Nifty ends above 7550, market cautious on China & Q3 nos; TCS down

There were some heady swings in market with benchmark indices ending lower on Monday despite sharp recovery after major loss in early trade. Domestic bears followed China turmoil which continued for second week. Investors were also cautious ahead of December earnings which is expected to be tepid. Crisil thinks Q3 will be sixth consecutive quarter of single-digit topline growth. It expects Q3 revenue growth to be tepid at 2 percent and sees a 60-70 basis points (bps) decline in the overall EBITDA margins.

Meanwhile, the Sensex ended down 109.29 points or 0.4 percent at 24825.04 and the Nifty slipped 37.50 points or 0.5 percent at 7563.85. About 1241 shares advanced, 1550 shares declined and 134 shares were unchanged.

There was no stopping in the rout in China as stocks hit their lowest level in 3 months even as the central bank bolsters the yuan for the second straight session. The Shanghai Composite lost over 5 percent and that took markets across Asia on a downward spiral.

The yuan was guided higher by the People's Bank Of China for the second straight session. The central bank also assured investors that the economy is "stable & healthy".

Just like the markets in China, rebound in crude oil also proved to be short-lived. Brent broke below USD 33-mark in intra-day trade. The speculators have increased their short-positions and long-positions have seen drastic cuts. It is a clear indication that not may have faith in the market recovery anytime soon. Crude oil prices drop over 2 percent as traders cut long-positions.

Back home, pharma, IT, banks and capital goods faced severe burns in today's trade.

Jonathan Schiessl of Ashburton does not think India is trading at attractive valuations yet. However, two things are definitely in favour of the nation lower commodity prices and earnings recovery, which he believes will materialise soon. He says the Indian market offers good value with a three-year horizon and largecaps are offering better value than midcaps.

Reliance, Maruti, NTPC and Hindalco were top gainers in the Sensex. Tata Motors ended with 2 percent gains despite China slowdown amidst weak market condition. The four-wheeler major is riding high on its British subsidiary- Jaguar Land Rover's strong sales in December and overall performance in December. In December, JLR global retail sales saw a growth of 20 percent annually at 49553. Jaguar sales rose 20 percent (Y-o-Y) at 838 2units while Landrover sales grew 20 percent (Y-o-Y) at 41171 units.

On the losing side were M&M, Wipro, Adani Ports, BHEL and Dr Reddy's. Shares of Sun TV slipped over 7 percent intraday. Former telecom minister Dayanidhi Maran, his brother and Sun Group chief Kalanithi Maran, and four others were charge sheeted by the Enforcement Directorate in the Special 2G court in connection with a money laundering case lodged in the Aircel-Maxis deal.

TCS ended with 1 percent down ahead of its September-December quarter earnings to be announced tomorrow. According to a CNBC-TV18 poll, profit in Q3 is expected to be marginally down 0.8 percent at Rs 6005 crore against Rs 6055.2 crore in preceding quarter while revenue is seen at Rs 27575 crore, up 1.5 percent from Rs 27165 crore on sequential basis.

3:30 pm Market closing: The market has ended lower depsite a sharp recovery. The Sensex is down 109.29 points or 0.4 percent at 24825.04 and the Nifty slips 37.50 points or 0.5 percent at 7563.85. About 1241 shares have advanced, 1550 shares declined, and 134 shares were unchanged. Reliance, Tata Motors, Maruti Suzuki, NTPC and Axis Bank are top gainers in the Sensex. Among top losers are Wipro, M&M, Adani Ports, Dr Reddy's and BHEL.

3:15 pm Odd-Even: The Odd-Even scheme has worked to an extent in other countries but may require more supporting transport infrastructure here to make travel comfortable for commuters, leading industrialist Ratan Tata said today.

Ratan Tata declined to get into the merits of the scheme that is being followed in the capital till January 15, saying that he is not the 'qualified person' to comment on it.

"Even Odd licence plate solution has been tried in other countries. It has worked to some extent. So I am not quick to dismiss it...may be it needs more supporting (transport) infrastructure to make it comfortable to other people to avail it," Tata told reporters here.

Delhi government introduced the Odd-Even formula for fortnight from January 1 to check pollution in the city.

3:00 pm Macro economy: India's GDP will grow marginally to 7.7 percent in the next fiscal from an estimated 7.5 percent in FY 2016 as the economy is going through a "painfully gradual cyclical recovery" process, even as the external headwinds are also posing challenges, says a Citigroup report.

According to the global financial services major, the structural drivers of growth are likely to benefit from the reform process, but external headwinds may remain strong in 2016.

"We expect real GDP growth to inch up to 7.7 percent in FY17 from 7.5 percent in FY16," Citigroup said in a research note today.

2:45 pm Result polls: Federal Bank is likely to see a tepid December quarter earnings with high provisions impacting profit and asset quality further worsening.

According to a CNBC-TV18 poll, the bank is expected to post a net profit of Rs 193.4 crore in October-December quarter down 27 percent from Rs 264.7 crore in Q3FY15. In Q2 profit was down 33 percent annually as provisions spiked 91 percent.

Net interest income is seen rising marginally by 3.1 percent to Rs 605 crore from Rs 587 crore year-on-year. Gross non-performing asset (NPA) may grow 15 percent to Rs 1498.73 crore while net NPA is seen up 39.3 percent to Rs 674.8 crore (Y-o-Y). In percentage terms, GNPA is likely to be 2.9 percent and NNPA at 1.3 percent.

2:30 pm Market update: The Sensex is up 4.75 points at 24939.08 and the Nifty is down 3.20 points at 7600.About 1242 shares have advanced, 1449 shares declined, and 131 shares are unchanged.

European stocks reversed opening losses to trade higher on Monday after U.S. stocks ended last week posting their worst five-day start to a year ever, and as the sell-off in Chinese equities continued.

The market has seen wild swings throughout the day with the benchmark indices recovering almost all early morning losses. The Sensex is down 57.55 points or 0.2 percent at 24876.78, and the Nifty down 22.45 points or 0.3 percent at 7578.90. About 1112 shares have advanced, 1544 shares declined, and 131 shares are unchanged.

Pharma, IT, infra and metal stocks are still under pressure. Wipro, Adani Ports, BHEL, ONGC and Cipla are losers in the Sensex while Reliance, Tata Motors, Axis Bank, NTPC and Maruti are top gainers in the Sensex.

Third-quarter earnings of blue chip companies like TCS and Infosys, as well as key macroeconomic data of IIP and inflation will dictate market trend this week, say experts.

Other factors that are likely to influence market sentiments in the near term include global market trends, investment by foreign institutional investors (FIIs), the movement of rupee against the dollar and crude oil prices.

According to domestic brokerage firm Reliance Securities, the short-term trend is likely to be dictated more by "global developments as compared to the India Inc's earnings' scorecard, where no significant improvement is expected."

1:55 pm Pharma update: Drug firm Cadila Healthcare on Monday said it has received Establishment Inspection Report (EIR) for Baddi manufacturing plant from the US health regulator after successful inspection closure. The company's "manufacturing plant at Baddi, Himachal Pradesh, has successfully obtained the Establishment Inspection Report from the United States Food and Drug Administration (USFDA)", Cadila Healthcare said in a BSE filing. This will now pave the way for further approval of products from this site, it added.

1:45 pm Bumper sales: Shares of Tata Motors rose 3 percent intraday despite China slowdown amidst weak market condition. The four-wheeler major is riding high on its British subsidiary- Jaguar Land Rover's strong sales in December and overall performance in December.

In December, JLR global retail sales saw a growth of 20 percent annually at 49553. Jaguar sales rose 20 percent (Y-o-Y) at 838 2units while Landrover sales grew 20 percent (Y-o-Y) at 41171 units.

Strong growth was registered in Europe, North America and UK driven by success of new models like Discovery Sport and Jaguar XE. Though sales in China was down 10 percent (Y-o-Y) at 10403 units , it has quite improved from low of 5409 units in Aug to 10403 units in Dec 2015.

1:30 pm Food prices down? International food prices dipped by 19 percent in the last year, the fourth consecutive annual fall, due to substantial decline in dairy, sugar and veg oil prices according to the United Nations food agency.

The maximum fall was witnessed in dairy prices, which fell by 28.5 percent compared to 2014, marking its lowest since 2009. It was followed by sugar prices, which were down by 21 from 2014 levels, as per the FAO price index.

Similarly vegetable oil prices also came down last year by 19 percent in comparison to 2014 prices, while cereal prices fell by 15.4 percent in 2015. The meat prices also came down by 15.1 percent in the last year.

The market seems to be stuck in a range this afternoon. The Sensex is down 183.94 points or 0.7 percent at 24750.39 and the Nifty slips 65.15 points or 0.9 percent at 7536.20. About 982 shares have advanced, 1594 shares declined, and 136 shares are unchanged.

Wipro, Adani Ports, BHEL, Tata Steel and SBI are losers while Reliance, Tata Motors, Maruti Suzuki, Axis Bank and NTPC are top gainers in the Sensex. TCS is also down over 1 percent ahead of December quarter earnings to be announced tomorrow.

The rupee trimmed its initial losses, but was still down by 17 paise to 66.80 per dollar amid persistent demand for the US currency from banks and importers on the back of higher dollar overseas amid weak domestic equities.

The dollar index was up by 0.19 percent at 98.45 against a basket of six currencies in the early trade.

In overseas, the safe haven yen eased against dollar after China's central bank set a stronger guidance rate for the yuan in early Asian trade, soothing fears that Beijing is trying to weaken its currency to gain a competitive export advantage. Oil prices fell further in Asian trade on persistent worries over the growth slowdown in China's economy and a supply glut.

12:45 pm Market outlook: Manish Gunwani, Deputy CIO - Equity at ICICI Prudential Mutual Fund advises, "Global risk-off phases create good entry points for investors. These are good times to enter equities," adding that over the long term, stock market returns roughly equal nominal growth of a country (which has generally been well into double digits for India).

"[Given the long term prospects for stocks] a good model for investors is to keep buying more and more as markets come down," he said. Gunwani manages a number of mutual fund schemes for ICICI, including its flagship, Focused Bluechip Equity.

12:30 pm China update: Chinese markets extended an already rough start to the year Monday, losing further ground and other Asian markets came along for the ride lower. The Shanghai composite was down as much 5.22 percent in late-afternoon trade, while the Shenzhen Composite shed 6.5 percent. Hong Kong's Hang Seng index was down 2.24 percent on Monday, slipping below the 20,000 threshold for the first time since June 2013.

Reuters reported that the yuan-based Hong Kong Interbank Offered Rates (HIBOR) spiked to over 13 percent from 4 percent Friday as offshore yuan volume declined.

The market is picking up strength gradually. The Sensex is down 103.02 points or 0.4 percent at 24831.31 and the Nifty slips 38.30 points or 0.5 percent at 7563.05. About 1070 shares have advanced, 1388 shares declined, and 144 shares are unchanged.

Cipla, Dr Reddy's, Adani Ports, BHEL and SBI are major losers while Reliance, Tata Motors, Maruti Suzukim Axis Bank and NTPC are top gainers in the Sensex.

Gold edged higher, trading close to last session's nine-week high as pressure on Asian stock markets supported safe-haven bids for the metal. Asian share markets swept lower after Wall Street suffered its worst starting week in history and doubts over Beijing's economic competence sent investors into the arms of the safe-haven yen and sovereign bonds.

Gold climbed to its highest since early November on Friday, adding more than 4 percent to its value this year, on concerns over the Chinese economy and tumbling stock markets.

11:45 am Autoo sales: Domestic passenger car sales rose 12.87 percent to 1,72,671 units in December from 1,52,986 units in the same month a year ago.

Motorcycle sales declined 5.93 percent to 7,24,807 units last month from 7,70,519 units a year ago, according to the data released by the Society of Indian Automobile Manufacturers (SIAM).

Total two-wheeler sales in December declined 3.10 percent to 11,67,633 units as against 12,04,942 units in the same month last year. Sales of commercial vehicles were up 11.45 percent to 56,840 units in December 2015, SIAM said.

11:30 am IT spend: IT spending in the domestic market is expected to grow 13.5 percent to Rs 1.91 lakh crore this year, says a report.

According to research firm Core Quadrant, the domestic IT industry revenue in India is expected to grow to Rs 1.91 lakh crore in 2016, against a spending of Rs 1.68 lakh crore in 2015. The report is based on inputs from 107 CIOs/ IT heads of large and medium-sized Indian enterprises regarding their business priorities and IT plans for this year.

"After a very sluggish growth in 2013, the lowest since 2002, and a muted recovery in 2014, it was widely expected that a full recovery shall begin in 2015. The domestic IT market performance in 2015 has however been below expectations," Core Quadrant co-founder and Principal Analyst Kapil Dev Singh said.

The market has managed to recover its early losses as the 50-share indices is near 7550. The Nifty is down 54.10 points or 0.7 percent at 7547.25 and the Sensex is down 143.16 points or 0.6 percent at 24791.17.

About 937 shares have advanced, 1390 shares declined, and 118 shares are unchanged.

Tata Motors added 3 percent while Reliance, Axis Bank, NTPC and Maruti are top gainers while BHEL, Cipla, Dr Reddy's, M&M and Adani Ports are losers in the Sensex.

Societe Generale is advising investors to add to their holdings of emerging market assets after a horrid 2015, with a somewhat unlikely name at the top of the bank's wish list: Russia.

The bank is betting on a rebound in oil prices as well as cheaper valuations to underpin demand for Eastern European assets while highlighting risks to Asia given the recent rumbling in China's economy and financial markets.

"It is time to consider some exposure to emerging markets, after the significant drop in asset prices since 2010 and the strongly negative newsflow," Societe Generale said in a note last week. But it advises "cherry picking" emerging markets to avoid Asia. Asia is at risk given China's slowdown, potential currency depreciation and worries about corporate defaults," it said.

10:55 am Buzzing: Shares of Sun TV slipped over 7 percent intraday. Former telecom minister Dayanidhi Maran, his brother and Sun Group chief Kalanithi Maran, and four others were charge sheeted by the Enforcement Directorate in the Special 2G court in connection with a money laundering case lodged in the Aircel-Maxis deal. In June, Ministry of Home Affairs had denied security clearance to 33 channels of company. Clearance was denied citing promoters' alleged involvement in economic offenses. ED, in its charge sheet filed before Special Judge O P Saini, named as accused the Maran brothers, Kalanithi's wife Kavery Maran and three others, including two companies.

10:45 am FM speaks: Finance Minister Arun Jaitley said the government would continue with the reforms, which it failed to pursue in the recent months, with "single-minded focus" to increase investment and growth. "If (India) is to grow, it is obvious that our public and added private investments have to grow. Some of our reforms, which we have missed out on in the last few months, have to be pursued with a single minded focus.

"We cannot afford a change in direction, and in this circumstances every state has to contribute," the minister said while addressing CII Partnership Summit here. Among major reforms, the government has not been able to push the Goods and Services Tax (GST) bill, which got stuck in Rajya Sabha because of stiff opposition from the Congress.

10:30 am Downgrade: Credit Suisse has downgraded Colgate Palmolive to neutral and reduced target price to Rs 1000 per share. The brokerage thinks that Baba Ramdev-promoted Patanjali poses a potential threat to Colgate's growth. It has also slashed FY17-18 earnings estimates by 3-7 percent. "Colgate's volume growth has seen a significant drop in FY16, which is divergent from peers who are seeing steady volume growth. The key reason in our view is the strong traction that Patanjali has gained in the category,' it says in a report.

The market is still struggling with bears as the Sensex is down 241.63 points or 0.9 percent at 24692.70. The Nifty is down 85.40 points or 1 percent at 7515.95. About 510 shares have advanced, 1503 shares declined, and 82 shares are unchanged.

Tata Steel, Hindalco, Bharti Airtel, Coal India and BHEL are losers while NTPC, Reliance, Axis Bank and Maruti Suzuki are among gainers in the Sensex.

Ajay Manglunia, Edelweiss said, "Indian bonds have been resilient in the midst of the global risk-off scenario. While the volatility might persist in the near term, domestic yields are expected to trade stable with an eye on the inflation release during the week. The 10-year benchmark yield is likely to trade in a range of 7.71-7.76% today."

US crude oil prices were down more than 2 percent in early trading as traders increasingly lose faith in a significant market recovery soon and bet on even lower prices. The fall adds to an over 10 percent price drop in the first trading week of the year and when Goldman Sachs said oil could hit USD 20, and would see sustained low prices through the first quarter "so producers will move budgets down to reflect USD 40 a barrel oil for 2016."

9:55 am Update: India's steel industry, which is facing a crisis due to cheap imports and subdued prices, has sought a government support package on the lines of the ones extended to textiles and sugar sectors.

After lobbying for imposition of import duty, safeguard duty and anti-dumping duty on imports from China, South Korea and Japan, the over USD 100 billion industry has now approached the government for a comprehensive Steel Package.

The demand includes a year-long moratorium on payment of interest and principle amount as well as segregation of debt into two categories - Sustainable and Balance.

9:45 am Profitable FY17? Communications and IT minister Ravi Shankar Prasad said state-run telecom firm MTNL, which is running into losses, is likely to turn profitable in the next fiscal. BSNL, the other state-owned telecom service provider, has already reversed its loss making trend by reporting operating profit of Rs 672 crore in 2014-15. "MTNL was in loss of Rs 2,900 crore loss in 2014. "They (MTNL) have promised me that in fiscal 2016-17 like BSNL they will also come into operating profits," he added.

9:30 am FII view: Bharat Iyer of JPMorgan said, "As seen over the last four quarters, the earnings season could increase volatility in the equity markets, but are unlikely to influence any change in direction. Progress on reforms and global risk appetite will continue to be the main drivers of markets."

The market has once again opened with sharp falls following weak China. The Nifty us below 7500 for first time since July 15, 2014. The 50-share index is at 7598, down 89 points or 1.15 percent while the Sense is down 326.29 points or 1.3 percent at 24608.04.

Hindalco, Tata Steel, Tata Motors, L&T and Adani Ports are major laggards in the Sensex.

Markets in Asia traded lower as worries over China and low commodity prices continue to dampen investor sentiments. The Chinese markets opened in negative territory with the Shanghai composite down 2.51 percent after losing all of its 2015 gains last week, falling by 9.97 percent in just five days. The Shenzhen composite was down 3.28 percent.

Chinese markets were shut down twice last week by circuit breakers - a market-calming regulatory tool - that were only implemented in the country at the start of the week. The circuit breakers were designed to trigger a 15-minute trading halt if the CSI 300 index fell 5 percent. If that index fell 7 percent, trade was halted for the rest of the session. By the end of the week, China suspended its circuit breakers, but investors remained wary over the country's ability to handle financial turmoil.

Meanwhile, the rupee declined in early trade. It has opened lower by 27 paise at 66.90 per dollar versus 66.63 Friday.

Agam Gupta of StanChart said, "We expect the USD-INR pair to trade between 66.75-67.10/dollar range today." The yen jumped to 117 per dollar, its strongest level since August. The dollar index was at around 98 mark.