Sensex Suffers Worst Single-Day Drop In Seven Months

Indian equity benchmarks fell sharply led by losses in auto, IT and private sector lenders.

The S&P BSE Sensex fell 1.51 percent or 550.51 points to 35,975.63 and the NSE Nifty 50 Index 1.36 percent or 150 points to 10,858.

The Sensex’s 1.51 percent drop, which matched the March 16 decline, was the worst since Feb. 6 when the index slumped 1.61 percent.

Markets fell sharply as the rupee hit a new low amid lack of clarity on whether the central bank will allow a separate window for oil refiners to hedge dollars, AK Prabhakar, head of research at IDBI Capital, told BloombergQuint over the phone.

Investors are taking money off the table as quality names like Mahindra & Mahindra Ltd. and Eicher Motors Ltd. are witnessing correction, added Prabhakar. Currency weakening beyond 73 per dollar may also have led to a likely selloff by foreign investors as investors look to preserve capital, he said.

Sixteen of 19 sector gauges compiled by BSE ended lower dragged by the S&P BSE Auto Index’s 2.9 percent drop. Consumer Discretionary Goods & Services, IT, Telecom and Realty indexes on the BSE also fell over 2 percent. On the other hand, the S&P BSE Metal Index was top gainer, up 1.7 percent.

• MOIL: The Nagpur-based mining company rose as much as 7.6 percent, the most in over a month, to Rs 169 after it revised prices for different grades of Manganese ore with effect from Oct. 1.
• NCC: The Hyderabad-based construction company rose as much as 8.2 percent, the most in over two months, to Rs 78 after the company said it received 3 new orders worth Rs 408.3 crore in September.
• Hindalco: The Aditya Birla group aluminium and copper manufacturer rose as much as 5.5 percent to Rs 256.25 after Norsk Hydro moved to shut its biggest alumina refinery in Brazil.
• Trigyn Technologies: The Mumbai-based IT company was locked in a 20 percent upper circuit at Rs 97.20 after its subsidiary received $18 million order from New York City Housing Authority (NYCHA) for a period of five years.

The benchmarks extended losses dragged by weakness in private banks, auto and IT shares.

The Sensex fell 0.96 percent or 350 points to 36,175 and the Nifty 50 Index tumbled 0.85 percent or 96 points to 10,912.

Ten of 19 sector gauges compiled by BSE were trading lower led bu S&P BSE Auto Index's 2 percent drop. On the flipside, the S&P BSE Metal Index was top gainer, up 2.6 percent.

Top 5 Nifty Losers

• Mahindra & Mahindra down 5.8 percent
• Eicher Motors down 5.3 percent
• Bharti Infratel down 5.3 percent
• TCS down 3.5 percent
• Axis Bank down 2.9 percent

Top 5 Nifty Gainers

• Yes Bank up 5.6 percent
• Hindalco up 5.3 percent
• HPCL up 4.4 percent
• Vedanta up 4.3 percent
• Indiabulls Housing Finance up 3.9 percent

Shares of the state-run aluminium manufacturer extended gains and rose as much as 12.24 percent, the most in nearly five months, to Rs 69.70 after Norsk Hydro moved to shut its biggest alumina refinery in Brazil.

Hydro’s alumina refinery Alunorte in Brazil announced today that the plant is preparing for full curtailment of its operation, Norsk Hydro said in a press release.

• Bandhan Bank: The Kolkata-based private sector lender fell as much as 6.66 percent to Rs 422.10. Trading volume was 16.3 times its 20-day average.
• Elgi Equipments: The Coimbatore-based flow control equipment maker rose as much as 1.75 percent to Rs 242. Trading volume was 56.6 times its 20-day average.
• Gayatri Projects: The Hyderabad-based construction company fell as much as 5.6 percent to Rs 181.55. Trading volume was 7 times its 20-day average.
• Mangalore Refinery & Petrochemicals: The Mangalore-based oil refiner fell as much as 7.63 percent to Rs 64.20. Trading volume was 8 times its 20-day average.

Shares of the commodities conglomerate rose as much as 5.87 percent to Rs 246.30 after it announced plans to expand investment in oil exploration.

Vedanta may spend up to $4 billion in 41 blocks if it finds oil. Chairman Anil Agarwal also said that company wants to expand oil output to 40,000 barrel per day in two years, according to a Bloomberg report.

Shares of the country's largest carmaker fell 2.07 percent to Rs 7,309 after it announced voluntary recall of Super Carry vehicles to inspect for a possible defect in fuel pump assembly, Maruti Suzuki said in an exchange filing.

640 vehicles in the domestic market manufactured between Jan. 20-July 14, 2018 will be covered in this recall campaign, the exchange filing added.

Metal stocks were witnessing buying interest. The gauge of metal shares on the BSE rose 2 percent led by gains in Vedanta, NMDC and Hindustan Zinc.

Shares of the Gurugram-based tyre maker fell as much as 3.1 percent to Rs 206.50 after its board re-nominated Neeraj Kanwar as its managing director.

BloombergQuint spoke to Anil Singhvi, chairman, Ican Investment Advisors, Sucheta Dalal of Moneylife and M Damodaran, former SEBI Chairman on how the IL&FS came to a point of default and what needs to be done next to rescue the shadow banker.

Key highlights of conversation:

Sucheta Dalal

• Government has no plan and it has put in a new Board because they had to do something
• A lot of senior people at IL&FS made a lot of money and that needs to be investigated
• There can’t be a rescue for IL&FS from public money
• Have sent a notice to LIC chairman against using public money to rescue a private company
• LIC does not have any right to put money in rescuing a private company
• Way people have been asked to keep quiet is surprising
• Board members have failed to take any action
• Many subsidiaries are under multiple litigation and bearing high litigation expenses
• Board should look at divesting SPVs rather than looking for one Ajay Piramal to rescue them
• Investigation should go back to who the LIC member was and what value did it see in investing in IL&FS

Anil Singhvi

• Why should there be a rescue plan for IL&FS and not for other infrastructure companies?
• LIC should stay out of this mess of rescuing IL&FS, let them first rescue IDBI Bank
• Surprised and amused at comparison of IL&FS with Satyam
• IL&FS was run with a very tight situation with Ravi Parthsarthy
• IL&FS was taking up larger projects without experience
• IL&FS Employee Welfare Trust was given a large holding to give an exit to some fat cats
• Amazed how the board allowed to open over 160 subsidiaries
• Road forward will be to identify the saleable assets and sell and pay the creditors

M Damodaran

• There is no comparison at all with Satyam
• Way forward is to make the structure simpler
• Way forward is to take haircuts because its not like there are too many buyers for many projects
• New board needs to first assess the current problem and identify key people to be brought in
• Unaware of what happened in the board room
• The complex company structure is a big problem

Indian rupee recovered sharply after a report suggested that the government is in talks with the Reserve Bank of India for a separate window for oil refiners to hedge their dollar positions, CNBC TV18 reported.

The rupee which fell to record low of 73.42 per dollar, recovered some lost ground, and last traded at 73.16 per dollar.

Shares of the Chandigarh-based steel wheel rim maker rose as much as 3.2 percent to Rs 1,108 after it won truck wheel orders from U.S. and European trailer markets, Steel Strips said in an exchange filing.

The company has won export order for supply of 1 lakh caravan and truck wheels to U.S. and European markets from October until December. The order is valued at $ 3 million and will be shipped from its manufacturing facility in Chennai.

Indian equity benchmarks extended decline led by losses in TCS, ICICI Bank, HDFC Bank and Reliance Industries.

The Sensex fell 0.9 percent or 325 points to 36,200 and the Nifty 50 Index tumbled 1 percent or 108 points to 10,900.

Eight of 11 sector gauges compiled by National Stock Exchange were trading lower led by Nifty Auto Index's 1.8 percent drop. On the flip side, the Nifty Metal Index was top gainer, up 1.15 percent.

The mid- and small-cap shares were mixed as the S&P BSE MidCap Index fell 0.6 percent while S&P BSE SmallCap Index climbed 0.4 percent.

Shares of the Mumbai-based lender extended gains for second day in a row and rose as much as 11 percent, the most in over two years, to Rs 222.95.

The company on Monday disclosed NPA numbers for the September quarter ahead of its earnings. Yes Bank’s gross NPA stood at 1.35 percent for Q2FY19 versus 1.82 percent as of Q2FY18.

Meanwhile, Yes Bank said the private lender will find Rana Kapoor’s successor by the Jan. 31 deadline given by the Reserve Bank of India.

Shares of the Nagpur-based mining company rose as much as 7.58 percent, the most in over a month, to Rs 168.90 after it revised ore prices.

Ferro grade, SMGR, Chemical Grade and Fines prices have been increased by about 10 percent on existing prices. Basic price of Electrolytic Manganese Dioxide has also been increased by Rs 9,000 per metric ton.

The company's revised prices will take effect from Oct. 1.

Shares of the Bhubaneswar-based aluminium maker rose as much as 3 percent to Rs 64 after it unveiled company's new business plan “NALCO:3-4-5”.

The main objective of new business plan is to increase the company’s three-digit profit figure to five-digit profit number, NALCO’s chairman Tapan Kumar Chand said.

The company will use artificial intelligence and internet of things in its business, he added.

Nifty Bank's 25,500 call option contract was among the most active option contracts on the National Stock Exchange.

Premium on the contract plunged 50 percent to Rs 62.55. Over 4.75 lakh shares were added to the open interest which stood at 13.85 lakh shares.

Shares of the Delhi-based Royal-Enfield maker fell as much as 6.77 percent to Rs 23,072 per share after it reported production loss of 10,000 motorcycles in September after a section of its workforce did not report to work since Sept. 24 at its Oragadam factory near Chennai, Eicher Motors said in an exchange filing.

Meanwhile, its sales rose 2 percent to 71,662 units last month, the filing added.

Shares of the Mumbai-based cable television service provider rose as much as 10 percent, the most since Sept. 10, to Rs 27.80 after a report suggested that Reliance Industries has initiated talks to acquire Hathway Cable, The Economic Times reported citing three unidentified people aware of the matter.

The acquisition talks are underway in a bid to speed up the commercial launch of Reliance’s GigaFiber high-speed home broadband services, the report added.

Shares of the Investment Leasing & Financial Services group companies were locked in an upper circuit for second day in a row after the NCLT allowed appointment of a new board and approved induction of six directors with Uday Kotak acting as the non-executive chairman.

The new board is tasked with the responsibility of preparing a robust and time bound resolution plan for the troubled shadow banker.

• IL&FS Transportation Network rose 20 percent
• IL&FS Engineering and Construction Company rose 20 percent
• IL&FS Investment Managers advanced 10 percent

Rally in crude oil is likely to put more pressure on the rupee, Bhaskar Panda, senior regional head of treasury advisory group at HDFC Bank told BloombergQuint in an interview.

Key highlights of conversation:

• Crude oil rally likely to put more pressure on the rupee
• Expect further rupee depreciation to be gradual
• If oil comes down to $75/bbl then expect rupee to retract significantly against the greenback
• Expect rupee to depreciate towards 74/$

Indian equity benchmarks declined after the rupee breached 73 per dollar mark for the first time.

The S&P BSE Sensex fell 0.5 percent or 198 points to 36,628 and the NSE Nifty 50 Index declined 0.6 percent or 71 points to 10,937.

Seventeen of 19 sector gauges compiled by BSE were trading lower led by the S&P BSE telecom Index's 1.8 percent drop. On the other hand, the S&P BSE Healthcare Index was top gainer, up 0.4 percent.

Mid- and small-cap shares were also facing selling pressure as the S&P BSE MidCap Index fell 0.2 percent and the S&P BSE SmallCap Index declined 0.4 percent.

The Indian rupee declined past 73 a dollar to a new record low amid worries that surging oil prices will stoke inflationary pressures and widen India's current and trade deficits.

Brent crude rose to $84.94 a barrel and there seems little respite for the rupee.

Rupee fell as much as 0.57 percent or 42 paise to 73.33 per dollar compared with Monday’s close of 72.91.

Bulk Deals

• Lakshmi Vilas Bank: Nomura Singapore sold 14.9 lakh shares or 0.58 percent equity at Rs 74.91 each.

Infibeam Avenues

• The Ezrah Charitable Trust acquired 41.4 lakh shares or 0.62 percent equity at Rs 61.34 each.
• IIFL Wealth Finance sold 50 lakh shares or 0.75 percent equity at Rs 55.51 each.

Insider Trades

• JSW Steel promoter groups acquired 19.6 lakh shares from Sept. 26-28.
• Greaves Cotton promoters acquired 1l akh shares on Sept. 28.
• Trident promoter group acquired 17.2 lakh shares on Sept. 28.
• Waterbase promoter acquired 65,400 shares on Sept. 28.
• Marcator promoter HK Mittal acquired 10 lakh shares on Sept. 28.
• Liberty Shoes promoter group sold 13,000 shares on Sept. 27.
• IRB Invit Fund promoter and director Virendra Mhaiskar acquired 25 lakh shares on Sept. 27.

(As reported on Oct. 1)

Trading Tweaks

• J. Kumar Infraprojects’ circuit filter revised to 10 percent.
• Sequent Scientific’s circuit filter revised to 5 percent,
• IRCON International added to BSE IPO Index.
• JMC Projects last trading day before stock split to Rs 2 from Rs 10 per share.

Garden Reach Shipbuilders & Engineers gets 102 percent demand for shares offered on last day. The IPO was extended from its earlier closing date of Sept. 26 to Oct. 1. (Bloomberg News)

Dinesh Engineers IPO was subscribed 8 percent on the second day sale, offer closes today.

• Hero Motocorp sold 769,138 units of two wheelers for the month of September.
• Maruti Suzuki India’s sales fell for the third month in a row. The country’s largest automaker sold 1.62 lakh units last month, a decline of 0.5 percent.
• Tata Motors domestic market sales for September up by 20 percent at 64,598 units versus 53,694 units on a year on year basis.
• Eicher Motors monthly motorcycles for September up 2 percent to 71,662 units year-on-year.
• TVS Motors monthly sales for September up 18 percent to 423,978 units.
• Mahindra and Mahindra’s total sales rose 1 percent to 51,268 units as passenger and utility vehicle sales fell.
• Ashok Leyland’s sales rose 28 percent on a yearly basis to 17,386 units.
• Bajaj Auto reported a 17 percent year-on-year increase in sales at 5.02 lakh units.

• IL&FS: NCLT allowed appointment of a new board and approves induction of six directors with Uday Kotak acting as the non-executive chairman. The new board is tasked with the responsibility of preparing a robust and time bound resolution.
• Vedanta plans to spend Rs 4,000 crore in exploration. The company may spend up to $4 billion in 41 blocks if it finds oil. Chairman Anil Agarwal also said that company wants to expand oil output to 40,000 barrel per day in two years, according to Bloomberg report.
• Coal India’s coal production for September up 3.8 percent at 40.24 MT versus 38.76 MT on a year to year basis and for the April to September quarter up 10.6 percent at 256.47 MT versus 231.88 MT. The offtake was also up 0.8 percent at 43.91 MT versus 43.57 MT for September and for the April-September quarter up 8.1 percent at 290.81 MT versus 269 MT.
• Minda Corporation’s board approved merger of four domestics Indian wholly-owned subsidiaries with self. The company said that the rationale for this merger to access better financial sources, creating synergies amongst all entities and to increase managerial efficiencies.
• NALCO’s chairman Tapan Kumar Chand unveiled new business plan “NALCO:3-4-5”. The main objective being to increase the company’s three-digit profit figure to five-digit profit number. The company will use artificial intelligence and internet of things in its business. Foundation stone of alumina refinery was also laid by him, which will increase the productivity of the plant and reduce the consumption of caustic soda as stated in the press release.
• MOIL revised manganese ore prices with effect from Oct. 1. Ferro grade, SMGR, Chemical Grade and Fines prices have increased by about 10 percent on existing prices. Basic price of Electrolytic Manganese Dioxide has also been increased by Rs. 9,000 per metric ton.
• Edelweiss Financial Services reported that the company’s current liquidity stands at Rs 5,400 crores and the liquidity cushion of 9 percent to 10 percent of balance sheet has been maintained all times. All contractual liabilities over next six months can be met without any roll-overs, the press release stated.
• Glenmark Pharma completed the sale of its orthopaedic and pain management business in India and Nepal to Private Equity firm True North.
• Future Enterprises to acquire majority stake in Mumbai-based Digital payment startup Livquik for Rs 20 crore.
• Mphasis board approved share buyback at Rs 1,350 per share.

• State-run firms lose Rs 4 lakh crore in market value this year
• After midnight march, farmers end protest at Delhi’s Kisan Ghat
• Trump says India wants trade deal to keep him happy
• Facebook takes steps an bullying, harassment with keyword blocks
• Trump and family have evaded taxes on millions, accuses NYT
• Contagion’s no longer the biggest problem on IL&FS saga
• Oil puts Indian rupee on course to outstrip Taper-tantrum losses
• Risk of hard Brexit has these Asian companies on edge
• A GST problem that threatens domestic cash transfer services
• A moment of truth for NBFCs...and for the system

Good Morning!

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India rose 0.4 percent to 11,004 as of 8:58 a.m.

Asian stocks traded mixed following a volatile U.S. session as investors weighed continuing concerns in Indonesia and Italy and strength in commodity prices. The euro climbed on reports the Italian government pulled back its budget-deficit plans.

Shares fell in Japan, fluctuated in Hong Kong and rose in Australia. Indonesia’s rupiah plumbed a new 20-year low as rising oil prices add to souring sentiment that’s left the nation’s central bank struggling to prevent further weakness.

Currencies

• The Japanese yen fell 0.1 percent to 113.77 per dollar.
• The offshore yuan rose less than 0.05 percent to 6.884 per dollar.
• The euro advanced 0.3 percent to $1.1581.
• The Bloomberg Dollar Spot Index fell 0.1 percent.

Commodities

• West Texas Intermediate crude rose less than 0.05 percent to $75.24 a barrel.
• Gold rose 0.4 percent to $1,207.68 an ounce.
• LME copper was little changed at $6,283.50 per metric ton.

Here are some key events coming up this week:

• U.K. prime minister May speaks Wednesday at her party’s annual conference.
• The Reserve Bank of India’s policy decision is due Friday.
• U.S. employment reports for September also due Friday.