Sensex down 231 points on Fed rate hike fears, Nifty below 7900
03 December 2015
The market fell nearly a percent in late sell-off, weighed down by FMCG, auto and select banking & financials stocks despite positive European cues. Fears of Fed rate hike this month also dampened sentiment.
The 30-share BSE Sensex ended below 26000-mark, down 231.23 points or 0.89 percent to 25886.62 and the 50-share NSE Nifty slipped 67.20 points or 0.85 percent to 7864.15.
Likelihood of Nifty going to 7500 is high and can happen anytime, but the general market may not fall in tandem, says Ajay Srivastava, CEO of Dimensions Consulting.
The BSE Midcap index was down 0.4 percent and Smallcap declined 0.5 percent. The market breadth was weak as about 1548 shares declined against 1240 advancing shares on the BSE.
On the global front, European markets like France's CAC and Germany's DAX were up 1 percent each ahead of ECB decision. Economists expect the European Central Bank to announce further stimulus measures in order to boost inflation and growth. Asian markets closed mixed after oil prices rebounded. China's Shanghai Composite gained 1.4 percent.
Brent and NYMEX crude oil prices gained 1.5-2 percent after a 4 percent fall in previous session. Gold declined to a near-six-year low today after comments from Federal Reserve chair Janet Yellen virtually cemented the case for a US rate hike this month (in a meeting on December 15-16). Fed Chair Yellen on Wednesday said she was looking forward to a US interest rate rise that will be seen as a testament to the economy's recovery from recession.
Meanwhile, services sector PMI hit 5-month low, down to 50.1 in November from 53.2 in October.
Wipro corrected after rising 1.6 percent in early trade, down 1 percent. The company has acquired Germany-based software firm Cellent AG.
Lupin was down 2.6 percent on profit booking after rising over 3 percent in previous session.
Shares of ITC, ICICI Bank, Tata Motors, ONGC, SBI, Mahindra & Mahindra, HUL, Hero Motocorp and BHEL were down 1-3 percent while Axis Bank and NTPC outperformed with more than half a percent gains.
In broader space, Amtek Auto rallied 9.6 percent after sources told CNBC-TV18 that Bharat Forge and Mahindra CIE Automotive are in race to buy company's assets. Bhushan Steel surged 13 percent as a media report indicated that the company is likely to get Rs 3,000 crore through asset sale in Odisha.
Just Dial slipped 5 percent after Goldman Sachs has downgraded the stock to sell. The brokerage has also lowered target price to Rs 750 per share as it feels 22 percent rally in the past one month likely due to a small buyback to use as an exit opportunity.
3:30 pm Market closing: The market ended lower as the Sensex is down 231.23 points or 0.9 percent at 25886.62. The Nifty slips 67.20 points or 0.8 percent at 7864.15. About 1240 shares have advanced, 1547 shares declined, and 137 shares are unchanged.
BHEL, ONGC, Lupin, Vedanta and ITC were among losers while Axis Bank, NTPC, HDFC Bank and Maruti were top gainers.
3:20 pm Macro data: India's economy will grow at 7.4 percent in the current fiscal, which will further improve to over 8 percent in 2016-17, Standard & Poor's Ratings Services projected on Thursday.
S&P in its 'India Credit Spotlight' newsletter noted that significant reforms are required with Indian corporates and banks currently facing a weak operating environment. Indian economy grew at 7.3 percent in last fiscal.
The Reserve Bank too has estimated GDP growth in current fiscal to be 7.4 percent. India's economic growth would be 7.4 percent in fiscal year ending March 31, 2016 and increase to over 8 percent in 2016-17, it said.
"This reflects the increasing importance of the Indian economy and its role as a new growth leader in Asia-Pacific, having overtaken China," S&P said.
3:00 pm Market Update: Equity benchmarks slipped further as the Sensex dropped 206.10 points to 25911.75 and the Nifty fell 67.50 points to 7863.85.
The market breadth was also weak as about 1268 shares have advanced against 1452 declining shares on the BSE.
2:50 pm Buzzing: Shares of Amtek Auto have rallied 14.8 percent intraday as the auto ancillary company seems to be getting good response for its assets sale plan.
Currently, Bharat Forge and Mahindra CIE Automotive are in race to buy out Amtek India's assets, reports CNBC-TV18 quoting unnamed sources. Mahindra CIE Automotive has showed preliminary interest in Amtek Tekfor, one of the businesses that the company is looking to sell for reduction in debt.
CNBC-TV18 learned that debt-laden Amtek Auto is looking to divest stake in various domestic businesses include health & wellness and food & real estate. This divestment is a part of Amtek's plan to raise Rs 7,000 crore over 12-18 months.
2:40 pm Tech Mahindra in News: Mobile value added services firm Mahindra Comviva today announced its foray into the direct to consumer space with Zerch, a mobile-based hyper-local deals discovery platform.
Zerch allows users to get access to deals and promotions being run by merchants in their locality. A subsidiary of IT services major Tech Mahindra, Mahindra Comviva has an extensive portfolio of mobile finance, content, infotainment, messaging and mobile data solutions.
2:20 pm Interview: MEP Infrastructure is targeting revenue of Rs 2,000 crore and EBITDA of Rs 600 crore in FY16, says Jayant Mhaiskar, Vice Chairman and Managing Director of the company.
Speaking to CNBC-TV18, Mhaiskar says he expects profitability to improve on the back of Mumbai Entry Point project and cost of borrowing to reduce going forward.
In total, 70 percent of revenues will come from the long-term projects, he says, adding, commercial operations in five short-terms projects have also started this quarter.
On the Chennai project, he says it is still under dispute and the company is working to resolve the matter with the concerned party.
2:00 pm Market Check
The market continued to see selling pressure despite positive European cues. The Sensex declined 95.53 points to 26022.32 and the Nifty fell 27.95 points to 7903.40.
The broader markets outperformed benchmarks. The market breadth was positive as about 1417 shares advanced against 1237 declining shares on the BSE.
Lupin dropped 2 percent on profit booking while HDFC Bank rebounded with marginal gains.
Crude prices inched up on a report suggesting that Saudi Arabia will propose a deal to balance oil markets, in the first sign the top OPEC producer is willing to compromise after a rout that has more than halved oil prices since June 2014.
US crude CLc1 was trading 29 cents higher at USD 40.23 per barrel while internationally traded Brent LCOc1 was up 48 cents at USD 42.97.
Saudi Arabia, which has so far resisted any intervention, will propose a cut of 1 million barrels per day (bpd) in OPEC output, Energy Intelligence reported, citing a senior OPEC delegate.
1:55 pm GST: The CEA-led panel report on GST revenue neutral rate (RNR) is likely to be submitted on Friday. The finance ministry had set up a committee to be headed by Chief Economic Advisor (CEA) Arvind Subramanian to look into possible tax rates under GST.
Sources say the likely recommended rate won't be higher than 18 percent. The panel will suggest the likely GST rate based on RNR.
The CEA panel may also recommend concessional, lower, standard and higher GST rates. Sources suggest cigarettes, luxury cars and beverages may have a higher GST rate. Precious metals on the other hand may be taxed at a concessional GST rate. Essential goods and services may also be taxed at a lower GST rate.
As far as the passage of the Bill is concerned, the central government is leaning on Bihar chief minister Nitish Kumar to garner support. Kumar has spoken to top BJP leaders on the GST Bill.
1:45 pm Macro data: Broadly growth recovery is on track, but there won't be a spike up soon and the upticks will be uneven, says Siddhartha Sanyal, chief India economist at Barclays. He expects the economy to grow at 7.5 percent in FY16 and 8 percent in FY17. On the Reserve Bank's fifth bi-monthly policy, he says the statement was balanced. "In fact, it was slightly more softer than expected. The RBI reiterated that it wants to stay data dependent and is not averse to the idea of lowering rates further," he told CNBC-TV18. Going ahead, Sanyal sees two 25 basis points rate cuts in the first half of 2016. He expects the first rate cut to be in April, post the Budget.
Broadly growth recovery is on track, but there won't be a spike up soon and the upticks will be uneven, says Siddhartha Sanyal, chief India economist at Barclays. He expects the economy to grow at 7.5 percent in FY16 and 8 percent in FY17. On the Reserve Bank's fifth bi-monthly policy, he says the statement was balanced. "In fact, it was slightly more softer than expected. The RBI reiterated that it wants to stay data dependent and is not averse to the idea of lowering rates further," he told CNBC-TV18. Going ahead, Sanyal sees two 25 basis points rate cuts in the first half of 2016. He expects the first rate cut to be in April, post the Budget.
CIE Automotive has showed preliminary interest in Amtek Tekfor, the report said.
Sources said Amtek Auto is looking to divest stake in various domestic businesses include health & wellness and food & real estate. This divestment is a part of Amtek Auto's plan to raise Rs 7,000 crore over 12-18 months.
The market is still reeling under pressure as the Sensex is down 169.33 points or 0.6 percent at 25948.52. The Nifty slips 48.50 points or 0.6 percent at 7882.85. About 1279 shares have advanced, 1248 shares declined, and 140 shares are unchanged.
NTPC, Reliance, Bharti Airtel, Axis Bank and Hindalco are top gainers in the Sensex. Vedanta, M&M, Tata Motors, ITC and BHEL are among losers.
Gold prices fell by Rs 21 percent to Rs 25,027 per 10 grams in futures trade today as participants trimmed positions, tracking a weak trend overseas.
Analysts said a weak trend in the overseas markets where gold sank to the lowest level in more than five years after Federal Reserve Chair Janet Yellen signaled that the US economy looks strong enough for an interest rate hike this month, eroded demand for the precious metal, kept pressure on gold futures here.
12:55 pm Market Update: Equity benchmarks extended losses in afternoon trade. The Sensex dropped 168.63 points or 0.65 percent to 25949.22 and the Nifty fell 48.30 points or 0.61 percent to 7883.05.
About 1292 shares have advanced, 1237 shares declined, and 135 shares are unchanged on the BSE.
12:40 pm Buzzing: Shares of Bhushan Steel, the country's largest manufacturer of auto-grade steel, surged 18 percent intraday as a media report indicated that the company is likely to get Rs 3,000 crore through asset sale in Odisha.
''We have sold the oxygen plant for Rs 1,000 crore and leased back, which will help reduce some liabilities. The coke oven plant (sale) is under process, which could translate to another Rs 2,000 crore,'' said a media report quoting Nittin Johari, the director, finance of the company.
The company's board of directors, on November 14, had approved sale & lease back arrangements of cock oven plant -I and oxygen plant - V situated at integrated steel plant, Meramandali Odisha.
12:20 pm India-Mauritius tax talks: India is discussing a whole host of issues with Mauritius including ways and means of ensuring that a tax treaty with the island nation is not misused, Akhilesh Ranjan, a joint secretary in the tax department told reporters on Thursday.
Earlier, in October, Mauritius finance minister had told Reuters they were in talks to review a tax treaty that had made the island the biggest single source of foreign direct investment in India.
But the treaty's terms have been a growing irritant to India, which says a chunk of the funds are not real foreign investment but Indians routing cash through the island to avoid Indian taxes.
12:00 pm Market Check
The market remained under selling pressure with the Sensex falling 134.60 points to 25983.25 and the Nifty down 37.70 points to 7893.65.
The likelihood of Nifty going to 7500 is high and can happen anytime, but the general market may not fall in tandem, says Ajay Srivastava, CEO of Dimensions Consulting.
The worse thing is all the beaten down, highly-leveraged stocks had a party this year, thanks to the Reserve Bank's benign view on NPAs and the 'most obnoxious' legislation called the 5:25 scheme, he told CNBC-TV18.
Shares of ITC, ICICI Bank, Tata Motors, Lupin, HUL, Mahindra & Mahindra, ONGC and Cipla were down more than 1 percent while Reliance Industries, Axis Bank, NTPC and Bharti Airtel bucked the trend with marginal gains.
11:55 am Buzzing: Shares of Wipro rose 1.6 percent on acquisition of Germany-based IT consulting & software company. "Wipro has signed an agreement with Landesbank Baden-Wuerttemberg (LBBW) to acquire Cellent AG for 73.5 million euro," says the IT firm in its filing. The company has acquired this firm through its subsidiary Wipro Cyprus. Cellent AG has a team of more than 800 consultants, who will now become a part of Wipro, it adds. This acquisition will provide Wipro with significant scale and prime customer relationships, especially in manufacturing and automotive domains, which are key industry sectors in DACH (Germany, Austria and Switzerland) region of Germany.
11:45 am Market outlook: The likelihood of Nifty going to 7500 is high and can happen anytime, but the general market may not fall in tandem, says Ajay Srivastava, CEO of Dimensions Consulting. The worse thing is all the beaten down, highly-leveraged stocks had a party this year, thanks to the Reserve Bank's benign view on NPAs and the 'most obnoxious' legislation called the 5:25 scheme, he told CNBC-TV18. "Wherever there is a high debt in the system, you need to find them and invest in them and HNIs are doing exactly that. They know that banks are going to rollover the debt and returns are going to come to equity holders," a frustrated Srivastava says. He feels value now lies in midcap sectors such as aviation. He also says Syngene has done exceedingly well.
11:30 am Macro data: India's services industry barely expanded in November, growing at its weakest pace in five months, as firms grew increasingly gloomy about the coming year, a business survey showed on Thursday.
The Nikkei/Markit Services Purchasing Managers' Index fell sharply to 50.1 in November from October's eight-month high of 53.2. A reading above 50.0 indicates growth.
For the first time in the 10-year history of the survey, the business expectations sub-index tipped below 50, falling to 49.9 from 53.7 and highlighting firms' pessimism regarding prospects.
The market has extended losses the Nifty is nearing 7850. The 50-share is down 46.55 points or 0.6 percent at 7884.80. The Sensex is down 157.79 points or 0.6 percent at 25960.06. About 1186 shares have advanced, 1087 shares declined, and 113 shares are unchanged.
Tata Steel, GAIL, Cipla, ITC and HUL are major laggards in the Sensex. Among gainers are NTPC, GAIL, Reliance, L&T and Axis Bank.
US crude prices were hovering above USD 40, after falling more than 4 percent a day earlier on an unexpected rise in stockpiles, while Brent was weighed down by concerns that OPEC will keep its output ceiling unchanged. US crude inventories rose for a tenth straight week, climbing 1.2 million barrels, in contrast to analysts' expectations of a decrease of 471,000 barrels, data from the US Energy Information Administration showed.
10:45 am Oil Update: US crude prices were hovering above USD 40 a barrel, after falling more than 4 percent a day earlier on an unexpected rise in stockpiles, while Brent was weighed down by concerns that OPEC will keep its output ceiling unchanged.
US crude was trading at USD 40.23 per barrel, up 29 cents, but down nearly 14 percent since the start of November.
Internationally traded Brent was up 23 cents at USD 42.72. It ended at USD 42.49 on Wednesday, the lowest since March 2009.
US crude inventories rose for a tenth straight week, climbing 1.2 million barrels, in contrast to analysts' expectations of a decrease of 471,000 barrels, data from the US Energy Information Administration showed on Wednesday.
10:40 am PMI at 5-month low: Posting a five-month low of 50.2 in November (October: 52.6), the seasonally adjusted Nikkei India Composite PMI Output Index was indicative of little-change in the level of private sector activity in India, says Nikkei Markit. Growth of manufacturing production softened to the slowest in the current 25-month sequence of expansion, while services activity broadly stagnated, it adds.
Down from October's eight-month high of 53.2 to 50.1 in November, the seasonally adjusted Nikkei Services Business Activity Index pointed to broadly unchanged levels of services activity across the country.
10:20 am TN financial loss: Life in the Tamil Nadu capital was crippled as fresh downpour worsened an already disastrous flood situation, posing danger to thousands of people in low-lying areas.
The financial loss may exceed Rs 15,000 crore, an industry lobby body said, as weather forecasting agencies predicted heavy rain to continue for at least the next two days.
The unprecedented rains, the worst in 100 years, have battered Tamil Nadu's northern districts such as Chennai, Tiruvallur, Kanchipuram and Cuddalore. In the last spell of rains, around 180 people had died in the four districts.
10:00 am Market Check
The market extended losses for the second consecutive session today due to selling in FMCG, healthcare, metals and select banks stocks. The broader markets were marginally in red.
The 30-share BSE Sensex fell 127.15 points to 25990.70 and the 50-share NSE Nifty declined 40.50 points to 7890.85.
Asian stocks traded lower after US oil prices fell below USD 40 per barrel for the first time since August. A sell-off in US stocks sped up in late afternoon trade, after WTI crude settled USD 1.91 lower, or 4.6 percent, at USD 39.94 a barrel. Government data showed a tenth straight week of inventory build-up, adding to worries over a supply glut.
Shares of ITC, Lupin, Tata Motors, ONGC, HUL, Cipla, Dr Reddy's Labs and Tata Steel were down 1-2 percent.
9:55 am Macro data: Inflation has not gone up since the imposition of Swachh Bharat cess in November, Rajya Sabha was informed.
Responding to a question on whether the cess had triggered a rise in inflation, Minister of State for Drinking Water and Sanitation Ram Kripal Yadav replied in negative.
Answering other questions relating to the campaign, Yadav said the government has constructed 1.10 crore toilets including 60.88 lakh toilets this year, ever since Swachh Bharat Mission (Rural) was launched on October 2, 2014.
9:45 am Buzzing: Shares of Wipro rose 1.6 percent in early trade on acquisition of Germany-based IT consulting & software company.
"Wipro has signed an agreement with Landesbank Baden-Wuerttemberg (LBBW) to acquire Cellent AG for 73.5 million euro," says the IT firm in its filing.
Cellent AG has a team of more than 800 consultants, who will now become a part of Wipro, it adds.
This acquisition will provide Wipro with significant scale and prime customer relationships, especially in manufacturing and automotive domains, which are key industry sectors in DACH (Germany, Austria and Switzerland) region of Germany. The acquisition is expected to be closed in quarter ended March 2016.
9:30 am Market outlook: Abhay Laijawala, Deutsche Bank has set December 2016 Sensex target of 29,000 implying an upside of 11 percent.
He believes corporate earnings are likely to turnaround in 2016 and the worst is over.
Large cap top picks are BPCL, Godrej Consumer, Lupin, M&M, NTPC, Shree Cement, SBI, Sun Pharma, Titan & Zee Entertainment. Midcap top picks are Bajaj Corp, Container Corporation, Cummins, Federal Bank, Gujarat Gas, JSW Energy, Just Dial, Marico, Shriram Transport, SKF, UPL & Whirlpool. Non-consensus sell ideas are Dr Reddy's Labs, L&T & Tata Motors, Laijawala says.
The market has opened in red. The Nifty is down 30.20 points or 0.4 percent at 7901.15. The Sensex is down 100.16 points or 0.4 percent at 26017.69.
Wipro, Axis Bank, Hero and Infosys are top gainers in the Sensex while ONGC, Hindalco, Bajaj Auto, Tata Steel and Tata Motors are losers.
The Indian rupee declined in the early trade. It has opened lower by 8 paise at 66.67 per dollar versus 66.59 Wednesday.
Mohan Shenoi of Kotak Mahindra Bank said, "Fed Chair Yellen's speech on Wednesday makes a December lift-off of Fed rates near certain. However, subsequent increases are expected to be gradual."
He further added, "On the other hand low inflation has increased odds of further QE in Eurozone in today's European Central Bank (ECB) rate setting meeting. This monetary divergence is lending support to the dollar."
Asian stocks slipped and the dollar advanced after hawkish-sounding comments from Federal Reserve Chair Janet Yellen further reinforced the case for an interest rate hike later this month.