Sensex sinks 305 points, Nifty below 7800 on Fed rate hike fears
19 May 2016
The market shed more than 1 percent in late extended sell-off on Thursday, tracking nervousness in global peers after Fed minutes indicated rate hike in June policy.
The 30-share BSE Sensex fell 304.89 points or 1.19 percent to 25399.72. The 50-share NSE Nifty breached 7800 level, down 86.75 points or 1.10 percent to 7783.40.
Experts are still positive on the market as they are betting on monsoon and gradual recovery in economy despite US rate hike fears but they don't see major upside.
Nifty is unlikely to have many upsides from its current levels, said Prashant Mittal of Ambit Capital. According to him, 8000 is acting as a near-term resistance for the index, with 7650 being the support level.
Amisha Vora of Prabhudas Lilladher said markets have held up very well on expectation of monsoon and gradual but slow recovery in the economy, but she does not rule out some jitters though going forward based on the global event.
Globally European stocks traded lower as markets around the world digest the latest minutes from the US Federal Reserve that appeared to raise the prospect of an interest rate hike in June. France's CAC, Germany's DAX and Britain's FTSE were down over 1 percent. Oil prices also declined more than 2 percent.
3:30 pm Market closing: After a lot of struggle fearing fed rate hike and results of assembly elections, the market has ended with losses. The Sensex slipped 304.89 points or 1.2 percent at 25399.72, and the Nifty ended 86.75 points or 1.1 percent at 7783.40. About 913 shares have advanced, 1638 shares declined, and 161 shares are unchanged.
Lupin, Wipro, Hero MotoCorp and TCS were top gainers while Adani Ports, SBI, L&T, HDFC and GAIL were losers in the Sensex.
3:00 pm Fiscal Deficit: Government's fiscal deficit target of 3 per cent by next financial year could be changed to a "range" post a committee's recommendations on the country's fiscal roadmap, says a Nomura report.
According to the Japanese financial services major, the recommendations by a five-member panel could be implemented in the next budget.
"Currently, the government has a fiscal deficit target at 3 per cent of GDP in 2017-18, but this could be changed to a 'range' post the committee's recommendations, in our view," Nomura said in a research note.
2:40 pm Stake sale: Oil major BP sold part of the stake its unit Castrol Ltd holds in Castrol India Ltd, but said it would remain a majority shareholder in the company.
The company said it sold an 11.5 percent stake in the Indian lubricants maker to a range of domestic and international investors. It held a 71 percent stake in the company before the sale.
Terms of the deal were not disclosed.
2:20 pm DBS on economy: As the government nears its two-year mark in office, global financial services major DBS today said the reform agenda has been "broad-based, granular and incremental".
According to DBS, there was notable progress on reforms agenda at the recently concluded Parliament session, but some of the important reforms like goods and services tax (GST) bill is still in the pipeline.
"Pulling together these executive reforms and the recent bankruptcy code, progress on the broader reform agenda has been notable," DBS said in a research note.
Amongst the 10 bills that were passed by both houses in second half of the session, the economically notable ones included the Mines and Minerals bill and the Insolvency and Bankruptcy code.
2:00 pm Market Check
Equity benchmarks extended losses in afternoon trade with the Sensex declining 226.80 points to 25477.81 and the Nifty falling 67.35 points to 7802.80, tracking weak global cues. The market breadth remained weak as about 1346 shares declined against 1053 advancing shares on Bombay Stock Exchange.
Lupin gained 1 percent after better-than-expected earnings. Profit in Q4 grew by 47.5 percent to Rs 807 crore and revenue jumped 36 percent to Rs 4,181.2 crore compared to year-ago period.
Gujarat Pipapav Port fell more than 2 percent after profit in March quarter declined 25.5 percent to Rs 49.8 crore and revenue fell 14.4 percent to Rs 161 crore compared to same period last year.
1:30 pm Congress on GST: Congress party on refused to relax the conditions it has laid down for backing the passage of a goods & services tax bill in parliament, further clouding the outlook for the landmark reform.
The proposed reform, India's biggest revenue shake-up since independence in 1947, seeks to replace a slew of central and state levies, transforming the nation of 1.2 billion people into a customs union.
Supporters say the new sales tax will add up to two percentage points to the South Asian nation's economic growth.
Pressure intensified in the market with the Nifty gradually drawing close to 7800. The 50-share index is down 56.85 points or 0.7 percent at 7813.30 while the Sensex slips 189.84 points or 0.7 percent at 25514.77.
ITC, SBI, ONGC, HDFC and Axis Bank are losers in the Sensex while Lupin, Tata Motors, Tata Steel, BHEL and Wipro are gainers in the Sensex.
Gold futures today fell 0.93 percent to Rs 29,776 per 10 grams as speculators reduced their bets amid a weak global trend. Market analysts said the fall in gold futures is mostly attributed to trimming of positions by speculators, tracking a weak trend overseas on concern that the Federal Reserve may raise interest rates as soon as June after the possibility was flagged in the minutes of its meeting last month.
12:58 pm Market extends losses: The Sensex fell 186.59 points to 25518.02 and the Nifty declined 57.70 points to 7812.45.
12:40 pm Earnings estimates: Drug major Lupin 's fourth quarter profit is expected to increase 32.7 percent to Rs 725.7 crore and revenue may rise 20 percent to Rs 3,816.3 crore compared to year-ago period, according to average of estimates of analysts polled by CNBC-TV18.
Strong operational performance and better US & India business may drive earnings growth during the quarter.
Operating profit (earnings before interest, tax, depreciation and amortisation) is seen rising 40 percent to Rs 1,105 crore and margin may expand 340 basis points to 29 percent compared to same period last fiscal.
Analysts feel exclusivity on Glumetza generic & full quarter of price hikes on Fortamet generic may drive US numbers.
12:20 pm Market Expert: The automobiles sector will be a winner, and the apparels space will be a loser when the Goods and Services Tax (GST) Bill finally comes into force, said Ajay Srivastava the CEO of Dimensions Consulting.
Even though foreign investors (FII) into India and other emerging markets are reducing their exposures, Srivastava believes that there is enough traction among local investors to take care of the slump in Indian markets.
He added that the market is bullish post the mixed bag of result season.
"For the market, bad news is good and good news is very good," he said.
Sharing his views on the Reserve Bank of India's stressed asset cleaning spree, he added that the policies are not very clear, and only big companies will benefit from them, whereas the medium and small businesses will be hit hard in the process.
12:00 pm Market Check
The market remained under pressure in noon trade with the Sensex falling 100.51 points to 25604.10 and the Nifty down 29.65 points to 7840.50 ahead of final outcome of assembly elections.
BJP continued to be leading party and Congress completely routed in Assam. Mamata Banerjee-led TMC is set to win in West Bengal, AIADMK in Tamil Nadu and LDF in Kerala.
The broader markets outperformed benchmarks with the Smallcap index rising 0.3 percent. About 1188 shares advanced against 1017 declining shares on Bombay Stock Exchange.
11:30 am Market outlook: UR Bhat, Director, Dalton Capital Advisors is of the belief that although the market is in a tight range of 7500-8000, it is unlikely that the Nifty will go below 7500. So, it remains a buy-on-dip market. According to him, although the foreign institutional investors have been selling, the domestic investors continue to support the market. With the upcoming Fed meeting in June, the probability of an interest rate hike by the US Central Bank has moved up from 4 to 34 percent but it is still below 50 percent, said Bhat. So, it is unlikely that the Fed will hike in June but could hike a couple of times post that till December. Globally, on the newsfront, Japan and China are stable; there is no bad news from Europe. Even if the US Fed hikes rates, the Indian equity market may correct but not substantially, he said.
The market continues to fall as Assembly election results are underway. BJP is set to form new government in only one state out of the five. The Sensex is down 81.75 points or 0.32% at 25622.86, and the Nifty down 22.95 points or 0.29% at 7847.20. About 1180 shares have advanced, 911 shares declined, and 138 shares are unchanged.
Lupin, Tata Steel, Tata Motors, BHEL and Wipro are top gainers while NTPC, HDFC, SBI, ITC and Bharti Airtel are losers.
Sun TV tanks 11 percent as DMK is unlikely to return to power in Tamil Nadu. The AIADMK crossed halfway mark and is all set to form government in Tamil Nadu for the second consecutive time.
It was a direct contest between Chief Minister J Jayalalithaa's AIADMK and DMK-Congress alliance for the 234-member assembly.
10:58 am Market Update: The market halved losses following buying in Infosys and ICICI Bank. The Sensex fell 64.69 points to 25639.92 and the Nifty declined 18.55 points to 7851.60.
Laggards in the index were Larsen (-1 percent), Bharti Infratel (-1 percent), HCL Tech (-1 percent) and Bank of Baroda (-1 percent). Gainers included Tata Steel (2 percent), Hindalco (2 percent), Tata Motors DVR (2 percent) and Lupin (2 percent).
In sectoral performance as reflected by the respective indices, FMCG (-0.6 percent), consumer durables (-0.2 percent), power (-0.2 percent) and oil & gas (-0.1 percent) were under pressure, while metals (1.0 percent), auto (0.4 percent) and healthcare (0.3 percent) gained.
Key Asian markets were trading weak. Singapore's Straits Times was the biggest lower, down 26 points or 1.0 percent at 2750. Taiwan's Taiwan Index was down 66 points at 8092, Korea's KOSPI was down 13 points at 1943, Hong Kong's Hang Seng was down 92 points at 19733, and Japan's Nikkei 225 was down 11 points at 16633. China was the only exception to the downtrend with the Shanghai up 11 points at 2818.
10:35 am Earnings estimates: IRB Infrastructure's fourth quarter profit is likely to be flat at Rs 140 crore against Rs 138 crore in year-ago period, according to average of estimates of analysts polled by CNBC-TV18. The bottomline may be hit by higher interest & depreciation cost and lower operating profit margin.
Revenue is seen rising 39 percent to Rs 1,375 crore compared to same quarter last fiscal. Analysts say EPC revenue may grow led by start of construction in newer projects and traffic on key road projects is likely to grow 6-7 percent YoY.
Operating profit (earnings before interest, tax, depreciation and amortisation) may jump 28 percent YoY to Rs 728 crore but margin may contract 470 basis points to 52.9 percent in Q4 due to change in revenue mix.
10:20 am Earnings downgrades likely?: Mahesh Nandurkar of CLSA says among the 54 companies under coverage that reported earnings for the March 2016 quarter so far, he reduced FY17 earnings estimates for 24 companies and raised estimates for 17 companies.
Overall, he said he lowered FY17 earnings estimates by 4 percent and consensus by 2 percent during the results season.
According to him, FY17 earnings growth estimate is now 17 percent as against 24 percent for consensus. "Although a low base would help earnings growth reach double digits from September 2017, risk of further downgrades to consensus earnings estimates remains high, Nandurkar says.
10:00 am Market Check
Equity benchmarks continued to see selling pressure as assembly elections counting started showing results. BJP is likely to get majority in Assam while Congress is seen losing in all five states.
The 30-share BSE Sensex fell 103.70 points to 25600.91 and the 50-share NSE Nifty declined 31.45 points to 7838.70. The market breadth was marginally positive as about 889 shares advanced against 712 declining shares on Bombay Stock Exchange.
Parag Milk Foods debuted on the bourses at Rs 217.50, up over 1 percent from its issue price of Rs 215 per share. However, the stock quickly climbed within minutes of listing, gaining over 13 percent touching intraday high of Rs 242.70 per share.
ITC, HDFC, HDFC Bank, Asian Paints, Axis Bank, ICICI Bank, SBI and TCS were down 0.3-1.6 percent while Tata Motors, Lupin and Tata Steel gained 1-2 percent.
9:55 am IPO listing: Dairy firm Parag Milk Foods, which recently concluded its extended IPO, will list shares on the bourses tomorrow. The company's Rs 760-crore initial public offering (IPO), which was extended by three days, was oversubscribed 1.83 times on the final day of the offer which ended on May 11.
The issue period was from May 4-11.
Parag Milk had also revised price band to Rs 215-227 per share. The price band was previously fixed at Rs 220-227.
The book running lead managers to the issue were Kotak Mahindra Capital Company, JM Financial Institutional Securities, IDFC Securities and Motilal Oswal Investment Advisors Private.
9:45 am Fed rates: US Federal Reserve officials said it would be appropriate to raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment, according to minutes from their policy meeting last month. That view, expressed by most of the Fed's policy-setting committee at the April 26-27 meeting, suggests the US central bank is closer to lifting rates again than Wall Street had expected.
The policymakers said recent data made them more confident inflation was rising towards the Fed's 2 percent target, and that they were less concerned about a global economic slowdown, according to the minutes, which were released on Wednesday.
9:30 am How will market react to election results: Election results from the five states that have begun counting today won't greatly impact the big picture policy, says Gautam Chhaochharia of UBS. The BJP-led government at the Centre will be able to pass the Goods and Services Tax Bill in the Upper House even without the support of the Congress and the Left parties, he said. Even without these opposing parties, the rest of the parties have a two-thirds majority in the Rajya Sabha. But the Centre would feel more confident about putting the GST Bill to the vote. Right now, the internals for US markets suggest a flight away from risk-on asset classes. What the US Fed does as regards the rate hike are bigger issues. He said there could be profit-taking in the near-term in Indian markets.
The market has opened lower as counting continues for Assembly elections in five states. The Sensex is down 42.46 points or 0.2 percent at 25662.15, and the Nifty down 18.45 points or 0.2 points at 7851.70. About 311 shares have advanced, 169 shares declined, and 38 shares are unchanged.
Lupin, Tata Motors, Dr Reddy's, NTPC and Sun Pharma are top gainers while ONGC, Asian Paints, Maruti, HDFC and SBI are losers in the Sensex.
Counting of votes in the high-stakes Assembly elections in West Bengal, Tamil Nadu, Assam, Kerala and Puducherry has begun. By 12 noon, a clear picture could emerge on the winners. Election Commission officials said counting of votes, which commenced at 8 am, will be over by 3 pm.
According to various exit polls, Assam, Tamil Nadu and Kerala appeared to have voted for change. BJP is likely to form its first government in the northeastern state dislodging Congress-led alliance which may also lose Kerala. DMK-led alliance has been tipped to regain power trouncing AIADMK in Tamil Nadu.
The counting of votes will decide the fate of approximately 8,300 candidates including CM Tarun Gogoi in Assam and CM contender BJP's Sarbananda Sonowal and Himanta Biswas, CM Jayalalithaa and DMK chief Karunandhi in Tamil Nadu, CM Oommen Chandy, CPI(M) leaders VS Achutanandan and Pinarayi Vijayan in Kerala, CM Mamata Banerjee and CPI(M) Suryakanta Mishra in West Bengal and CM M Rangaswamy in Puducherry.