Nifty ends below 8700; Bharti up 6%, Hindalco falls 4%
11 March 2015
03:30 pm Market closing: It as another volatile day at Dalal Street. The Sensex was down 50.70 points at 28659.17 and the Nifty slipped 12.10 points at 8699.95. About 1199 shares advanced, 1638 shares declined and 200 shares were unchanged.
03:10 pm Sinking euro: The euro dived to its lowest since early 2003 against the dollar on Wednesday, dragging other European currencies with it on the back of the huge differences developing in market interest rates between Europe and the United States.
In a dollar rally that began last July the single currency has lost around a quarter of its value, and there is little sign of that bottoming out. Deutsche Bank on Tuesday forecast a fall to 85 US cents by the end of 2017.
That comes largely courtesy of the collapse in European bond yields, which are set to stay low for the foreseeable future under the programme of money-printing launched by the European Central Bank on Monday. Yields on German 30-year government bonds are now lower than those on US two-year paper.
02:50 pm Rate cut? Indian banks would prefer to defer any decision on lending rates until after the RBI holds its monetary policy review on April 7, Bank of India Chairman VR Iyer told reporters on Wednesday.
"Banks would prefer to wait for April policy before taking a decision on interest rates," said Iyer on the sidelines of a meeting between bankers and government officials.
"There is a possibility of 10-20 bps after the (April) policy," she added.
Bank of India's is India's third-largest lender by assets. The Reserve Bank of India has cut its policy repo rate by 50 basis points since January, but only a few banks have lowered their base lending rates.
02:25pm MTNL, HMT under pressure: Five public sector undertakings (PSUs) will be closed down by the government, which has included some of the best known state-run enterprises like Air India, MTNL and Hindustan Shipyard, in the list of 65 sick PSUs, Lok Sabha was informed on Tuesday.
The five state-run organisations to be closed down include three HMT units whose brand of watches and tractors once ruled the market, Heavy Industries Minister Anant Geete said during Question Hour, adding that their employees were being offered a "very good" VRS package.
However, he did not name the other PSUs which are slated to be closed down.
Air India and MTNL, once market leaders in aviation and mobile telephony sectors respectively, were declared sick as per the criteria for a PSU to be declared as such, after they incurred losses worth 50 percent or more of their average net worth during four preceding years.
The Minister said there were 65 units in the list of sick PSUs as of March 31 last year.
The reasons for their sickness vary from enterprise to enterprise and included obsolete plants and machinery, heavy interest burden, resource crunch, surplus manpower and shortage of working capital, he said.
Air India accumulated losses of Rs 5388 crore, Rs 5490 crore and Rs 7559 crore in years 2013-14, 2012-13 and 2011-12 respectively, according to the figures tabled in the House. MTNL showed profit of Rs 7820 crore in 13-14 but had incurred losses of Rs 5321 cr and Rs 4109 cr in the previous years.
Hindustan Shipyard Limited posted losses of Rs 859 crore, Rs 551 crore and Rs 462 crore in the three years.
02:00pm Market Check
The market continued to be volatile in afternoon trade while the broader markets underperformed benchmarks. Metals and auto stocks dragged while FMCG, HDFC twins and telecom stocks gained.
The Sensex rose 94.36 points to 28804.23 and the Nifty advanced 33 points to 8745.05 whereas the BSE Midcap and Smallcap indices marginally declined.
About 1120 shares have advanced, 1566 shares declined, and 190 shares are unchanged on the Bombay Stock Exchange.
S Naren of ICICI Prudential AMC does not see Fed raising interest rates in the upcoming policy meet and is bullish on the market in the long term. He bets big on infra and banking stocks.
The rupee recovered marginally after hitting a fresh 2-month low following a steep rise in the dollar. Barclays expects the rupee to gradually decline to 64.50 a dollar by year-end.
Hindalco extended losses to 7 percent after a special court summoned Kumar Mangalam Birla along with former PM Manmohan Singh & former coal secretary PC Parakh in the coal allocation scam case. Hindalco in a media statement reiterated that none of their officials used unlawful means to get coal blocks.
European markets rallied 0.5-1 percent, dismissing Fed rate hike jitters. ECB chief, Mario Draghi says financial stability risks are contained and expects the economic recovery to strengthen soon. He says real GDP expectations for the eurozone are revised upwards for 2015 & 2016.
1:30 pm FII view: The global markets have been selling-off since past two days with the US stocks closing at one-month low and Asia and Europe trading weak. Speaking to CNBC-TV18, Geoffrey Dennis, head- Global Emerging Market Strategy, UBS said there is fair amount of panic among global investors According to him, there will be a buying opportunity in emerging markets as currently, valuations are not expensive. He does not expect a long-term correction in the markets. Dennis is overweight on China and India and will buy the two once the dollar settles. He believes rupee has been a relative outperformer versus the dollar and says the Indian market is finding excuses for profit booking post the Union Budget and is unlikely to underperform for too long.
The market is still flat. The Sensex is up 3.03 points at 28712.90 and the Nifty is up 0.40 points at 8712.45. About 1067 shares have advanced, 1512 shares declined, and 192 shares are unchanged.
Bharti Airtel, HUL, M&M, NTPC and Wipro are top gainers in the Sensex. Among the losers are Hindalco, Cipla, ONGC, Tata Motors and Sesa Sterlite.
State-run insurance major LIC today committed Rs 1.5 lakh crore to the Indian Railways for development of various commercially viable projects in one of the largest railway networks in the world. The investment would be made over a period of five years. "LIC has taken the task of supporting Indian Railways.
It is a commercial decision... LIC will invest Rs 1.5 lakh crore over a period of five years," Finance Minister Arun Jaitley said here. The investment would be done in bonds issued by various railway entities such Indian Railways Finance Corporation (IRFC), beginning next fiscal.
12:55pm Interview: The US Food and Drug Administration (FDA) has carried out inspection at two units of Shilpa Medicare at Raichur, MD Vishnukant Bhutada told CNBC-TV18 in an interview.
''The outcome will be known in three-six months,'' he said, adding that the company was focused on both the formulations and API business, with oncology being one of its key focus.
Shilpa has filed 10 abbreviated new drug applications (ANDAs) in both injectables and oral division, he said.
''Once we get approvals, we could start with the US business by 2016 end,'' he said.
12:25pm Asian Paints in Focus: Asian Paints has signed a memorandum of understanding (MoU) with the Government of Andhra Pradesh for setting up a manufacturing facility for paints and intermediates at Pudi Village, Rambilli Mandal, Vishakhapatnam district, Andhra Pradesh.
An amount of approximately Rs 1750 crore would be invested by the company in phases over a period of 12 years from the date of commencement of construction, including the cost of land admeasuring approximately 110 acres, subject to due diligence and obtaining necessary regulatory and other approvals, says the country's largest paint company.
The maximum capacity of the said manufacturing facility would be 4 lakh kiloliters per annum, which would be achieved in phases, it adds.
12:00pm Market Check
The market remained in a consolidation mode. The 30-share BSE Sensex fell 50.12 points to 28659.75 and the 50-share NSE Nifty declined 13.80 points to 8698.25.
The broader markets too fell marginally. About 1052 shares have advanced, 1387 shares declined, and 188 shares are unchanged on the Bombay Stock Exchange.
The Indian rupee slipped to a fresh 2-month low following a steep rise in the dollar. The greenback surged to 12-year highs holding strong above 98.7 level.
Hindalco Industries topped the selling list on Sensex, down 4 percent as Kumar Mangalam Birla is named in the coal allocation scam case. A Special Court has summoned him along with former PM Manmohan Singh & former coal secretary PC Parakh. They will have to appear in the court on April 8.
Telecom stocks continued to be in focus as the spectrum auction entered day 7. Experts say the auctions are likely to end in a day or two. However, industry body, COAI sees a significant hit on telecom companies' balancesheet due to aggressive bidding. Bharti Airtel, Idea Cellular and Reliance Communications rallied 2-4 percent.
CESC climbed 2 percent as the West Bengal Electricity Regulatory Commission approved a multi-year tariff plan of Rs 6.98 per unit. This new tariff order gave more visibility to the company's earnings over next 2 years. JP Morgan maintains an overweight stance with price target of Rs 815.
Finance Minister Arun Jaitley holds a quarterly performance review meeting with the chief executive officers of public sector banks and financial institutions. the finance minister is expected to focus on two key areas of pain - credit growth and NPA concerns.
11:55 am Rupee talk:The US dollar hit a near 12-year high against the euro and touched its highest level against the Japanese yen in nearly eight years led by expectations for a mid-year Federal Reserve rate hike and the European Central Bank's bond-buying programme.
Speaking to CNBC-TV18, Mitul Kotecha, head - FX Strategy (Asia Pacific), Barclays said the dollar is expected to strengthen further against the euro.
Kotecha, however, does not expect the Indian currency to weaken significantly. He believes rupee is still the best performing emerging market currency though it may decline gradually to 64.50 against the dollar by year-end.
11:45 am Big deal: Queensland's new state government cleared plans by two Indian companies to expand a port for coal projects that are opposed by green groups worried about pollution and damage to the Great Barrier Reef.
The approval, supporting separate mining projects planned by Indian conglomerates Adani Enterprises and GVK, came as a surprise. The new Labor government had been seen as less supportive of the coal industry than its predecessor conservative government.
The previous government, toppled in January in a stunning election outcome, had proposed spending taxpayers' money to help fund the Abbot Point port expansion and a rail line for Adani's Carmichael project in the untapped Galilee Basin.
The port expansion was to have involved dumping 3 million cubic metres of soil dredged at the port of Abbot Point into the sea about 25 km (15 miles) from the Great Barrier Reef.
11:30 am Buzzing:Shares of CESC rallied 5 percent intraday on Wednesday as the West Bengal Electricity Regulatory commission has approved a multi-year tariff plan of Rs 6.98 per unit. This new tariff order is beneficial to the company as it will give visibility for next two year earnings.
JP Morgan maintains overweight rating on CESC with a price target of Rs 815 per share citing attractive valuations.
"We believe the combination of growth in the core regulated business, the turnaround of BPO and retail companies and subsiding concerns about its non-regulated power project should drive a rerating. With peak capex behind us, we believe CESC should be in a position to improve FCF generation substantially," it says in a report.
The market is flat with some positive bias. The Sensex is up 25.04 points at 28734.91, and the Nifty is up 4.95 points at 8717.00. About 1144 shares have advanced, 1109 shares declined, and 176 shares are unchanged.
IT stocks led by Wipro and Infosys are top gainers in the Sensex. NTPC, HUL and M&M are other gainers in the Sensex. Among the losers are Hindalco, Sesa Sterlite, Cipla, Tata Motors and Sun Pharma.
Public sector banks are in focus on account of the Finance Minister and Finance Ministry official meeting the chiefs for a quarterly review. The points to be taken up during the meet include credit growth, NPAs, taking forward plans on bank bureau boards and possibly encouraging PSBs to pass on rate cuts .
Globally, Asian markets are mixed pressurised by the weak US close.
10:55am Spectrum Auction: Aggressive bidding in the latest round of telecom spectrum auctions will strain the balance sheets of telecom companies, feels Rajan Mathews, Director General of Cellular Operators Association of India (COAI).
In an interview with CNBC-TV18, he says tariffs could rise post the auctions as telecom players try to pass on higher operating costs to consumers.
He expects the auctions to end this week, and says the fierce bidding in the 900 MHz frequency has not come as a surprise.
Mathews says Reliance Jio has been one of the most disciplined bidders and expects the company to bid for 800 MHz and not 900 MHz.
10:25am FII View: Abhay Laijawala, Deutsche Equities says while current investor focus on a gridlocked upper house of parliament is legitimate, investors must not overlook the tectonic changes that are being ushered on governance and ease of doing business, which will go a long way in rebooting India and reviving its economic dynamism.
"The path to reform will not be easy but this government will move ahead," he adds.
According to Laijawala, this government's focus encompasses the entire gamut of reform ranging from external liberalisation to a more effective decentralisation of decision making to states, an obsessive focus on processes and dramatically improving India's rankings on the ease of doing business," he adds.
10:00am Market Check
The market seems to be gaining strength gradually. The Sensex is up 71.77 points at 28781.64, and the Nifty is up 22.45 points at 8734.50. About 1042 shares have advanced, 727 shares declined, and 159 shares are unchanged.
HUL, HDFC, GAIL, M&M and Wipro are major gainers while Sun Pharma, Cipla, Coal India, ONGC and Dr Reddy's Labs are losers in the Sensex.
Gold hovered near its lowest in over three months, hurt by consecutive losses in the last seven sessions as a robust dollar and expectations of higher US interest rates curbed appetite for the metal.
Spot gold had ticked up slightly to USD 1,162.85 an ounce, after dropping 4 percent in the seven sessions to Tuesday. The metal slumped to USD 1,155.60 in the previous session, its lowest since December 1.
Bullion has taken a hit from stronger-than-expected US non-farm payrolls data on Friday that renewed expectations the Federal Reserve would begin to increase interest rates in June.
9:50 am Good time to buy telecom stocks? With the action in the ongoing telecom spectrum auction appearing to be slowing down over the past few days, bidding by companies has become very selective and may end in a day or two, Suresh Mahadevan, MD and Head of Asian Telecom and Media Research, UBS AG said.
Mahadevan pointed out that premium telecom companies paid over the reserve price to buy spectrum was higher than most analysts had forecasted -- as much as 82 percent in some cases – and that, accordingly, he expected tariffs to go up.
''Now that the key 900 Mhz spectrum has been secured for the next 20 years, the fundamentals of the sector will get better. I expect telecom stocks to rally after the auction,'' he said.
9:30 am Buzzing: Shares of Maruti were under pressure in early trade on Wednesday. The auto-major will recall 33098 units including 19780 units of Alto 800 and 13318 units of Alto K10, citing problems in right hand door latch assembly.
"Maruti will proactively inspect and replace the right hand door latch assembly manufactured between 8 December and 18 February. Maruti Suzuki dealers in the domestic market will contact owners of all the affected vehicles. The dealer workshop technicians will inspect the condition and carry out the necessary replacement, free of cost," it said in a statement to the bourses.
However, the company has added that there is no concern if the right hand side door, both front and rear, is completely latched. If the door is half-latched, then the door may open if pressure is applied from inside, it said.
The market rebounded with marginal gains after falling in previous two sessions. The Sensex rose 38.63 points to 28748.50 and the Nifty climbed 13.95 points to 8726.
About 544 shares have advanced, 158 shares declined, and 99 shares are unchanged on the Bombay Stock Exchange.
Tata Motors, Larsen & Toubro, Sun Pharma, SBI, ITC, Reliance Industries, Axis Bank, Infosys, ONGC and Cipla gained 0.3-0.9 percent while TCS, M&M, Maruti Suzuki, Hero Motocorp, Coal India, NTPC and BHEL fell 0.5-0.9 percent.
Meanwhile, the Indian rupee opened marginally lower at 62.83 per dollar today versus 62.76 Tuesday.
Himanshu Arora of Religare said, "Rupee is expected to trade higher today following the strong current account deficit data. Weak trade deficit data and dollar strength against a basket of currencies is expected to keep a cap on rupee today. Expect the rupee to trade in the range of 62.52-62.95/dollar."
Current account deficit in October to December 2014 narrowed to over USD 8 billion which is just 1.6 percent of GDP.
Among global markets, in the US, stocks closed at 1 month lows losing more than 1.5 percent lower pressured by a surge in the dollar and some weakness in oil. Both Dow Jones and S&P 500 breached their 50-day moving average, wiping off their 2015 gains. Meanwhile, the US 10-year treasury yield slid to 2.13 percent.
In Asia, markets are weak this morning but Nikkei is the standout performer. Japan's January machinery orders rose an unexpected 1.9 percent year-on-year, better than expectations for a 1 percent drop.
On a monthly basis, the leading indicator of capital spending notched down 1.7 percent, smaller than the 4.1 percent slump estimated. Yesterday, yen touched its lowest level since July 2007.
Among commodities, Brent crude prices slipped nearly 3 percent yesterday to around USD 56 per barrel. However, it pulled back some losses in trade today led by a fall in US crude inventories.
From precious metals space, gold is trading at its lowest level in nearly four months as dollar rose to its highest in nearly 12 years.