Nifty ends at 8102, Sensex falls, banks crack post RBI policy

3:30 pm Market closing: After a tumultous ride, the market has ended in red. The Sensex was down 155.89 points or 0.6 percent at 26236.87, and the Nifty down 41.10 points or 0.5 percent at 8102.05. About 1106 shares advanced, 1501 shares declined, and 176 shares were unchanged.

Banks were knocked off after Reserve Bank of India, in a surprise move, kept key interest rates unchanged. HDFC Bank, SBI, ICICI Bank and Axis Bank are losers among bank stocks. Bankex lost over 1 percent at closing.

Sun Pharma, Lupin and TCS were losers in the Sensex while Adani Ports, HDFC, Tata Motors and M&M were gainers.

3:15 pm On Inflation RBI says:

  • Due to abrupt compression of demand In Nov, fall in price of perishables will become available in the reading in December (Nov CPI)
  • Prices of wheat, gram and sugar have been firming up
  • Discretionary spending on goods and services in CPI (ex of food and fuel) which is 16 percent of CPI could be impacted by restricted access to cash
  • Prices of housing, fuel and light, health, transport communication, pan, tobacco, intoxicants and education which is 38 percent of CPI may remain largely unaffected
  • Base effects expected to reverse and turn unfavourable in Dec and Feb
  • If usual winter moderation in food prices does not materialise then food inflation pressures could re-emerge
  • With OPEC's agreement to cut production crude prices may firm up in coming months
  • Withdrawal of specified bank notes (SBNs) could result in possible temporary reduction in inflation of the order of 10-15 bps in Q3
  • Fuller effects of house rent allowances under 7th CPC yet to be assessed and not been reckoned in this baseline inflation path

3:10 pm Governor Urjit Patel says:

  • Inflation outcome in Sep, Oct vindicates current stance
  • 7th Pay Commission salaries have not been disruptive to inflation outcome
  • Core inflation assumes critical importance in policy
  • MPC felt further reduction in policy rate not warranted
  • Government has pro-actively responded with increasing mss limit to Rs 6 lakh crore
  • Banks will not have to keep additional CRR from Dec 10, 2016

3:05 pm Bank stocks: HDFC Bank, ICICI Bank, SBI and Axis Bank are down over 1 percent.

3:00 pm Market Update: Equity benchmarks remained under pressure with the Sensex falling 146.17 points to 26246.59 and the Nifty down 38.30 points at 8104.85 after the unexpected outcome of RBI MPC.

About 1490 shares declined against 1045 advancing shares on the BSE.

2:50 pm Deomonetisation: RBI says Rs 11 lakh crore of old notes (Rs 500 and Rs 1,000) have come back into the system so far.

Demonetisation may bring down CPI by 10-15 basis points in October-December quarter. Oil price and financial market turbulence are risk to March 2017 CPI target.

2:45 pm Fed policy eyed: This bi-monthly review is set against the backdrop of heightened uncertainty. Globally, the imminent tightening of monetary policy in the US is triggering bouts of high volatility in financial markets, with the possibility of large spillovers that could have macroeconomic implications for EMEs, RBI says.

2:40 pm Incremental CRR to be withdrawn: With the enhancement in the ceiling for issue of securities under the Market Stabilisation Scheme (MSS) to Rs  6 lakh crore, it has been decided to withdraw the incremental CRR effective the fortnight beginning December 10, 2016, RBI says.

 The liquidity released by the discontinuation of the incremental CRR would be absorbed by a mix of MSS issuances and liquidity adjustment facility (LAF) operations, it says.

On November 26, 2016 the Reserve Bank had announced an incremental cash reserve ratio (CRR) of 100 per cent of the increase in net demand and time liabilities (NDTL) of scheduled banks between September 16, 2016 and November 11, 2016 effective the fortnight beginning November 26, 2016. It was intended to absorb a part of the large increase in liquidity in the system following the withdrawal of the legal tender status of ? 500 and ? 1,000 denomination bank notes. It was also indicated that the incremental CRR was purely a temporary measure and that it would be reviewed on December 9, 2016 or even earlier.

2:36 pm RBI cuts GVA estimates: RBI says incorporating the expected loss of growth momentum in Q3 and waning effects in Q4 alongside the boost to consumption demand from higher agricultural output and the implementation of the 7th CPC award, GVA growth for 2016-17 is revised down from 7.6 percent to 7.1 percent, with evenly balanced risks.

2:33 pm Market Update: Equity benchmarks fell sharply after the RBI kept all policy rates unchanged, which was completed unexpected by the street.

The Sensex was down 201.29 points at 26191.47 and the Nifty down 62.70 points at 8080.45. About 1341 shares declined against 1163 advancing shares on the BSE.

2:30 pm RBI policy decision: The Reserve Bank of India kept policy rates unchanged.

"On the basis of an assessment of the current and evolving macroeconomic
situation, the Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25 percent," the RBI said in its release.

Consequently, the reverse repo rate under the LAF remained unchanged at
5.75 percent, and the marginal standing facility (MSF) rate and the Bank Rate at
6.75 percent.

The RBI said the decision of the MPC was consistent with an accommodative stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 percent by Q4 of 2016-17 and the medium-term target of 4 percent within a band of +/- 2 per cent, while supporting growth.

2:25 pm US policy impact on India: India with a large domestic economy will be less affected by changes in growth and monetary policy in the new set-up under Donald Trump administration, S&P Global Ratings said today.

In a report on effect of Trump's victory in the presidential elections on Asia-Pacific economies, S&P said many key US policies under the new administration remain undefined, leading to unusual uncertainty around the baseline outlook.

"The effect of changes in the US growth and monetary policy on Asia's trade and general financial market confidence, whether positive or negative, will be greater on smaller and more open economies of the region," S&P Global Ratings' Asia-Pacific Chief Economist Paul Gruenwald said.

"Countries with large domestic economies -- China, Japan, India and Indonesia -- will be less affected." S&P said it will have to wait until Trump's economic team is in place and its policy intentions become clearer before firming up its view on the effect and the associated risks on the Asia-Pacific.

2:15 pm Europe Update: European stocks were higher as investors shifted their focus to an upcoming meeting of the European Central Bank (ECB), where they expect further monetary stimulus to be announced.

France's CAC, Germany's DAX and Britain's FTSE gained around a percent each.

2:00 pm Market Check
Equity benchmarks extended gains in afternoon trade with the Nifty inching towards 8200 on hopes of rate cut by Reserve Bank of India. Banking & financials and auto stocks continued to lead the market higher.

A 25 basis points cut in repo rate seems already priced in by the market. If the RBI cuts repo rate by 50 basis points then the rally is likely to extend.

Shankar Sharma of First Global says he expects the RBI to cut repo rate by 50 basis points to 5.75 percent today but it is unlikely to make any comments on growth outlook.

The 30-share BSE Sensex was up 105.61 points at 26498.37 and the 50-share NSE Nifty rose 36.30 points to 8179.45. About 1403 shares advanced against 1067 declining shares on the BSE.

HDFC jumped 2.5 percent followed by ICICI Bank, Tata Motors, SBI and M&M with 1-1.5 percent upside. However, Sun Pharma tanked 5.5 percent on the company confirmed that USFDA issued Form 483 for Halol plant post inspection.

1:55 pm Exclusive: Brookfield has backed out of the race to buy stake in Bharti Infratel, sources say. Post the end of exclusivity period, Brookfield will exit the deal.

Quoting sources, CNBC-TV18 says that KKR and CPPIB combined are the sole contenders now and are interested in buying majority stake in Bharti Infratel.

The deal is likely to value Bharti Infratel at market capital of Rs 70,000 crore.

Bharti Airtel, which owns 7.196 percent in the company, is still evaluating the majority versus minority stake sale strategy. Airtel has got the board's approval to sell the stake already.

1:45 pm European market: European stocks opened higher as investors shift their focus to an upcoming meeting of the European Central Bank, where they expect further monetary stimulus to be announced.

The Stoxx 600 started 0.26 percent higher with most sectors trading in the green.

Credit Suisse has lowered its 2018 pre-tax income targets for its Asia Pacific and international wealth management divisions. It also reported on Wednesday more than 1 billion Swiss francs (USD 0.99 billion) in extra cost cuts, according to Reuters.c

Data released in Germany showed the country's industrial production recovering only marginally in October, increasing by 0.3 percent on the month. It was up by 1.2 percent on the year.

1:30 pm New government funds: Government today sought the approval of the Lok Sabha for gross additional expenditure of Rs 59,978.29 crore as part of the Second Batch of Supplementary Demands for Grants for the fiscal 2016-17.

Presenting a statement showing the supplementary Demands for Grants in the House, Finance Minister Arun Jaitley said of the total of Rs 59,978.29 crore, the net cash outgo would aggregate to Rs 35,171.92 crore.

The rest would be matched by savings of the ministries and departments or by enhanced receipts or recoveries aggregating to Rs 24,805.34 crore.

As per the document tabled in the House, Rs 3,096.28 crore has been sought for transfer of Krishi Kalyan Cess to Krishi Kalyan Kosh and meeting additional requirement towards general component, special component of Schedule Cast and Tribal Sub-Plan under Pradhan Mantri Fasal Bima Yojna of the Ministry of Agriculture and Farmers Welfare.

The market is surging ahead of Reserve Bank of India monetary policy. The Sensex is up 119.84 points or 0.4 percent at 26512.60 and the Nifty is up 38.35 points or 0.5 percent at 8181.50. About 1461 shares have advanced, 993 shares declined, and 138 shares are unchanged.

HDFC, Adani Ports, M&M, Tata Motors and Hero MotoCorp are top gainer in the Sensex while Sun Pharma, TCS, Lupin, Tata Steel and GAIL are losers in the Sensex.

The stock market is now taking a pause following the correction that was recently seen. It is wading through various events like referendum in Italy, RBI policy meet and US Federal Reserve's meet this month, says noted commentator Udayan Mukherjee.

Support for Nifty is currently at 7800-7900, he says, adding, Bank Nifty so far has been supportive. A 25 basis cut interest rate cut is priced in for today's policy meet. A 50 bps cut could push up market a bit to 8250-8300 level.

However, Mukherjee believes private capex is unlikely to improve even with a 25 or 50 bps cut.

12:59 pm Market Update: Benchmark indices continued to gain with the Sensex rising 74.61 points to 26467.37 and the Nifty up 28 points at 8171.15.

About 1408 shares advanced against 992 declining shares on the BSE.

12:45 pm Tractors sales: Tractor maker Sonalika ITL today reported a 32 percent growth in its exports in November this year.

The company exported 1,059 units in November this year as against 800 in the same month last year, Sonalika ITL said in a statement.

Sonalika ITL Managing Director Deepak Mittal said: "During this time, we have made successful inroads into most developed tractor markets of the world and have added seven lakh customers to our company since inception." He added: "Seeing interest of many countries towards agriculture mechanisation, the company firmly believes that future will further fuel the growth in the export market."

 In April-November, the company said it registered a growth of 20 percent in exports at 8,121 units as against 6,739 in the year-ago period.

12:31 pm Swap deals: A unit of ONGC is in early talks with Gazprom for supply of natural gas through a complex swap involving Russia, China and Myanmar, the head of the unit said.

The unit, ONGC Videsh, and two other state companies, GAIL and Engineers India, first discussed the idea with Gazprom a few months ago, said Narendra K Verma, ONGC Videsh's managing director.

"Myanmar is sending gas to China through an existing pipeline ... if Russia can provide equivalent gas to China, then we can reverse the flow of gas from Myanmar to China and bring that gas to India," Verma told reporters on the sidelines of India's Petrotech energy conference.

"For that we'll need a pipeline from Myanmar to India."

He said this was the best way of getting Russia to help India with its gas needs, but would need the cooperation of China and Myanmar.

12:20 pm Partnership: Multiplex chain operator PVR has partnered with South Korea's CJ 4DPLEX to add another 10 4DX screens to its network in major cities like Bengaluru and Mumbai.

The company today signed an agreement with CJ 4DPLEX to add ten more 4DX screens at 'CineAsia 2016' in Hong Kong, PVR said in a statement.

PVR had launched its first 4DX site theatre in New Delhi in March 2016 in partnership with CJ 4DPLEX.

"Through this roll-out agreement, PVR cinemas will retain its position as the largest provider of 4DX in India with 11 theatres. The new roll-out includes installation of 4DX in PVR Cinemas' highest grossing theatres in prime PVR locations in Bangalore and Mumbai," the statement said.

The 4DX features include motion, wind, lightning, vibration, fog, rain, snow, rainstorm and scents. It also offers a complete visual, aural, olfactory and tactile experience to cinema viewing.

12:00 pm Market Check: The market retained its positive trend in noon trade with a range of 20 points on the Nifty. Banks and auto continued to support the equity benchmarks ahead of the outcome of RBI monetary policy committee meeting that will be announced around 2:30 PM IST.

Economists largely expect a 25bps cut in repo rate after considering October CPI inflation that fell to 4.2 percent from 4.39 percent in September. RBI commentary will also be closely watched, especially after currency demonetisation.

The 30-share BSE Sensex was up 54.86 points at 26447.62 and the 50-share NSE Nifty gained 21.60 points at 8164.75 while the broader markets advanced 0.3 percent as about 1358 shares advanced against 888 declining shares on the BSE.

Eicher Motors, BPCL, Adani Ports, Idea Cellular, HDFC, Hero Motocorp, M&M and Tata Motors were top gainers, up 1-2.6 percent while Sun Pharma plunged 4 percent on USFDA concerns.

Asian shares were mostly higher, with Australia shrugging off weak GDP and Japan's benchmark index up on a Trump announcement that saw SoftBank shares gain smartly. Japan's Nikkei, China's Shanghai, Hong Kong's Hang Seng, Australia's ASX 200 and South Korea's Kospi gained 0.2-1 percent.

11:45 am Fund raising: Private sector lender ICICI Bank said it proposes to raise funds through bonds in the next three months to fund business expansion.

It did not specify the amount to be raised through the bonds.

In a regulatory filing, it said the bank proposes "fund raising in single or multiple tranches in any currency through public or private placement by way of issuances of debt instruments for remaining period of 2016-17".

The board of the bank will meet on December 9 to take a call on fund raising, it added.

11:30 am Market outlook: Indian stock and long bond markets are currently trading at similar yields -- around 15 times price-to-earnings for stocks, translating into 6 percent earnings yield, which is roughly the same yield on the 10-year, says Ridham Desai Head of India Equity Research & India Equity Strategist at Morgan Stanley. In an interview with CNBC-TV18, Desai said that given the current state of valuations, if one were bullish on bonds and bearish on equities, "now is the time to make the switch." Although it is tough to predict the precise impact of demonetisation alone, in combination with other measures like the GST, it will aid in formalising the economy over the next 4-5 years and eventually have a positive fiscal impact, he says. He feels that while corporate earnings momentum has been set back by couple of quarters due to demonetisation, stock prices have turned more attractive than they were 2 months ago thanks to the 7-8 percent correction seen.

The market is still steady with the Nifty above 8150 comfortably. The 50-share index is up 23.25 points or 0.3 percent at 8166.40 and the Sensex is up 62.87 points or 0.2 percent at 26455.63. About 1343 shares have advanced, 760 shares declined, and 118 shares are unchanged.

Adani Ports, HDFC, Hero MotoCorp, NTPC and Bharti are top gainers while Sun Pharma, TCS, ITC, Lupin and Dr Reddy's Labs are losers in the Sensex.

Meanwhile, a Reuters Poll showed the Sensex is expected to rise next year but it may not scale record highs predicted a few months back mainly because Prime Minister Narendra Modi's shock currency ban is seen knocking economic growth in the next few quarters.

Indian shares fell over 6 percent a day after the November 8 announcement by Modi outlawing high-value bank notes, coinciding with a shakeout in global financial markets after Donald Trump's victory in the US presidential election.

10:59 am Market Update: The Sensex was up 40.25 points at 26433.01 and the Nifty gained 17.55 points at 8160.70. The market breadth remained positive as about 1327 shares advanced against 737 declining shares on the BSE.

10:55 am Interview: Hit by demonetisation Indian textile major Raymond has seen 30 percent decline in demand over 3-4 weeks, said CEO Sanjay Behl.

In an interview with CNBC-TV18, he pointed out that demand is improving gradually as liquidity gets restored at all levels.

However, the company's Rs 280-crore capex might have to be deferred. The new Amravati plant will be on hold due to liquidity requirement, he said.

10:32 am Buzzing: Sun Pharmaceutical Industries shares plunged 4.5 percent intraday Wednesday as brokerage house IIFL said the US health regulator has issued 14-page 483 observation letter after the inspection of Halol unit, Gujarat.

The US Food and Drug Administration has completed inspection of the plant on December 1, 2016.

With having a buy call on the stock, the brokerage house says it doesn't know the contents of the observations yet and it is also difficult at this point to ascertain the severity of the 483 Form.

According to the firm, 483 letter is expected to available in a couple of days.

10:20 am Sensex expectations: Sensex is expected to rise next year but it may not scale record highs predicted a few months back, a Reuters Poll showed, mainly because Prime Minister Narendra Modi's shock currency ban is seen knocking economic growth in the next few quarters.

Indian shares fell over 6 percent a day after the November 8 announcement by Modi outlawing high-value bank notes, coinciding with a shakeout in global financial markets after Donald Trump's victory in the US presidential election.

"What demonetisation did from an equities perspective is it added to an already lengthy list of risks, such as a impending Fed rate hike, Trump's win, corporate earnings slowdown and investor flight to higher-yielding assets," said CA Rudramurthy, managing director at Vachana Investments.

While there are concerns Modi's demonetization drive, aimed at curbing corruption and tax evasion, will put the brakes on the economy, a more immediate risk is its impact on foreign investors who have already begun moving out of the country.

In November alone, foreign investors sold nearly USD 3 billion worth of Indian stocks - a trend that could extend in a milder form until a sufficient amount of cash seeps through the economy and rekindles consumer demand, analysts said.

10:00 am Market Check
Equity benchmarks continued to trade higher with moderate gains ahead of the outcome of monetary policy committee. All economists say they expect the RBI to cut repo rate by 25 basis points but if more than that comes then that would be bonus points.

"Against the backdrop of the current economic scenario, particularly the impact of the recent demonetization of high denomination currency in India, our expectation is that there would be a rate cut of 25 bps tomorrow. Also we expect another 25 bps rate cut for the remaining fiscal," CARE Ratings said.

The 30-share BSE Sensex was up 46.10 points at 26438.86 and the 50-share NSE Nifty rose 15.50 points to 8158.65 while the broader markets marginally outperformed benchmarks. About two shares advanced for every share falling on the Bombay Stock Exchange.

Banks and auto stocks supported the market on hopes that the policy is likely to be on expected lines. HDFC gained for the second consecutive session, up 1 percent followed by HDFC Bank, ICICI Bank, SBI and Maruti Suzuki.

Sun Pharma extended losses as the day progressed, falling 4 percent. TCS, ITC, Axis Bank, Lupin and Dr Reddy's Labs were other losers.

9:55 am NEw IPO: Marketplace firm ShopClues is looking to garner sales worth around USD 2 billion on its platform in 2017 and plans to file for public share listing at Nasdaq by September next year.

"With last investment round in January, ShopClues is valued at around Rs 7,100 crore. We were earlier expecting gross merchandise volume of USD 2.3-2.5 billion in 2017 but due to demonetisation, we expect our topline to be around USD 2 billion," ShopClues CEO and co-founder Sanjay Sethi told reporters here.

On plans to go for public listing, Sethi said, "We expect to file our documents with Nasdaq for listing by September 2017 but the IPO will depend on market condition." He further said the customer traffic on its platform has fallen 30 per cent after the scrapping of old Rs 500 and Rs 1,000 notes by the government on November 8.

9:45 am RBI policy preview: Global uncertainties will restrain the Reserve Bank to announce only a 0.25 percent reduction in policy rates today but there could be more loosening in the future, analysts said.

A majority of analysts and bankers are expecting RBI Governor Urjit Patel-led Monetary Policy Committee (MPC) to cut rates by 0.25 percent today, with some expecting a 0.50 percent reduction.

 "Even as inflation remains in a comfortable territory of around 4 percent (March-end forecast of 4.6 percent), the RBI could hold back on cutting the policy rate by a considerable margin," HDFC Bank said in a note.

9:30 am FII view: Manish Nigam of Credit Suisse says driven by some unexpected happenings in November like India's demonetisation drive and the US election results, he made several changes to the focus list.

He has reduced exposure to India in Asia ex-Japan Focus List by removing ICICI Bank and L&T from the list while HDFC Bank, LIC Housing and Tata Motors remain in the list.

The market has opened steady ahead of RBI monetary policy review. The Sensex is up 71.33 points or 0.3 percent at 26464.09 and the Nifty is up 25.25 points or 0.3 percent at 8168.40. About 213 shares have advanced, 30 shares declined, and 10 shares are unchanged.

Bajaj Auto, SBI, Adani Ports, Maruti and HDFC are top gainers while Sun Pharma, TCS, Coal India, Dr Reddy's and Tata Motors are losers in the Sensex.

The Indian rupee opened marginally higher at 67.84 per dollar on Wednesday versus previous close 67.90.

NS Venkatesh of Lakshmi Vilas Bank said, "The rupee gained considerably against the USD yesterday on account of dollar selling by exporters and custodial banks. A deeper than expected rate cut may take the rupee lower today."

The euro held slightly below three week highs against the US dollar as investors waited on tomorrow's highly anticipated European Central Bank meeting. The dollar index rises after dropping to its lowest levels since November 15.

Meanwhile, global cues are firm as Asian shares edged up as investors covered short positions in European equities as they pondered the ramifications of Italy's referendum and looked to the upcoming policy meeting of the European Central Bank.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent while Japan's Nikkei gained 0.4 percent.

The Australian market rose despite the data showing the economy contracted in the third quarter. While rate futures imply scant chance of another rate cut in the next few months, all thought of a hike has also vanished. The MSCI's broadest gauge of the world's stock markets rose to its highest level in almost two months.

Wall Street climbed as telecom stalwarts AT&T and Verizon gained and bank shares added to their torrid post-election rally, helping the Dow set another record closing high.

The S&P financial sector rose nearly 1 percent, lifted by a 2.2 percent gain for Wells Fargo. The bank's chief executive told an investor conference it will see a near-term profit hit because of the sharp rise in interest rates, but will benefit in the longer term from rising rates.