China & oil spook market; Sensex down 554 points, Nifty below 7600
07 January 2016
Indian equity benchmarks slaughtered for fourth consecutive session Thursday, tracking global rout after Chinese shares suspended trading in early trade and sharp fall in crude oil prices. All sectoral indices ended in red.
Indices ended at four-month closing low. The 30-share BSE Sensex fell below 26000-mark to hit its lowest level (of 24825.70) in 52 weeks, weighed down by auto and commodity stocks. The index plunged 554.50 points or 2.18 percent to 24851.83.
The 50-share NSE Nifty crashed 172.70 points or 2.23 percent to 7568.30 after hitting an intraday low of 7556.60.
The market may continue to track global factors in near term, feel experts, saying 7500 could be strong support on the Nifty.
Ajay Srivastava of Dimensions Capital says the market is still underestimating impact the devaluation will have. He feels the market may see one more gut-wrenching fall before the Union Budget 2016-17.
The broader markets also got butchered today with the BSE Midcap and Smallcap indices falling 2.6 percent and 2.9 percent, respectively. The market breadth was pathetic as more than three shares declined for every share advancing on the Bombay Stock Exchange.
China was the main cause of concern today. Shanghai halted for trading within 30 minutes of opening after shares tumbled more than 7 percent, triggering a circuit breaker following a further devaluation of yuan. Market's circuit breaker was triggered for the second time. Other Asian markets fell 1-3 percent.
European markets like Britain's FTSE and France's CAC were down 2.6 percent each (at 16 hours IST). Germany's DAX index fell below 10,000 for the first time since mid-October, down 3 percent.
Brent crude oil slipped to lowest level since April 2004, falling below USD 33 a barrel intraday (down 5 percent) but managed to recoup some of losses later on. NYMEX hit seven-year low intraday on massive stockpiles of unwanted crude and refined products.
Following yuan devaluation, the rupee fell 11 paise to 66.93 a dollar. The Japanese yen surged to 117 against the US dollar while Australian dollar (seen as a liquid proxy to the yuan) tumbled to a three-month low. Other regional currencies also followed suit. South Korean won test four-month low against US dollar. Malaysian ringgit slipped to a three-month low and Singapore dollar was down to a six-year low against the greenback.
Back home, Tata Motors was the biggest contributor to Sensex's fall, down more than 6 percent on China rout. Its subsidiary Jaguar Land Rover gets 15 percent of sales from the world's second largest economy, which was already declined from 30 percent earlier.
Maruti Suzuki lost 4.8 percent as Japanese yen appreciation will hit its operating profit margin. Analysts say every 1 percent appreciation in yen means 15 basis points negative impact on the four-wheeler's margins. Maruti's exposure to the yen is in form of royalty paid to Suzuki and import of raw material.
Commodity stocks such as Tata Steel (down 7 percent), Vedanta (down 9 percent) and Hindalco (down 5 percent) too were under pressure on the back of a global risk off and as a devalued yuan could lead to further imports into India.
Axis Bank plunged 5 percent. Media reports suggested that the government is likely to consider selling stake in the bank.
Among others, state-run power equipment maker BHEL crashed 7 percent followed by HDFC, Reliance Industries, ITC, Infosys, L&T, SBI, HDFC Bank and ICICI Bank with 1-3 percent loss.
3:30 pm Market close: The market has ended at four-month closing low. The Sensex was down 554.50 points or 2.2 percent at 24851.83, and the Nifty was down 172.70 points or 2.2 percent at 7568.30.About 690 shares have advanced, 2188 shares declined, and 94 shares are unchanged.
BHEL, Tata Steel, Tata Motors, Axis Bank and ONGC were laggards in the Sensex.
3:10 pm Stake sale: The government is mulling selling part of its stake in the nation's third-biggest private sector lender, Axis Bank.
The government is considering the sale to meet its asset sales target.
At the current market price, the government's about 11.6 percent stake is worth around USD 1.8 billion. A spokesman for the finance ministry and the Economic Affairs Secretary were not immediately available for comments.
2:58 pm Market Update: The Sensex crashed 534.01 points or 2.10 percent to 24872.32 and the Nifty fell 171 points or 2.21 percent to 7570, tracking global correction after China suspended trading in shares in early trade.
About 2179 shares declined against 647 advancing shares on the BSE.
2:45 pm Goldtops 26000: Gold prices regained the Rs 26,000- mark by soaring Rs 430 -- its biggest one-day surge this year -- to trade at its highest level in over three weeks at Rs 26,330, tracking uptrend in the global bullion market and rise in demand from domestic jewellers.
In the global market, the precious metal once again topped the USD 1,100 an ounce mark. Depreciation in rupee, which was trading at over two-week low against the dollar, also supported the upside in goldprices as it would make imports costlier.
2:35 pm China's FX reserves: China's foreign exchange reserves, the world's largest, fell USD 107.9 billion in December to USD 3.33 trillion, the biggest monthly drop on record, central bank data showed on Thursday.
The December figure missed market expectations of USD 3.40 trillion, according to a Reuters poll.
China's foreign exchange reserves fell USD 512.66 billion in 2015, the biggest annual drop on record.
2:25 pm Oil cess relief: For the first time in over four decades, the government is likely to convert a cess on domestically produced crude oil into an ad-valorem rate from a fixed per tonne levy, at present.
The Budget for 2016-17, the second full year Budget by Finance Minister Arun Jaitley is likely to make changes in the way Oil Industry Development Cess is levied to provide relief to companies like ONGC and Cairn India that are being battered by oil prices plunging to 11-year low.
"There are indications the Budget may announce an ad valorem rate of cess instead of Rs 4,500 per tonne fixed levy currently," a senior government official said.
2:15 pm China's GDP: China kept its annual economic growth rate in 2014 unchanged at 7.3 percent in its final verification of the data though it revised down the value of gross domestic product slightly, the National Bureau of Statistics (NBS) said today.
The final revised GDP stood at 63.591 trillion yuan (USD 9.65 trillion) in 2014, down 22.9 billion yuan from the previous estimate, as they revised down the size of the services sector.
The NBS reports annual GDP figures in three stages: a preliminary calculation and second and final revisions.
China is set to release 2015 full-year GDP data on January 19.
2:00 pm Market Check
The market continued to see selling pressure in afternoon trade, tracking global weakness post China's trading halt and commodity rout. The Sensex plunged 423.74 points or 1.67 percent to 24982.59 and the Nifty fell 137.55 points or 1.78 percent to 7603.45.
The market breadth remained in favour of declines with ratio of 4:1 on the Bombay Stock Exchange.
European markets traded lower amid further turmoil in Chinese stock market, where stocks were suspended from all trade. The German DAX index fell below 10,000 for the first time since mid-October, down over 3 percent. FTSE slipped 2.5 percent and CAC dropped 3 percent.
Brent crude oil futures fell sharply to levels not seen since April 2004, down 4 percent to USD 32.87 a barrel. Much of the negative sentiment came from concerns over the Chinese economy and continued worries over oversupply in the market.
1:50 pm Brent price: Brent crude prices tumbled over 4 percent to levels not seen since April 2004 on Thursday as as a sliding yuan and a second emergency halt in China's stock trading this week left Asian markets in turmoil. A huge supply overhang and near-record output levels also continued to drag on oil prices, which have now shed 70 percent in value since the current downturn began in June 2014, causing pain to companies and governments that rely heavily on oil revenues.
China accelerated the depreciation of the yuan on Thursday, sending regional currencies and stock markets tumbling as investors feared the Asian giant could trigger competitive currency devaluations from trading partners.
1:40 pm Investment drags? The Centre for Monitoring Indian Economy (CMIE) recently released a report that said announcement of proposals to create new capacities declined sharply (74 percent) in Q3FY16. The same was on a continuous rise post September 2014.
According to the report only 383 projects were announced in Q3FY16 with an estimated investment of Rs 1 trillion, the lowest in the past 5 quarters.
Mahesh Vyas, MD & CEO, CMIE says the investment figures have been a record low in the last quarter.
However, Vinayak Chatterjee, chairman, Feedback Infra, says one should give more three months before making an opinion on the state of investments as any public procurement chain needs atleast 18-20 months before investments can be acknowledged.
1:30 pm FII view: Aditya Narain, MD & India Strategist, Citi, believes that the bottom up stock picking theme for the Indian market is not at risk. Neither does he think that we are in a middle of cyclical bear phase. However, market could see-saw for a while and volatility would overshadow, says Narain as the "Guest Editor" in an interview to CNBC-TV18's Latha Venkatesh and Anuj Singhal.
Although the bottom-up story continues, Narain does not expect it to be 'A'-thematic but thinks there would be multiple themes and multiple drivers along the way. He is upbeat on Indian equities and expects 20 percent upside for the market by end of 2016.
Carnage in market continues as the Sensex is down 458.49 points or 1.8 percent at 24947.84. The Nifty slips 149.45 points or 1.9 percent at 7591.55. About 601 shares have advanced, 2145 shares declined, and 85 shares are unchanged.
BHEL, Tata Motors, Tata Steel, ONGC and Maruti Suzuki were major losers in the Sensex. GAIL is only gainer in the Sensex.
To safeguard investor interest, stock exchanges NSE and BSE have advised members to take extra caution while trading in 386 illiquid stocks. Illiquid stocks are those that cannot be sold easily because they see limited trading. These stocks pose higher risks to investors because it is difficult to find buyers for them as compared to frequently traded shares.
BSE and NSE have listed out 357 and 29 illiquid stocks, respectively, where additional due diligence is required. Illiquid scrips listed by both the exchanges include Goldstone Technologies, Usha Martin Education & Solutions, Khaitan (India), Pradip Overseas, Todays Writing Instruments Hotel Rugby, Blue Chip India and Gujarat Lease Financing. The exchanges said that periodic call auction will be conducted in these 386 securities with effect from January 11.
12:59 pm Market Update: Equity benchmarks remained under pressure as the Sensex cracked 443.71 points or 1.75 percent to 24962.62 and the Nifty plunged 141.50 points or 1.83 percent to 7599.50.
Four shares declined for every share advancing on the Bombay Stock Exchange while 11 shares slipped for every share rising on the National Stock Exchange.
12:50 pm Commodities expert: Brent crude prices fell to fresh 11-year lows on Thursday as fresh concerns over China's economy added to huge storage overhangs, near-record production and slowing demand that have already pummeled prices. Chris Main, Commodities Strategy Analyst, Citi does not rule out Brent going to USD 30 per barrel but says it is unlikely to sustain at those levels, and would in fact rise again in second half of 2016.
He has an increasing price trajectory for crude through 2016 and expects to see levels of USD 50-60/bbl in the second half of the year as oil market balances.
There is rebalancing taking place in other metals too, says Main, adding that 2016 is going to be a year of bottoming out for some commodities.
12:40 pm Interview: There is a decent pick up in demand and signs of green shoots for TTK Prestige, says TT Jagannathan, Chairman of the company. In an interview to CNBC-TV18, Jagannathan says the company has witnessed a double digit recovery year-on-year (y-o-y) for the company.
However, the company has no expansion plans, he says. "We had invested a lot of funds futuristically in capacity utilisation and I believe it would last until two years," he adds.
Meanwhile, he believes e-commerce will bring a "dramatic change" for the company's sales going forward as the success rate in the segment is good.
12:30 pm Radio ad rates up: Dainik Bhaskar group's radio division 94.3 MY FM today said it will increase advertising rates across all its 17 stations by 25 percent with effect from February 1.
The decision to hike rates has been taken to address the current inventory crunch, the company said in a statement. Launched in 2006, MY FM is present in 17 Tier II and III cities across seven states.
"Our inventory has been peaking and increase in ad rates is the only way to balance, we want to deliver a good listening experience to the listeners and better return on investment to our advertiser," 94.3 MY FM Chief Executive Officer Harish Bhatia said.
12:15 pm Global Update: European equities are expected to open lower today amid further turmoil in the Chinese stock market, where stocks were suspended from all trade on Thursday.
The London FTSE index is expected to open 77 points lower at 5,996, the German DAX down 170 points at 10,044 and the French CAC below 67 points at 4,413.
All eyes are on China after stocks were suspended from all trade today after the CSI 300 index - the benchmark index against which China's new circuit breakers are set -- tumbled more than 7 percent in early trade, triggering the market's circuit breaker for a second time this week.
12:00 pm Market Check
Bears took control over Dalal Street as investors digested Chinese woes and geopolitical tensions. Equity benchmarks fell nearly 2 percent, weighed down by all stocks. Not only equity but also commodities saw selling pressure.
The 30-share BSE Sensex tanked 505.93 points or 1.99 percent to 24900.40 and the 50-share NSE Nifty fell 155 points or 2 percent to 7586. The BSE Midcap and Smallcap indices plunged 2.6 percent and 2.9 percent, respectively.
The market breadth continued to be in favour of declines with ratio of 4:1.
Tata Motors, BHEL, ONGC, Hindalco Industries, Tata Steel, Adani Ports and Maruti Suzuki topped selling list, falling 4-6 percent.
Brent crude futures fell to a fresh 11-year low as a sliding yuan and an emergency halt in China's stock trading left Asian markets in turmoil, while a huge supply overhang and near-record output levels also continued to drag on oil prices.
China accelerated the devaluation of the yuan today, sending currencies across the region reeling and domestic stock markets tumbling, as investors feared the Asian giant was kicking off a virtual trade war against its competitors. Brent crude fell below 33 level, down 4.21 percent to USD 32.79 a barrel and NYMEX dropped 3.89 percent to USD 32.65 a barrel.
11:45 am Market slips again: The market is slipping away as the 50-share index breaks 7600. The Sensex is down 434.85 points or 1.7 percent at 24971.48, and the Nifty down 135.10 points or 1.7 percent at 7605.90. About 563 shares have advanced, 1990 shares declined, and 78 shares are unchanged.
BHEL, ONGC, Tata Motors, Maruti and Hindalco are major laggards in the Sensex. There are no green stock in the Sensex.
11:30 am Market outlook: While Indian equity market saw significant losses in the first hour of trade on the back of yuan devaluation, Ajay Srivastava of Dimensions Capital says the market is still underestimating the impact the devaluation will have. The Sensex today broke its psychological level of 25000 as the Nifty slipped 126.20 points or 1.63 percent to 7614.80.
Speaking to CNBC-TV18, Srivastava says the market may see one more gut-wrenching fall before the Union Budget 2016-17 as the Finance Minister is likely to tax citizens more than earlier. Furthermore, a potentially sub-optimal Q3 earnings season will weigh on the market, he adds. On sectoral picks, Srivastava says one must short banks at every recovery as 2016 is likely to be worse for all banking stocks as the market comes to terms with its asset worries.
The market continues to skid as the Sensex is down 344.15 points or 1.3 percent at 25062.18. The Nifty slips 109.60 points or 1.4 percent at 7631.40. About 537 shares have advanced, 1902 shares declined, and 80 shares are unchanged.
Bharti Airtel, Sun Pharma, GAIL, Coal India and Lupin are top gainers while ONGC, Tata Motors, M&M, Maruti and Hindalco are major losers in the Sensex.
Meanwwhile, the World Bank has cut its global economic growth forecast for 2016, saying the weak performance of major emerging market economies will tamp activity overall, as will anemic showings from developed countries such as the United States.
Global growth should accelerate to 2.9 percent this year from 2.4 percent in 2015, the bank said, but that still represents a downgrade from its June forecast for 3.3 percent growth.
The bank raised particular concern about the flagging performance of top emerging economies.
10:59 am Market Update: The Sensex declined 344.62 points or 1.36 percent to 25061.71 and the Nifty fell 109.10 points or 1.41 percent to 7631.90. About 537 shares have advanced, 1894 shares declined, and 71 shares are unchanged on the BSE.
10:45 am Interview: S Ramnath, CFO, ITD Cementation in an interview to CNBC-TV18 said the company has not received any order under Namami Gange Programme because they basically are not into water treatment business.
However, the company would be looking for opportunities to create water infrastructure alongside the Ganga River as they did alongside Narmada River. " So on the cleaning aspect, no role for companies like us," he added.
The Union Cabinet today approved a proposal for taking up hybrid annuity-based public private partnership (PPP) model under Namami Gange Programme to reform the wastewater sector in India.
10:30 am Sensex breaks 25000: The market extended losses in morning trade with the Sensex breaking 25000, down 410.08 points or 1.61 percent to 24996.25. The Nifty slipped 126.20 points or 1.63 percent to 7614.80.
The market breadth was pathetic as nearly four shares declined for every share advancing on the Bombay Stock Exchange.
10:25 am Market Expert: The global sentiment currently is extremely negative with the Chinese markets suspending trade today. But it is exactly times like these that investors should use to add to their portfolios, says Niraj Dalal, independent market analyst and founding partner, 3A Capital Advisors.
10:15 am Water waste programme: A new entity will be set up in the coming days to explore and develop new markets for treated waste water as part of the ambitious Namami Gange Programme which seeks to integrate efforts to clean and protect river Ganga.
The Union Cabinet approved a proposal for taking up hybrid annuity-based public private partnership (PPP) model under Namami Gange Programme to reform the wastewater sector in India.
"Keeping in view the specialised nature of this model and to scale it up in future on sustainable basis, the government is establishing a special purpose vehicle (SPV) to plan, structure, procure concessionaires, monitor implementation of such PPP projects and develop market for treated waste water through appropriate policy advocacy under overall guidance of National Mission for Clean Ganga," an official statement said after the Cabinet meeting.
10:00 am Market Check
Bears continue to rampage Dalal Street as China's stocks were suspended from all trade after the CSI300 tumbled more than 7 percent in early trade, triggering the market's circuit breaker for a second time this week. The Sensex is down 329.67 points or 1.3 percent at 25076.66. The is Nifty down 105.45 points or 1.4 percent at 7635.55. About 385 shares have advanced, 1737 shares declined, and 55 shares are unchanged.
Lupin, Bharti Airtel, GAIL and Coal India are top gainers while Tata Motors, Maruti Suzuki, Tata Steel, M&M and Axis Bank are laggards in the Sensex.
Gold is near a seven-week high as investors channelled money into the safe-haven metal amid a global stock market rout, worries over the Chinese economy and heightened geopolitical tensions. Gold benefited from the risk-averse sentiment in the market, along with other haven assets such as the Japanese yen and US Treasuries.
9:45 am Market check: The Sensex is down 347.75 points or 1.4 percent at 25058.58 and the Nifty slips 111 points or 1.4 percent at 7630. About 354 shares have advanced, 1620 shares declined, and 50 shares are unchanged.
Tata Motors, Tata Steel, Hindalco, Maruti and BHEL are major laggards in the Sensex. Among the gainers are Lupin, GAIL and Bharti 9: 30 am FII View: Laurence Balanco, CLSA says the grinding downtrend that has unfolded off the March 2015 high remains dominant feature on Nifty's daily chart. Additionally, it's worth noting head-and-shoulders topping pattern which supports a downside target of 6,900-7,000, he feels.
According to him, from a long-term perspective, this correction is seen as a partial retracement before long-term uptrend resumes.
The market has opened sharply lower on Thursday on global correction post China turmoil. The 30-share BSE Sensex fell 321.31 points or 1.26 percent to 25085.02 and the 50-share NSE Nifty declined 99.55 points or 1.29 percent to 7641.45.
Tata Motors, Hindalco Industries, Adani Ports, Tata Steel, Axis Bank, Vedanta and Adani Ports plunged 3-4 percent.
The Indian rupee opened marginally lower at 66.86 per dollar against
previous close of 66.82.
Mohan Shenoi of Kotak Mahindra Bank said, "2016 has started with risk-off sentiment in the backdrop of poor Chinese data and geopolitical developments."
"Odds of another Fed rate hike in March are high. The market is expecting a total of 3 Fed rate hikes in 2016. The USD-INR is expected to trade in a range of 66.65-66.95/dollar today," he added.
The dollar weakened against a basket of currencies as FOMC minutes supported bets that further US rate hikes would be gradual on concerns about persistent low inflation.
There was another sell-off in China today, down over 7 percent that led to trading being halted for the second time this week.
The fresh weakness in global markets has been triggered by a fresh devaluation of yuan and amid continuing concerns over the Chinese slowdown, as oil plummeted, and as a Fed official was quoted as saying the market may be optimistic on expectations over rate hikes.
The Chinese central bank fixed the yuan mid point at 6.5646/USD this morning, a move that sent the country's stocks tumbling.
Brent crude slumped to fresh 11-year low, falling below USD 34 a barrel. It was trading at USD 33.27 a barrel (the lowest level since June 2004), down 2.8 percent