Sensex cracks; Sesa Goa, Hindalco, Coal India outperform

3:30 pm Market outlook: Vibhav Kapoor, IL&FS expects recent volatility in the market to continue going ahead . According to him, the market is too volatile and therefore, he won't call it an investor's market. "I would call it speculative to some extent," he says in an interview to CNBC-TV18.

Kapoor further adds that Nifty is likely to trade in a broad range of 5400-6200. He believes the Indian currency will trade in the range of 60-64/USD. "Some measures have been taken which should prevent the type of volatility we saw in the rupee earlier." He says, US tapering has been postponed, but it will be announced sometime later and "the later it comes, there are more chances it will be aggressive," he adds.

Traders continued to sell in the last trading hour of the day as the Sensex is still down 342.83 points or 1.69 percent at 19920.88. The Nifty loses 114.80 points or 1.91 percent at 5897.30. About 902 shares have advanced, 1259 shares declined, and 161 shares are unchanged. Rate sensitive stocks are dragging the market as Bank Nifty is down 4 percent. SBI and ICICI Bank are among the top losers in the Sensex.  Meanwhile Sesa Goa , Hindalco , Coal India , Hero Motocorp and Wipro are major gainers in the Sensex.

Shane Lee, director-economist- Equity Research, CIMB remains underweight on India. Lee says the Fed will address its asset purchasing programme at a later date and that is likely to affect emerging market economies, particularly India and Indonesia which are reeling under high current account deficit (CAD). But his pessimism is for the short-term. He is quite bullish on the American economy. Lee is also keen to see a rally in dollar which will help Japan and Europe push growth "and then ultimately you get a pick up in the emerging part of the world as well."

02:59pm Market Update The Sensex is down 350.18 points or 1.73 percent at 19913.53, and the Nifty is down 118.80 points or 1.98 percent at 5893.30.

Markets rallied sharply since Raghuram Rajan took over as RBI Governor, rising 9 percent since September 4 and is now trading near the top end of the range. Jyotivardhan Jaipuria of Bank of America Merrill Lynch expects the market to correct 6-8 percent from current levels as RBI's credit policy belies the high market expectations.

02:55pm Bond yields
It seems as though the RBI policy has washed away all the optimism in the bond market. The 10-year yield has hardened from a closing of 8.19 percent  on Thursday (reacting to the FOMC dovish outcome) to levels of 8.7 percent intraday on Monday which means at current reckoning  the 10-year has hardened over 50 bps hardening in 1.5 days.

02:38pm Experts see more correction further
Ridham Desai, managing director of Morgan Stanley cautioned that the Nifty may see previous low of 5,300. "Though the Fed's surprise move to not touch the bond buying programme has come as a relief to the markets, the Nifty can still move lower as most of the positives are already factored in," he explains. He does not see much of an upside in the market from current levels and advises traders to sell on every rally. He adds the turf won't be easy for equity investors over the next three months.

02:18pm The market extended its fall in afternoon trade with the equity benchmarks losing more than 2 percent, weighed down largely by financials. Oil & gas, realty, auto, capital goods and telecom stocks are also under pressure. The Sensex is down 427.12 points at 19836.59, and the Nifty is down 137.80 points at 5874.30. Declining shares outpaced advancing ones by 1280 to 874 on the Bombay Stock Exchange.

Vibhav Kapoor, IL&FS expects recent volatility in the market to continue going ahead. According to him, the market is too volatile and therefore, he won't call it an investor's market. "I would call it speculative to some extent," he says in an interview to CNBC-TV18.

Kapoor further adds that Nifty is likely to trade in a broad range of 5400-6200. DLF , Punjab National Bank , Bank of Baroda and Axis Bank are the major losers in the Nifty, falling more than 6 percent. Country's major lenders State Bank of India and ICICI Bank crashed 5 percent each followed by ONGC and Maruti with 4 percent loss. However, HCL Technologies , Ranbaxy Labs , Sesa Goa and Hero MotoCorp are major gainers, rising 1-2 percent. Meanwhile, the rupee depreciated by 40 paise to 62.63 against the US dollar.

1:55 pm Update: The Uttar Pradesh sugar industry is facing extinction. That's the word coming in from the region's top sugar producers, who are currently pleading to the government not to increase cane prices. Sugar cane prices have increased 17 percent on average for the last three years, while sugar prices have been lower by nearly 10 percent year-on-year (Y-o-Y).

According to the industry, at Rs 36 per kilo, UP mills have the highest cost of production globally. It claims to have lost around Rs 3,000 crore in 2012-13. The UP mills have incurred losses in 3 out of last 4 years. The industry is lobbying for an immediate review on current cane pricing. It wants the UP government to introduce the revenue sharing model as per the Rangarajan committee recommendations.

1:45 pm FII view: Shane Lee, director-economist - Equity Research, CIMB remains underweight on India despite the emergence of near-time positives following US Federal Reserve's postponement of its tapering programme. Lee says the Fed will address its asset purchasing programme at a later date and that is likely to affect emerging market economies, particularly India and Indonesia which are reeling under high current account deficit (CAD).

But his pessimism is for the short-term. He is quite bullish on the American economy. Lee is also keen to see a rally in dollar which will help Japan and Europe push growth "and then ultimately you get a pick up in the emerging part of the world as well."

1:30 pm Bond market update: It seems as though the RBI policy has washed away all the optimism in the bond market. The 10-year yield has hardened from a closing of 8.19 percent  on Thursday (reacting to the FOMC dovish outcome) to levels of 8.7 percent intraday on Monday which means at current reckoning  the 10-year has hardened over 50 bps hardening in 1.5 days.

Why has the 10 year hardened so much and so quickly? Well, it began post the RBI policy where the surprise rate hike caught the market off guard resulting in a negative sentiment that easing on the long end might not be in the foreseeable future. The 10-year at Friday's closing hardened 39 basis points to close at 8.58 percent. Other negatives that might be affecting bonds today is the supply pressure from the Rs 15000 crore bond auction scheduled today along with the continued negative sentiment from the RBI policy.

1:15 pm Buzzer: Shares of Strides Arcolab jumped 8.5 percent on reports that the company may pay out Rs 800 per share to shareholders post the Agila deal. According to information available in BSE, Strides Acrolab has 27,177 shareholders, including 24,320 retail investors. As of June 30, the promoters had a 27.39 percent stake in the company, while foreign institutional investors had 51.7 percent.

Selling pressure intensifies with the Nifty cracking almost 2 percent on the back of disappointing global markets and fears of more rate hikes at home. Bank of America Merrill Lynch expects the market to correct another 6 to 8 percent from current levels as RBI's credit policy belies high market expectations. The Sensex is down 332.82 points or 1.64 percent at 19930.89, and the Nifty is down 111.15 points or 1.85 percent at 5900.95. About 781 shares have advanced, 1195 shares declined, and 146 shares are unchanged.

SBI (down 5 percent), ONGC (down 4 percent), Maruti Suzuki (down 4 percent), HDFC (down 4 percent) and ICICI Bank (down 3.5 percent) are top losers in the Sensex. Top gaienrs in the Sensex include Wipro , Sesa Goa,  Hero MotoCorp, Infosys and Hindalco . Indian government bonds are sharply lower as market adjusts to fears that the RBI may hike repo rate by another 25 to 75 basis points over the next few months. Bonds are also selling off ahead of the government's borrowing calendar for the second half of the year. Meanwhile, Montek Singh Ahluwalia , deputy chairman of the Planning Commission says that the government must progressively phase out diesel subsidies and no plans are on the anvil to cut down planned expenses. Former RBI Governor Bimal Jalan who heads the committee on new bank licences says, he is not keen to issue a large number of licences.

12:58pm Movers & Shakers Wipro and Sesa Goa are top gainers in the Sensex, rising around 2 percent followed by Infosys , TCS , Hero MotoCorp and Hindalco with 0.5-0.8 percent gains. However, top lender State Bank of India plunged 5 percent. ICICI Bank and HDFC fell over 3.5 percent while HDFC Bank lost 2.7 percent. Index heavyweights Reliance Industries and ITC declined over 1.5 percent.

Globally, European markets are marginally weak while Asian markets are mixed today with Chinese PMI lifting sentiment. The HSBC flash Purchasing Managers' Index (PMI) hit a six-month high of 51.2, from a final reading of 50.1 in August, moving further above the key 50 mark that divides expanding activity in the sector from a contraction.

12:50pm Expert talks The market fell nearly 2 percent in afternoon trade on further weakness in rate sensitives after a repo rate hike by the central bank last Friday. Shane Lee, director-economist - Equity Research, CIMB remains underweight on India despite US Federal Reserve postponing the tapering of quantitative easing. Lee is still positive on the US economy and believes that ultimately the Fed will address its asset purchasing program which is likely to affect emerging market economies.

Lee is concerned about the outlook on India and Indonesia as he believes the emerging markets are likely to be pressurised by the Fed's tapering plans going ahead. However, he believes the emerging markets may see some 'tactical' rally in the short-term driven by the defensives.

12:35pm India VIX The VIX or volatility index is up 6.8 percent to an uncomfortable level of 26.5 percent indicating the kind of volatility in the Indian market ahead of the crucial September expiry. The Put-Call ratio had moved towards the 1.40 mark pre-RBI policy, but crashed to 1.28 today from the 1.36 in the beginning of the day. Nifty 6000 and 6100 calls have seen aggressive writing as more than 40 lakh shares have been added at these strikes and the premium has crashed between 50 and 65 percent.

Nifty 5700 put has added 10.5 lakh shares and buying is seen at these levels with the premium rising by 45 percent. Half of Nifty's 95-point fall is on the back of four heavyweights HDFC (down 4.27 percent), ICICI Bank (down 3.93 percent), HDFC Bank (down 3.37 percent) and ITC (down 1.65 percent).

12:19pm Investors remained on the sellers' side with the Sensex falling more than 300 points due to weakness in rate sensitives after hike in repo rate last Friday by Reserve Bank of India. The Sensex is down 338.61 points or 1.67 percent at 19925.10, and the Nifty is down 119.10 points or 1.98 percent at 5893.00. Declining shares outnumbered advancing ones by 1069 to 751 on the Bombay Stock Exchange. In fact, the market lost all its Thursday's gains in following two days. On Friday, the market shed 383 points after new RBI governor Raghuram Rajan raised repo rate by 25 basis points to 7.5 percent to check inflation.

Jyotivardhan Jaipuria of Bank of America Merrill Lynch says that the market rallied sharply since Raghuram Rajan took over as RBI Governor, rising 9 percent since September 4 and is now trading near the top end of the range. "We expect markets to correct 6-8 percent from current levels as RBI's credit policy belies the high market expectations," he adds. BSE Bankex dropped 4 percent followed by Realty and Capital Goods indices with 2-3 percent loss whereas IT Index gained 1 percent (Wipro surged 2.6 percent). Meanwhile, former RBI govenor Bimal Jalan, who heads the committee on new bank licences says, he is not keen to issue a large number of banking licences. "We will prefer entities that promise banking unbanked areas," he adds. Jalan also says that he is opposed to freeing up limits on FII investments in Indian debt.

11:45 am Rupee outlook: The intrinsic value of the rupee is between 58 and 60 against the dollar, a senior finance ministry official said on Monday, adding that overseas speculators were partly responsible for the sharp fall in the currency over the past few months, reports Reuters. Arvind Mayaram, economic affairs secretary at the finance ministry, also said that a fall in bulk diesel demand this fiscal year will save the government about USD 1 billion. Diesel accounts for over 40 percent of fuel consumption in the world's fourth-biggest energy user, whose crude import bill was USD 144 billion last fiscal year.

Mayaram said he expected foreign direct investment flows of about USD 36 billion if current trends continues. Net FDI in the first quarter of this fiscal year rose to USD 9 billion from USD 5 billion in the same period a year earlier, Mayaram said last week.

11:30 am Buzzer: Shares of Hotel Leela Venture gained 5.5 percent in intraday trade Monday after shareholders of the company approved a preferential issue of shares of up to Rs 100 crore. Shareholders, in its meeting on September 20, approved preferential allotment of equity shares to Rockfort Estate Developers, a promoter group entity. "The applicable price per share is Rs 19.72 and accordingly the said promoter group entity is entitled to receive not exceeding 5,07,09,939 shares of Rs 2 each at a premium of Rs 17.72 per share," Hotel Leela said in its filing.

11:15 am Montek Singh's views: Montek Singh Ahluwalia , deputy chairman of the Planning Commission, refuses to call September monetary policy moves either tightening or loosening. According to him, what the central bank did was more of a rebalancing act. He feels that the RBI and the government need to do a lot more to revive growth. But the RBI can't cut long-term rates by tinkering with short-term rates, he cautions. He says lower long-term rates are a key to growth and expects growth to pick up in the second half of FY14. Meanwhile, he informs that the government does not intend to cut planned expenses. On talks of one-time major hike in diesel rates, he advises to progressively phase out diesel subsidies (read the full interview here).

The market is losing control over the bears as the Sensex is down another 300 points. The Sensex is at 19952.30, down 311.41 points or 1.54 percent, and the Nifty slips 96.85 points or 1.61 percent at 5915.25. About 707 shares have advanced, 925 shares declined, and 103 shares are unchanged. Bank Nifty (down 4 percent) is under heavy selling pressure with SBI , ICICI Bnak, HDFC falling between 3-4.5 percent each. Other losers in the Sensex are Bharti Airtel and ONGC . Meanwhile, technology stocks are holding up gains. Sesa Goa , Wipro , Hero MotoCorp, Infosys and TCS are major gainers in the Sensex.

Asian markets are mostly mixed today with Chinese PMI lifting sentiment. The HSBC flash PMI for china hit a 6-month high for September at 51.2 vs Augusts' 50.1. Japan and Hong Kong are shut for trade today. In commodities, gold dropped close to USD1300/oz on tapering fears and Brent was unchanged at USD 109/ barrel. The dollar index strengthened slightly to 80.4 level. The emerging market currencies conversely were under slight pressure on Friday. Back home, the rupee opened lower tracking the weakness in the euro and the other Asian currencies. Bonds are weaker as well ahead of the release of the government's Oct- March borrowing calendar

10:55am Market falls further The 30-share BSE benchmark dropped below the 20000 level on weakness in rate sensitives. The Sensex is down 280.42 points or 1.38 percent at 19983.29, and the Nifty is down 88 points or 1.46 percent at 5924.10. Bank of Baroda , Punjab National Bank , DLF , SBI , Axis Bank , Bharti Airtel , HDFC and HDFC Bank are top losers on benchmarks, falling between 3-5.5 percent. However, HCL Technologies , Ranbaxy Labs , Sesa Goa , Infosys , Hero MotoCorp, TCS and Wipro gained 1-3 percent.

10:45am Global update Shanghai Composite gained 0.86 percent to 2210.79 today after China's manufacturing sector picked up further steam in September , a preliminary survey of factory managers showed on Monday, a sign that the country's economic recovery is gaining traction. The HSBC flash Purchasing Managers' Index (PMI) hit a six-month high of 51.2, from a final reading of 50.1 in August, moving further above the key 50 mark that divides expanding activity in the sector from a contraction.

"The HSBC Flash China Manufacturing PMI [adds] further evidence to China's ongoing growth rebound. The firmer footing was supported by simultaneous improvements of external and domestic demand condition," said Hongbin Qu, chief China economist and co-head of the Asian economic research team at HSBC, reported CNBC.

10:25am Market Update The market extended its downward journey on further fall in financials. The Sensex is down 247.49 points or 1.22 percent at 20016.22, and the Nifty is down 76.05 points or 1.26 percent at 5936.05. India's largest lenders State Bank of India and ICICI Bank crashed 3.8 percent each while HDFC and HDFC Bank fell 3 percent each. Among others, Bharti Airtel, ONGC and Maruti Suzuki are down 2-3 percent.

10:15am Buzzer Investors are buying shares of Hindalco Industries with the stock rising 1.6 percent in early trade Monday. JP Morgan has maintained its overweight stance on the stock. The brokerage house raised target price on the stock from Rs 140 to Rs 155 as it believes the free cash flow generation should pick up sharply.

In case of recent hike in stake by promoters, the board of directors had allotted 15 crore warrants on preferential basis on March 22, 2012 to promoter group companies at Rs 144.35 per share. Promoters have paid 25 percent of the purchase price at the time of allotment of warrants. However, the promoters have exercised warrants and paid balance 75 percent of the purchase price. Promoter and promoter group held 32.06 percent stake as of June 2013, which has been increased to 37.06 percent now.

10:00am The market continues to reel under selling pressure Monday as banks remained weak for the second consecutive session after Reserve Bank of India hiked repo rate by 25 bps to 7.5 percent. The Sensex is down 155.07 points at 20108.64, and the Nifty is down 48.75 points at 5963.35, but the broader markets outperformed benchmarks, trading flat. Ridham Desai, managing director of Morgan Stanley cautioned that the Nifty may see previous low of 5,300.

"Though the Fed's surprise move to not touch the bond buying programme has come as a relief to the markets, the Nifty can still move lower as most of the positives are already factored in," he explains. He does not see much of an upside in the market from current levels and advises traders to sell on every rally. He adds the turf won't be easy for equity investors over the next three months. Investors remained sellers in rate sensitives stocks post RBI policy with the Bank Nifty lost 300 points. Country's largest lenders State Bank of India, ICICI Bank and HDFC Bank plunged 3 percent each. Even housing finance major HDFC lost 3 percent. Capital goods majors L&T and BHEL slipped more than 1 percent. BSE Realty index dropped more than 2 percent.

10:00 am Buzzer: Shares of Dr Reddys Laboratories (DRL) were under pressure, falling more than 1 percent as US-based Genzyme Corporation filed an infringement suit against the company. Genzyme, a fully-owned subsidiary of drug major Sanofi-Aventis, alleged that the Indian drug maker infringed patents of its blockbuster cancer drug Mozobil on three counts.

n its petition filed in the District Court of Delaware, Genzyme alleged that DRL intimated though a letter that it had submitted an Abbreviated New Drug Application with US FDA seeking approval to engage in the commercial manufacture, importation, use, and sale of 20 mg/ml Plerixafor injection as a generic version of Mobozil drug.

9:45 am FII views: Ridham Desai of Morgan Stanley told CNBC TV18 that most of the positive news are price in at current levels and Nifty can drift down to test its previous low of 5300. He doesn't see much upside at current levels and will use the rally to sell. While Fed's decision to differ taper is positive for EM equities, India's fundamentals are still weak and the turf wont be easy for equity investors over the next 3 months, he said. Similar caution was voiced by Jyoti Jaipuria of BOA-ML in his strategy note this morning where is said, "We expect the market to correct 6-8 percent from current levels and will be in the 18,500-20,500 range as weak economic and earnings growth to cap the upside."

However, he feels, hopes of rate cuts and policy measures protect the downside. He continue to favour global plays (software, pharma) over domestic plays and within sectors he maintains overweight on telecom and prefers to play a better monsoon demand through autos. For BOAML their top buy are Lupin, TCS, Idea, Hero Motocorp, ICICI and their top Under-performs are BHEL, NTPC, HUL. Even Bharat Iyer of JP Morgan feels, Investors need to brace for volatility and stay hedged and stick to benchmark. "We expect a more decisive stake into late Oct/early November," he added.

9:34 am Market check: The market has recovered a bit after the panic selling in opening. The Sensex is down 124.70 points or 0.62 percent at 20139.01, and the Nifty is still below 6000, down 37.95 points or 0.63 percent at 5974.15.  About 496 shares have advanced, 450 shares declined, and 58 shares are unchanged. HDFC twins, SBI, ICICI Bnak and Bharti Airtel are top losers in the Sensex. On the gainers list are Hero Motocorp, HUL, Hindalco, Wipro and Coal India. Meanwhile, Angela Merkel won a landslide personal victory in Germany's general election. However, leftist rivals may have to join a coalition government due to short of the votes needed to rule to be majority.

The market has opened on a lower note as rate sensitive stocks are under selling pressure buoyed down by Raghuram Rajan's maiden monetary policy. The Sensex is down 201.87 points or 1 percent at 20061.84, and the Nifty down 66.30 points or 1.10 percent at 5945.80. About 98 shares have advanced, 224 shares declined, and 32 shares are unchanged. SBI, L&T, ICICI Bnak, Dr Reddy's Labs and HDFC are top losers in the Sensex.  On the gaining side are technology stocks with Infosys leading the pack.

Meanwhile, the Indian rupee opened lower by 31 paise at 62.54 per dollar against 62.23 Friday. Agam Gupta, Standard Chartered said, "Rupee will probably open between 62.60-62.70/USD. We saw nationalised banks sell dollars on Friday after the RBI repo rate hike and we need to see whether they follow it up with more sales. The range for the day is seen between 62.35-62.85/USD." On the global front, Japan and Hang Seng are shut for trade. Other Asian markets were mixed in morning trade today ahead of the release of China's manufacturing PMI. Experts are waiting to see if China's positive growth momentum will extend into this month, after rising to 50.1 in August.

In the currency space, the dollar is subdued ahead of China's PMI data. The euro-dollar traded at 1.35 levels and the yen stood at 99/USD levels. It was a volatile Friday for the rupee as well. Post RBI's announcement, the rupee slipped further from that level. The currency finally ended the day at 62.23/USD. In commodities, Brent prices traded flat at USD 109/bbl levels while Nymex slipped to sub USD 105/bbl levels as Friday's expiration of the contract for October delivery prompted liquidation selling. From precious metals space, gold slid 3 percent on Friday on hints that the Fed may taper in October although it pared some losses in early Asian trade today morning.