Nifty ends below 8000; Sensex tanks for 6th day, down 385 points
21 November 2016
3:30 pm Market Update: Equity benchmarks remained under pressure as the Sensex was down 385.10 points or 1.47 percent at 25765.14 and the Nifty down 145 points or 1.80 percent at 7929.10, erasing all 2016 gains.
The Sensex has seen the biggest losing streak since March 2015.
About five shares declined for every share rising on the BSE.
3:15 pm Interview: Bankers have maintained a positive stance after the roll-out of the demonetisation scheme. Rakesh Sharma, MD & CEO of Canara Bank concurs with the optimism and says that though the bank faced initial hiccups in having their deposits placed in RBI currency chests, the task force formed to manage the chaotic situation has made life easier.
He also said borrowing is not a problem for the bank. According to him, the huge amount of deposits received via demonetisation is going to help the bank in recovering non-performing assets (NPAs).
Sharma also sees no stress in the book currently and remains positive on the impact of cash cleanup on banks. He said the bank received Rs 32,000 crore deposits since November 10 and the current and savings account ratio (CASA) has gone up by 30 percent. Recovery in loan accounts is at Rs 4,000 crore.
3:10 pm Market update: The Sensex is down 410.48 points at 25739.76, and the Nifty is down 151.35 points at 7922.75. About 386 shares have advanced, 2207 shares declined, and 141 shares are unchanged.
2:28 pm Demonetisation impact: Motilal Oswal says assuming 10 percent of the currency in circulation (Rs 1.8 trillion) does not return to the system, nominal GDP growth could be 10 percent in FY17 against pre-demonetisation forecast of 11.5 percent. The higher the unclaimed currency, the more detrimental it will be for FY17 GDP.
The impact on real GDP growth would depend on how much and how quickly the inflation metrics get affected. Since prices could prove to be sticky over the near term, the entire downgrade in nominal GDP growth could be reflected in real GDP growth in FY17. It implies real GDP growth of 5 percent YoY in 2HFY17, as against 7.4 percent YoY in 1HFY17.
2:20 pm Trump impact on visa: The main US visa program for technology workers could face renewed scrutiny under President-elect Donald Trump and his proposed Attorney General, Senator Jeff Sessions, a long-time critic of the skilled-worker program.
H-1B visas admit 65,000 workers and another 20,000 graduate student workers each year. The tech industry, which has lobbied to expand the program, may now have to fight a rear-guard action to protect it, immigration attorneys and lobbyists said.
Trump sent mixed signals on the campaign trail, sometimes criticizing the visas but other times calling them an important way to retain foreign talent.
2:00 pm Market Check
Equity benchmarks extended losses in afternoon trade as investors continued to assess the impact of demonetisation on company's earnings and economy. Some brokerages started lowering earnings estimates as well as GDP forecast.
The government's demonetisation drive brings in big challenges to growth in FY17 and FY18, global investment banking firm Jefferies has said in a report. It has also reset Nifty target at 7500.
The 30-share BSE Sensex was down 386.41 points or 1.48 percent at 25763.83 and the 50-share NSE Nifty fell 137.70 points or 1.71 percent to 7936.40.
The BSE Midcap index shed 2.65 percent and Smallcap tanked 3 percent as six shares declined for every share rising on the exchange.
Bank Nifty plunged 600 points as Bank of Baroda, PNB, Federal Bank, Canara Bank, Yes Bank, SBI and IndusInd Bank were down 5-8 percent. Tata Group stocks like Tata Steel and Tata Motors fell nearly 4 percent.
1:45 pm Delay in earnings recovery: Ajay Bodke of Prabhudas Lilladher says the surprise demonetisation move of higher denomination currencies by the government on 8th November 2016 took markets by surprise.
After witnessing a tepid earnings growth for the last few years, markets were looking forward to a return to robust earnings jump in 2H FY17. The optimism stemmed from consumption-focused sectors riding on cash infusion in the economy due to the VII Pay Commission award to Central government employees and OROP to defence personnel (serving & retired) as well as a boost to rural consumption after a near-normal monsoon leading to bumper kharif harvest after two successive years of drought.
The currency crunch in the wake of demonetisation and adjustments warranted due to shocks to supply chains and necessity to incorporate tweaks in the mode of conducting business would delay the demand recovery by atleast a quarter, he says.
1:38 pm Europe opens: European markets opened higher as dollar strength took a breather and oil prices jumped.
The pan-European Stoxx 600 started the day 0.14 percent higher, with most stocks moving north. Basic resources were outperforming their peers, rising more than 1 percent.
1:32 pm Fund raising: Indian firms raised around Rs 18,600 crore through issuance of shares to promoters and shareholders on preferential basis in the first six months of the current fiscal, a slump of 11 percent from year-ago level.
The funds have been mobilised for business expansion, refinancing debt, working capital requirements and general corporate purposes.
Preferential allotment serves as an alternative mechanism of resource mobilisation, wherein a listed firm issues shares or convertible securities to a select group of shareholders on a private placement basis.
As per the latest data available with the Securities and Exchange Board of India, funds garnered by listed companies via preferential allotment stood at Rs 18,594 crore in the April-September period of 2016-17, compared to Rs 20,874 crore in the same period of the preceding fiscal.
1:20 pm USFDA nod: Drug firm Zydus Cadila has received final approval from the US health regulator to market its Metronidazole tablets used for the treatment of infections caused by bacteria or parasites.
The company has received "final approval from the United States Food and Drug Administration (USFDA) to market Metronidazole tablets USP in strengths of 250 mg and 500 mg," Cadila Healthcare, the listed entity of the Zydus Group, said in a BSE filing.
The drug will be produced at the group's formulations manufacturing facility at Baddi, it added.
"The group now has more than 105 approvals and has so far filed nearly 275 abbreviated new drug applications (ANDAs) since the commencement of the filing process in FY 2003-04," Cadila Healthcare said.
1:00 pm Market Check
Bears kept complete control over Dalal Street in afternoon as equity benchmarks as well as broader markets were down between 1 percent and 2 percent despite mixed global cues.
The 30-share BSE Sensex was down 315.84 points or 1.21 percent at 25834.40 and the 50-share NSE Nifty declined 116.00 points or 1.44 percent to 7958.10. More than five shares slipped for every share rising on the BSE.
Deutsche Bank expects the remainder of 2016 to be highly uncertain, which will keep markets volatile with a downward bias. It cut December 2016 Sensex target to 25,000 (from 27,000 earlier).
Nifty PSU Bank fell the most among sectoral indices, down nearly 5 percent. Bank of Baroda plunged 7.5 percent and PNB was down 6.5 percent followed by OBC, SBI, Canara Bank, Union Bank, Syndicate Bank and Allahabad Bank with 3-4.5 percent losses.
Cash crunch after demonetisation hit realty stocks badly as analysts expect major impact on earnings. Nifty Realty lost over 4 percent.
12:50 pm Interview: With demand and consumption coming to a standstill due to demonetisation, secondary sales have come down drastically for Blue Star which saw a drop in sales in the first two weeks on the back of consumer nervousness, says B Thiagarajan, JMD of the company.
In an interview with CNBC-TV18 he said that the second quarter is a seasonally weak quarter and expects revival in the fourth quarter post February, 2017.
12:35 pm Market Expert: Speaking to CNBC-TV18 Dhananjay Sinha, Head, Institutional Research, Economist and Strategist at Emkay Global Financial Services said that the currency replacement scheme has caused some distress. ''Given the good amount of linkage between cash transactions, and symbiotic relationship between black and white component from a technical standpoint the ability of the government to replace old notes will be critical.''
He believes it will take another 6 months before all bank notes can be replaced. By that time, the currency supply will be choked, he said. ''What has to be understood is that we have had a scenario of no-growth for two and a half years. This year we have seen some top-line growth and this shock will [impact further].''
He believes government's positive measures will play out. One, the minimum support price had gone up by 9 percent (for pulses), which is a significant increase. "That is a generous increase in the last six years," he said. Second, allocation for MNREGA has been higher than budgeted. As of now a Rs 10,000 crore of additions over last year have been made, he said.
12:15 pm Dealers' desk: Dealers say there has been lack of buying interest at institutional desk and the margin calls triggered after the Nifty breached 8000.
Brokerage houses started lowering Sensex/Nifty Target. Deutsche Bank cut December-end Sensex target to 25000 while Jefferies has set new Nifty target of 7500 and cut FY18 earnings growth to 15 percent from 20 percent.
Citi also lowered multiple to 15x (from 17x) one year forward consensus earnings to factor in uncertainty.
12:00 pm Market Check
Selling pressure continued in noon trade with the Sensex struggling below 26000 level. Banks, auto, infra and metals stocks hit hardest.
The 30-share BSE Sensex was down 326.80 points or 1.25 percent at 25823.44 and the 50-share NSE Nifty fell 115.35 points or 1.43 percent to 7958.75. The broader markets continued to underperform benchmarks as the BSE Midcap was down 2 percent and Smallcap index tanked 2.7 percent.
More than five shares declined for every share rising on the BSE.
SBI and Adani Ports retained top position in selling list on Sensex, down more than 4 percent followed by HDFC, ICICI Bank, Tata Motors and Mahindra & Mahindra with 2-3 percent loss. However, Infosys, TCS and Wipro gained 0.5-1.3 percent.
11:55 am USFDA nod: Panacea Biotec has received establishment inspection report from the US Food and Drug Administration indicating the formal closure of the current good manufacturing practise and pre-approval inspection conducted by USFDA, at its oncology parenteral and oral solids dosage formulation facilities at Malpur, Baddi, District Solan, Himalchal Pradesh.
The oral solids manufacturing facility located at Baddi site has a history of completion of four consecutive successful current good manufacturing practise and pre-approval inspections by USFDA in last 7 years. The manufacturing facility of oncology parenteral formulations has been inspected successfully for the first time by USFDA.
11:34 am Fiscal deficit: Ratings agency Moody's has maintained its stable rating on India in its recent report and expects to see strongest profit growth among corporates in India in the Asia Pacific region.
The firm sees sustained economic growth, commissioning of additional production capacity and higher commodity prices that will boost corporate earnings in India.
On the recent developments in India with regards to demonetisation, Marie Diron of Moody's Investors Services told CNBC-TV18 that this move is a part of the reform steps undertaken by the government and will prove to be positive for the economy and budget in the medium term.
She said that the government may have to cut its fiscal spending but see it meeting its fiscal deficit target of 3.5 percent.
11:17 am FII View: Abhay Laijawala of Deutsche Bank says while India's balance of payments situation has improved sharply since the taper tantrum in May'13 (when India saw significant currency volatility on foreign outflows), it will not remain immune to the outflow pressure seen across EMs.
In the run up to the end of the calendar year, he expects the flow environment to stay highly challenging with many uncertainties. These include: the outcome of the Italian referendum on Decmeber 4, 2016, Fed meeting on December 15, pace of outflows from China and the associated depreciation of the CNY.
"In case the pressure on outflows from China increases as a consequence of Fed policy and President-elect Trump's pro-growth policies, which would result in sharp dollar strengthening, we may see acceleration in the selling by foreign institutional investors who have been net sellers throughout November (net sold USD 1020 billion MTD)," he says.
He expects the remainder of 2016 to be highly uncertain, which will keep markets volatile with a downward bias. It cut December 2016 Sensex target to 25,000 (from 27,000 earlier).
11:00 am Market Check
Dalal Street caught in bear grip as equity benchmarks fell more than 1 percent and the broader markets shed more than 2 percent. Nifty Auto and Bank indices were down 2 percent each while Realty plunged 4 percent.
The 30-share BSE Sensex was down 331.12 points or 1.27 percent at 25819.12 and the 50-share NSE Nifty declined 116.95 points or 1.45 percent to 7957.15. About five shares declined for every share rising on the BSE.
Technology stocks outperformed the market with the Nifty IT index rising 0.4 percent as the rupee traded over 8-month low. It was down 0.18 percent to 68.25 against the US dollar.
State Bank of India was the biggest loser on the Sensex, down over 4 percent followed by Adani Ports, Tata Steel, HDFC, ICICI Bank and Tata Motors.
10:53 am FII View: Adrian Mowat of JP Morgan says Indian nominal GDP growth is recovering. This is driving domestic cyclical profits.
"Our strategy has been overweight domestic cyclicals and underweight defensives and exporters. The result is a neutral position," he says.
He feels the reform agenda is breaking new ground with an audacious attack on 'black money' by withdrawing high denomination banks notes. There is short-term pain with the lack of cash hitting consumption. Hopefully at the end, the formal economy and tax revenues will increase.
Mowat says the implementation of GST is another source of near term economic risk with significant long-term benefits. "We are buyers into the weakness," he adds.
10:42 am Market Update: Equity benchmarks fell further in morning trade with the Sensex down 250.51 points or 0.96 percent at 25899.73 and the Nifty down 92.55 points or 1.15 percent at 7981.55.
About three shares declined for every share rising on the BSE.
10:20 am Interview: Suresh Worrior, Director Finance, Rashtriya Chemicals and Fertilisers is not overly worried about demonetisation impacting them and expects things to be normal by the end of the month.
Talking on company's weak performance in second quarter, Worrior said EBITDA was down because of a drop in import parity price of Urea and topline was impacted due to discontinuation of one product.
The total income for the company in the quarter ended September was down 26.3 percent at Rs 1,772.1 crore versus Rs 2,403.3 crore in the same quarter earlier fiscal. Meanwhile, income related to gas price is down too, he said.
EBITDA in Q2 was down 13.1 percent at 100.2 crore versus Rs 115.3 crore year on year (YoY). EBITDA margins stood at 5.7 percent versus 4.8 percent. Net profit was down 6.5 percent at Rs 43.4 crore versus Rs 46.4 crore YoY.
10:00 am Market Check
Equity benchmarks extended losses in morning trade with the Sensex falling more than 100 points, weighed by FMCG, banking & financials, auto and pharma stocks. However, oil and select technology stocks bucked the trend.
The 30-share BSE Sensex was down 125.07 points at 26025.17 and the 50-share NSE Nifty fell 43.55 points to 8030.55. The broader markets underperformed benchmarks.
The BSE Midcap and Smallcap indices were down more than 0.8 percent on weak breadth. About 1091 shares declined against 688 advancing shares on the exchange.
Mahesh Nandurkar of CLSA says most investors view the demonetisation move as good long-term but with a short-term negative impact. He believes the expected market weakness over the next quarter or so to be a good entry point for long-term investors.
Nifty Auto, Bank and Realty indices slipped 1-2 percent.
HDFC, HDFC Bank, Tata Motors, SBI, Maruti, HUL and Dr Reddy's Labs declined 1-1.6 percent while Adani Ports, ONGC, Wipro, Infosys, Reliance Industries and Bharti Airtel gained strength.
9:53 am Market Update: Equity benchmarks extended losses in morning trade with the Sensex falling 144.07 points to 26006.17 and the Nifty down 51.40 points at 8022.70.
The market breadth also turned lower as about 1070 shares declined against 683 advancing shares on the BSE.
9:45 am Oil production cut?: Iraq will offer three new proposal at the upcoming OPEC meeting in Vienna to implement oil output cut, the Wall Street Journal reported on Sunday, citing Iraqi Oil Minister Jabbar Ali al-Luaibi.
The options will be consistent with OPEC policy and will bolster the unity of the group, the Journal reported citing Luaibi.
Luaibi told the Journal "Our alternatives are based on other variables and will make it easier for OPEC members to make a decision", but he declined to give details over the proposals.
The Iraq oil ministry was not immediately available for comment.
Reuters reported last week that OPEC is moving closer towards finalizing this month its first deal since 2008 to limit oil output.
9:35 am GDP growth: Ambit Capital has said that demonetisation will paralyze economic activity in the short term and has cut its FY17 gross domestic product (GDP) estimate to 3.8 percent from 6.8 percent.
As per a media report, Ambit sees a significant decline in GDP growth in the second half of the current fiscal and sees it decelerating from 6.4 percent in the first half 0.5 percent year-on-year (YoY) in H2FY17.
Ambit had earlier cut its FY18 GDP growth forecast to 5.8 percent against 7.3 percent previously, before the cash ban. The FY17 Sensex target of 29,500 has also been scrapped and has set its FY18 Sensex target at 29,000 given that earnings growth stays at a minimum of 10 percent.
9:25 am Macquarie on Sun Pharma: Macquarie says Sun Pharma remains its preferred large-cap pharma pick, as it considers it best positioned to make the speciality transition which is essential for long-term growth.
Along with the recently launched AGs for Benicar and Benicar HCT, which have limited competition, the ramp-up of speciality launches like Bromsite (launch imminent), Xelpros and Elepsia in the next few quarters should lend support to growth in absence of one-time opportunities, it feels.
The brokerage house has an outperform rating on the stock with a target price of Rs 1,020.
9:15 am Market Check
Equity benchmarks rebounded in opening trade Monday with the Nifty reclaiming 8100 level but immediately turned volatile ahead of expiry of November futures & options contracts due on Thursday. The market had lost nearly 7 percent in last four consecutive weeks.
The 30-share BSE Sensex was up 93.32 points at 26243.56 and the 50-share NSE Nifty gained 28 points at 8102.10.
Asian Paints, Adani Ports, Coal India, Lupin, Bosch and Bank of Baroda gained 1-2 percent whereas Tata Motors, HDFC, Dr Reddy's Labs and Bharti Airtel were under pressure.
The Indian rupee has opened flat at 68.10 per dollar today against Friday's closing value of 68.12 a dollar.
Pramit Brahmbhatt of Veracity said, "In anticipation of a interest rate hike, dollar will continue to trade with positive bias, putting pressure on rupee. Trading range for USD/INR seen at 68-68.50/dollar."
The dollar rose to its highest level since April 2003 against a basket of currencies on Friday and was on track for its largest two-week increase since March 2015, as traders piled bets on a massive dose of fiscal stimulus under a Donald Trump US presidency.
Also stoking the dollar rally were growing expectations the Federal Reserve would raise interest rates next month on signs of rising inflation and improved economic growth.
Asia markets traded mostly higher, as dollar strength took a breather and oil prices jumped. Japan's Nikkei, China's Shanghai and Hong Kong's Hang Seng gained 0.4-0.9 percent.
US stocks ended lower on Friday, with healthcare stocks leading the declines, as investors cashed in on a post-election rally and waited for clarity on the next administration's policies.
Crude futures gained upward momentum during Asian trade, with US West Texas Intermediate (WTI) crude up 1.01 percent at USD 46.15 a barrel, while Brent added 1.15 percent to USD 47.40 a barrel. Both crude futures had risen nearly 5 percent last week.