Sensex crashes 556 points, Nifty slips 1.8%; Reliance falls 4%
20 April 2015
03:30 pm Market close: The Sensex is down 555.89 points or 1.9 percent at 27886.21 and the Nifty is down 157.90 points or 1.8 percent at 8448.10. About 897 shares have advanced, 1951 shares declined, and 155 shares are unchanged.
Reliance lost 5 percent and Hero Motocorp fell 4 percent. Other laggards were HDFC, Cipla and M&M. Top gainers are ICICI Bank and Sun Pharma.
03:10 pm Warning: Earnings disappointments in the first few results and already low expectations could result in further market correction, says Sanjeev Prasad, Kotak Equities. Other global events (Grexit) and domestic issues (tax notices to FIIs for past income) could also affect sentiment. He sees potential correction in the high-growth quality stocks if investors start questioning Street's earnings assumptions. In an interview to CNBC-TV18, Prasad says valuations would remain heady even with a 15-20 percent correction.
The Sensex is down 532.49 points or 1.9 percent at 27909.61 and the Nifty is down 148.30 points or 1.7 percent at 8457.70. About 788 shares have advanced, 1992 shares declined, and 158 shares are unchanged.
02:56pm Rupee Check: The rupee slumped to its weakest in over a month after a spurt in dollar outflows triggered by the greenback's strength globally as well as weaker shares, traders said.
The rupee was trading at 62.8450/8550 to the dollar, compared with 62.36/37 on Friday. The rupee had fallen to as much as 62.86 to the dollar, its lowest since March 16.
Shares were also headed for their biggest single-day fall in nearly a month on worries over retrospective taxation for foreign institutional investors.
02:50pm Market Update: Equity benchmarks extended losses in last hour of trade, falling more than 2 percent. The Sensex crashed 621.91 points to 27820.19 and the Nifty plunged 179.20 points to 8426.80.
About 740 shares have advanced, 2016 shares declined, and 148 shares are unchanged on the BSE.
02:45pm Chinese shares retreat: China shares dived today in volatile trade as fears of a regulatory crackdown on the world's hottest stock market offset the central bank's most aggressive move yet to bolster the slowing economy.
A cut in banks' reserve requirements announced by the People's Bank of China on Sunday was the largest since the global financial crisis, but markets reacted half-heartedly as traders focused on moves by the securities regulator which they feared could pop a gravity-defying, six-month rally.
Money market rates fell but corporate bond yields were largely flat, while the yuan weakened about 0.9 percent to 6.203 to the dollar by late afternoon.
Stocks had rallied early and at one point touched fresh seven-year highs, with the CSI300 of the largest listed companies in Shanghai and Shenzhen closing the morning session up 1.2 percent.
But those gains quickly evaporated in the afternoon on concerns that regulators want to slow the pace of gains in a market that has already bolted more than 80 percent since late November, thanks in large part to borrowed money.
Securities regulators announced on Friday they would allow fund managers to lend shares for short-selling, and ban margin financing through unregulated accounts.
Both the CSI300 index and the Shanghai Composite Index, which tracks all stocks on the Shanghai Stock Exchange, ended down 1.6 percent.
02:35pm Market Update: The Sensex fell more than 950 points and the Nifty cracked over 320 points in last four consecutive sessions.
Today, shares of ITC, Infosys, L&T, ONGC, HUL, M&M, Hero Motocorp, Cipla, Dr Reddy's Labs, Wipro and NTPC plunged 2-4 percent followed by HDFC, TCS, Axis Bank and Tata Motors with over 1 percent loss.
However, ICICI Bank bucked the trend, up 1.6 percent. Sun Pharma gained nearly a percent.
02:15pm Oil Check: Oil prices eased back from midday highs today after Saudi Arabian Oil Minister Ali al-Naimi said production in the world's biggest crude exporter would stay near record highs at around 10 million barrels per day (bpd) in April.
"I have said many times we will always be happy to supply to our customers with what they want. Now they want 10 million," Naimi told Reuters on Monday in South Korea's capital Seoul, where he is due to attend a board meeting of the state oil firm Saudi Aramco.
Naimi earlier this month said Saudi Arabia produced 10.3 million bpd of crude in March, eclipsing a previous record of 10.2 million bpd, in what is seen as a move to defend market share against non-OPEC competition, including the United States.
US oil drilling rigs fell for a record 19th straight week to the lowest since 2010, data from Baker Hughes showed, which has helped lift prices from six-year lows reached in January.
Since the beginning of April, oil prices have risen around 17 percent, pushed up by reports of a possible dip in US output, but Morgan Stanley warned on Monday that Saudi production could be more important than developments in the United States.
02:00pm Market Check
The market extended losses in afternoon trade on concerns over tax-related issues for foreign investors. The Sensex plunged 429.71 points or 1.51 percent to 28012.39 and the Nifty slipped 124.25 points or 1.44 percent to 8481.75, dragged by oil, technology and FMCG stocks.
The broader markets continued to underperform benchmarks. The BSE Midcap Index dropped 1.6 percent and Smallcap lost 1.9 percent. More than two shares declined for every share advancing on the Bombay Stock Exchange.
Mahesh Nandurkar, CLSA said the 2015 Budget made it clear that the FIIs don't have to pay minimum alternate tax (MAT) on capital gains from April 2015 onwards. But, media reports indicate that the income tax authorities have issued notices to several foreign institutional investors pertaining to their MAT liabilities for prior years, he added.
According to him, clearly, India is not completely out of the 'tax claims pertaining to prior years' syndrome yet.
Reliance Industries was the biggest contributor to Sensex's fall, down 4.5 percent on profit booking post strong Q4 earnings.
1:50 pm IPO update: MEP Infrastructure Developers is going to open its initial public offer (IPO) of 5.14 crore equity shares for subscription on Tuesday, April 21, 2015. The Mumbai-based toll management company has fixed price band of the issue at Rs 63-65 per share. The public issue will close on April 23. Bids can be made for minimum 225 equity shares and in multiples of 225 equity shares thereafter. MEP Infrastructure intends to utilise the net proceeds of the issue to repay loans availed by subsidiary MIPL and for general corporate purpose.
1:30 pm MF exposure: The mutual fund industry has increased exposure in software stocks to over Rs 36,000 crore at the end of 2014-15, up for the third consecutive fiscal, primarily on account of sharp rally in the equity markets.
According to the data available with capital markets regulator Sebi, the funds' investment in software or IT stocks stood at Rs 36,121 crore as on March 31, 2015, accounting for 10.02 percent of their total equity assets under management (AUM) of Rs 3.6 lakh crore.
This also marks the third consecutive full fiscal rise in the industry investment in software or IT companies.
In comparison, MFs had deployed Rs 24,315 crore in the shares of software companies at the end of March 2014. They had invested Rs 19,196 crore and Rs 18,177 crore in these stocks as of March 2013 and March 2012.
Selling pressure continues on Dalal Street as foreign investors are awaiting clarity on tax-related issues. The Nifty is down 66.50 points or 0.8 percent at 8539.50 while the Sensex is down 248.44 points or 0.9 percent at 28193.66. About 944 shares have advanced, 1636 shares declined, and 150 shares are unchanged.
ICICI Bank, Sun Pharma, Tata Steel, HDFC Bank and SBI are major gainers in the Sensex. On the losing side are Hero MotoCorp, Reliance, Infosys, HUL and Coal India. Technology stocks are still laggards with losers like TCS, Infosys and Wipro.
Asian shares slipped and Chinese stock markets erased their earlier sharp gains made after Beijing's latest stimulus steps, which still underpinned sentiment and helped limit losses.
Oil prices rose in Asia, fuelled by sustained unrest in the crude-rich Middle East, while also gaining support on hopes that declining US production will ease a global supply glut, analysts said.
Dealers are also reading a drop in US oil rig activity as a sign of a production slowdown that could alleviate global oversupply and push prices up, analysts said. The latest count by Baker Hughes showed rigs targeting US crude dropped by 26 to 734 last week, Bloomberg News reported. Oil prices rallied last week on news that US shale output may be on the cusp of easing.
12:45pm Interview: Titagarh Wagons strategy to de-risk business and diversify customer base has started to pay off and was the prime reason for good fourth quarter performance said Umesh Chowdhary, VC & MD, Titagarh Wagons in an interview to CNBC-TV18.
The revenues in fourth quater (Q4FY15) have gone up 60 percent to Rs 118 crore on back of pick up in wagon dispatches, while margins have come in at 10 percent. Profit after tax (PAT) was up 400 percent at Rs 8.8 crore versus Rs 1.7 crore reported a year back (Q4FY14).
According to Chowdhary, synergy with the French company has helped them do away with its dependence of wagon orders from Indian railways alone. The company now also caters to African countries through its hundred percent French subsidiary.
The wagons are designed by the French company and are manufactured in India, he added. Titagarh has signed several export contracts for the African market through this subsidiary, Chowdhary said.
However, with Suresh Prabhu as Railway Minister, Chowdhary is hopeful of seeing Indian railways transformed, which in turn is likely to benefit the company.
12:25pm MAT issue: The Indian government has made it clear that minimum alternate tax (MAT) will not be levied on foreign institutional investors or FIIs FY16 onwards. The IT department is seemingly using this as a basis for MAT demands for years prior to FY16.
Reiterating the point, Mahesh Nandurkar, CLSA said the 2015 Budget made it clear that FIIs don't have to pay minimum alternate tax (MAT) on capital gains from April 2015 onwards. But, media reports indicate that the income tax authorities have issued notices to several foreign institutional investors pertaining to their MAT liabilities for prior years, he added.
"The Q&A with the taxation experts from Deloitte explains the case details and we believe that the stage is set for a long legal battle ahead. Clearly, India is not completely out of the 'tax claims pertaining to prior years' syndrome yet," Nandurkar said.
Rajesh Simhan, head - international tax at Nishith Desai says as things stand, the matter is already with the Supreme Court and a number of rulings prior to this are in favour of the tax payer. As a non-resident Indian, or NRI, the investor does not maintain books of accounts, as per Indian law, he or she just allocates a little amount to invest here. Hence the question of computation of book profits for the purposes of MAT does not really arise as far as NRIs are concerned.
12:00pm Market Check
The market continued to see selling pressure in noon trade, pulled down by technology, FMCG, oil and auto stocks. The Sensex slipped 190.69 points to 28251.41 and the Nifty declined 52.05 points to 8553.95.
The broader markets underperformed benchmarks with the BSE Midcap and Smallcap indices falling 0.8-1 percent. About 930 shares have advanced, 1523 shares declined, and 147 shares are unchanged on the BSE.
Asian markets are mostly lower. Shanghai fell more than 1 percent after trading higher in morning trade, as the country's central bank lowered the reserve requirement ratio for all banks by 100 basis points. In commodities, Brent crude rose to USD 64 a barrel.
Shares of Infosys, HUL and Hero Motocorp were top losers on Sensex, down over 2.5 percent. ITC, TCS, L&T, Tata Motors, Mahindra & Mahindra, ONGC, Cipla and Coal India slipped 1-2 percent.
Reliance Industries saw profit taking today after the company reported a standalone profit of Rs 6,243 crore with gross refining margins at a 2-year high of USD 10.10 a barrel. JPMorgan sees the recent rally as a good opportunity to take profit given the recent downward trend in GRMs and lower gas prices kicking-in as of April 1.
NMDC plunged nearly 4 percent as the company cut iron ore prices by upto 20 percent for the remaining days of April. Citi maintained its sell rating on the stock and cut EBITDA estimates for FY15-17 on lower volumes and prices.
However, ICICI Bank, Tata Steel and Sun Pharma bucked the trend, rising more than 2 percent each.
Centre for Monitoring the Indian Economy said project completion and new project announcement picked up last year, but the trend of new projects fell sharply in the 4th quarter; also not much pick up in manufacturing sector; electricity, roads and ports showed maximum uptick in new projects.
11:50 am Buzzing: Shares of Claris Lifesciences climbed 8 percent intraday on settlement of litigations & licence agreement for anesthetic with US company. "Claris has reached a settlement and license agreement, ending all pending litigation with Fresenius Kabi USA Inc, with reference to the alleged infringement of a patent relating to Propofol for injection, 10 mg/ml," said the company in its filing to the exchange. Propofol for injection is a generic version of Diprivan, which is indicated for general anaesthesia for surgery or other medical procedures. Under the terms of settlement and license agreement, Claris and Claris Lifesciences Inc USA has been granted approval to sell its generic version of Propofol for injection beginning October 15, 2016, prior to June 1, 2025 expiry of the patent that formed the basis of litigation.
11:30 am Exclusive: In what comes as a big boost for real estate and infrastructure companies, the government is likely to reconsider levying Minimum Alternate Tax (MAT) at the time of Real Estate Investment Trust (REIT) creation.
However, while the government is considering a MAT exemption at the time of REIT creation, it is not willing to provide such an exemption when the REIT is listed on the stock exchange or when a REIT sells or buys property assets.
Sources say the government is likely to give a clarification on MAT being a pass through in the Finance Bill.
The industry made a case for the removal of MAT at the time of REIT creation to Central Board of Direct Taxes (CBDT) chief Anita Kapur, who is expected to take it up with the Finance Minister
The market continues to be under pressure as the Sensex is down 209.73 points or 0.7 percent at 28232.37 and the Nifty is down 61.30 points or 0.7 percent at 8544.70. About 819 shares have advanced, 1421 shares declined, and 135 shares are unchanged.
Tata Steel, ICICI Bank, Sun Pharma, GAIL and SBI are top gainers in the Sensex. Among the losers are Infosys, HUL, Coal India, M&M and Tata Motors. Stock markets in China and Japan rose after Beijing's latest stimulus to shore up the world's second-largest economy underpinned sentiment and helped limit losses across the rest of Asia.
China's central bank on Sunday cut the amount of cash that banks must hold as reserves, the second industry-wide cut in two months, adding more liquidity to bolster slowing growth. MSCI's broadest index of Asia-Pacific shares outside Japan was down about 0.1 percent, after ascending to a fresh seven-year peak in the previous session. Japan's Nikkei stock index was up 0.3 percent, after shedding 1.3 percent last week.
10:45am Market Update: The Sensex dropped 190.04 points to 28252.06 and the Nifty fell 62.55 points to 8543.45.
About 830 shares have advanced, 1345 shares declined, and 141 shares are unchanged on the BSE.
10:25am New IPO: MEP Infrastructure Developers is going to open its initial public offer (IPO) of 5.14 crore equity shares for subscription on Tuesday, April 21, 2015.
The Mumbai-based toll management company has fixed price band of the issue at Rs 63-65 per share. The public issue will close on April 23.
Bids can be made for minimum 225 equity shares and in multiples of 225 equity shares thereafter.
MEP Infrastructure intends to utilise the net proceeds of the issue to repay loans availed by subsidiary MIPL and for general corporate purpose.
10:00am Market Check
Equity benchmarks as well as broader markets extended losses in morning trade today, dragged by technology, auto, FMCG and HDFC group stocks. The Sensex fell 129.45 points to 28312.65 and the Nifty declined 43.20 points to 8562.80.
The BSE Midcap and Smallcap indices fell 0.9 percent each. About 797 shares have advanced, 1104 shares declined, and 127 shares are unchanged on the BSE.
Markets could crack further from these levels, is the word coming in from Ajay Srivastava, CEO, Dimensions Consulting. He says oil was the best low-hanging fruit for the Indian market. But if it stays where it is or prices increase a bit, the Indian economy will suffer, he says. Besides, as things stand, the recovery on the ground is getting more and more delayed, he adds.
Infosys topped the selling list on Sensex, down 2.6 percent followed by TCS, Tata Motors, Mahindra & Mahindra, Hero Motocorp, Coal India and Sesa Sterlite with 1-2 percent losses.
Index heavyweight Reliance Industries declined 0.7 percent despite strong earnings in Q4 with the profit rising over 22 percent and gross refining margin at USD 10.1 a barrel.
However, shares of Sun Pharma rebounded today with 2.6 percent upside. ICICI Bank, Dr Reddy's Labs, ONGC and Tata Steel gained 0.5-1 percent.
09:45am FII View: Mahesh Nandurkar, CLSA said the 2015 Budget made it clear that the FIIs don't have to pay minimum alternate tax (MAT) on capital gains from April 2015 onwards. But, media reports indicate that the income tax authorities have issued notices to several foreign institutional investors pertaining to their MAT liabilities for prior years, he added.
''The Q&A with the taxation experts from Deloitte explains the case details & we believe that the stage is set for a long legal battle ahead. Clearly, India is not completely out of the 'tax claims pertaining to prior years' syndrome yet,'' Nandurkar said.
09:15am Market Check
The market opened volatile on first day of the week. The Sensex fell 58.74 points to 28383.36 and the Nifty declined 26.15 points to 8579.85. About 506 shares have advanced, 532 shares declined, and 115 shares are unchanged on the BSE.
NMDC topped the selling list, down 4 percent after CLSA has a sell rating on the stock and sees more downside to the stock. Larsen & Toubro, Bharti Airtel, TCS, M&M, Sesa Sterlite, Idea Cellular, IndusInd Bank, Kotak Mahindra Bank and Ambuja Cements declined 0.5-1.5 percent.
Reliance Industries also declined marginally despite strong earnings. The run up in stock in previous few sessions might have discounted strong earnings. Reliance Industries delivered its best ever quarterly performance with its profits rising over 22 percent sequentially. The company's gross refining margins (GRMs) are at a 2-year high and that offsets weakness in other segments.
However, Sun Pharma, NTPC, Tata Steel, Hindalco, GAIL and Lupin gained 0.5-1.5 percent.
The Indian rupee slipped in the early trade on Monday. It has opened lower by 18 paise at 62.54 per dollar versus 62.36 Friday.
Dollar is off to a sluggish start as underwhelming US data prompted the market to trim long positions.
Agam Gupta of Standard Chartered said, "The USD-INR pair should trade in a range of 62.30-62.60/dollar for the day."
"Expect local government banks to be buyers in the 62.30-62.35/dollar area and exporters to sell on upticks above 62.50/dollar," he added.
Global cues, meanwhile, too are negative with the Asian markets starting the week on the back foot, following a lower finish on Wall Street on Friday. The negative sentiment is also on back of China's move to lower the reserve requirement ratio for all banks by 100 basis points fails to boost sentiment.
Nymex crude prices rose above USD 56 per barrel on the back of continued turmoil in Yemen and worries over lower US oil output.
And from the precious metals space, gold rose above USD 1200 an ounce after data showing US consumer prices rose in March tempered speculation the Federal Reserve will delay its first interest rate rise in nearly a decade.