Nifty ends expiry below 8350, Yemen woes drag Sensex 654 points
26 March 2015
03:30pm Market Closing: The market crashed more than 2 percent on geopolitical tensions and March F&O expiry. The Sensex plunged 654.25 points to close at 27457.58 and the Nifty fell 188.65 points to 8342.15.
About 1033 shares have advanced, 1781 shares declined, and 171 shares are unchanged on the BSE.
03:20pm IT outsourcing deals: In what can be a huge boost to IT players, outsourcing deals worth a whopping USD 900 million may be up for renewal before may 2015.
Tata Consultancy Services (TCS), Wipro, HCL Tech, Cognizant, Tech Mahindra and MindTree amongst the names of the IT players that are bidding for this. By mid April it should be closed. So by May mid we could see some kind of action or some kind of announcements. There is one deal from ArcelorMittal that is for USD 450 million for IT, infrastructure. Then there is Australian Westpac Bank which is likely to renew a USD 250 million deal. This is largely for application development services.
There is another application development services deal by Johnson & Johnson and that is about USD 100 million. Besides, there is a Citi Bank analytic deal that is also likely up for renewal that has not been confirmed yet that is about USD 100 million to handle the analytics across Europe.
03:10pm Market Update: The Sensex fell 677.36 points or 2.41 percent to 27434.47 and the Nifty dropped 193.10 points or 2.26 percent to 8337.70.
About 897 shares have advanced, 1854 shares declined, and 162 shares are unchanged on the BSE.
02:50pm GSPL holds 5% gains: Investors continued to buy shares of Gujarat State Petronet despite big fall in equity market today. The stock rallied 5 percent as brokerage house Citi feels the natural gas transmission company be the biggest beneficiary from new gas policy given the potential for 10-18 mmscmd of additional LNG imports.
The Cabinet Committee on Economic Affairs, on Wednesday evening, cleared a new policy (reverse bidding method) for providing imported LNG to stranded gas-based power plants at a concessional rate. The government will auction gas with each power plant allowed to bid up to 30 percent plant load factor (PLF).
The government also proposed to provide support to distribution companies from the Power System Development Fund (PSDF) through a transparent reverse e-bidding process which will make the cost of power affordable.
The government aims to finalise the framework and technology for this policy in the next one month.
02:35pm Market Update: The market extended losses with the Sensex falling 482.03 points or 1.71 percent to 27629.80 and the Nifty losing 134.60 points or 1.58 percent to 8396.20.
About 915 shares have advanced, 1757 shares declined, and 183 shares are unchanged on the BSE.
HDFC is the biggest contributor to Sensex fall, down 4.8 percent. Infosys, ICICI Bank, HDFC Bank, Tata Motors, Axis Bank, HUL, Coal India and Dr Reddy's Labs declined 2-3 percent.
02:30pm JLR's mega investment: Tata Motors-owned luxury car maker Jaguar Land Rover will invest 600 million pounds in the UK as part of its expansion plans, including doubling the size of its operations at its headquarters in Coventry.
The funds will be pumped into its R&D and manufacturing divisions across three JLR sites in the West Midlands region of England Castle Bromwich Advanced Manufacturing Plant; Whitley Advanced Design and Development Centre; and the National Automotive Innovation Centre in Coventry.
The largest single investment has been made at the company's Castle Bromwich plant, where over 400 million pounds will go into new and upgraded facilities to support the introduction of the all-new Jaguar XF model.
"This investment, made here in the heartland of our UK business operations, signals the confidence we have in this region to support the creation, engineering and manufacturing of ultra-low emission, premium British products, today and in the future," said JLR CEO Ralf Speth.
02:20pm Adani in focus: Indigenous traditional owners of the lands have rejected Indian mining giant Adani's 16.5 billion dollar mine, rail and port projects in Australia's coal-rich Queensland state, in what is being described as the biggest case in recent history involving native title law.
The Wangan and Jagalingou (W&J) people, the traditional owners of the lands earmarked for the mine and of much of the Galilee Basin, have rejected the Indigenous Land Use Agreement with Adani to build coal mine in the area.
Reports said that Adani took legal action to override the W&J people and, if successful, it would allow the Queensland government to compulsorily acquire the land and issue a mining lease for the Carmichael mine.
The W&J were now seeking talks with the new Labor government to convince it to refuse support to Adani's legal action against them,rule out any compulsory acquisition, and'reject his application for a mining lease for Carmichael.
02:00pm Market Check
The market fell further in afternoon trade as crude oil prices extended gains following weak cues from US and escalation of political turmoil in Yemen. Brent and NYMEX crude surged over 5 percent each.
The 30-share BSE Sensex dropped 408.46 points or 1.45 percent to 27703.37 while the Nifty shed 115.85 points or 1.36 percent to 8414.95 ahead of expiry of March derivative contracts.
About 896 shares have advanced, 1746 shares declined, and 178 shares are unchanged on the BSE.
Jet Airways CEO Cramer Ball said the company stayed on its course for three year turnaround plan. He expects company to be profitable by 2018.
01:25pm Telcos in focus: Payment for spectrum won by companies in the auction concluded on Wednesday is expected to push up the debt on telecom operators to about Rs 3.5 lakh crore, leading to a significant rise in tariffs, says industry body Assocham.
"Telecom industry which was already saddled with nearly Rs 2.5 lakh crore is now going to helplessly see it mount to nearly Rs 3.5 lakh crore," Assocham Telecom Council Chairman T V Ramachandran said in a statement.
The spectrum was sold at about 68 per cent premium, at Rs 1,09,874.91 crore.
At the base price fixed by the government, its value was Rs 65,463.40 crore. About 11 percent remained unsold which also included 800 Mhz, 1800 Mhz and 2100 Mhz (3G) band.
Idea Cellular, Airtel, Vodafone and Reliance Communications participated in the auction mainly to defend their existing spectrum holding as their licences are set to expire. Reliance Jio, Tata Teleservices, Telewings (Uninor) and Aircel participated to buy additional spectrum.
Ramachandran said that "consumer tariffs are bound to rise significantly but, due to the level of hyper-competition present here, the increase would not be anywhere near adequate to cover the higher cost". He said that the cash outgo may restrict roll out of networks and affect the basic objectivity of sector to provide telecom connectivity to people.
01:00pm Market Check
The market remained under pressure ahead of expiry. Equity benchmarks fell more than 1 percent dragged by financials and pharma stocks while the BSE Midcap marginally outperformed key indices, down 0.5 percent.
The Sensex tanked 351.34 points to 27760.49 and the Nifty dropped 89.50 points to 8441.30. About 868 shares have advanced, 1668 shares declined, and 164 shares are unchanged on the Bombay Stock Exchange.
Expectation of an economic recovery is what was driving the markets, but it did not pan out as per expectation, said R Sreesankar, head - institutional equities, Prabhudas Lilladher.
According to him, commentary post Q4 of FY15 will be important to see.
HDFC kept its top position in the selling list, down 4 percent. Infosys, HDFC Bank, ICICI Bank, HUL, Sun Pharma, ONGC, Wipro, Dr Reddy's Labs, Sesa Sterlite and Coal India dropped 1-3 percent while BHEL gained 2 percent.
Telecom stocks like Bharti Airtel and Idea Cellular traded higher as spectrum auctions concluded post 19 days and 115 rounds of bidding. The provisional amount committed by bidders stood at over Rs 1.09 lakh crore. Kotak remained positive on Bharti and Idea.
Gas based power plants like Torrent Power, GMR Infra and Lanco Infratech continued to be in focus, up 1-3 percent. The government last evening approved import of LNG for stranded gas based power plants. The government believes this move will save Rs 60,000 crore worth of investments on the verge of becoming NPAs.
Gujarat State Petronet jumped 5 percent as Citi said the company was likely to be the biggest beneficiary. GSPL's earnings could increase by 28-30 percent against a 7 percent increase for GAIL's earnings. The brokerage said there was a potential 10-18 mmscmd of additional LNG import.
United Bank of India gained 4 percent as the RBI has relaxed restrictions on credit disbursements of the bank.
Disclosure: Reliance Industries (which owns Reliance Jio) has acquired management control of Network18, which owns TV18 Broadcast and moneycontrol.com.
12:35am Crude Update: Crude prices have spiked a bit in the past few days after Saudi Arabia launched airstrikes in Yemen. Brent crude climbed 2.66 percent to USD 57.98 a barrel and US crude jumped 3.6 percent to USD 51 a barrel. However, David Lennox, Analyst at Fat Prophets, said he does not expect geopolitical concerns to majorly impact crude prices. "Two factors are impacting oil at the moment: Energy Information Administration (EIA) numbers [on inventory] and rig count in the US," he said. "One is negative and the other positive."
12:15am Pipavav Defence in News: The much-delayed corporate debt restructuring for the debt-laden Pipavav Defence may finally go through today. Most of the bankers have already approved the CDR package. Today's meeting is crucial for Pipavav not just because of its mounting debt, but because it is an important part of the Reliance Infrastructure deal. It is a key condition that only if this CDR goes through then the Reliance Infra deal will conclude. Sources say, Pipavav Defence's debt stands at Rs 7,500 crore, but including the non-secured funding this debt may go up to Rs 12,000 crore. As per rules, for the CDR package to go through, the promoters have to put 2 percent of the debt on the table, which is around Rs 150 crore. Also, come March 31, the regulatory forbearance window will close for banks, so once the loan is recast it will be considered as an NPA. So if this package does not go through, lenders will have to take a big hit on their provisioning.
12:00pm Market Check The market extended losses in noon trade with the Sensex falling more than 350 points, dragged by banking & financials and technology stocks. However, the broader markets saw less fall compared to benchmarks. The BSE Midcap and Smallcap indices declined 0.3-0.6 percent. The Sensex plunged 365.63 points or 1.30 percent to 27746.20 and the Nifty tanked 92.10 points or 1.08 percent to 8438.70. More than two shares declined for every share advancing on the Bombay Stock Exchange. Housing finance company HDFC crashed 5 percent followed by Coal India with 3 percent loss and Infosys with 2.6 percent decline. ICICI Bank, HDFC Bank, Sun Pharma, Tata Motors, HUL, ONGC, Wipro, Dr Reddy's Labs and Sesa Sterlite fell 1-2 percent. However, capital goods and telecom stocks bucked the trend. Bharti Airtel, L&T and BHEL gained 1-2 percent.
11:50am Market Update: The market extended losses in late afternoon trade, falling a percent. The Sensex tanked 296.61 points to 27815.22 and the Nifty fell 75.45 points to 8455.35. About 848 shares have advanced, 1481 shares declined, and 164 shares are unchanged on the BSE.
11:35am Ford India investment: Ford Motor Company has invested USD 1 billion in a new plant in western India which will help the automaker triple exports from the country, chief executive Mark Fields told reporters today. Ford plans to make India an export hub for compact cars such as the EcoSport, a sub-four meter sports utility vehicle, and the newly launched compact sedan, Ford Figo Aspire, the first car to be produced at the new facility. The new manufacturing facility in Gujarat will nearly double the company's installed production capacity in the country to 610,000 engines and 440,000 vehicles a year, Fields said at the launch of the new facility.
11:20am FII View: There are too many factors in the short-term to predict the near-term trajectory, is the word coming in from Anup Maheshwari, executive vice-president and head of equities at DSP Blackrock Investment Managers. The first quarter is usually a little soft for the midcaps, but they come back in the subsequent quarters, he says. But earnings overall have been disappointing in the last few quarters, he adds. However, he believes that earnings will normalize soon and it is a buy on dips market. In telecom, he says the sector is yet to see pricing power. He is waiting for revenue per minute (RPM) to increase in telecom to justify capex in auctions. Maheshwari also expects the government to start spending aggressively from next month.
11:00am Market Check The market plunged on expiry day, infact extended losses into the seventh consecutive session. The rupee and bond markets too declined, reacting to the spike in brent crude prices. The Sensex dropped 236.66 points to 27875.17 and the Nifty slipped 58.30 points to 8472.50. About 802 shares have advanced, 1335 shares declined, and 152 shares are unchanged on the BSE.
Telecom stocks such as Bharti Airtel remained in focus, up 1.5 percent. Spectrum auctions concluded yesterday after 19 days and 115 rounds of bidding. Kotak says while aggregate results are marginally negative versus their pre-auction expectations, it does not see preliminary results as an irreparable damage outcome.
Kotak is positive on Bharti and Idea Cellular. Companies with gas based power plants such as Torrent Power, GMR Infra and Lanco Infratech were in focus. The government approved a mechanism for providing imported LNG to stranded gas based power plants at a concessional rate. Citi says Gujarat State Petronet is likely to be the biggest beneficiary. GSPL's earnings could increase by 28-30 percent against a 7 percent increase for GAIL's earnings.
The brokerage says there is a potential 10-18 mmscmd of additional LNG import. Analysts see the policy move as an incremental positive for lenders to gas based power plants such as IDFC, SBI and IDBI amongst others. United Bank spiked 4.5 percent as the RBI has relaxed restrictions on credit disbursements of the bank. Meanwhile, the Indian rupee dropped 38 paise to 62.70 a dollar. Global markets continued to be in focus on account of the geopolitical tensions emerging in Yemen. Brent crude prices spiked up to USD 58 a barrel.
10:50am Rupee Update: The rupee weakened by 34 paise to 62.67 against the US dollar on month-end demand for the American currency from banks and importers. Forex dealers attributed the fall in the rupee to increased demand for the dollar from importers and a lower opening of the domestic equity market but the Greenback's weakness against other currencies overseas, capped the rupee's losses. The rupee had snapped its seven-day winning spree by slipping seven paise to close at 62.33 against the dollar in yesterday's trade.
10:20am China economy: China will control economic risks as the country pushes reforms to make the yuan convertible on the capital account, the foreign exchange regulator said today. "It's viable for China to steadily achieve capital account convertibility, but controlling risks remains the top priority," Wang Yungui, head of policy and regulations for the State Administration of Foreign Exchange (SAFE) told a news conference. Wang said China has "the last one kilometre" to go before achieving full yuan convertibility, but he did not elaborate. China has pledged to move towards making the yuan convertible on the capital account, amid hopes that the International Monetary Fund could include the yuan in its special drawing rights (SDR) basket during a five-year review due to be conducted this year. Central bank governor Zhou Xiaochuan said on Sunday that China will take more steps this year to smooth the way for citizens to invest in overseas financial markets, and reform the Qualified Foreign Institutional Investors (QFII) scheme, which is "not convenient and flexible enough".
10:00am Market Check The market remained under pressure ahead of expiry of March derivative contracts. Banking & financials, healthcare and select technology stocks dragged. The Sensex dropped 201.98 points to 27909.85 and the Nifty shed 56.30 points to 8474.50. The broader markets too were down; the BSE Midcap and Smallcap indices declined 0.4 percent each. Nearly two shares declined for every share advancing on the Bombay Stock Exchange. HDFC topped the selling list, falling 3.5 percent followed by ICICI Bank, Tata Motors, SBI, Wipro, ONGC, Dr Reddy's Labs, Sesa Sterlite and Coal India with over a percent loss. However, Bharti Airtel gained 1.8 percent post closure of spectrum auction. BHEL and GAIL climbed over a percent.
09:40am FII View: Bharat Iyer, JPMorgan says expectations are converging towards Fed rate normalisation ahead. "Our house view is for 25 basis points rate hike in the June meeting. Consensus expects rate hikes to start in September," he adds. According to him, at the macro level, India's vulnerability to Fed tightening has diminished. "The current account deficit has reduced meaningfully. Improved inflation outlook has led to substantial capital flows, taking FX reserves at USD 310 billion to historic highs," he explained.
09:15am Market Check The market opened sharply lower on Thursday with the Nifty breaking 8500 ahead of expiry of March derivative contracts. The Sensex lost 211.54 points to 27900.29 and the Nifty declined 55.85 points to 8474.95. About 172 shares have advanced, 307 shares declined, and 103 shares are unchanged on the BSE. Shares of HDFC, ICICI Bank, Tata Motors, Dr Reddy's Labs, Wipro, Coal India and Sesa Sterlite fell 1-2 percent. Infosys and HDFC Bank declined 0.9 percent each.
However, Bharti Airtel and GAIL gained 1.4 percent each. The Indian rupee slipped in the early trade on Thursday. It has opened lower by 22 paise at 62.55 per dollar versus 62.33 Wednesday. The US dollar slipped against major world currencies on weak economic data in the US but still held onto gains of more than 7 percent year-to-date. Mohan Shenoi of Kotak Mahindra Bank said, "Markets are expecting a delayed start of the Fed rate hike cycle.
This has stalled dollar rally against major currencies." He further added, "Rupee has also gained against the dollar in the last one week. The rupee is expected to trade in a range of 62.20-62.50/dollar today." In the US stocks plunged, closing more than 1 percent lower as investors weighed the impact of the strong dollar on the economy and the coming earnings season.
On the data front in the US, February's durable goods orders posted a decline, rather than the modest expected increase, under pressure from the strong dollar and weak global demand. Asian markets were mixed with the Shanghai, Hang Seng and Straits Times trading higher while Nikkei dropped 1.5 percent. Kospi and Taiwan lost over 0.5 percent.