Closing bell: Sensex falls 205 pts, Nifty Bank slips 273 pts; RBI maintains status quo on repo rate

3:30 pm Market Closing: Equity benchmarks closed lower for second consecutive session Wednesday, tracking global weakness and after the Reserve Bank of India decided to maintain repo rate at 6 percent.

The 30-share BSE Sensex was down 205.26 points at 32,597.18 and the 50-share NSE Nifty fell 74.20 points to 10,044.10 while the Nifty Bank plunged 273 points.

About two shares declined for every share rising on the BSE.

3:28 pm RBI Governor Urjit Patel said the credit flow is already better than last October.

As economy picks up, demand for credit will go up, he feels.

Weighted average call rate continued to remain below repo rate. “Market adjusting to the fact that we are in surplus conditions for a while,” he said.

3:26 pm HC on RERA: The Bombay High Court today upheld the validity of the Real Estate (Regulation and Development) Act (RERA), saying its objective is to develop the real estate sector.

A bench of Justices Naresh Patil and Rajesh Ketkar pronounced its judgement on a bunch of petitions filed by real estate developers and individual plot owners, all challenging the constitutional validity of the Act that was brought into effect in May this year.

The bench, headed by Justice Patil, however, allowed a significant leeway for the developers in today’s judgement by permitting the state-level RERA Authority and the Appellate Tribunal to consider delays on a case-to-case basis, and not to cancel such projects or developers’ registration in cases
where the delay was caused due to “exceptional and compelling circumstances.”

3:24 pm With the Union Budget on the anvil and while awaiting more data on the inflation trajectory, Asutosh Kumar Mishra (Senior Research Analyst at Reliance Securities) expects RBI to maintain its current stance at least till the current fiscal year end.

Apart from the local factor development at international front also indicates that further monetary policy easing will be difficult in current fiscal year.

International crude oil price has surged shapely over the last few months led by the production cuts by OPEC along with increasing political uncertainty in Saudi Arabia and other oil producing nations.

He expects higher fuel price will eventually get transmitted into inflation rates as well negatively impact fiscal deficit estimates of GOI. These all factors will weight against monetary policy easing going forward, he said.

3:21 pm Reaction on RBI Policy: Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank said, “RBI’s policy was in line with expectations, maintaining a word of caution on the upside risks emanating from high commodity prices, global financial instability, HRA related increases, rising input costs and fiscal slippages.”

RBI’s second half of FY18 inflation has been revised marginally higher by 10bps to 4.3-4.7 percent even as they retained the GVA forecast of 6.7 percent as against expectation of 6.5 percent.

Given that MPC members are fixated with anchoring 4 percent inflation target and the upside risks emanating from higher oil prices, higher rural real wages, sticky core inflation and mean reversion of food prices, Upasna finds limited room for any further monetary accommodation this year.

3:19 pm Demerger: Future Retail board has approved scheme of arrangement between Hypercity and company.

Future Retail will demerge retail arm of Hypercity into company.

3:17 pm Europe Trade: European markets were lower as investors monitored corporate earnings and fresh economic data.

The pan-European Stoxx 600 was down around 0.8 percent during early morning deals with all sectors and major bourses in negative territory.

3:15 pm Gainers: Index heavyweight Reliance Industries (up 1.5 percent) continued to cap losses. The stock yesterday also supported the market, rising 1.1 percent.

Nifty IT index was up 0.5 percent. Infosys, HCL Technologies, Tech Mahindra, Wipro and TCS 0.1-1.44 percent.

3:13 pm Expert said bond yield may head higher in the coming year due to fiscal concerns, liquidity problems and global cues.

3:08 pm Market Expert: Ajay Srivastava of Dimensions Consulting said the market is falling due to expectations of weak economic growth for FY18 and likely tough fight for Gujarat elections.

3:06 pm Rupee Update: The Indian rupee declined further, trading 13 paise lower at 64.52 against the US dollar.

Market Expert said the rupee is trading in tandem with equity market and bond market already priced in RBI event.

3:04 pm Market Check: Equity benchmarks extended losses in late trade, dragged by banking & financials after the Reserve Bank maintained status quo on repo rate.

The 30-share BSE Sensex was down 207.37 points at 32,595.07 and the 50-share NSE Nifty declined 76.90 points to 10,041.40.

About 1,545 shares declined against 977 advancing shares on the BSE.

3:00 pm Industrial Activity: RBI said available high-frequency indicators suggest a mixed picture of industrial activity for Q3.

“Core industries’ growth was flat in October as all constituents barring steel and fertilisers slowed down sequentially. Coal mining, which revived strongly in Q2, slowed down too, while cement production contracted. In contrast, the Purchasing Managers’ Index (PMI) for manufacturing, which fell in October, rebounded in November, driven by output and new orders,” it explained.

Also, according to the Reserve Bank’s Industrial Outlook Survey (IOS), production is expected to pick up in Q3 as order books are rising.

2:55 pm NMDC to sign MOU: State-run miner NMDC is likely to soon sign an MoU with Vietnam-based Masan Resources for a possible acquisition of a minority stake in a tungsten mine in the Southeast Asian nation, a top company official said today.

“We have got clearance from the Ministry (of Steel) (for the MoU). We are going to have an MoU with Masan Resources very soon. Then the due diligence will be done. After that we will take a call on whether to invest (in the mine) and if yes how much. We have a JV partnership with Midhani. DMRL will be supporting in the form of funding the due diligence,” said P K
Satpathy, NMDC Director (production), at a press conference.

2:50 pm GVA Growth: On the domestic front, the growth of real gross value added (GVA) accelerated sequentially in Q2 of 2017-18, after five consecutive quarters of deceleration. It was powered by a sharp acceleration in industrial activity. All the three sub-sectors of industry registered higher growth.

GVA growth in the manufacturing sector – the key component of industry – accelerated sharply on improved demand and re-stocking post goods and services tax (GST) implementation.

The mining sector expanded in Q2 due to higher coal and natural gas production. GVA growth in the electricity, gas, water supply and other utility services sector also strengthened on higher demand.

In contrast, growth in agriculture and allied activities slackened, reflecting the lower than expected kharif harvest.

Activity in the services sector decelerated, mainly on account of slowdown in financial, insurance, real estate and professional services, and in public
administration, defence and other services (PADO) following the large front-loading of government expenditure in Q1.

2:47 pm Keeping in mind the output gap dynamics, the MPC decided to continue with the neutral stance and watch the incoming data carefully. The MPC remains committed to keeping headline inflation close to 4 percent on a durable basis, the RBI said in monetary policy review.

2:45 pm MPC members View: Five out of six committee members – Chetan Ghate, Pami Dua, Michael Debabrata Patra, Viral V Acharya and Urjit R Patel were in favour of the monetary policy decision, while Ravindra H Dholakia voted for a policy rate reduction of 25 basis points.

The next meeting of the MPC is scheduled on February 6 and 7, 2018.

2:43 pm Selling pressure extended in banking and financials. PSU Bank index fell 1.5 percent and Nifty Bank dropped 170 points.

Metal index fell further, down 2 percent.

2:42 pm While there has been weakness in some components of the services sector such as real estate, the Reserve Bank’s survey indicates that the services and infrastructure sectors are expecting an improvement in demand, financial conditions and the overall business situation in Q4,

2:40 pm Economic Growth: The RBI said the projection of real GVA growth for 2017-18 of the October resolution at 6.7 percent has been retained, with risks evenly balanced.

Q2 growth was lower than that projected in the October resolution. The recent increase in oil prices may have a negative impact on margins of firms and GVA growth. Shortfalls in kharif production and rabi sowing pose downside risks to the outlook for agriculture.

On the positive side, there has been some pick up in credit growth in recent months. Recapitalisation of public sector banks may help improve credit flows further.

2:37 pm Inflation projection: The October bi-monthly statement projected inflation to rise and range between 4.2-4.6 percent in the second half of this year, including the impact of increase in house rent allowance (HRA) by the Centre, RBI said.

2:35 pm RBI said the decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 per cent, while supporting growth.

2:30 pm RBI Policy: The Reserve Bank of India has kept repo rate unchanged at 6 percent today and hence the reverse repo remained at 5.75 percent.

Consequently, the reverse repo rate under the LAF remains at 5.75 percent, and the marginal standing facility (MSF) rate and the bank rate at 6.25 percent.

2:29 pm Bond and Rupee Trade: The 10-year bond yield spiked 0.14 percent to 7.07 percent and the rupee declined 7 paise to 64.45 a dollar ahead of RBI policy.

2:26 pm Gold prices drop: Gold tumbled by Rs 200 to Rs 30,050 per ten gram at the bullion market today on muted demand from local jewellers and a weak trend overseas.

Silver too slumped by Rs 500 to Rs 38,500 per kg due to reduced offtake by industrial units and coin makers.

Traders said besides fall in demand from local jewellers and retailers at the spot market, a weak trend overseas mainly weighed on gold prices.

2:17 pm Sugar prices fall: Sugar saw a fall of Rs 40 per quintal in its prices at the wholesale market in the national today on higher output estimates.

The Indian Sugar Mills Association (ISMA) has pegged 251 lakh tonnes (lt) sugar output this year as against 202 lt in the last year.

Releasing the latest production figures, ISMA said sugar production during October-November reached 39.51 lt, much higher than 27.82 lt in the year-ago period.

Marketmen said mounting stocks on constant supplies from mills coupled with slack offtake by stockists and bulk consumers also kept pressure on sweetener prices.

2:07 pm IPO Subscription: The initial public offer of Shalby has been subscribed 22 percent on second day today.

The issue has received bids for 45.64 lakh shares against IPO size of 2.05 crore shares, as per data available on NSE.

2:04 pm Buzzing: IOC, HPCL and BPCL shares fell around a percent intraday as research house Kotak continued to see downside risks to consensus estimates for oil marketing companies, given its concerns on Street’s generous assumptions for the marketing segment.

The recent correction in oil retailers led by weakness in marketing margins has not made the valuations compelling enough for it to revisit negative thesis on these stocks, it said.

Kotak remains cautious on intermittent curtailment of marketing margins, sustained loss of market share and significant capex plans, which may limit free cash flow generation.

Oil retailers HPCL, IOC and BPCL were down around 7-9 percent since November on concerns over marketing margins and rising oil prices globally.

1:50 pm Market Outlook: The Indian market is trading below the record high tested in the month of November on the back of selling pressure.

Giving a positive view on India’s long-term prospects, Ashok Wadhawa, Group CEO at Ambit said that India’s position has improved globally and has become attractive destination for long term capital.

He said this by highlighting that the current government is very keen on maintaining fiscal discipline. Reforms by the government in the form of GST, insolvency rule, and bank recap will have positive impact on the economy over a medium to long term.

On the D-Street impact, he said that the market has significantly supported by expectations that these reforms will yield the desire results and ultimately corporate earnings will move up.

Over the medium to long term the market is confident that tax to GDP ratio will improve dramatically with the changes that government has made. FII and strategic player are continued to invested and interesting in India, he said.

1:40 pm Europe Trade: European markets opened lower as investors monitored corporate earnings and fresh economic data.

The pan-European Stoxx 600 opened 0.22 percent lower with all sectors and major bourses in negative territory.

1:25 pm FII Investment Limit: The Reserve Bank has allowed foreign investors to raise their stake in micro finance lender Bharat Financial Inclusion as the applicable limit has gone below the threshold limit.

The aggregate foreign shareholding by foreign portfolios investors (FPIs) under Portfolio Investment Scheme in Bharat Financial Inclusion Limited has gone below the prescribed threshold caution limit, Reserve Bank (RBI) said in a notification.

“Hence, the restrictions placed on the purchase of shares of the above company are withdrawn with immediate effect,” the RBI said.

Foreign portfolio investors held 68.83 percent in the company as on September 30, 2017, the BSE data showed. Promoter shareholding in the company stands at 1.65 percent.

1:05 pm Nomura on Axis Bank: Global research firm Nomura has maintained its buy call on Axis Bank, but cut its target price to 620 from Rs 640.

The reduction in target price implies a downside of around 3 percent.

The firm believes PPOP/asset is readjusting downwards to a new normal, the brokerage believes.

It expects normalised RoEs of 15-15.5 percent for the bank.

12:40 pm Management Interview: Retail conglomerate Future Group, which owns fashion chains like Big Bazaar, Brand Factory and Central, will be among the top 10 global fashion companies selling about 35 crore garments by FY2019, group CEO Kishore Biyani said today.

The company, which has built an integrated warehouse with a capacity of over 30 crore garments in Nagpur, is betting big on the growing demand from fashion conscious customers and consumers’ interest for lifestyle and fashion.

Biyani said by next financial year the fashion units alone will clock total revenue of USD 3-3.5 billion (about Rs 20,000 crore). He, however, denied commenting on expected profit.

12:27 pm Oil Price Update: Oil prices dipped, as refined product inventories in the United States rose in what the market interpreted as a sign of lacklustre demand.

Brent crude futures, the international benchmark for oil prices, were down 0.3 percent, at USD 62.67 a barrel.

US West Texas Intermediate (WTI) crude futures were at USD 57.41 a barrel, down 0.36 percent, from their last settlement.

12:15 pm Corporate Tax Rate Cut Extension Likely?: Government sources suggest there are ongoing discussions to extend the cut in corporate tax rate for larger companies in the upcoming Budget, reports CNBC-TV18.

For a large universe of companies the tax rate was brought down to 25 percent. At the start of this government’s tenure they had announced the glide path and so we could see some forward movement on that front but there is no final decision yet.

As part of pre-Budget consultation process, there is a meeting today of industry with the government and as part of the recommendations big demand has come from the industry for a significant reduction in the corporate tax rate. How much of that is possible will depend on government’s revenue constraints as well.

Given the US senate has approved a tax overhaul on Saturday, Singapore has tax rate of 17 percent, UK has it 20 percent, CII has recommended that India should reduce Corporate Tax to 18 percent all inclusive at the earliest with the withdrawal of tax incentives, and exemptions, withdrawal of surcharges and Cess.

12:05 pm Management Interview: Plastiblends India reported weak set of Q2 numbers. In an interview with CNBC-TV18, Satyanarayan Kabra, Vice Chairman and MD said July month was bad due to goods and services tax (GST) disruption. August was better than July, September was better than August and subsequently October and November will also be better.

November witnessed the highest ever sales, he added.

According to him, GST pain will remain till the end of March but second half of the year FY18 will be definitely better than the first half.

The company should become normal by March ending and next year should be very good for the industry, said Kabra.

He expects 11-12 percent EBITDA margin once GST disruption normalises.

11:55 am Market Check: Equity benchmarks extended losses in late morning deals, tracking further weakness in Asian stocks. Investors also maintained caution ahead of RBI’s rate decision and its commentary in afternoon.

The 30-share BSE Sensex was down 158.72 points at 32,643.72 and the 50-share NSE Nifty declined 59.80 points to 10,058.50.

Asia markets declined across the board, following overnight losses on Wall Street. Japan’s Nikkei 225 Average, China’s Shanghai Composite, Hong Kong’s Hang Seng and South Korea’s Kospi were down 1-2 percent.

11:45 am Drug Patents: Shares of Suven Life Sciences added 5 percent intraday as it has secured two product patents from Eurasia and Norway.

The company has been granted one product patent from Eurasia and one product patent from Norway, corresponding to the new chemical entities (NCEs) for the treatment of disorders associated with Neurodegenerative diseases and these patents are valid through 2034 and 2026 respectively.

The granted claims of the patents include the class of selective 5-HT6 compounds and are being developed as therapeutic agents and are useful in the treatment of cognitive impairment associated with neurodegenerative disorders like Alzheimer’s disease, Attention deficient hyperactivity disorder (ADHD), Huntington’s disease, Parkinson and Schizophrenia.

11:36 am Earnings Reaction: Shares of direct-to-home operator Dish TV today witnessed volatile trading on the bourses after the company reported a consolidated net loss of Rs 17.87 crore for the September quarter.

Shares of the company opened on a weak note at Rs 79.15 and touched an early low of Rs 78.30. Later the stock rallied to a high of Rs 81.35 amid volatile trade on BSE.

The company had posted a net profit of Rs 68.96 crore in the July-September quarter a year ago. Its revenue from operations came down 3.93 percent to Rs 748.58 crore during the quarter under review as against Rs 779.28 crore a year earlier.

“Average revenue per user (ARPU) strengthened to Rs 149 while churn rate recovered to close at slightly less than 0.8 percent per month,” the company said.

11:27 am Buzzing: CLSA has retained its Buy call on Bharat Forge, the auto ancillary company, with a target price of Rs 905 per share, implying a potential upside of nearly 30 percent from Tuesday’s closing price.

Valuations at 30x one-year forward PE are not cheap but should sustain, the research house feels.

The stock rallied nearly 2 percent intraday Wednesday, on top of 3.4 percent upside seen in previous session after strong trend continued in North American class 8 truck orders.

The research house said outlook for exports has improved significantly and the demand is picking up in US trucks and key industrial export segments.

CLSA sees a strong 34 percent EPS CAGR over FY17-20.

11:20 am Order Win: Reliance Infrastructure has won two EPC contracts in Bangladesh together valued at Rs 5,000 crore.

The projects were won on international competitive bidding (ICB).

Both the contracts are to be executed in a project schedule of 24 months, and are to be completed by 2019.

Sharekhan said it is positive for Reliance Infrastructure.

11:05 am Market Check: Equity benchmarks remained mildly under pressure in morning as investors await RBI policy due in afternoon.

Economists largely expect the Reserve Bank to keep policy rates unchanged but the commentary is key to watch out for.

The Q2FY18 GDP prints accelerated to 6.3 percent from 5.7 percent in the previous quarter reversing the 5-quarter falling trend. The cyclical recovery in growth, although only gradually, is likely to reduce the challenge on the Monetary Policy Committee’s front as they get assured of improvement going ahead, Upasna Bhardwaj, Senior Economist, Kotak Mahindra Bank said.

She thus expects MPC to pause in the upcoming policy meeting with a probable hawkish-cautious bias given that inflation prints have been trending higher and are likely to begin overshooting their mid-point target of 4 percent in the months ahead.

“The risk to RBI’s estimated inflation trajectory has further surmounted given the surge in crude oil prices. Given that MPC members are fixated with anchoring 4% inflation target and the upside risks emanating from higher oil prices, higher rural real wages, sticky core inflation and mean reversion of food prices, we find limited room for any further monetary accommodation this year,” Upasna said.

The 30-share BSE Sensex was down 69.86 points at 32,732.58 and the 50-share NSE Nifty fell 29.40 points to 10,088.90 but the market breadth was positive.

About 1,289 shares advanced against 902 declining shares on the BSE.

10:55 am Buzzing: Shares of Reliance Communications today fell more than two percent in morning trade on bourses after credit rating agency Fitch said it has withdrawn ratings of debt-ridden Reliance Communications for commercial reasons.

10:45 am Metals under pressure: Metals stocks lost shine following correction in commodities prices in international market as investors raised doubts over China demand for metals.

The Nifty Metal was biggest loser among sectoral indices, falling 1.5 percent as Hindustan Zinc, Hindalco Industries, Vedanta, Hindustan Copper, Tata Steel, Jindal Steel, NALCO, SAIL and MOIL rallied 1-3 percent.

Copper prices fell 3 percent and steel prices declined 2 percent while aluminium prices dropped 1.5 percent.

10:35 am Inflation: Countering the Congress’s allegations of “price rise”, Finance Minister Arun Jaitley today said inflation data shows a steady decline in general prices.

Taking to Twitter, he gave comparative data on inflation during the UPA rule and the Narendra Modi government with the help of graphs.

“Since the issue of price rise has been raised by some in the Congress Party, let the data on inflation figures speak for itself,” he tweeted.

“Inflation Data shows a steady decline in general prices,” he said in another tweet.

10:25 am Rupee Trade: The rupee depreciated by 3 paise to 64.41 against the dollar at the interbank forex market today ahead of the announcement of RBI’s monetary policy amid foreign fund outflows.

Dealers said increased demand for the American currency from importers also weighed on the rupee but dollar’s weakness against other currencies overseas limited the losses.

Yesterday, the rupee had struggled to hold on to early strong gains and eventually ended the day almost flat at 64.38 against the US dollar.

10:15 am Buzzing Stocks: Shares of Plastiblends India and The Byke Hospitality fell 2-8 percent intraday on the back of weak September quarter (Q2FY18) numbers.

Byke Hospitality has reported 10 percent decline in its Q2FY18 net profit at Rs 5.2 crore against Rs 5.76 crore in a year ago period.

Revenue of the company was down 45 percent at Rs 29.4 crore and EBITDA was down 6 percent at Rs 11 crore.

The company announced acquisition of the 3 hotels, The Byke Nature Villas (35 rooms) in Shimla, The Byke Puja Samudra (42 rooms) in Kovalam and The Byke Brightlands Resort (63 rooms) in Matheran.

9:50 am LIC Investment: Life Insurance Corporation of India (LIC) said it has invested Rs 44,000 crore in the equity markets between April-November this year, a rise of 52 per cent over the year-ago period.

It had invested around Rs 29,000 crore in April-November period in the previous fiscal.

In the first half of the current fiscal, the life insurance major had more than doubled its investment in equities to Rs 39,224 crore from Rs 18,000 crore in the same period last fiscal.

“This year the government’s disinvestment program has picked up in the first half and, we, being the long term investor have invested there,” its chairman V K Sharma told reporters here today.

In the previous fiscal, LIC had invested Rs 47,000 crore into equities.

9:40 am RCom in focus: Credit rating agency Fitch has withdrawn ratings of debt-ridden Reliance Communications for commercial reasons.

“Fitch has chosen to withdraw the ratings on Rcom for commercial reasons. Accordingly, Fitch will no longer provide ratings or analytical coverage for RCom,” it said in a statement.

RCom also informed stock exchanges that Fitch “has withdrawn ‘C’ rating of the company’s Long-Term Foreign and Local Currency Issuer Default Ratings and Bonds listed in Singapore Stock Exchange due to commercial reasons”.

9:34 am USFDA Observations: Shares of Shilpa Medicare declined nearly 6 percent in morning as it has received 10 observations from USFDA.

The company has received 483 observations from the United States Food & Drug Administration (USFDA) in relation to SEZ formulation facilities situated at Jadcherla, Telangana (near Hyderabad).

The company has received total 10 observations, which includes 7 observations for improvement in procedures and practices and 3 observations are related to setting of analytical specifications, test procedures and method validation.

9:25 am Buzzing: Shares of Tata Communications gained more than 1 percent in early trade after it has been selected as global loT connectivity partner by International fleet management application provider.

DRVR, international fleet management application provider, has selected Tata Communications as it global loT (Internet of Things) connectivity partner to help achieve its objective of making Asia’s vehicle fleets the smartest and most cost efficient in the world.

Vehicles in fleets using DRVR technology have been fitted with Tata Communications’ MOVE-IOT Connect SIM technology.

9:20 am IPO opens: The Rs 650-crore initial public offer of Future Supply Chain Solutions has opened for subscription today, with a price band of Rs 660-664 per share.

The public issue of 97,84,570 equity shares will close on December 8.

The issue comprises an offer for sale of up to 78,27,656 equity shares by Griffin Partners and up to 19,56,914 shares by the promoter, Future Enterprises. The offer will constitute up to 24.43 percent of the post-offer paid-up equity share capital.

Future Supply will not receive any proceeds from the offer for sale.

Bids can be made for a minimum lot of 22 equity shares and in multiples of 22 equity shares thereafter.

9:15 am Market Check: Equity benchmarks extended losses in opening on Wednesday, with the Nifty falling below 10,100 level, dragged by banking and financials as investors maintained cautious stance ahead of RBI policy decision.

The 30-share BSE Sensex was down 77.36 points at 32,725.08 and the 50-share NSE Nifty fell 31.90 points to 10,086.40.

About 692 shares declined against 451 advancing shares on the BSE.

Eicher Motors, Hindalco Industries, Bajaj Finance, Yes Bank, Indiabulls Housing, HDFC Bank, ICICI Bank, HUL, PNB, Bank of Baroda and Coal India were early losers while Infosys, Tech Mahindra, Cipla, IndusInd Bank and Dr Reddy’s Labs were gainers.

Nifty Midcap was down 0.4 percent.

Dish TV, Hathway Cable and Voltas were down 1-4 percent. Balkrishna Industries, Shree Renuka, Balrampur Chini, Bajaj Hindusthan, Madras Fertilizers, RCF, Mangalore Chemicals, Prism Cement and JK Cement gained 1-6 percent.

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