Sensex down 318 points; Nifty ends below 7800, F&O expiry eyed

Equity benchmarks completely wiped out previous day's gains on Wednesday, tracking sell-off in global stock markets despite China rate cut and ahead of expiry of August derivative contracts. The rupee was rangebound against US dollar.

Benchmark indices failed to hold psychological levels due to selling pressure in banking & financials and healthcare stocks. The 30-share BSE Sensex cracked 317.72 points or 1.22 percent to 25714.66 and the 50-share NSE Nifty ended below the 7800-mark, down 88.85 points or 1.13 percent to 7791.85. The BSE Midcap also lost ground, down 0.8 percent.

Raamdeo Agarwal of Motilal Oswal feels the market may not move much this year due to pressure on commodity stocks. However, this is a good time to buy into quality stocks, he said.

Globally, Asian markets closed mixed despite the liquidity easing measures by China. Shanghai Composite index ended lower by 1.3 percent after a choppy session and Hang Seng lost 1.5 percent while Nikkei rallied 3.2 percent. European markets were down 1 percent each (at 16 hours IST).

Commodities were rangebound as the dollar gained marginally after China's easing measures. NYMEX crude was up 0.1 percent at USD 39.35 a barrel and and Brent crude rose 0.3 percent to USD 43.34 a barrel while gold fell 0.6 percent to USD 1,131 an ounce.

Back home, housing finance company HDFC topped the selling list on Sensex, down 3.8 percent followed by Infosys, ICICI Bank, Larsen & Toubro, State Bank of India, Sun Pharma, ITC, M&M, ONGC, Hero Motocorp and Bharti Airtel with 1-3.5 percent losses.

3:30 pm Market closing: Equity benchmarks lost more than one percent on Wednesday ahead of July F&O contracts expiry and dragged by weak global cues. The Sensex plunged 317.72 points or 1.22 percent to 25714.66 and the 50-share NSE Nifty slipped 88.85 points or 1.13 percent to 7791.85.

The BSE Midcap also lost ground, down 0.8 percent. The market breadth was marginally negative as about 1332 shares advanced against 1339 shares declined on the Bombay Stock Exchange.

Hero Motocorp, HDFC, M&M, SBI, Bharti Airtel, Ambuja Cements, Tech Mahindra and Bank of Baroda were the biggest losers, down 3-4.5 percent. However, BHEL, Bajaj Auto, Coal India, Wipro, Cairn India, Tata Power and Tata Motors gained 1-4 percent.

3:22 pm Cairn's investment: Cairn India is set to expand its crude oil and natural gas carrying capacity by laying a new gas pipeline from its Barmer (Rajasthan) field with an investment outlay of Rs 1,400 crore.

Moreover, crude oil output would be expanded from 200,000 bopd (barrels of oil per day) to 300,000 bopd and natural gas carrying capacity from 6.3 mmscfd (million standard cubic feet per day) to 40 mmscfd, they said.

"The capital cost of the project is approximately Rs 1,400 crore. The main component of investment would go into the augmentation of existing Mangala Development Pipeline (MDP) from RJON-90/1 Block (Barmer, Rajasthan) to Bhogat Terminal (Gujarat) and development of new 30 inch pipeline from Raageshwari Gas Terminal to Palanpur for 280 mmscfd natural gas sale.

Meanwhile, a senior official of Cairn India said the oil block in Rajasthan operated by Cairn - ONGC JV has crossed a milestone of 300 million barrels crude production.

3:11 pm Market below 7800: The Nifty breached 7800 level, down 94.60 points or 1.20 percent to 7786.10 ahead of F&O expiry Thursday, weighed by banking & financials, capital goods and FMCG stocks.

The Sensex plunged 307.52 points or 1.18 percent to 25724.86.

HDFC crashed 4 percent followed by Infosys, HDFC Bank, L&T, ICICI Bank, SBI, ITC and Sun Pharma with 1-3 percent loss.

3:05 pm ICICI launches home loan product: Largest private lender ICICI Bank  launched the country's first mortgage guarantee-backed home loan product that will expand the credit amount and increase the tenure for an additional fee as well.

It will help customers raise the eligible amount by up to 20 per cent and increase the tenure by up to seven years, MD and CEO Chanda Kochhar told reporters here. ICICI Bank Extraa Home Loans can be availed only after paying a one-time mortgage guarantee fee to be paid at the start.

Executive Director Rajiv Sabharwal said the fee will depend on the age of the borrower, extension in tenure, the nature of her income - whether she is salaried or self-employed - and the loan-to-value ratio.

It will be up to two per cent of the overall loan, including the incremental component, he said.

2:55 pm Market Update: Equity benchmarks continued to be volatile ahead of F&O expiry (on Thursday). The Sensex plunged 275.84 points or 1.06 percent to 25756.54 and the Nifty dropped 71.05 points or 0.90 percent to 7809.65, dragged by HDFC, Larsen & Toubro and Infosys.

About 1310 shares have advanced, 1255 shares declined, and 99 shares are unchanged on the BSE.

2:45 pm Fitch on IOC: Fitch Ratings said that Indian Oil Corporation (BBB-/stable) ratings are not affected by the government's reduction of its stake in the company to 58 percent from 68 percent.

The Indian government has proposed to reduce the state's shares in certain public-sector companies, while maintain controlling stakes in these companies, as part of a divestment plan.

The other two smaller state-controlled oil refining and marketing companies - Bharat Petroleum Corporation (BBB-/Stable) and Hindustan Petroleum Corporation (BBB-/Stable) - have historically had lower state ownership at 55 percent and 51 percent, respectively. Their ratings are also equalised with that of India.

Fitch believes that the state continues to have close operating and strategic linkages with these entities despite the recent reforms to fuel prices and subsidy schemes. It also believes these three companies will continue to be important policy tools that the state will use to meet socio-economic objectives when required.

The Indian government's diesel price deregulation in October 2014 took place after a substantial drop in global oil prices; the government's resolve to maintain its current approach to petroleum product pricing and subsidies in an environment of high crude prices is yet to be tested, said the rating agency.

2:35 pm Mahindra capex: Home grown auto major Mahindra and Mahindra plans to invest Rs 700 crore in commercial vehicle (CV) vertical as it aims to become a full range player in the segment in the next two years.

Mahindra Truck and Bus Division (MTBD), a part of USD 16.9 billion Mahindra Group, plans to be a full range commercial vehicle player with focus on developing vehicles in the 9-16 tonnes range.

"We want to become a complete player in the commercial vehicle segment. Currently we are not present in the 9-16 tonnes segment. We are investing Rs 700 crore so that we have a full range of vehicles starting from 6 tonnes to 49 tonnes," Mahindra & Mahindra (M&M), President & Chief Executive Truck & Power Train, Rajan Wadhera told PTI.

As part of the product development project which began last year, the company plans to introduce intermediate commercial vehicles (ICVs), medium commercial vehicles (MCVs), upgrade light commercial vehicles (LCVs) and consolidate its heavy commercial vehicles (HCV) segment, he added.

2:20 pm FII View: European markets are responding negatively on the unsettling confidence in global trading and deep scars in the emerging Asian markets, says Guy Stear, Head of Credit Research and Emerging Markets Strategy, at Societe Generale CIB.

France's CAC, Germany's DAX and Britain's FTSE were down more than 1 percent, trimming some initial losses.

Speaking to CNBC-TV18, Stear says India's problem is that Fedral Reserve's interest rate cut and a stronger dollar would raise questions on the ability of companies paying back in dollars.

He sees a further fall in US market and the biggest trouble coming from the Fed's uncertainty of a September rate hike, as America's domestic economic growth sentiment is good, but the global stock markets turbulent, which is essentially a leading indicator of economic growth.

2:00 pm Market Check
The market declined marginally amid consolidation, dragged by banking & financials, FMCG, capital goods and select pharma stocks. However, the consistent buying in oil, technology and select auto stocks capped the downside.

The Sensex dropped 109.29 points to 25923.09 and the Nifty fell 25.80 points to 7854.90. About 1341 shares have advanced, 1173 shares declined, and 92 shares are unchanged on the BSE.

Mahindra & Mahindra, Hero Motocorp and Bharti Airtel topped the selling list on Sensex, down around 3 percent followed by HDFC, ITC, SBI, ICICI Bank, L&T and Axis Bank with 1-2 percent loss.

However, TCS, Reliance Industries, Tata Motors, Bajaj Auto, Wipro, ONGC, Coal India, NTPC and GAIL gained 1-3 percent.

Meanwhile, the rupee recovered from day's low, trading at 66.08, up 2 paise.

01:25 pm New Listing: Shares of Arvind Infrastructure, the subsidiary of textile and apparel maker Arvind, fell drastically on the day of debut. The stock listed at Rs 56.05, down 75 percent compared to previous closing price of Rs 224.05 (the price derived post demerger from Arvind).

It was trading at Rs 53.25 on the National Stock Exchange while Arvind was trading at Rs 258, down Rs 5.80, or 2.20 percent.

Arvind shareholders received one share of Arvind Infrastructure for every 10 shares held

Arvind Infra is going to enter into real estate development business with JV partners.

Promoter and promoter group have 43.76 percent shareholding in the company as of June 2015. LIC is the biggest (public) shareholder in the company with 6 percent stake followed by Multiples Private Equity FII I (3.12 percent stake), Government Pension Fund Global (2.15 percent), Dimensional Emerging Markets Value Fund (1.49 percent), Multiples Private Equity Fund (1.06 percent) and Sundaram Mutual Fund (1.05 percent).

01:10 pm Gold Update: Gold edged up today after falling the most in five weeks the session before as global equities were revived after China cut interest rates and bank reserve requirements to support a flagging economy.

But China's move appears to have only boosted equities temporarily, with US stock futures resuming their descent and Asian shares slightly lower.

Further losses in equities could switch appetite back to safe-haven assets such as gold.

01:00 pm Market Check
The market slipped again amid consolidation in afternoon trade, tracking further fall in European markets. France's CAC, Germany's DAX and Britain's FTSE extended losses, losing 2-2.7 percent.

The 30-share BSE Sensex dropped 122.05 points or 0.47 percent to 25910.33 and the 50-share NSE Nifty slipped 24.75 points or 0.31 percent to 7855.95. The BSE Midcap also wiped its gains, trading flat.

The rupee, too, depreciated by 20 paise to 66.30 against US dollar.

12:55 pm Buzzing: Edelweiss Tokio Life Insurance granted FIPB approval for increasing Tokio Marine's stake to 49% in the joint venture.

Edelweiss Tokio Life Insurance is a joint venture between Edelweiss Financial Services and Tokio Marine Holdings Inc.

Tokio Marine currently owns 26 percent in Edelweiss Tokio Life Insurance. The increase in Tokio Marine's stake to 49 percent in the life insurance joint venture will lead to fresh issue of foreign direct investment into the company.

''The approval is a reinforcement of Tokio Marine's long term commitment to India and to Edelweiss Tokio Life. We are committed to build a high quality and well capitalised business with strong support from Tokio Marine in areas like product design, new technology, etc," Deepak Mittal, MD & CEO, Edelweiss Tokio Life said.

12:40 pm Europe drops: European stock markets opened sharply lower today after a rebound yesterday, giving traders little respite from this week's big market swings.

London's benchmark FTSE 100 fell over 1.2 percent, Germany's DAX was trading 1.7 percent lower and France's CAC was off by 1.8 percent.

Investors are now looking towards the weekend's Jackson Hole gathering for reassurance from some of the top-level officials attending about the state of the global economy and what the US Federal Reserve will do next.

12:30 pm Shanghai erases gains: Shanghai Composite fell for the fifth consecutive session today, down 1.3 percent to close at 2927.29, the fresh 8-month low despite People's Bank of China cut interest rates on Tuesday evening.

12:15 pm Oil update: Crude oil futures held in a narrow band today not far off 6-1/2 year lows after China's central bank moved to support the country's stumbling economy, while concerns about a supply glut capped gains.

US stock futures resumed their descent in early Asian trade and Asian shares were seen on the defensive on Wednesday as monetary easing by China's central bank had limited success in cheering up nervous investors.

Brent LCOc1 was trading up 1 cent at USD 43.22 a barrel after it settled up 52 cents at USD 43.21 a barrel in the previous session.

US October crude CLc1 was down 6 cents at USD 39.25 a barrel, after finishing the previous session USD 1.07 higher at USD 39.31.

ANZ said that China's rate cuts had calmed commodity markets, but they remained cautious and gains would be limited.

12:00 pm Market Check
The market continued to consolidate ahead of expiry of Nifty August derivative contracts. The Sensex declined 94.21 points to 25938.17 and the Nifty fell 19.55 points to 7861.15. About 1287 shares have advanced, 1017 shares declined, and 83 shares are unchanged on the BSE.

Banks, FMCG, capital goods, metals and select pharma stocks remained under pressure. However, technology and oil stocks rebounded.

State Bank of India, ICICI Bank, HDFC, Axis Bank, Bharti Airtel, Dr Reddy's Labs, Cipla, Vedanta and Tata Steel dropped 1-3 percent. BHEL slipped 2.5 percent after Goldman Sachs downgraded stock to sell from neutral earlier with a target of Rs 207 per share as it believes that the new ordering momentum is unsustainable.

11:45 am Rate cut possible: In the wake of PBoC's rate cut move, pressure is likely to mount on the Indian central bank to follow suit, said DBS Group.

Minutes of the RBI Technical advisory committee out yesterday saw four of the seven members suggest that rates be cut back in August (with one suggesting a steep 50bp cut). Governor Raghuram Rajan however left rates unchanged, instead highlighting risks that could disrupt the on-going disinflationary phase.

But DBS Group suspects that the RBI is unlikely to act in haste, just as most domestic factors favour rate cuts at this juncture.

"The bigger wildcard are externals, particularly worries over the Chinese economy (and its shaky financial markets), weak demand-driven fall in commodity prices and US Fed's policy direction. There are bound to be concerns that lower rates might increase the downside pressure on the respective currencies," it reasoned.

DBS Group said for the time being, the shakeout in the EM currency and equity markets (including US) have pushed back Fed rate hike expectations for September. It remains to be seen if calmer market conditions that prevailed yesterday will extend in the near-term or lose steam. If sentiments stabilise in the run-up to next month's review and the US Fed pushes back rate hikes into next year, a window for the RBI to lower rates is likely to re-emerge, it added.

11:30 am L&T bags order: The power transmission and distribution business of L&T Construction has won a prestigious order in the middle east market from their reputed customer and key stakeholder, Qatar General Electricity & water Corporation KAHRAMAA for its ongoing Qatar Electricity Transmission Network Expansion plan-phase XII.

The order encompasses the engineering, procurement & construction of two substation packages.

Before this, the company has won orders worth Rs 1563 crore in both the international and domestic market in July and August 2015.

11:15 am Expert on China volatility: China is currently undergoing a major shift from its investment-led, export-driven economic model to one led by domestic consumption and this transition has implications for global capital, commodities as well as the broader world economy, believes noted economist Sanjeev Sanyal.

In an interview to CNBC-TV18, Deutsche Bank Global Strategist and Managing Director Sanyal said the latest crisis in the world's second largest economy is resulting from the above-mentioned shift and it is going to alter global dynamics in a major way.

"China will continue to slow down [during the transition], capital will flood out and will have to go elsewhere. It remains to be seen if countries such as the US or India can absorb this excess capital [that will flow out of China]," he said, adding that moves such as interest rate cuts by the Chinese central bank will only help smoothen the transition.

The development is significant from India's standpoint as it could use cheap global capital to build capacities and overhaul its infrastructure, as well as benefit from what may be a broken commodity market for years.

"But it will require leadership reform. Cost of capital has to come down structurally. Bank reforms have to take place," Sanyal said.

11:00 am Market Check
The market recouped all its early losses amid consolidation. The Sensex recovered nearly 400 points from day's low, to trade at 26082.20, up 49.82 points. The Nifty rose 27.55 points to 7908.25.

The broader markets like BSE Midcap and Smallcap gained 0.5-1 percent. About 1322 shares have advanced, 784 shares declined, and 71 shares are unchanged on the Bombay Stock Exchange.

Asian markets mood was lifted by the liquidity easing measures by China despite negative handover from US. Nikkei and Shanghai gained nearly 3 percent.

Lupin gained 3 percent as it received USFDA nod for anti-inflammatory drug Diclofenac Sodium. Additionally, Credit Suisse said that Lupin has raised prices in its branded us portfolio by 10 to 100 percent on Antara, Alinia and Suprax, which can add 2 percent to FY17 EPS.

Infosys rebounded, up 0.8 percent as Jefferies upgraded stock to a buy from underperform and raised target price to 1,260 from Rs 900 as it expects FY16 revenue growth at the higher end of guidance and EBIT could be closer to the top end of 24-26 percent range.

BHEL dropped 2 percent after Goldman Sachs downgraded stock to sell from neutral earlier with a target of Rs 207 per share as it believes that the new ordering momentum is unsustainable.

In new listings today, Power Mech Projects has a subdued listing, but recovered 10 percent from day's low. Management told CNBC-TV18 that they expect revenue growth of 25 percent to Rs 1,600 crore in FY16.

10:55 am IOC OFS backed by LIC: State-owned LIC, the country's largest investor, bought just under 86 percent of shares sold by the government earlier this week in state-run refiner and fuel retailer IOC,  a regulatory filing showed.

New Delhi is seeking to raise as much as USD 11 billion by selling stakes in state-run firms this year.

While LIC is a frequent back up for government sales, the sum it bought on Monday, amid a stock market rout, is likely to raise questions over the future of the sell-off programme.

The Indian government sold 10 percent of Indian Oil, raising around USD 1.4 billion.

Officials at LIC, whose stake has risen to 11.11 percent in Indian Oil from 2.52 percent according to Tuesday's filing after market hours to the Bombay Stock Exchange, did not immediately respond to requests for comment.

10:45 am Market Expert: The earlier approachable Nifty level of 8060 is a huge resistance now, says VK Sharma, Head – Private Broking & Wealth Management at HDFC Securities.

With US data expected tomorrow, Sharma says expected gross domestic product (GDP) will be revised from 2.3 percent to 3.2 percent, which will further vitiate the situation. He advises a put buying if Nifty regains 8060 level.

10:35 am Market Update: Equity benchmarks rebounded in morning trade with the Sensex rising 45.46 points to 26077.84 and the Nifty climbing 25.45 points to 7906.15.

The market breadth also improved, resulting further upside in broader markets. About 1233 shares have advanced against 732 shares declined on the Bombay Stock Exchange.

The BSE Midcap index rose 0.7 percent and Smallcap gained 1 percent.

Lupin extended gains to 3 percent on getting approval from US Food and Drug Administration for anti-inflammatory drug Diclofenac Sodium. Reliance Industries, TCS, ONGC, Wipro, NTPC and Bajaj Auto rose 1-2 percent.

10:25 am Buzzing: Gayatri Projects surged 8 percent on new orders worth Rs 3318 crore from NHAI.

These orders to build road projects are in the state of Uttar Pradesh under NHDP phase-IV on EPC mode.

10:15 am New Listings: Arvind Infrastructure, the subsidiary of Arvind, fell 75 percent to Rs 56.05 in opening trade against Rs 224.05 (the price derived post merger).

Power Mech Projects has opened at Rs 600 apiece, lower compared to issue price of Rs 640. It hit an intrday high of Rs 661.25 on the National Stock Exchange.

10:00 am Market Check
Equity benchmarks cut down early losses while the broader markets rebounded half a percent. The Sensex fell 71.85 points to 25960.53 and the Nifty declined 6.75 points to 7873.95.

The market breadth was positive as about 991 shares have advanced against 795 shares declined on the Bombay Stock Exchange.

Anant Shirgaonkar, Head-India Equities at UBS Securities says this is a good time to buy for investors having a 12-18 month horizon. UBS is not as bullish on midcaps and small caps as it was a few quarters back.

Infosys, TCS and Reliance Industries turned positive, rising marginally. Lupin, ONGC, Wipro, Bajaj Auto, NTPC, Coal India and GAIL gained 1-2 percent.

However, ICICI Bank, HDFC, ITC, HDFC Bank, Axis Bank, SBI and HUL declined 0.5-1 percent.

9:45 am Jefferies on Infosys: Brokerage Jefferies has upgraded Infosys to a buy due to higher growth focus based on improved deal wins & channel checks. More attention on largest clients, being handled by the CEO office; and faster decision making alluded to by management are the other reasons behind rating upgrade on the stock.
 
It has raised target on the stock to Rs 1,260 per share from Rs 900 per share.

These initiatives should lead to FY16E revenue growth at the higher end of guidance and improve prospects for FY17E, said the brokerage, adding pricing pressure should have some offset from weak INR and keep EBIT margins towards high end of the 24-26 percent range.

Key risks, according to Jefferies, are weakening macro, higher competitive intensity, unfavorable cross currency moves and stronger INR.

9:30 am Market Expert: The China phenomenon is quite impossible to analyze and one should not rush out to buy imagining world would straightening out in a few days, warns Udayan Mukherjee. The market is in complete flux right now and amid volatile India may see sharp rallies.

He says India stands out as a relative underperformer, but if this becomes part of the problem whose magnititude is yet unknown, "then this outperformance will not be of any consolation." 

If one must buy, then top notch housing finance names and blue chip companies can be bought in small quanities, he advised.

9:15 am Market Check
The market retreated badly in early trade Wednesday following weakness on Wall Street and volatility in China despite rate cut by People's Bank of China.

The Sensex fell 337.22 points or 1.30 percent to 25695.16 and the Nifty lost 87.65 points or 1.11 percent to 7793.05. About 246 shares have advanced, 661 shares declined, and 35 shares are unchanged on the BSE.

Vedanta, BHEL, Tata Motors, Hero Motocorp, Infosys and HCL Tech fell 2.5-3.6 percent. However, Wipro, Tata Power and Asian Paints gained more than half a percent.

The Indian rupee has opened lower by 12 paise at 66.22 per dollar on Wednesday against previous close of 66.10.

Ashutosh Raina of HDFC Bank said the People's Bank of China (PBoC) reduced the benchmark interest rates by 25 bps and RRR by 50 bps to stem the turbulence in the Chinese and global markets.

Some smooth action by the RBI to support the currency and limit the volatility helped the USD-INR pair to close near 66/dollar figure, he added.

He expects the USD-INR pair to trade in the 65.50-66.50/dollar range in the short term.

On the global front, Asian markets were mixed in trade today. China's Shanghai remained recovered to trade marginally in green despite rate cut by People's Bank of China on Tuesday evening.

China's central bank has lowered its one-year lending rate by 25 basis points to 4.6 percent effective August 26. It also cuts deposit rate by 25 bps to 1.75 percent effective August 26, while cutting banks' reserve requirement ratio by 50 bps effective September 6.

However, Wall Street closed lower in a late plunge overnight.

Dollar gained against a basket of major currencies, recovered from seven-month lows against the safe-haven yen and euro.