Sensex, Nifty End Volatile Session With Losses On MPC’s Surprise Rate Pause

Indian equity benchmarks ended lower after a topsy-turvy session, following a surprise pause in rate cut by Monetary Policy Committee.

The S&P BSE Sensex fell 0.17 percent to end at 40,779.59 and the NSE Nifty 50 fell 0.21 percent to close at 12,018.40. The broader markets represented by the NSE Nifty 500 Index fell 0.25 percent.

The Monetary policy committee’s surprise move of keeping the rate unchanged will be a negative factor for stocks, Bloomberg reported quoting Samco Securities’ Umesh Mehta.

“The RBI has thrown the ball back to the government for them to do whatever is required to kickstart the economy. From investing point of view nothing has changed. It’s still expected that markets will be higher and the revival will happen eventually. From a trading point of view this could act as a pause, that the market won’t move higher immediately,” the head of research told Bloomberg, adding that the move will open up opportunities as the pause rate cuts could result in stock market volatility.

India’s Monetary Policy Committee unexpectedly keeps the benchmark repo rate unchanged at 5.15 percent. All 34 economists surveyed by Bloomberg as of Wednesday forecast a reduction, with the majority expecting a quarter-point cut, and the rest pegging reductions at between 15 to 50 basis points.

“This is the worst-case scenario I would have painted for RBI to muddy the waters by bringing in inflation concerns,” says HDFC Bank’s Abheek Barua, calling the policy “very mechanical and very unimaginative”.

Key highlights:

• MPC leaves repo rate unchanged at 5.15 percent.
• MPC keeps reverse repo rate unchanged at 4.9 percent.
• All MPC members voted to keep rates unchanged.
• MPC maintains monetary policy stance at "accomodative as long as it is necessary"

Read these to get up to speed:

• RBI tightens norms for urban cooperative banks.
• RBI raises peer-to-peer lending limit fivefold.
• Bonds drop most in two months.
• RBI fully aware of the vulnerabilities in NBFC sector, says Shaktikanta Das
• Monetary Policy: The cost of inflation targeting.

Finolex Cables

• Stock fell as much as 4.3 percent to Rs 345.
• Trading volume was more than 20 times its 20-day average.

Larsen & Toubro

• Stock rose as much as 2.2 percent to Rs 1,313.
• Trading volume was more than two times its 20-day average.

Can Fin Homes

• Stock rose as much as 6 percent to Rs 424.60.
• Trading volume was almost five times its 20-day average.

DCM Shriram

• Stock rose as much as 9.3 percent to Rs 374.90.
• Trading volume was more than 20 times its 20-day average.

DCM Shriram

• Stock rose for the second day and advanced as much as 9.3 percent to Rs 374.90.
• The company has commissioned 200 KLD distillery at Ajbapur on Dec. 3, according to its statement on the exchanges. “The total capacity of the company’s distillery after the said commissioning now stands at 350 KLD,” it added.

Gayatri Projects

• Stock rose as much as 4.9 percent to Rs 73.30.
• Company offer to sell 6 percent stake in Sembcorp Energy to Sebcorp Utilities for Rs 406 crore. Both the parties have signed a non-binding term sheet with each other.

Tata Elxsi

• Stock rose as much as 6.7 percent to Rs 861.
• Fresh longs seen with high OI of 50 percent.
• Trading volume was seven times its 20-day average.

Polycab

• Stock rose as much as 10 percent to hit an all-time high at Rs 1,091.70.
• Trading volume almost six times its 20-day average

Shares of JSW Steel fell as much as 3.5 percent to Rs 250.80.

The stock resumed declines after a one-day breather and was the worst performer on NSE Nifty 50.

JSW Steel traded at 14 times its estimated earnings per share for the coming year, according to Bloomberg data. Of the shares traded on NSE, about 41 percent were at the ask price and 49 percent were at the bid.

Indian equity benchmarks continued to fluctuate between gains and losses, following a surprise pause in rate cut by Monetary Policy Committee.

The S&P BSE Sensex fell 0.2 percent to 40,758 and the NSE Nifty 50 fell 0.26 percent to 12,011. The broader markets represented by the NSE Nifty 500 Index traded little changed.

India’s Monetary Policy Committee unexpectedly keeps the benchmark repo rate unchanged at 5.15 percent. All 34 economists surveyed by Bloomberg as of Wednesday forecast a reduction, with the majority expecting a quarter-point cut, and the rest pegging reductions at between 15 to 50 basis points.

Key highlights:

• MPC leaves repo rate unchanged at 5.15 percent.
• MPC keeps reverse repo rate unchanged at 4.9 percent.
• All MPC members voted to keep rates unchanged.
• MPC maintains monetary policy stance at "accomodative as long as it is necessary"

European stocks ticked higher with U.S. equity-index futures on Thursday after a mostly positive session in Asia as investors weighed the prospects of America removing a scheduled tariff hike on Chinese imports in 10 days.

• The Stoxx Europe 600 Index increased 0.1 percent.
• Futures on the S&P 500 Index climbed 0.1 percent.
• France’s CAC 40 Index advanced 0.3 percent.
• The MSCI Asia Pacific Index jumped 0.5 percent.
• The MSCI Emerging Market Index advanced 0.3 percent.

Get your daily fix of global markets here.
Source: Bloomberg

Shares of DCM Shriram rose for the second day and advanced as much as 9.3 percent to Rs 374.90.

The company has commissioned 200 KLD distillery at Ajbapur on Dec. 3, according to its statement on the exchanges. “The total capacity of the company’s distillery after the said commissioning now stands at 350 KLD,” it added.

The stock traded at 6.8 times its estimated earnings per share for the coming year, according to Bloomberg data.

Shares of MAS Financial Services extended gains for the second consecutive trading session. The stock rose as much as 9.3 percent to hit an all-time high at Rs 785.

Trading volume was more than 13 times its 20-day average, Bloomberg data showed. The Relative Strength Index was above 70, indicting that the stock may be overbought.

The stock rose 7.7 percent in the past five days and returned 8.8 percent in the past 30 days.

Shares of Federal-Mogul Goetze extended declines for the second consecutive trading session. The stock fell as much as 10.1 percent, the most in 10 months, to Rs 534.

Of the shares traded on National Stock Exchange, about 39 percent were at the ask price and 54 percent were at the bid, according to Bloomberg data. Trading volume was almost six times its 20-day average, Bloomberg data showed.

Indian equity benchmarks recovered after falling in the afternoon session, following a surprise pause in rate cut by Monetary Policy Committee.

The S&P BSE Sensex rose 0.2 percent to 40,930 and the NS Nifty 50 rose 0.11 percent to 12,056.70. The broader markets represented by the NSE Nifty 500 Index traded little changed.

India’s Monetary Policy Committee unexpectedly keeps the benchmark repo rate unchanged at 5.15 percent. All 34 economists surveyed by Bloomberg as of Wednesday forecast a reduction, with the majority expecting a quarter-point cut, and the rest pegging reductions at between 15 to 50 basis points.

Key highlights:

• MPC leaves repo rate unchanged at 5.15 percent.
• MPC keeps reverse repo rate unchanged at 4.9 percent.
• All MPC members voted to keep rates unchanged.
• MPC maintains monetary policy stance at "accomodative as long as it is necessary"

Read these to get up to speed:

• RBI tightens norms for urban cooperative banks.
• RBI raises peer-to-peer lending limit fivefold.
• Bonds drop most in two months.
• RBI fully aware of the vulnerabilities in NBFC sector, says Shaktikanta Das
• Monetary Policy: The cost of inflation targeting.

Shares of Polycab extended gains for the fifth consecutive trading session. The stock rose as much as 10 percent to hit an all-time high at Rs 1,091.70.

Trading volume almost six times its 20-day average, according to Bloomberg data. The stock advanced 99 percent in the past 12 months compared to 14 percent rally in the Sensex.

Polycab traded at 24 times its estimated earnings per share for the coming year, Bloomberg data showed.

RBI Executive Director Michael Patra says:

• Term premia have actually been coming down.
• There is transmission going through into the money market.

“This is the worst-case scenario I would have painted for RBI to muddy the waters by bringing in inflation concerns,” says HDFC Bank’s Abheek Barua, calling the policy “very mechanical and very unimaginative”.

The timing of rate cut is important to ensure greatest impact rather than mechanically cutting interest rates, RBI Governor Shaktikanta Das says in response to BloombergQuint’s Ira Dugal’s question.

Indian equity benchmarks fluctuated between gains and losses to trade little changed after India’s Monetary Policy Committee keeps unexpectedly keeps repo rate unchanged.

India’s Monetary Policy Committee unexpectedly keeps the benchmark repo rate unchanged at 5.15 percent. All 34 economists surveyed by Bloomberg as of Wednesday forecast a reduction, with the majority expecting a quarter-point cut, and the rest pegging reductions at between 15 to 50 basis points.

Key highlights:

• MPC leaves repo rate unchanged at 5.15 percent.
• MPC keeps reverse repo rate unchanged at 4.9 percent.
• All MPC members voted to keep rates unchanged.
• MPC maintains monetary policy stance at "accomodative as long as it is necessary"

The Monetary policy committee’s surprise move of keeping the rate unchanged will be a negative factor for stocks, Bloomberg reported quoting Samco Securities’ Umesh Mehta.

“The RBI has thrown the ball back to the government for them to do whatever is required to kickstart the economy. From investing point of view nothing has changed. It’s still expected that markets will be higher and the revival will happen eventually. From a trading point of view this could act as a pause, that the market won’t move higher immediately,” the head of research told Bloomberg, adding that the move will open up opportunities as the pause rate cuts could result in stock market volatility.

• RBI says Draft regulations on offshore rupee markets were modified to the following:
• Users may undertake Over The Counter currency derivative transactions upto USD 10 million, without the need to evidence underlying exposure.
• Banks shall be provided with the discretion, in exceptional circumstances, to pass on net gains on hedge transactions booked on anticipated exposures.
• Strengthening of the safeguards to ensure, that complex derivatives are sold only to users that are capable of managing the risks.
• The final directions will be issued after notification of changes to FEMA regulations.

Source: RBI Statement on Developmental and Regulatory Policies

The NSE Nifty Bank Index swung to fall as much as 0.73 percent or 233.25 points to 31,746.05 from a gain of as much as 0.46 percent or 147.65 points.

The decline in the 12-share gauge was led by Yes Bank Ltd.’s 2 percent fall, followed by IDFC First Bank Ltd. (-1.75 percent), RBL Bank Ltd. (-1.54 percent).

As of 12:50 p.m., the Nify Bank Index was trading off day’s low, but remained in the negative territory.

MPC says:

• The inflation outlook is likely to be influenced by several factors.
• First, the upsurge in prices of vegetables is likely to continue in immediate months
• Second, incipient price pressures seen in other food items such as milk, pulses, and sugar are likely to be sustained
• Third, both the 3-month and 1-year ahead inflation expectations have risen sharply

RBI cuts growth forecast to 5 percent in 2019-20 and 5.9-6.3 percent in the fist half of the next fiscal.

The Indian rupee reversed gains and the 10-year yield rose after India’s Monetary Policy Committee keeps the benchmark repo rate unchanged at 5.15 percent.

The home currency depreciated 0.12 percent to 71.60 against the greenback.

In the bond markets, the yield on the 10-year note rose over 10 basis points to 6.56 percent.

Indian equity benchmarks erased gains and traded lower after India’s Monetary Policy Committee keeps unexpectedly keeps repo rate unchanged.

India’s Monetary Policy Committee unexpectedly keeps the benchmark repo rate unchanged at 5.15 percent. All 34 economists surveyed by Bloomberg as of Wednesday forecast a reduction, with the majority expecting a quarter-point cut, and the rest pegging reductions at between 15 to 50 basis points.

Key highlights:

• MPC leaves repo rate unchanged at 5.15 percent.
• MPC keeps reverse repo rate unchanged at 4.9 percent.
• All MPC members voted to keep rates unchanged.
• MPC maintains monetary policy stance at "accomodative as long as it is necessary"

About seven out of 12 PSU banks in the NSE Nifty PSU Bank Index traded higher ahead of RBI policy, led by Syndicate Bank, Bank of Baroda and Allahabad Bank.

On the flipside, Jammu & Kashmir Bank Ltd. was the top loser, down 1.2 percent.

Shares of InterGlobe Aviation resumed declines after a one-day breather. The stock fell as much as 3.5 percent to Rs 1,356.50.

IndiGo said it expects its capacity to grow by 22-23 percent for fiscal year 2020 as against earlier stated guidance of 25 percent announced during September quarter earnings. The company lowered its capacity growth guidance for the second time in last 45 days.

During the second-quarter earnings, IndiGo had lowered its capacity growth guidance to 25 percent from 30 percent for 2019-20.

Despite expected MTM forex losses, IndiGo expects profits in the third quarter to be similar to last year. RASK and CASK are expected to increase by about 4-5 percent in the ongoing quarter. It also expects capacity growth of 15-20 percent in March quarter.

Shares of Zee Entertainment extended gains for the second consecutive trading session. The stock rose as much as 5.2 percent to Rs 296.

Of the shares traded on NSE, about 44 percent were at the ask piece and 40 percent were at the bid, Bloomberg data showed. The stock declined 39 percent in the past 12 months compared to a 14 percent gain in the Sensex.

Nifty’s 12,100 call option contract was among the most active Nifty option contracts on National Stock Exchange.

Premium on the contract, which is set to expire today, fell 11.72 percent to Rs 12.80. Over 12.25 lakh shares were added to the open interest which stood at over 36.05 lakh shares.

Shares of Gayatri Projects rose as much as 4.9 percent to Rs 73.30.

The company’s arm offered to sell 6 percent stake in Sembcorp Energy to Sebcorp Utilities for Rs 406 crore. Both the parties have signed a non-binding term sheet with each other.

The analysts consensus price target tracked by Bloomberg was at Rs 179, implying a potential return of 144.5 percent from the current market price.

Shares of Vodafone Idea fell as much as 7.1 percent to Rs 7.20. The stock was the second-worst performer on NSE Nifty 500 Index.

Of the shares traded, 56 percent were at the ask price and 43 percent were at the bid, Bloomberg data showed. The stock advanced 11 percent in the past five days and rallied 75 percent in the past 30 days.

Shares of Bharti Airtel fluctuated between gains and losses to trade 1.7 percent to Rs 453.75.

The company planned to raise $3 billion or Rs 21,500 crore via debt and equity shares or convertible instruments. Via debt, the company will raise $1 billion or Rs 7,200 crore and via equity shares or convertible instruments $2 billion or Rs 14,300 crore. Equity issuance can lead to 6 percent dilution.

Here's what analysts had to say:

Citi

• Maintained ‘Buy’ with a price target of Rs 525.
• Capital raise likely aimed at increasing preparedness to preempt no relief on AGR front.
• Fund raise arguably reflects uncertainty on monetization of Infratel stake.
• Await further clarity on exact mode of capital raise and on promoter participation.

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 530.
• Fund raise to take care of worst outcome in AGR case.
• If part of AGR dues waived off, then company to use funds to repay debt.

Credit Suisse

• Maintained ‘Outperform’ with a price target of Rs 550.
• Fund raise to aid in any potential regulatory payments.
• Remain constructive on Airtel as it remains well positioned to capitalise on pricing recovery.
• Tariff hike along with capital raise to bring down leverage from 4.3 times to 2.9 times by March 2021.

Shares of Housing & Urban Development Corporation fell as much as 7.9 percent, the most since September 2018, to Rs 37.30.

The company said that two borrowing agencies of the company have defaulted in repayment of their dues with a default amount of Rs 87.46 crore against principal outstanding of Rs 869.4 crore and has been classified as non-performing assets with an impact of 1.14 percent on gross NPA.

Trading volume was 150 times its 20-day average, Bloomberg data showed. Of the shares traded on NSE, about 59 percent were at the ask price and 30 percent were at the bid.

Indian equity benchmarks opened higher, led by the gains in Reliance Industries Ltd. and ICICI Bank Ltd.

The S&P BSE Sensex rose 0.19 percent to 40,926 and the NSE Nifty 50 rose 0.19 percent to 12,066. The broader markets represented by the NSE Nifty 500 Index rose 0.18 percent.

The market breadth was tilted in favour of buyers. About 882 stocks advanced and 528 shares declined on National Stock Exchange.

Eight out of 11 sectoral gauges compiled by NSE traded higher, led by the NSE Nifty PSU Bank Index’s 0.56 percent gain. On the flipside, the NSE Nifty Metal Index was the top sectoral loser, down 0.31 percent.

Index Futures

• Nifty December futures closed at 12,089.8, premium of 46.6 points versus 52 points
• Nifty December futures series open interest shed 4.5k shares in open interest
• Nifty Bank December futures closed at 32,080.9, premium of 101.6 points versus 97.9 points
• Nifty Bank December futures series open interest up 5 percent, adds 86,000 shares in open interest

Options

• Nifty PCR at 1.44 versus 1.30 (across all series)

Nifty Weekly Expiry: Dec. 5

• Max open interest on call side at 12,100 (23.8 lakh shares).
• Max open interest on put side at 12,000 (23.9 lakh).
• open interest addition seen in 12,050P (+5.9 lakh shares), 11,900P (+4.5 lakh shares), 12,000P (+3 lakh shares).
• Open interest shedding seen at 12,100C (-7.3 lakh shares), 12,000C (4.4 lakh shares).

Nifty Monthly Expiry: Dec. 26

• Max open interest on call side at 12,500 (18.7 lakh shares)
• Max open interest on put side at 12,000 (31.3 lakh shares)

• Alembic promoter Nirayu acquired 1.14 lakh shares from Dec. 2-3.
• Nava Bharat Ventures promoter Ashwin Devineni acquired 81,000 shares from Dec. 2-3.
• Infibeam Avenues promoter Infinium Auto Mall sold 17 lakh shares on Dec. 3.

• Thomas Cook ex-date for demerger.
• HCL Tech ex-date for bonus issue (1:1).
• Mahamaya Steel, Jaiprakash Associates, KSK Energy Ventures, Jaiprakash Power Ventures to move into short term ASM Framework.
• TIPS Industries to move out of short term ASM Framework.
• Adhunik Industries price band revised to 10 percent.

The Indian rupee fluctuated between gains and losses in the opening trade. The home currency traded little changed at 71.54 compared to yesterday’s close of 71.53 against the greenback.

Indian equity benchmarks are headed for a mixed start.

The S&P BSE Sensex rose 0.17 percent to 40,892 during the pre-market trade and the NSE Nifty 50 fell 0.3 percent to 12,013.

• Bharti Airtel planned to raise $3 billion or Rs 21,500 crore via debt and equity shares or convertible instruments. Via debt, the company will raise $1 billion or Rs 7,200 crore and via equity shares or convertible instruments $2 billion or Rs 14,300 crore. Equity issuance can lead to 6 percent dilution.
• InterGlobe Aviation: IndiGo said it expects its capacity to grow by 22-23 percent for fiscal year 2020 as against earlier stated guidance of 25 percent announced during September quarter earnings. The company lowered its capacity growth guidance for the second time in last 45 days. During the second-quarter earnings, IndiGo had lowered its capacity growth guidance to 25 percent from 30 percent for 2019-20. Despite expected MTM forex losses, IndiGo expects profits in the third quarter to be similar to last year. RASK and CASK are expected to increase by about 4-5 percent in the ongoing quarter. It also expects capacity growth of 15-20 percent in March quarter.
• Reliance Industries: Telecom unit Reliance Jio launched new all-in-one plans. The company it is offering up to 300 percent more benefits than earlier all-in-one plans. Plans to be available from Dec. 6.
• SBI: Board approved divestment of the Bank’s stake in UTI AMC by up to 1.05 crore shares or 8.25 percent equity through initial public offering via offer for sale. The bank’s stake in UTI AMC will fall to almost 10 percent post the OFS.
• Tata Power’s joint venture Renascent Power Ventures acquired 75.01 percent stake and 27 lakh preference shares of Prayagraj Power Generation. Tata Power has 26 percent stake in JV and the balance 74 percent is held by ICICI Bank and other global investors.
• Bharti Infratel to consider declaring dividend on Dec. 10.
• Hudco said that two borrowing agencies of the company have defaulted in repayment of their dues with a default amount of Rs 87.46 crore against principal outstanding of Rs 869.4 crore and has been classified as non-performing assets with an impact of 1.14 percent on Gross NPA.
• Gayatri Projects arm offered to sell 6 percent stake in Sembcorp Energy to Sebcorp Utilities for Rs 406 crore. Both the parties have signed a non-binding Term Sheet with each other.
• SH Kelkar’s arm plans filing an appeal against Tax Tribunal’s order regarding disallowance of depreciation of goodwill. The arm expects a refund of Rs 7.7 crore.
• IFB Industries said that fire broke out in its warehouse in Haryana. Estimation of loss is yet to be ascertained.
• Vedanta approved raising up to Rs 3,000 crore via debentures.
• Allcargo Logistics clarified on the news of company acquiring stake in Gati stating that it is exploring various business opportunities of organic and inorganic growth and would not like to comment on the news item.
• CSB Bank has re-appointed CV Rajendran as the managing director and chief executive officer of the Bank for a period of three years till Dec. 2022.
• Karnataka Bank reported a fraud of Rs 40.39 crore in credit facilities extended to the borrowing account of Hanung Toys & Textiles to Reserve Bank of India.
• IL&FS Group 2018-19 Update: Net Loss was at Rs 22,527 crore versus net profit of Rs 333 crore. Total revenue fell 52 percent to Rs 824 crore. Total assets declined 82 percent to Rs 4,148 crore, according to company’s statement.
• Canara Bank allotted 27.69 crore shares at Rs 237.23 per share aggregating to Rs 6,570 crore to Government of India.
• Vaibhav Global has completed buyback of its equity shares. Company brought back 8.66 lakh shares at an average price of Rs 831.72 per share.
• Arshiya to consider raising capital via preference shares on Dec. 7.

• Ujjivan Small Finance IPO got 166 times demand for shares offered..
• HDFC AMC offer-for-sale received 123.86 pecent on the first day.

• India’s Monetary Policy Committee will likely cut rates for the sixth consecutive time.
• Economists polled by Bloomberg are forecasting a 25 basis point cut in the repo rate to 4.9 percent.
• This would take the benchmark policy rate down to its lowest level since after the global financial crisis.

Read to get up to speed:

• Here’s how low India rates can go after five cuts in a row.
• Monetary Policy: Are calls for an ‘operation twist’ justified?
• With growth this bad, India needs more than luck.

• The S&P 500 Index halted a three-day slide after Bloomberg News reported negotiators are getting near an agreement on the amount of tariff relief in a phase-one accord between the world’s two largest economies.
• Oil surged the most in more than two months amid growing optimism for a U.S.-China trade deal and as OPEC and its allies prepared to discuss extending or possibly deepening output limits.
• The pound touched the highest level against the euro in more than two-and-a-half years as traders stepped up bets for a Conservative victory in next week’s election.

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Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.2 percent to 12,070 as of 8:20 a.m.

Stocks in Asia climbed after a report said the U.S. and China are getting closer to a deal that would avoid tariffs due to kick in later this month.

Shares advanced in Hong Kong, Sydney and Seoul. Japanese stocks remained higher after the unveiling of the nation’s fiscal package.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.