Key domestic equity market slumped on Monday, as tensions in the Middle East dragged global shares lower. Investors fled riskier assets like equities in favor of safer alternatives like gold and bonds. Meanwhile, Brent crude oil climbed above $70 a barrel, stoking fears of inflationary pressures. The Nifty slipped below its 50 days simple moving average (DMA) placed at 12,013.46, reporting its worst fall since 3 September 2019.
The barometer BSE S&P Sensex tanked 787.98 points or 1.90% to 40,676.63, as per the provisional closing data. The Nifty 50 index slumped 233.60 points or 1.91% to 11,993.05, as per the provisional closing data.
The broader market tumbled. The S&P BSE Mid-Cap index fell 2.31% while the BSE Small-Cap index lost 1.96%.
On BSE, 608 shares advanced while 1939 shares declined as bears took over the control of D-Street. A total of 182 shares were unchanged. In Nifty 50 index, 4 stocks advanced and 46 stocks declined while 2 shares remained unchanged.
Economy:
The IHS Markit India Services PMI rose to a five month high of 53.3 in December 2019 from 52.7 a month earlier. The Composite PMI Output Index was up to 53.7 in December from 52.7 in November, reflecting stronger rates of expansion in both the manufacturing and service sectors.
Buzzing Index:
The Nifty PSU Bank index slumped 4.31% to 2,415.40 amid profit booking after recent rally triggered by the central bank's operation twist.
Canara Bank (down 6.38%), Punjab National Bank (down 5.38%), Syndicate Bank (down 5.37%), Bank of Baroda (down 4.96%), State Bank of India (down 4.19%), IDBI Bank (down 4.17%), Corporation Bank (down 3.59%), Bank of India (down 3.47%), Union Bank of India (down 3.11%), Indian Bank (down 2.82%), Andhra Bank (down 2.69%), Punjab & Sind Bank (down 2.65%), Bank of Maharashtra (down 2.64%), Allahabad Bank (down 2.12%), United Bank of India (down 2.02%), Central Bank of India (down 1.65%) and UCO Bank (down 0.3%) declined.
Indian Overseas Bank surged 4.23% to Rs 11.58. The state-run lender said it has received capital infusion of Rs 4,360 crore from the government. IOB said it has received the amount as contribution of the government in preferential allotment of equity shares during the financial year 2019-20 as government's investment.
Shares of public sector banks were in demand recently after the Reserve Bank of India on 19 December 2019 decided to conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for Rs 10,000 crore each on 23 December 2019. Since then, the country's central bank has undertaken two more tranches of the special OMOs, taking the total count to three.
This simultaneously buying long-end bonds and selling short-end bonds leads to a flattening of the yield curve. The falling yields and rising bond prices are credit positive for state-run banks as mark-to-market (MTM) profit from the government bonds' increases in their investment portfolios.
Stocks in Spotlight:
Adani Ports and Special Economic Zone shed 0.69% at Rs 380.05. The company said it will acquire 75% stake of Krishnapatnam Port Company (KPCL) from the existing shareholders. The investment is in line with the company's strategy to increase its footprint in Andhra Pradesh. KPCL handled 54 MMT in FY2019. Acquisition value of KPCL is approximately Rs 13,500 crore. The purchase consideration will be funded through internal accruals.
Bajaj Finance fell 4.71% to Rs 3995. In its Q3 business update, the company said that customer franchise as of 31 December 2019 rose 23.93% and stood at approximately 40.4 MM as compared to 32.6 MM in the same period last year. The company acquired 2.5 MM new customers in December 2019. New loans booked rose 13.24% to 7.7 MM on YoY basis. The Assets under management (AUM) stood at approximately Rs 145,200 crore as of 31 December 2019 as compared to Rs 107,507 crore as of 31 December 2018, a rise of 35.06%.
Titan Company rose 1.80% to Rs 1160 after the company's jewellery division witnessed revenue growth of 11% in Q3 December 2019, meeting its revised expectations for the quarter. The retail growth was actually much better at 15%. While the industry witnessed reasonable growth in the festive season, the company has done better which is evident in the market share gains.
"The general economic slowdown in the economy leading to poor consumer sentiment and lower walk ins has been a concern for the last few quarters. The company experienced different consumer responses in each of its divisions. Retail sales in jewellery were better than expected at the beginning of the quarter, possibly due to a good wedding season and reasonable inelasticity of wedding jewellery, but growth in Watches and Eyewear were difficult to come by. Sales in all divisions in the second half of December was also impacted to some extent due to forced store closures due to the protests in the North East and in many other parts of the country", Titan Company said.
Force Motors jumped 8.21% to Rs 1184.90 after the company announced robust sales numbers for the month of December 2019. Total domestic sales rose by 30.01% to 2,517 units in December 2019 from 1,936 units in November 2019. The figure was also up by 52.55% YoY from 1,650 units in December 2018.
Tata Motors fell 3.06% to Rs 185.20. Jaguar Land Rover (JLR) total December U.S. sales reached 13,801 units, slightly down from December 2018. For the calendar year, Jaguar Land Rover achieved 125,787 units, up 3% compared to the previous record of 122,626 units in 2018 and establishing a new all-time U.S. sales record for the combined brands.
Bharat Forge, which manufactures class 8 trucks, lost 1.43% to Rs 479.60. Preliminary North America Class 8 net orders in December 2019 were 20,000 units, up 14% from November and down just 6.5% from year-ago December, as the industry transitions to much easier year-over-year comparisons.
Biocon fell 4.42% to Rs 287.75. The company informed that the Board of its subsidiary Biocon Biologics India has approved a primary equity investment by True North. As per the terms of the proposed agreement, True North will invest Rs 536.25 crore that will eventually translate to a 2.44% minority stake in the biosimilars business post all restructuring, including the filed merger of Biocon Research with Biocon Biologics.
ITI fell 3.48% to Rs 91.50, ahead of Q3 number scheduled for release today.
Foreign Markets:
Trading in the futures market indicated that the Dow Jones may slide 141.50 points at opening bell on Monday.
Shares in Europe and Asia fell across the board on Monday as geopolitical tensions flared up after a U.S. airstrike killed Iran's top military commander. The Iranian regime said Sunday that it would no longer abide by uranium enrichment limits established in the 2015 nuclear deal, which the U.S. unilaterally withdrew from in 2018.
On Sunday President Trump reportedly threatened to impose sanctions on Iraq, the second largest producer among the Organization of the Petroleum Exporting Countries (OPEC), if US troops were forced to withdraw from the country. Baghdad earlier called on American and other foreign troops to leave Iraq.
Trump also said that the United States will retaliate against Iran if Tehran were to strike back after the killing, the reports said.
Brent Crude oil prices jumped 3% on Monday, rising for second straight sessions, on concerns that potential conflict between the U.S. and Iran could disrupt energy production in the region.
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