Key benchmark indices advanced for the fourth straight session on Friday. The indices sharply pared gains and ended near the flat line as profit booking emerged at record high levels. PSU banks and metal stocks were in demand.
The barometer index, the BSE Sensex, rose 7.62 points or 0.02% to 41,681.54, its record closing high. The index hit a record high of 41,809.96 in intraday today.
The Nifty 50 index gained 12.10 points or 0.10% to 12,271.80, its record closing high. The index hit a record high of 12,293.90 in intraday today.
In the broader market, the S&P BSE Mid-Cap index rose 0.15% while the S&P BSE Small-Cap index fell 0.03%.
The market breadth was positive. On BSE, 1276 shares advanced while 1237 shares declined. A total of 171 shares were unchanged.
In the past four sessions, the Sensex and the Nifty rose 1.81% each.
Economy:
Fitch Ratings has affirmed India's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB-' with a stable outlook. Fitch expects growth to slow to 4.6% in the financial year ending March 2020 (FY20), from 6.8% in FY19, which is still higher than the 'BBB' median of 2.8%.
The ratings agency expects growth to gradually recover to 5.6% in FY21 and 6.5% in FY22 with support from easing monetary and fiscal policy and structural measures that may also support growth over the medium term.
"Our outlook on India's GDP growth is still solid against that of peers, even though growth has decelerated significantly over the past few quarters, due mainly to domestic factors, in particular a squeeze in credit availability from non-banking financial companies (NBFC) and deterioration in business and consumer confidence," Fitch said.
Meanwhile, the Reserve Bank of India (RBI) on Thursday (19 December) said it will simultaneously buy and sale government securities worth Rs 10,000 crore each on 23 December under its open market operations (OMO), a move aimed at managing the yields. RBI said it will buy Rs 10,000 crore of 6.45% government bonds maturing in 2029 and simultaneously sell Rs 10,000 crore of short-term bonds maturing in 2020.
Further, the minutes of the last meeting of RBI's Monetary Policy Committee (MPC) were released on Thursday (19 December). RBI's MPC at its last meeting on 5 December 2019 decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.15%. Consequently, the reverse repo rate under the LAF remained unchanged at 4.90%, and the marginal standing facility (MSF) rate and the bank rate at 5.40%.
According to the minutes, the RBI remains concerned about the slower pace of rate cut transmission in the economy while the sudden spurt in food inflation, though seasonal, seems to have put policy makers at the central bank on alert.
RBI Governor Shaktikanta Das said that the impact of recent counter-cyclical measures taken by the government was starting to play out, while stressing that it was imperative that monetary and fiscal policies should work in close coordination. The MPC, which decides on the benchmark policy rate of RBI, comprises six members, three from the central bank and three others appointed by the central government.
Numbers to Track:
The yield on 10-year benchmark federal paper fell to 6.593% as compared with 6.746% in the previous trading session.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 71.115, compared with its close of 71.03 during the previous trading session.
In the commodities market, Brent crude for February 2020 settlement was down 35 cent at $66.31 a barrel. The contract rose 37 cents or 0.55% to settle at $66.54 a barrel during the previous trading session.
Foreign Markets:
European shares continued to trade higher while Asian markets ended mixed on Friday. China on Friday left its new lending benchmark - the loan prime rate - unchanged, as expected, after it kept rates of medium-term loans steady earlier this month.
In US, all three benchmark stock indexes scored record highs again on Thursday, unfazed by President Donald Trump's impeachment, while finding support from the US-China trade deal, the passage of the United States-Mexico-Canada Agreement (USMCA) trade deal to replace North American Free Trade Agreement (NAFTA) by the House, and improving economic data.
Compared to NAFTA, the new treaty aims to help US farmers, ranchers, manufacturers, workers and consumers by opening new markets to American goods and reducing the cost of household staples such as drugs and groceries.
On economic front, new applications for US jobless benefits fell during the week ended 14 December 2019, dipping 18,000 to a seasonally adjusted 234,000 after surging to 252,000, a two-year high, the week before.
Back in Europe, Financial Conduct Authority (FCA) Chief Executive Andrew Bailey has been named the new governor of the Bank of England, replacing the departing Mark Carney, media reports said.
Buzzing Indian Indices:
Shares of public sector banks rose after bond yields tumbled following RBI's OMO announcement. The Nifty PSU Bank index rose 2.28% to 2,570.90.
Corporation Bank (up 4.95%), Union Bank of India (up 4.04%), Canara Bank (up 3.12%), State Bank of India (up 2.96%), Bank of Baroda (up 2.18%), Punjab National Bank (up 1.57%), UCO Bank (up 1.23%) and IDBI Bank (up 0.13%) advanced.
PSU banks have a high exposure in government bonds. Falling bond yields could boost their treasury gains.
Among private sector banks, Yes Bank (up 2.91%), ICICI Bank (up 1.08%), Federal Bank (up 0.81%), HDFC Bank (up 0.60%) and RBL Bank (up 0.22%) rose.
The Nifty Metal index rose 0.61% to 2,707.50. The index has risen 4.49% in four sessions.
Tata Steel (up 3.23%), Jindal Steel & Power (up 2.85%), SAIL (up 1.22%), Hindustan Zinc (up 1.16%) and NALCO (up 0.12%) rose.
Vedanta (down 3.45%) and Hindalco Industries (down 0.32%), declined.
Stocks in Spotlight:
Reliance Industries (RIL) in an exchange filing announced that the company is transferring the Panna-Mukta fields back to ONGC after operating it for 25 years. The Panna-Mukta and Tapti (PMT) was a joint venture between ONGC, RIL and BG Exploration & Production India (BGEPIL), each holding 40%, 30% and 30% participating interest respectively.
The Production Sharing Contracts (PSC) for the Panna-Mukta and Tapti fields will expire on 21 December 2019 and thus RIL will hand over oil and gas fields back to the Government of India's nominee i.e. ONGC.
Shares of RIL fell 0.36% to Rs 1599.40 while ONGC fell 0.40% to Rs 125.10.
Titan Company rose 3.64% to Rs 1201.95. The company said Titan Global Retail LLC, Dubai, has been incorporated as a subsidiary company of Titan Holdings International FZCO, Dubai, which in turn is a wholly owned subsidiary of the company. Titan Global will be mainly engaged in carrying out business activities and retail trade for carrying out business activities, in the industry in which Titan Company operates.
Mahindra & Mahindra slipped 0.79% to Rs 530.80. The company's board approved transition of Anand Mahindra's role to non-executive chairman and re-designated Pawan Kumar Goenka as managing director and chief executive officer with effect from 1 April 2020.
Lemon Tree Hotels advanced 3.74% to Rs 62.40. The company informed that it has opened its first international hotel in Dubai under the company's brand Lemon Tree Hotel. The hotel, owned by Al Waleed Real Estate LLC, is located on Al Wasl Road, less than a kilometre from Sheikh Zayed Road and Jumeirah Open Beach, and is the first branded midscale hotel in the area. The hotel features 114 well-appointed rooms, complemented by a multi-cuisine restaurant.
Dishman Carbogen Amcis slumped 8.67% to Rs 106.35 after the company said search inquires were conducted by IT Authorities at the company's premises. In a exchange filing made post trading hours yesterday, company said that the officials of the Income-Tax Department have visited the company's head offices and manufacturing sites in connection with search under Section 142 of the Income-Tax Act on 19 December 2019 and search enquiry is continuing.
Ratnamani Metals & Tubes rose 0.50% to Rs 1010.15. The company announced that it has received two major orders in Carbon Steel division. Domestic order of Rs 124 crore for supply of coated CS pipes for an oil & gas pipeline project to be completed between April to September, 2020. Export order of $14.30 Million (equivalent to approx. Rs 100 crore) for supply of bare CS Pipes to be completed between May to June, 2020.
Cadila Healthcare rose 1.78% to Rs 266.20. The company in an exchange filing during market hours said that the US drug regulator inspected the company's topical manufacturing facility located in Ahmedabad from 16 to 20 December 2019. The inspection ended with no Form 483 observations.
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