Domestic shares corrected on Friday, as flare up in geopolitical tensions between the US and Iran compelled investors to lock recent profits. Brent crude prices spurted amid fears of possible retaliation from Iran. Strong dollar boosted shares of IT and pharma firms in an otherwise weak market.
The barometer index, the BSE Sensex, rose 162.03 points or 0.39% to 41,464.61. The Nifty 50 index rose 55.55 points or 0.45% to 12,226.65.
In the broader market, the S&P BSE Mid-Cap index slipped 0.45% while the BSE Small-Cap index gained 0.03%.
The market breadth turned negative in late trade. On BSE, 1251 shares advanced while 1273 shares declined. A total of 190 shares were unchanged.
Economy:
The Reserve Bank of India (RBI) on Thursday announced its third round of simultaneous purchase and sale of government securities through special open market operations (OMOs) for Rs 10,000 crore each on 6 January 2020.
The RBI said it will purchase two new long-term government securities, maturing in 2024 and 2026, in addition to the 10-year bond maturing in 2029. The central bank will sell short-term securities including 6.65% maturing on 9 April 2020, 7.8% maturing on 3 May 2020, and 8.27% maturing on 9 June 2020, besides the 8.12% maturing on 10 December 2020.
Numbers to Track:
The yield on 10-year benchmark federal paper rose to 6.516% compared with 6.502% in the previous trading session.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was trading at 71.78, compared with its previous closing low of 71.3825.
In the commodities market, Brent crude for March 2020 settlement was up $2.97 a barrel, or 4.48% at $69.22 per barrel.
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). Higher crude prices also leads to a spike in domestic inflation.
Foreign Markets:
Shares in Europe and Asia edged lower after Iranian Major-General Qassim Soleimani, head of Tehran's elite Quds Force, was killed early on Friday by a U.S. airstrike on his convoy at Baghdad airport. The United States urged its U.S. citizens to leave Iraq "immediately" after Iran vowed harsh retaliation in the wake of the targeted killing.
US stock market closed at record highs on the first trading day of 2020 after a move by China's central bank aimed at stimulating the country's economy.
On economic front, the number of people applying for first-time jobless benefits in the week ended 28 December slipped to 222,000. The US IHS Markit manufacturing purchasing managers final index for December slipped to 52.4 below the 52.6 reading notched in November
Buzzing Indian Sectors:
The Nifty IT index rose 1.44% to 15,936.60, outperforming other sectoral indices on the NSE.
TCS (up 1.99%), HCL Technologies (up 1.66%), Tech Mahindra (up 1.17%), Wipro (up 1.03%) and Mindtree (up 0.31%) advanced.
IT major Infosys rose 1.55%. The company will declare Q3 results on 10 January 2019.
The Nifty Pharma index rose 0.72% to 8,111.95. Sun Pharmaceutical Industries (up 2.08%), Wockhardt (up 1.87%), Cadila Healthcare (up 1.35%), Dr. Reddy's Laboratories (up 0.87%), Alkem Laboratories (up 0.75%), Divi's Laboratories (up 0.63%), Strides Pharma (up 0.52%) and Lupin (up 0.2%) advanced.
Rupee depreciation could boost margins of export-oriented Indian IT and pharmaceutical companies, which earn a large part of their revenues in dollars.
Shares of public sector oil marketing companies (PSU OMCs) tumbled after oil prices surged.
Hindustan Petroleum Corporation (down 2.17%), Bharat Petroleum Corporation (down 1.09%) and Indian Oil Corporation (down 0.04%) tumbled.
Higher crude oil prices could increase under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at controlled prices. The government has already freed pricing of petrol and diesel.
Stocks in Spotlight:
Interglobe Aviation rose 2.10% to Rs 1360.95 after the company said a meeting of shareholders will be convened on 29 January 2020 to seek approval for certain changes in the company's articles of association.
The extraordinary general meeting (EGM) is being convened following request by co-promoter Rakesh Gangwal and related entities who together hold 36.64% stake in the company.
HDFC fell 0.51%. The Corporation sold individual loans worth Rs 21,066 crore in calendar year 2019 and assigned home loans amounting to Rs 4,258 crore to HDFC Bank in the December quarter. It had assigned loans worth Rs 6,959 crore to the bank in the same period last year. It also pocketed Rs 9,020 crore on equity sale of Bandhan Bank after it was allotted shares of the lender due to its merger with Gruh Finance. HDFC was allotted 9.89% in Bandhan Bank against the 38% stake it held in Gruh.
Hero MotoCorp rose 0.18%. The automaker said it sold 424,845 units of two-wheelers in December 2019, as compared to 453,985 units in the corresponding month of the previous year (December 2018), a decline of 6.42%.
TVS Motor Company fell 1.55%. The scrip extended its losing streak to second session post dismal December sales. The company's total sales tumbled 14.67% YoY to 2,31,571 units in December 2019. Domestic sales slumped 25.09% to 1,57,244 units in December 2019 from 2,09,906 units in December 2018.
ONGC rose 0.39%. The state-run oil major on Thursday bagged all the seven oil and gas blocks offered in the latest bid round. These seven blocks are adding exploration acreage of 18,510 square kilometres spread over three sedimentary basins of India and have a resource potential of approximately 33 billion barrels of oil and oil equivalent gas.
IIFL Securities was locked in an upper circuit of 5% at Rs 47.15 after a well-known investor Rakesh Jhunjhunwala's Rare Enterprises bought 27.85 lakh shares, or 0.87% equity, of IIFL Securities through a bulk deal on BSE on Thursday, 2 January 2020, at an average price of Rs 42.83.
Info Edge (India) rose 1.31%. The company has entered into an agreement to sell its stake in Applect Learning Systems (Meritnation) to Aakash Education Services. Taking into consideration the independent valuation report, the sale value of the investment is determined as about Rs 50 crore.
Cords Cable Industries surged 8.30%. The company received approval from a Japanese engineering consultancy & contracting major for future supplies. This approval enables the company to participate in future bids for supplying qualified products to the said engineering consultancy & contracting major.
RITES advanced 3.08%. The company said it has secured a major work of project Management Consultancy from the Government of Bangladesh amounting to $ 14.01 Million (Rs 99.94 crore) in relation to 4 laning of National Highway in Bangladesh. RITES is a lead partner in the JV arrangement and will receive $10.88 million (Rs 77.57 crore) out of the total consultancy fee of $14.01 million (Rs 99.94 crore). Amount is inclusive of taxes.
State-owned telecom service provider MTNL was locked in an upper circuit of 5% at Rs 9.9 after the media reported that MTNL has started the process to monetize assets worth Rs 23,000 crore. The move aims to turn the debt ridden company into a profitable company.
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