Sensex snaps 3-day gains, down 134 points ahead of RBI policy

Equity benchmarks snapped three-day gains on Monday with the Sensex falling over 100 points as investors looked cautious ahead of RBI policy. Profit booking and weak global cues also pushed the market lower; oil, capital goods, metals, power and HDFC group stocks lost ground whereas FMCG, auto and select technology stocks supported the market.

The 30-share BSE Sensex fell 134.37 points to close at 28559.62. The 50-share NSE Nifty slipped 32.35 points to 8555.90 after hitting a record high of 8623 in early trade.

The market may be nervous ahead of RBI policy, but the uptrend remains intact, feel experts.

Ridham Desai of Morgan Stanley expects the Sensex to hit 32,500 by end of December 2015.

''Indian equities are benefiting from the start of a new growth cycle, a benign global environment resulting in a positive shift in terms of trade and reforms, which can lift India's potential growth rate,'' he said.

Mark Matthews, Bank Julius Baer and Co is also bullish on Indian equities. He sees 50 percent upside from the current levels in the Indian market in the next 18-24 months on the back of improving economy and earnings growth.

However, according to Gautam Shah, Associate Director & Technical Analyst, JM Financial, it is time for investors to book serious profits as the market is showing signs of making a near term top. He expects the market to correct over the next 4 to 8 weeks.

Meanwhile, the Reserve Bank of India will unveil its fifth bimonthly monetary policy review on Tuesday. As the crude (one of the major contributors to inflation) has consistently been falling, investors feel the RBI may consider rate cut or may indicate rate cuts in next policy meets. A CNBC-TV18 poll shows that 95 percent economists don't expect a rate cut on Tuesday while 60 percent expect the governor to sound dovish.

The HSBC PMI hit a 21-month high in November at 53.3 versus 51.6 in October. Manufacturing operating conditions in India improved for the thirteenth month in a row in November, supported by stronger growth of output and new work intakes.

On the global front, Asian markets (barring Japan) closed lower with the Hang Seng falling 620 points while the Nikkei index hit a 7-year high. China's manufacturing PMI hit six-month low at 50 in November from 50.4 in October.

European markets like France's CAC, Germany's DAX and Britain's FTSE were down 0.4-0.8 percent (at 16 hours IST) after Germany's November manufacturing PMI was lowest in 17-month at 49.5 versus 51.4 in October.

The commodity collapse continued as oil saw its longest losing streak since 2008 crisis. Brent crude slumped further to USD 68 a barrel, down almost 3 percent today. Both Nymex and Brent have fallen for five straight months.

Back home, shares of ONGC and Hindalco Industries plunged 4 percent each followed by Reliance Industries, HDFC, Tata Steel, BHEL, Sesa Sterlite and Tata Power with 2-3 percent fall.

Infosys was down 0.2 percent as it will trade ex-bonus from Tuesday onwards. The software services exporter had announced the issue of bonus shares in the ratio of 1:1.

However, Asian Paints was the biggest gainer on the Nifty, up 7 percent after Bank of America Merrill Lynch upgraded the stock to buy from neutral and raised target price to Rs 875 from 680 (18 percent potential upside).

Auto stocks remained in focus today. Car maker Maruti Suzuki was up 1.6 percent after it recorded a 19.5 percent growth in November sales. However, the company decided to recall 3796 Ciaz cars to replace the relevant part of clutch operation system.

Ashok Leyland was up 2.5 percent as the commercial vehicle maker sold 7,732 units in November, up 44 percent year-on-year led by strong growth in medium and heavy commercial vehicles sales. TVS Motor Company jumped 3 percent on reporting a 36 percent sales growth in November. Mahindra & Mahindra declined 2 percent as it recorded a 13 percent degrowth in November sales.

Hero Motocorp climbed 3.7 percent and Tata Motors gained 0.6 percent ahead of monthly sales data in evening today.

TCS, Hindustan Unilever, Axis Bank and Wipro were other gainers on the Sensex, up 1-3 percent.

Drug makers Sun Pharma and Ranbaxy Labs gained 2-4 percent intraday after Foreign Investment Promotion Board cleared Sun Pharma-Ranbaxy merger deal. But the comments from Competition Commission of India on the deal report dragged Sun Pharma half a percent. Ranbaxy trimmed gains to 0.7 percent.

Sources told CNBC-TV18 that CCI sent back merger deal to companies to make changes and asked both companies to divest some brands to avoid monopoly.

Crude impact continued on stocks. HPCL gained 1.2 percent while Cairn India lost 1.3 percent. Aviation stocks like SpiceJet and Jet Airways also continued to fly high on the back of declining crude prices, up 16.5 percent and 8 percent respectively. Berger Paints surged 12 percent.

In the broader space, shares of Shree Ganesh Jewellery and Gitanjali Gems were up 20 percent after the Reserve Bank of India announced the government had scrapped the 80:20 scheme, which mandated that 20 percent of raw gold imported into the country had to be exported as finished product. Tribhovandas Bhimji Zaveri, Tara Jewels, Titan Company and PC Jeweller gained 3-5 percent.

Mangalore Chemicals gained 9 percent on news that Vijay Mallya has resigned as a director from the company. This development brought more clarity and is likely to strengthen the case for Deepak Fertiliser in the ongoing race for Mangalore Chemicals.

Declining shares outnumberd advancing ones by a ratio of 1693 to 1213 on the Bombay Stock Exchange.

03:30pm Market Closing
Equity benchmarks snapped three-day winning streak on Monday as investors looked cautious ahead of RBI monetary policy review scheduled to be announced on Tuesday. The 30-share BSE Sensex fell 134.37 points to 28559.62 and the 50-share NSE Nifty slipped 32.35 points to close at 8555.90.

About 1211 shares advanced while 1696 shares declined on the Bombay Stock Exchange.

Hero Motocorp spiked 4.09 percent ahead of November sales data. Asian Paints surged 7 percent after Bank of America Merrill Lynch upgraded the stock to buy from neutral and has upped target price to Rs 875 from Rs 680.

HUL, TCS, Axis Bank, DLF and IndusInd Bank rallied 1.5-3.5 percent. Maruti Suzuki trimmed gains to 1.39 percent after it decided to recall 3796 Ciaz cars to replace the relevant part of clutch operation system, but its November sales grew by 19.5 percent year-on-year to 1.1 lakh units.

However, ONGC, BHEL, Hindalco Industries, Reliance Industries, Tata Power, NMDC and Jindal Steel fell 2.5-4 percent.

03:15pm Ashok Leyland in News
Commercial vehicle maker Ashok Leyland sold 7,732 units in November, up 44 percent compared to same period last fiscal, led by strong growth in medium and heavy commercial vehicles sales (M&HCV)

M&HCV sales grew by 92 percent to 5,204 units while light commercial vehicle sales fell 5 percent to 2,528 units during the same period. The stock gained 2 percent.

03:00pm Moody's downgrades Japan
Moody's Investors Service today downgraded Japan's sovereign debt rating by one notch to A1 from Aa3, citing heightening uncertainty over the country's ability to hit its debt-reduction goal.

The announcement briefly sent the yen to a seven-year low against the dollar and pushed 10-year Japanese government bond (JGB) futures down by 10 ticks.

The US rating agency said the outlook was stable, reports Reuters.

02:45pm Sun Pharma, Ranbaxy off day's high
Competition Commission of India has directed Sun Pharma-Ranbaxy to divest brands, reports CNBC-TV18 quoting unnamed sources.

Sources say CCI sent back merger deal to companies to make changes and asked both companies to divest some brands to avoid monopoly. According to CCI, 37 drug categories are under /scanner for potential dominance.

It is learnt that companies may have to dilute market share in some drug categories.

Sun-Ranbaxy merger is yet to get CCI and FTC approvals. FIPB, on November 28, approved the proposal of the company for issuing equity shares of the company to the non-resident investors of Ranbaxy Laboratories pursuant to the merger of Ranbaxy Laboratories into Sun Pharmaceutical Industries Limited through the scheme of arrangement between both companies.

Shares of Sun Pharma declined 0.7 percent and Ranbaxy gained 0.1 percent.

02:30pm Maruti recalls Ciaz cars
Maruti Suzuki India said it will proactively undertake a service campaign to inspect a suspected fault and replace the relevant part of clutch operation system of a batch of 3796 Ciaz cars. These cars are among those manufactured till November 7, 2014.

02:00pm Market Check
The market remained quiet as the Nifty is consolidating around the 8600 level while the BSE Midcap gained 0.2 percent. The market breadth is in favour of declines; about 1214 shares advanced while 1560 shares declined on the Bombay Stock Exchange.

The 30-share BSE Sensex fell 66.16 points to 28627.83 and the 50-share NSE Nifty slipped 15.40 points to 8572.85.

Mark Mathews of Julius Baer expects the Indian markets to appreciate by another 50 percent over the next 12-18 months and says India continues to remain the cleanest shirt in the laundry basket.

The month of November provided cheer to the auto sector. Companies like Maruti Suzuki, TVS Motor and Ashok Leyland showcased a recovery in November sales while tractor makers like Escorts sulked due to weak tractor sales post slow monsoons.

In other positive macro news, the HSBC PMI hit a 21-month high in November at 53.3 versus 51.6 in October. Manufacturing operating conditions in India improved for the thirteenth month in a row in November, supported by stronger growth of output and new work intakes.

In global action, the Hong Kong market is the weakest link with a 620 points fall while the Nikkei index hit a 7-year high. China manufacturing gauge hit six-month low as China PMI fell to 50 in November from 50.4 in October.

European markets like France's CAC, Germany's DAX and Britain's FTSE declined 0.7-1 percent after German data. Germany November manufacturing PMI is lowest in 17 months at 49.5 versus 51.4 in October.

The commodity collapse continued as oil saw its longest losing streak since 2008 crisis. Brent crude slumped further to USD 68 a barrel, down almost 3 percent today. Both Nymex and Brent have fallen for five straight months.

01:25pm FII View
Mark Matthews of Bank Julius Baer and Co is bullish on Indian equities. He sees 50 percent upside from the current levels in the Indian market in the next 18-24 months on the back of improving economy and earnings growth.
01:00pm Market Check

Equity benchmarks remained directionless with the Nifty hovering around 8590 level ahead of RBI policy scheduled to be announced on Tuesday. FMCG, healthcare, technology and select auto stocks supported the market while capital goods, metals, oil and power stocks lost ground.

The Sensex declined 0.43 points to 28693.56 while the Nifty gained 1.55 points at 8589.80. About 1233 shares have advanced, 1349 shares declined, and 81 shares are unchanged.

Auto companies remained in focus on account of November sales data expected today. Maruti gained 2 percent today as sales grew 19.5 percent year-on-year to 1.1 lakh units with exports up over 50 percent and domestic sales jumping 17 percent.

TVS Motor climbed over 3 percent as the two-wheeler maker recorded a 36 percent sales growth in November and its exports grew by 55 percent year-on-year to 39,215 units. Its rival Hero Motocorp gained over 2 percent ahead of sales numbers.

Hindustan Unilever topped the buying list on the Sensex, up nearly 3 percent followed by TCS, Axis Bank, Cipla and Wipro with over 1.5 percent gain.

However, shares of Reliance Industries, HDFC, ONGC, State Bank of India, Tata Steel, Sesa Sterlite, BHEL, Tata Power, Gail India and Hindalco Industries fell 1-2.8 percent.

Gold companies like Titan, Shree Ganesh Jewelley, TBZ and PC Jeweller are zooming ahead, up 6-20 percent after the Reserve Bank of India removed the 80:20 scheme which curbed gold imports. This came as a big relief for the jewellery industry as it reduces bureaucratic hassles, delays and uncertainty.

Meanwhile, market sentiment is supported by lower global crude oil prices. Brent crude slipped below USD 70 a barrel. Prices have fallen for fifth straight months and are on longest losing streak since the 2008 financial crisis.

Bonds rallied as weak GDP and falling crude prices led market to hope for an outside chance that the RBI will cut rates tomorrow. CNBC-TV18 poll shows that 95 percent economists don't expect a cut tomorrow while 60 percent expect the governor to sound dovish.

12:55pm TVS Motor Company in News
TVS Motor, one of the largest two-wheeler makers, recorded a 36 percent sales growth in November at 2.2 lakh units compared to 1.62 lakh units in same quarter last year.

Exports grew by 55 percent year-on-year to 39,215 units.

Two-wheeler sales jumped 36 percent to 2.1 lakh units while scooter sales increased by 62 percent to 62,223 units and motorcycle sales rose by 41 percent to 86,424 units during the same period.

"Three wheeler sales of the company registered an increase of 44 percent, growing from 6,304 units in November 2013 to 9,067 units in November 2014, said the company in its filing.

12:40pm Interview
Yadindra Kumar, GM Finance at Thangamayil Jewellery said with the RBI scrapping the 80:20 rule on gold imports, the availability of gold would improve and also help curb gold smuggling.

It would also mean that the procurement costs for gold companies would be lower, he said in an interview to CNBC-TV18.

According to him, as a result of this move, the company per se would see a volume growth of 25. Moreover, the upcoming festive season in December would also give a fillip to volumes, he added.

12:20pm FM to introduce GST Bill in winter session
Finance Minister Arun Jaitley today expressed hope that the much-awaited GST Bill, which provides for a uniform indirect tax structure, would be introduced in the current winter session of Parliament.

"We will try and introduce GST (Goods and Services Tax) Bill in this session...GST Bill would be taken up by the Cabinet after Empowered Committee (of state finance Minister)
meeting on December 12," he said here.

The government has proposed to implement GST from April 1, 2016, and the new Finance Commission may be set up ahead of its schedule to look into the issues related to the new indirect tax regime.

The GST will subsume indirect taxes like excise duty and service tax at the central level and VAT on the states front, besides local levies.

There are differences between the Centre and states on some issues with regard to the implementation of GST that includes the revenue neutral rate and keeping petroleum,
liquor out of the ambit.

While a sub-committee on GST has suggested that the revenue neutral rate of GST be pegged at about 27 percent, the states are yet to decide on it.

It had suggested states GST at 13.91 percent and Central GST at 12.77 percent, reports PTI.

12:00pm Market Check
The market remained firm with the Nifty hitting fresh record high of 8623 led by classic defensives like FMCG and pharma stocks. Rate sensitives like banking and auto also lent support ahead of RBI policy tomorrow.
The Sensex rose 15.60 points to 28709.59 and the Nifty advanced 8.50 points to 8596.75. About 1196 shares have advanced, 1247 shares declined, and 65 shares are unchanged.

The market sentiment has been supported by lower crude prices. Brent crude fell below USD 70 a barrel. Prices have fallen for five straight months and are on longest losing streak since the 2008 financial crisis.

Crude impact continued on stocks. HPCL gained 1.5 percent while Cairn India lost 1.5 percent. Asian Paints extended Friday's gains after Bank of America Merrill Lynch upgraded the stock to buy. Aviation stocks like SpiceJet and Jet Airways also continued to fly high on the back of declining crude prices, up 8-14 percent.

Auto companies are in focus on account of November sales data expected today. Maruti Suzuki gained almost 2 percent today as sales are better-than-expected, up 19.5 percent Y-o-Y with exports up over 50 percent and domestic sales jumping 17 percent.

Gold companies like Titan, Shree Ganesh Jewelley, TBZ and PC Jeweller are zooming ahead, up 6-20 percent after the Reserve Bank of India removed the 80:20 scheme which curbed gold imports. This came as a big relief for the jewellery industry as it reduces bureaucratic hassles, delays and uncertainty.

Mangalore Chemicals gained 12 percent on news that Vijay Mallya has resigned as a director from the company. This development brought more clarity and is likely to strengthen the case for Deepak Fertiliser in the ongoing race for Mangalore Chemicals.

Meanwhile, bonds rallied as weak GDP and falling crude prices led market to hope for an outside chance that the RBI will cut rates tomorrow. CNBC-TV18 poll shows that 95 percent economists don't expect a cut tomorrow while 60 percent expect the governor to sound dovish.

11:50am Asian Paints top gainer
Asian Paints is the biggest winner on the Nifty, up 5 percent as Bank of America Merrill Lynch upgraded the stock to buy from neutral and has upped target price to Rs 875 from Rs 680.

The brokerage sees growth accelerating by a compounded rate of 29 percent over FY15-17. It upgraded FY16/FY17 earnings per share by 11 percent/12 percent. BoAML also see margins rising 270 basis points in FY15-17 due to benign raw material costs and portfolio premiumisation.

11:40am Maruti in News
India's largest car maker Maruti Suzuki sold 1.1 lakh units in November, up 6.8 percent compared to previous month and 19.5 percent compared to same month last year. The sale of compact, super compact, mid-size cars and vans helped the company to report good growth in the month gone by.

Domestic sales grew by 17 percent on yearly basis to 1 lakh units while exports surged 52.7 percent to 10,123 units during the the same period.

Passenger vehicle sales rose by 14.9 percent to 82,306 units in November compared to corresponding period of last fiscal.

Compact cars like Ritz, Celerio, Swift and Dzire recorded a 13.8 percent sales growth while mid-size cars like SX4 and Ciaz (launched in October 2014) showed 2516 percent growth in sales at 5,232 units. Omni and Eeco's sales grew by 52.1 percent year-on-year to 12,203 units in November.

11:25am FII View
Brokerage house Citi has raised its Sensex target for December 2015 by 16 percent to 33,000, and has forecast a target of 9850 for the Nifty.

''We expect 2015 to be a good year; 2015 should be front-loaded with falling rate gains, back-loaded with an actual economic/investment recovery,'' said the Citi note to clients.

The brokerage expects the RBI to reduce benchmark rates by 75 basis points during the year. Lower rates coupled with a rising economy and uptick in corporate earnings growth could fire the market even more, the brokerage said.

Citi is overweight on banks, oil & gas, cement and pharma stocks.

11:00am Market Check
The market gained some strength after HSBC PMI touched 21-month high today. The 30-share BSE Sensex advanced 79.53 points to 28773.52 and the 50-share NSE Nifty rose 25.45 points to 8613.70.
Advancing shares outnumbered declining ones by a ratio of 1268 to 1007 on the Bombay Stock Exchange.

Manufacturing operating conditions in India improved for the thirteenth month in a row in November, supported by stronger growth of output and new work intakes. Foreign orders and buying activity also rose during the month, while employment remained broadly stable, said HSBC in its report.

Rising from 51.6 to 53.3, the headline seasonally adjusted HSBC India Purchasing Managers' Index (PMI) - a composite indicator designed to give an accurate overview of manufacturing operating conditions - reached a 21-month peak in November.

"Manufacturing activity accelerated further in November led by higher output and new orders. Domestic orders saw the biggest increase, even as new export orders continued to be strong. The sharp rise in input prices was surprising, but future prints may be lower as falling commodity prices eventually lead to softer intermediate good prices," said Pranjul Bhandari, Chief India Economist at HSBC.

Maruti Suzuki, Axis Bank and Hindustan Unilever topped the buying list, up over 2 percent followed by TCS, Hero Motocorp, Dr Reddy's Labs, Sun Pharma and Wipro with more than 1 percent gain.

However, Reliance Industries, ONGC, BHEL, Sesa Sterlite, Tata Steel and Tata Power fell over a percent.

10:50am Mangalore Chemicals in focus
Shares in Mangalore Chemicals and Fertilizers (MCF) jumped 15 percent after the company informed the stock exchanges this morning that liquor baron Vijay Mallya had stepped down from its board with immediate effect.

Mallya, whose UB Group is going through choppy times following a debt crisis at grounded airliner Kingfisher, was facing a tough battle to retain control of MCF after rival Deepak Fertilizers had initiated a hostile takeover of the firm.

UB Group (which holds a 22 percent stake in MCF) had later teamed up with Zuari (which has 16 percent) and announced a joint open offer to acquire additional stake in the firm to rival the challenge from Deepak, which had successfully acquired 25 percent in MCF and announced its own open offer.

10:30am HSBC PMI improves
Manufacturing operating conditions in India improved for the thirteenth month in a row in November, supported by stronger growth of output and new work intakes. Foreign orders and buying activity also rose during the month, while employment remained broadly stable, said HSBC in its report.

Rising from 51.6 to 53.3, the headline seasonally adjusted HSBC India Purchasing Managers' Index (PMI) - a composite indicator designed to give an accurate overview of manufacturing operating conditions - reached a 21-month peak in November.

"Manufacturing activity accelerated further in November led by higher output and new orders. Domestic orders saw the biggest increase, even as new export orders continued to be strong. The sharp rise in input prices was surprising, but future prints may be lower as falling commodity prices eventually lead to softer intermediate good prices," said Pranjul Bhandari, Chief India Economist at HSBC.

10:00am Market Check
Equity benchmarks remained lacklustre in trade with the Sensex falling 18.63 points to 28675.36 and the Nifty declining 1.45 points to 8589.70. The BSE Midcap and Smallcap indices were marginally in green.
About 1157 shares have advanced, 875 shares declined, and 54 shares are unchanged on the Bombay Stock Exchange.

Ridham Desai, Morgan Stanley says the brokerage house expects the bull market to continue in 2015. "Indian equities are benefiting from the start of a new growth cycle, a benign global environment resulting in a positive shift in terms of trade and reforms, which can lift India's potential growth rate," he reasoned.

Shares of Infosys, Reliance Industries, Larsen & Toubro, ONGC, BHEL, Tata Steel and Tata Power declined around a percent while ICICI Bank, TCS, Axis Bank, ITC, HUL, Sun Pharma, Hero Motocorp and Dr Reddy's Labs gained 0.5-1.8 percent.

09:47am Market Check
Equity benchmarks are directionless after positive start. The Sensex declined 17.86 points to 28676.13 and the Nifty fell 1.70 points to 8586.55.

About 978 shares have advanced, 678 shares declined, and 45 shares are unchanged.

09:45am Sun Pharma, Ranbaxy in focus
Sun Pharmaceutical Industries said Foreign Investment Promotion Board (FIPB) has approved the proposal of the company for issuing equity shares of the company to the non-resident investors of Ranbaxy Laboratories pursuant to the merger of Ranbaxy Laboratories into Sun Pharmaceutical Industries through the scheme of arrangement between Ranbaxy Laboratories Limited and Sun Pharmaceutical Industries Limited.

09:30am FII View
Ridham Desai, Morgan Stanley says the brokerage house expects the bull market to continue in 2015. "Indian equities are benefiting from the start of a new growth cycle, a benign global environment resulting in a positive shift in terms of trade and reforms, which can lift India's potential growth rate," he adds.

"Our December 2015 Sensex target is 32,500. From a portfolio perspective we back cyclical stocks and sectors that could benefit from policy changes. We prefer avoiding high beta stocks. We are overweight energy, consumer discretionary, financials, technology. We are underweight consumer staples, healthcare, industrials, materials and utilities," says Desai.

09:15am Market Check
The market started the week on a positive note on Monday. The Sensex climbed 93.78 points to 28787.77 while the Nifty reclaimed 8600, up 25.95 points at 8614.20.

About 728 shares have advanced, 274 shares declined, and 43 shares are unchanged on the Bombay Stock Exchange.

Sun Pharma, SBI, Hero Motocorp, NTPC, Infosys, Asian Paints, BPCL and HCL Technologies topped the buying list in early trade, up 1-3.6 percent. However BHEL, Coal India, Reliance Industries, HUL, ONGC, Cairn India and DLF lost 0.5-2 percent.

The Indian rupee slipped by 21 paise in the early trade on Monday. It has opened at 62.23 per dollar versus 62.02 on Friday.

Agam Gupta of Standard Chartered said," The dollar strength against other currencies is leading a similar move with the rupee too. The demand from the local government banks is persistent and is expected to continue."

He further added, "Foreign inflows are expected to continue and exporters are likely to sell on upticks to Rs 62.50/dollar. We expect to see a range of Rs 62.10-62.50/dollar for the day."

Meanwhile, Asian markets are mixed this morning, as Japan's benchmark index rose to a seven-year peak while Yen marked a new seven-year low. China's official PMI fell to 50.3 in November, missing estimates for a 50.6 figure and slowing from October's reading of 50.8.

In the US, Wall Street finished lacklustre on Friday amid a slide in oil prices. The Dow Jones and the Nasdaq ended flat and the S&P 500 was down a quarter of a percent. The Dow and S&P 500 posted a second straight month of gains. Meanwhile the US ten year bond yield dipped sharply to 2.17 percent.

In commodities, Nymex crude was down 10.2 percent hitting its lowest settlement since September 2009, currently trading at USD 64. Meanwhile, Brent is trading below USD 70 per barrel.

From precious metals space, gold slid 2 percent and silver slumped more than 6 percent to its lowest since 2009 after Swiss voters overwhelmingly rejected proposals on Sunday to boost gold reserves.