Key benchmark indices ended with decent gains on Monday. Domestic shares tracked strength in other Asian stock markets which rose after progress on US-China trade talks. The indices, however, sharply pared gains in late trade amid profit selling at higher levels. Weakness in IT major Infosys put pressure on bourses.
The barometer index, the BSE Sensex, rose 87.39 points or 0.23% to 38,214.47. The Nifty 50 index rose 36.10 points or 0.32% to 11,341.15.
The market breadth was negative. On the BSE, 1230 shares rose and 1279 shares fell. A total of 225 shares remain unchanged.
The S&P BSE Small-Cap index rose 0.12%. The S&P BSE Mid-Cap index was up 0.44%.
The Nifty 50 index opened higher but reversed gains in early trade. Buying resumed in morning trade and pushed Nifty above 11,350 level. The 50-unit index faced a stiff resistance at 11,375 during mid-morning trade. The index remained range bound and traded sideways before a break out in afternoon trade. The Nifty 50 index briefly crossed its 100-day moving average in mid afternoon session. Profit booking in last hour of the day drag Nifty lower to settle below 11,350 mark.
On the macro front, the Wholesale Price Index (WPI)-based inflation, base year 2011-12, dipped further down to 39-months low of 0.3% in September 2019 from 1.1% in August 2019. The WPI based inflation has been moderating consistently for last five straight months from 3.2% in April 2019. The data was unveiled during trading hours today, 14 October 2019.
Lower WPI inflation data boosted hopes that the Reserve Bank of India (RBI) may further reduce key interest rates. RBI on 4 October reduced repo rate by 25 basis points (bps) to 5.15%. It was the fifth straight rate cut from the RBI, resulting in an overall decline of 135 bps or 1.35 percentage point in the key lending rate. The next meeting of the MPC is scheduled during 3-5 December 2019.
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RBI aims to achieve the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/-2%, while supporting growth. CPI inflation data for August 2019 will be unveiled later today.
India's industrial production (IIP) declined 1.1% in August 2019, while snapping consistent growth for last 25 straight months. Also, the pace of decline in industrial production was highest in August 2019 for 2011-12 base year data. As per the revised data for industrial production of July 2019, the growth is higher at 4.6% compared with 4.3% growth reported provisionally. The data was announced after market hours on Friday, 11 October 2019.
Meanwhile, the World Bank cut its economic growth forecast for India to 6% for the current fiscal from its April projection of 7.5%, citing a broad-based and severe cyclical slowdown. Growth is expected to gradually recover to 6.9% in 2020-21 and to 7.2% the following year, the bank said in its South Asian Economic Focus report released on Sunday. India's cyclical slowdown is severe, the bank noted.
Moody's Investors Service on Thursday, 10 October 2019, cut India's gross domestic product (GDP) growth forecast for 2019-20 to 5.8% from the earlier estimate of 6.2%. It attributed the deceleration to an investment-led slowdown that has broadened into consumption, driven by financial stress among rural households and weak job creation. It expects growth to pick up to 6.6% in FY21 and around 7% over the medium term.
Overseas, European stocks fell Monday as the UK and the European Union are still divided on customs arrangements as they look to hammer out a deal for Britain's departure before the 31 October deadline.
Asian shares edged higher on Monday as investor sentiment improved following last week's high-level trade negotiations between the United States and China. Markets in Japan were shut for a public holiday.
The US agreed to postpone an increase in tariffs from 25% to 30% on at least $250 billion of Chinese goods, which had been scheduled for Tuesday. However, customs data showed that China's import and export figures were worse than expected in September, with exports falling 3.2% on the year in US dollar terms, while imports declined 8.5%.
US Federal Reserve announced that it would buy $60 billion of Treasury bills every month at least into the second-quarter, starting from next week. The central bank also said it would conduct overnight repurchase agreements at least through January of next year in order to reduce pressures in funding markets.
On the equity front back home, FMCG major Hindustan Unilever (HUL) rose 0.50% to Rs 2014.70. On a consolidated basis, HUL's net profit jumped 23.42% to Rs 1,818 crore on a 5.14% increase in total income to Rs 10,223 crore in Q2 September 2019 over Q2 September 2018.
On a standalone basis, net profit soared 21.18% to Rs 1,848 crore on a 5.16% increase in total income to Rs 10,032 crore in Q2 September 2019 over Q2 September 2018.
HUL said domestic consumer growth was 7% with underlying volume growth was at 5%. Margin expansion was driven by improved mix, benign commodity price movement in HUL's large segments and its savings agenda.
Sanjiv Mehta, chairman and managing director commented: "Amidst a challenging market environment, HUL has delivered another quarter of resilient performance and sustained margin improvement. HUL's focus on consumer value, excellence in execution and market development continues to serve it well. The near-term outlook for demand especially in rural India remains challenging."
Shares of IRCTC made a strong debut on the bourses today, 14 October 2019. The stock settled at Rs 728.60 on BSE, premium of 127.69% over the initial public offer (IPO) price of Rs 320. The stock debuted at Rs 644, premium of 101.25% to the IPO price.
The IRCTC IPO, which was subscribed 112 times, was open for subscription between 30 September and 3 October 2019. The price band for IPO was Rs 315 to Rs 320 per share.
IT major, Infosys witnessed profit booking. The stock fell 3.68% to Rs 785.65 after surging 4.19% in Friday's session. On a consolidated basis, Infosys' net profit rose 4.55% to Rs 3,971 crore on a 3.78% increase in total revenue from operations to Rs 22,629 crore in Q2 September 2019 over Q1 June 2019. The company's operating margin stood at 21.7% in Q2 September 2019 as against 20.5% in Q1 June 2019. The firm increased lower end of FY 2020 revenue guidance. Revised guidance is 9%-10% in constant currency. It maintained FY 2020 operating margin guidance range of 21%-23%.
Telecom stocks advanced. Vodafone Idea (up 6.50%), Bharti Airtel (up 2.61%) advanced.
Reliance Industries, which owns Reliance Jio, rose 0.39%.
The department of telecommunications is in the process of reforming the spectrum pricing architecture and expects to see good competition among operators, Telecom Minister Ravi Shanker Prasad said on Monday. This will come as a relief to operators which have sought lower spectrum prices amid falling revenue of the sector. The auction will be India's first for 5G airwaves.
Sentiment in the telecom sector was also upbeat after Reliance Jio said last week that it will start charging for calls made to rival networks at 6 paise a minute.
Bank of Baroda (BoB) dropped 2.75%. on reports P.S. Jayakumar ended his term as the bank's managing director and chief executive on Saturday, 12 October 2019. According to reports, a replacement for the position will be announced in a day or two. Jayakumar received a one-year extension after his initial three-year term ended on 12 October 2018.
Meanwhile, BoB informed after market hours on Friday, 11 October 2019, that it has entered into binding transaction documents with BNP Paribas Asset Management Asia in relation to merger of Baroda Asset Management India with BNP Paribas Asset Management India and merger of BNP Paribas Trustee India with Baroda Trustee India.
Avenue Supermarts fell 0.82%. On a consolidated basis, Avenue Supermarts' net profit rose 47.49% to Rs 323 crore on 22.44% increase in total revenue to Rs 5991 crore in Q2 September 2019 over Q2 September 2018. The result was announced on Saturday, 12 October 2019. Consolidated EBITDA rose 33.25% to Rs 517 crore during the period under review. EBITDA margin improved to 8.6% in Q2 September 2019 from 7.9% in Q2 September 2018.
Adani Gas surged 9.41% after the company signed definitive agreements with French multinational oil integrated company, Total. The definitive agreement will deepen their existing partnership as the companies will work together in exploring synergies in gas distribution, fuel retail and LNG.
Total S.A. will purchase 37.4% shares in Adani Gas through a tender offer to public shareholders to acquire up to 25.2% shares, with an intention to acquire control of Adani Gas, subject to applicable regulations and purchase the residual shares from Adani Family. Accordingly, Total Holdings SAS will acquire up to 27.71 crore shares of Adani Gas, representing 25.2% of the voting share capital, at the price of Rs 149.63 per share, payable in cash. The partnership and equity support from the partners will help Adani Gas accelerate project executions in all its new geographical areas.
Pharma major, Cadila Healthcare rose 1.04%. Cadila Healthcare announced hat the US Food and Drug Administration (USFDA) inspected its Active Pharmaceutical Ingredients (API) manufacturing facility at Dabhasa in Gujarat, the group's largest API manufacturing site, from 7th to 11th October 2019. This was a cGMP (current good manufacturing practice) audit and a pre-approval inspection (PAI). At the end of the inspection, no observation (483) was issued. The announcement was made after trading hours on Friday, 11 October 2019.
Bajaj Consumer Care slipped 5.44%. On a consolidated basis, Bajaj Consumer Care's net profit rose 11.2% to Rs 56.03 crore on a 3.2% increase in net sales to Rs 214.22 crore in Q2 September 2019 over Q2 September 2018. The result was announced after market hours on Friday, 11 October 2019.
Birlasoft advanced 7.15% after the company signed $240 million multi‐year agreement to deliver IT‐as‐a‐ Service (ITaaS) to US-based Invacare. Birlasoft will build a new analytics platform and move the Invacare data centre to the cloud. The company will also implement a new product lifecycle management system and Invacare customers will benefit from a new ecommerce portal to access products, spares and supplies.
Sun Pharmaceutical Industries rose 2.15% to Rs 394.60 after the drug major announced the launch CEQUA solution for the treatment of dry eye disease in the U.S. CEQUA (cyclosporine ophthalmic solution) has been approved by USFDA and offers the highest concentration of cyclosporine for ophthalmic use. CEQUA is indicated to increase tear production in patients with keratoconjunctivitis sicca (dry eye), an inflammatory disease that afflicts more than 16 million people in the US.
Indiabulls Housing Finance tumbled 5.74% to Rs 197.90 after the Moody's Investors Service downgraded the corporate family rating (CFR) and the foreign-currency senior secured rating of the company to B2 from Ba2. In addition, Moody's has downgraded Indiabulls' foreign and local currency senior secured MTN program ratings to (P) B2 from (P) Ba2. The outlook on all ratings, where applicable, remains negative. The downgrade is driven by Indiabulls' ongoing challenging access to funding. Governance considerations were also a key driver of this rating action.
DLF surged 6.36% to Rs 154.80 after media reports suggested that the real estate developer clocked bookings of 376 residential apartments for Rs 700 crore in its project in New Gurugram. As per reports, the bookings were registered on the first day earlier this week, in the second phase of its premium Ultima project, which has a total of 504 apartments. Nearly three years back, the real estate firm had said that it will construct and complete its residential projects before selling, given the tepid sentiment among homebuyers to risk buying into under-construction projects, the reports added.
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