Nifty ends below 6000, Sensex slides 406 points; banks bleed

21 Nov 2013

3:50 pm Market closing: The Sensex ended down 406.08 points or 1.97 percent at 20229. The Nifty closed at 5999.05, down 123.85 points or 2.02 percent. About 923 shares have advanced, 1536 shares declined, and 133 shares are unchanged.

Sesa Sterlite and HDFC ended 4 percent down while L&T, BHEL and NTPC closed with loss of 3 percent each.

Equity markets across Asia and Europe slide in trade after the US Federal Reserve hints at scaling down its USD 85 billion monthly bond buying programme earlier than expected. FOMC believes that a taper will not lead to high interest rates.

Taper fears force investors to bet on the dollar, as the Indian rupee sees sharp cuts in trade.

3:40 pm Macro outlook: India's narrowing current account deficit will not be enough to shield the country from pressures tied to Fed tapering, says Fitch Ratings.

However, Fitch adds the spillover effects of the Indian rupee's weakness have not significantly hurt India's creditworthiness and will therefore not trigger any ratings action at this point.

"(India's ratings) already incorporate both the sovereign's vulnerabilities and tolerance for volatility in global financial market conditions," Fitch said.

3:30 pm Opinion: In an interview to CNBC-TV18, Rob Aspin, Standard Chartered Bank says he believes equities will generate positive returns next year. However, that does not mean he is bullish on equities compared to other asset classes.

''The US dollar will strengthen going into 2014 and that will be partially negative for the emerging markets. But also with tapering that will impact the liquidity in the emerging markets which will be negative as well,'' he explains. As a result, despite expecting reasonable returns from Indian market over the next 12-month period, he remains "underweight" on the country.

The market is getting slaughtered as bears took charge of Dalal Street on nervous investor sentiment. The Nifty slides 126.30 points or 2.06 percent at 5996.60.

The Sensex is down 410.66 points or 1.99 percent at 20224.47, and About 835 shares have advanced, 1487 shares declined, and 151 shares are unchanged. The Nifty and the Sensex mark the biggest obe-day loss since September 3. The Nifty put call ratio slips to 0.85. All 50 Nifty and 30 Sensex stocks trading in the red.

All global markets are under pressure as Fed minutes hint of taper in the next few months.

However, World Bank Chief Jim Young Kim says India is expected to have a good third quarter which is in line with P Chidambaram's observations that the country's economy is picking up.

02:55pm Market Update
The market extended fall in last hour of trade. The Sensex is down 357.56 points or 1.73 percent at 20277.57, and the Nifty is down 109.85 points or 1.79 percent at 6013.05.

European markets, too, are under pressure on Fed tapering fears. France's CAC and Germany's DAX dropped 0.7 percent each while Britain's FTSE declined 0.3 percent.

Meanwhile, all emerging markets' currencies are weak against the US dollar. The rupee is down 32 paise to 62.89 against the US dollar.

02:45pm Kirloskar Oil Engines sees heavy volumes

Kirloskar Oil Engines gained more than 10 percent in intraday trade on Thursday on four big block deals worth Rs 51 crore in afternoon trade.

More than 31 lakh equity shares changed hands at Rs 163.50 apiece on both exchanges.

02:35pm Motilal Oswal's view on private banks

Motilal Oswal expects private banks to deliver around 18 percent earnings per share CAGR over FY13-15. ICICI Bank , Axis Bank and Federal Bank and YES Bank are its top picks.

"Better than expected performance by Private Banks in a volatile and challenging quarter enhances our confidence in their profitability. The cumulative benefit of RBI actions is likely to be felt more by bulk financiers like YES Bank and Axis Bank, and NIM outlook has improved. While the retail portfolio is holding up well, higher stress in the corporate segment and a challenging macro environment will drive up credit cost. Higher than expected credit cost is likely to be compensated by better NIM and operating leverage; thus, RoAs are likely to remain healthy. Overall return ratios are likely to remain strong, with RoA of 1.6%+ and RoE of ~17%; tier-I ratio for most banks would be at a comfortable level," Motilal elaborated.

02:25pm Ceat Boardroom
Ceat shares have nearly doubled over the last month as investors see the company's profits rising due to low rubber prices. The company some time back had decided to import natural rubber to gain from cheaper prices. This year so far, the company has imported roughly half its rubber requirements. A Subba Rao, CFO says he is flexible on this strategy and it would be driven by cost advantages.

Rao says tyre companies abroad don't see too much volatility in profit margins even if rubber prices fluctuate sharply. Indian companies too will have to learn to overcome these raw material cost increases and maintain profit margins.

Rao sees second half earnings and margins to be in line with those seen in the first half.

Around 30 percent of Ceat's revenues come from vehicle manufacturers, and the rest from the replacement market. "Auto industry has been going through one of its worst periods in the last decade; commercial vehicle growth – there is a negative growth of 25 percent for the second successive year, so passenger car sales is just at the breakeven level as compared to last year," he says. Rao doesn't expect any substantial improvement in demand from the OEM side, but he is trying to get new customers from the OEM segment.

02:15pm Equity benchmarks lost more than 1.5 percent in afternoon trade on fears that Fed tapering may start earlier-than-anticipated. All sectoral indices are in the red.

The Sensex is down 318.46 points at 20316.67, and the Nifty is down 96.80 points at 6026.10. About 822 shares have advanced, 1395 shares declined, and 142 shares are unchanged.

According to Laurence Balanco of CLSA, ultimately a break below 6,008-6,107 support should result in move down to the 5,870-5,880 area over the coming weeks. "This means is that the Nifty is likely to remain rangebound below the 6,330-6,340 resistance zone into 2014," he adds.

The biggest loser in the Sensex was HDFC with a 3 percent cut followed by Infosys , ITC , Sun Pharma , L&T, NTPC and Sesa Sterlite with a 2-2.5 percent loss.

Just Dial, SBI , Axis Bank, Infosys, ICICI Bank, Tata Steel and Wockhardt are most active shares.

Meanwhile, the rupee declined 31 paise to 62.88 against the US dollar.

Nizam Idris of Macquarie says dollar rupee will be stuck within that 62-64/USD range for now. He does not see massively strong data coming out of the US. He continues to expect tapering in March from the Federal Reserve.

1:50 pm Opinion: Bruce Kasman, JPMorgan expects Fed to start tapering in January albeit at a slower pace but feels it is Fed's end plan to stop buying bonds.

"One should be paying attention to Chairman Bernanke's speech yesterday, which was consistent in talking and telling the market that the Fed will move to taper early as long as the economic news continues at a solid pace," says Kasman in an interview to CNBC-TV18.

However, what is more important is to see what message Fed gives on rate guidance and that rates will not go up till end of 2015, adds Kasman.

1:40 pm Exclusive interview: Some time back, Ceat had decided to import natural rubber to gain from cheaper prices . This year so far, it has imported roughly half its rubber requirements. A Subba Rao, CFO says he is flexible on this strategy and it would be driven by cost advantages.

1:30 pm Rupee: India will close the special concessional swap rate offered to lenders raising funds abroad on November 30, according to the text of the speech Finance Minister P Chidambaram gave in Singapore earlier on Thursday, reports Reuters.

The window for the foreign currency non-resident (bank), or FCNR (B), was due to close on November 30, although some banks have pushed for an extension.

The market falls sharply as Fed's keenness to begin tapering in coming months makes investors jittery. The Sensex is down 322.13 points or 1.56 percent at 20313, and the Nifty slips 97.30 points or 1.59 percent at 6025.60.

About 795 shares have advanced, 1330 shares declined, and 138 shares are unchanged.

Among the laggards are HDFC , ITC , L&T, Sun Pharma abd Infosys in the Sensex. GAIL and Maruti Suzuki are top gainers.

Baer Capital turns cautious on India, says fundamentals are weak and the recent rally is driven purely by liquidity. He even warns that Nifty may test August lows of 5200.

However, Fitch gives India a breather. The rating agency says that India's creditworthiness is not significantly hurt by a weaker rupee. It sees no requirement for any rating action at this point.

The Fed's intentions make for some sharp cuts in most Asian markets. A bigger-than-expected fall in china manufacturing also weighs. Japan, however, bucks the trend. The Nikkei jumps over one percent to a near-6-month high as the Bank of Japan maintains its ultra-loose monetary policy.

01:00pm Market update
The market extended its losses in afternoon trade. The Sensex is down 312.85 points or 1.52 percent at 20322.28, and the Nifty is down 94.55 points or 1.54 percent at 6028.35.

Notwithstanding the volatility in the market, technical analyst Gautam Shah of JM Financials says this retracement is actually healthy for the market. The Nifty will continue to stay in the consolidation phase for next couple of weeks and trade in the range of 5950-6250. Shah believes 5950 is a firm base and does not see market breaking below that.

He is exceptionally positive of market breaking the 6250 level in a December rally and advises investors to take a positional call for that month. He goes on to add that breaking of 6250 would translate into a massive 10-15 percent rally in 2014.

12:55pm POSCO
POSCO has received SEZ extension for USD 12 billion plant in Orissa that is the largest FDI investment in steel sector, reports CNBC-TV18 quoting sources.

It is learnt that POSCO's Orissa plans are delayed, but are still on track. POSCO is not looking at pulling out from Orissa, sources say.

12:45pm JSW Steel in focus
JSW Steel says low-grade iron ore in Goa can be utilised domestically. "We have technical capabilities to utilise low-grade iron ore. We will bid for excavated Goa iron ore after looking into details," the company adds.

JSW Steel expects FY14 coal imports to be 15 percent higher than last year's 14 million tonne.

12:35pm Movers and shakers
Shares of ITC , Infosys , HDFC , L&T, Sun Pharma and Sesa Sterlite are the biggest losers, falling more than 2 percent.

The Sensex is down 323.43 points or 1.57 percent at 20311.70, and the Nifty is down 94.20 points or 1.54 percent at 6028.70 while the Bank Nifty lost over 200 points.

12:19pm Equity benchmarks remain under pressure in noon trade as the US Federal Reserve's keenness to begin tapering in coming months revives fears of a liquidity crunch.

The Nifty registers its biggest one-day loss since September 30, falling 76 points or 1.24 percent to 6046.75. The Sensex is down 248.45 points or 1.20 percent at 20386.68.

About 760 shares have advanced, 1196 shares declined, and 137 shares are unchanged.

Financials, oil & gas, capital goods, realty and technology stocks lost ground.

Alok Sama of Baer Capital turns cautious on India. He says fundamentals are weak and the recent rally is driven purely by liquidity. According to him, the Nifty may even test August lows of 5,200.

Asian markets too are weak on Fed tapering fears. A bigger-than-expected fall in China manufacturing also weighed. However, Japan's Nikkei bucked the trend, rising over one percent to a near-6-month high as the Bank of Japan maintains its ultra-loose monetary policy and reiterates that the economy is recovering moderately.

The rupee weakened sharply as the Fed's minutes help the dollar rally against its major rivals. Fresh month-end dollar demand also added to the pressure. The currency declined 26 paise to 62.83 against the US dollar.

12:00 pm Update: State-run GAIL (India) plans to sell 1 million tonnes of liquefied natural gas (LNG) per year sourced from the United States through its Singapore-based trading arm, the company said.

The gas utility is also keen to acquire upstream assets in Tanzania and plans to set up floating LNG re-gasification terminal in southern Indian state of Andhra Pradesh along with GDF Suez and Shell, Chairman BC Tripathi said in the statement.

The stock jumped over 1 percent intraday on the BSE.

11:50 am Macro outlook: The annual headline inflation is expected to moderate to near 5 percent as there was reasonable price stability in some major commodities, the finance minister said, reports Reuters.

Chidambaram also said the fiscal deficit target of 4.8 percent of gross domestic product in 2012-13 would not be breached under any circumstances, even as many private economists say the deficit could cross the 5 percent mark.

11:40 am Market outlook: Notwithstanding the volatility in the market, technical analyst Gautam Shah of JM Financials says this retracement is actually healthy for the market . The Nifty will continue to stay in the consolidation phase for next couple of weeks and trade in the range of 5950-6250. Shah believes 5950 is a firm base and does not see market breaking below that.

He is extremely bullish on the auto index with M&M , Tata Motors and Bajaj Auto being his favourite picks. "You can make serious money from the auto sector so the suggestions are not for traders," he said.

11:30 am Buzzer: Shares of Bombay Dyeing extended gains (up 5 percent) intraday as the Bombay High Court's nod injected relief. The HC has allowed the Wadia group controlled company to handover land to local authorities in Mumbai, at a single location, instead of two different locations.

The ruling states that the final discretion over where to surrender land, in such a scheme of redevelopment, rests with the developer Bombay Dyeing, in this case. The Court also held that Bombay Dyeing's proposal was sound in law and was fully compliant with the local regulations.

11:20 am Rupee outlook: The sharp depreciation of the rupee in mid-2013 highlights India's difficult transition following an extended period of low growth, high inflation and a widening in the current account deficit.

Fitch Ratings says in a report published today that the spillover effects of a weaker rupee have not significantly hurt India's creditworthiness, and hence would not trigger any rating action as this point, reports Reuters.

The market is reeling under selling pressure weighed down by banking, capital goods, FMCG and realty stocks. The Sensex is down 239.47 points or 1.16 percent at 20395.66, and the Nifty is down 73.35 points or 1.20 percent at 6049.55.

Sun Pharma , Sesa Sterlite. HDFC , ITC and L&T are top losers in the Sensex. GAIL, Maruti, Hindalco , Coal India and M&M are on buyers' list with marginal gains.

About 749 shares have advanced, 1165 shares declined, and 135 shares are unchanged.

The rupee is sharply lower against the dollar and inline with emerging markets currencies as FOMC minutes revive tapering fears.

Government bond prices too fell sharply and appetite in the secondary market is already weak ahead of the Rs 15,000 cr rupee auction tomorrow.

Asian markets are broadly lower with China down 1 percent on fears of a reduction in US stimulus and weak Chinese manufacturing data.

In commodities, gold prices got a pounding as tapering fears re-surfaced with gold trading near 4-month lows of USD 1250 per ounce.

In currencies, the euro came under fire after a report said the European Central Bank (ECB) was considering cutting its deposit rate to below zero. The dollar held 81 levels and the yen continued to be weak beyond 100 per dollar.

11:00am Market Update
The market remained under pressure as the Sensex is down 251.36 points or 1.22 percent at 20383.77, and the Nifty is down 79.90 points or 1.30 percent at 6043.

Axis Bank is the biggest loser in the Nifty, falling more than 3.5 percent followed by Jaiprakash Associates and Punjab National Bank with a 3 percent cut.

Just Dial, Zee Entertainment, Uttam Galva , State Bank of India , Reliance Industries and Axis Bank are the most active shares on exchanges.

10:55am Fitch report
The sharp depreciation of the rupee in mid-2013 highlights India's difficult transition following an extended period of low growth, high inflation and a widening in the current account deficit. Fitch Ratings says in a report published today that the spillover effects of a weaker rupee have not significantly hurt India's creditworthiness, and hence would not trigger any rating action as this point.

The economy has not lost much momentum, with both agriculture and exports remaining resilient and providing a cushion. Fitch therefore expects the economy to recover with real GDP forecast to rise 4.8 percent and 5.8 percent in FY14 (financial year ending March 2014) and FY15, respectively, compared with a 5.0 percent rise in FY13, reports Reuters.

10:50am SKS Microfinance gets NBFC-MFI status

There was buying seen in shares of SKS Microfinance after the Reserve Bank of India (RBI) classified the company as non-banking financial company-micro finance institution (NBFC-MFI). The stock gained 6.4 percent in intraday trade on Thursday.

The change in status is effective from November 18.

The earlier status of the company was non-banking financial company (non-deposit taking) systematically important (NBFC-ND-SI).

10:40am Market Expert
Despite market being on shaky grounds, Ambareesh Baliga, Edelweiss Financial Services has not turned a seller today.

"I don't see too much of a downside. In fact, I see a decent support at levels of about 6000-6050 closer to where it had taken support last time around. So possibly closer to those levels it would be again time to buy. Especially those who have missed out on this huge rally in the past couple of weeks, I think they should start buying at those levels instead of selling,'' he told CNBC-TV18 in an interview.

10:30am Bombay Dyeing on fire
Shares of Bombay Dyeing extended gains (up 5 percent) intraday as the Bombay High Court's nod injected relief . The HC has allowed the Wadia group controlled company to handover land to local authorities in Mumbai, at a single location, instead of two different locations.

Bombay Dyeing owned and sought to redevelop the land from two cotton mills located in the Lower Parel and Wadala regions of Mumbai. As per the local Development Control Regulations of 1991, 34 percent land has to be surrendered to Maharashtra Housing & Area Development Authority (MHADA) and 33 percent to Brihanmumbai Municipal Corporation (BMC). Bombay Dyeing was initially supposed to surrender 52331.55 sq. m at Wadala and 12823.39 at Lower Parel.

However, Bombay Dyeing, as a part of an integrated proposal, offered to surrender over 66,000 sq m of land from the Wadala land parcel, provided that the Lower Parel land parcel would remain untouched.

This plan for redevelopment has been upheld, with the Bombay HC ruling that the final discretion over where to surrender land, in such a scheme of redevelopment, rests with the developer Bombay Dyeing, in this case. The Court also held that Bombay Dyeing's proposal was sound in law and was fully compliant with the local regulations.

The mill workers are likely to appeal against the order in the apex court.

10:20am Future Retail under pressure

Shares of Future Retail fell 4 percent as the National Stock Exchange decided to remove the stock from its F&O segment.

According to a circular, contracts for new expiry months (i.e. February onwards) in the security will not be issued on expiry of existing contract months.

"The existing unexpired contracts of expiry months November 2013, December 2013 and January 2014 would continue to be available for trading till their respective expiry and new strikes would also be introduced in the existing contract months. Accordingly, no contracts shall be available for trading in the above mentioned security with effect from January 31, 2014," the NSE said.

10:00am Equity benchmarks fell more than 1 percent in morning trade Thursday on fears that the Federal Reserve may scale back its USD 85 billion monthly fiscal stimulus earlier than later.

The Sensex is down 229.32 points or 1.11 percent at 20405.81, and the Nifty is down 74.30 points or 1.21 percent at 6048.60. Declining outnumbered advancing ones by a ratio of 732 to 443 on the BSE.

Bruce Kasman, JPMorgan expects Fed to start tapering in January albeit at a slower pace but feels it is Fed's end plan to stop buying bonds.

''One should be paying attention to Chairman Bernanke's speech yesterday, which was consistent in talking and telling the market that the Fed will move to taper early as long as the economic news continues at a solid pace,'' says Kasman in an interview to CNBC-TV18.

Sun Pharma is the biggest loser among largecaps, falling 2.5 percent followed by ITC , ICICI Bank and HDFC with a 2 percent loss.

Among others, Reliance Industries, Infosys , HDFC Bank , L&T, Hindustan Unilever and SBI declined 1 percent each. However, GAIL , Maruti Suzuki, Wipro and Coal India are under pressure.

Meanwhile, the rupee is moving towards the 63-mark, losing 35 paise to 62.92 against the US dollar.