Banking, auto and metal sector stocks and index heavyweights HDFC and ITC led losses for key benchmark indices on the first trading session of the week. The barometer index, the S&P BSE Sensex, lost 385.10 points or 1.47% to settle at 25,765.14. The losses for the Nifty 50 index were higher than the Sensex's decline in percentage terms. The Nifty fell 145 points or 1.8% to settle at 7,929.10. The Sensex settled below the psychological 26,000 level and the Nifty closed below the 8,000 level.
Realty stocks extended recent steep losses on worries of slowing demand post government's move to demonetize higher denomination notes in crackdown on black money, as this sector is known to have a high volume of cash transactions, being the preferred route for stowing black money.
The recent selling by the foreign portfolio investors (FPIs) of Indian stocks weighed on sentiment. FPIs sold shares worth a net Rs 926.32 crore on Friday, 18 November 2016, as per provisional data released by the stock exchanges. FPIs were net sellers for the seventh straight session. Likely short term negative impact on the economy of recent demonetization of higher denomination notes by the Indian government and worries that the recently elected US president Donald Trump's policies stance - from protectionism and fiscal expansion - will boost inflation and lead the Federal Reserve to raise interest rates more than expected continued to weigh on sentiment. Investors fear that the higher interest rates in the US will spark capital outflows from the emerging equity markets.
In overseas stock markets, European and Asian stocks witnessed mixed trend. US stock markets finished lower on Friday, 18 November 2016, but higher for the week as Wall Street heads into a holiday-shortened week when the focus will be on a slew of economic data and fresh scrutiny of a suddenly surging US dollar and rising interest rates. A recent rally sparked by bullishness about President-elect Donald Trump's potential pro-growth fiscal policies helped pushed stocks back toward record levels. Friday's trading was subdued as investors pulled back and focused on remarks made on the previous day by Federal Reserve Chairwoman Janet Yellen that pointed to a hike in interest rates next month.
The Sensex lost 385.10 points or 1.47% to settle at 25,765.14, its lowest closing level since 24 May 2016. The index rose 120.04 points or 0.45% at the day's high of 26,270.28. The index lost 432.31 points or 1.65% at the day's low of 25,717.93.
The Nifty fell 145 points or 1.8% to settle at 7,929.10, its lowest closing level since 24 May 2016. The index rose 28.35 points or 0.35% at the day's high of 8,102.45. The index lost 157.70 points or 1.95% at the day's low of 7,916.40.
The BSE Mid-Cap index lost 2.8%. The BSE Small-Cap index fell 3.16%. The decline in both these indices was higher than the Sensex's decline in percentage terms.
The broad market depicted weakness. There were more than five losers against every gainer on BSE. 2,223 shares fell and 408 shares rose. A total of 147 shares were unchanged.
The total turnover on BSE amounted to Rs 2546.77 crore, higher than turnover of Rs 2412 crore registered during the previous trading session.
All the nineteen sectoral indices on the BSE registered losses. The S&P BSE Auto index (down 3.25%), the BSE Bankex index (down 2.89%), the BSE Metal index (down 3.34%) and the BSE Realty index (down 4.71%) underperformed the Sensex. The BSE FMCG index (down 1.39%), the BSE Healthcare index (down 1.44%) and the BSE Telecom index (down 0.57%) outperformed the Sensex.
Bank stocks declined. Among public sector banks, Punjab National Bank (down 8.82%), Bank of Baroda (down 8.63%), State Bank of India (down 6.51%), Union Bank of India (down 5.25%), IDBI Bank (down 4.95%) and Bank of India (down 3.54%) edged lower.
Among private sector banks, Yes Bank (down 5.71%), IndusInd Bank (down 3.87%), Kotak Mahindra Bank (down 2.16%), RBL Bank (down 1.87%), ICICI Bank (down 1.13%), Axis Bank (down 1.61%) and HDFC Bank (down 1.08%) edged lower.
Auto stocks also dropped. Maruti Suzuki India (down 3.46%), Eicher Motors (down 6.64%), Bajaj Auto (down 1.5%), Ashok Leyland (down 4.59%), Tata Motors (down 2.99%), TVS Motor Company (down 4.88%) and Hero MotoCorp (down 0.23%) declined.
Mahindra & Mahindra (M&M) dropped 3.16%. The company announced that it inaugurated a state of the art spare parts warehouse in Mahindra World City (MWC), Jaipur. The announcement was made during market hours today, 21 November 2016. The warehouse will cater the requirement of company's customers in north and north western region of the country for both automotive and tractor spare parts. Spread over an 11 acre plot with an additional 5 acres for future expansion, this state-of-the-art spare parts warehouse aims to significantly reduce the order processing time for its customers based in North India. The processing time for the availability of spare parts and distance-to-market is expected to take less than 4 days. The company will procure spare parts from over 1,000 vendors and 9 plants for this new facility. With an investment of Rs. 150 crore, it will generate employment for over 450 direct and indirect employees.
This is the Mahindra's fourth spare parts warehousing facility, with the others being in Kanhe for automotive parts, Bhiwandi for tractor parts & Hyderabad for commercial vehicle parts, which send out supplies directly to dealerships and in the open market. The world class warehouse in MWC, Jaipur has state-of-the-art infrastructure including a 4 storied warehouse for stock storage, a store capacity for Rs 130 crore of inventory and extreme flexibility in the storage system.
Realty stocks extended recent steep losses on worries of slowing demand post government's move to demonetize higher denomination notes in crackdown on black money as this sector is known to have a high volume of cash transactions, being the preferred route for stowing back money. Indiabulls Real Estate (down 8.06%), Unitech (down 6.97%), Oberoi Realty (down 5.08%), Housing Development & Infrastructure (down 3.46%), Sobha (down 0.08%), DLF (down 6.66%) and Godrej Properties (down 3.28%) slumped.
NBCC (India) shed 4.55%. The company's consolidated net profit rose 1.42% to Rs 69.11 crore on 15.75% increase in net sales to Rs 1224.41 crore in Q2 September 2016 over Q2 September 2015. The result was announced after market hours on Friday, 18 November 2016.
Index heavyweight and cigarette maker ITC dropped 1.56%. The company announced that consequent to subscription of the entire share capital of Indivate Inc., USA by its step down wholly owned subsidiary, ITC Infotech (USA), Inc. on 18 November 2016, Indivate Inc. became a wholly-owned subsidiary of ITC. ITC Infotech (USA), Inc. is a wholly-owned subsidiary of ITC Infotech India which in turn is a wholly-owned subsidiary of ITC. The announcement was made during market hours today, 21 November 2016.
Index heavyweight and housing finance major HDFC was down 2.05%. The company after market hours on Friday, 18 November 2016 said it has assigned the outstanding loans in projects of Unitech Group to JM Financial Asset Reconstruction Company (JMFARC). Detailing the rationale behind the move, HDFC stated that over the last three decades, it has funded various projects of the Unitech Group and that HDFC's current exposure to the Group involves funding of certain projects across various locations. In the recent past, the Unitech Group has faced sluggishness in the sale of apartments in its projects. This has affected the cashflows of the Group, which in turn has had an adverse impact on the progress of construction, and has resulted in irregular servicing of the loans. Under these circumstances, HDFC has assigned the outstanding loans in these projects to JMFARC. All these projects are located in prime locations, are financially viable but require additional funding. JMFARC will arrange for funds to support and kick-start these projects. The progress of the projects and the resultant cash flows will thereafter be closely monitored.
Against the total dues of Rs 869 crore in respect of these projects, JMFARC has paid HDFC Rs 155 crore upfront and has issued security receipts (SRs) to HDFC amounting to Rs 705 crore which will be redeemable over the period of construction. Though these accounts were standard assets as at 30 September 2016, and turned non-performing assets (NPA) only at the end of October 2016, in view of the irregular payment history, HDFC said, it has over the last few quarters as a matter of prudence, made provisions amounting to Rs 240 crore in respect of these accounts. No further provisioning is required as a result of the sale of the loans to JMFARC. After considering the provision of Rs 240 crore already made (34% of the SRs) the net carrying value of the SRs will be Rs 465 crore.
The Sensex declined for the sixth straight trading session. It has fallen 1,752.54 points or 6.36% in six trading sessions from its close of 27,517.68 on 10 November 2016. The Sensex has fallen 2,165.07 points or 7.75% in November 2016 so far (till 21 November 2016). The Sensex has fallen 352.40 points or 1.34% in calendar year 2016 so far (till 21 November 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 3,270.53 points or 14.53%. From a 52-week high of 29,077.28 hit on 8 September 2016, the barometer index has fallen 3,312.14 points or 11.39%. The Sensex is off 4,259.60 points or 14.18% from a record high of 30,024.74 hit on 4 March 2015.
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