Rally in PSU banks helps Sensex close in positive zone, Nifty above 9600

14 Jun 2017

3:30 pm Market at Close: Equity benchmark indices ended the session on a strong note, in a day that was largely dominated by the bears.

A sharp surge in the midcap index helped the Sensex and Nifty recover from their day's lows. Meanwhile, PSU banks and power stocks, among others, witnessed gains as well.

The Sensex closed up 52.42 points at 31155.91, while the Nifty ended up 11.25 points at 9618.15. The market breadth was, however, negative as just 1,249 shares advanced against a decline of 1,419 shares, while 169 shares were unchanged.

A sharp surge in Reliance tipped it to be the top gainer for the day, followed by Dr Reddy's Laboratories and Bank of Baroda. Meanwhile, Cipla, ITC and Yes Bank lost the most.

3:05 pm Tie-up: Emkay Global Financial Services shares were locked at 10 percent upper circuit at Rs 150, the 52-week high, after signing an agreement for distribution of equity research with Singapore firm.

The brokerage firm informed exchanges that it has signed an exclusive agreement with DBS Vickers Securities (Singapore), a wholly owned subsidiary of DBS Bank, on June 13, for sharing of knowledge, co-branding of research and distribution to global clients of DBS Vickers.

"The alliance would facilitate DBS Vickers to enhance its service offering to its clients, while enabling Emkay to expand its reach," the company said in its filing.

2:56 pm PSU bank in action: Nifty PSU Bank extended gains in last hour of trade, rising more than a percent on further consolidation.

Allahabad Bank, IDBI Bank, Syndicate Bank, Andhra Bank, Bank of Baroda, Union Bank, PNB, Canara Bank, Bank of India and Oriental Bank of Commerce gained 1-6 percent after RBI kicked off NPA resolution process by identifying 12 NPA accounts.

2:45 pm Dena Bank surges: Dena Bank's share price rallied nearly 15 percent intraday Wednesday on buzz of it merging with a stronger state-run lender.

A government official said the Centre was aiming to merge the bank with stronger PSU lender, according to CNBC-TV18 reports quoting NewsRise.

Bank of Baroda and Canara Bank are top two contenders to absorb smaller state-run banks, the official said, adding that Punjab National Bank and Bank of India's balance sheets are too weak at the moment to absorb other lenders.

2:30 pm Buzzing Stock: Shares of Hexaware Technologies lost over 5 percent intraday on Wednesday as investors turned cautious on buzz of revenue dip from its top client.

According to a report in The Times of India, the company was facing a revenue headwind from EY.

The company considers EY as a platinum account, with an annual IT outsourcing exposure of USD 80 million-about 15 percent of overall revenue. This figure reportedly has come down sharply after the global consultancy reviewed its IT strategy.

2:04 pm Interview: With the Maharashtra state announcing farm loan waivers, the non-banking financial companies (NBFCs) like M&M Financial Services are back in focus.

A Morgan Stanley note indicated that the above company saw no meaningful impact from the previous farm loan waiver in 2009.

Ramesh Iyer, VC & MD, M&M Financial Services clarified that farm loan waivers are for a very different segment of customers, and that the company works with customers who want loan to acquire assets and they  bring in at least 25 percent of margin. So, largely it does not impact their profile of customers, said Iyer.

With good monsoon last year, the year started off with on positive sentiment and that is likely to continue this year to with expectations of good monsoons.

''We are an enabler providing loans to customers who want to acquire utility vehicle, tractors, cars etc., and with most original equipment manufacturers (OEMs) focusing on the rural India growth story, we would benefit from emerging volumes from these segments,'' said Iyer.

He said, the company was functionally ready to take advantage of the new emerging rural India.

1:44 pm Market Check: Benchmark indices continued to be volatile in afternoon trade as investors eagarly await the final decision of two-day Federal Reserve meeting later today.

The 30-share BSE Sensex was up 29.33 points at 31,132.82 and the 50-share NSE Nifty declined 0.35 points to 9,606.55. About 1,390 shares declined against 1,121 advancing shares on the BSE.

Reliance Industries, Dr Reddy's Labs, ICICI Bank, L&T, Hero Motocorp and Bank of Baroda were top gainers, up 1-3 percent whereas Wipro, Cipla, ITC, HDFC, BHEL, Yes Bank and Tata Motors (DVR) fell 1-3 percent.

European markets edged higher as investors cautiously awaited the latest monetary decision by the US Federal Reserve. France's CAC was up 0.8 percent and Germany's DAX gained 0.5 percent.

1:20 pm USFDA nod: Pharma major Lupin has received final approval for its Oxycodone Hydrochloride tablets from the US Food and Drug Administration to market generic version of Mallinckrodt Inc's Roxicodone tablets.

Oxycodone Hydrochloride is indicated for the management of pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate.

12:59 pm Buzzing: Dena Bank share price rallied nearly 15 percent intraday on buzz of merger of it with stronger state-run lender.

Government official said the Centre is aiming to merge the bank with stronger PSU lender, according to CNBC-TV18 reports quoting NewsRise.

Bank of Baroda and Canara Bank are top two contenders to absorb smaller state-run banks, official said, adding, however, Punjab National Bank and Bank of India' balancesheets are too weak now to absorb other lenders.

Consolidation of not only banks but also other PSUs has been on government's radar. Last year, the five associate banks and Bharatiya Mahila Bank already merged with country's largest lender State Bank of India.

According to reports, UCO Bank, Oriental Bank of Commerce and United Bank are also expected to be considered by the government for merger with big PSU lenders.

12:30 pm NPA resolution: Speeding up NPA resolution process by RBI with identifying 12 NPL accounts under the new bankruptcy code is a positive step for banks, Nomura said.

"Banks, instead of just ageing NPAs on their books, will evaluate for a time-bound resolution, failing which there will be a forced liquidation which is also faster under the new Insolvency and Bankruptcy Code (IBC)," it explained.

The Reserve Bank of India's (RBI) appointed committee on Tuesday has identified large accounts for reference of NPAs under the Insolvency and Bankruptcy Code. Of the pool of 500 NPAs as of March 2016, it has identified 12 accounts (each with fund and non-fund exposure of more than Rs 5,000 crore each) and these accounts comprise around 25 percent of the system's existing NPAs as per the RBI.

The research house believes a majority of resolution will be around right-sizing of debt (around 50 percent haircut) and forcing sale of non-core assets.

12:15 pm Market Check: Benchmark indices were sluggish in the afternoon trade, with the Nifty remaining below 9600-mark. Investors could be sitting on the fence ahead of the US Federal Reserve's decision on interest rates, which the Street factors in a rate hike.

The Sensex was down 28.65 points at 31074.84, and the Nifty down 18.05 points at 9588.85. The market breadth was negative as 1,024 shares advanced against a decline of 1,400 shares, while 148 shares were unchanged.

Wipro, ITC and Yes Bank lost the most on both indices, while Reliance Industries, Dr Reddy's Laboratories and Bank of Baroda were the top gainers.

12:00 pm WPI inflation: India's wholesale inflation slipped to 2.17 percent during May as compared to 3.85 percent in April, according to data released by the commerce ministry.

Wholesale inflation rate, measured by the wholesale price index (WPI), is a marker for price movements in bulk buys for traders and broadly mirrors trends in shop-end prices.

The index portrays new series of WPI data released by the government last month, with 2011-12 as the base year, replacing existing the base year of 2004-05.

11:45 am PSU banks consolidation: Four public sector banks (PSBs) have made presentations about their consolidation plans to the Finance Ministry, according to a media report that said these four banks are Canara Bank, Dena Bank, Syndicate Bank and Vijaya Bank.

NITI Aayog was also asked to provide plans for the consolidation of the PSBs as the government wanted to have 4-5 banks of SBI size.

Finance Minister Arun Jaitley told reporters yesterday that the government is actively working on the consolidation of banks.

11.19 am Market Check: Benchmark indices continued to be choppy in late morning trade, with the Nifty hovering around 9600 level ahead of Federal Open Market Committee's interest rate decision.

The 30-share BSE Sensex was down 4.97 points at 31,098.52 and the 50-share NSE Nifty fell 13 points to 9,593.90. About 1,278 shares declined against 1,000 advancing shares on the BSE.

Ahead of the FOMC meet, economists and traders expect the central bank to raise rates. As per the CME Group's FedWatch Tool, nearly 100 percent of traders believe that the US Fed will announce an increase in interest rates tonight.

Reliance Industries was top gainer among Sensex stocks, up 2.6 percent followed by ICICI Bank, TCS, Tata Motors, Dr Reddy's Labs and L&T while HDFC, ITC, Asian Paints and Wipro were down 1-2 percent.

10:50 am MF charges: DSP Black Rock Mutual Fund has modified the exit load structure of DSP BlackRock Equity Savings Fund with immediate effect, the fund house said in a notice today.

The fund house will now charge exit load for switches and systematic transfer plan (STP) made to DSP BlackRock Balanced Fund and all open-ended equity schemes of DSP BlackRock Mutual Fund.

Earlier, the scheme did not charge any exit load for switches or STP made to any other schemes of the fund house.

10:26 am Buzzing: Shares of Raymond lost nearly 4 percent intraday as investors turned wary of the market regulator's actions on the company.

The Securities and Exchange Board of India (SEBI) has initiated a preliminary enquiry against the company over corporate governance lapses relating to the sale attempt of JK House.

The watchdog gave notices to the company's Board and its audit and remuneration panel for not complying with listing, obligation and disclosure requirements.

The regulator has questioned Raymond's board and audit committee as to why the information about the tripartite agreement relating to JK House was not disclosed to the stock exchanges and investors over the last ten years. The agreement was signed in November 2007 between the company, Pashmina Holding and each of the sub-lessee.

SEBI has also raised concerns on payment of remuneration in form of commission to non-executive directors. Usually, companies do not pay any fees other than sitting fee and profit-based commission calculated on pre-disclosed performance criteria.

10.05 am Market Check: Equity benchmarks were marginally under pressure amid volatility as investors remained cautious ahead of outcome of Federal Reserve meeting tonight.

The 30-share BSE Sensex was down 1.79 points at 31,101.70 and the 50-share NSE Nifty fell 14.25 points to 9,592.65.

The market breadth was also negative as about 1,057 shares declined against 867 advancing shares on the BSE.

"The Federal Reserve is expected to result in rate hike of 25 bps," Motilal Oswal said. This would be fourth rate hike in this cycle, third in last six months and Fed has managed market expectations quite well so far.

We haven't seen any major market tantrums despite three rate hikes that have already happened and current hike is also largely factored in, the research house feels.

According to Motilal Oswal, the language of Federal Reserve, however, could offer some scope of surprise. It believes markets are likely to see a dovish hike rather than a hawkish hike. This means that while a rate hike will happen, the Fed will tone down the language to suggest that the next rate hike may not happen very soon, the research house said.

It believes that after this hike, a third rate hike this year will happen only in December.

9:44 am Buzzing: Nifty PSU Bank index gained nearly half a percent in morning trade after the Reserve Bank of India announced steps to speed up NPA resolution process by identifying 12 accounts that can be immediately taken up under the Insolvency and Bankruptcy Code (IBC).

Syndicate Bank, Bank of Baroda, State Bank of India and Oritenal Bank of Commerce gained upto 1.5 percent.

"12 accounts totaling about 25 percent of the current gross non-performing assets of the banking system would qualify for immediate reference under IBC," the RBI said.

9:28 am Earnings growth: Ridham Desai of Morgan Stanley said broad market revenue and net profit growth gained pace at 10 percent YoY and 20 percent YoY, respectively. Earnings growth was the fastest since June 2013, he added.

Even as corporate India witnessed EBITDA margin compression, net margins expanded during the quarter, he said.

Desai expects revenue growth acceleration to persist in the coming quarters. He sees FY18 YoY earnings growth for Sensex of 18 percent and for the broad market of 20 percent.

9:15 am Market Check: Equity benchmarks started off Wednesday's trade on a flat note as investors await the outcome of two-day Federal Reserve policy meeting due tonight.

The 30-share BSE Sensex was up 28.79 points at 31,132.28 and the 50-share NSE Nifty rose 2.85 points to 9,609.75. About 596 shares advanced against 364 declining shares on the BSE.

Reliance Industries, ICICI Bank, TCS, Infosys, Lupin and Dr Reddy's Labs were early gainers while Asian Paints, HDFC, ITC, HDFC Bank and Tata Steel were losers.

Stressed assets stocks like Videocon, Bhushan Steel and Electrosteel Steels fell more than 5 percent while Hexaware declined 4 percent on a media report that revenue from EY declined.

Raymond was down 3 percent as SEBI initiated enquiry on company while tyre stocks fell further, Ceat and Balkrishna Industries down 1 percent each.

The Indian rupee opened flat at 64.34 per dollar today against previous close 64.33 a dollar.

Pramit Brahmbhatt of Veracity feels the rupee will appreciate and may test 64.20/dollar. Trading range for the spot USD-INR pair for the day will be 64.20-64.50/dollar, he said.

Equities in Asia were mixed as oil prices fell after a surprise build in US stocks and as markets awaited the release of economic data from China. Japan's Nikkei 225 was up 0.1 percent and South Korea's benchmark Kospi index slipped 0.18 percent.

Oil prices fell after data showed a build in US crude stocks and OPEC reported a rise in its production despite its pledge to cut back. Brent crude futures were at USD 48.37 per barrel, down 0.72 percent, from their last close. US West Texas Intermediate (WTI) crude futures were at USD 46.05 per barrel, down 0.88 percent.