Nifty ends below 8150, Sensex flat; Maruti up 4%, ITC down 1%
29 November 2016
3:30 pm Market closing: Selling pressure triggered in last hour of trade dragged the market. The Sensex closed up 43.84 points or 0.2 percebt at 26394.01 and the Nifty was up 15.25 points or 0.2 percent at 8142.15. About 1578 shares advanced, 1024 shares declined and 198 shares were unchanged.
Maruti, Bharti Airtel, GAIL, Hero MotoCorp and M&M were top gainers while Axis Bank, Sun Pharma, NTPC, ITC and TCS were losers.
2:57 pm FII View: The Indian equity market is exiting the low return trap and equities are likely to deliver 15 percent return in rupee terms next year, says a Morgan Stanley report.
The low return environment that the country seems to be trapped in may get a breather in 2017, thanks to better equity valuations, bottoming of the growth cycle (disrupted temporarily by the recent demonetisation) and higher correlations with global equities market, the report said.
Demonetisation has come as a negative surprise leading to lower GDP growth estimates and therefore earnings and the recovery are likely to be pushed back by a couple of quarters, it said.
"The equity markets are once again looking attractive and appear poised for double digit returns in 2017," Morgan Stanley said in a research note, adding that equities are likely to deliver 15 percent returns in rupee terms in 2017 compared to (-)3 percent in 2015 and 2016.
It said double digit returns are possible next year, with a base case (50 percent probability) BSE Sensex target of 30,000.
2:42 pm Europe update: European bourses were mixed as investors focused on talks between OPEC members and the political uncertainty ahead of a key referendum in Italy.
The pan-European Stoxx 600 was marginally higher but with major bourses pointing in different directions.
2:32 pm GDP growth: Fitch Ratings today lowered India's GDP growth forecast for this fiscal to 6.9 percent from 7.4 percent, saying there will be "temporary disruptions" to economic activity post demonetisation.
It said economic activity will be hit in the October-December quarter because of the cash crunch created by withdrawal and replacement of Rs 500 and 1,000 notes that accounted for 86 percent of the value of currency in circulation.
"Indian growth has also been revised down to reflect temporary disruptions to activity related to the RBI's surprise demonetisation of large-denomination bank notes," Fitch said, as it revised real GDP growth forecast down to 6.9 percent for 2016-17, from 7.4 percent projected earlier.
The US-based ratings agency also revised GDP growth forecast for 2017-18 and 2018-19 lower to 7.7 percent from 8 percent earlier.
2:20 pm FPI investment: Foreign Portfolio Investors (FPIs) have raised their stake in BSE-200 companies to USD 337 billion during July-September quarter and heavy buying was seen in sectors like banking and telecom, says a report.
FPI ownership in the BSE-200 index stood at USD 311 billion during the June quarter, according to the Kotak Institutional Equities report.
In percentage terms, FPI holding (including American Depository Receipts or ADRs and global depository receipt or GDR) in the index marginally rose to 25 per cent in three months ended September 30, 2016 against 24.8 per cent in the preceding quarter.
A sector-wise analysis shows that FPIs invested in automobiles, banking and energy and sold pharmaceuticals, technology and telecom stocks.
2:00 pm Market Check
Equity benchmarks came off day's high in afternoon trade due to selling pressure in ITC, HDFC Bank and Infosys. Auto & telecom and index heavyweights HDFC & Reliance continued to support the market.
The 30-share BSE Sensex was up 117.12 points at 26467.29 and the 50-share NSE Nifty gained 38.35 points at 8165.25. The broader markets also erased some gains with the BSE Midcap and Smallcap indices rising 0.7-0.9 percent.
The market breadth remained in favour of advances as about two shares gained for every share falling on the exchange.
Eicher Motors was the biggest gainer, up nearly 6 percent followed by Idea Cellular, Maruti Suzuki, Bosch, Asian Paints, GAIL, M&M and Hero Motocorp with 2-4 percent upside.
Axis Bank, NTPC, Infosys, Sun Pharma, HDFC Bank, Hindalco, Bank of Baroda and BPCL were under pressure.
1:45 pm Cement: French multinational Lafarge has received environment clearance for raising production capacity of its Nongtrai limestone mine in Meghalaya to 5 million tonnes per annum (MTPA) from 2 MTPA, at a cost of Rs 194 crore.
Nongtrai limestone mine is operated by Lafarge Umiam Mining Pvt Ltd (LUMPL), a 100 percent subsidiary of Lafarge Surma Cement Ltd (LSC), Bangladesh. The limestone from the mine is supplied to a cross-border cement manufacturing plant of LSC in Bangladesh.
The mine was set up as per an agreement between India and Bangladesh in November 2000.
1:30 pm European markets: European bourses open lower as investors focused on talks between OPEC members and the political uncertainty mounting ahead of a key referendum in Italy.
The pan-European Stoxx 600 opened 0.17 percent lower.
OPEC oil producers are preparing for a crucial meeting on Wednesday where they aim to agree on a production cut. However, oil prices are trading lower as investors doubt that a deal will be reached. On Monday, OPEC technical teams reportedly failed to agree on any details for the proposed cuts.
Meanwhile, President Mario Draghi of the European Central Bank warned Monday that Britain will feel the pain from Brexit before the euro zone. Draghi also asked for clarity over the upcoming negotiations.
The market is steadily surging with the Sensex up 177.67 points or 0.7 percent at 26527.84. The Nifty is up 56.60 points or 0.7 percent at 8183.50. About 1715 shares have advanced, 743 shares declined, and 158 shares are unchanged.
Maruti, GAIL, Asian Paints, HDFC and Tata Motors are top gainers while Sun Pharma, Axis Bank, TCS, ITC and Cipla are losers in the Sensex.
Oil prices fell early on doubts that producer cartel OPEC will be able to hammer out a meaningful output cut during a meeting on Wednesday to rein in a global supply overhang and prop up prices, as per Reuters report.
Virendra Chauhan, Oil Analyst, Energy Aspects believes if the deal is struck then there could be an initial knee-jerk reaction and crude prices would rise by even USD 10 per barrel but if there is no deal then it could signal a death of OPEC in many ways and oil would sell off.
OPEC knows that they need to deliver something but the question is in what shape and form but the question is will they manage to get Iran, Iraq to the table, says Chauhan.
12:59 pm Market Update: The Sensex was up 196.56 points at 26546.73 and the Nifty gained 63 points at 8189.90.
About 1703 shares advanced against 691 declining shares on the BSE.
12:50 pm Oil production cut: Iraq's prime minister says his country will agree to cut its own oil production as part of a plan by OPEC to push crude prices higher.
Prime Minister Haider al-Abadi told The Associated Press that current prices are not sustainable for oil-producing countries.
Al-Abadi's comments could be critical because Iraq along with Iran has been reluctant to go along with cuts, creating an obstacle for an OPEC deal, according to published reports.
Al-Abadi said he understands that OPEC members will agree to reduce production by between 900,000 and 1.2 million barrels per day that would be a cut of between 2.7 per cent and 3.6 per cent from October levels. He said it would be enough to push prices up.
"Yes, we will take our share and we agreed to this," he told the AP.
12:41 pm Morgan Stanley on Idea: With retaining underweight rating and target price of Rs 60 on Idea, Morgan Stanley says the company has 9,800 of its own towers with a tenancy ratio of 1.67x. It values these towers at around USD 1.1 billion, assuming Enterprise value per tower of USD 1,08,000, a 5 percent discount to Bharti Infratel's EV/tower at current market price.
Including Idea's 16 percent stake in Indus, the brokerage house values its overall tower portfolio at USD 3.3 billion.
12:31 pm JP Morgan on Britannia: Bakery and dairy products maker Britannia shares gained nearly 2 percent intraday after JP Morgan has initiated coverage with an overweight rating and a December 2017 target price of Rs 3,500, implying 18 percent potential upside.
It is a leading packaged foods company and benefits from a rising focus on innovation, astute marketing and good execution, which should continue to support market-share gains and mix enhancements, the brokerage house says.
In near term, even as demonetisation keeps 2HFY17 performance volatile, JP Morgan expects growth rates to improve over FY18 and find current levels to be a good entry opportunity for long term investors.
It also expects revenue momentum to sustain a 13 percent CAGR with modest margin expansion driving a 16 percent EPS CAGR over FY16-19.
Strong free cash flow generation, healthy return ratios and potentially higher dividends are other positive drivers, it says.
12:20 pm Demonetisation effect: Rating agency Moody's Investors Service sees securitisation market to remain stable next year despite the demonetisation drive as it expects good credit quality across most asset classes.
"Robust growth and low oil prices will underpin stable auto ABS performance despite the economic disruption from the demonetisation drive," Moody's Senior Vice-president Yian Ning Loh said in a report, adding that ABS backed by CV loans account for 45 percent of total volume outstanding.
It expects performance of commercial vehicle (CV) loans supporting auto asset-backed securities (ABS) transactions to remain stable next year even though it expects the delinquency rates to increase somewhat in the very short term owing to the demonetisation.
"But delinquencies should return to their current levels over the course of 2017 due to robust economic growth and low oil prices," says the report.
12:00 pm Market Check
Buying continued in equity benchmarks as well as broader markets in noon trade with the Sensex rising nearly 200 points, aided by auto, banking & financials and telecom stocks.
The 30-share BSE Sensex was up 185.42 points at 26535.59 and the 50-share NSE Nifty gained 59.40 points at 8186.30 while the BSE Midcap index climbed 0.9 percent and Smallcap jumped 1.2 percent.
About three shares advanced for every share declining on the exchange.
Oil prices fell on doubts that producer cartel OPEC will be able to hammer out a meaningful output cut during a meeting on Wednesday to rein in a global supply overhang and prop up prices.
International Brent crude oil futures were trading at USD 47.80 per barrel, down 0.91 percent, from their last close. US West Texas Intermediate crude futures were down 0.79 percent at USD 46.71 a barrel.
11:55 am FII view: Speaking to CNBC-TV18 Gautam Chhaochharia, Head of India Research at UBS Securities, said that the longer term India story remains intact. Demonetisation doesn't impair the economic trajectory in the long term. He said he is estimating a 3-6 month disruption which may have been priced in by many stocks already. It is difficult to assess the impact on GDP rate owing to cash ban. ''It is difficult to take a linear view,'' he said, adding that he believes the GDP for this fiscal year could be about 6 percent, but it will go up to 8 percent because of base effect. Nifty earnings growth in FY17 will be 5 percent, and 14 percent for FY18, he said.
11:45 am Poll: India's economy probably picked up steam in the July-September quarter on strong demand, but Prime Minister Narendra Modi's surprise currency crackdown this month will likely dent growth in coming months, a Reuters poll found.
While developed economies have wallowed in lacklustre activity, Asia's third-largest economy has maintained a resilient pace of expansion in recent years, eclipsing China.
That trend likely continued in the last quarter, according to the median consensus of 35 economists polled over the past week.
They forecast India's nearly USD 2 trillion economy expanded 7.5 percent in July-September from the same period a year ago, accelerating from a 15-month low of 7.1 percent in the previous quarter.
11:30 am International markets: Italian Referendum in the upcoming weekend would not have an impact on global markets as Brexit or US elections had is the word coming from Ian Hui, Global Market Strategist, JP Morgan Asset Management, adding that it could have an impact on some of the European economies.
Talking on the FOMC meet mid-December, Hui says there is 100 percent probability of a rate hike by Fed.
Although a rising dollar has been negative for emerging markets, and has resulted in outflows, further outflows would depend on US policies by Trump government and how much stronger the US dollar will get.
The market is still picking up pace as the Nifty eyes 8200. The 50-share is up 63 points or 0.8 percent at 8189.90 while the Sensex is up 184.62 points or 0.7 percent at 26534.79.
Pharma stocks are underperforming while auto stocks are gaining. Maruti, M&M, GAIL, HDFC and Tata Motors are gainers while Sun Pharma, Lupin, HUL, Cipla and NTPC are losers in the Sensex.
Gold edged lower on Tuesday as the US dollar steadied, with markets on edge ahead of a meeting this week that could see oil producers curb output.
The dollar index, which measures the greenback against a basket of currencies, was steady at 101.390. Gold prices have fallen over USD 140 an ounce from their post-US election peak on Nov. 9 after a surge in US Treasury yields had sent the dollar to its highest in nearly 14 years.
10:58 am Poll: Tata Power, one of the largest power generation companies in the private sector, is expected to report a 39 percent growth in profit at Rs 344 crore, according to average of estimates of analysts polled by CNBC-TV18. The low base is likely to support bottomline.
Year-ago quarter numbers are likely to change due to new accounting standards.
Revenue is seen falling 19 percent year-on-year to Rs 7,729 crore while EBITDA (earnings before interest, tax, depreciation and amortisation) may slip 25 percent to Rs 1,862 crore and margin may contract 180 basis points to 24 percent in Q2.
10:42 am Rupee higher: The Indian rupee recovered further against the US dollar, rising 13 paise to 68.62 from previous settlement.
FIIs net sold Rs 16,793.36 crore worth of equity shares in November so far (till November 28), which is the highest selling since August 2015, when they had sold Rs 17,248.65 crore worth of shares.
10:35 am Market Update: Equity benchmarks extended rally in morning trade with the Sensex rising 220.86 points to 26571.03 and the Nifty climbing 67.60 points to 8194.50.
About 1620 shares advanced against 448 declining shares on the BSE.
10:25 am IPO: Sheela Foam, the maker of Sleepwell brand of mattresses, has received Rs 153 crore through anchor investors' portion on Monday.
The company has allotted 20,95,889 equity shares at Rs 730 per share to 14 anchor investors.
Anchor investors included leading international & domestic investors namely Fidelity, Goldman Sachs, East Spring, HDFC MF, SBI MF, ICICI Prudential AMC, Premji Investment, IDFC MF and Sundaram MF.
"In spite of challenging market environment, due to the on-going demonetisation scenario, the company saw spectacular response from anchor investors, who bade for more than 10-times the number of shares from the anchor book," the company said.
The Rs 510-crore public has opened for subscription today and will close on December 1. The price band for the issue is at Rs 680-730 a share.
10:15 am FII View: Gautam Chhaochharia, Head of India Research at UBS Securities, said that the longer India story remains intact. Demonetisation doesn't impair the economic trajectory in the long term. He said he is estimating a 3-6 month disruption which may have been priced in by many stocks already.
It is difficult to assess the impact on GDP rate owing to cash ban. ''It is difficult to take a linear view,'' he said, adding that he believes the GDP for this fiscal year could be about 6 percent, but it will go up to 8 percent because of base effect.
Nifty earnings growth in FY17 will be 5 percent, and 14 percent for FY18, he said.
FIIs have been net sellers in the last two weeks on buzz that the US Fed will hike rates and make borrowings expensive. Till a week ago, markets were EM driven, he said, admitting that over the last week India has been underperforming a bit.
10:00 am Market Check
Equity benchmarks retained early gains with the Nifty holding 8150 level, supported by banking & financials, auto, infra, oil and metals stocks. However, healthcare stocks were under pressure.
The 30-share BSE Sensex was up 114.15 points at 26464.32 and the 50-share NSE Nifty rose 37 points to 8163.90. The broader markets continued to outperform benchmarks as the BSE Midcap index was up 0.9 percent and Smallcap gained 1 percent on strong breadth.
About 1476 shares advanced against 390 declining shares on the exchange.
HDFC, Maruti Suzuki, Coal India, Reliance Industries, GAIL and Mahindra & Mahindra were top gainers among Sensex 30 stocks, up 1-2 percent whereas Infosys, Infosys, Lupin, Axis Bank, HUL and Cipla declined.
Japanese markets slipped in a mostly lower Asian trading session, despite the release of government data hinting at a stabilisation in domestic demand. The country's seasonally adjusted unemployment rate was steady in October at 3 percent, the same level as August.
9:55 am New IPO: As initial public open offer of India's first mattress company opens Tuesday, analysts seem to be a bit cautious about it.
The issue which will close on December 1 is planning to raise Rs 510 crore. The issue is priced at Rs 680-730 per share. The company is issuing 0.7-0.75 crore shares worth Rs 510 crore via offer for sale post which promoter stake is likely to be in range of 84.6-85.7 percent.
Angel Broking says that on its FY17's net profit of Rs 121 crore, the issue on its upper band is priced at price to earnings (PE) ratio of 27 times which is at par with consumer durable peers which have strong brand and higher B2C sales. However, it recommends subscribing the issue for medium to long term perspective but does not think the IPO will give any listing gains considering market conditions.
9:45 am FII view: Sanjay Mookim of Bank of America Merrill Lynch says the near-term impact of demonetisation is difficult to model.
He further says channel checks suggest sales are down between 30-50 percent but may now be slowly improving.
Cutting weights in consumer discretionary stocks as long as this uncertainty lasts should help, but investors should track demand trends for an opportunity to get back in, he feels.
Mookim says the conservative portfolio now would look to add utilities, telecom and oil marketing companies. A more balanced outlook would be to add also to pharma and quality banks.
9:30 am Market rises: The Sensex is up 114.45 points or 0.4 percent at 26464.62 and the Nifty is up 34.25 points or 0.4 percent at 8161.15. About 1170 shares have advanced, 279 shares declined, and 44 shares are unchanged.
Coal India, HDFC, Tata Steel, Reliance and ONGC are top gainers while Infosys, Hero MotoCorp, Axis Bank, NTPC and TCS are losers in the Sensex.
The market has opened flat as the Sensex is up 36.78 points or 0.1 percent at 26386.95. The Nifty is up 4.65 points or at 8131.55. About 418 shares have advanced, 101 shares declined, and 27 shares are unchanged.
Tata Steel, Adani Ports, Coal India, Sun Pharma and BHEL are top gainers while Hero MotoCorp, Infosys, Lupin, NTPC and Asian Paints are losers in the Sensex.
The Indian rupee opened higher by 3 paise at 68.73 per dollar versus previous close 68.76. The dollar edged down against a basket of major currencies on Monday, surrendering some gains after a sharp rally that followed Donald Trump's surprise victory in the US Presidential election.
The dollar had surged more than 4 percent against a basket of currencies in the wake of the election earlier this month - but has now retreated from its 14-year high.
Asia markets were mixed, taking cues from the US where a post-election rally appeared to stumble.
Traders also looked ahead to key global events set to take place this week, including a meeting on Wednesday between the world's largest oil producers, and the release of the US nonfarm payroll report on Friday.
Japanese shares were likely pressured by a slightly stronger yen, which traded at 111.94 against the dollar on Tuesday morning in Asia, climbing from levels near 113.00 in the previous week.
US stocks declined for their worst performance in nearly a month, weighed down by a pullback in the financial and consumer discretionary sectors as some investors booked profits on the heels of a record-setting week. US stocks have jumped since Donald Trump's victory in the presidential election, with the S&P 500 up nearly 3 percent, as investors expect his plans to boost infrastructure spending, cut corporate taxes and reduce regulation to benefit the economy.