Sensex At 1-Week Low, Nifty Below 8,350 On Earnings Letdown

Indian shares declined the most since December 2 after a string of corporate earnings missed street estimates, and as investors await the start of Donald Trump’s presidency.

The rupee weakened against the dollar for a third straight session after Janet Yellen made the case for the Federal Reserve to gradually raise interest rates.

The S&P BSE Sensex declined 1 percent to 27,028 while the NSE Nifty dropped little over 1 percent to 8,349. This was 50-share index’s first close below the 8,350-mark since January 10. Both the indices closed the week over 0.6 percent lower, snapping a three-week gaining streak.

The S&P BSE Metal index (-2.4 percent) led the list of losers followed by S&P BSE Power (-2 percent) and S&P BSE Realty (-1.9 percent) indexes. Only two sectoral gauges – S&P BSE FMCG (+0.1 percent ) and S&P BSE Telecom (+0.2 percent) – advanced.

The market breadth was firmly skewed in favour of the bears. About 1,238 stocks declined, 379 advanced and 290 remained unchanged.

Shares of the three-wheeler maker pared gains and dropped as 3.8 percent after its net profit declined on a year-on-year basis.

The company posted a net profit of Rs 58.58 crore for the three-month period ending December, compared to Rs 61.76 crore same period a year ago. It clocked net sales of Rs 676 crore versus Rs 640 crore YoY.

• HDFC Bank has 1.46 million shares change hands
• PI Industries has 3.07 million or 2.2 percent of equity change hands in two block deals

Shares of the water tank maker dropped as much as 6.8 percent, the most since November 9, after reporting a net income slump of 39 percent for the third quarter.

The company posted a net profit of Rs 111 crore for the three-month period ending December, compared to Rs 181 crore same period a year ago.

• Revenue Rs 2,090 crore versus Rs 2,080 crore; plastics segment revenue falls 14 percent YoY to Rs 1,460 crore.
• Total cost Rs 1,840 crore versus Rs 1,820 crore YoY

Shares of the state-owned bank dropped as much as 5 percent, the most since December 5, after reporting third quarter net profit of Rs 322 crore, which was lower than Rs 345 crore estimated by analysts in a Bloomberg.

• Gross NPA end-Dec. at 9.97 percent versus 9.81 percent end-September
• Q3 bad loan provisions Rs 1,490 crore versus Rs 1,430 crore
• Q3 other income Rs 1,790 crore versus Rs 1,170 crore

Shares of the education service provider dropped as much as 6 percent after its net profit havled for the December quarter.

The company reported a net profit of Rs 6 crore for the three-month period, compared to Rs 13.7 crore during the same period last year. It clocked net sales of Rs 267 crore for the December quarter, versus Rs 262 crore a year ago.

Its EBITDA came in at Rs 8 crore versus Rs 16.4 crore YoY.

Shares of the billionaire Gautam Adani-led firm slumped as much 8.8 percent after it reported disappointing set of third quarter earnings.

The power producer posted a net loss of Rs 324 crore for the three-month period ending December, compared to the Rs 130 crore loss estimated by analysts polled by Bloomberg.

It clocked net sales of Rs 5,810 crore for the December quarter, which was in line with street estimate.

Joining the list of brokerages cutting their ratings on Axis Bank, HSBC has downgraded the counter to ‘Reduce’ from ‘Hold.’ The target price has been cut to Rs 368.

Axis Bank is facing a barrage of price target cuts by brokerage houses after the country’s third largest private sector lender reported a disappointing set of earnings mainly on account of weak operating performance and asset quality concerns.

Shares were trading lower by 5.54 percent at Rs 457.

Also Read: Axis Bank Faces Slew Of Price Target Cuts After Q3 Earnings Letdown

ACC Ltd. has informed the exchanges that it plans to challenge the Rs 35.52 crore penalty imposed on the company by the Competition Commission of India for allegedly rigging bids to win Haryana government contracts.

Shares of ACC were trading little changed at Rs 1,357.10.

Along with ACC, Ambuja Cements too has decided to challenge the CCI order where it imposed a penalty of Rs 29.84 crores on the company. Shares were trading little changed at Rs 220.

Also Read: Competition Commission Raps Seven Cement Firms For Trying To Rig Bids

Rupee recovered by 10 paise to 68.03 against the U.S. dollar in early trade today on fresh selling of the American currency by exporters.

Besides, dollar's weakness against other currencies overseas after Fed Chair Janet Yellen indicated the central bank would take a wait-and-see approach to monetary policy, suggesting any rate hikes this year could be slow, supported the rupee, forex dealers said.

However, they said, a lower opening of the domestic equity market, capped the gain. The local unit had lost 5 paise to close at one-week low level of 68.13 in yesterday's trade.

PTI

Shares of the country’s largest auto component maker jumped 4 percent to Rs 338 after it offered to acquire a Finland’s PKC Group for as much as 571 million euros ($610 million).

The Indian company will make a public tender offer of 23 euros a share for the truck wire maker, it said in a statement, which is a 51 percent premium over PKC’s closing stock price on Thursday. The acquisition is said to be completed by March.

Indian shares opened lower, tracking mixed set of global cues, and as a disappointing set of third quarter earnings from the country's third largest private sector lender weighed on sentiment.

The S&P BSE Sensex dropped as much as 0.4 percent to 27,196 while the NSE Nifty too lost 0.4 percent and slipped briefly below the 8,400-mark before paring some of its losses.

Axis Bank slumped as much as 6.5 percent, the most since November 9, and was the worst performer on the Sensex, the Nifty and the BSE 500 indexes.

Movers & Shakers: Axis Bank, Orient Green Power, Idea Cellular And More

• Alembic: Q3 profit Rs 68 lakh versus Rs 3.91 crore loss YoY
• Axis Bank: Q3 profit slumps 73 percent to Rs 580 crore, misses estimate of Rs 830 crore after provisions at Rs 3,800 crore versus Rs 713 crore year ago
• Central Bank of India: To consider bond buy-back on January 23
• Gallantt Ispat: Q3 profit Rs 9.31 crore versus Rs 8.17 crore YoY
• Lakshmi Vilas Bank: May consider raising Rs 600-700 crore in next 12 months
• MindTree: Q3 profit Rs 103 crore, estimate Rs 105 crore
• Motherson Sumi in tender offer for PKC to merge wiring business
• Sundaram Finance: To merge insurance broking ops with unit LGF Services
• Zuari Global: Says unit Adventz Group and Poland’s Forte to form furniture venture in India
• Axis Bank cut to underperform versus neutral at Macquarie
• Axis Bank raised to hold versus reduce at Reliance Securities
• Dish TV rated new buy at Nomura
• Zee Entertainment rated new buy at Nomura

Offerings

• Further Fund Offer (FFO) for CPSE ETF offer to close Jan. 20

• Adani Power
• Atul
• Canara Bank
• Indiabulls Housing Finance
• Jyothy Laboratories
• NIIT
• Rallis India
• RBL Bank
• Sintex Industries
• VST Industries

• India December oil output fall 0.8 percent YoY; gas output flat YoY
• December refinery production rose 6.4 percent YoY to 21.44 million tonne
• India extends anti-dumping duty on nylon filament yarn from China
• CCI penalises 7 cement companies for alleged collusion in a tender
• Government approves six FDI proposals
• India’s SEBI seeks views on commodity derivatives exchange norms
• India payment utility NPCI asks ICICI to open UPI transactions
• JM Financial Products to consider debentures issue
• Global funds sell Rs 132 crore of local stocks; domestic funds buy Rs 380 crore yesterday: Provisional data
• Sugar climbs to 2-month high on lower Indian supply
• TRS cuts Indian sugar-output forecast; import estimate unchanged
• Indian banks said to seek reprieve for $13 billion loan revamp
• Lenders ask central bank to relax rules under S4A programme
• Vinci to bid for new Mumbai airport within weeks (Reuters)
• Amid India’s central bank turmoil, new deputy enters policy fray
• Delhi Police Commissioner Alok Verma appointed new CBI chief (PTI)

Indian rupee may post a gain against the dollar this week. The rise will be the first in six weeks. Asian currencies were up against the dollar after the Fed Chair Janet Yellen said the rate increase will be gradual.

In bond news, the yields on the longer-term Indian bonds are likely to rise in 2017 as the spread with U.S. Treasuries narrows, according to SocGen. Traders are concerned about the demand for longer tenure notes in today's auctions, as the underwriting fees rose sharply, signaling a weak appetite.

Good Morning!

The Nifty futures on the Singapore Stock Exchange, an early indicator of Nifty’s performance in India, fell 0.2 percent to 8,425.

Most Asian equities traded in a narrow range this morning, as investors digest a slew of economic data from China, latest comments from Fed Chair Janet Yellen and await U.S. President-elect Donald Trump’s inauguration.

China’s gross domestic product rose 6.8 percent in the fourth quarter last year, slightly better than economists’ estimate.

• Retail sales increased 10.9 percent from a year earlier in December, compared with the projected 10.7 percent advance
• Industrial production rose 6 percent in December from a year earlier, compared with and estimated 6.1 percent rise
• Fixed-asset investment excluding rural areas expanded 8.1 percent for the full year

The dollar erased an advance after Janet Yellen said it’s prudent for the Federal Reserve to gradually adjust policy over time.

Long-term strength of the dollar is important “now more than ever”, Treasury Secretary nominee Steven Mnuchin told U.S. lawmakers during his confirmation hearing on Thursday before the Senate Finance Committee.

Jobless claims declined by 15,000 to 234,000 for the week ending January 14, according to data from the U.S. Labor Department. The median estimate of analysts surveyed by Bloomberg stood at 252,000.

Oil extended Thursday's gains after government data indicated that U.S. crude stockpiles at its biggest storage hub, at Cushing, Oklahoma, dropped the most since October.

Gold traded 0.2 percent higher around the $1,200 an ounce mark and is set to post the fourth straight week of gains.