Nifty ends at 18-month low, Sensex down 143 points; banks, TCS dip
12 January 2016
Equity benchmarks continued southward journey on Tuesday with the Nifty falling below psychological 7500-mark intraday, weighed down by banking & financials, technology and metals stocks. Correction in crude oil prices and weak earnings caused selling pressure.
The 50-share NSE Nifty ended at 18-month closing low of 7510.30, down 53.55 points after hitting an intraday low of 7487.80. The 30-share BSE Sensex lost 143.01 points to 24682.03, the lowest closing level since May 30, 2014.
The broader markets underperformed benchmarks, falling around a percent. The market breadth was also weak as about two shares declined for every share advancing on the Bombay Stock Exchange.
On the global front, Brent crude fell more than 3 percent intraday to hit a low of USD 30.43 a barrel, the lowest level since April 2004, before edging back to 31.42 a barrel (down 0.41 percent at 16 hours IST). NYMEX crude was down 1 percent to USD 31.11 a barrel. With this correction, prices fell nearly 20 percent since the start of the year, dragged lower by soaring oversupply, China's weakening economy and stock market turmoil, as well as the strong dollar.
European markets extended rally after recovery in crude oil prices. Germany's DAX, France's CAC and Britain's FTSE gained 1-2 percent (at 16 hours IST) while Asian markets barring China ended lower. Nikkei hit one year low, down 2.7 percent and Hang Seng lost 0.89 percent while Shanghai gained 0.2 percent.
Ruchir Sharma of Morgan Stanley says the globe may see a mild recession based on what's happening in China.
On home turf, Bank Nifty ended at fresh 52-week closing low of 15,734.80, down 1.76 percent. State Bank of India, ICICI Bank, Bank of Baroda, Punjab National Bank and Axis Bank were down 1-3 percent followed by HDFC Bank with 0.77 percent loss.
On earnings front, IndusInd Bank dropped 2.7 percent on higher provisions in Q3FY16. Profit and net interest income beat expectations, up 30 percent and 36.2 percent, respectively. Federal Bank lost nearly 8 percent on 38 percent fall in December quarter profit.
TCS hit fresh 52-week low of Rs 2,301.10 intraday, before closing down 1.7 percent ahead of third quarter earnings. A CNBC-TV18 poll expects muted growth owing to seasonality & Chennai floods.
ONGC and Cairn India dropped more than 2 percent on correction in crude oil prices.
Larsen and Toubro gained 0.4 percent. Credit Suisse has upgraded the stock to outperform from neutral but reduced target to Rs 1,475 from Rs 1,515 per share earlier.
Among others, Bharti Airtel, Tata Steel and Hindalco Industries were down 2-3 percent while Mahindra & Mahindra, Wipro, NTPC and Adani Ports gained 1-2.5 percent.
3:30 pm Market update: After heavy selling, the market ended lower the Sensex was down 143.01 points or 0.6 percent at 24682.03, and the Nifty slippped 53.55 points or 0.7 percent at 7510.30. About 938 shares have advanced, 1850 shares declined, and 160 shares were unchanged. Hindalco, Axis Bank, TCS, Tata Steel and SBI were top losers and gainers were NTPC, M&M, Wipro, Adani Ports and HUL.
3:00 pm Market Update: Equity benchmarks remained under pressure. The Sensex dropped 152.45 points or 0.61 percent to 24672.59 and the Nifty declined 53.65 points or 0.71 percent to 7510.20.
The market breadth was negative as about two shares declined for every share advancing on the Bombay Stock Exchange.
2:45 pm FII View: US interest rate hike has been adjusted and it could lead to a rally in equities worldwide, says Bruno Verstraete, Partner, Lakefield Partners. One currently needs to focus on the movement in dollar, he adds.
Speaking to CNBC-TV18, Verstraete says that a weakening dollar could lead to rally in commodities, which is also driving the current negative sentiment in the market. Upward movement in commodities will be a great support and will be beneficial for both emerging markets and developed markets, he says.
Trigger for dollar to go down is in the Fed's hands, he says adding that restricted hikes in 2016 will come as a disappointment.
Verstraete says that some sense of calm will come in once oil touches USD 30 per barrel. However, he says one could see it touching USD 20 per barrel in the near term.
2:25 pm Earnings: IndusInd Bank's third quarter earnings beat analysts' expectations on Tuesday but higher provisions limited profit growth. Net profit increased 29.9 percent to Rs 581 crore in December quarter compared to Rs 447.2 crore in a year-ago period, boosted by other income, operating profit and net interest income.
Net interest income, the difference between interest earned and interest expended, grew by 36.2 percent to Rs 1,173.4 crore from Rs 861.37 crore year-on-year, the private sector lender said in its filing.
2:00 pm Market Check
The market continued to see steep sell-off with the Nifty hovering around 7500. Bank Nifty hit a fresh 52-week low of 15,728.25, down more than 1 percent.
The 30-share BSE Sensex declined 137.64 points to 24687.40 and the 50-share NSE Nifty slipped 48.40 points to 7515.45. Nearly two shares declined for every share advancing on the Bombay Stock Exchange.
Jet Airways, SpiceJet, Reliance Industries, Axis Bank, SBI and TCS were most active shares on exchanges.
Most Asian markets ended weak today with Nikkei sliding almost 500 points. Ruchir Sharma of Morgan Stanley says the globe may see a mild recession based on what's happening in China.
There is no respite for crude prices. Brent crude slipped below USD 31 a barrel, the lowest level since April 2004. ONGC and Cairn India felt the direct impact of lower crude.
TCS hit fresh 52-week low ahead of third quarter earnings today. A CNBC-TV18 poll expects muted growth owing to seasonality & Chennai floods.
1:45 pm Macro data outlook: The ongoing commodity rout has implications for inflation and growth, both in India and the global economy, says Samiran Chakraborty of Citi, who says that locally, lower nominal growth could pressure the fiscal deficit and result in undershooting of the RBI's first quarter inflation targets. In an interview with CNBC-TV18, Chakraborty said that lower nominal growth would result in the government missing its fiscal deficit target of 3.9 percent of GDP even if the actual deficit is met in rupee terms.
He also commented on the prospects for the global economy, saying that growth in China could be lower than reported numbers, but added that this was unlikely to result in a global recession though conditions could feel "recessionary".
1:30 pm Interview: Persistent Systems has signed an agreement with Swiss company Citrix Systems and will acquire its CloudPlatform and CloudPortal Business Manager product lines for an undisclosed sum.
Speaking to CNBC-TV18, Anand Deshpande, Founder, MD and CEO of the company, says the products are powered by Apache CloudStack. The two are used by companies to build their own cloud platform, which helps them monetise and monitor infrastructure services, he adds.
However, the company does not have any timeline for acquisitions and is working on a pipeline of larger deals, Deshpande says. These acquisitions are consistent with other products like Aepona and RGen Soutions from Intel, he adds.
The market is still under pressure as the Sensex is down 216.73 points or 0.9 percent at 24608.31. The Nifty slips 71.95 points or 0.9 percent at 7491.90. About 932 shares have advanced, 1629 shares declined, and 172 shares are unchanged.
NTPC, Sun Pharma, Adani Ports, M&M and GAIL are top gainers while Axis Bank, Hindalco, Tata Steel, ONGC and Tata Motors are losers in the Sensex.
The rupee surrendered its initial gains and was trading lower by 8 paise to 66.89 per dollar in late morning deals on fresh bouts of demand for the American currency from importers and banks amid volatile domestic equities.
In overseas, the US dollar enjoyed some respite from recent volatility as it stuck to overnight levels in early Asian trade, holding above a more than four-month low against the yen and not far from a 5-1/2-year high against sterling.
12:58 pm Market Update: Equity benchmarks continued to be lower with the Sensex falling 136.54 points to 24688.50 and the Nifty down 46.65 points to 7517.20.
The market breadth remained in favour of declines. About 1478 shares declined against 1053 advancing shares on the BSE.
12:50 pm Asia Update: Asia's major markets closed mostly lower, with investor sentiment in the region remaining fragile as oil prices continued to slide and China concerns weighed. The Australian market erased its morning gains to slip into negative territory, with the main ASX 200 closing down 7.13 points, or 0.14 percent, at 4,925. In Japan, where markets resumed trading today after a day off Monday, the Nikkei 225 finished 479 points, or 2.71 percent, lower at 17,218.96. In South Korea, the Kospi closed down 3.98 points, or 0.21 percent, at 1,890.86.
The Shanghai composite was up 0.13 percent after rising as much as 0.9 percent and falling as much as 0.71 percent in the first 10 minutes of trade. On Monday, a late-afternoon sell-off saw the index fall more than 5 percent.
12:40 pm Omkar Speciality in news: Omkar Speciality Chemicals has received environment clearance for its manufacturing unit - V in Maharashtra.
The production at this unit shall commence in phased manner. In phase I, the company plans to produce vitamin C & folic acid, says the company.
12:20 pm Nifty breaks 7500: The 50-share NSE Nifty breached 7500 intraday, down 57 points to 7506. Bank Nifty hit fresh 52-week low with all stocks trading in red.
12:15 pm Foreign reserves eased: India's foreign reserves eased to USD 350 billion by the end of December last year, down about USD 5 billion from its record peak seen in mid-2015, according to a report published today by a leading Singapore-based bank.
Currency valuations and the authorities' active presence to contain rupee volatility likely influenced the pace of reserve accumulation, DBS Bank said in its today's report on Asian economies.
The report said despite the modest pullback, the current stock is comfortable on domestic metrics, especially with regard to the import cover (10x) and adequacy to cover short-debt external debt levels.
But the coverage falls short when compared to the total external debt position and as a percentage of Gross Domestic Product (GDP) vis-a-vis regional counterparts.
12:00 pm Market Check
Equity benchmarks extended losses with the Sensex falling 164.32 points to 24660.72 and the Nifty down 52.40 points to 7511.45, dragged by banks and IT stocks. The broader markets also wiped out morning gains, declining marginally. The market breadth too turned in favour of declines.
Axis Bank fell more than 3 percent followed by Tata Motors, ONGC and Hindalco Industries with more than 2 percent losses. Infosys and TCS declined nearly 1.5 percent ahead of third quarter earnings this week. L&T, BHEL and NTPC were only gainers with more than 1 percent upside.
Aviation companies gained strength following further correction in crude oil prices. Brent crude fell below USD 31 a barrel, down 3 percent to USD 30.58 a barrel and NYMEX crude lost 2.77 percent to USD 30.54 a barrel. Jet Airways, SpiceJet and InterGlobe Aviation climbed 2-4 percent.
11:55 am Poll: According to CNBC-TV18 poll, the consumer price index (CPI) data for the month of December is expected to come in at around 5.5 percent compared to 5.41 percent reported for the month of November. CPI data has been consecutively hardening for the past four months and December will be the fifth month. It has risen from levels of around 3.7 percent in July of 2015. One of the key reasons for the hardening in the CPI is because of the food inflation. Food inflation is 46 percent of the CPI basket and that is possibly going to harden to 6.1-6.5 percent odd levels. In November, the food inflation was around 6.07 percent which in fact was at an eight month high with pulses at a record high and that trend is likely to continue. The core CPI too is expected to see some amount of hardening at around 4.76 percent versus 4.6 percent month-on-month.
11:45 am New norms: The decision by market regulator Securities and Exchange Board of India (SEBI) to tighten exposure norms for debt mutual fund schemes is likely to have an impact on non-banking financial companies (NBFcs). SEBI has reduced the company-, group- and sector-wise limits that debt mutual fund schemes can have. It also reduced the additional sector exposure granted for NBFCs from 10 percent to 5 percent of a scheme's corpus. This may mean NBFCs will have to look for alternate means of financing. R Sivakumar, Head - Fixed Income of Axis Mutual Fund said that while overall exposure for schemes is currently lower than the limit, the threshold in some individual schemes may have been crossed.
11:30 am Buzzing: Shares of L&T jumped over 2 percent intraday on Credit Suisse&'s bullishness. The brokerage has upgraded L&T to outperform from neutral but reduced target to Rs with Rs 1475 from Rs 1515 per share. It says that substantial expectation reset and value erosion have set the stage for sustainable expectations, potential for positive surprise given downward reset and reasonable valuation. Credit Suisse has also revised earnings by 12 percent and 7 percent for FY16 and FY17 on lower consolidation. According to the brokerage, lower-risk transmission and distribution (T&D) is the main driver of inflows from middle east and execution on some large projects has proceeded well.
The market continues to be under pressure after early morning slight gains. The Sensex is down 113.59 points or 0.5 percent at 24711.45, and the Nifty slips 37.90 points or 0.5 percent at 7525.95. About 1198 shares have advanced, 1097 shares declined, and 157 shares are unchanged.
NTPC, L&T, Adani Ports, BHEL and GAIL are top gainers in the Sensex. Among the losers are Axis Bank, ONGC, Infosys, Hindalco and Dr Reddy's Labs.
US crude tumbled below USD 31 a barrel today, extending a sell-off that has sent the commodity to more than 12-year lows, hit by a global supply glut, a strong dollar and tepid demand. Prices plummeted 10 percent last week as investors grow concerned about the global supply glut and weakness in key market Chinese, which is the world's biggest energy user. Potential geopolitical risks, including the escalating Saudi Arabia-Iran row are also keeping traders on edge.
10:50 am Market Update: Equity benchmarks extended losses in morning trade following further correction in crude oil prices.
The Sensex fell 112.01 points to 24713.03 and the Nifty declined 38.90 points to 7524.95. About 1233 shares have advanced, 1004 shares declined, and 148 shares are unchanged on the BSE.
10:30 am Crude oil cracks: Crude oil prices continued a relentless dive, falling as much as 20 percent since the beginning of the year as analysts scrambled to cut their 2016 oil price forecasts and traders bet on further price falls. US crude West Texas Intermediate (WTI) was trading at USD 30.86 per barrel, down 55 cents from the last settlement and more than 19 percent lower than at the beginning of the year. WTI has shed over 70 percent in value since the downturn began in mid-2014.
Brent crude futures fell 56 cents to USD 30.99 a barrel.
10:15 am Omax Auto's stake sale: Auto component maker Omax Autos said it has sold the remaining 51 percent stake in its subsidiary Gmax Auto.
"The shares transfer in this regard have been registered today by the board of Gmax auto. Hence, with effect from today the company has no stake in Gmax Auto and it is no more a subsidiary of the company," Omax Autos said in a regulatory filing.
It has sold the remaining 51 percent stake to AG Industries which already holds 49 percent of the total paid up share capital of the Gmax Auto, it said.
10:00 am Market Check: The market erased early gains due to selling pressure in technology stocks ahead of TCS earnings. The Sensex fell 19.12 points to 24805.92 and the Nifty declined 6.65 points to 7557.20.
However, the market breadth continued to be strong as more than two shares advanced for every share declining on the Bombay Stock Exchange. The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising 0.3-0.5 percent.
TCS slipped 1 percent as its third quarter earnings are expected to be muted with profit falling 0.8 percent and dollar revenue growth at 0.7 percent on sequential basis, impacted by Chennai floods. Infosys and Wipro also declined over 0.5 percent.
ONGC and Axis fell more than 1.5 percent while L&T, NTPC, Adani Ports, BHEL and GAIL gained 1-2 percent.
9:45 am FII view: Rakesh Arora, Macquarie says the Indian market has been dragged down by China worries and look extremely oversold. Some of the strong names have also come under selling pressure, he adds.
According to him, it is a good time to start accumulating. The market bottom can't be too far off, he feels.
9:30 am Inflation poll: Indian consumer inflation likely rose slightly in December, due to higher food costs and increases in fuel duties, a Reuters poll found, pushing prices further away from the central bank's medium-term target. Retail inflation is expected to have risen 5.6 percent annually in the last month of 2015, according to a survey of 33 economists, higher than November's 5.41 percent. The data will be released today. With inflation running above the RBI's March 2017 target of 5 percent, future interest rate cuts will likely be hard to come by. The RBI left policy rates unchanged in December. It holds its next policy meeting in early February.
After yesterday's tumble, the market has opened in green on Tuesday. The Sensex is up 46.48 points or 0.2 percent at 24871.52 and the Nifty is up 19.40 points or 0.3 percent at 7583.25. About 390 shares have advanced, 117 shares declined, and 49 shares are unchanged.
L&T, Hindalco, Tata Steel, Tata Motors and Maruti are top gainers in the Sensex. Among losers are Hero, Dr Reddy's, ONGC, ITC and Adani Ports.
The Indian rupee has opened marginally lower at 66.83 per dollar on Tuesday against previous close of 66.81 a dollar.
"The USD-INR pair is expected to take cues from the movement in stock market today and is expected to trade in range of 66.70-66.90/dollar," he added.
Euro retreated marginally as market sentiment improves, dollar rose. The dollar index inched towards the 99 mark.
Asian shares hovered near four-year lows and oil prices languished at near 12-year lows as investors fretted over whether Beijing may be losing control of the economy. From the beginning of year, markets have been rocked by plunges in Chinese stock markets, the yuan's fall and subsequent heavy intervention by the Chinese authorities to push it back up.
In another hit to crude prices, Nymex crude plunged more than 6 percent overnight to new 12-year lows. Some experts have now forecast crude to slip to USD 20 dollars or below.