Sensex down 102; weak IIP, inflation data offset rupee gain

Benchmark indices extended their losing streak on Wednesday, as the latest macro-economic indicators showed that a decent recovery was still some way off. The dour April industrial output and May inflation readings offset cheer from the partial rebound in the rupee.

The Sensex ended the day at 19041, down 102 points over its previous close, after touching a low of 18969. The Nifty finished at 5760, down 29 points over its close.

"There is no sign of a growth pick up," JP Morgan economist Sajid Chinoy said in an interview to CNBC-TV18 after the April Index of Industrial Production reading came in at 2.0 percent, well below market expectations.

The number was all the more disappointing as it came on a very low base.

With consumer inflation for May at 9.31 percent, versus expectations of a sub-9 percent reading, the market has given up hopes of the RBI cutting interest rates at its policy review meet on Monday. Already, the weakness in the rupee had lowered expectations of an interest rate cut.

Shares from the pharma, banking and oil & gas sectors found takers while those from the IT, FMCG, metal, power and auto shares were under pressure.

Jindal Steel was the top gainer among frontline shares, rising over 4 percent. It had fallen 15 percent Tuesday after its promoter Naveen Jindal was named by the CBI in its FIR in the coal blocks allotment scam.

Other key gainers in the Nifty included IndusInd Bank and Jaiprakash Associates, up 2-3 percent.

Laggards included Coal India, Tata Power and Tata Stee, which fell 2-3 percent.

Brokers said rupee will be the key sentiment driver in the short term. While there has been no major pull out by FIIs from Indian equities, inflows have dried down to a trickle in the last couple of weeks.

"What we have seen in the debt markets panning out since May 22 is now coming into the equity desk," Tirthankar Patnaik of Religare Capital Markets said in an interview to CNBC-TV18. He expects another 5-7 percent slide in the rupee.

3:50 pm Losers: Tata Power , Coal India , Tata Steel , Hero MotoCorp and Hindalco are major losers in the Sensex.

3:40 pm Government measures: The government may unveil measures on Wednesday or Thursday to boost capital inflows into the country, as the rupee hovers around record-low levels, a source familiar with the development said.

Finance Minister P Chidambaram held a meeting with his top economic advisers on Wednesday to discuss a sharp fall in the rupee, which hit a lifetime-low on Tuesday, the source, who was familiar with the meeting, told Reuters.

3:30 pm Market closing: The Sensex closed down 101 points to 19041.13  (provisional) while the Nifty slips 28.60 points to 5760.

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Selling pressure continues in the last trading session. The Sensex is down 102.37 points at 19040.63, and the Nifty slips 26.65 points to 5762.15. About 905 shares have advanced, 1333 shares declined, and 155 shares are unchanged.

Tata Coffee is one of the major laggard of the day. The stock lost 20 percent

Other losers in the Sensex are Tata Power, Coal India, Tata Steel, Hindalco and Hero MotoCorp.

Meanwhile, gold fell for a second straight day on Wednesday as a holiday in China deprived the metal of a strong support base and as investors worried about global central banks scaling back their easy-money policies.

The Bank of Japan's (BoJ) move on Tuesday to refrain from taking fresh steps to calm turbulence in the domestic bond market, and Standard & Poor's upgrade of the US credit outlook on Monday indicated that the global economy was on track for a recovery, hurting bullion's appeal as a hedge against inflation.

2:55 pm Buzzing: United Breweries surges 4.6 percent on the BSE.

2:47 pm Selling: Muthoot and Manappuram are under pressure as CNBC-TV18 reports quoting sources that securitisation by NBFCs has come under tax radar. Tax notices have been sent to gold financing companies. It is learnt central excise has sought service tax on collection fees received from banks.

2:40 pm Management speaks: Ranbaxy Laboratories , which pleaded guilty to 'felony charges' for violating US Food and Drug Administration's manufacturing norms today agreed that the company had serious issues in the past and has now taken measures to set things right.

Speaking to CNBC-TV18 in defense of the firm, CEO Arun Sawhney said, "We have invested more than USD 300 million since 2009 to upgrade our facilities; making sure that good systems are in place; training people, hiring the best consultants in the world to build skill sets."

2:35 pm Top gainer:  Jindal Steel is up over 5 percent while Cipla has added 1 percent on the BSE.

2:30 pm Currency outlook: The rupee which has depreciated by six per cent over the past month, is likely to stay "volatile" in the near term but the worst may be behind us, Bank of America Merrill Lynch said in a research note today.

"We feel that most of the depreciation may be behind us as gold imports are reducing and likely to fall given measures taken by government. Secondly oil prices are stable and thirdly government may be forced to raise flows through NRI bonds," BofA-ML said in a research note.

The report further said that in the near term, the rupee is likely to be volatile due to global events and the RBI will have to instill confidence in the market.

2:25 pm Gold update: Gold prices fell 0.46 per cent to Rs 27,955 per 10 gm in futures trade today as participants reduced their positions largely in tandem with a weak trend overseas where precious metal dropped to over two-week low, reports PTI.

At the Multi Commodity Exchange, gold for delivery in far-month October contracts eased by Rs 130, or 0.46 per cent, to Rs 27,955 per 10 gm in business turnover of 189 lots.

Likewise, the metal for delivery in August shed Rs 117, or 0.42 per cent, to Rs 27,775 per 10 gm in 2,578 lots.

2:17 pm Macro data outlook: Headline inflation probably held near the central bank's comfort level of 5 percent last month, giving it room to ease policy, as commodity, food and fuel costs remained moderate, a Reuters poll found.

Wholesale prices, India's key inflation measure, probably rose an annual 4.87 percent in May, the slowest pace since November 2009, the poll of economists showed.

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Though the market pulled back a bit, trading is still under pressure as the Nifty is struggling to hold above 5750. The Nifty is down 14.35 points at 5774.45 while the Sensex at 19085.35, down 57.62 points.

Banking, oil and gas and pharma stocks are supporting the index. Jindal Steel, Cipla, SBI , GAIL and Tata Motors are key gainers in the Sensex.
MTNL is excited in trade today ahead of the group of ministers meet on the revival strategy for BSNL and MTNL.

MMTC is under pressure as the panel of ministers on disinvestment is likely to meet today to decide the base price for the MMTC stake sale. The issue is expected to hit the market tomorrow.

01:55pm Indian equities slipped again, losing 0.4 percent on benchmarks. BSE Sensex is down 82.90 points at 19060.10, and the Nifty is down 21.15 points at 5767.65.

The rupee is quite volatile. It was recovered to 57.90 per dollar around 1 pm, but lost some gains now. It is now at 58.07 per dollar as against previous day's closing of 58.39.

01:50pm Reliance Industries and ONGC shares also led the recovery, rising 0.4-0.8 percent.

Commercial vehicle major Tata Motors rose 0.55 percent. The stock gained more than 25 percent in last one year, but it fell 4 percent in one month.

Nitin Klkarni - executive director of Persistent Systems says he is comfortable with EBITDA margins of 25 percent. According to him, the sensitivity of rupee to margins is at 2-3 percent.

01:40pm Adani group stocks are under pressure; Adani Enterprises crashed 10 percent followed by Adani Power with 2 percent fall and Adani Ports with 3.7 percent loss.

Among midcaps, Ipca Labs , Havells India , Jain Irrigation , Greaves Cotton and Monnet Ispat rose 3-5 percent.

01:30pm  Equity benchmarks recovered from day's low, but continue to trade flat to negative. BSE Sensex is down 47.11 points at 19095.89, and the Nifty is down 8.90 points at 5779.90.

Banks led the recovery in afternoon trade; private sector lender HDFC Bank gained 0.56 percent while its rival State Bank of India is up 0.3 percent.

Titan Industries shares tanked 11 percent amid hefty volumes, after a 11 percent slide in previous session. The new RBI rule making it mandatory for gold imports to be paid in cash upfront will push up Titan Industries  ' interest costs, as the company was till now buying gold on six months credit, S Subramanian, the company's chief financial officer told CNBC-TV18.

Brokerage house Deutsche Bank downgraded the stock to hold with a lowered target price of Rs 230. "The business model will change considerably and capital constraints could impact expansion plans," Deutsche Bank report said.

01:20pm Muthoot Finance and Manappuram Finance shares lost 0.4-0.7 percent, as sources say securitisation by non-banking finance companies is on tax radar.

CNBC-TV18 reports that tax notices sent to gold financing companies. Central excise seeks service tax on collection fees received from banks, sources say.

It is learnt that both companies get tax notices on service tax evasion.

01:10pm Indian equities recovered from day's low following a stregnth in rupee that appreciated by 48 paise to 57.90 per dollar. The Bank Nifty gained 0.5 percent.

The rupee had touched a record low of 58.98 per dollar on Tuesday.

BSE Sensex is down 38.50 points or 0.20 percent at 19104.50, and the NSE Nifty is down 6.40 points or 0.11 percent at 5782.40.

Jindal Steel is the top gainer among largecaps, rising 3 percent after seeing a fall of 15 percent Tuesday.

Jaiprakash Associates and IndusInd Bank gained 3 percent each while shares of DLF and IDFC rallied more than 2 percent.

European markets extended gains; France's CAC and Germany's DAX gained 0.4-0.5 percent.

12:59pm Wockhardt dropped 4 percent Wednesday after a 10 percent slide in previous session. Reports suggest that after Ranbaxy, Wockhardt is likely to come under the scanner of the Indian drug regulator as a proactive measure to ensure quality and compliance.

CNBC-TV18 reports that the government might inspect the facilities of Wockhardt which are under the US import alert.

In last month, the US FDA had placed Wockhardt's facilities in Waluj near Aurangabad on import alert, barring supply of various products from these facilities to the US. Also , in the last week of May, the health ministry suspended the sale and distribution of Proxyvon, a pain-relieving drug in the country.

12:50pm Wipro said it would expand operations in Germany and would hire 1,000 employees in next 3 years. The stock is trading flat.

Jet Airways gained 1.7 percent, after aviation minister Ajit Singh (after a meeting with finance minister) said Foreign Investment Promotion Board (FIPB) would meet on Friday to consider Jet-Etihad deal.

He said he did not see any problem with this deal getting FIPB nod.

12:40pm Indian rupee recovered quite sharply, appreciating by 39 paise to touch 58 per dollar on Wednesday.

The Reserve Bank of India (RBI) intervened in the foreign exchange markets on Tuesday to halt the rupee's slide , the deputy chairman of the Planning Commission Montek Singh Ahluwalia told CNBC-TV18 on Wednesday.

Titan Industries shares extended fall to 13 percent amid large volumes. Brokerage house CLSA advised selling the stock with a target price of Rs 200. "We estimate working capital to go up by 50 days; this would require Titan to borrow. RoCE in jewellery would be down to 35%. We cut our estimates to build-in lower financial income and higher interest expense and see this as a PE de-rating event," CLSA report said.

12:30pm European markets are mixed in opening trade; France's CAC rose 0.15 percent whereas Britain's FTSE and Germany's DAX declined 0.2 percent.

Back home, declining shares outnumbered advancing ones by 793 to 403 due to fall in broader markets. The BSE Midcap Index lost 0.65 percent and Smallcap Index fell 0.5 percent.

12:20pm Gainers: Jindal Steel , Cipla , Infosys , ONGC and Gail are key gainers in the Sensex.

The market is growing weak on dismal April industrial output and May retail inflation.  The Sensex is down 149.08 points 18993.92 while the Nifty is hovering around 5750.

Metals, auto and FMCG stocks are dragging the indices while Consumer Durables index is down around 8 percent.

Bajaj Auto (down 3.11 percent), Coal India (down 3.11 percent), Hero Motocorp (down 2.99 percent) and Hindalco (down 2.8 percent) are key losers in the Sensex.

11:50 am: DLF has moved plea to vacate High Court ex-parte stay against Gurgaon Project. The stock is currently at Rs 189.00, up Rs 2.10, or 1.12 percent on the BSE.

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11:35 am Gold outlook: The Indian government does not need to act as of now to further moderate gold imports as recent steps have already had considerable impact, economic affairs secretary Arvind Mayaram said on Wednesday in the sidelines of an investor conference.

The government has recently raised import duties on gold to 8 percent and the central bank has put curbs on gold financing by banks to put a brake on gold imports, which have been a key reason for India's wide current account deficit.

11:20 am Management speak: The new RBI rule making it mandatory for gold imports to be paid in cash upfront will push up Titan Industries' interest costs, as the company was till now buying gold on six months credit, S Subramanian, the company's chief financial officer told CNBC-TV18.

"All imports need to be paid in cash upfront and that means that for inventory, you need to borrow from local sources which would mean that the cost would go up quite significantly from an interest perspective,"  said Subramanian.

11:15 am CPI stats: Annual consumer price inflation slowed for the third straight month in May to 9.31 percent, government data showed on Wednesday. Consumer prices rose an annual 9.39 percent in April.

Food prices for consumers rose an annual 10.65 percent in May, slightly faster than an annual rise of 10.61 percent in April. Unlike most central banks, the Reserve Bank of India mainly uses the wholesale price index (WPI) for setting up its monetary policy.

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The Sensex is down 128.88 points at 19014.12, and the Nifty slips down 36.10 points at 5752.70.  The industrial output for the month of April grew at a lower-than-expected 2 percent. A CNBC-TV18 poll of economists had expected April IIP to grow at 2.7 percent.

The rupee has weakened to 58.37 per dollar. In a CNBC-TV18 exclusive interview , deputy chairman of the planning commission, Montek Singh says that the government is not waiting on the sidelines on the rupee and that they will address the recent fall. India will have to live with short-term volatility in the rupee, but for the longer term steps are being taken to lower the current account deficit to 2.5 percent of GDP by the end of the 12th plan.

Hero Motocorp (down 3.17 percent),  Bajaj Auto (down 3.07 percent), Coal India (down 2.63 percent), Tata Steel (down 2.59 percent) and Hindalco (down 2.59 percent) are top losers in the Sensex.

11:00am Industrial output grew 2 percent in April that is lower compared to expectations of 2.7 percent.

10:59am Emkay Global Financial Services maintained a buy rating on Titan Industries with a price target of Rs 280. The stock lost 9 percent.

"The last leg of regulatory concerns seems to be addressed with the ceasing of gold on lease and increase in cash margins to 100%. The cash flow impact would be transitional and it would turn free cash flow positive in FY15E. Demand scenario remains strong, thus we maintain our revenue growth targets," Emkay report said.

The only caveats to its call are i) Expansion plan review & ii) RBI targeting savings scheme.

10:55am Unichem Labs rallied 2.6 percent, after Competition Commission of India (CCI) gave green signal to Mylan-Unichem deal.

Kellton Tech Solutions surged 5 percent, after the company received order worth Rs 27.25 crore from Kandla Port. Company's current market capitalisation stands at Rs 29.70 crore.

10:50am Titan Industries, United Spirits , Reliance Communications , State Bank of India and Wockhardt are most active shares on exchanges.

Brokerage house Macquarie has an underperform rating on Bank of Baroda with a target price to Rs 565. "We believe the worst is not over in terms of asset quality and stresses would persist for a couple of more quarters before it stabilises," Macquarie report said. The stock is down 0.77 percent to Rs 647.

10:40am Equity benchmarks continue to trade lower since early trade, after showing a recovery of more than half of losses. BSE Sensex is down 56.02 points at 19086.98, and the Nifty is down 13.40 points at 5775.40.

Shares of Coal India , Hero Motocorp and Bajaj Auto lost more than 2 percent while TCS and ITC declined 1.5 percent each.

Mahindra Satyam shares gained 1.7 percent and Tech Mahindra rose by 1.3 percent, after Andhra Pradesh HC approved Mahindra Satyam-Tech Mahindra merger, subject to conditions.

Vineet Nayyar the chairman of Mahindra Satyam aims to complete the merger of its company with Tech Mahindra in eight weeks following a clearance for amalgamation from Andra Pradesh High Court.

10:35am Deutsche bank recommended holding Titan Industries with a target price of Rs 230. "Jewellery business model's attractiveness diminishes substantially with the recent rbi regulation which effectively bans the 'gold-on-lease' model. The overhang of further regulation cannot be ignored," Deutsche Bank report said. Shares dropped more than 9 percent.

Japan's Nikkei 225 Average fell one percent as yen strengthened to 96.5 mark versus the dollar. China, Hong Kong and Taiwan markets are shut today.

10:25am Department of Economic Affairs secretary says he does not see panic in market due to rupee depreciation. He expects the rupee to correct itself in near future.

Index of Industrial Production data will be closely watched by the market today. Pramit Brahmbhatt of Alpari India feels the IIP is likely to come in over 3 percent.

State-owned telecom operator MTNL shares rose by 2 percent ahead of the group of ministers meet on the revival strategy for the company and BSNL.

MMTC touched a 52-week low of Rs 191, as the panel of ministers on disinvestment is likely to meet today to decide the base price for the offer for sale. The issue is expected to hit the market tomorrow.

Jubilant Foodworks declined 2.4 percent. Kotak expects FY14 same stores sale growth for the company to be down to 8-10 percent. Kotak reiterates its sell call on the stock with a target of Rs 900 a share.

10:15am Indian equities recouped more than half of early losses, helped by financials, oil & gas and capital goods stocks. The BSE Sensex is down 43.71 points at 19099.29, and the Nifty is down 8.80 points at 5780.

Indian rupee appreciated by 15 paise today to trade at 58.24 per dollar.

Shares of Reliance Industries and ICICI Bank gained 0.9 percent each while Infosys and ONGC rose 0.5 percent.

HDFC Bank and Tata Motors advanced 0.4 percent.

Meanwhile, ITC, TCS and Coal India fell 1.6 percent each. Two-wheeler majors Hero Motocorp and Bajaj Auto dropped more than 2 percent.

10:00 am Buzzing: Mahindra Satyam surges around 2 percent at Rs 113 as the Andhra Pradesh High Court approved merger of the company with Tech Mahindra on Tuesday.

9:52 am Expert talks: Sukhani sees 5750 as strong support, suggests buys

9:50 am Index check: Consumer Durables index is down 4.5 percent, FMCG index loses 1.3 percent while Capital Goods and Oil & Gas are gaining. 

9:42 am Brokerages on Titan:

Religare has downgraded its rating on Titan to 'hold', and cut price target to Rs 225 from Rs 290 following the RBI restrictions on gold, that could hurt margins of jewellery firms in general.

Deutsche Bank has a hold rating on Titan with a price target of Rs 230.

Jefferies has a buy rating on Titan for a target price of Rs 310.

9:40 am Market outlook: Foreign fund flows into equities could weaken near term, feels Tirthankar Patnaik of Religare Capital Markets, as he is expects the rupee to weaken further from these levels .

FIIs have been heavy sellers of government debt over the last three weeks, and market fears this could put further pressure on the rupee, and spark a vicious circle of weakening rupee and FII outflows.

"What we have seen in the debt markets panning out since May 22 nd or so is now coming into the equity desk," Patnaik said in an interview to CNBC-TV18.

9:35 am Market update: The Sensex is down 59.84 points at 19083.16 while the Nifty falls 17.20 points to 5771.60.

9:30 am  Buzzing: Despite the coal scam woes, Jindal Steel (up 0.9 percent) is lead gainer in the Sensex.

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It is a quiet start to trade. The Sensex opens 37.64 points down to19105.36, and the Nifty slips 14.75 points at 5774.05. About 177 shares have advanced, 226 shares declined, and 37 shares are unchanged.

Titan Industries is hammered around 10 percent amid concerns that restrictions put by RBI on gold imports will hit business prospects.

Other losing stocks in the Sensex are Tata Power , Coal India , TCS , Bajaj Auto and Sun Pharma .

GAIL , Jindal Steel, Cipla , Sterlite Industries and ONGC are the stocks which have gained momentum in the Sensex.

Meanwhile, the rupee has appreciated by 19 paise in early trade to open at 58.20 per dollar on Wednesday as against previous day's closing of 58.39 per dollar.

Index of industrial production (IIP) and consumer price index (CPI) will be released today. According to a CNBC-TV18 poll, April IIP is seen at 2.7 percent. Capital goods are expected to do better. May CPI is seen lower at 8.9 percent versus 9.39 percent month on month.

The Dow Jones Industrial Average dropped 116.57 points, or 0.76 percent, to finish at 15,122.02 in volatile trading with all key S&P sectors closing in the red. The correction was seen on the back concerns about the scaling back of monetary stimulus programs by central bank. The CBOE volatility index spiked above 17. The US treasury yields rise to 2.20.

The S&P 500 slumped 16.68 points, or 1.02 percent, to end at 1,626.13. And the Nasdaq declined 36.82 points, or 1.06 percent, to close at 3,436.95.

After the Bank of Japan left its key policy unchanged, investors are now waking up to the fact that there could be no additional stimulus.

China, Hong Kong and Taiwan markets are shut today.