Sensex Swings 781 Points, Ends With Gain

Indian equity benchmarks rebounded despite Urjit Patel's exit from Reserve Bank of India and ruling Bharatiya Janata Party trailing to Congress in Rajasthan and Chhattisgarh.

The S&P BSE Sensex rose 0.54 percent or 190 points to 35,150 and the NSE Nifty 50 Index advanced 0.6 percent or 61 points to 10,549. In the intraday deals, Sensex swung 781 points while the Nifty touched high of 10,567 and low of 10,334.

Bharatiya Janata Party is set to lose power to Congress in Chhattisgarh and Rajasthan. While, both the parties were neck and neck in Madhya Pradesh. In Telangana, TRS headed by K Chandrsekar Rao and MNF in Mizoram are set to form the government.

"Markets have probably given a thumbs up to a formation of stable government in various states", AK Prabahakar, head of research at IDBI Capital told BloombergQuint over phone.

All 11 sector gauges compiled by National Stock Exchange ended higher led by the Nifty PSU Bank Index's 2.65 percent gain.

Mid- and small-cap shares outperformed their larger peers as the Nifty Midcap 100 Index climbed 1.7 percent and the Nifty Smallcap 100 Index advanced 1.8 percent.

While the current scenario could lead to lower market levels, we believe that the fundamentals of corporate India are likely to improve and therefore the current downtrend would pose an attractive value for the long-term investors, Nilesh Shah, MD & CEO, Envision Capital, told BloombergQuint in an interview.

Key highlights of the conversation:

• The investors are currently focusing on the political outcome over the corporate earnings. This would lead to some uncertainty and therefore the investors would hold back until there is clarity.
• We are bullish on India with a long-term view due to falling commodities and crude oil prices.

The Indian National Congress and Bharatiya Janata Party are locked in a close fight in Rajasthan, with both parties below the half-way mark. The BJP is leading in 111 seats while the Congress is trailing with a lead in 108 seats, after multiple swaps over the last hour.

Click here for live coverage of election results

• 3M India: The Bengaluru-based container and packaging products maker fell as much as 1.15 percent to Rs 20,700. Trading volume was 40 times its 20-day average.
• Gayatri Projects: The Hyderabad-based road developer rose as much as 8 percent to Rs 176. Trading volume was 12 times its 20-day average.
• GE Power: The Noida-based power generation and energy deliver services company rose as much as 1.5 percent to Rs 825. Trading volume was 10 times its 20-day average.
• IFB Industries: The Kolkata-based home improvement products maker rose as much as 4 percent to Rs 811.25. Trading volume was more than seven times its 20-day average.

F&O data suggest significant build-up in open interest in futures of 23 non-bank lenders’ stocks. Mahindra & Mahindra Financial Services Ltd., Ujjivan Financial Services Ltd. and other peers saw an increase in long positions.

About 77 percent of the stocks in F&O universe, including Colgate Palmolive Ltd., Jubilant Foodworks Ltd. and Godrej Industries Ltd., have seen buying positions. That’s a complete turnaround compared with the extreme sentiment going into the state election verdict day with 91 percent of the scrips on negative side since start of this expiry.

About 60 percent of the stocks had seen a short build-up while 31 percent witnessed long liquidation since Nov. 30 until close of trade on Monday. Such an extreme sentiment sometimes acts as a contrarian indicator and it may not be a surprise if market stabilises at the current levels in the near term.

Congress' Sachin Pilot, who has been touted to be the chief ministerial candidate, is leading his BJP Rival Yoonus Khan in the Tonk constituency by over 15,000 votes.

The Tonk constituency has fluctuated between the Congress and BJP since 1998. Khan, who is currently the state's transport minister, is the only Muslim candidate fielded by the BJP in Rajasthan.

Congress is leading on 91 seats in Rajasthan, while the BJP is gaining ground and leading on 84 seats.

Click here for live coverage of election results

• Indian equity benchmarks rebound from day's low.
• The S&P BSE Sensex Index rose as much as 0.6 percent to 35,199.15 and the NSE Nifty 50 Index rose as much as 0.7 percent to 10,565.55.
• About 1,184 stocks advanced and 496 shares declined on National Stock Exchange.

The Congress party is holding on to its dominance in Rajasthan by a narrow margin, a state where it was expected to make a clean sweep.

Congress is currently leading in 92 seats while the BJP is leading in 82 seats.

Click here for live coverage of election results

Pharma and IT stocks rose after rupee depreciatedd against the dollar. Indian rupee fell as much as 1.58 percent to 72.46 per dollar before recovering to 71.88.

Gauge of pharma stocks on National Stock Exchange surged 2 percent while the Nifty IT Index climbed 1.2 percent.

Indian equity benchmarks rebounded while rupee came off day's low after the Bharatiya Janata Party took lead on 115 seats in Madhya Pradesh.

The S&P BSE Sensex rose 0.01 percent or 4 points to 34,964 and the NSE Nifty 50 Index advanced 0.12 percent or 12 points to 10,500.

Twelve of 19 sector gauges compiled by BSE were trading higher led by the S&P BSE Healthcare Index's 1.5 percent gain. On the flipside, S&P BSE Oil & Gas Index was top loser, down 1.2 percent.

India's gauge of volatility — India VIX cooled off sharply after it dropped 12.5 percent to 17.84 from intraday high of 20.44.

Click here for live coverage of election results

Relationship between Reserve Bank of India and government is of of natural friction and its requires maturity on both sides but surprised Urjit Patel's resignation, Vallabh Bhansali, co-founder of Enam Financial Consultants told BloombergQuint in an interview.

Key highlights of the conversation:

• Patel gave great account of his capability on various fronts
• Oil is biggest factor for Indian markets
• China - U.S. trade war, prospects of a recession in the U.S. a cause for concern
• Domestic order and demand situation fairly encouraging
• Need a healthier dialogue between Government and RBI to manage a complex country like India
• Communication lines need to be open between the government and RBI
• Investment climate in India is just starting to thaw
• Need to ensure that the deserving are not starved of credit
• Need more understanding about RBI's reserves and government's intentions for the same
• Resolution of the bad loan issue needs to continue
• It is clear that the board cannot run the RBI
• India has a real opportunity to assert its position on the world
• No institution can be over and above the national agenda
• Slightly surprised by the market reaction considering the uncertainty
• A BJP victory in Madhya Pradesh will give the markets comfort

The Congress is set to lose its last feather in India’s north-eastern states as the Mizo National Front leads in 28 out of 40 seats. Mizoram went into elections on 28 November, recording an 80 percent voter turnout.

The BJP currently holds power in Assam, Manipur and Tripura.

Click here for live coverage of election results

Indian equity benchmarks came off intraday low levels as buying emerged in TCS, Sun Pharma and Infosys tracking weakness in rupee.

The S&P BSE Sensex declined 0.47 percent or 162 points to 34,797 and the NSE Nifty 50 Index fell 0.4 percent or 45 points to 10,443.

Eleven of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Energy Index's 1.4 percent fall. On the flipside, S&P BSE IT Index was the top gainer, up 1 percent.

The overall breadth was neutral as 1,022 shares were advancing while 921 were declining on the BSE.

On the election results front, BJP was trailing in incumbent states of Rajasthan and Chhattisgarh. While, it was neck and neck fight between Congress and BJP in Madhya Pradesh. In Telangana and Mizoram regional parties, TRS and MNF were leading respectively.

About 15 lakh shares of ICICI Bank changed hands in a block deal, according to Bloomberg data. Buyers and sellers were not known immediately.

Gauge of mid cap shares edged higher in an otherwise volatile session. Nifty Midcap rose as much as 0.28 percent to 16,698.

Quess Corp, Hexaware, Glenmark, Power Finance Corporatoion and Info Edge were among top gainers from mid-cap space.

Nifty's 10,000 strike price put option contract was among the most active option contracts on the National Stock Exchange.

Premium on the contract rose 10 percent to Rs 56. Over 8 lakh shares were added to the open interest which stood at over 53.48 lakh shares.

Prime Minister Narendra Modi ahead of parliament session:

• Have made a constant effort to engage in dialogue on all subjects
• Hope that the house works longer than scheduled
• Hope all parties make use of this session in the interest of the people

Shares of the Pune-based IT firm rose nearly 4.4 percent to Rs 236.50 per share.

Zensar Technologies was selected as IT infrastructure partner by European Bank for Reconstruction and Development, according to a notification to the bourses.

The stock traded at 16 times its estimated earnings per share for the coming year, according to data compiled by Bloomberg.

India's Sensex posted worst two-day decline since Oct. 8 as election results for five states were underway a day after Urjit Patel shocked investors by resigning from Reserve Bank of India's governorship.

The S&P BSE Sensex fell 1 percent or 378 points to 34,580 and the NSE Nifty 50 Index dropped 110 points to 10,378.

Election results as of 10:10 a.m. showed BJP trailing in Rajasthan and Chhattisgarh and a neck and neck fight in Madhya Pradesh. While, in Telangana TRS was leading on 73 seats and MNF was ahead on 25 seats in Mizoram.

Seventeen of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE Bankex Index’s 1.5 percent fall. On the flipside, S&P BSE FMCG Index was top gainer, up 0.3 percent.

Click here for live coverage of election results

Shares of the West Bengal-based rail carriage maker rose as much as 9.4 percent, the most in nearly five months, to Rs 72.50.

Titagarh won a contract to manufacture and supply 5,058 wagons to Indian Railways for Rs 1,560 crore, according to its exchange filing.

The wagons will be designed to carry coal, steel and stones. One -third quantity is to be supplied in next six months and the remaining orders to be supplied by February 2020, as stated in the contract.

Shares of the Mumbai-based of retail chain operator fell 1.34 percent to Rs 1,490 after UBS initiated sell for target price of Rs 950.

UBS in a note said:

• Revenue growth could disappoint; margins likely to be flattish
• Believe the stock could react negatively to any result disappointments
• Premiumisation in modern retail could impact discount retailers

Shares of banking and financial services companies were among the worst hit after Urjit Patel resigned from governorship of the Reserve Bank of India.

IndusInd bank, HDFC Bank, ICICI Bank and Axis Bank were among the top losers from the banking space.

• Nifty Bank Index declined 1.9 percent
• Nifty Private Bank Index fell 2 percent
• Nifty Financial Services Index dropped 2 percent

Indian equity benchmarks extended decline after results showed BJP trailing in all the three ruling states of Rajasthan, Chhattisgarh and Madhya Pradesh.

The Sensex fell 1.53 percent or 533 points to 34,426 and the NSE Nifty 50 Index dropped 1.47 percent or 155 points to 10,333.

Click here for live coverage of election results

Government knows it is under pressure and more stimulus should be expected going ahead, Ajay Srivastava, MD, Dimensions Corporate Finance Services told BloombergQuint adding that 30 percent of the portfolio should be cash at current juncture.

Key highlights of the conversation:

• 30 percent of the portfolio should be cash; will find more opportunities going ahead
• Look at aligning the portfolio to large banks, healthcare; should move on from midcaps
• Not the best time to increase allocation considering the uncertainty
• Commodity stocks are currently cheap; such opportunities come once in a while
• Inflation is not a very big worry at this point of time
• Expect more fiscal stimulus to get demand going
• Expect a more flexible person to head the Reserve Bank going ahead

Shares of the Mumbai-based private sector lender snapped its five-day losing streak and rose as much as 4.54 percent to Rs 172.85 in an otherwise weak session.

Yes Bank was among the two stocks which were gaining on the Sensex.

Indian equity benchmarks fell along with rupee and bonds after Reserve Bank of India's Governor Urjit Patel resigned citing personal reasons.

The S&P BSE Sensex fell 1.44 percent or 503 points to 34,457 and the NSE Nifty 50 Index dropped 1.46 percent or 153 points to 10,335.

Meanwhile, investors are awaiting results to five state assembly elections which are underway. Early trends showed the ruling Bharatiya Janata Party (BJP) lagging in Rajasthan and Chhattisgarh while it was ahead on 64 seats in Madhya Pradesh. In Telangana K Chandrashekar Rao's TRS was ahead on 31 seats and in Mizoram MNF was leading on seven seats.

Eight of 11 sector gauges compiled by the National Stock Exchange were trading lower led by the Nifty Financial Services Index’s 1.3 percent fall. On the flipside, the Nifty Media Index was top gainer, up 0.7 percent.

Indian rupee fell 1.55 percent to 72.44 per dollar against yesterday's close of 71.34 after Reserve Bank of India's Governor resigned citing personal reasons.

Yield on the 10-year government of India bond maturing in 2028 spiked 12 basis points to 7.71 percent.

Abrupt resignation of the central bank governor is not good for markets and it will now depend on the decisions that the government takes to bring down the risk premium, Jahangir Aziz, head of emerging markets economic research told BloombergQuint.

Key highlights of the conversation:

• Not concerned over government's demand over additional capital
• Question is for what purpose does the government want to use the excess capital
• Government cannot fund current expenditure with RBI's excess capital
• Concerned over providing separate windows to SME, NBFCs
• Previous monetary policy provides a significant support in terms of liquidity
• Question is over RBI's independence on and outside monetary policy

Reserve Bank of India is one of the most respected institutions of India and its reputation is looking shaky due to uncertainty, Arvind Sanger, managing partner at Geosphere Capital Management told BloombergQuint.

Key highlights of the conversation:

• Resignation of the RBI governor is event negative
• Markets likely to sell-off, people will stay on the sidelines till people get more clarity
• RBI is one of the most respected institution in India
• Reputation of the RBI currently looking shaky due to uncertainty
• India cannot afford to treat the viewpoint of foreign investors as inconsequential
• India has scored a 'self-goal' amidst improving global backdrop
• We are in a global risk-off market
• Investors not looking to take risk on countries where uncertainties are growing
• Uncertainties in India making it less attractive for investors

RBI governor Urjit Patel's resignation signals that agreement with government is allegiance with government and deference of opinion is its defiance, Shankkar Aiyar, political economy analyst & author told BloombergQuint in interview.

Key highlights of the conversation:

• RBI governor Urjit Patel's resignation signals that agreement with government is allegiance with government and deference of opinion is its defiance
• Needs to be factored in that Patel is the fourth internationally known economists who has quit
• Urjit Patel resisted government's diktats on power companies’ loans, easing norms for banks under PCA to lend
• If new governor accepts government's diktats it will be intriguing to see how Governor Acharya and Governor Vishwanathan react

Urjit Patel's resignation is a reaction of what transpired over the last two months between the Reserve Bank of India and government of India, former RBI Governor D Subbarao told BloombergQuint in an interview.

Key highlights of the conversation:

• Don’t believe that Governor Urjit Patel resigned for “personal reasons”
• First reaction is that I am surprised, but also not surprised
• Surprised because got impression that RBI, government had resolved differences
• Not surprised because Patel’s resignation was in realm of speculation
• Government pushing its positions resulted in Patel’s resignation
• The government has the right and responsibility to let views be known to RBI
• Government must respect the right ways to let their views be known
• I would see this as a morale booster for the RBI
• Patel’s resignation sends a strong message
• Government should respect the independence of the RBI
• Message has gone to government that there are limits to which it can push the RBI

Citi on Container Corp

• Maintained ‘Buy’ with a price target of Rs 806.
• Indian railway container volume growth slows.
• Longer-term prospects remain intact.
• Capex/capacity expansion plans remain on track.

UBS on Avenue Supermarts

• Initiated ‘Sell’ with a price target of Rs 950.
• Revenue growth could disappoint; margins likely to be flattish.
• Believe the stock could react negatively to any result disappointments.
• Premiumisation in modern retail could impact discount retailers.

Brokerages On RBI Governor Resignation

Macquarie

• Event will lead to lot of speculation on reasons for this move
• Market reaction will be swift regarding both Governor resignation and elections results
• Fiscal/monetary policy outcomes now get intertwined
• Will wait for the government to react before altering our view

UBS

• Any risk to central bank's credibility is negative for Indian assets
• Bond yields may gap higher by 10-15 basis points.
• Recommended being long 10y IGBs vs. Indian equities as top trade for the emerging markets in 2019.

Nomura

• Sudden resignation will lead to questions whether government is trying to stifle institutions.
• Lack of policy coordination between RBI and government, will mean higher India risk premium.

• Nifty December futures closed trading at 10,515, at a premium of 27 points.
• Max open interest for December series at 11,000 Call (open interest at 47.6 lakh shares).
• Max open interest for December series at 10,000 Put (open interest at 45.4 lakh shares).

• Capital Trust price band revised to 5 percent
• Navkar Corporation, Electrosteel Steels to move into ASM Framework

Insider Trading

• Aster DM Healthcare promoter Azad Moopen acquired 1.47 lakh shares from Nov. 30-Dec. 7.
• Dabur India promoter Ratna Commercial Enterprises acquired 70,000 shares on Dec. 6.
• Nava Bharat Ventures promoter group acquired 30,000 shares from Dec. 6-7.
• Mangalore Chemicals and Fertilizers promoter McDowell Holdings sold 45,000 shares on Dec. 5.
• Quess Corp promoter Ajit Isaac acquired 48,000 shares on Dec. 7.

Who’s Meeting Whom

• TCI Express to meet Motilal MF, Invesco MF and other investors from Dec. 11-12
• Cipla to meet JP Morgan, Centrum Broking and other investors from Dec. 17-24

• Titagarh Wagons has been awarded a contract to manufacture and supply 5,058 wagons to Indian Railways for Rs 1,560 crore. The wagons will be designed to carry coal, steel and stones. One -third quantity, comprising of 1,686 wagons is to be supplied in next six months and the remaining orders to be supplied by February 2020, as stated in the contract.
• Lupin received tentative U.S. FDA approval for Apibaxan Tablets, which is used for reducing risk of stroke and deep vein thromobosis.
• Zensar Technologies selected as IT infrastructure partner by European Bank for reconstruction and development.
• GMR Infrastructure arm raised Rs 225.6 crore through compulsory convertible debentures for investment in its 180MW hydro-project in Himachal Pradesh.
• Cox & Kings’ arm’s Education division received requisite approvals from respective authorities including the anti-trust approval for its sale to U.K. based Midlothian Capital Partners for 467 million pounds. The arm is now awaiting final approval from the travel regulator, Civil Aviation Authority. The company expects the transaction to conclude in 2018 itself.
• KDDL to acquire Swiss Watch Hands manufacturing Company named “Estima AG” for CHF 4,00,000 current turnover of Estima AG is CHF 1.8-2 million. The cut-off date for acquisition by new management is Jan. 07
• SBI To consider raising up to $1.25 billion in Dec. 12 meeting.
• ICICI Bank approved proposal for raising funds via bond sale.

• What brokerages are saying about Urjit Patel’s exit
• Who will be the next RBI Governor
• How money markets may react to RBI Governor Urjit Patel’s resignation
• U.K. court allows Vijay Mallya’s extradition to India
• Government wants to turn RBI into a board-managed company: Chidambaram
• Kotak moves court against RBI decision on promoter shareholding
• Theresa May backs down over Brexit votes in parliament, official says
• Modi faces test of popularity ahead of 2019 poll
• In charts: The economy under Urjit Patel’s governorship
• Real crazy rich Asian wedding to cost $100 million
• Does Arvind Subramanian believe India’s GDP and fiscal deficit data?

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 1.5 percent or 153 points to 10,364 as of 7:24 a.m. after Reserve Bank of India's Governor Urjit Patel resigned citing personal reasons ahead of state election results.

Asian stocks extended this week’s declines as investors shrugged off a U.S. rebound, with investors loath to “buy the dip” amid a panoply of concerns about the global outlook.

Benchmarks in Japan and South Korea fell, while stocks in Australia were little changed near a two-year low. U.S. futures declined even after the S&P 500 Index recovered from the lowest intraday level since April to finish higher, buoyed by rallies in Facebook Inc. and Microsoft Corp.

Short on time? Well, then listen to this podcast for a quick summary of the article!

Stocks

• The MSCI Asia Pacific fell 0.6 percent as of 10:00 a.m. in Tokyo.
• Japan’s Topix index fell 1 percent.
• Australia’s S&P/ASX 200 Index was little changed after reaching a two-year low.
• Hong Kong’s Hang Seng Index contracts fell 0.8 percent overnight.
• S&P 500 futures fell 0.4 percent. The S&P 500 Index rose 0.2 percent at the close of trading in New York Monday.

Currencies

• The Japanese yen rose 0.2 percent to 113.10 per dollar after decreasing 0.6 percent.
• The offshore yuan traded at 6.9190 per dollar after dropping 0.4 percent.
• The Bloomberg Dollar Spot Index was stable after increasing 0.5 percent.
• The euro was steady at $1.1354.
• The British pound was at $1.2553, near the weakest in almost 20 months, after sinking 1.3 percent.

Commodities

• West Texas Intermediate was steady at $51.01 a barrel. It slid 3.1 percent Monday.
• Gold traded little changed at $1,244.22 an ounce.