Key equity market barometers ended with modest losses on Tuesday as negative global cues and firm crude oil prices spooked investors. Profit selling was witnessed in IT and FMCG counters after the strong outperformance in the past couple of months.
The market opened lower and extended losses as the session progressed. The Nifty started above 11,950, but soon slipped below 11,900. After hitting an intraday low of 11,844.70, the index managed to close above 11,850.
The barometer index, the BSE Sensex, fell 247.55 points or 0.61% to close at 40,239.88. The Nifty 50 index fell 80.70 points or 0.68% to end at 11,856.80.
Broader market was under pressure. The S&P BSE Mid-Cap index fell 1.11% and the S&P BSE Small-Cap index fell 1.02%.
The market breadth was weak. On BSE, 811 shares advanced while 1723 shares declined. A total of 171 shares were unchanged.
Trading sentiment took a hit since past couple of days after the Reserve Bank of India (RBI) unexpectedly left interest rates unchanged on Thursday, 5 December 2019. The move was driven by the rising inflationary pressure and gradual improvement in monetary transmission.
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RBI revised GDP growth downwards to 5% for 2019-20 from 6.1% projected in its October policy. The CPI inflation projection has also been revised upwards to 4.7-5.1% for the second half of FY20 and 3.8-4% for the first half of FY21.
Key Numbers:
The yield on India's 10-year benchmark federal paper rose to 6.710% at 16:30 IST, compared with 6.659% at close in the previous trading session.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 70.90, compared with its close of 71.0450 during the previous trading session.
In the commodities market, Brent crude for February 2020 settlement rose 6 cents at $64.31 a barrel. The contract fell 14 cents or 0.22% to settle at $64.25 a barrel during the previous trading session.
Brent crude prices have risen over 5% in six sessions from its closing low of $60.82 on 3 December 2019.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and nine other allies agreed in Vienna last week to new production cuts of 500,000 barrels per day (bpd) in the first three months of 2020. This is in addition to their already existing cuts of 1.2 million bpd.
India is heavily dependent on oil imports for satisfying its domestic demand. A high crude price directly maps into a high trade deficit and in turn a high current account deficit (CAD). At the same time, being an important input for the aggregate economy, a crude price shock also leads to a spike in domestic inflation.
Buzzing Sectors:
The Nifty IT index fell 1.39% to 14,946.50. The index has fallen 2.74% in three sessions.
TCS (down 2.34%), Oracle Financial Services Software (down 1.85%), Mindtree (down 1.62%), HCL Technologies (down 1.21%), Persistent Systems (down 1.08%), Tech Mahindra (down 0.99%), Hexaware Technologies (down 0.95%), Wipro (down 0.94%), Mphasis (down 0.83%) and Infosys (down 0.37%) declined.
The Nifty FMCG index fell 1.04% to 30,059. The index has fallen 2.39% in three sessions.
Procter & Gamble Hygiene and Health care (down 2.59%), Bajaj Consumer Care (down 2.09%), Godrej Consumer Products (down 1.84%), Dabur India (down 1.71%), Tata Global Beverages (down 1.08%), Nestle India (down 0.99%), Colgate- Palmolive (India) (down 0.78%), Marico (down 0.25%) and Britannia Industries (down 0.17%) declined.
Index giant and cigarette major ITC fell 2.47% to Rs 235.40.
The Nifty Auto index fell 0.79% to 7,801.35 after industry body SIAM unveiled auto sales data for November 2019.
Mahindra & Mahindra (down 1.53%), TVS Motor Company (down 1.29%), Escorts (down 1.1%), Ashok Leyland (down 0.65%), Tata Motors (down 0.56%) and Maruti Suzuki India (down 0.29%) declined.
Hero MotoCorp fell 2.22% to Rs 2330.40. The company said it will make an upward revision in the ex-showroom prices of its motorcycles and scooters, effective 1 January 2020. The price increase across its range of two-wheelers will be upto Rs 2000, although the exact quantum of the increase will vary on the basis of the model and the specific market.
As per the Society of Indian Automobile Manufacturers (SIAM) data, domestic passenger vehicle sales fell by 0.84% to 2.63 lakh units in November 2019 from 2.66 lakh units in November 2018. Domestic car sales were down 10.83% to 1.60 lakh units as against 1.79 lakh units in November 2018.
Motorcycle sales last month declined 14.87% to 8.93 lakh units as against 10.49 lakh units a year earlier. Total two-wheeler sales in November declined 14.27% to 14.10 lakh units compared to 16.45 lakh units in the year-ago month.
Sales of commercial vehicles were down 14.98% to 61,907 units in November 2019 over November 2018. Vehicle sales across categories registered a decline of 12.05% to 17.92 lakh units from 20.38 lakh units in November 2018, it added.
Stocks in Spotlight:
State Bank of India (SBI) fell 1.04% to Rs 313.45. SBI said the Reserve Bank of India has found that it has under-reported bad loans by Rs 11,932 crore in the year ended 31 March 2019. For the year ended March 2019, the gross non-performing assets (NPAs) assessed by RBI was at Rs 1,84,682 crore compared with Rs 1,72,750 crore in gross NPA reported by the bank.
The bank had reported Rs 65,895 crore net NPAs during the year while the RBI assessed it at Rs 77,827 crore, leaving a gap of Rs 11,932 crore. The divergence in provisioning also increased by Rs 12,036 crore for the fiscal ended March 2019.
Yes Bank slumped 10.05% to Rs 50.55 ahead of its board meeting later today. The stock is banned from NSE Futures & Options segment for today after the security crossed the 95% market wide position limit.
According to media reports, Billionaire investor Rakesh Jhunjhunwala might shelve a plan to invest $25 million in Yes Bank due to uncertainty over the lender's capital raising plans. Jhunjhunwala is expected to release a formal letter regarding the investment on Tuesday, 10 December, reports stated.
HDFC slipped 0.69% to Rs 2294.70. The corporation said it is proposing to acquire 1,14,70,000 shares representing 9.12% of the equity share capital of its subsidiary HDFC Credila Financial Services from its other promoters for amount not exceeding Rs 395 crore. Post acquisition, HDFC Credila Financial Services will become wholly owned subsidiary of HDFC.
HDFC Asset Management Company (HDFC AMC) declined 3.14% to Rs 2890.90, sliding for fifth consecutive session. The stock has tumbled 16% in five trading sessions from its previous closing high of Rs 3441.45 on 3 December 2019 to its current market price of Rs 2942.95.
HDFC AMC's promoter, Standard Life Investments, concluded its offer for sale (OFS) last week. It sold 3.10% stake via OFS. The floor price for the sale was set at Rs 3,170 per equity share.
PC Jeweller slumped 8.08% to Rs 22.75. The company said CRISIL has downgraded its long term and short terms ratings to the bank loan facilities of the company to CRISIL D. The downgrade in the rating factors in the instances of devolvement of Letter of Credits (LC) and overutilization in working capital limits for more than 30 days.
Foreign Markets:
Shares in Europe and Asia edged lower on Tuesday as investors refrained from making major bets before 15 December, when the next round of US tariffs on Chinese imports is due to take effect.
US stocks ended lower on Monday following economic reports that pointed to weakness in China's economy. Investors also kept a close eye on trade negotiations ahead of Sunday's tariff deadline for 15% import duties on $156 billion of annual consumer imports.
A Chinese Commerce Ministry official reportedly said on Monday that Beijing hoped for a deal with Washington as soon as possible before the deadline, while U.S. Agriculture Secretary Sonny Perdue said that U.S. President Donald Trump wants to see 'movement' from China to avoid implementing the tariffs.
Trade tensions have hurt the world's second-largest economy, as China's exports unexpectedly dropped 1.1% in November from a year earlier, while shipments to the US fell 23%.
Chinese consumer inflation jumped in November, according to data released by the country's National Bureau of Statistics on Tuesday. The Consumer Price Index for November jumped 4.5% year-on-year, as food prices skyrocketed 19.1% amid an outbreak of African swine fever.
On the other hand, producer prices in China declined in the same month, with the Producer Price Index (PPI) for November falling 1.4% year-on-year.
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