Sensex ends 111 points lower, Nifty holds 11050; Nifty PSU Bank index drags

Benchmrk indices ended lower on Thursday, snapping a six-day record-setting rally, as profit-taking hit IT stocks while large state-run lenders slid as they stood to receive less money than expected from a government recapitalisation plan.

Bonds also fell, sending the benchmark 10-year yield up 4 basis points to 7.48%, after oil prices rallied on heavy volume, boosted by a record 10th straight weekly decline in US crude inventories.

But the rupee strengthened to 63.49 per dollar from its previous close of 63.70, tracking a rally in Asian currencies after US Treasury Secretary Steven Mnuchin welcomed a weaker dollar, calling it good for trade, in a departure from traditional US policy.

Overall sentiment was cautious as investors awaited the annual budget for the fiscal year starting in April to be unveiled on Feb. 1.

Expiry of monthly derivative contracts at the end of the session, after indexes hit record highs in each of the six previous sessions, also kept sentiment in check.

3:40 PM IST Nifty PSU Bank Index down 5% on bank recapitalisation

3:37 PM IST Sectoral Trend

3:35 PM IST Sensex top gainers and losers

3:32 PM IST Markets at Close   Benchmrk indices fell on Thursday, snapping a six-day record-setting rally, as profit-taking hit IT stocks while large state-run lenders slid as they stood to receive less money than expected from a government recapitalisation plan.   The S&P BSE Sensex ended at 36,050, up 111 points while the broader Nifty50 index settled at 11,069, up 16 points

3:22 PM IST Real estate transaction cost needs to be brought down: Abhishek Lodha   Mumbai based Lodha Developers, with estimated sales of Rs 85 billion in 2017-18, over 20 per cent higher than in the previous financial year, is one of the largest real estate players in the country. At a time when India’s residential real estate market is seeing its biggest demand slump since 2010, the company, promoted by lawyer-turned-businessman Mangal Prabahat Lodha, now a sitting Bharatiya Janata Party (BJP) member of legislative Assembly (MLA) from the affluent Malabar Hills constituency in South Mumbai, has become a consolidator. CLICK HERE FOR FULL STORY

3:10 PM IST Budget 2018: Betting on stock market boom? Capital gains tax may end party   The taxman may end up being a speed bump for the Indian stock market, which like its counterparts across the world has marched to multiple records in the past year.   Brokerages including Kotak Securities say Prime Minister Narendra Modi's administration may make it harder for investors to claim exemptions on capital gains from equity investments when the federal Budget is announced on February 1. Modi's move in 2016 to scrap high-value currency bills and the implementation of the new sales tax last July have hurt demand and revenue, forcing the government to borrow more. READ MORE

2:59 PM IST Recap to mitigate PSB risks but NPAs to impact near-term performance: Fitch   The government's Rs 881.39 billion capital infusion in struggling public sector banks should help in part to mitigate risks but resolution of bad assets and continued high credit costs hinder the sector's near-term performance, Fitch Ratings said on Thursday.   While the capital infusion plan was less than half of its estimate of $65 billion needed for the sector, Fitch said yesterday's announcement will encourage banks to resolve their non-performing loan (NPL) stock faster as improved capital buffers bolster their ability to absorb potential large haircuts. CLICK HERE FOR FULL STORY

2:46 PM IST Investing in TCS? Street may be ignoring these three near-term headwinds   The market capitalisation of Tata Consultancy Services is close to the Rs 6-trillion mark, with the company’s stock gaining 46% over its 52-week low of February last year. Half of the gains have come over the past month, and a large part of those after the December quarter results. Given the sharp price rise, the stock is trading at an expensive valuation of 20 times its FY20 estimates. The near-peak valuations are at a 10-14% premium to the target prices of brokerages.   Analysts at Kotak Institutional Equities say that the stock is trading at full valuations even after the recognition of potential cyclical uptick in business. The stock has already reached the peak-cycle multiple, implying about 12% growth for the next 7-8 years. READ MORE

2:28 PM IST Corporate Affairs Ministry asks ICAI to submit report on bitcoin auditing   The Institute of Chartered Accountants of India (ICAI) has been asked by the ministry of corporate affairs to submit a report on auditing of Bitcoins. ICAI will submit its report by 31st March 2018.   "The study will look into how Bitcoin disclosures can be made in the financial statement," said Debashis Mitra, council member, ICAI, at a seminar on corporate governance, analysing Uday Kotak Committee recommendations and recent changes in Companies (Amendment) Bill, 2017, organised by the CII. The disclosure format will not only be meant for all Bitcoin transactions made this financial year but also set standard for future such transactions. Also, one of the motives behind the study was to insulate auditors of any legal discrepancies arising out of such transactions. CLICK HERE FOR FULL STORY

2:13 PM IST Jindal Saw extends fall post Q3 results   Jindal Saw dipped 8% to Rs 154, extending Wednesday’s 4% decline on BSE after the company reported 19% growth in net profit at Rs 963 million for the quarter ended December 2017 (Q3FY18). It had profit of Rs 807 million in the same quarter last fiscal.   Total income increased 49% to Rs 21,807 million from Rs 14,666 million in the corresponding quarter of previous year. READ MORE

1:59 PM IST Sectoral Trend

1:45 PM IST Oil producing countries must ensure price balance: Pradhan at Davos   Union minister Dharmendra Pradhan on Wednesday said responsible pricing is key for the growth of the global oil industry as consumers in countries like India are price sensitive.   He also asserted that producing countries must ensure there remains a price balance, the oil minister told world leaders in Davos.   "Responsible pricing is key for the balance and growth of global oil industry as consumers in countries like India are price sensitive," Pradhan said. READ MORE

LIVE UPDATES

Nifty PSU Bank Index down 5% on bank recapitalisation


Sectoral Trend


Sensex top gainers and losers


Markets at Close
 
Benchmrk indices fell on Thursday, snapping a six-day record-setting rally, as profit-taking hit IT stocks while large state-run lenders slid as they stood to receive less money than expected from a government recapitalisation plan.
 
The S&P BSE Sensex ended at 36,050, up 111 points while the broader Nifty50 index settled at 11,069, up 16 points
Real estate transaction cost needs to be brought down: Abhishek Lodha
 
Mumbai based Lodha Developers, with estimated sales of Rs 85 billion in 2017-18, over 20 per cent higher than in the previous financial year, is one of the largest real estate players in the country. At a time when India’s residential real estate market is seeing its biggest demand slump since 2010, the company, promoted by lawyer-turned-businessman Mangal Prabahat Lodha, now a sitting Bharatiya Janata Party (BJP) member of legislative Assembly (MLA) from the affluent Malabar Hills constituency in South Mumbai, has become a consolidator. CLICK HERE FOR FULL STORY
Budget 2018: Betting on stock market boom? Capital gains tax may end party
 
The taxman may end up being a speed bump for the Indian stock market, which like its counterparts across the world has marched to multiple records in the past year.
 
Brokerages including Kotak Securities say Prime Minister Narendra Modi's administration may make it harder for investors to claim exemptions on capital gains from equity investments when the federal Budget is announced on February 1. Modi's move in 2016 to scrap high-value currency bills and the implementation of the new sales tax last July have hurt demand and revenue, forcing the government to borrow more. READ MORE
Recap to mitigate PSB risks but NPAs to impact near-term performance: Fitch
 
The government's Rs 881.39 billion capital infusion in struggling public sector banks should help in part to mitigate risks but resolution of bad assets and continued high credit costs hinder the sector's near-term performance, Fitch Ratings said on Thursday.
 
While the capital infusion plan was less than half of its estimate of $65 billion needed for the sector, Fitch said yesterday's announcement will encourage banks to resolve their non-performing loan (NPL) stock faster as improved capital buffers bolster their ability to absorb potential large haircuts. CLICK HERE FOR FULL STORY
Investing in TCS? Street may be ignoring these three near-term headwinds
 
The market capitalisation of Tata Consultancy Services is close to the Rs 6-trillion mark, with the company’s stock gaining 46% over its 52-week low of February last year. Half of the gains have come over the past month, and a large part of those after the December quarter results. Given the sharp price rise, the stock is trading at an expensive valuation of 20 times its FY20 estimates. The near-peak valuations are at a 10-14% premium to the target prices of brokerages.
 
Analysts at Kotak Institutional Equities say that the stock is trading at full valuations even after the recognition of potential cyclical uptick in business. The stock has already reached the peak-cycle multiple, implying about 12% growth for the next 7-8 years. READ MORE
Corporate Affairs Ministry asks ICAI to submit report on bitcoin auditing
 
The Institute of Chartered Accountants of India (ICAI) has been asked by the ministry of corporate affairs to submit a report on auditing of Bitcoins. ICAI will submit its report by 31st March 2018.
 
"The study will look into how Bitcoin disclosures can be made in the financial statement," said Debashis Mitra, council member, ICAI, at a seminar on corporate governance, analysing Uday Kotak Committee recommendations and recent changes in Companies (Amendment) Bill, 2017, organised by the CII. The disclosure format will not only be meant for all Bitcoin transactions made this financial year but also set standard for future such transactions. Also, one of the motives behind the study was to insulate auditors of any legal discrepancies arising out of such transactions. CLICK HERE FOR FULL STORY
Jindal Saw extends fall post Q3 results
 
Jindal Saw dipped 8% to Rs 154, extending Wednesday’s 4% decline on BSE after the company reported 19% growth in net profit at Rs 963 million for the quarter ended December 2017 (Q3FY18). It had profit of Rs 807 million in the same quarter last fiscal.
 
Total income increased 49% to Rs 21,807 million from Rs 14,666 million in the corresponding quarter of previous year. READ MORE
Sectoral Trend


Oil producing countries must ensure price balance: Pradhan at Davos
 
Union minister Dharmendra Pradhan on Wednesday said responsible pricing is key for the growth of the global oil industry as consumers in countries like India are price sensitive.
 
He also asserted that producing countries must ensure there remains a price balance, the oil minister told world leaders in Davos.
 
"Responsible pricing is key for the balance and growth of global oil industry as consumers in countries like India are price sensitive," Pradhan said. READ MORE
Do not rush to buy PSU banks post recap plan
 
Despite the capital infusion of Rs 881 billion announced by the government across public sector banks (PSB), investors should not rush to buy these PSBs but evaluate on a case-to-case basis and invest selectively, analysts say.
 
As a part of the Rs 2.1-trillion bank recap plan spread over FY18 and FY19 announced on October 25, 2017, the government on Wednesday announced Rs 881.39 billion capital infusion in 20 public sector banks (PSBs) during the current fiscal, with IDBI Bank cornering a lion's share of Rs 106.1 billion. READ MORE


Dr Reddy's Q3 profit tumbles 38% as sales decline on US pricing pressure
 
Indian generic drugmaker Dr Reddy's Laboratories Ltd posted a 38.5 per cent slump in quarterly net profit as sales declined due to pricing pressure in the United States, its biggest market.
 
Net profit was Rs 3.03 billion ($47.7 million) in the third quarter ended December 31, compared with Rs 4.92 billion a year earlier, the company said.
Market Check
S&P BSE Sensex 36,040.30 -0.34%
 
Nifty 50 11,050.30 -0.32%
 
S&P BSE 200 4,861.70 -0.27%
 
Nifty 500 9,824.80 -0.30%
 
S&P BSE Mid-Cap 17,934.88 -0.23%
 
S&P BSE Small-Cap 19,429.47 -0.23%

NIIT Technologies zooms 31% in one week as Q3 results beat estimates
 
NIIT Technologies hit a new high of Rs 906, up 5% on BSE, extending its gains for tha past four days, after the company reported a better than expected 12.4% sequential growth in consolidated net profit at Rs 756 million in December quarter (Q3FY18).
 
In past one week, the stock rallied 31% from Rs 692 on January 18, as compared to 2% rise in the S&P BSE Sensex. The stock of information technology (IT) company is top gainer in weekly chart among the S&P BSE 500 index. READ MORE
Investing in bitcoins? Beware, hedge funds are growing wary of crypto mania
 
Hedge funds that rode the wave as cryptocurrencies surged last year have turned cautious, the latest sign of doubt among investors that the red-hot rise of bitcoin and its ilk can be sustained.
 
Bitcoin's more than thirteen-fold rise in 2017 helped fuel a stellar year for the still-small number of hedge funds dedicated to cryptocurrency investing. An index of around 17 cryptocurrency hedge funds from data provider Hedge Fund Research Inc rose almost 3,000% in 2017. CLICK HERE FOR FULL STORY
Budget 2018: Overseas investors demand status-quo on LTCG tax
 
The Asia Securities Industry and Financial Markets Association (Asifma), a lobby for overseas investors, met with finance ministry officials last week amid buzz that the holding period to avail long-term capital gains (LTCG) in equities could be raised in the Union Budget 2018.
 
Sources said foreign portfolio investors (FPIs) urged the government not to take such a decision as it would further escalate the cost of transaction and impact incremental flows into domestic equities. READ MORE
SBI, other bank shares fall as recapitalisation plan disappoints
 
Shares in State Bank of India and other big state-run banks fell on Thursday as they stood to receive less money than investors had expected from the government's much-awaited recapitalisation plan.
 
By contrast, smaller state-run lenders such as UCO Bank gained, as analysts said they would receive more funds than expected. CLICK HERE FOR FULL STORY

SBI falls over 3%

Everest Industries hits record high on strong Q3 results
 
Everest Industries hit a new high of Rs 637, up 9% on BSE in intra-day trade, after the company reported a net profit of Rs 94 million for the quarter ending December 2017 (Q3FY18).
 
The company engaged in cement & cement products business had posted a net loss of Rs 141 million in the same quarter last fiscal. READ MORE
Regulatory hangover continues to take toll on United Spirits in Q3
 
United Spirits (USL), the producer and distributor of prominent liquor brands such as Royal Challenge, Antiquity, and Johnnie Walker, disappointed the Street with its December 2017 quarter (Q3) results. In fact, the subsidiary of London-based Diageo — the world’s largest producer of spirits — lagged behind expectations on several counts.
 
The share price of USL fell over 8% intra-day on Wednesday before closing down 7% at Rs 3,489. The regulatory environment continues to take a toll on the company’s performance. READ MORE
Equal mix between retail and wholesale assets is the future for RBL Bank
 
Following its listing in August 2016, the RBL Bank stock had seen a good run, doubling in less than a year, thanks to a neat scaling up of the bank’s loan book. But after touching its all-time high of Rs 600 in last May, it has lost ground.
 
In fact, on Tuesday, the stock shed over 4% (the second time in its history) reacting to its quarterly results, which was otherwise in-line with expectations. The increasing stress from asset quality (which has been fast catching up after the farm loan waivers were announced) hasn’t gone down well with investors. CLICK HERE FOR FULL STORY
Market Check
S&P BSE Sensex 36,083.53 -0.22%
 
Nifty 50 11,068.85 -0.15%
 
S&P BSE 200 4,872.87 -0.04%
 
Nifty 500 9,844.80 -0.09%
 
S&P BSE Mid-Cap 18,000.95 0.14%
 
S&P BSE Small-Cap 19,519.09 0.23%

Bharat Electronics gains on share buyback plan
 
Bharat Electronics was up 2% at Rs 178 on BSE after the state-owned company said that its board will consider the proposal for buyback of shares of the company on January 30, 2018.
 
Earlier on January 9, Bharat Electronics announced that a meeting of the board of directors of the company is scheduled to be held on Tuesday, the 30th January, 2018 to consider and approve, unaudited standalone financial results for the quarter and nine months ended 31st December, 2017 and also to consider declaration of interim dividend for the financial year 2017-18. READ MORE
PSBs trade mixed after Government unveils bank recap plan
 
Shares of frontline public sector banks (PSBs) were down up to 5% on the National Stock Exchange (NSE) in early morning trade on profit booking after the government unveiled recapitalisation (recap) plan.
 
The government has announced details of the Rs 2.1tn recapitalisation plan approved in October, 2017 for 20 public sector banks (PSB), with over Rs 881 billion to be infused in FY18 itself, of which Rs 800 billion is to be raised via “recap bonds”.
 
State Bank of India (SBI) Punjab National Bank (PNB), Indian Bank and Bank of Baroda (BOB) were trading lower by 3% each, while Syndicate Bank, Allahabad Bank, Oriental Bank of Commerce, Union Bank of India and Canara Bank , all from the Nifty PSU Bank index, were down 1% to 2% on NSE. READ MORE
Nifty breaches 11,000: Brace for a lot of volatility in the new zone
 
The Nifty has broken out past 11,000. High hopes about the Budget, coupled to huge portfolio inflows, have been the drivers for this uptrend. The long trend is bullish but centred on newsflow about the Budget. It's impossible to calculate upside targets since the market is in a new zone.
 
The VIX is signalling a possibly serious correction. It has risen to 12-month high. However, a pullback would not be considered serious unless the Nifty slid below 10,550, which is the level where the recent breakout came. If that is broken, the next key support would be at 10,325. READ MORE
58% banks report rise in bad loans in July-December period, reveals Survey
 
The percentage of banks reporting a rise in non performing assets (NPAs) in July-December last year has reduced significantly, indicating stability in credit environment, according to a report.
 
The latest round of the Ficci-IBA survey drew responses from 19 public sector, private and foreign banks representing 59 per cent of the banking industry by asset size. READ MORE
 

Satyam accounting fraud: NSE mulls removal of audit firm Price Waterhouse
 
The National Stock Exchange (NSE) is likely to seek removal of auditor Price Waterhouse (PW) at its upcoming board meeting.
 
The move comes after market regulator Securities and Exchange Board of India (Sebi) imposed a two-year ban on PW for alleged involvement in the Satyam accounting fraud case.
 
The country's largest stock exchange had appointed PW as its currently statutory auditor of the exchange for a period of five years starting September 2016.
 
Sebi's ban on PW is applicable on all listed companies and also on intermediaries registered under it. READ MORE
Interview of the day
 
Banks remain a good structural bet: Gautam Duggad
 
Continued liquidity from DIIs coupled with pick up in FII flows (especially in January) along with healthy start to the earnings season has resulted in rally in CY18, says GAUTAM DUGGAD, head of research for institutional equities at Motilal Oswal Financial Services in an interview. He also adds that banking sector is still a good structural bet and remains convinced about the underlying long term value migration in favour of private banks.
 
Sectoral Trend


Sensex top gainers and losers



Markets at Open

At 9:17 am, The S&P BSE Sensex were trading at 36,129, down 32 points whiele the broader Nifty50 index was ruling at 11,077 down 8 points
Stock picks from Prabhudas Lilladher
 
BUY SUN PHARMA 
CMP: Rs 586.55 
TARGET: Rs 645 
STOP LOSS: Rs 560
 
The stock has been in consolidation phase for quite some time after the gradual rise from the bottom made at around 440 levels and now has indicated a positive candle formation in the daily chart to signify strength and potential to rise further in the coming days. The stock has maintained above the significant moving average of 34 WMA and also the RSI has indicate a trend reversal to signal a buy. Click here for more
Nifty outlook from Prabhudas Lilladher:
 
Nifty after the spectacular rally has taken a pause around 11,100 mark and now technically speaking, the indicator RSI has attained the highly overbought zone to signify a further consolidation or profit booking in the coming days. Being the expiry of the F&O Segment, we anticipate volatility in the market. The support for the day is seen at 11,020 while resistance is seen at 11,140.
Overseas investors demand status-quo on LTCG tax from Budget 2018
 
The Asia Securities Industry and Financial Markets Association (Asifma), a lobby for overseas investors, met with finance ministry officials last week amid buzz that the holding period to avail long-term capital gains (LTCG) in equities could be raised in the Union Budget. 
 
Sources said foreign portfolio investors (FPIs) urged the government not to take such a decision as it would further escalate the cost of transaction and impact incremental flows into domestic equities. READ MORE
Recapitalisation plan: Govt to inject nearly $14 bn into PSU banks by March
 
India's government pledged on Wednesday to inject nearly $14 billion combined into all but one state-run lender by March in return for them implementing reforms, in a bid to boost lending and tackle a record bad debt problem.
 
The funds will be injected into 20 lenders majority-owned by the government, which together hold most of India's record $150 billion in soured loans. Lenders with high stressed-asset ratios, such as IDBI Bank, will get a bigger portion of the money. READ MORE
Oil hits Dec 2014 high on dollar weakness
 
Oil prices on Thursday hit their highest level since December 2014, lifted by a weak dollar and a 10th straight week of declines in US crude inventories.
 
Brent crude futures LCOc1, the international benchmark for oil prices, were at almost $71 per barrel - $70.98 a barrel - a level not seen since early December 2014 and up 45 cents, or 0.6%, from their last close.
Asia shares near record peak
 
Asian stocks held near a record high on Thursday though concerns about the Trump administration’s protectionist stance cast a shadow on financial markets, while the dollar was under pressure after U.S. Treasury Secretary Steven Mnuchin welcomed a weaker currency.
 
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.15% while Japan’s Nikkei fell 0.8%, hit by the dollar’s decline against the yen.
Wall Street ends mixed

Wall Street shares were mixed, however, as a boost from solid earnings were offset by trade protectionism worries fanned by U.S. President Donald Trump’s decision to impose steep import tariffs on washing machines and solar panels earlier in the week.
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