The benchmark indices trimmed some losses, but settled lower on Tuesday ahead of Reserve Bank of India (RBI)'s policy outcome due on Wednesday.
The RBI is widely expected to keep policy rates on hold, but investors will watch for any hints of a cut at the February meeting. The central bank kicked off its two-day monetary policy committee meeting on Tuesday.
Meanwhile, November's Nikkei/IHS Markit Services Purchasing Managers' Index fell to 48.5 - its lowest since August - from 51.7 in October, well below the 50 mark that separates expansion from contraction.
Globally, Asian shares remained subdued, while European markets were trading higher, shrugging off the news that the UK and the European Union failed to agree upon the terms for Brexit on Monday.
Vinod Nair, Head of Research, Geojit Financial Services
After a subdued trade through the day, the market reversed from day’s low led by banking stocks. The recent correction in PSU banks provides an opportunity for investors to accumulate as the long term prospects remains strong owing to healthy recapitalisation. On the macro front, upcoming RBI policy and Gujarat state election will be an influential factor for investors which is steering the market to consolidate.
Nifty PSU Bank leading sectoral gainer ahead of RBI policy
Sensex heatmap at close
Markets at close
The S&P BSE Sensex ended at 32,802, down 67 points, while the broader Nifty50 settled at 10,118, down 9 points.
Shares of sugar companies have moved higher by up to 10% on the BSE on back of heavy volumes.Dwarikesh Sugar Industries, Triveni Engineering Industries, Ugar Sugar Mills, Uttam Sugar Mills, Dhampur Sugar, Simbhaoli Sugar and Balrampur Chini Mills were up more than 2%. On comparison, the S&P BSE Sensex was down 0.15% at 32,828 points at 03:09 PM. READ MORE
At 3:05 pm, the S&P BSE Sensex was trading at 32,814, down 55 points, while the broader Nifty50 was ruling at 10,119, down 8 points.
KEC International (KEC) has delivered a strong performance in 2QFY18. Despite higher commodity prices, KEC’s overall EBITDA margin expanded by 139bps YoY to 10.1% in 2QFY18 owing to absence of low-margin legacy orders in Water, Railways and Power Systems segments and execution of recently bagged better-margin orders by SAE Towers. Its net profit rising by 42% YoY to Rs894mn led by higher margin and lower interest cost.
With fresh orders worth Rs 57.5 billion, KEC’s order book stood at Rs 140 billion as of FY18 YTD (+14% YoY). We expect the strong order intake traction to continue, going forward led by higher T&D spending by SEBs, improved Railways ordering and recovery in overseas markets i.e. Saudi, SAARC & Africa.
We expect KEC’s earnings to witness 25.2% CAGR over FY16-19E on strong order book, improving margin profile and healthy outlook in T&D and other emerging business segments.
We continue to remain positive on the fundamentals of KEC with a Target Price of Rs 372.
Level the playing field
The Bombay Stock Exchange’s (BSE) suggestion that benefits related to the long-term capital gains (LTCG) tax on equity investments should be removed to curb market manipulation via the exchange platform deserves serious thought.
Though this demand has emerged from several quarters in the run-up to some earlier Budgets as well, the government has been ignoring it on the grounds that a differential tax treatment is required in order to encourage long-term investments instead of short-term trading in the capital market. READ MORE
Top five Nifty losers in afternoon trade
Ramky Infrastructure hit a new high of Rs 258, up 8% on the BSE in otherwise weak market on back of heavy volumes. The trading volumes on the counter almost doubled with a combined 1.36 million shares changed hands on the BSE and NSE till 01:19 PM.
Since November 8, post July-September (Q2FY18) quarter results, the stock of construction & engineering company surged 50% from Rs 172, after it reported net profit of Rs 3.3 crore against a loss of Rs 41.5 crore in the same quarter previous year. Operational income of the company grew 46% to Rs 324 crore from Rs 222 crore in the corresponding quarter of previous fiscal. READ MORE
Force Motors hits 52-week low
Force Motors hits 52-week low of Rs 3,164, down 3% on the BSE in intra-day trade, after the company recorded sales growth of 4% at 1,687 units in the month of November 2017. The car & utilities vehicles maker had sold 1,622 units in November 2016. It had recorded total sales of 2,539 units in October 2017. READ MORE
At 1:30 pm, the S&P BSE Sensex was trading at 32,719, down 150 points, while the broader Nifty50 was ruling at 10,084, down 43 points.
RBI policy: Current inflationary environment does not allow for a rate cut
RBI had maintained status quo on policy rates in its last review. It cited risks due to higher inflation, largely emanating from rising crude oil prices, uneven distribution of monsoon and amplified global geopolitical uncertainty. Other factors included increased volatility in financial markets as the US Fed unwound its balance sheet and domestic fiscal challenges.
Not much has changed since.
The upcoming RBI Monetary Policy Committee (MPC) bi-monthly meeting on 6th December will assess some of these factors before settling on new rates and direction. But any real change can safely be ruled out given the unchanged background. However, it’s not totally an open and shut case and there are some points worth considering. READ MORE
Interview of the day
Benign liquidity situation to support markets: Kalpen Parekh
A benign liquidity situation along with a pick-up in earnings, both globally and locally, will continue to support markets despite above-average valuations, says Kalpen Parekh, president, DSP BlackRock Mutual Fund.
Parekh says that investors should temper their return expectations as interest rates have fallen over the past three years and valuations have stretched considerably. Read full interview here
Mastercard to repurchase up to $4 billion of its shares
Payment processor Mastercard Inc said on Monday it would buy back up to $4 billion of its class A shares.
The new share repurchase program will be effective at the completion of the company's previously announced $4 billion share repurchase program, Mastercard said.
Under the previously announced buyback, the company has about $1.5 billion remaining, the statement added.
The company said it also increased its quarterly cash dividend to 25 cents per share, a 14 percent increase over the previous dividend of 22 cents a share.
Balaji Amines advances after project gets mega project status from govt
Balaji Amines rose 1.34% to Rs 641.05 at 9:25 IST on BSE after the company said that the Department of Industries, Energy and Labour, Mantralya, Mumbai has conferred mega project status to its expansion project.
The announcement was made after market hours yesterday, 4 December 2017. The stock had jumped 6.27% to Rs 632.60 yesterday, 4 December 2017, ahead of the announcement. READ MORE
Services PMI down in Nov as GST subdues domestic, foreign demand
Activity in India's dominant services industry shrank in November as rising prices, driven up in part by the new national sales tax, took a toll on both foreign and domestic demand, a business survey showed on Tuesday.
November's Nikkei/IHS Markit Services Purchasing Managers' Index fell to 48.5 - its lowest since August - from 51.7 in October, well below the 50 mark that separates expansion from contraction.
After initial confusion among firms over the pricing of their products, firms are now better adjusted to the Goods and Services Tax (GST) and are gradually passing higher input costs to end-consumers. READ MORE
RBI builds $31-bn forwards position as dollar tide rises
The Reserve Bank of India (RBI) has built up a $31-billion position in rupee-dollar forwards as a continuous foreign fund inflow has necessitated active intervention by the central bank in the spot market.
Forwards contracts are designed to buy foreign currencies at pre-agreed prices. A buyer has to pay a fee, the forward premium, for the right to buy at that price.
Economists and currency dealers said the RBI action could also be a form of insurance against an outflow of dollars as central banks around the world had begun normalising their easy money policies. In August and September, the markets witnessed outflows from the equity markets, highlighting the need to remain cautious on funds flow. READ MORE
Shalby IPO kicks off today; should you subscribe?
Shalby, an operator of multi-specialty hospitals chain kicked off its initial public offering (IPO) on Tuesday in a price band of Rs 245-248 per share to raise Rs 504 crore. The issue will close on Thursday.
The offer comprises a fresh issue of equity shares aggregating up to Rs 480 crore and an offer for sale of up to 10,00,000 equity shares by the promoter Vikram Shah Burman, which at the upper end of the price band will fetch Rs 24.8 crore.
Click here to find what brokerages recommend on the issue
Top Sectoral Loser: Nifty Metal
Shree Pushkar gains on capacity expansion
Shree Pushkar Chemicals & Fertilisers was up 2.84% to Rs 278.90 on BSE after the company said an additional dye capacity of 3,000 MTA has been added to its plant.
Only sectoral index in green: Nifty IT
Avoid timing the market with lump-sum investments
IDFC Mutual Fund is the latest fund house to join the ranks of those which have restricted heavy lump-sum investments in their funds. It has limited lump-sum investment in IDFC Focused Equity Fund to Rs 2 lakh a day.
Similar restrictions have been imposed in the recent past in other funds: DSP BlackRock Micro Cap, Edelweiss Tax Advantage, L&T Emerging Businesses, and SBI Small and Midcap Fund. Investors should heed the message in these measures being taken by fund houses and avoid lump-sum investments at a time when valuations are high. READ MORE
Ruias want to pay up, bid for Essar Steel
The Essar Group is planning to pay its dues to lenders so that it can take part in the bidding process for its steel plant in Hazira, Gujarat. Tata Steel, ArcelorMittal and others are reportedly keen to acquire it.
The group has sought clarification from lenders on the overdue interest so that it can pay it and submit its bid by December-end, said a lender. Essar Steel is among the 12 companies that were sent to the National Company Law Tribunal (NCLT) by the RBI for resolution under the Insolvency and Bankruptcy Code (IBC). READ MORE
NSE may refile IPO papers after getting clarity on algo-trading case
Leading bourse National Stock Exchange (NSE) may have to file fresh draft papers with markets regulator Sebi to float an initial public offering after getting clarity on the co-location matter.
However, the current preliminary IPO papers, which were filed with Sebi in December last year, will remain open, the exchange said.
The IPO is expected to be one of the biggest in recent times, with an estimated size of over Rs 10,000 crore, merchant banking sources said. READ MORE
Bitcoin bigger than Buffett, Boeing, New Zealand's economy
Bitcoin’s extraordinary price surge means its market capitalisation now exceeds the annual output of whole economies, and the estimated worth of some of the world’s top billionaires.
With debate over its bubble status still raging, the flagship cryptocurrency continued its march higher on Monday, solidifying above $11,000 and bringing its climb this year to more than 1,000 per cent. With market tracker Coinmarketcap.com putting the total value of all bitcoins in circulation at $190 billion, it’s come a long way from August, when one coin could buy you a hefty supply of avocados.
Click here for five things that have been eclipsed by bitcoin in terms of market capitalisation:
Top Sensex gainers and losers
In broader markets, the BSE Midcap index was a little changed while the BSE Smallcap index was down 0.2%
Benchmark indices opened on a negative note after Fitch cut India's FY18 GDP forecast. At 9:17 am, the S&P BSE Sensex was trading at 32,787, down 82 points while the broader Nifty50 index was ruling at 10,106, down 21 points
Current: 25,075 (fut: 25,242)
Stop-long positions at 25,125. Stop-short positions at 25,375. Big moves could go till 25,550, 24,900. The trend seems negative.
Current price: Rs 266
Target price: Rs 261
Keep a stop at 269 and go short. Add to the position between 262-263. Book profit at 261.
Current price: Rs 1,269
Target price: Rs 1,290
Keep a stop at 1258 and go long. Add to the position between 1282-1286. Book profit at 1290.
Before MPC meet, PM Modi advisor says RBI should cut rates
The Indian central bank’s tendency to overestimate inflation has prevented it from cutting interest rates further and cost the economy, according to one of Prime Minister Narendra Modi’s advisors.
“Their view of the economy doesn’t seem to be correct,” and by keeping rates high, they “have imposed a high output sacrifice,” said Ashima Goyal (pictured), a member of Prime Minister’s Economic Advisory Council. “They believe inflation will rise, but you know their predictions of inflation have always been overestimated.”
The six-member monetary policy committee’s (MPC’s) two-day meeting to decide on policy rates will start on Tuesday. READ MORE
Nifty after correcting by 395 points from a high of 10,490, for now has held on to the support of previous low of 10,098 & closed above 10,100. The support for the day is seen at 10,080 while resistance is seen at 10,170.
Shalby raises Rs 150 crore via share sale to anchor investors
Hospital operator Shalby Ltd has allotted six million shares to its anchor investors in a bid to raise funds to the tune of Rs 150 crore. The company’s initial public offer (IPO) will be opening on Tuesday.
Among the anchor investors are Goldman Sachs, Citigroup and Axis Mutual Fund.
The company has set a price band of Rs 245 to Rs 248 per equity share. Through the IPO, Shalby is looking to raise Rs 480 crore by issuing fresh shares. READ MORE
RBI has room to cut policy rate: Fitch
Ahead of the Reserve Bank of India (RBI)’s monetary review on Wednesday, rating agency Fitch on Monday said the central bank had headroom to "keep the policy rate low" to perk up the economy, which grew "weaker than expected" in the second quarter.
There is widespread expectation that the RBI would maintain status quo on the policy rate. Fitch, which assigns its lowest investment grade to India, recalled its earlier scaling down of India's economic growth estimate to 6.7% for the current financial year from 6.9%. READ MORE
Fitch cuts India growth forecast for FY18 to 6.7% from 6.9% earlier
Days after India's economy showed signs of recovery, Fitch Ratings today cut the country's GDP growth forecast for the current fiscal to 6.7% from the earlier projected 6.9%, saying the rebound was weaker than expected.
It also cut GDP growth forecast for 2018-19 fiscal year to 7.3% from 7.4% predicted in its September Global Economic Outlook (GEO).
Fitch, however, expects GDP growth to pick up in the next two years on back of gradual implementation of the structural reform agenda and higher real disposable income. READ MORE
The Nifty50 futures on the Singapore Stock Exchange were trading 32.5 points lower at 10128 indicating a negative opening for the domestic market.
Asian shares subdued
Asian shares were subdued on Tuesday as investors’ rotation out of technology shares took the toll on some of the region’s tech heavyweights although hopes of a major tax cut in the United States underpinned risk sentiment.
MSCI’s broadest index of Asia-Pacific shares outside Japan were capped by the fall in the region’s technology shares, with Samsung Electronics losing 1.5%.
Japan's Nikkei fell 0.4%, with semiconductor-related shares such as Tokyo Electron and Shin-etsu Chemical, leading the losses.
Dow hits record high but US markets end mixed
The Dow Jones Industrial Average reached a record high on Monday, with banks and retailers surging as investors realigned their portfolios in hopes of benefiting from expected corporate tax cuts.
The Dow Jones Industrial Average rose 0.24% to end at 24,290.05 points, while the S&P 500 lost 0.11% to 2,639.44. The Nasdaq Composite dropped 72.22 points to end at 6,775.37.
Welcome to Markets's live blog. Catch all live market action here