Sensex, Nifty Fall As Fed’s Rate Hike Talks, Weak China Data Spook Investors
Nifty Bank index fell below the 19,000-mark for the first time since Aug 12 of this year.
Closing Bell
Indian shares dropped like nine pins after a combination of weak Chinese export data and talks of an U.S. Federal Reserve rate hike coming “relatively soon” spooked investors.
The S&P BSE Sensex declined 1.5 percent to 27,643 while the NSE Nifty too fell 1.5 percent to close at 8,673. The 50-share index briefly slipped below the 8,550-mark – a critical support area watched by technical analysts.
If Nifty breaks 8,500 tomorrow morning, we can see levels of 8,000 and if it holds on to 8,500, it will continue to consolidate between the range of 8,500-8,750.”Jay Thakkar, senior technical analyst at Sharekhan told BloombergQuint in a telephonic conversation.
The market breadth was firmly skewed in favour of the sellers at 1,206 declines, 295 advances and 44 stocks remaining unchanged.
Unwarranted exuberance is getting punished time and again, said Ajay Srivastava, managing director of Dimensions Consulting. Public sector banks led the fall today after indecisiveness on debt recast has cast a cloud on hopes surrounding the pace of banks’ recovery.
The Bank Nifty closed below the 19000-mark first time since August 12 of this year. Barring the S&P BSE IT index, all other 18 sectoral gauges closed lower.
While today’s fall might seem steep, Srivastava said, the market continued to show signs of inherent strength. “We are relatively insulated from any external shocks at the moment. Of course, there will be knee-jerk reactions from time-to-time but that would be limited to just that,” he told BloombergQuint in a telephonic interview.
Overall, he advises investors to “stick to good quality names”.
Cyient Soars 14% on Q2 Earnings Boost
Shares of the midcap IT firm rose as much as 13.8 percent to Rs 552 after it reported a 31 percent sequential jump in second quarter net profit. A Bloomberg poll of analyst had estimated a net profit of Rs 87.1 crore for the quarter.
It clocked a net profit of Rs 97.2 crore for quarter-ended September, compared to Rs 74 crore previous quarter. Net sales came in at Rs 913 crore versus Rs 834 crore, quarter-on-quarter.
Market At Day’s Low; Nifty Bank Below 19,000 First Time Since Aug
Indian shares extended their fall following weak trade European equities as an unexpected decline in Chinese exports stoked worries about the health of the global economy.
Concerns about corporate earnings and speculation of tighter U.S. monetary policy have also weighed on equities, with the Nifty Bank index falling below the 19,000-mark for the first time since August 12 of this year.
All 19 sectoral gauges on the BSE are seeing selling pressure, with the S&P BSE Realty index leading the list of losers, while S&P BSE IT index dropped the least.
The S&P BSE Sensex fell as much as 1.6 percent to 27,635 while the NSE Nifty dropped 1.6 percent to 8,566. This it steepest fall for the indices since September 29, when the Nifty made a low of 8,558 after the Indian Army announced that it had carried out surgical strikes beyond the LoC.
The market breadth was firmly in favour of the sellers at 1,344 declines, 260 advances and 271 stocks remaining unchanged.
Sentiment indicators for Indian equity markets are approaching the “sell zone”, according to Morgan Stanley.
Hindustan Unilever Falls for a Third Day
Shares of the FMCG firm dropped 1.6 percent to Rs 861, extending its losing streak to day three.
According to its parent Unilever, market conditions in India were weaker in July to September period. As a result, it said volume growth and rural demand in the country was under pressure.
“Rs 864 is not a good level to enter the stock. The stock can see further downside towards levels of Rs 770. Once it gets to that level, we will take a fresh call on it.”Jay Thakkar, senior technical analyst at Sharekhan said.
European Shares Open Weak
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Cera Sanitaryware Recoups Losses After Q2 Beats Estimates
Shares of the sanitary ware manufacturer reversed losses and jumped as much as 1.6 percent to Rs 2,718 to a new 52-week high after beating street estimates with its second quarter results. The stock had fallen 3.2 percent in early trade.
It clocked a net profit of Rs 25.14 crore for quarter-ended September, compared to Rs 17.88 crore same period last year. This was higher than the Rs 23.24 crore estimated by analysts polled by Bloomberg.
Net sales came in at Rs 261 crore for the three-month period, an increase of 12.5 percent from last year.
Bank of Baroda, Bank of India Slump on Merger Talks
Shares of public sector banks Bank of India Ltd. and Bank of Baroda Ltd. fell well over 3 percent each after a Reuters report suggested that the government is considering merging the two banks once the cleaning up process of bad loans is completed.
Gruh Finance Hits 52-Week High After Q2 Earnings
Shares of the home finance firm jumped as much as 4.1 percent to Rs 370. The stock has risen seven out of the last eight trading session.
Gruh Finance reported a 20 percent YoY rise in net profit at Rs 61.98 crore for quarter-ended September. Total revenue from operations grew 17.8 percent YoY to Rs 367 crore for the quarter under review against Rs 312 crore in the corresponding quarter of previous fiscal.
According to Bloomberg data, around 2.62 million shares changed hands in two block deals on the BSE today.
CRISIL Warns That 4 PSBs May Not Be Able to Pay Interest On Bonds
A sharp decline in profitability and mounting losses could wipe out the revenue reserves of some PSU banks and hamper their near-term ability to pay interest on the bonds issued to meet Basel III norms, Crisil Ratings said on Wednesday.
As many as 14 PSBs have Rs 22,600 crore of additional Tier 1 (AT1) bonds outstanding, it said.
Read the full report HERE
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Cipla Rises on U.S. Drug Regulator’s Clearance for Indore Plant
Shares of the drug maker gained as much as 3.1 percent to Rs 599 after the U.S. United States Food and Drug Administration gave its clean chit to the pharmaceutical major’s Indore plant.
Cipla remains the top pick for Credit Suisse. The brokerage has an 'outperform’ rating on the stock with a price target of Rs 675.
Full report HERE
Infosys Jumps Nearly 3% Ahead of Q2 Earnings
Shares of the country’s second largest software services firm rose as much as 2.7 percent, the most since August 30, ahead of its second quarter earnings.
Infosys Ltd. expects growth to bounce back from last quarter’s disappointing showing but warned that the IT services industry will take a short-term hit from Britain’s decision to depart the European Union. (More details HERE)
Pimco Turns Defensive on Fed Watch
Pacific Investment Management Co., which runs the world’s biggest actively managed bond fund, says it’s time to reduce risk.
“We continue to stress more defensive themes in portfolio construction,” Scott Mather, chief investment officer for core strategies at the Newport Beach, California-based company, wrote in an e-mail. Pimco is “focused on selective opportunities in mortgages, inflation-linked bonds, and select credit markets,” he wrote.
More details HERE
Opening Bell
Indian shares fell most since September 29 after the minutes of the Fed meeting of last month showed several officials saying a rate hike was needed “relatively soon”.
The S&P BSE Sensex dropped as much as 0.9 percent to 27,815 while the NSE Nifty too fell 0.9 percent to 8,626. The market breadth was firmly in favour of the sellers with 1,031 declines, 391 advances and 419 stocks remaining unchanged.
Movers & Shakers: Tata Consultancy Services, Cipla, Mahindra & Mahindra And More
Stocks to Watch
- Adani Enterprises: Queensland to accelerate Adani’s Carmichael coal mining project
- Capital First: Raises Rs 575 crore selling non-convertible debentures
- Capri Global: Plans to raise Rs 800 crore
- Cipla: Gets report from U.S. FDA for Indore facility, indicating formal closure of inspection made in July/Aug. 2015
- Colgate-Palmolive: Names M.S. Jacob CFO
- Dr. Reddy’s: Starts selling lamotrigine tablets in U.S.
- Gail: Approves order placement for part of $1.9 billiongas pipeline; separately, markets $300 million loan to general syndication
- Grasim: Shareholders approve raising overseas investment limit to 30 percent from 24 percent
- KEC: Gets Rs 1,190 crore of new orders
- Mahindra & Mahindra: Among 6 companies selected by U.S. Postal Service for delivery vehicles
- *Separately, Korean unit Ssangyong Motor explores China JV with Shaanxi Auto
- National Aluminium: First half bauxite mining +24 percent
- Piramal Enterprises: Critical care unit is hunting for more deals after Janssen buy; advances decision to review early non-convertible debt redemption plan
- Prakash Industries: GMK, among founder companies, pledges 2.5 million shares with Moneywise Financial
- Sun Pharma: Voluntarily recalls 31,762 bottles of anti-depressant
For a complete list of stocks to watch, click HERE
Earnings to Watch
- Cera Sanitaryware
- Cyient
- Reliance Industrial Infrastructure
- Tata Consultancy Services
Earnings Reaction to Watch
- Gruh Finance (GRHF): Second quarter net income Rs 61.98 crore versus Rs 51.71 crore
- IndusInd Bank (IIB): Q2 net income +26 percent YoY to Rs 704 crore; est. Rs 705 crore
Data/Event to Watch
- 10/13-10/15: SEA to release September edible-oil imports data
- FM Jaitley, Central Bank Governor Patel at BRICS seminar in Mumbai
- 5:30pm: Sept. CPI YoY; est. 4.6 percent (prior 5.05 percent)
- 10/13-10/17: India September exports; no estimate (prior -0.3 percent)
- Imports; no estimate (prior -14.1%)
- Trade Balance; estimate -$8 billion (prior -$7.674 billion)
Talking Points
- India net indirect tax collections up to September rises 25.9 percent year-on-year (YoY).
- India considers bad loan purge plan for banks (Economic Times)
- India August industrial production falls 0.7 percent YoY; estimate -0.8 percent
- Renault-Nissan recalls 51,000 units of Kwid, Redi-Go (PTI)
- Schneider Electric to invest Rs 750 crore in India (PTI)
- Home First may raise Rs 300 crore from Morgan Stanley PE (Mint)
- KKR said to be in talks to buy L&T Valves stake (Times of India)
- India to award Rs 50,000 crore of defence orders (PTI)
- BSNL to invest Rs 2,500 crore on expansion plans (PTI)
- India exports growth recovery to be slow, gradual: Minister
- Ssangyong Motor, Shaanxi Automobile joint venture to set up plant in China
- Mobius says India ’very exciting’, likes Brazil, Mexico in stocks
- After divorce from VW, Suzuki joins Toyota in partnership talks
- Global funds sell Rs 547 crore of local stocks; domestic funds buy Rs 469 crore on October 10: Provisional data
Good Morning!
The Nifty Futures on the Singapore Exchange, an early indicator of Nifty’s performance in India, dropped 0.3 percent to 8,678.
Hong Kong shares slumped with U.S. stock futures and the yen reversed a decline against the dollar as data showing Chinese exports unexpectedly dropped spurred concern about the outlook for the global economy.
The trade report halted gains in the Bloomberg Dollar Spot index, which had advanced to a seven-month high after minutes of the Federal Reserve’s last meeting reinforced the case for an interest-rate increase in 2016.
Bets for a Fed rate hike by December climbed six percentage points to 68 percent compared to last week, according to futures rates tracked by Bloomberg.
U.S stocks closed mixed on Wednesday, with the Dow Jones Industrial Average and the S&P 500 Index gaining 0.1 percent each, while the Nasdaq Composite Index closed in the red.