Bear party fells Sensex by 214 to 2-month low; Sun down 3%

Weak global cues dragged down benchmark indices further Thursday, with the benchmark indices closing at their lowest level in two months. A weak rupee and bearish outlook on the economy discouraged buyers from looking for bargains at lower levels, as the market never really recovered from a bearish start.

The Sensex shed 214 points to close at 18827.16, and the Nifty fell 61 points to 5699.10 as Finance Minister P Chidambaram's assurances on the health of the economy failed to calm jittery investors.

Rating agency Fitch late Wednesday raised its outlook on India's sovereign rating to 'stable' from 'negative', but the market ignored the upgrade in the face of too many negative macro data points.

The Nikkei tumbled 800 points, casting a pall of gloom over Asia and lingering fears of the US Federal Reserve cutting back on its monetary stimulus weighed on sentiment in other markets too.

Power, healthcare, auto and realty were among the worst performers today.
 
Apollo Tyres shares fell over 25 percent to close at Rs 68.60 as the market feels that the company's acquisition of US-based Cooper Tire for USD 2.5 billion will wreck Apollo's financials.

"This will result in an increase in the consolidated debt:equity for Apollo from 0.75 times to 1.35 times and the Net debt:EBITDA from 1.7 times to 3.8 times. The sharp increase in debt will be an area of concern for investors who were expecting balance sheet deleveraging in the next two years," said brokerage house Credit Suisse in a note to clients.

Sun Pharma shares closed 3 percent lower at Rs 949.45, but way above their intra-day low of Rs 916, after the company had to settle its patent case with Pfizer for a sum higher than what it had provided for.

"The outflow will happen in FY14 and will be a significant dent to Sun Pharma's cash balance (66 percent of consolidated and 40 percent of standalone cash). We also highlight that the cash outflow will be from the high yielding standalone cash ,thus impacting Sun of robust other income which will reduce by Rs 300 crore," said a note by brokerage house Antique to clients.

In some relief for the government, the offer-for-sale issue of MMTC was fully subscribed even as the stock tumbled 10 percent to Rs 189 due to the steep discount (Rs 60) at which the shares were sold.

Sun TV , JSW Energy , Indiabulls Real Estate , Adani Power and Mphasis were the other big losers, crashing 5-11 percent.

3:55 pm Macro take: HSBC cuts FY14 GDP growth forecast to 5.5 percent from 6 percent.

3:50 pm Yellow metal update: Both gold and silver bounced back in the national capital on Thursday on stockists buying in tandem with a firming global trend.

While gold recovered sharply by Rs 360 to Rs 28,550 per 10 grams, silver gained Rs 500 to Rs. 44,700 per kg. Traders said stockists buying in line with a firm global trend mainly led an recovery move in both gold and silver prices.

Gold in New York, which normally sets the price trend on the domestic front, rose by USD 10.20 to USD 1,388.40 an ounce and silver by 0.48 percent to USD 21.79 an ounce.

3:45 pm: Nifty closes below 5700 for first time since April 17.

3:40 pm Laggards: Apollo Tyres (down 25.4 percent), Sun TV (down 10.9 percent), Adani Power (down 5.5 percent) are major laggards of the day.

3:35 pm Gainers: Hindalco (up 4.8 percent), Bharti Airtel (up 3.5 percent) are najor gainers in the Sensex.

3:30 pm Market closing: The Sensex ends down 239.41 points or 1.26 percet at 18801.72, and the Nifty down 64.50 points or 1.12 percent at 5695.70 (provisional). About 753 shares have advanced, 1555 shares declined, and 151 shares are unchanged.

3:20 pm Government's take: The government will go ahead with the 10 percent stake sale of Coal India , which may fetch Rs 20,000 crore to the exchequer, and the Coal Ministry will talk to the Trade Unions to sort out issues.

"CIL disinvestment is on the list of companies that we have to disinvest in. But the ministry is talking to the union, there are some voices of protest. We will explain to them," Finance Minister P Chidambaram told reporters here.

Pain in the market continues even in the last trading hour of day. The Nifty is stuck at 5700. The Sensex is down 198.33 points at 18842.80, and the Nifty down 58.05 points at 5702.15. About 720 shares have advanced, 1518 shares declined, and 144 shares are unchanged.

Tata Motors , Sun Pharma , M&M, Sterlite Industries and Tata Steel are major losers in the Sensex.

02:50pm Buying continues in aviation stocks. Jet Airways and SpiceJet gained 6.6 percent and 3.5 percent, respectively.

Aluminium major Hindalco shares extended gains to 5 percent, outperforming its peers and other frontliners. But the stock fell 7 percent in past one month and 21 percent in one year.

BSE Sensex is down 186.66 points or 0.98 percent at 18854.47, and the Nifty down 52.85 points or 0.92 percent at 5707.35.

Telecom operator Bharti Airtel rallied nearly 4 percent on short covering today, which dropped 8 percent in past one month

02:40pm Jubilant Foodworks shares plunged 6.6 percent and touched a 52-week low of Rs 958.80, after its promoter Weston Investments sold 3.6 lakh equity shares.

ILandFS Transportation Networks rose nearly 3 percent as the company received environment nod for three road projects.

BSE Sensex is down 199.63 points or 1.05 percent at 18841.50, and the Nifty is down 53.70 points or 0.93 percent at 5706.50.

02:30pm European markets trimmed early losses; France's CAC and Britain's FTSE slipped 1 percent each while Germany's DAX declined 1.8 percent.

Indian equities too recouped some losses following a slight recovery in rupee that was trading at 58.17, down 38 paise.

Apollo Tyres shares plunged 25 percent after the company agreed to buy US-based Cooper Tire for Rs 14,500 crore in all cash deal. Goldman Sachs feels the acquisition is a giant step for Apollo, but execution is the key.

02:20pm Indian rupee recouped some losses, depreciating 44 paise to 58.23 per dollar. It touched an intraday low of 58.44 per dollar.

State-owned STC India crashed 20 percent following a sharp cut in MMTC . The government set the floor price at Rs 60 per share for MMTC's offer for sale as against Wednesday's closing price of Rs 214.

02:10pm The downward journey sustains in equity benchmarks due to weak global cues and rupee depreciation. BSE Sensex is down 207.01 points or 1.09 percent at 18834.12, and the Nifty is down 55.70 points or 0.97 percent at 5704.50.

Declining shares outnumbered advancing ones by 1469 to 671 on the Bombay Stock Exchange. The BSE Midcap Index dropped 1.2 percent and Smallcap slipped 0.9 percent.

Reliance Communications is likely to sell controlling stake in DTH business to Sun Group, reports CNBC-TV18 quoting sources. Sources say talks with Sun Group are at advanced stage for DTH business. The stock declined 1.2 percent.

1:50 pm Macro outlook: Subir Gokarn, Director of Research, Brookings India says the economy may hit bottom but there is no sign of recovery yet. He feels the current account deficit (CAD) problem needs to be addressed on various parameters; a diesel price hike alone will not be enough.

Gokarn, who is also ex-RBI deputy governor, also says restriction on gold imports only a short-term solution. He says the government must ensure alternate investment options to gold.

"The inflation-indexed bonds (IIB) a clear alternate to gold investment," he told CNBC-TV18 in an interview .

But the bigger concern for the economy right now is the relentless fall in the domestic currency. Gokarn says earlier growth forecast of 6 percent did not factor in rupee volatility. "We may see RBI revising forecasts in upcoming policy," he says. 

1:45 pm Macro outlook: A tumbling rupee and pressure on the current account deficit are likely to prevent the Reserve Bank of India from lowering policy rates on Monday despite softening inflation and decade-low economic growth, reports Reuters.

A policy hold would halt a cycle that has seen the central bank cut rates at each of its reviews in 2013.

1:40 pm MMTC OFS Update: Gets bids for 3 crore shares vs issue of 9.33 crore till 1:15 pm. Its indicative price is at Rs 60.86 per share vs floor price of Rs 60 per share. The stock is down 10 percent.

1:35 pm Brokerages on Apollo Tyres

Goldman maintains neutral rating with a target price of  of Rs 101. Cooper acquisition is a giant step for Apollo but execution is the key, it adds.

Kotak maintains neutral rating with target price of Rs 92  "Bold move is an understatement, deal is extremely aggressive. As the size of the transaction is very large versus the current operations, it could swing either way for Apollo," Kotak says.

Credit Suisse maintains underperform rating on it with a target price of Rs 89. It feels that acquisition is EPS accretive but it is still risky.

1:30 pm: Hindalco , Bharti Airtel , Hero Motocorp , SBI , ONGC are key gainers in the Sensex.

1:20 pm Expert views: The second half of 2013 is likely to be better than what the first half has been for the stock market, Madhu Kela, chief investment strategist at  Reliance Capital said on Thursday. ( Full interview here. )

Speaking on CNBC-TV18, he said that while the first quarter's optimism was over done, the current skepticism in the market is also overdone.

"We have talked about USD 6 billion outflow in the last three weeks and the market has got so jittery just by the USD 6 billion outflow. I just feel that this talk of complete withdrawal from the Fed might just be little premature because if you see globally there is no sign of inflation anywhere in the world so why should there be any abrupt withdrawal of the Quantitative Easing," Kela said.

He sees Nifty trading in 5,400-5,500 range in the next one months and still feels there are stock specific buying opportunities in the market.

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Selling pressure continues in the market as the Nifty struggles hard to sustain 5700 is currently down 56.80 points. The Sensex is down 209.33 points at 18831.80.

Most of the indices are down with Bankex, IT, Auto, FMCG and Realty being the laggards during the day. Tata Motors (down 3.5 percent), Sun Pharma (down 3.04 percent), Maruti Suzuki, Bajaj Auto and ITC are major losers in the Sensex.

The rupee is lower as well and is in sync with currencies of all emerging markets. It falls further on no announcements on NRI bond.

12:55pm The Cabinet Committee on Economic Affairs (CCEA) approved streamlining of approval process of highways.

Aviation stocks are on buyers' radar; Jet Airways rallied 6.5  percent and SpiceJet gained nearly 4 percent. Amtek group stocks are under pressure; Amtek India dropped over 7 percent and Amtek Auto lost 5.8 percent.

12:50pm Country's largest lender State Bank of India extended gains to 0.9 percent from 0.4 percent while its rivals ICICI Bank and HDFC Bank cut down their losses.

Sun Pharmra and Tata Motors topped the selling list, losing more than 3 percent each. Meanwhile, ITC , Bajaj Auto and Maruti Suzuki shares slipped 2-2.5 percent.

12:40pm The government has corrected industrial output to 2.2 percent for April today as against 2 percent announced yesterday.

NSE Nifty is trading below the 5700, down 62 points and Indian rupee depreciated by 64 paise to 58.43 per dollar.

European markets plunged nearly 2 percent in early trade following a sharp fall in Asian markets amid uncertainty over the Federal Reserve's policy outlook.

12:30pm JSW Energy lost 3 percent after its promoters pledged 12.1 crore shares. The stock tanked more than 20 percent in past one month, but it gained 2.5 percent in one year.

The offer for sale of state-owned MMTC received lukewarm response till 11:45 am despite the government lowered its floor price quite significantly compared to previous day's close. The issue got bids 2.02 crore shares as against issue size of 9.33 crore shares. The floor price is at Rs 60 per share as against previous day's close of Rs 211.45.

12:25pm Hindalco Industries and Bharti Airtel shares outperformed the market, rising nearly 4 and 3 percent, respectively. Even country's largest lender State Bank of India gained 0.5 percent whereas its rivals ICICI Bank and HDFC Bank fell 0.8-1.4 percent.

12:15pm Indian equities remain under pressure despite finance minister P Chidambaram assured that the government will be taking steps to improve economic growth and cure rupee depreciation.

BSE Sensex is down 213.96 points or 1.12 percent at 18827.17, and the Nifty is down 57.35 points or 1 percent at 5702.85. About 595 shares have advanced while 1385 shares declined on Bombay Stock Exchange.

Indian rupee depreciated by 60 paise to 58.39 per dollar as against previous day's closing of 57.79.

The globally, it's a dismal session for most Asian markets, the Japanese market is down nearly 6%. China re-opened today after a long break to slip to a 6-month low on disappointing inflation data.

11:55 am Market update: The Sensex is down 232.24 points at 18808.89, and the Nifty slips 62.55 points to 5697.65. Hindalco is up 4 percent while Bharti Airtel surges 2.8 percent.

11:40 am: Wipro's offshore employees' salary hiked by average 6-8 percent from June 1 while salaries of onshore employees hiked by average 2-3 percent from June 1.

11:30 am FM speech: The Finance Minister says government is set to take string of decisions on gas, coal pricing, FDI caps. He also adds the government will accelerate clearance of stuck infra projects. He, however, does not announce much expected steps on NRI bonds.

11:25 am Gainers: Hindalco, Bharti Airtel, Tata Steel , Dr Reddys Labs and SBI are key gainers in the Sensex.

11:20 am Banker's view: SBI chairman says that the bank can't cut rates unless other saving instrument rates fall as it is lending rates already lowest in industry. He adds that deposit costs are not determined by bond yields and retail segment is key driver of credit.

Expert talk: Nifty below 5K given; sell oppurtnities in midcaps, says Sukhani

The market has shrugged off Finance Minister P Chidambaram's assurance of a steady economic and is continuing its downward slide. The Nifty has slipped below 5700 dragged lower by rate sensitives and commodities. The Nifty is down 61.45 points at 5698.75 while the Sensex falls 221.49 points at 18819.64.  About 452 shares have advanced, 1196 shares declined, and 103 shares are unchanged.

Asian markets have cracked with the Nikkei down around 6% as the yen appreciates to a two-month high of 94.7 to the dollar. China trades at a 6-month low after reopening for trade after 3-day public holiday reacting to the recent disappointing inflation data.

It is a stable session in commodities, Brent is at USD 103.5 and gold hovers around USD 1390.

10:55am Equities are unmoved after a speech by Finance Minister P Chidambaram on current economic environment and rupee depreciation.

Initially when he started speech the Sensex recovered nearly 100 points from day's low and even rupee recovered quite a bit, but his speech could not be able to move the market and rupee towards recovery.

BSE Sensex is down 219.25 points or 1.15 percent at 18821.88, and the Nifty is down 61.65 points or 1.07 percent at 5698.55. Indian rupee fell 56 paise to 58.35 per dollar.

Finance Minister said the government took steps to spur growth & investment, and tame inflation. Steps taken by the government delivered desired outcome, he added.

"Number of steps to cure rupee depreciation will be taken soon and number of steps will be taken to spur economic reforms this month," FM said.

10:50am Tata Coffee is trading off day's low, down 5 percent. It was down another 20 percent in early trade to touch a 52-week low of Rs 880.25.

More than 3.8 lakh equity shares changed hands at its 52-week low via four block deals on Bombay Stock Exchange.

10:40am Broader markets are slightly outperforming benchmarks; the BSE Midcap Index declined 0.7 percent and Smallcap slipped 0.6 percent.

Among midcaps, Jet Airways , PC Jeweller , SpiceJet, Kansai Nerolac and
Pfizer surged 2-6 percent. However, Apollo Tyres crashed 19 percent. Eros International, Educomp Solutions , Religare Enterprises and Amtek Auto lost 4-5.5 percent.

10:35am Equity benchmarks slipped one percent again and even Indian rupee depreciated more than 40 paise. BSE Sensex is down 205.14 points or 1.08 percent at 18835.99, and the Nifty is down 52.10 points or 0.90 percent at 5708.10.

Shares of Tata Motors , Sun Pharma , Punjab National Bank and Bank of Baroda plunged 3 percent each.

10:30am Apollo Tyres crashed 19 percent amid hefty volumes, after it decided to buy US-based Cooper Tire for Rs 14,500 crore. Credit Suisse maintained "underperform" rating on the stock, citing the acquisition is EPS accretive, but still looks risky.

"While the Vredestein acquisition has been a big success for the company, Apollo had acquired that from a bankrupt company at a very reasonable valuation. Though Cooper seems like a good strategic fit, Apollo is paying a fair price for it, and hence any upside would be based on the kind of synergies it can get. Also, a few investors were holding this stock as a proxy on the Indian CV cycle recovery, but post this acquisition only around 20 percent of revenues will come from India," Credit Suisse report said.

10:20am While addressing press conference, Finance Minister P Chidambaram said the number of steps to cure rupee depreciation would be taken soon. On Tuesday, the Indian rupee had touched a record low of 58.98 per dollar, but it recovered to 57.79 at close on Wednesday. Today again, it depreciated to 58.10 per dollar.

"All countries with high current account deficit depreciated against dollar", he added.

He also said, "Coal & gas pricing issue and FDI limit issue would be resolved before June-end."

10:10am Indian equities recouped some early losses on hopes that the government may take some measures for rupee depreciation. Indian rupee too is off day's low at 58.05 per dollar, falling 26 paise compared to previous day's closing value. It depreciated to 58.19 in early trade today.

BSE Sensex is down 146.04 points or 0.77 percent at 18895.09, and the Nifty is down 36.10 points or 0.63 percent at 5724.10.

Laurence Balanco, Asian technical research at CLSA sees support at 5500-5600 levels for the Nifty. However, he says, a break of 5500 may lead to a drop to 5000 levels .

"The Nifty is already below March level in dollar terms," he adds.

More worryingly, he sees the bealguared rupee sliding to 62-63 against the dollar.

Declining shares outpaced advancing ones by 876 to 378 on the Bombay Stock Excahnge.

9:56 am: Auto, FMCG and Realty index are dragging the indices.

9:52 am Government decision: Despite opposition from key ally, NCP leader and Agriculture Minister Sharad Pawar, the UPA is set to push through the Food Security ordinance at the Cabinet meet on Thursday. If the Cabinet approves it, the ordinance will be sent to President Pranab Mukherjee.

If the President signs it, then the ordinance will have to come into immediate effect. However, with a lot of ground work still pending, the Food Security ordinance cannot be implemented immediately.

9:50 am Macro outlook: In a breather to the government and the economy, which have been swamped with bad news for many months now, global rating agency Fitch has upgraded the country's sovereign credit outlook to stable from negative.

Art Woo, Director, Fitch Asia Sovereign Ratings says the rating agency acknowledges the moves by the Indian government to address the fiscal deficit problem ( full interview here .)

Woo says there has been a structural shift in the economy, though it is early to judge the reform measures initiated by the government. Easing of inflation is an added positive for the economy, but other challenges loom, said Woo.

The two key headwinds right now are weak growth and the high current account deficit, Woo said.

9:42 am Buzzing: MMTC is down 10 percent on the BSE. The government is selling 9.33 percent stake in MMTC today and has fixed the floor price at Rs 60 apiece, which will fetch the exchequer about Rs 600 crore. MMTC disinvestment would be the first stake sale of the government in the current fiscal. The government aims to raise Rs 40,000 crore from PSU stake sale in 2013-14.

9:40 am Losers: Sun Pharma , Jindal Steel , Tata Motors , Wipro and HDFC are top losers in the Sensex.

9:32 am Expert speaks: There could be more pain for equities in the medium term unless the rupee shows signs of stabilising, says Dhiraj Agarwal of Standard Chartered Securities . He expects the Nifty to find support in the 5,700-5,750 range near term.

The weak industrial output data for April and high consumer inflation underscores the stress in the economy and this will reflect in the stock market, Agarwal says.

Nevertheless, there are stock specific buying opportunities even as the broader market is in a bear grip, he says.

Hopes of an interest rate cut have receded following the pressure on the rupee, and the higher-than-expected consumer inflation for May.
But even if the RBI were to cut rates, it would not really help in reviving the investment cycle, he says.

9:30 am Market update: The Sensex is down 179.41 points at 18861.72, and the Nifty is down 47.40 points at 5712.80. About 249 shares have advanced, 690 shares declined, and 52 shares are unchanged.

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The market has once again opened on a shaky note as the Sensex starts trading session 194.49 points down at 18846.64, and the Nifty is down 50.85 points or 0.88% at 5709.35. About 38 shares have advanced, 241 shares declined, and 26 shares are unchanged.

Ratings agency Fitch raising India's economic outlook to 'stable' from 'negative' has not even managed to boost market sentiments. On Wednesday, the rating agency has given a thumbs up to the government's fiscal consolidation drive and expects inflation to ease further.

Stock specifically, Apollo Tyres crashes 13% as the company acquired US based Cooper Tires for about USD 2.5 billion  and will fund the deal through debt.

Other losing stock is Sun Pharma (down 5.1 percent) as the drug company settled Protonix patent infringement battle with Pfizer and Takeda for USD 550 million.

Meanwhile, the rupee has opened at 58.10 per dollar Thursday, down by 31 paise compared to previous day's closing of 57.79 per dollar.

On the global market front, Wall Street ended yet again in red in choppy trading. The CBOE VIX, the volatility index, spiked 9 percent. The Dow posted its first three day losing streak, amid concerns of Fed tapering its quantitative easing (QE) The Dow Jones Industrial Average tumbled 126.79 points, to close at 14,995.23

The important data to be released from the US today are the weekly jobless claims. Estimates peg it slightly higher at 350000 compared to 346000 the previous week.

In other asset classes, the euro is holding firm above 1.33 to the dollar. The dollar index has slipped below the 81 mark. Meanwhile, the yen strengthened, currently sub 96. In commodities, Brent Crude hovers around 103 dollars per barrel. From precious metals space, gold is continuing to trade around 1385 dollars an ounce.