Sensex drops 604 points as Fed rate hike worry looms

Equity benchmarks plunged Monday, mirroring the nervousness in global markets about an earlier-than-expected rate hike by the US Federal Reserve.

The Sensex crashed 604.17 points or 2.05 percent to close at 28844.78, and the Nifty tumbled 181 points or 2.03 percent to end the day at 8756.75.

Shares from banking, capital goods, metals, power and realty sectors took a beating as the steep fall triggered a vicious cycle of margin calls.

On Friday, US shares had fallen around 1.5 percent as strong employment data for February prompted speculation that the Fed may hike rates ahead of schedule.

Expectations of a rate hike could lead to more funds flowing into US treasury bonds in the coming days, which in turn could mean less money flows into emerging markets.

''Emerging market equities face but a dominant theme has been for the past several quarters and is likely to be for many more quarters to come is the strength in the US dollar because we are living in a world where the recovery is very asynchronous,'' said George Hoguet of State Street Global Advisors in an interview to CNBC-TV18 today.

''In the short-term at least I would say the outlook is not particularly positive for emerging market equities,'' he said.

While India's currency is in a far better shape compared to other emerging markets, its equities look expensive as earnings growth has been weak and could remain that way for at least another couple of quarters.

''I think despite legislation (passing of key Bills), the market will come under pressure because of earnings,'' said Sandeep Bhatia of Kotak Securities in an interview to CNBC-TV18 today.

''I don't think anyone is stopping capacity expansion because they don't have land in the near-term, there is enough land available, it is a question of demand,'' he said.

European stocks traded lower, following falls in Asia and a drop on Wall Street on Friday after the US jobs data. Britain's FTSE lost 1.4 percent and France's CAC & Germany's DAX fell 0.4-0.7 percent (at 16 hours IST). The US economy added 2,95,000 new jobs in February - more than forecast - and the unemployment rate fell to a more than 6.5-year low of 5.5 percent from 5.7 percent in January.

The BSE Bank, Capital Goods, IT, Metal, Power and Realty indices were down 2-3 percent.

ICICI Bank, Axis Bank, Sesa Sterlite, Tata Power, BHEL, GAIL, Hindalco Industries, NTPC and Larsen & Toubro were prominent losers on Sensex, down 3.5-5.5 percent.

Infosys, HDFC Bank, ITC, Reliance Industries and HDFC lost 2-3 percent whereas Hindustan Unilever outperformed, up 3.4 percent. Sun Pharma and Dr Reddy's Labs gained more than 0.6 percent.

Ranbaxy Labs climbed over 1 percent to end at record closing high of Rs 815.90 after the Sun Pharma-Ranbaxy merger received the last approval. Punjab & Haryana High Court today approved the merger of both companies.

Jindal Steel spiked 4.8 percent after its power generation unit Jindal Power won Tara coal block in Chhattisgarh for Rs 2,103 crore.

The BSE Midcap Index was down 1.3 percent and Smallcap lost 0.92 percent. Declining shares outnumbered advancing ones by a ratio of 2:1 on the Bombay Stock Exchange.

03:30 pm Market close: It is a bloody Monday on Dalal Street. The bulls fell prey to profit booking. The Sensex ended down 604.17 points or 2 percent at 28844.78. The Nifty also skid 181.00 points or 2 percent at 8756.75. About 995 shares advanced, 1882 shares declined and 178 shares were unchanged.

Sesa Sterlite, Hindalco, GAIL, ICICI Bank and Axis Bank were among laggards. HUL gained over 3 percent while Dr Reddy's Labs, Sun Pharma and Maruti were top gainers in the Sensex.

03:25pm World market: Stocks fell and the dollar held firm in the wake of forecast-beating US jobs numbers that stoked expectations the Federal Reserve could raise interest rates sooner than previously thought.

In Europe, most euro zone government bond yields fell on the first day of the European Central Bank's 1 trillion euro bond-buying programme.

European stocks opened lower, following falls in Asia and a drop on Wall Street on Friday after the US jobs data. The US economy added 295,000 new jobs in February -more than forecast -and the unemployment rate fell to a more than 6.5-year low of 5.5 percent from 5.7 percent in January.

This raised expectations the Fed would at its March meeting drop a reference to "patience" on the timing of a rate hike, opening the door for a rate rise in June.

03:18pm Market slides: The market has skid further as the Sensex is down 629.05 points or 2 percent at 28819.90. The Nifty is down 190.30 points or 2 percent at 8747.45. About 946 shares have advanced, 1910 shares declined, and 175 shares are unchanged.

03:15pm Gold price: Gold prices recovered by Rs 85 to Rs 26,625 per 10 grams at the bullion market today on the back of buying by jewellers and retailers at prevailing levels amid a firm global trend. Silver, however, remained under selling pressure and lost Rs 100 at Rs 36,200 per kg. Bullion traders said apart from fresh buying by jewellers and retailers at existing levels, a firming global trend where gold rose from a three-month low on speculation of increased demand in China, mainly influenced gold prices.

03:00pm Market Update: The Sensex tanked 541.18 points or 1.84 percent to 28907.77 and the Nifty plunged 166.85 points or 1.87 percent to 8770.90.

About 947 shares have advanced, 1844 shares declined, and 189 shares are unchanged on the BSE.

02:45pm Ranbaxy, Sun Pharma at new high: Ranbaxy Laboratories says the Hon'ble High Court of Punjab & Haryana has orally pronounced the order today, approving the scheme of arrangement involving merger of Ranbaxy Laboratories with Sun Pharmaceutical Industries under Sections 391 to 394, Sections 78 and 100 of the Companies Act. 1956 and Section 52 of the Companies Act, 2013.

Certified true copy of the order is awaited, it adds.

02:30pm MF AUM base: Buoyed by robust capital inflows and strong participation of retail investors, the asset base of mutual fund industry has crossed Rs 12 lakh crore mark in February.

The country's 45 fund houses together have an average assets under management (AUM) of Rs 12,02,196 crore at February-end, up from Rs 11,81,356 crore in January, according to the data by Association of Mutual Funds in India (AMFI). In December, assets base of the industry stood at Rs 10.5 lakh crore.

Industry experts said the monthly rise in AUM is largely on account of strong capital inflows and a sharp rally in stock markets. Besides, retail participation in equity schemes increased significantly in the post-election rally begun in May. "There is optimism among investors and they are bullish on the economy and markets, which helped retail investors to increase participation," an expert said.

Overall, the fund houses together witnessed an inflow of over Rs 18,000 crore last month. Of this inflow, liquid or money market category witnessed an inflow of Rs 8,784 crore, while equity segment saw an inflow of Rs 5,217 crore.

02:15pm Gold Update: Gold edged up today, but remained near a three-month low as the dollar hit an 11-year high after a strong US jobs report boosted expectations the Federal Reserve would soon hike interest rates.

Spot gold rose to USD 1,172.41 an ounce, retaining most Friday's near 3 percent drop. It reached its weakest since December 1 of USD 1,163.45 in the previous session, when data showed US jobless rate fell to the lowest since May 2008.

US nonfarm payrolls increased 295,000 last month after rising 239,000 in January.

The dollar drifted to its highest in more than 11 years against a basket of major currencies early on Monday.

02:00pm Market Check
Indian equity benchmarks fell nearly 2 percent in afternoon trade on weakness in global markets. Investors feel the Federal Reserve could hike interest rates sooner rather than later after a strong US jobs report.

The 30-share BSE Sensex tanked 521.95 points or 1.77 percent to 28927 and the 50-share NSE Nifty declined 167.05 points or 1.87 percent to 8770.70. The BSE Midcap and Smallcap indices lost 1 percent and 0.7 percent, respectively.

More than two shares declined for every share advancing on the Bombay Stock Exchange.

Amisha Vora of Prabhudas Lilladher believes the market will have to spend some more time in the 8500-9000 range.

She says earnings need time to catch up and there has been no short-term booster dose that has come from the government through the Budget. Hence India continues to remain vulnerable to each global event – be it the strengthening of the dollar or the re-emergence of expectation of interest rate hike in the US earlier than expected, he says. According to her, all this is spooking investors.

ICICI Bank, Sesa Sterlite, Hindalco Industries, GAIL and Axis Bank topped the selling on Sensex, down 3.5-4 percent. Infosys, HDFC Bank, L&T, ITC, HDFC, TCS, Reliance Industries, NTPC and M&M shed 1-3 percent.

However, Hindustan Unilever bucked the trend, up 2.6 percent followed by Sun Pharma and Dr Reddy's Labs with marginal gains.

1:55 pm  FII view: Robust jobs growth in the US is the talking point in market across globe. However, wages still remain very subdued, it rose a miniscule 2 percent year-on-year, which means the case for a rate hike isn't that strong as perceived, feels Mark Matthews of Bank Julius Baer & Co. In an interview to CNBC-TV18, he said the matter is more complex than it appears and ruled out interest rate hike any time soon. ''Certainly not in June,'' but added that the Fed won't hike it more than 25 bps at one go. "So by end of this year if the Fed raises rates two more times, it would still be hovering around historic lows, Matthews analysed.

1:30 pm Market check: The Sensex is down 478.61 points or 1.6 percent at 28970.34 and the Nifty is down 170.40 points or 1.9 percent at 8767.35. About 908 shares have advanced, 1741 shares declined, and 199 shares are unchanged.

Sesa Sterlite, GAIL, ICICI Bank, Axis Bank and BHEL are top losers in the Sensex.

The market is still under pressure as the Sensex is down 389.48 points or 1 percent at 29059.47. The Nifty is down 124.75 points or 1 percent at 8813.  About 987 shares have advanced, 1613 shares declined and 189 shares are unchanged.

HUL, Dr Reddy's Labs, Bajaj Auto, Sun Pharma and Maruti are top gainers in the Sensex. Among the losers are Sesa Sterlite, GAIL, ICICI Bank, Axis Bank and NTPC.

Oil prices will reverse their recent gains as global crude inventories begin to increase again, with US crude likely to drop as far as USD 40 a barrel in the near-term, Goldman Sachs said.

Oil prices rose by almost a third between January and February on the back of Middle East supply disruptions, strong winter demand and high refinery margins. That followed a rout that had seen price falls of around 60 percent between June 2014 and January this year.

But Goldman said that "the activity pull is sequentially weakening" and that global crude inventories would therefore rise, pushing West Texas Intermediate (WTI) crude to $40 a barrel, levels last seen at the peak of the global financial crisis in late 2008, early 2009. It stood at around $49.40 on Monday.

12:45pm Monnet Ispat on buyers' radar: Monnet Ispat is planning to sell stake in power and sponge business, sources tell CNBC-TV18. The company is likely to sell 87.5 percent in Monnet Power and 35.17 percent in Orissa Sponge. JSW Group is learnt to be talks to buy out these assets.

According to sources, JSW Energy and Tata Power are eyeing Monnet Power. JSW is said to be willing to spend up to Rs 4000 crore for the power business. The valuation of Monnet Power is pegged at about Rs 3500 crore, while that of Orissa Sponge's stake is in the range of Rs 300-400 crore, which is being eyed by JSW Steel.

The buyer will have option of hiking stake in Orissa Sponge over the next 3-5 years, sources say. Monnet Ispat's consolidated debt as of March 2014 stands at Rs 10,000 crore.

12:30pm BHEL in focus: State-run BHEL has commissioned another 660 MW super-critical or energy efficient unit of NTPC's Barh thermal power project in Bihar.

Meanwhile, the company said it is presently executing orders for 36 sets of super-critical boilers and 31 sets of super-critical turbine generators, which are in various stages of execution. "These orders include orders from central and state sectors as well as private sectors," BHEL said in a statement.

Super-critical units are more efficient, consume lesser coal and are eco-friendly. The key equipment for the project has been manufactured by BHEL at its Haridwar, Trichy, Hyderabad and Bengaluru works, while the construction of the plant was undertaken by the company's Power Sector - Eastern Region.

12:15pm FII View: Robust jobs growth in the US is the talking point in market across globe. However, wages still remain very subdued, it rose a miniscule 2 percent year-on-year, which means the case for a rate hike isn't that strong as perceived, feels Mark Matthews of Bank Julius Baer & Co.

In an interview to CNBC-TV18, he said the matter is more complex than it appears and ruled out interest rate hike any time soon.

''Certainly not in June,''  but added that the Fed won't hike it more than 25 bps at one go. "So by end of this year if the Fed raises rates two more times, it would still be hovering around historic lows, Matthews analysed.

12:00pm Market Check
The market extended losses in noon trade with the Sensex losing nearly 400 points dragged by weakness in banking, metals and technology stocks.

The 30-share BSE Sensex fell 385.01 points or 1.31 percent to 29063.94 and the 50-share NSE Nifty slipped 121 points or 1.35 percent to 8816.75. The BSE Smallcap and Midcap indices also traded weak but fell lesser than key indices, down 0.3-0.5 percent.

About 955 shares have advanced, 1500 shares declined, and 179 shares are unchanged on the Bombay Stock Exchange.

TCS declined more than 1 percent as the management told analysts that they expect Q4 revenue growth to be in-line with last year's trend. CLSA slashed FY16 and FY17 earnings estimates for TCS by 4 percent while Religare too downgraded the stock to hold with a target of Rs 2,700 per share.

Sesa Sterlite, NTPC, GAIL, Axis Bank and Hindalco Industries topped the selling list on Sensex, down 3-4 percent. ICICI Bank, Infosys, HDFC, HDFC Bank, L&T, ITC, Wipro and ONGC declined 1-2.7 percent.

However, Hindustan Unilever, Bajaj Auto, Dr Reddy's Labs and Coal India bucked the trend, up 0.5-1.9 percent.

Jindal Steel & Power (JSPL) surged 6 percent after the company won Tara coal block at a negative bid price of Rs 126 per tonne. The company also secured 2 Gare Palma blocks at a negative bid price of Rs 108 a tonne.

Meanwhile, the rupee remained trading at two-month low of 62.63 a dollar, down 47 paise.

Asian markets traded lower tracking a negative finish on Wall Street as a strong US jobs report suggested that the Federal Reserve could hike interest rates sooner rather than later.

11:50 am Market outlook: With all major events behind us, the next big trigger for the markets would be the earnings, said Sandeep Bhatia, Executive Director & Head of Sales at Kotak Institutional Equities. He however does not expect huge improvement in the fourth quarter earnings. ''The overall earnings expectations are continuing to get moderated. Even for FY16, we are looking at a 17 percent earnings growth, but I think eventually we will head down to around 12 percent. The markets hence should trade down,'' he told CNBC-TV18.

According to Bhatia, the Nifty may trade at around 8500 levels in March. He expects financials to remain weak till the month-end and feels consumption-theme stocks are likely to see correction in the near-term. He however remains positive on on ICICI Bank , LIC Housing Finance & Bajaj Finance .

11:30 am Downgrade: Shares of TCS slipped 3 percent intraday on Monday as investors are concerned about its growth prospects in the fourth quarter of FY15. In an analyst call, the management has said taht the software service company expects Q4FY15 revenue growth to be in line with last year's trend. Well, Q4FY14 reading was at a disappointing 1.9 percent.

This has also disappointed analysts with a slew of downgrades dragging the stock. CLSA has downgraded it to outperform from buy with a target price of Rs 30150. It has also slashed FY16-17 earnings by 4 percent stating that margin pressures from forex (40 basis points) ensure that TCS has its third poor earnings print in a row.

Religare has downgraded TCS to hold from buy on limited upside with a target price of Rs 2700 per share. It sees downside risks to earnings with a view that Q4 is likely to be another soft quarter for the software service company.

The market is still struggling with deep red cut dragged by weakness in banking and metal stocks. The Sensex is down 350.77 points or 1 percent at 29098.18 and the Nifty is down 114.50 points or 1 percent at 8823.25. About 896 shares have advanced, 1347 shares declined, and 174 shares are unchanged.

Sesa Sterlite, Axis Bank, GAIL, HDFC and NTPC are top losers while HUL, Dr Reddy's Labs, Coal India and Bajaj Auto are major gainers in the Sensex.

Among other Asian markets, Hong Kong's Hang Seng was down by 0.75 percent, while Japan's Nikkei fell 0.63 per cent in early trade today after data showed that Japanese economy grew slower than expected in the last quarter of 2014.

10:58am TCS under pressure: Tata Consultancy Services shares fell as much as 3.2 percent intraday after India's biggest software services exporter said on Thursday that fourth-quarter revenue is expected to be in line with last year trend.

TCS reported a 1.9 percent sequential revenue growth in US dollar terms for the fourth quarter of 2013-14 which would put the January-March quarter growth at below current estimates, analysts said.

"Overall, Q4 is likely to be another soft quarter from TCS, and with expectations already high, we see downside risks to earnings," Religare said in a note.

The broker downgraded the stock to "hold" from "buy".

10:45am Market Expert: With all major events behind us, the next big trigger for the markets would be the earnings, said Sandeep Bhatia, Executive Director & Head of Sales at Kotak Institutional Equities. He however does not expect huge improvement in the fourth quarter earnings.

''The overall earnings expectations are continuing to get moderated. Even for FY16, we are looking at a 17 percent earnings growth, but I think eventually we will head down to around 12 percent. The markets hence should trade down,'' he told CNBC-TV18.

According to Bhatia, the Nifty may trade at around 8500 levels in March. He expects financials to remain weak till the month-end and feels consumption-theme stocks are likely to see correction in the near-term.

10:30am Natco Pharma in News: Natco Pharma launched the first generic version of sofosbuvir in Nepal.

Sofosbuvir is a medicine used for chronic hepatitis C infection and sold globally by Gilead Sciences Inc., under its brand Sovaldi. Natco priced its generic medicine at an MRP of Rs 19,900 for a bottle of 28 tablets in Nepal.

"Natco markets generic sofosbuvir under its brand HEPCINAT. Natco hopes to launch HEPCINAT in India soon, subject to approval from the Drugs Controller General of India (DCGI)," said the company in its filing to the exchange.

Natco had recently signed a non-exclusive licensing agreement with Gilead Sciences, to manufacture and sell generic versions of its chronic hepatitis C medicines in 91 developing countries.

10:15am FII View: Ridham Desai, Morgan Stanley says, "We think the market will slowly move away from quality in favor of growth, operating leverage and eventually, financial leverage."

"Our stock-picking approach remains to buy cyclicals & stocks with growth at a reasonable price (GARP) orientation, although, as usual, we avoid beta," he adds.

10:00am Market Check
Profit booking is dragging benchmark indices as the Sensex is down 343.04 points or 1 percent at 29105.91. The Nifty falls 111.40 points or 1 percent at 8826.35. About 690 shares have advanced, 1240 shares declined, and 157 shares are unchanged.

Sesa Sterlite, GAIL, Axis Bank, Tata Power and ICICI Bank are major losers while Dr Reddy's Labs, HUL, Coal India, Cipla and Reliance are top gainers in the Sensex.

The rupee plummeted by 50 paise to 62.66 against the US dollar in early trade today as the American currency strengthened overseas. Forex dealers said besides the dollar's gains against other currencies overseas on an upbeat US jobs data, fresh demand from importers for the Greenback and a weak opening in the domestic stock market put pressure on the rupee. The domestic unit had gained 9 paise to finish at 62.16 against the American currency on Thursday on the back of dollar selling by banks and exporters amid rise in equities.

9:55 am Satyam case: The much-awaited verdict in the Satyam case is likely later on Monday. The Satyam case has often been touted as India's Enron moment ironically for the company whose name in Hindi translates to 'truth', which has become synonymous to the biggest accounting fraud which CBI suspects goes way back to 1999. The primary proponent here was Ramalinga Raju who the CBI suspects had engaged in fraud worth Rs 7,000 crore causing a loss of Rs 14,000 crore of investors. The CBI claims there was vast fake in-voicing, which led to fraudulently increasing of revenues and profits. At the same time it inflated the stock, it inflated the bank balance of the company giving false assurances to investors.

9:44 am Market check: The market is slipping away under selling pressure. The Sensex is down 363.81 points or 1 percent at 29085.14 and the Nifty is down 119.70 points or 1 percent at 8818.05. About 615 shares have advanced, 1129 shares declined, and 164 shares are unchanged.

Axis Bank, Hindalco, Sesa Sterlite, ICICI Bank and GAIL are among laggards in the Sensex.

9:30 am DLF: India's largest realty firm DLF plans to monetise properties worth about Rs 15,000 crore under various projects to boost its cash flow and reduce debt, a senior company official said. DLF had a net debt of Rs 20,336 crore at the end of the December quarter. "We have a total of Rs 14,000-15,000 crore stocks. Out of this, Rs 4,000 crore is in finished projects and more than Rs 10,000 crore is unsold stocks in projects which are launched and are under development," DLF Chief Financial Officer (CFO) Ashok Tyagi said.

These stocks would get monetised as and when the demand picks up resulting in improvement in cash-flow as well as reduction of debt, he said when asked about the company's strategy to reduce the huge debt.

The market opened sharply lower on first day of the week with the Sensex falling 310.43 points or 1.05 percent to 29138.52 on weak global cues. Banking & financials and technology stocks pulled the market down.

The Nifty shed 95.15 points or 1.06 percent to 8842.60. About 315 shares have advanced, 634 shares declined, and 113 shares are unchanged on the BSE.

TCS, ICICI Bank, HDFC Bank, Axis Bank, HDFC, Infosys, Sun Pharma, L&T, SBI, ONGC, M&M and Sesa Sterlite lost 1-3 percent while Dr Reddy's Labs, Reliance Industries and Coal India gained.

The Indian rupee slipped 45 paise at 62.61 per dollar against Thursday's closing value of 62.16 a dollar.

Pramit Brahmbhatt of Veracity said, "Asian markets have already opened on a strong note taking cues from a better than expected US jobs data. We expect the rupee to appreciate today backed by the strong equities but strength in dollar may put some pressure. We see the range for the rupee between 61.80-62.50/dollar."

Asian markets too are trading lower following a weak US handover. The Japanese economy grew less than previously thought in the final quarter of 2014. GDP grew an annualized 1.5 percent in the October-December period, down from an initial reading of 2.2 percent in February, which still showed Japan emerging out of recession.

In the US, stocks closed down more than 1 percent on Friday as investors weighed jobs report that indicated an interest rate hike could come sooner rather than later. February's non-farm jobs report showed a gain of 295,000, above expectations of 240,000 in February, down from 257,000 in January. The unemployment rate fell to 5.5 percent, while hourly wages ticked up 0.1 percent.

The US 10-year treasury note yield rose to 2.25 percent.

In the currency space, the dollar rose to a fresh 11-year high against a basket of major currencies on expectations of a interest rate hike sooner rather than later. In commodities, Nymex crude traded below 50 dollars per barrel while Brent stood at sub-60 dollars.

From precious metals space, gold had its worst day since December 2013 on Friday again on the back of data coming out of the US. Currently gold trades at around 1170 dollars an ounce.