Sensex, Nifty end in red; ITC & Reliance drag, HDFC gains
07 December 2015
3:30 pm Market Closing: Equity benchmarks ended lower again after a consolidation. The Sensex fell 108 points or 0.42 percent to 25530.11 and the Nifty declined 16.50 points or 0.21 percent to 7765.40.
The market breadth was positive as about 1460 shares advanced against 1311 declining shares on the BSE.
ITC crashed 6.57 percent followed by Coal India, ONGC, Reliance Industries, Maruti Suzuki and Cairn India with 1-2.5 percent loss. Sun Pharma, HUL, Lupin, Tata Steel, HDFC, Asian Paints and Tech Mahindra were down 1-4 percent.
3:15 pm Buzzing: Shares of Pincon Spirit are locked at 10 percent upper circuit on Monday after acquisition of bottling unit of the liquor manufacturer based in West Bengal.
"Pincon Spirit has acquired bottling unit of Indian Made Indian Liquor (CS Liquor) of National Industrial Corporation (Nicols) situated at Asansol, West Bengal," says the liquor maker in its filing.
Indian Made Indian Liquor (CS Liquor) brand of the company i.e. Bangla No. 1 is one of the largest selling brands in West Bengal. Asansol, being a coal mining belt in West Bengal, is having very high demand for Indian Made Indian Liquor (CS Liquor), it says.
3:10 pm Market Update: Equity benchmarks continued to see selling pressure. The Sensex fell 97.90 points or 0.38 percent to 25540.21 and the Nifty declined 14.05 points or 0.18 percent to 7767.85.
About 1404 shares have advanced, 1285 shares declined, and 141 shares are unchanged on the BSE.
3:00 pm Nomura on Emami: Nomura has maintained its neutral rating on Emami but slashed target price to Rs 1050 from Rs 1200. It believes near-term earnings are still at risk despite the strength of core business, though valuations have come down from their peak earlier this year after the recent stock correction. The stock fell more than 25 percent in last four months. The brokerage has also cut FY16/FY17F/FY18 revenue estimates by 3.9 percent/4.3 percent/4.4 percent due to lower Kesh King sales this year, a delayed winter season and a slower-than-expected pick-up in consumption.
Accordingly, it also lowered EBITDA margin forecasts by 60 basis points for FY16 to 25.8 percent, but largely stick with its estimates of 26.3 percent and 26.6 percent for FY17 and FY18, respectively, as sales of Kesh King pick up.
2:55 pm New tidings for market: The Indian market remains a bright spot in the global setup and will withstand a likely one-off Federal Reserve interest rate hike, says veteran investor Ramesh Damani. "I think we're on the cusp of an earnings recovery. Come new year and there will be glad tidings for the Indian equities," he told CNBC-TV18 in an interview. However, not a "macro person" by his own admission, Damani said he would ignore the larger setup and is more interested in the investing opportunities markets throw up due to ongoing changes in the environment. "The themes that investors should watch out for are financial inclusion and digital payments," Damani said, citing Bill Gates' recent comments in India in which he said he expects half of financial transactions in India to go digital in the next five years.
2:45 pm IPO calling: Mumbai-based Alkem Laboratories is set to launch its initial public offer of 1.28 crore equity shares for subscription on December 8. The company has fixed price band at Rs 1020-1050 per share. The company aims to raise more than Rs 1,300 crore through this issue. Meanwhile, Dr Lal Pathlabs aims to garner Rs 600 crore through its IPO, wherein the promoters and other existing shareholders will collectively sell 1.16 crore shares of the company, amounting to 14.1 percent stake. Both the companies aim at tapping the uptick in investor sentiment. Daljeet Singh Kohli, HOR, India Nivesh Securities recommends susbcribing to both the issues. According to him valuations of Alkem are comfortable compared to its peers. The company also has a strong product pipeline, he says in an interview to CNBC-TV18. The company has filed for 69 Abbreviated New Drug Application (ANDA) out of which 45 are pending.
2:30 pm Petro products in GST net? The petroleum products should come under the ambit of the proposed Goods and Services Tax (GST) but a final decision would be taken when the state governments come on board on it, government told the Lok Sabha today. Replying to questions, Petroleum Minister Dharmendra Pradhan said altogether 52 percent tax is levied on petroleum products by both central and state governments and such revenues are used for various welfare and infrastructure projects. He said state governments are free to fix the amount of tax they want to levy on petroleum products as every state has its own aspirations and development projects which they carry out through the revenue generated from the sale of petroleum products.
2:00 pm Market Check
Sell-off intensifies market heads for closing. The Sensex is down 148.33 points or 0.6 percent at 25489.78, and the Nifty down 30 points or 0.4 percent at 7751.90.
About 1394 shares have advanced, 1229 shares declined, and 144 shares are unchanged.
Pharma and Realty indices are up almost 1 percent. Sun Pharma, Tata Steel, HUL, HDFC and Lupin are top gainers in the Sensex. ITC, Coal India, ONGC, Reliance and NTPC are major losers in the Sensex.
Asian stocks lost much of their gains from the morning session to close mixed on Monday, as investors eye a host of economic data due this week.
Oil prices will remain in focus after US crude futures once again dipped below the USD40-mark. In Asian trade, the West Texas Intermediate (WTI) futures traded at 46 cents or 1.15 percent lower at USD 39.51. The Japanese market closed in positive territory as investors await the latest update of third quarter gross domestic product (GDP) data, the broadest measure of economic health, and machinery orders figures.
1:55 pm Big dreams: With its listed firms adding over USD 100 billion to market capitalisation in the last 15 years, the Tata Group is looking at an increase of nearly USD 250 billion by 2025, including through acquisitions. The group will not shy away from global buyout activity and will continue to make significant investments in both existing as well as new businesses, including in the digital space to meet its vision 2025 targets.
1:45 pm Buzzing: Shares of Bharat Forge fell 2.4 percent intraday to hit a 52-week low of Rs 818 on the BSE due to further decline in truck orders inflow. Order inflows for class 8 trucks in North America (as per Freight Transportation Research, FTR) fell sharply by 59 percent year-on-year to 16,475 units in November 2015. This is the lowest level of order inflows since September 2012 and weakest November data since 2009. Order inflows have now declined for 9 consecutive months (order inflows down 29 percent Y-o-Y over the March-November 2015 period). Over April-October 2015, production averaged around 28,400 units per month, while order inflows averaged around 21,000 units.
1:30 pm Market outlook: Currently, there are no powerful triggers and no surprises for the market to go up, so it is likely to be stuck in a range of around 7700-8100 is the word coming in from CNBC-TV18's Udayan Mukherjee. Triggers like Fed rate hike, GST etc are already discounted by the market and so, we could be in for a few more boring weeks and grinding in a range, says Mukherjee. Stock/sector specific, he is not enamoured by the ADAG pack and the telecom sector. He does not like companies that haven't made wealth for shareholders and so does not recommend buying the pack. Telecom sector too has been mired with problems, so it is not one of his favourites. According to him, stocks within sectors are giving divergent performances, so it is becoming more of a stock specific and increasingly bottom-up market.
The market is slipping further. The Sensex is down 116.91 points or 0.5 percent at 25521.20, and the Nifty is down 21.55 points or 0.3 percent at 7760.35. About 1411 shares have advanced, 1109 shares declined, and 155 shares are unchanged.
ITC tanks 6 percent, while Coal India, ONGC, NTPC and Reliance are laggards. Sun Pharma, Tata Steel, Lupin and HDFC are top gainers in the Sensex. FMCG index is dow n over 2 percent while pharma index is up 0.8 percent.
Services like telephony, dining out and banking will get dearer if the recommendations made by the GST panel on the proposed nationwide uniform taxation are accepted as the tax rate will increase to 17-18 percent from 14.5 percent at present, experts said. A Finance Ministry panel headed by CEA Arvind Subramanian has suggested a 'standard rate' of 17-18 percent on bulk of the goods and services for the entire country.
The government plans to roll out Goods and Services Tax (GST) from April 1. A Constitution Amendment Bill is currently stuck in Rajya Sabha. The Service Tax was introduced at 5 percent in 1994 on limited number of services, she said, adding the tax rate has gradually increased to 14 percent and now covers almost of all services with few exceptions.
12:55 pm Earnings outlook: Nilesh Shah, Kotak Mutual Fund clearly believes that we are currently in a stage where earnings have not yet recovered, Fed hike uncertainty and there are still concerns on global market, which are keeping our market in range bound scenario. Since the market has now gone through a phase of consolidation, from a 12-18 month horizon one could see uptick in earnings and markets, says Shah in an interview to CNBC-TV18. He is hopeful that going forward for the next few quarters if earnings are better than of earlier fiscal, it will give an optical illusion that they are recovering. He genuinely believes that economy is on a growth trajectory with interest rates being cut and government spending in infra spaces taking place. Also with the 7th pay Commission coming through it would help consumption and related sectors and aid capacity utilizations.
12:45 pm Market views: What is happening in the banking sector right now is unprecedented, Vetri Subramaniam, CIO, Religare Invesco Mutual Fund, tells CNBC-TV18. He is not betting right now as to who the winners and losers are likely to be, but sees small banks and payment banks giving the established players a run for their money. He is not bullish on pharma companies as he feels valuations are expensive. Also, he advises caution on midcap mutual fund schemes, saying valuations are expensive. According to Subramaniam, large caps are not cheap either, but they are attractive relative to midcaps.
12:30 pm Commodities: Gold held near a three-week high on Monday, boosted by short-covering after strong US nonfarm payrolls data bolstered the case for a Federal Reserve rate hike next week.
With speculators holding record short positions in COMEX gold and the dollar failing to gain much traction post payrolls data, some believe gold prices could see more upside.
US nonfarm payrolls rose 211,000 last month, above market expectations and removing most doubts about the first Fed rate hike in nearly a decade at the central bank's next policy meeting on Dec. 15-16.
The market is sluggish as the Sensex is down 24.59 points at 25613.52. The Nifty is up 6.95 points at 7788.85. About 1472 shares have advanced, 992 shares declined, and 153 shares are unchanged.
Sun Pharma, Tata Steel, Lupin, HDFC and Vedanta are top gainers while ITC, Coal India, ONGC, NTPC and Reliance are among losers in the Sensex.
Crude prices fell in the first trading session after OPEC members failed to agree on output targets to reduce a bulging oil glut that has cut prices by more than 60 percent since June 2014.
The Organization of the Petroleum Exporting Countries failed to agree on an oil production ceiling on Friday after a disagreement between Saudi Arabia and Iran meant that the group for the first time in decades didn't even mention an output quota, which previously stood at 30 million barrels per day (bpd). OPEC's output of more than 30 million bpd has compounded an oil glut, pushing production 0.5 million to 2 million bpd beyond demand and putting many producers under pressure, especially small-sized U.S. shale drillers which have piled up large amounts of debt.
11:55 am Sin Tax hurting?: Committee on Possible Tax Rates under Goods and Service Tax (GST), headed by Arvind Subramanian, Chief Economic Adviser (CEA) has suggested that tobacco products including cigarettes will be taxed 40 percent. The taxation is over and above the 25 percent value added tax (VAT) already charged on current products.
IDFC believes it will be a huge negative for ITC as that will significantly increase its tax incidence and would require another steep price increase (of roughly 15-17 percent to pass on tax increase). The brokerage has an underperform rate on the stock with a target price of Rs 311 per share.
Meanwhile, Morgan Stanley sees three possible outcome of the GST recommendation. It says highest probability is that 40 percent GST rate is levied on cigarettes in addition to the existing central excise tax. According to the brokerage, it will be neutral to the FMCG stock as the government will subsume part of the central excise tax under CGST with net effect that tax collection from cigarettes gets broadly revenue neutral.
11:45 am Buzzing: Investors continued to buy shares of Sun Pharmaceutical Industries on Monday as brokerages bet on anti-cancer drug Gleevec generic. The stock surged 3.3 percent today, in addition to 4 percent upside in previous trading session. Nomura expects Sun Pharma to earn USD 370 million in revenue during 6-month exclusivity period for Gleevec. It feels earnings support from Gleevec and Ranbaxy synergy limited downside risk. The brokerage has upgraded the stock to neutral from reduce but slashed target price to Rs 817 from Rs 825 earlier.
11:30 am Deal: GMR Group is in talks with private equity players to sell 30 percent stake in its airport business, according to reports in The Economic Times and Mint newspapers. Canada-based Fairfax Financial Holdings and Singapore's Changi Airports are in preliminary stage of discussions with the company, which is expected to be fianlised before March. KKR & CO. LP and Apollo Global Management, reportedly, also plans to invest in the company. The deal will mainly involve GMR selling a 30 percent stake in airport business to raise USD 500-700 million. Newspaper reports say that the funds will be used to furnish the company's debt and to consolidate operations.
There seems to be no respite for the market as it reels under selling pressure. The Nifty is struggling below 7800. The 50-share index is down 26.85 points at 25611.26. The Nifty is down 0.45 points at 7781.45. About 1400 shares have advanced, 874 shares declined, and 105 shares are unchanged.
Sun Pharma continues to rally 3 percent while Tata Steel, Hindalco, HDFC Bank and Hero Motocorp are top gainers in the Sensex. Among the losers are ITC, NTPC, Coal India, ONGC and Dr Reddy's Labs.
Asian share markets bounced after Wall Street welcomed an upbeat US jobs report that suggested the world's biggest economy was well placed to handle an expected first increase in interest rates in almost a decade. Equity investors in Asia were also wary ahead of a bevy of Chinese data which are expected to show a still sluggish economy. Trade figures are due on Tuesday, followed by inflation on Wednesday and industrial output and retail sales.
Oil prices were near their lowest since 2009 in the wake of the Organization of the Petroleum Exporting Countries' decision to keep production high despite depressed demand.
10:55 am Market outlook: The Indian economy is seeing a "lot more green shoots" than in the past and these are likely to show up in earnings of select companies, says Arvind Sanger, Founder and Managing Partner of New York-based hedge fund firm Geosphere Capital. In an interview to CNBC-TV18 he said data on several fronts such as auto sales, commercial vehicle sales, urban consumer and oil demand showed the Indian economy was on the mend following a multi-year downturn that started in 2012. "In such an environment, investors should buy bank and non-banking financial companies (NBFCs) stocks, industrial equipment suppliers, road companies and select consumer stocks," he said.
10:45 am New wings: Despite reduction in fuel prices, flash sales by different airline companies and strengthening US dollar will restrict margins at current levels, says Aditya Ghosh, President & whole-time director of Interglobe Aviation, parent company of India's budget carrier IndiGo. In an interview with CNBC-TV18, Ghosh said he expects the coming few quarters to be good with visible improvement in passenger traffic. Revenue will remain in early to mid-20s level for next three to four years, he says.
10:30 am Buzzing: Shares of Godrej Properties rose 3 percent intraday as it claims to sell 300 apartments within one week at The Trees, its flagship project in Vikhroli, Mumbai. This represents more than 80 percent of the 374 apartments it opened for sale in the first phase of this project.
"The value of apartments sold is in excess of Rs 700 crore making this Godrej Properties' most successful ever launch in terms of value of real estate sold," it said in a press statement.
The Trees mixed-use development contains a commercial precinct spread across 9.4 acres, which houses Godrej One, the Godrej Group's global headquarters. The central mixed use precinct, spread over 9.2 acres, will comprise of a 5 star luxury hotel, cultural buildings, luxury residential, and a high street retail park.
The market is completly flat after a high opening. The Sensex is up 2.19 points at 25640.30 and the Nifty is up 10.25 points at 7792.15. About 1380 shares have advanced, 581 shares declined, and 91 shares are unchanged.
Sun Pharma, Hero MotoCorp, Tata Steel, HUL and Cipla are top gainers while ITC, NTPC, ONGC, Dr Reddy's Labs and Bharti Airtel are among losers in the Sensex.
Essar Oil Ltd , India's second biggest private refiner, has set a floor price of Rs 146.05 a share to buy out minority shareholders, the company said in a public notice. Essar Oil has decided to delist from local stock exchanges by buying out the non-promoter shareholding of 28.54 percent to give its promoters greater flexibility, the company said.
The Bombay Stock Exchange and the National Stock Exchange had earlier approved the planned delisting of shares in Essar Oil. The share buyback would begin on December 15, the notice said.
9:45 am FII on GST: Neelkanth Mishra, Credit Suisse says suggestion of low revenue neutral rate and no central sales tax (CST) could help break the logjam on goods & service tax (GST) legislation.
However, with state law changes, synchronisation of rates & exemptions, a national rollout of new IT systems, and training of government staff & industry still ahead, he believes April 1, 2017 is still the most likely start date for GST.
The committee on possible tax rates under GST, headed by Dr Arvind Subramanian, Chief Economic Adviser (CEA), Ministry of Finance, submitted its report to the Finance Minister on December 4.
9:35 am Buzzing: Shares of Lanco Infratech rose nearly 9 percent intraday after its step down subsidiary, Lanco Amarkantak Power (LAPL) has started power supply to Haryana discoms from its domestic coal based 300 MW Unit no. 2, Chhattisgarh.
"With the commencement of power supply to Haryana discoms at regulated tariff from this pithead plant, the entire 1800 MW operating coal based power portfolio of Lanco is now utilised to its full capacity with fuel pass through," the company says in its filing.
LAPL has recently got a favourable order from the Supreme court directing the South Eastern Coalfields to supply coal to 300 MW Lanco Amarkantak unit II treating it as a unit having a subsisting long term PPA.
9:15 am Market Check
The market started week on a positive note tracking global cues. The Sensex rose 108.70 points to 25746.81 and the Nifty climbed 34.65 points to 7816.55.
Tata Steel, Sun Pharma, Hindalco Industries, Hero Motocorp, ICICI Bank, Bank of Baroda and Asian Paints gained 1-3 percent. ITC, NTPC, M&M, ONGC and Cairn India were under pressure.
The Indian rupee has opened flat at 66.70 a dollar on Monday against Friday's closing value.
Agam Gupta of Standard Chartered said, "The USD-INR pair should range between 66.60-66.90/dollar today. We could see dollar selling interest from local banks on any upticks to 60.90/dollar."
"The demand at lower end of the range should emerge from oil importers," he added.
The US dollar gained against the euro after stronger-than-expected US monthly jobs data.
Asian markets traded higher following positive lead from the Wall Street. Nikkei, Straits Times and Taiwan Weighted rallied 1-1.5 percent followed by Shanghai Composite and Hang Seng with 0.4 percent upside.
Indices in US markets gained close to two percent on Friday on increased certainty of divergent Central Bank policy with a strong job data report supported by increased likelihood of a Fed rate hike in December.