Sensex, Nifty fall for 6th day; ITC, HDFC Bank, Infosys drag
21 December 2016
3:30 pm Market closing: Benchmark indices fell for the sixth consecutive session with the Sensex losing 65.60 points to 26242.38. The Nifty managed to hold 8050 level, falling 21.10 points to 8061.30.
About 1400 shares declined against 1176 advancing shares on the BSE.
Maruti Suzuki, Lupin, NTPC, M&M, ONGC, UltraTech Cement, Hindalco and Bank of Baroda gained 1-1.5 percent while Sun Pharma, ITC, TCS, Axis Bank, L&T, Bharti Infratel, Idea Cellular and Ambuja Cements fell 1-3 percent.
3:23 pm Wages Act: The Centre today decided to bring in an ordinance to amend the Payment of Wages Act for allowing business and industrial establishments to pay salaries through cheques or electronically.
"The Union Cabinet today approved the ordinance route to amend the Payment of Wages Act, 1936, to allow employers of certain industries to make payment through the electronic mode and cheques," a source said.
Employers will also have the option to pay wages in cash, the source added.
As per practice, the government introduces ordinance to amend laws for immediate implementation of new rules. An ordinance is valid for six months only. The government is required to get it passed in Parliament within that period.
The Payment of Wages (Amendment) Bill, 2016, seeks to amend Section 6 of the principal Act to enable employers to pay wages to employees through cheques or by crediting it to their bank accounts electronically.
3:15 pm Market Update: Equity benchmarks erased gains. The Sensex was down 76.31 points at 26231.67 and the Nifty fell 23.55 points to 8058.85.
About 1395 shares declined against 1141 advancing shares on the BSE.
3:01 pm Buzzing: Industrial gases maker Linde India shares touched a record high of Rs 413.90, up 16.55 percent intraday after its parent company and US competitor Praxair decided to merge into new holding company.
"Linde AG and Praxair Inc on Tuesday announced that the companies intend to combine in a merger of equals under a new holding company through an all-stock transaction," the German-based parent company said.
The companies have signed a non-binding term sheet and expect to execute a definitive business combination agreement as soon as practicable.
2:45 pm RBI rolls back norms: Under all-round attack, the Reserve Bank today did a U-turn on customers depositing demonetised notes over Rs 5,000 till December 30 by making it clear that there will be no questions asked either in case of one-time or repeat deposits if the accounts are KYC-compliant.
Such customers will also not be questioned by bank officials on why they had failed to deposit the old notes earlier.
The RBI turnaround came as Finance Minister Arun Jaitley's assurance on Monday night and yesterday that there will be no questions asked to customers who would make one-time deposit above Rs 5,000 failed to persuade bank officials who insisted that there should be fresh circular from RBI so that customers will not be harassed.
2:25 pm FII View: With regards to demonetistaion in India, Ruchir Sharma of Morgan Stanley says outside observers are surprised at the move because normally this kind of a step is undertaken when a country is in severe crisis like a financial one or inflation.
He says, if the move was to end corruption then one could have undertaken more organic steps to curb that because there is no developing economy in the world where corruption is not a major issue.
According to him, it is tough to understand the current situation in India and the impact of demonetistiaon on the gross domestic product (GDP) at the current stage. He says, most business people that he has met in India are talking about a 30 percent impact due to demonetistaion and are downgrading earnings for FY17.
So, it would be tough to see high earnings growth in FY18 too with so many economic disruptions, says Sharma.
2:00 pm Market Check
Equity benchmarks remained listless in afternoon trade with the Nifty hovering around 8100 level. European markets turned volatile after opening in red as German authorities ramped up their search for the person behind Monday's terrorist attack.
The 30-share BSE Sensex was up 45.89 points at 26353.87 and the 50-share NSE Nifty rose 14.25 points to 8096.65. The BSE Midcap and Smallcap indices gained 0.2-0.4 percent on positive breadth.
About 1276 shares advanced against 1161 declining shares on the Bombay Stock Exchange.
Asian markets ended mixed, losing some of the optimism spurred from the Dow hitting a new record close overnight just shy of the psychological 20,000 level.
Oil prices nudged higher on expectations of a US crude inventory draw, although trading activity was muted as markets start to wind down ahead of the Christmas weekend. US West Texas Intermediate crude oil futures were trading at USD 53.66 per barrel, up 0.68 percent from their last settlement. International Brent crude oil futures were at USD 55.76 a barrel, up 0.74 percent.
1:45 pm Europe opens: Markets in Europe started trading in the red after German authorities admitted the country suffered a terrorist attack.
The pan-European Stoxx 600 opened 0.32 percent lower.
German authorities continue searching for a suspect who drove a truck into a Christmas market in Berlin, killing 12 people on Monday afternoon.
1:25 pm FII View: If one were to look out for 2017, the momentum currently is with the developed markets and China still remains the biggest risk to the global economy is the word coming in from author and investor Ruchir Sharma.
"It takes a debt of USD 4 to create USD 1 GDP growth in China," says Sharma in an exclusive interview to CNBC-TV18's Shereen Bhan.
Most surveys indicate a sharp pullback for US economy, says Sharma, adding that with economic momentum returning to developed economies it could be negative for emerging markets. Moreover, with US talking about reducing corporate tax rate to as much as 15-20 percent could be a big negative for emerging markets because investors then would naturally flock to US market.
So if emerging market like India wants to attract capital then reducing corporate tax rate is very crucial. "India needs to match the corporate tax rate with the US," he adds. India will also have to reduce its dependence on external funding for growth.
1:00 pm Market Check
Benchmark indices remained volatile in afternoon trade with the Nifty hovering around 8100 level. Trading volume has been low since the start of the week as activity at FIIs desk slowed down due to Christmas vacation.
The 30-share BSE Sensex rose 64.52 points to 26372.50 and the 50-share NSE Nifty gained 16.60 points at 8099.
Saurabh Mukherjea of Ambit Capital says FII outflows will continue to present a bad picture for the Indian market and market may correct by 10-15 percent in 3-6 months if domestic institutional investors (DIIs) sell off.
He says the December month is turning out to be the worst as large amount of old notes are now gone.
HDFC, ICICI Bank, Mahindra & Mahindra, Infosys, ONGC, SBI and NTPC were up 0.8-1.8 percent while ITC, TCS, HDFC Bank, Sun Pharma, Tata Motors and L&T fell 0.4-1.6 percent.
12:40 pm Tower sale deal: Shares of Reliance Communications, the Anil Dhirubhai Ambani Group company, rallied nearly 10 percent intraday after signing binding agreement with the US asset management company to sell tower business.
It will receive an upfront cash payment of Rs 11,000 crore (USD 1.6 billion) on completion of the transaction, which will be solely used for debt reduction.
12:15 pm Interview: Need to appoint more distributors and enrol more outlets in coming days, says Abhishek Singh, Director of Manpasand Beverages.
Manpasand Beverages pays their retailers a margin of 5-7 percent more than the competitors, said Singh.
Speaking to CNBC-TV18, he said that they faced problems due to demonetisation for the first 10-15 days.
He further said that the company will set up four new plants, which will be operational in the next 18 months.
However, we will maintain margins and sales growth at current levels, he said.
12:00 pm Market Check
The market remained rangebound in noon trade with the Sensex moving in a 80 points range due to lack of global as well as domestic cues. However, the rupee recovered further, rising 16 paise to 67.86 against the US dollar.
The 30-share BSE Sensex gained 42.42 points at 26350.40 and the 50-share NSE Nifty rose 12.00 points to 8094.40.
Reliance Industries, HDFC, Sun Pharma, Yes Bank, Welspun Corp, Indiabulls Housing, Kushal Trade, Coffee Day and Bharat Financial were most active shares on exchanges.
Reliance Communications was the biggest midcap gainer, up nearly 9 percent on hope of likely announcement of tower sale deal with US asset management company Brookfield this week, which will help the company pare its debt.
Among other midcaps, Reliance Power, M&M Financial, Adani Power and Torrent Pharma climbed 2-3 percent while CRISIL, Petronet LNG, Shriram City, Pidilite Industries and Bharat Forge lost 1-3 percent.
11:25 am Market Expert: Saurabh Mukherjea of Ambit Capital shook the world when he said it is contracting gross domestic product (GDP) for the current year and now he says the evidence that emerged in the last few days validates the point that the economy is under pressure.
He said, the economy will barely grow in the second half of this fiscal year and our FY18 growth estimate of 5.8 percent looks to be under pressure.
He said that there is pressure on banking and financial stocks and all near-term targets on the market have been scrapped.
The situation is tricky for foreign instituional investors (FIIs) after the election of Donanld Trump as US president.
Mukherjea says FII outflows will continue to present a bad picture for the Indian market and market may correct by 10-15 percent in 3-6 months if domestic instituional investors (DIIs) sell off.
11:00 am Market Check
Equity benchmarks remained volatile in morning trade with the Nifty hovering around 8100. Asian peers except Nikkei continued to trade higher, following the positive lead from Wall Street that hit record high.
The 30-share BSE Sensex gained 43.07 points at 26351.05 and the 50-share NSE Nifty rose 11.75 points to 8094.15 while the broader markets marginally outperformed benchmarks. About 1188 shares advanced against 828 declining shares on the BSE.
Japan's benchmark Nikkei 225 turned lower by 0.3 percent after hitting a one-year high earlier while China's Shanghai, Hong Kong's Hang Seng and Australia's ASX 200 gained 0.4-1 percent.
Gold rose, reversing earlier losses, as the US dollar edged slightly lower from 14-year highs touched the previous day. Spot gold was up 0.3 percent at USD 1,137.1 an ounce. It fell 0.6 percent in the previous session.
10:42 am Buzzing: Shares of Reliance Communications, the Anil Dhirubhai Ambani Group company, rallied nearly 5 percent intraday on hope of likely announcement of tower sale deal with US asset management company this week.
According to CNBC-TV18 report quoting unnamed sources, the telecom operator is expected to sell 100 percent stake in the tower arm to Brookfield, the US-based asset management company.
It is likely to announce this deal this week. It is likely to get upfront payment of Rs 11,000 crore and may get close to Rs 9,000 crore over 3-5 years depending on performance, sources say.
The deal for which a non-binding term sheet was signed by the two parties in October, will help Reliance Communications pare its debt.
10:25 am FDI meet: Inter-ministerial body FIPB will consider 17 foreign investment proposals on December 28, including that of Sanofi Synthelabo India Pvt Ltd, Star Den Media Services and Gland Pharma Ltd.
The Foreign Investment Promotion Board (FIPB), headed by Economic Affairs Secretary Shaktikanta Das, is scheduled to meet on December 28. As many as 17 proposals are on the agenda, the Finance Ministry said in a meeting notice.
Other investment proposals on the table include those of Flag Telecom Singapore Pte Ltd, Idea Cellular Infrastructure Services, You Broadband India and AMP Solar India Pvt Ltd.
India allows FDI in most sectors through the automatic route, but in certain segments considered sensitive for the economy and security, the proposals have to be first cleared by FIPB.
10:00 am Market Check
Benchmark indices as well as broader markets continued to consolidate amid low volumes at FIIs desk. Banking & financials and telecom stocks gained while FMCG and infra stocks were under pressure.
The 30-share BSE Sensex rose 38.54 points to 26346.52 and the 50-share NSE Nifty gained 8.30 points at 8090.70 amid consolidation. The market breadth was positive as about 1071 shares advanced against 754 declining shares on the BSE.
HDFC, Infosys, ICICI Bank, SBI and Axis Bank continued to support the market while TCS, ITC, HDFC Bank, Tata Motors and L&T were under pressure.
Datamatics Global Services shares rallied 8 percent after Insync Capital, wherein Rakesh Jhunjhunwala is a partner, bought 2.95 lakh shares of the company.
Oil prices nudged higher on expectations of a US crude inventory draw, although trading activity was muted as markets start to wind down ahead of the Christmas weekend. US West Texas Intermediate crude oil futures were trading at USD 53.49 per barrel, up 0.36 percent from their last settlement. International Brent crude oil futures were at USD 55.52 a barrel, up 0.31 percent.
9:40 am FII View: Gurvinder Brar of Macquarie Capital says the brokerage house supported the ongoing value rally and thinks it will persist in 2017.
Equity markets will continue to be driven by policy/political events, which increases uncertainty of any predictions.
Investors should not be surprised to see a multi-year value rally if the economic momentum continues to surprise on the upside and gets reflected in improving earnings outlook, he says.
Previous cycles show this is possible and attractive valuations suggest scope for a further uplift, he feels.
9:25 am UBS on PFC & REC: UBS says Power Finance Corporation and Rural Electrification Corporation look inexpensive, with healthy return on equities & over 5 percent dividend yields.
The brokerage house has increased target price on PFC to Rs 150 from Rs 145 and raised target on REC to Rs 165 from Rs 145.
9:15 am Market Check:
Equity benchmarks rebounded in opening trade with the Nifty reclaiming 8100 level, supported by positive global cues. Banking & financials, auto, select technology and infra stocks gained.
The 30-share BSE Sensex was up 82.73 points at 26390.71 and the 50-share NSE Nifty rose 25.35 points to 8107.75.
HDFC, Infosys, ICICI Bank, L&T, Sun Pharma and SBI were leading contributors to Sensex's gains while TCS, ITC, HDFC Bank and HUL were under pressure.
The Indian rupee recovered in early trade today after hitting 68 against the US dollar in previous session. The dollar yesterday traded near its 14-year high on hopes of better US growth going ahead and a fastest pace of rate increases in 2017.
It has opened higher by 10 paise at 67.93 per dollar versus 68.03 Tuesday.
Pramit Brahmbhatt of Veracity says despite yesterday's dollar gain, recovery in the rupee can be expected as 68-68.20/dollar is a crucial support level.
The trading range for the spot USD-INR is seen between 67.70-68.20/dollar, according to him.
Dollar held strong above 103 mark after Federal Reserve Chair Janet Yellen's comments about the labor market reinforced the notion of a faster pace of US interest rate hikes next year than had been expected.
Asian markets were higher today, after the Dow hitting a new record close overnight just shy of the psychological 20,000 level.
US equities touched record highs on Tuesday and the dollar rose to its highest level in 14 years as markets shrugged off risk aversion and continued the rally that has elevated Wall Street since Election Day.