Indian shares dropped the most in nearly two weeks tracking weakness in global equities.
The Sensex lost nearly 1.2 percent to 26,241 while the Nifty dropped 1.3 percent to 8,085. This was the biggest single day drop for the indices since November 21. With this, both the key benchmarks have pared their weekly gains and are down 0.4 percent after gaining nearly 1 percent up until Thursday.
The market breadth was firmly in favour of the sellers at close with 1,182 stocks declining, 295 advancing 295 and 65 remaining unchanged.
Since morning, the market was following as per the rising global anxiety over today’s US employment data and the forthcoming Italian constitutional referendum. While RBI’s market stabilisation scheme (MSS) to suck the excess liquidity in the system provided some short-lived relief to banks. But the ongoing GST councils meet and the issues related to dual control & the road map to the implementation disrupted the investors’ mood.”Vinod Nair, head of research, Geojit BNP Paribas Financial Services said in a email.
Next week is likely to remain volatile as the focus shifts to key global events like U.S. Federal Reserve policy meet and the Italian referendum. According to Avinash Gorakshakar, head of research at Moneylicious Capital Advisory Services, a negative surprise could lead the Nifty testing the Brexit low of 7,927.
Locally, the RBI policy meet on December 7 will also be keenly watched. While the market has factored in a 25 basis point rate cut, a pause by the central bank, reacting to a Fed decision, could lead to further downside, said Gorakshakar.
The entire game is now based on liquidity; whether we see it coming in after the rate hike by Fed does happen. We are likely to see a selloff in Indian equities post the Fed hike; likewise, in gold.Gorakshakar told BloombergQuint.
Gorakshakar advises investors to be in a “wait and watch” mode for a week or so until the dust settles.
Chart of the Day
RBI Gets More Flexibility To Mop Up Surge In Liquidity
The Reserve Bank of India (RBI) is expanding the tools at its disposal to suck out the surge of liquidity in the banking sector following the government’s decision to scrap Rs 500 and Rs 1000 notes.
On Friday, the central bank said that the government has raised the limit for issuing market stabilization scheme (MSS) bonds to Rs 6 lakh crore compared to Rs 30,000 crore earlier.
Read the full report HERE
European Shares Decline
HCC Approves Fresh Share Issue Under Debt Restructuring Scheme
Debt-ridden Hindustan Construction Company said its board has approved issuance of equity shares as well as optionally convertible debentures to lenders under the scheme for sustainable structuring of stressed assets (S4A).
Stocks At 52-Week Highs
Stocks of Hindustan Construction Company Ltd., Balkrishna Industries Ltd., and Engineers India Ltd., surged to their 52-week highs in trade today.
- Hindustan Construction Company surged to its 52-week high of Rs 42.65 before giving up gains to trade lower by 0.6 percent. The stock has gained 53 percent over the last one year.
- Balkrishna Industries too surged to an intraday high of Rs 1,280 before giving up gains to trade higher by 3.6 percent at Rs 1,231. The stock has gained almost 90 percent in the last one year.
- Engineers India scaled its highest level in 12-months of Rs 304.30 but turned negative to trade lower by 1.7 percent at Rs 294. The stock has gained over 27 percent in the last 12-months.
Bonds Markets Bet On 25 Bps RB Rate Cut
Auto Majors Hit By Demonetisation
Shares of Bajaj Auto Ltd., and Hero MotoCorp Ltd., fell 0.5 percent each after they posted a drop in sales for the month of November.
While Bajaj Auto saw a 13 percent drop in their overall sales, their exports continued to slid for the 14th month in a row.
On the other hand, Hero MotoCorp saw a 25 percent fall in sales for November. The company attributed the slump due to the demonetisation initiative undertaken by the Narendra Modi government.
Rupee Extends Gains To Day 4
Extending gains for the fourth session, the rupee appreciated by another 5 paise to 68.29 against the U.S. dollar in early trade on continued selling of the American currency by banks and exporters.
Forex dealers said the dollar's weakness against some currencies overseas led to the rupee upmove. However, a weak opening in domestic equity market restricted the gains in rupee, they said.
Yesterday, the domestic currency had gained 4 paise to end at one-week high of 68.34 against the resurgent dollar following robust macro-economic data even as crude prices jumped after the historic OPEC deal.
Indian shares dropped the most in two-weeks tracking weak Asian trade after fresh concerns emerged around the pickup in U.S. economy and stability in Europe.
The S&P BSE Sensex fell 0.7 percent to 26,359 while the NSE Nifty dropped 0.8 percent to 8,128. The market was firmly in favour of the sellers at 952 advances, 431 declines and 450 stocks remained unchanged.
Money Markets Heads Up
Stocks to Watch
- Astrazeneca Pharma: Says AstraZeneca U.K. extended the date of distribution right for Meronem up to July 31
- Bharti Infratel: Brookfield said in exclusive talks to takeover Bharti Infratel; Offers around Rs 400 per share (Bloomberg)
- Clariant Chemicals: Q2 profit Rs 3.46 crore versus Rs 24.89 crore
- Coal India: November output rises 5.3 percent YoY to 50 million tonne
- Tata Motors: November sales flat at 38,900 units
- TVS Motor: November sales at 224,971 units versus 225,401 units YoY
- Valecha Engineer: To consider pact to convert deposits to shares
- Wipro: Wins 3-year IT infra services deal from Woodside
- Eros International Media to consider raising funds via NCDs sale
- Hindustan Construction: To consider issue of 24.44 percent shares and OCDs of expanded capital
5 Things To Watch
- No proposal to split Coal India, says Coal secretary Kumar
- Indian steelmakers raise prices to make up for costlier coal
- Large notes ban doesn’t infringe on citizens’ rights: Government to apex court
- Delhi court observes Tata must find a way to pay NTT Docomo
- SEBI asks stock exchanges to connect colocation centers
- India top court to hear Kerala co-op banks’ plea on notes ban
- India GST Council to consider revised laws on December 2-3
- Cotton market seen facing little impact from India currency woes
- Global funds sell Rs 403 crore of local stocks; domestic funds buy Rs 238 crore yesterday: Provisional data
The Nifty futures on the Singapore Stock Exchange, an early indicator of Nifty’s performance in India, fell 0.6 percent to 8,158.
Asian stocks declined this morning as fresh concerns over the U.S. outlook and stability in Europe weigh on the dollar and global equities. The yen extended its rebound against the greenback amid caution ahead of key American jobs data.
Investors will be looking to Friday’s non-farm payrolls data for more clues as to the pace of interest-rate increases in the U.S., after the number of Americans filing for unemployment benefits rose to the highest level since June.
Besides that, Italy’s referendum on reducing the power of the Senate is also weighing on risk sentiment, given a win for ‘No’ could result in the government’s ouster.
On Thursday, a sharp decline in technology stocks pulled both the Nasdaq and the S&P 500 indexes into the red, while the Dow managed to notch a record closing high with a lift from bank and energy shares.
Oil prices were headed for its biggest weekly gain since August 2015 post a first supply cut deal in eight years by members of the OPEC (Organization of Petroleum Exporting Countries). Investors are now focussed on how strictly will the deal be implemented.
Analysts at Morgan Stanley and Goldman Sachs Group Inc. are expecting oil prices to rally to as high as $60 per barrel.