Hindustan Unilever, Maruti Suzuki and Wipro gained 0.3-0.8 percent.
9:50 am Stake sale: Hinduja Group flagship company Ashok Leyland has sold 32 percent stake in its subsidiary firm Hinduja Tech Ltd (HTL) to a strategic investor. The company did not disclose the amount for which the stake has been sold. "To unlock value, HTL has roped in a strategic investor to subscribe to the equity share capital of the company. Consequent to the allotment of equity shares to the strategic investor, the holding of Ashok Leyland now stands at 68 percent," Ashok Leyland Ltd said in a filing to the BSE. The stock is quoting at Rs 50.30, down Rs 1.45, or 2.80 percent on the BSE.
9:30 am GDP growth: The GDP growth is likely to have slowed down to 5.3 percent in the second quarter of the current fiscal, hit by lower farm output and subdued industrial activity, says a report. The second quarter GDP number is likely to be announced later this week. The economy grew at 5.7 per cent in the first quarter. "The economy is likely to have expanded 5.3 percent (y-o-y) in the second quarter. The slower growth can be put to weak rains affecting farm output, slow turnaround in domestic demand and subdued industrial activity," DBS Bank said in a report.
After hitting record high yesterday, the market has opened on a sluggish note Tuesday. The Sensex is down 14.18 points at 28485.36 and the Nifty is down 11.90 points at 8518.25. About 476 shares have advanced, 277 shares declined, and 26 shares are unchanged. Coal India, ONGC, ICICI Bank, HDFC and GAIL are major losers while Bharti Airtel, BHEL, Cipla, Sesa Sterlite and Sun Pharma are among the top gainers in the Sensex. The Indian rupee opened flat at 61.90 per dollar against previous day's closing value of 61.94 a dollar.The euro clings to modest gains having benefited from a short squeeze following an encouraging rebound in German business sentiment.
Ashutosh Raina of HDFC Bank said, "The unexpected rate cut by the People's Bank of China (PBoC) coupled with assurances of more stimulus from European Central Bank (ECB) and Bank of Japan (BoJ) have sent most of the global equity markets to their all time highs. Lower oil prices have acted as a catalyst to the prevailing bullish sentiment.'' He further added, ''The USD-INR pair has been mostly trading the Rs 61-62/dollar range, tracking the global developments. Strong FII/FDI flows should help the currency."
US stocks rose on hopes that China will take further accommodative monetary policy action if needed, while merger deals kept traders focused even as volumes were below average. Helping bullish sentiment was expectation central banks will continue to boost equities. Following last week's surprise rate cut, China's leadership and central bank are ready to cut interest rates again and to loosen lending restrictions.
In commodity space, Brent crude prices were flat as investors speculate that OPEC countries might surprise with an output cut above what market players expect when the producer group meets this week Gold is slightly below USD 1200 per ounce after a surprise rate cut in China raised hopes that demand for bullion in the top consumer would increase.