Sensex 318 points, Nifty below 11,600; Yes Bank tanks 13%
18 July 2019
Nifty Closes Below 11,600
Benchmark indices fell sharply in late trade as US-China trade worries dragged global peers. All sectoral indices ended in red with PSU Bank, Auto and Metal falling 2.5-3 percent.
The BSE Sensex was down 318.18 points at 38,897.46 and the Nifty50 fell 90.60 points to 11,596.90. More than two shares declined for every share rising on the BSE.
The broader markets fell more than benchmark indices as the Nifty Midcap was down 1.7 percent and Smallcap index 1 percent.
European stocks traded lower as investors digest fresh corporate results and keep a close watch on global trade developments.
France's CAC and Britain's FTSE were down half a percent while Germany's DAX declined 0.8 percent.
Sensex Holds 39,000 Amid Pressure:
Benchmark indices continued to trade in negative terrain in afternoon, dragged by auto, metals and select banks stocks.
The BSE Sensex was down 129.33 points at 39,086.31 and the Nifty50 fell 41.90 points to 11,645.60 while the Nifty Midcap index slipped 1.5 percent.
The market breadth remained in favour of bears as more than two shares declined for every share rising on the BSE.
Monsoon Rains Below Average in Past Week
India's monsoon rains were 20 percent below average in the week ending on July 17, the weather office said, as summer showers turned patchy over the central, western and southern parts of the country, raising concerns over the progress of crop plantings.
Overall, India has received 16 percent below average rain since the monsoon season began on June 1.
Monsoon rains are crucial for farm output and economic growth in India, where about 55 percent of all arable land is reliant on rainfall and the farm sector employs nearly half of the country's 1.3 billion people.
Gold Retreats From Two-Week Peak
Gold prices pulled back from a two-week high to trade lower, as some investors took advantage of the last session's gain to book profits.
US gold futures edged 0.1 percent lower to $1,421.60 an ounce. Source: Reuters.
Sensex Under Pressure:
Benchmark indices continued to reel under selling pressure with the Sensex falling 125.76 points to 39,089.88 and the Nifty declining 41 points to 11,646.50.
About two shares declined for every share rising on the BSE.
If the index manages to sustain above the 11,700 mark, then it could continue this pullback move towards the recent gap area of 11,770-11,800 which also coincides with the 61.8 percent retracement of the recent corrective move. On the flipside, the immediate support is placed around 11,530," said Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel Broking who advised traders to continue to trade with a stock specific approach and trade with a proper risk management strategy.
Benchmark indices were trading in the negative, with Sensex down over 80 points, while Nifty was above 11,650 levels.
Sensex was down 79.68 points or 0.20 percent at 39,135.96, and the Nifty was down 25.50 points or 0.22 percent at 11662. About 685 shares have advanced, 1213 shares declined, and 109 shares are unchanged.
HDFC, Bajaj Finance, Wipro were the biggest gainers, while Yes Bank, Vedanta and Tata Motors were the top losers.
On the sectoral front, all but financial services, FMCG and media stocks were trading in the red. Financial services stocks were the top gainers, up 0.47 percent on Nifty, while metal stocks were the biggest losers, down 1.76 percent.
MindTree Plunges 10%
MindTree fell more than 10 percent intraday to hit a fresh 52-week low of Rs 675.05 on the BSE on Thursday after the midcap IT company disappointed the Street by reporting more than 50 percent sequential fall in profit as well as operating income for the quarter ended June 2019, partly impacted by the transition to Ind AS 116.
Most global brokerage firms maintained their rating on MindTree but slashed its target price to Rs 670 post June quarter results.
BNP Paribas which maintained its Reduce call on MindTree slashed its target price to Rs 670 from Rs 810 earlier. FY20 outlook was lowered to factor in uncertainty.
Punjab & Sind Bank Dips 6%
Punjab & Sind Bank shares fell 6 percent intraday after reporting fraud by Bhushan Power & Steel to Reserve Bank of India.
"On the basis of Forensic Audit Investigation findings and CBI filing FIR, on suo moto basis, against the Bhushan Power & Steel and its directors, alleging diversion of funds from banking system, a fraud of Rs 238.30 crore is being reported by bank to RBI," the lender said in its BSE filing.
In the accounts of the company (BPSL), bank has already made provisions amounting to Rs 189.35 crore, as per prescribed prudential norms, it added.
Technical Market Outlook
"Going ahead, as the Nifty is maintaining higher high and higher low on the daily chart, we expect it to extend the current pullback towards 11,800 levels, as it is the confluence of the 61.8 percent retracement of previous decline (11,982–11,461) and the negative gap on July 8 placed at 11,811-11,772 levels," Dharmesh Shah of ICICI Direct said.
Going ahead, he advises investors to stick to quality stock as we sail through Q1FY20 earnings season.
L&T Bags Order
L&T said L&T Hydrocarbon Engineering has been awarded another mega project in the Marjan Field by Saudi Aramco.
The project scope for oil facilities for the Marjan Incremental Development Project consists of four tie-in platforms, one tie platform module, nine production deck modules (wellhead decks), 217 kilometers of subsea pipelines across 25 segments, and 145 kilometers of subsea cables across 16 segments. It also includes the replacement of existing control gears at eight existing SA Offshore platforms and tie-in to existing systems, it added.
Oriental Veneer Products in Action
Company said its subsidiary Oriental Foundry Private Limited achieved another milestone by receiving approval from Government of India-Ministry of Railways Research Designs & Standards Organisation, Lucknow, for its prototype product BOXHNL Wagons.
The company will be in process to produce and complete the delivery of wagons to Indian Railways, it added.
The rupee appreciated marginally by 3 paise to 68.78 against the US dollar, driven by weakening of the US dollar vis-a-vis other currencies overseas.
Forex traders said the local unit rose tracking gains in other Asian peers. Moreover, selling of the American currency by exporters also supported the domestic unit.
The rupee opened strong at 68.76 at the interbank forex market then gained further ground to touch 68.73 per dollar, displaying gains of 9 paise over its last close.
Asian Indices Lower
Asian stocks traded lower amid renewed trade tensions between US and China.
China's Shanghai Composite, Hong Kong's Hang Seng and South Korea's Kospi were down 0.3-0.7 percent while Japan's Nikkei fell 1.7 percent.
ADB Cuts India's GDP Growth Forecast to 7% for FY20
Asian Development Bank lowered India's GDP growth forecast to 7 percent for the current year on the back of fiscal shortfall concerns.
"India is expected to grow by 7 per cent in 2019 (FY20) and 7.2 per cent in 2020 (FY21), slightly slower than projected in April because the fiscal 2018 outturn fell short," ADB said in its supplement to the Asian Development Outlook 2019.
For the south Asian region, ADB said the outlook remains robust, with growth projected at 6.6 percent in 2019 and 6.7 percent in 2020.
CARE in Focus
CARE Ratings has sent its Managing Director and Chief Executive Officer Rajesh Mokashi on leave after Securities and Exchange Board of India (SEBI) received an anonymous complaint.
Mokashi has been sent on leave with immediate effect until further notice, CARE Ratings said in a filing with the BSE.
The ratings agency appointed TN Arun Kumar, an executive director, as the interim CEO.
"He (Arun Kumar) will not be part of Rating Operations to ensure independence of ratings," the company said in the statement.
Emkay's Take on Wipro After Q1 Results
Wipro remains a perennial 'tactical trade' in the sector as the excitement generated in Q2/Q3FY19 has failed to carry on in Q4FY19 and Q1FY20. Wipro's relatively inferior positioning to keep growth prospects under check notwithstanding recent interventions, the brokerage said.
Emkay moderated its FY20/21 EPS estimates by 1/3 percent to around Rs 16/17. "Assume coverage with a sell rating and target price of Rs 240, based on 14x FY21E P/E."
Impending buyback should support stock price in the near term, it said.
Jefferies Has Underperform rating and Cut Target Price to Rs 225 from Rs 245
"The first quarter disappointed on topline where it reported QoQ decline of 1.2 percent in constant currency. On top of that, Q2 growth guidance was tepid at 0-2 percent despite low Q1 base."
"All above factors indicated weakness in parts of BFSI viz capital markets & European banks."
"We cut revenue & earnings estimates over FY20-21 and expects growth underperformance to continue. We believe it is over-valued at 16/15x FY20/21 estimated P/E."
Benchmark indices opened lower with the Sensex falling 81.89 points to 39,133.75 and the Nifty50 slipping 21 points to 11,666.50 due to weak Asian cues.
Citi on Wipro
Global brokerage has sell rating on the stock and cut price target to Rs 250 from Rs 255 per share as company reported another weak quarter with revenues declining QoQ.
BFSI revenue sluggishness is a cause of worry as it was a growth driver in FY19, it said.
The Indian rupee opened higher at 68.76 against the US dollar, up compared to Wednesday's close of 68.81 a dollar.
10-year government benchmark bond yield opened at 6.31 percent against previous close of 6.34 percent.
IMF Sees Dangers From Trade Tensions
The International Monetary Fund on July 17 said that the US dollar was overvalued by 6 percent to 12 percent, based on near-term economic fundamentals, while the euro, Japan's yen and China's yuan were seen as broadly in line with fundamentals.
The IMF has been at odds with US President Donald Trump over his use of tariffs to resolve trade imbalances, but its assessment that the dollar is overvalued is likely to give Trump more fodder for his frequent complaints that dollar strength is hampering US exports. Source: Reuters.
Benchmark indices were mixed in pre-opening trade. The BSE Sensex was up 25.32 points at 39,240.96 and the Nifty50 fell 17 points to 11,670.50.
Expert's Take on Yes Bank Results
After weak set of earnings in June quarter by Yes Bank, IndiaNivesh told CNBC-TV18 that it expects bank's remainder watchlist of Rs 7,500 crore to remain under stress and could turn into an NPA.