A trader reacts while working in a brokerage house in Mumbai, India. (Photographer: Prashanth Vishwanathan/Bloomberg News)

Sensex, Nifty End At Over 1-Month Low After RBI Status Quo

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Closing Bell

Indian equity benchmarks fell to their lowest level in over a month led by losses in banking shares after the Reserve Bank of India kept key rates unchanged and maintained its neutral policy stance.

The S&P BSE Sensex fell 0.63 percent or 205 points to 32,597 and the NSE Nifty 50 Index declined 0.73 percent or 74 points to 10,044.

The losses in today's session were broad based as the S&P BSE MidCap Index fell 0.9 percent and the S&P BSE SmallCap Index declined 0.66 percent.

Barring the Nifty IT Index, all sector gauges compiled by the National Stock Exchange ended lower led by the Nifty PSU Bank Index's 2.1 percent fall.

Countdown

RBI Governor Urjit Patel On RBI Monetary Policy

  • Neutral stance is for a reason that all possibilities are on the table
  • ‘Very small’ change in inflation projection for October-March
  • To look at growth, inflation data in coming months
  • Wholesale deposit rate was very low
  • Rise in some bulk deposit rates a qualitative assessment
  • MPC reiterated commitment to meet inflation target of 4 percent
  • MPC considered upside pressure of food, living costs
  • MPC votes to leave repo rate unchanged at 6 percent by 5-1

RBI Deputy Governor Viral Acharya Says

  • Liquidity situation normalising
  • Banking system liquidity moving to neutrality
  • Liquidity should still be in surplus at the end of FY2018
  • Neutrality should be achieved by first half of FY19: RBI estimates
  • To consider OMOs in case needed

Rate Sensitive Shares Extend Losses

Rate sensitive banking, finance and auto shares extended losses after the Reserve Bank of India kept key rates unchanged and maintained its neutral stance.

  • NSE Nifty Bank Index fall 0.8 percent
  • S&P BSE Auto Index declines 0.6 percent
  • S&P BSE Finance Index falls 1 percent

RBI Says:

  • FY18 real GVA growth aim stays 6.7 percent with risks evenly balanced
  • See recent rise in crude prices sustain after OPEC decision
  • CPI seen 4.3-4.7 percent Oct-Mar, including rent allowance hike
  • See recent rise in crude prices sustain after OPEC decision
  • MPC committed to keep CPI close to 4 percent on durable basis
  • Impact of house rent allowance by centre see easing Dec.
  • Risk of upward non-food, fuel inflation trend continuing
  • Prices of pulses showing a downward bias
  • Home rent allowance hike impact seen 35 basis points on inflation
  • Risks to CPI inflation projection evenly balanced
  • Seen pick up in bank credit growth, PSU bank infusion to aid
  • Survey shows improvement in overall economic situation January-March

RBI Leaves Key Rates Unchanged

  • Repo rate unchanged at 6 percent
  • RBI retains neutral monetary policy stance
  • Reverse repo rate unchanged at 5.75 percent
  • One member of RBI'S MPC voted in favor of rate cut
  • Five members of RBI'S MPC voted in favor of policy decision
  • GROWTH of gross fixed capital formation improved in Q2
  • Next MPC meet to happen on Feb. 6-7

Market Check

Indian equity benchmarks extended losses after the Reserve Bank of India kept key rates unchanged and maintained its neutral stance.

The Sensex fell 0.47 percent to 32,643 and the NSE Nifty 50 Index was hovering around its crucial psychological level of 10,050.

Ajay Bagga To BloombergQuint

  • Equity market not expecting much from Reserve Bank of India's monetary policy decision
  • Market will watch out for GVA growth projection for next two quarters, inflation projection and what is the liquidity policy of the RBI

European Shares Slide

Market Check

  • Indian equity benchmarks continue to trade on a weak note ahead of Reserve Bank of India's monetary policy decision.
  • The S&P BSE Sensex fell 0.3 percent to 32,697 and the NSE Nifty 50 Index declined 0.45 percent to 10,070.
  • Rate sensitive indices were trading lower ahead of the policy decision. The S&P BSE Bankex, Realty, Finance and Auto indices were down 0.12-0.65 percent.
  • S&P BSE Metal Index was the top sectoral loser, down 2.2 percent as prices of base metals fell to a two-month low in international markets.

Top Nifty Losers

  • Hindalco
  • Vedanta
  • Bajaj Finance
  • UltraTech Cement
  • Sun Pharma

Top Nifty Gainers

  • Tech Mahindra
  • HUL
  • Reliance Industries
  • Coal India
  • Infosys

Metal Makers Crack As Base Metal Prices Fall To Two-Month Low

Shares of metal producers were trading lower after the base metal prices fell to two-month low.

Power Lunch

Rate Sensitives Decline Ahead Of RBI's Policy Decision

Shares of companies in the interest rate sensitive sectors such as real estate, automobile, banks and finance companies were trading lower ahead of the Reserve Bank of India's monetary policy review.

  • S&P BSE Finance Index falls 0.65 percent
  • S&P BSE Bankex Index declines 0.57 percent
  • S&P BSE Auto Index falls 0.55 percent
  • S&P BSE Realty Index slips 0.12 percent

#Ask BQ

Suven Life Sciences Rises On Securing Product Patents

Shares of the Hyderabad-based drugmaker rose as much as 5 percent, the most since Nov. 21, to Rs 199.90 after it secured product patents from Eurasia and Norway corresponding to the New Chemical Entities (NCEs) for the treatment of disorders associated with Neurodegenerative diseases, the company said in a press release.

Market Check

  • Indian equity benchmarks extended losses led by decline in banking shares ahead of the Reserve Bank of India's monetary policy review.
  • The S&P BSE Sensex declined 0.4 percent to 32,677 and the NSE Nifty 50 Index fell 0.49 percent to 10,068.
  • Seventeen out of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Metal Index's 2.2 percent fall. On the other hand, the S&P BSE Energy index was the top sectoral gainer, up 0.38 percent.
  • From the Nifty 50 basket of shares, 43 were trading lower while 7 were among the gainers.

Hot Money

Nifty Breaks Below 100-Day Moving Average Of 10,071.9

China Development Bank Seeks Clubbing Reliance Telecom Insolvency With RCom

Shares of the debt laden telecom operator fell 1.76 percent at Rs 11.15. China Development Bank has sought to club Reliance Telecom insolvency with Reliance Communications insolvency.

  • Reliance Telecom expressed intent to oppose clubbing.
  • NCLT has adjourned Reliance Telecom insolvency petition to Dec. 18.

Apex Frozen Foods Locked In Upper Circuit For Eighth Day

Shares of the shrimp producer rose by its daily maximum limit of 5 percent to record high of Rs 902.10. The stock has risen over 300 percent since the day it got listed on stock exchanges outperforming the S&P BSE IPO Index which has during the course declined 1.3 percent.

Tend Spotting

Tata Communications Gains Nearly 2% On Partnering With Thai Start-Up

Shares of the Mumbai-based telecom company rose as much as 1.89 percent, the most since Nov. 21, to Rs 681 after a Thai start-up DRVR, an international fleet management application provider selected Tata Communications as its global IoT (internet of things) connectivity partner.

Banking Stocks Fall Ahead Of RBI Monetary Policy Decision

Banking shares were trading lower ahead of the Reserve Bank of India's monetary policy decision due later in the day. A poll by Bloomberg News suggests that most economists expect a status quo policy.

Atlas Cycle Locked In 5% Lower Circuit

Shares of the Sonepat-based bicycle maker fell as much as 5 percent to Rs 207.65 after Bank of Baroda and Central Bank of India downgraded the company's debt to non-performing.

Punjab Chemicals Gains Ahead Of Board Meet to Discuss Fund Raising

Shares of the Chandigarh-based pesticide maker rose as much as 6.88 percent, the most in nearly two months, to record high of Rs 455 ahead of its board meet on Dec. 8 to consider raising funds.

The F&O Show

Expect Status-Quo In Monetary Policy Decision: Bloomberg Poll

A poll by Bloomberg News suggests that most economists expect a status quo policy. Forty-one of 46 economists polled expect the repo rate to remain unchanged at 6 percent, while a small minority expects another 25 basis point cut to 5.75 percent.

Most economists also expect the Reserve Bank of India to maintain its neutral stance, giving the central bank flexibility to move in either direction, should economic data throw up any surprises in the coming months.

Indian Open

Shilpa Medicare Falls On Receiving 10 Observations From U.S. FDA

Shares of the Raichur-based specialty pharma company fell as much as 6.5 percent, the most in nearly four months, to Rs 596.25. The company has received Form 483 with 10 observations from the U.S. drug regulator for its manufacturing facility at Jadcherla in Telangana, Shilpa Medicare said in a stock exchange filing.

Seven observations are for improvement in procedures and practices while the rest are related to setting of analytical specifications, test procedures and method validation, the company added.

Stocks Reacting to Q2 Earnings

Windsor Machines: The Mumbai-based maker of plastic processing machines rose as much as 13.16 percent to Rs 105.

  • Revenue up 8 percent at Rs 86 crore.
  • Net profit up 30 percent at Rs 7.8 crore.
  • Ebitda up 18 percent at Rs 13 crore.
  • Margin at 15.1 percent versus 13.8 percent.

Harrisons Malayalam: The Cochin-based tea producer rose as much as 7 percent, the most since Nov. 30, to Rs 108.

  • Revenue flat at Rs 92.5 crore.
  • Net profit up 13 percent at Rs 87 crore.
  • Ebitda down 27 percent at Rs 3.3 crore.
  • Margin at 3.6 percent versus 4.9 percent.

The Byke Hospitality: The Mumbai-based hotel operator fell as much as 1.9 percent, the most since Nov. 22, to Rs 168.

  • Revenue down 45 percent at Rs 29.4 crore.
  • Net profit down 10 percent at Rs 5.2 crore.
  • Ebitda down 5 percent at Rs 11.3 crore.
  • Margin at 38.4 percent versus 22.2 percent.

Plastiblends: The Mumbai-based specialty chemical company fell as much as 8.5 percent, the most since July 10, to Rs 220.

  • Revenue up 12 percent at Rs 144 crore.
  • Net profit down 62.5 percent at Rs 3 crore.
  • Ebitda down 33 percent at Rs 10 crore.
  • Margin at 6.9 percent versus 11.6 percent.

Dish TV: The Noida-based satellite television service provider fell as much as 2.9 percent, the most since Nov. 30, to Rs 78.20.

  • Revenue down 4 percent at Rs 749 crore.
  • Net loss of Rs 16 crore from a profit of Rs 70 crore.
  • Ebitda down 18 percent at Rs 216.5 crore.
  • Margin at 28.9 percent versus 34 percent.

Lux Industries: Kolkata-based apparel maker rose as much as 3.27 percent to record high of Rs 1,477.

  • Revenue down 15 percent at Rs 226 crore.
  • Net profit down 23.5 percent at Rs 13 crore.
  • Ebitda down 17 percent at Rs 29 crore.
  • Margin at 12.8 percent versus 13.1 percent.

Manali Petrochemicals: The Chennai-based petroleum products maker fell as much as 3.21 percent to Rs 36.15.

  • Revenue up 7 percent at Rs 148 crore.
  • Net profit down 16 percent at Rs 9.2 crore.
  • Ebitda down 26 percent at Rs 14 crore.
  • Margin at 9.5 percent versus 13.7 percent.

Opening Bell

Indian equity benchmarks opened lower ahead of Reserve Bank of India’s monetary policy decision.

The S&P BSE Sensex Index fell as much as 0.3 percent to 32,706, while the NSE Nifty 50 Index fell as much as 0.4 percent to trade below 10,100 mark.

The market breadth was tilted in favour of sellers. Fifteen out of 19 sectoral gauges compiled by BSE dipped, led by S&P BSE Metal Index’s 1.06 percent decline. On the flip side, S&P BSE Energy was the top sectoral gainer as it advanced 0.3 percent.

Rupee Opens Marginally Lower

  • Rupee opens lower at 64.43 per dollar against Tuesday’s close of 64.38.

Bitcoin Crosses $12,000 Mark

BQ Heads Up

F&O Cues

  • Nifty December Futures trading at 10,146.7, premium of 28.7 points versus 31.5 points.
  • December Futures: Nifty open interest up 6 percent, Bank Nifty open interest up 3 percent
  • India VIX closed one percent higher at 15.
  • Max open interest for Dec. series at 10,500 Call (open interest at 62.2 lakh, up 1 percent).
  • Max open interest for Dec. series at 10,000 Put (open interest at 80.4 lakh).

IPO

  • Shalby Limited IPO continues on day 2. The issue was subscribed 0.21 times on day 1.
  • Future Supply Chain Solutions IPO opens with a price band of Rs 660-664.

Trading Tweaks

  • Last trading day before ex-entitlement for buyback: Novartis and Lovable Lingerie.
  • Circuit filter revised to 10 percent: Oceanic Foods.
  • Circuit filter revised to 5 percent: Ramky Infra and Soma Textiles.

Brokerage Radar

Morgan Stanley on Aditya Birla Capital

  • Initiated ‘Equal-weight’ rating with price target of Rs 185.
  • Expect steady rise in profitability in lending and asset management.
  • ABCL gives good exposure to rising financialisation in India.
  • Expect net profit compound annual growth rate of 33 percent and 35 percent for NBFC and AMC respectively by March 2020.
  • Positives: diversified loan book, low cost of funds and low cost of operations
  • Good long-term growth story but near-term valuation seems full
  • Higher rates and competition from PSU banks will likely remain an overhang
  • Would turn positive if there is strong pickup in growth and/or sustained increase in return ratios
  • Bull Case price target of Rs 330: Expect strong volume coupled with improvement in profitability

CLSA on Bharat Forge

  • Maintained ‘Buy’ with price target of Rs 905.
  • Outlook for Bharat Forge’s exports improved.
  • Demand pick-up in US trucks and industrial exports.
  • Expect earnings per share to grow at a compound annual growth rate of 34 percent by March 2020.
  • Valuations not cheap but should sustain.
  • Tightening emission norms (BS-VI) is positive; Electrification is a long-term risk.

Jefferies on Housing Finance

  • Housing Finance Companies to see steady loan growth.
  • Affordable housing gaining traction, especially LIG/EWS.
  • Positive on HFCs for medium term, but expect near term headwinds.
  • Prefer asset financiers with strong growth and leverage to rural recovery.
  • Prefer PNB Housing; Consumer Finance like Bajaj Finance and M&M Financials.

Citi on M&M

  • Maintained ‘Buy’; Raised price target to Rs 1,700 from Rs 1,670.
  • Farm equipment remains on a solid footing; But is overshadowed by utility vehicles weak performance.
  • Target price raised to adjust for stock prices of listed subsidiaries.
  • M&M is trying to put together an EV business dealing with regulatory uncertainty and ensuring capex don’t rise.

CLSA on Dish TV

  • Maintained ‘Buy’; raised price target to Rs 108 from Rs 97.
  • Concerned on slow recovery in ARPU/subscribers, but big merger synergies ahead.
  • Management has reiterated net synergies of Rs 510 crore in the next financial year from merger.
  • Expect Dish TV to deliver 10 percent Ebitda compound annual growth rate by March 2020 pre-merger.
  • Full synergy realisation to drive further 16 percent upside.

B&K on Dish TV

  • Maintained ‘Outperformer’; raised price target to Rs 95 from Rs 90.
  • Incremental recovery in operating metrics.
  • Management expects ARPU to improve in the current and next quarter, partly aided by GST.
  • Outperformer rating due to share price correction, recovery in ARPU, improved earning visibility and merger with Videocon d2h.

HDFC Securities on Dish TV

  • Maintained ‘Buy’; cut price target to Rs 102 from Rs 105.
  • Positive on the back of digitisation, merger with Videocon d2h and inexpensive valuations.
  • Materialization of synergy benefits post-merger is key near-term trigger.
  • Favourable ruling from the court on license fee, would increase price target by Rs 15.

Bulk Deals

  • 5paisa Capital: Promoter Nirmal Jain bought 1.25 lakh shares or 1 percent equity at Rs 191.22 each.
  • Sical Logistics: Samyaktva Constructions bought 3.68 lakh shares or 0.7 percent equity at Rs 215.37 each.
  • C&C Constructions: Trupti Karani sold 2.22 lakh shares or 0.9 percent equity at Rs 81.74 each.

Century Textiles

  • Cygnet Industries bought 17.85 lakh shares or 1.6 percent equity at Rs 1295.50 each.
  • Camden Industries sold 17.85 lakh shares or 1.6 percent equity at Rs 1295.50 each.

Technofab Engineering

  • Karuna Rajan sold 95,659 shares or 0.9 percent equity at Rs 232.58 each. Held 1.20 lakh shares (1.15 percent).
  • Consolidated Infrastructure Co. sold 55,000 shares or 0.5 percent equity at Rs 233.16 each. Held 1.34 lakh shares (1.28 percent).

Mandhana Retail Ventures

  • Mentor Capital bought 1.79 lakh shares or 0.8 percent equity at Rs 136.01 each.
  • Azarel fashions Pvt. Ltd. sold 1.78 lakh shares or 0.8 percent equity at Rs 136 each.

Earnings To Watch

Dish TV (Q2, YoY)

  • Revenue down 4 percent at Rs 749 crore.
  • Net loss of Rs 16 crore from a profit of Rs 70 crore.
  • Ebitda down 18 percent at Rs 216.5 crore.
  • Margin at 28.9 percent versus 34 percent.

Lux Industries (Q2, YoY)

  • Revenue down 15 percent at Rs 226 crore.
  • Net profit down 23.5 percent at Rs 13 crore.
  • Ebitda down 17 percent at Rs 29 crore.
  • Margin at 12.8 percent versus 13.1 percent.

Manali Petrochemicals (Q2, YoY)

  • Revenue up 7 percent at Rs 148 crore.
  • Net profit down 16 percent at Rs 9.2 crore.
  • Ebitda down 26 percent at Rs 14 crore.
  • Margin at 9.5 percent versus 13.7 percent.

Windsor Machines (Q2, YoY)

  • Revenue up 8 percent at Rs 86 crore.
  • Net profit up 30 percent at Rs 7.8 crore.
  • Ebitda up 18 percent at Rs 13 crore.
  • Margin at 15.1 percent versus 13.8 percent.

Harrisons Malayalam (Q2, YoY)

  • Revenue flat at Rs 92.5 crore.
  • Net profit up 13 percent at Rs 87 crore.
  • Ebitda down 27 percent at Rs 3.3 crore.
  • Margin at 3.6 percent versus 4.9 percent.

The Byke Hospitality (Q2, YoY)

  • Revenue down 45 percent at Rs 29.4 crore.
  • Net profit down 10 percent at Rs 5.2 crore.
  • Ebitda down 5 percent at Rs 11.3 crore.
  • Margin at 38.4 percent versus 22.2 percent.

Plastiblends (Q2, YoY)

  • Revenue up 12 percent at Rs 144 crore.
  • Net profit down 62.5 percent at Rs 3 crore.
  • Ebitda down 33 percent at Rs 10 crore.
  • Margin at 6.9 percent versus 11.6 percent.

Earnings To Watch

  • Dish TV
  • Harrisons Malayalam
  • Lux Industries
  • Manali Petro
  • Orient Bell
  • Plastiblends
  • Rane Holdings
  • Byke Hospitality

Talking Points

  • Cyclone Ockhi weakens, may not hit Gujarat coast: IMD
  • Quota in education and jobs a big problem, says PMEAC’s Surjit Bhalla
  • Godrej gets fresh order for Supersonic BrahMos Missile components
  • Eight PSU Banks to raise capital from market by March
  • Soon, policy to restrict pet coke imports: Oil Minister
  • RBI reiterates warning as Bitcoin hits another record
  • India’s Detroit struggles as new states become growth drivers
  • The SpiceJet rally may have more wind beneath its wings
  • Too early to comment on distribution of taxes between states, centre: NK Singh

Stocks To Watch

  • IRFC gets more than $1.6 billion orders for $500m 10-year green bond.
  • Rural Electrification Corp to start investor meetings from today for a U.S dollar three-year bond.
  • Gayatri Projects to Consider Raising Raising Via Shares/securities.
  • Hatsun Agro Products to consider Right Issue to Shareholders.
  • Lanco Infra to sell four renewable energy assets (Mint).
  • Aurobindo Pharma gets U.S. FDA nod for Ranolazine Extended Release Oral Tablet.
  • RBI allows foreign institutions to further buy shares of Bharat Financial.
  • Shilpa Medicare received 10 observations from U.S. FDA for its Telangana plant.
  • Indo National to provide corporate guarantee of Rs 8.5 crore on behalf of subsidiary.
  • Punjab Chemicals to consider raising funds at its board meeting on Dec. 8.
  • Atlas Cycles says lenders Bank of Baroda and Central Bank of India have downgraded the company debt to non-performing.
  • Hatsun Agro paid Rs 2.07 crore to the income tax authorities as per the settlement commission order.
  • Reliance Communications says petition filed by Fortuna PR is misconceived.
  • IRB Infra acquired additional 2.40 lakh units of IRB invit.
  • Byke Hospitality acquires 3 hotels in Shimla, Kovalam and Matheran.
  • Dalmia Bharat, Piramal Bain tie up for Binani Cement bid (Economic Times)

Policy Day Guide: Key Questions For The MPC To Debate

The monetary policy committee will deliver its fifth review of the financial year on Wednesday. A poll by Bloomberg News suggests that most economists expect a status quo policy.

Forty-one of 46 economists polled expect the repo rate to remain unchanged at 6 percent, while a small minority expects another 25 basis point cut to 5.75 percent.

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India was little changed at 10,134 as of 7:30 a.m.

Asian stocks are poised for the longest losing streak in two years as commodities companies led declines following a rout in copper prices.

A sub-index of mining companies weighed the most on the MSCI Asia Pacific Index, which is set to fall for eight days, making it the longest run of losses since 2015. Shares fell in Japan, Australia and South Korea.

Here are some key events scheduled for the remainder of the week:

  • The European Commission College of Commissioners discusses Brexit on Wednesday and will likely make its recommendation on whether sufficient progress has been made to move negotiations onto the future relationship.
  • The U.S. faces a partial government shutdown after money runs out on Dec. 8 if Congress can’t agree on a spending bill by then.
  • U.S. employers probably hired at a robust pace in November as the unemployment rate held at an almost 17-year low. The Labor Department’s jobs report Friday may also show a bump up in average hourly earnings.
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