Nifty ends below 8700, Sensex in red post RBI policy; Lupin down
09 August 2016
3:30 pm Market closing: The Sensex ended at 28085.16, down 97.41 or 0.3 percent while the Nifty closed at 8678.25 down 33.10 or 0.4 percent. Tata Power, Zee Entertainment, Coal India, ONGC and Bharti Infratel were top gainers while Idea Cellular, Lupin, Ambuja Cements, Grasim and BPCL were losers in the Sensex.
3:10 pm Loans: Adani Ports is likely to reverse its related party loans and advances, sources have told CNBC-TV18.
The company's investors have been concerned about the group's lending to its own entities, reports CNBC-TV18. Loans and advances provided to related parties for the Group rose by Rs 344 crore to Rs 2,530 crore in the last quarter. In FY16, the inter-corporate deposits had gone up to Rs 1,960 crore. Loans and advances currently form 47 percent of the total debt for Adani.
2:59 pm Market remains lower: Equity benchmarks continued to fall with the Sensex down 114.31 points at 28068.26 and the Nifty down 33.90 points at 8677.45.
About 1565 shares declined against 1125 advancing shares on the BSE.
2:45 pm Europe update: European stocks reversed early losses to trade slightly higher but investors remained cautious amid a retreat in oil prices and US markets closed lower overnight.
The pan-European STOXX 600 was up around 0.26 percent.
European markets have been moving higher since the Brexit vote in late June caused turmoil in financial markets with easy monetary policy from central banks in the region helping stocks. Last week, the Bank of England cut interest rates for the first time in over seven years, from 0.5 percent to 0.25 percent. Meanwhile, a stronger-than-expected US jobs number in July could help the Fed's case for a rate hike, the opposite to looser monetary policy in Europe, which weighed on US stocks on Monday.
2:30 pm Moody's on inflation: Inflation will remain moderate in the near term aided by normal monsoon but implementation of the seventh Pay Commission award could stoke prices, Moody's Investors Service today said.
It said larger than average monsoon rainfall will help maintain moderate food price inflation, contributing to keeping headline inflation within or close to target this year.
The RBI, in its bi-monthly monetary policy today, said it expects some upside risk to 5 percentt inflation target by March 2017 mainly on account of the 7th Pay Commission award.
"Medium-term, we assume that inflation will remain moderate. Should higher wages boost consumption significantly, inflationary pressures could rise. When the full 7th Pay panel recommendations are implemented, further inflationary pressure could arise as a consequence of the increase in housing allowances," said Marie Diron, Senior VP, Sovereign Risk Group, Moody's Investors Service.
2:15 pm Hero reappoints Pawan Munjal: Two-wheeler market leader Hero MotoCorp today reappointed Pawan Munjal as its Chairman, Managing Director and CEO for a period of five years and also elevated its head of operations and supply chain Vikram Kasbekar as a director on the company's board.
Munjal's current tenure comes to an end on September 30 this year. He has been leading the company over the past several years in a highly competitive and volatile market, not to just consolidate market leadership but also expand global footprint across continents, the company said in a statement.
The company said Kasbekar's elevation to the board of directors is a part of its initiative aimed at consolidation of leadership at home and accelerate global expansion.
Besides, Hero MotoCorp said it has appointed Neerja Sharma as the Company Secretary and Chief Compliance Officer.
2:00 pm Market Check
The market recouped some of its losses in afternoon trade with the Sensex reclaiming 28000 level, driven by select banks and IT stocks.
The 30-share BSE Sensex was down 114.35 points at 28,068.22 and the 50-share NSE Nifty declined 37.55 points to 8,673.80 while the BSE Midcap fell 0.5 percent.
The market breadth remained weak as about 1574 shares declined against 1079 advancing shares on the Bombay Stock Exchange.
Lupin fell 3 percent after the company missed analysts' expectations on operational front, though profit and revenue grew by 55 percent and 40.7 percent, respectively. US business surged 82 percent on yearly basis but fell 0.1 percent sequentially.
1:45 pm Earnings: Healthcare major Lupin's consolidated profit for the April-June quarter increased sharply by 55 percent to Rs 882 crore compared with year-ago period.
Revenue grew by 40.7 percent to Rs 4,439.4 crore in the quarter ended June 2016 against Rs 3,156 crore reported in corresponding period of last fiscal.
Bottomline and topline beat analysts' expectations but operational performance was a miss. Profit was estimated at Rs 777.8 crore on revenue of Rs 4,347.1 crore for the quarter while operating profit was likely to be at Rs 1,344.2 crore and margin at 31 percent, according to a CNBC-TV18 poll.
Operating profit shot up 58.6 percent year-on-year to Rs 1,308 crore and margin expanded by 332 basis points to 29.46 percent, though the growth was limited due to higher operational expenses.
1:30 pm Rajan's view on GST: The Reserve Bank today said it will be challenging to roll out GST from April 1, 2017 but the new indirect tax regime will eventually boost business sentiment and investments.
Dispelling fears of price rise due to the rollout of Goods and Services Tax, RBI Governor Raghuram Rajan said its impact could be assessed only after the GST rate is decided and inflation could be short-lived as seen in many other countries.
"While timely implementation of GST will be challenging, there is no doubt that it should raise returns to investment across much of the economy, even while strengthening government finances over the medium term," Rajan said in the fourth bi-monthly monetary policy statement.
The Sensex is down 166.40 points or 0.6 percent at 28016.17 and the Nifty is down 57.10 points or 0.7 percent at 8654.25. About 953 shares have advanced, 1568 shares declined, and 115 shares are unchanged.
ONGC, SBI, Coal India, ICICI Bank and NTPC are top gainers while Bharti Airtel, HDFC, Adani Ports, ITC and M&M are losers in the Sensex.
The Reserve Bank today retained growth projection for the current fiscal at 7.6 percent but cautioned that sluggishness in global economy may neutralise
India's momentum which has been built up by good monsoon and uptick in rural demand.
In its 3rd bi-monthly monetary policy review, RBI said the momentum of growth is "expected to be quickened" by the normal monsoon raising agricultural growth and rural demand, as well as by the stimulus to consumption spending that can be expected from the 7th Central Pay Commission's award.
"The current accommodative stance of monetary policy and comfortable liquidity conditions should also provide a congenial environment for the reinvigoration of aggregate demand conditions," RBI Governor Raghuram Rajan said.
12:58 pm RBI policy analysis: As expected RBI maintained its status quo on the policy rate with an accommodating standpoint, Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services said.
Despite increase in CPI trajectory, RBI maintained the target at 5 percent for March 2017, but with an increasing risk from 7th pay commission and global uncertainties. "Due to which today we are seeing some correction in interest rate sensitive stocks. The governor highlighted a concern that in spite of improvement in liquidity and reduction in cost of funds, the customers have been largely refrained from this benefit. On a positive note RBI has provisioned the forthcoming FCNR redemption, which will provide stability in the currency market," Nair said.
12:53 pm FCNR redemptions: Allaying fears of market disruption in view of USD 20 billion worth of redemptions in foreign deposit accounts in the coming months, the Reserve Bank today said it will continue with domestic liquidity operations and foreign exchange interventions to ensure smooth repayments.
In the Third Bi-monthly Policy Statement for 2016-17, RBI Governor Raghuram Rajan said that as regards the management of the imminent FCNR(B) redemptions, the central bank has been frontloading liquidity provision through open market operations and spot interventions/deliveries of forward purchases.
"The Reserve Bank will continue with both domestic liquidity operations and foreign exchange interventions that should also enable management of the FCNR(B) redemptions without market disruptions," he said.
12:48 pm Anti-dumping duty: India today slapped anti-dumping duty on import of hot-rolled steel products from six nations, including China and South Korea, in a bid to shield domestic manufacturers against cheaper inward shipments.
An anti-dumping duty of USD 474-557 per tonne was imposed on 'hot-rolled flat products of alloy or non-alloy steel' import from China, Japan, South Korea, Russia, Brazil and Indonesia, the Department of Revenue in the Ministry of Finance said in a notification.
The duty would be in force for six months till February 7, 2017.
The anti-dumping duty was imposed on recommendation of the Directorate General of Anti Dumping (DGAD).
12:43 pm HDFC's Mistry on rate transmission: On Rajan's worry regarding the various stumbling blocks in transmission of previous rates cuts by banks, Mistry said one possible reason for the slow transmission could be the incremental funding with banks is coming largely from high cost fixed deposits compared to low-cost current and saving account.
Only when the incremental cost of funding reduces will banks have the opportunity to pass on benefit of lower interest rates to customers, Mistry says.
12:40 pm Europe opens: European stocks opened slightly lower as investors paused for breath as oil prices retreated and US markets closed lower overnight.
The pan-European STOXX 600 was down 0.18 percent.
European markets have been moving higher since the Brexit vote in late June caused turmoil in financial markets with easy monetary policy from central banks in the region helping stocks. But markets in the US closing lower on Monday as the Federal Reserve moves in the opposite direction towards an interest rate hike.
12:35 pm Policy reactions: "RBI keeping the status quo is in line with the inflationary pressure and achieving sustainable growth on the economy. RBI in past has taken considerable steps to infuse liquidity in the market however the banks have not passed on the benefits of rate cuts to home buyers. We expect RBI to relax its monetary policies in near future to boost sentiments and ease the burden of EMIs on customers," Aman Agarwal, Director, KV Developers & Governing Council Member NAREDCO said.
12:30 pm Godrej Properties Q1 misses estimates: Profit grew by 9.2 percent to Rs 43 crore in April-June quarter compared with Rs 40 crore in year-ago period.
Revenue jumped 52.6 percent to Rs 303.8 crore on yearly basis.
Profit was estimated at Rs 51 crore on revenue of Rs 482 crore and operating profit was expected at Rs 75 crore with margin at 16 percent.
EBITDA increased 8.3 percent to Rs 39.7 crore and margin at 13.1 percent for the quarter.
12:22 pm Nifty breaches 8650: Equity benchmarks extended fall on profit booking after the Reserve Bank of India announced monetary policy.
The Sensex shed 189.65 points or 0.67 percent to 27992.92 and the Nifty declined 62.25 points or 0.71 percent to 8649.10.
About two shares declined for every share rising on the BSE.
12:20 pm RBI on GST: The passage of the Goods and Services Tax (GST) Bill augurs well for the growing political consensus for economic reforms.
While timely implementation of GST will be challenging, there is no doubt that it should raise returns to investment across much of the economy, even while strengthening government finances over the medium-term. This should boost business sentiment and eventually investment.
12:16 pm Losers: HDFC, ITC, HDFC Bank, Asian Paints and Mahindra & Mahindra were top five contributors to Sensex' fall, down between 1 percent and 2 percent.
12:11 pm Lupin falls ahead of Q1 earnings: Pharma major Lupin's first quarter (April-June) profit is seen rising 48 percent year-on-year to Rs 777.8 crore and revenue may increase 38 percent to Rs 4,347.1 crore on strong US business, according to average of estimates of analysts polled by CNBC-TV18.
Operating profit (EBITDA - earnings before interest, tax, depreciation and amortisation) is likely to jump 64.6 percent to Rs 1,344.2 crore and margin may expand 500 basis points to 31 percent compared with year-ago period.
12:08 pm Reaction on policy: "In the coming months, the disinflationary impact will be upheld by a favorable monsoon and structural policy reforms instituted by the government. Hence, notwithstanding the current pause, this will engender 50-100 bps space for incremental monetary easing before end of FY17," Rana Kapoor, MD & CEO, YES Bank said.
12:00 pm Market Check: Equity benchmarks traded near day's low in noon trade with the Nifty struggling below 8700 level after the Reserve Bank of India kept policy rates unchanged, saying monetary policy stance remains accommodative.
The 30-share BSE Sensex was down 110.46 points to 28072.11 and the 50-share NSE Nifty declined 39.35 points to 8672. About 1343 shares declined against 1047 advancing shares on the BSE.
The RBI has kept repo rate, at which banks borrow money from the central bank, unchanged at 6.5 percent and cash reserve ratio at 4 percent. It also retained FY17 GDP growth forecast at 7.6 percent.
"The stance of monetary policy remains accommodative and will continue to emphasise the adequate provision of liquidity," the RBI said, adding risks to the inflation target of 5 percent for March 2017 continue to be on the upside.
Nifty Bank index fell marginally and PSU Bank index pared gains.
11:54 am Market check: The Sensex is down 96.10 points or 0.3 percent at 28086.47, and the Nifty down 35.95 points or 0.4 percent at 8675.40.
About 1056 shares have advanced, 1322 shares declined, and 96 shares are unchanged.
11:45 am Sanjeev Bhasin, Executive VP, Markets, India Infoline says, "Policy was inline with our expectations. It was Rajan's last policy and we weren't expecting anything dramatic given what the target for inflation and growth is."
"We expect the new governor now to definitely cut rates in the next policy by around 25 basis points because I expect second-half should play out on account of moderating inflation post good monsoon and to instigate more consumption and good credit growth, you could have RBI cutting at least once before the year end."
11:38 am Market check: The Sensex is down 20.73 points at 28161.84, and the Nifty down 9.45 points or 0.1 percent at 8701.90. About 1078 shares have advanced, 1263 shares declined, and 88 shares are unchanged.
PSU Banks are rising with PNB, Bank of Baroda up over 2 percent. Nifty PSU Banks index is up 1.8 percent.
11:28 am Market check: The Sensex is down 39.78 points or 0.1 percent at 28142.79, and the Nifty down 14.80 points or 0.2 percent at 8696.55. About 1068 shares have advanced, 1248 shares declined, and 92 shares are unchanged.
NTPC, ONGC, Coal India, BHEL and Bharti Airtel are top gainers while Adani Ports, HDFC, ITC, Hero MotoCorp and Asian Paints are losers in the Sensex.
11:20 am RBI policy reaction: Marie Diron, Senior Vice President, Sovereign Risk Group, Moody's Investors Service says RBI's decision to leave policy interest rates unchanged today was no surprise to market participants, in line with transparent and predictable monetary policy. "In the next few months, we expect continuity in the RBI's policymaking. In particular, the government's notification of the inflation target at 4 percent+/-2 percent through to 2021 denotes ongoing commitment to keeping inflation at moderate levels. Meanwhile, the formation of a monetary policy committee is in line with common practice in many central banks around the world. We do not expect the RBI's shift to such a structure to have any significant implications for the conduct of monetary policy," Diron adds.
11:15 am RBI Policy: The central bank says that the momentum of growth is expected to be quickened by the normal monsoon raising agricultural growth and rural demand, as well as by the stimulus to consumption spending that can be expected from the disbursement of pay, pension and arrears following the implementation of the 7th CPC's award. The passage of the Goods and Services Tax (GST) Bill augurs well for the growing political consensus for economic reforms. While timely implementation of GST will be challenging, there is no doubt that it should raise returns to investment across much of the economy, even while strengthening government finances over the medium-term. This should boost business sentiment and eventually investment.
11:10 am RBI says upside risks to 5 percent inflation target for 2017 continue, monetary policy stance remains accommodative.
11:05 am RBI Policy: On the basis of an assessment of the current and evolving macroeconomic situation, RBI has decided to:
#keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5 percent
#keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4 percent of net demand and time liabilities (NDTL)
#continue to provide liquidity as required but progressively lower the average ex ante liquidity deficit in the system from one per cent of NDTL to a position closer to neutrality.
Consequently, the reverse repo rate under the LAF will remain unchanged at 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 7.0 percent.
The market is in red as the Sensex is down 69.96 points or 0.2 percent at 28112.61, and the Nifty down 21.15 points or 0.2 percent at 8690.20. About 988 shares have advanced, 1212 shares declined, and 88 shares are unchanged. The Reserve Bank of India has kept key rates unchanged.
Outgoing governor Raghuram Rajan was not expected to tinker with rates as he presents his last monetary policy. According to a CNBC-TV18 poll attention has moved from rates to liquidity, 70 percent of the respondents expect him to keep liquidity at current excess.
Lupin, NTPC, ONGC, Coal India and BHEL are top gainers whule Adani Ports, ITC, HDFC, L&T and Asian Paints are losers in the Sensex.
Amid a weakening global trend, gold futures fell Rs 22 to Rs 31,154 per 10 gm today as participants trimmed their positions.
Market analysts said the fall in gold futures was mostly in tune with a weak trend overseas as signs of US economic resilience boosted world equities and the dollar, reducing demand for the precious metal as a haven.
Meanwhile, gold prices in global market retreated as much as 0.09 percent to USD 1,333.80 an ounce in Singapore today.
10:40 am CAG on ONGC: State-owned ONGC shelled out Rs 18,787 crore in excess subsidy over 3 years as it 'over- reported' crude oil production by 12 percent, which also resulted in extra payment of peformance related pay to its executives, government auditor CAG said today.
In a report tabled in Parliament, the Comptroller and Auditor General of India (CAG) said ONGC 'over-reported' its crude oil production by 12 per cent through inclusion of items like condensate in the output.
"Audit of the crude oil measurement and reporting system indicated that the company (ONGC) was reporting partially stabilized crude oil as its crude oil production.
"This led to over-reporting of crude production by including items other than crude oil, namely, off-gas, BS&W (impurities) and recoverable internal consumption," it said.
10:25 am Poll: Pharma major Lupin's first quarter (April-June) profit is seen rising 48 percent year-on-year to Rs 777.8 crore and revenue may increase 38 percent to Rs 4,347.1 crore on strong US business, according to average of estimates of analysts polled by CNBC-TV18.
Operating profit (EBITDA - earnings before interest, tax, depreciation and amortisation) is likely to jump 64.6 percent to Rs 1,344.2 crore and margin may expand 500 basis points to 31 percent compared with year-ago period.
10:00 am Market Check
Equity benchmarks continued to consolidate with the Nifty hovering around 8700 level after two-day rally and ahead of RBI monetary policy.
The 30-share BSE Sensex was down 36.12 points at 28146.45 and the 50-share NSE Nifty fell 14.55 points to 8696.80.
Outgoing Reserve Bank Governor Raghuram Rajan's is expected hold key rates at his last monetary policy today before his three-year term comes to an end.
A CNBC-TV18 poll of economists says 95 percent expect repo rate to remain unchanged, while 5 percent expect a 25 basis point rate cut.
Indranil Sengupta, Chief Economist - India, BoFA-ML, is among the 5 percent who expect the central bank to cut key interest rates as he feels there are strong fundamental reasons for a rate cut.
Tata Power surged nearly 5 percent followed by ONGC, Bharti Infratel, Coal India, ICICI Bank and NTPC.
Idea Cellular tanked 5 percent after dismal performance in Q1 with standalone profit falling 36 percent on yearly basis.
Ambuja Cements, Tech Mahindra, ITC, HDFC, Asian Paints, HDFC Bank and TCS were other losers.
9:55 am RBI action: A CNBC-TV18 poll of economists says 95 percent expect repo rate to remain unchanged, while 5 percent expect a 25 basis point rate cut.
Indranil Sengupta, Chief Economist - India, BoFA-ML, is among the 5 percent who expect the central bank to cut key interest rates.
"There are strong fundamental reasons for a rate cut," he told CNBC-TV18, adding that he expects inflation to come down to RBI's 5 percent March target on back of good monsoons.
He maintained that growth is weak and that reflects in poor loan demand. "An RBI cut will help bank cut lending rates," he said, adding that if the RBI cuts now before the busy season, it would allow banks to pass on the cut.
9:45 am Masala bonds adding spice? With two companies raising Rs 5000 crore via offshore masala bonds in the last month, global ratings agency Fitch has said it will help diversify funding for India Inc, especially non-banking finance companies.
"The recent issuance of the first offshore masala bonds by domestic companies could pave the way for a broader opening and development of the market," the agency said today in a note.
Even though the instrument is in its infancy, the two recent issues by mortgage major HDFC and state-run NTPC will mitigate initial market concerns about liquidity, it said, adding the issuance also helped both the companies get better ratings.
The bond pricing was surprisingly competitive relative to onshore funding considering uncertainty over liquidity and currency risks, it said, adding this will prod other corporates to go to the market.
9:30 am FII view: Timothy Moe of Goldman Sachs says Asian equities have rallied 10 percent and seen USD 17 billion FII inflows since the Brexit lows.
History suggests the current rally looks mature in terms of price moves/inflows.
However, active managers look under-exposed and may be forced near term to chase the market, according to him.
Moe says he sees draw-down risk if fundamentals do not improve, adding India remains the largest overweight in the region but funds have pared down their overweight allocations to reasonable levels.
The market has opened flat as investors prepare for Raghuram Rajan's last monetary policy review in few hours. Outgoing governor Raghuram Rajan is not expected to tinker with rates as he presents his last monetary policy today. According to a CNBC-TV18 poll shows attention has moved from rates to liquidity, 70 percent of the respondents expect him to keep liquidity at current excess.
The Sensex is down 11.07 points at 28171.50, and the Nifty is down 6.70 points at 8704.65. About 508 shares have advanced, 327 shares declined, and 40 shares are unchanged.
Lupin, Tata Motors, ONGC, M&M and Coal India are top gainers while Bajaj Auto, TCS, Hero MotoCorp, Reliance and Infosys are losers in the Sensex. Idea is down 4 percent post Q1 results.
The Indian rupee opened flat at 66.84 per dollar versus previous close 66.84.
Ashutosh Raina of HDFC Bank said, "The Reserve Bank of India (RBI) is widely expected to maintain status quo in today's credit policy, but the statements following the policy will be keenly analysed. Any roadmap on the upcoming FCNR redemptions, and steps to ensure adequate dollar as well as rupee liquidity will be keenly awaited."
The dollar held on its gains against Japan's currency, after strengthening the most in 1.5 weeks yesterday.
Asian shares stood atop one-year peaks as a desperate search for yield drove a record inflow into emerging market funds, while oil prices tried to sustain their latest bounce.
Analysts at Bank of America Merrill Lynch noted the search for yield had led to the largest 5-week inflow on record to emerging market debt funds and the longest inflow streak to equity funds in two years. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.1 percent having already risen for three sessions in a row. Japan's Nikkei was also attempting a fourth session of gains with an early rise of 0.1 percent, while South Korea firmed 0.2 percent.
Wall Street receded from record highs as a drop in healthcare stocks offset gains caused by higher oil prices and a strong jobs report. A rally to several all-time highs since late June has left the S&P 500 up nearly 7 percent in 2016, with many investors concerned about stretched valuations.