Closing bell: Sensex dives 536 points, Nifty breaches 11,000, HDFC down 6%14 min read . Updated: 25 Sep 2018, 09:06 AM IST
BSE Sensex closed 536.58 points lower at 36,305.02, while the Nifty 50 ended 168.20 points down at 10,974.90. Here are the highlights from the markets
OTHERS : Mumbai: The BSE Sensex and the NSE Nifty 50 posted losses for the fifth straight session on Monday, dragged down mainly by finance stocks such as HDFC and Indiabulls Housing Finance, which fell by up to 7%. Shares of non-banking finance companies (NBFCs) plummeted further over fears of a liquidity crunch. The rupee also weakened against the US dollar, tracking heavy selloff in the local equity markets. In global markets, European stocks and US equity futures declined as China called off talks with the US aimed at improving trade relations. Oil prices climbed after OPEC and Russia gave a tepid response to US President Donald Trump’s call to boost supply. Here are the highlights from the markets:
Closing bell: Sensex, Nifty close lower for 5th day
The Sensex closed 536.58 points, or 1.46%, lower at 36,305.02, while the Nifty 50 fell 168.20 points, or 1.51%, to close at 10,974.90. The BSE MidCap and SmallCap indices declined 2.40% and 2.70%, respectively.Sixteen out of 19 BSE sectoral indices ended lower with realty losing most at 5.10%. Auto, finance and consumer discretionary goods and services fell over 3%. IT, technology and energy were up 2.06%, 1.37% and 0.44%, respectively.TCS, Coal India, Infosys, Reliance and NTPC were among the top gainers, whereas HDFC, Mahindra, Indibulls Hosuing Finance and IndusInd Bank were among the major losers.Meanwhile, FIIs bought shares worth a net of Rs 760.70 crore on Friday, while DIIs purchased equities worth Rs 497.03 crore, provisional data showed.
Blackstone said to plan 7% yield for India’s first REIT IPO
Blackstone Group LP and its Indian partner set a tentative yield for their initial public offering of the country’s first real estate investment trust, which could raise about Rs 5,250 crore ($720 million), people with knowledge of the matter told Bloomberg. Blackstone and Embassy Group plan to approach investors with an annual yield of around 6.5 percent to 7 percent, according to the people, who asked not to be identified because the information is private. They are considering marketing the deal with a total return of about 14 percent to 16 percent, which takes into account factors like asset value appreciation and rental increases in addition to yield, the people said. Read more
Graphite India shares down 5%
Graphite India Ltd denied reports that it had lied to stock exchanges regarding consent for operation for its Bangalore plant. Shares traded 4.94% down at Rs 902.
BHEL signs deal to offer air pollution control products to US firm
Bharat Heavy Electricals Ltd said that it has entered into a technology collaboration agreement with Babcock Power Environmental Inc. USA to offer air pollution control products. BHEL shares traded at Rs 70.70 per share, down 1.12%.
Sebi to probe sharp selloff in financial stocks for irregularities
The Securities and Exchange Board of India is examining Friday’s sharp moves in shares of Dewan Housing Finance Corp., Yes Bank Ltd. and other lenders for possible trading irregularities, people with knowledge of the matter said. Sebi is looking into whether brokers and investors colluded during the sharp selloff and subsequent recovery in financial shares, the people said, asking not to be identified due to the sensitivity of the matter. Read more
Lakshmi Vilas Bank says has exposure to ILFS subsidiary
Lakshmi Vilas Bank Ltd has disclosed that it has an exposure to an IL&FS subsidiary. The bank said it had received multiple queries from investors regarding its exposure to the ILFS group. The bank, however, said it could not share further customer specific data due to business constraints. The bank’s shares fell as much as 2.43% to Rs 86.15, but soon recovered and traded 0.85% up at Rs 89.05.
How Sebi’s new KYC regulations will affect FPIs
Sebi on Friday relaxed the know-your-client (KYC) norms and eligibility conditions for foreign portfolio investors. Mint looks at Sebi’s major decisions on FPIs and how these will impact them.
If an existing FPI fails to comply with the KYC norms by the deadline, the custodian shall not let that FPI make fresh purchases till the KYC norms are met.https://t.co/PJCMqmr6Ug— Livemint (@livemint) September 24, 2018
IT companies stocks trade higher
Shares of the IT companies traded higher after the Reserve Bank has shortlisted five IT firms— Capgemini Technology Services India, IBM India, Infosys, Larsen & Toubro Infotech and Tata Consultancy Services—for implementation of a centralised information and management system (CIMS) for seamless data collection and validations. The Nifty IT Index was up over 2% led by Infibeam, TCS, Tech Mahindra and Infosys.
European equities down at open
Europe’s main stock markets dropped at open with investor fears growing over the US-China trade war, as Donald Trump’s tariffs on another $200 billion of Chinese imports took effect, according to analysts. London’s benchmark FTSE 100 index was down 0.2 percent at 7,476.05 points, with the Paris CAC stock exchange losing 0.2 percent to open at 5,480.64 points. Frankfurt’s DAX 30 meanwhile shed 0.4 percent, opening at 12,383.42 points. AFP
Gold prices set to soar over next 12 months, forecasts Bank of America
Gold is set to surge over the next year as concerns deepen about the widening U.S. budget deficit and a tariff-driven trade war starts to damage the country’s economy, according to Bank of America Merrill Lynch. Bullion could average $1,350 an ounce in 2019 as corporate tax reforms worsen the U.S. fiscal balance, Francisco Blanch, head of global commodities and derivatives research, said in a phone interview last week. “We’re still pretty constructive longer term on gold,” because of worries over the future of the U.S. economy even though it’s performing relatively well right now, said New York-based Blanch. “In the short run, the effects of strong dollar, higher rates dominate. But in the long run, a huge U.S. government budget deficit is pretty positive for gold,” he said. Read more
Market update: Sensex, Nifty extend losses
BSE Sensex traded lower by 452.56 points, or 1.23%, to 36,389.04, while the Nifty 50 fell 91.25 points, or 0.81%, to 11,143.10. BSE MidCap and SmallCap were down 2.19% and 2.54%, respectively.In intraday trade, the Sensex slumped as much as 602 points to a low of 36,239.57 and the Nifty 50 plunged 197.05 points to 10,946.05.All the sectoral indices on BSE, except IT and teck, declined with realty losing most at 4.85% followed by auto 3.69%, consumer discretionary and goods services 3.15%, finance 2.95% and industrials 2.27%.
What analysts say about recent selloffs
Rajesh Cheruvu, chief investment officer at WGC Wealth Management Ltd: “The ongoing elevated volatility is here to stay in the near term. Housing finance companies have seen the pressure due to high valuations as a segment over the past two quarters. This may spread to NBFC stocks as their valuations too are quite demanding.” Jaiganesh Balasubramaniam, market technician at Cashthechaos.com in Singapore: “Cash markets not respecting supports was a big surprise. Either the fall is an aberration or India will underperform EM and global markets for a month or so.”IIFL: “Investors raised concerns over tightness in the money market amid continuing financial crisis at IL&FS. Further, investors are risk averse after the recent expereience of IL&FS, which dampened overall market sentiment.” “Traders expect borrowing costs for NBFCs to rise and they could face challenges in raising funds. Market participants are linking this with other NBFCs and housing finance companies which use commercial paper as one of their sources of funding.”Arthur Kwong, head of Asia Pacific equities at BNP Paribas Asset Management: “We are not worried about overall India. It is still bullish for me. We like private sector banks.”James Syme, a London-based money manager at JO Hambro Capital Management: “Despite current stresses. comfortable owning Indian stocks, particularly private sector banks. This is more a historical problem being resolved now rather than an ongoing credit crisis in Indian corporate.”Isabelle Mateos y Lago, chief multi-asset strategist at BlackRock Investment Institute: Focus is on the nation’s resilience amidst the broader emerging-market selloff. Strong domestic growth and the high proportion of dollar earnings from corporate India has acted as a good hedge against dollar strength. “It’s a market that requires high selectivity particularly within the financial sector.”Jayant Manglik, president at Religare Broking Ltd: We believe the coming week will begin in some clarity. Investors should buy-the-dip and start accumulating “fundamentally sound” stocks. Read more
Generic Engineering Construction shares rise on new orders
Generic Engineering Construction and Projects Ltd shares rose as much as 4.88% to Rs 194.40 per share after the company said it has received multiple orders to the tune of Rs 273.92 crore from real estate developers and one from India’s leading defence public sector undertaking.
DHFL says all repayments as per schedule, shares gain
DHFL in a statement today reiterated that the company has neither defaulted on any bonds or repayment of its financial obligations, nor has there been any instance of delay on any repayment of any liability. It further added that DHFL fulfilled on September 21 its commitment of repaying commercial papers worth Rs 575 crore and as per schedule and terms, is repaying Rs 400 crore on September 24. DHFL shares 11.09% up at Rs 390.55.
Oil prices could rise to $100 a barrel by 2019, warn merchants
Oil prices could rise towards $100 per barrel by 2019 as US sanctions against Iran tighten markets, commodity merchants Trafigura and Mercuria said at the annual Asia Pacific Petroleum Conference (APPEC) in Singapore.Almost 2 million barrels per day (bpd) of crude could be taken out of the market as a result of the U.S. sanctions against Iran by the end of the fourth quarter this year, said Daniel Jaeggi, president of commodity merchant Mercuria Energy Trading, making a crude price spike to $100 a barrel possible. Ben Luckock, co-head of oil trading at fellow merchant Trafigura said crude oil prices could rise to $90 per barrel by Christmas and to $100 by the New Year as markets tighten. Reuters
Market update: Sensex, Nifty trade lower
The Sensex opened at 36,924.72, up 83 points from its previous close and hit a high of 36,945.50. But soon erased all the gains and fell as much as 283 points to a low of 36,558.61. On NSE, the Nifty 50 opened 21.3 points up at 11,164.40 and hit a peak of 11,170.15. But it failed to hold gains and dropped as much as 102.45 points to a low of 11,040.65.BSE Sensex traded lower by 188.60 points, or 0.51%, to 36,653, while the Nifty 50 fell 67 points, or 0.60%, to 11,076.10. BSE MidCap and SmallCap fell 1.30% and 1.63%, respectively. Among the sectoral indices on BSE, IT and oil and gas, teck and energy gained, while realty, auto telecom and finance led losses.The Sensex basket had 11 advances and 20 declines. On NSE, the Nifty has 21 advances and 28 declines. Vedanta, Coal India, Infosys, ONGC and TCS were among the top gainers, whereras HDFC, Maruti, Mahindra, Indiabulls Housing Finance and IndusInd Bank were among the major losers.
Shares of ILFS group companies gain as parent plans to raise authorized share capital
Shares of IL&FS Transportation Networks and IL&FS Investment Managers rose as much as 19.9% and 7.2%, respectively, as parent Infrastructure Leasing and Financial Services (IL&FS) is planning to boost its authorized share capital by Rs 4,000-5,000 crore to enable the cash-strapped group to raise money from its shareholders, reported Mint, citing two people with direct knowledge of IL&FS Group’s plans.
Shares of NBFCs trade lower amid liquidity fears
Shares of non-banking finance companies (NBFCs) plummeted further on Monday on expectations that the firms may face a liquidity crunch after IL&FS and its lending arm defaulted on a series of loan repayments. Bajaj Finance fell 5%, Gruh Finance 5%, Cholamandalam Investment and Finance 4%, Edelweiss Financial Services 3%, Indiabulls Housing Finance 3%, Repco Home Finance 4%, GIC Housing Finance 3% and PNB Housing Finance 3%.“Investors raised concerns over tightness in the money market amid continuing financial crisis at IL&FS. Further, investors are risk averse after the recent expereience of IL&FS, which dampened overall market sentiment,” said IIFL in a 21 September note. “Traders expect borrowing costs for NBFCs to rise and they could face challenges in raising funds. Market participants are linking this with other NBFCs and housing finance companies which use commercial paper as one of their sources of funding,” the report added. Read more
Yes Bank shares fall for 2nd day after RBI’s denial to extend CEO term
Yes Bank shares traded 0.46% down at Rs 226. In early trade, the stock fell as much as 4.86% to Rs 216. RBI had asked Yes Bank last week to end Rana Kapoor’s tenure as managing director and chief executive on 31 January, disregarding the bank’s plea to extend his term by three years.
Usha Martin shares gain on Tata Steel deal
Shares of Usha Martin Ltd traded 3.18% up at Rs 32.40. In early trade, the stock rose as much as 15.9% to Rs 36.40 after Tata Steel on Saturday announced it will acquire the steel business of Usha Martin Ltd for Rs 4,300-4,700 crore. The sale of steel business to Tata Steel will help the company in “significant reduction” of its debt, Usha Martin said in a filing to the BSE. The deal is expected to be completed in 6-9 months, it added. Tata Steel shares were down 1.09% to Rs 617.75.
Biocon shares jump nearly 3% over progress on bio-similar product
Biocon shares rose as much as 2.94% to Rs 696 after the company and its partner Mylan announced that they have received positive opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use for recommending approval of bio-similar product ‘Fulphila’. This positive opinion will now be considered by the European Commission. The decision on approval is expected by Nov. 2018. The USFDA also completed their inspection at Biocon’s Bangalore facility with no Form 483 being issued.
DHFL shares surges nearly 25%
Shares of Dewan Housing Finance Corp Ltd surged as much as 24.80% to Rs 438.75 after the company said it has enough funds for repayments. On Friday, DHFL shares closed at Rs 351.55 per share on the BSE, down 42.43%, or ₹ 259.05, from the previous session. The DHFL stock slumped nearly 60% in in intraday trade on Friday following media reports that DHFL had defaulted interest payment on its debt. However, DHFL chairman and managing director Kapil Wadhwan quickly denied and added that the company has ample liquidity of Rs 10,000 crore.
Govt will ensure liquidity maintained in NBFCs, SMEs, says finance minister
The Government will take all measures to ensure that adequate liquidity is maintained/provided to the NBFCs, the Mutual funds and the SMEs.— Arun Jaitley (@arunjaitley) September 24, 2018
Rupee trades lower against dollar
The Indian rupee weakened against the US dollar, tracking panic selling in the local equity markets. At 9.07am, the rupee was trading at 72.45 to a dollar, down 0.34% from its Friday’s close of 72.20. The home currency opened at 72.47 per dollar. The 10-year gilt yield stood at 8.031%, below its previous close of 8.07%. Bond yields and prices move in opposite directions. So far this year rupee has declined 11.5%, while foreign investors have sold $1.22 billion and $6.79 billion in the equity and debt markets, respectively.
Friday mayhem exposes chinks in non-banking financial firms’ armour
Shares of finance companies fell anywhere between 10-50% on Friday.
Friday's mayhem was a reminder to investors that NBFCs are far more fragile than bankhttps://t.co/HJCuvTrlAI— Livemint (@livemint) September 24, 2018
Commodity corner: Oil prices over 2-month high
Oil climbed near the highest level in more than two months after OPEC and its allies signalled less urgency to boost output and stopped short of promising extra volumes of crude despite US pressure to temper prices. Brent crude futures gained 92 cents to $79.72 a barrel, while U.S. crude futures rose 77 cents to $71.55.Gold edged lower as the dollar held firm on news that China has cancelled trade talks with the United States, with the market also eyeing this week’s US Federal Reserve meeting for guidance on future rate hikes. Spot gold inched down 0.2% to $1,196.51, after falling as much as 1.3% on Friday on a stronger dollar. US gold futures were virtually unchanged at $1,201.1 an ounce.
Opening bell: Cues to look out for before trading today
■ The Dow and S&P 500 hit record highs on Friday and posted solid weekly gains as concerns about global trade dissipated. The markets in Japan, South Korea and China are closed for public holidays on Monday. Meanwhile, Australia’s market was lower in the morning of the first trading day of the week, following last Friday’s record gains on Wall Street.■ The Reserve Bank of India (RBI) and the market regulator Securities and Exchange Board of India (Sebi) are closely monitoring developments in financial markets and are ready to take appropriate steps if needed, according to a central bank statement on Sunday.■ Seven of the 10 most valued Indian companies suffered a cumulative erosion of ₹89,779.67 crore in market valuation last week, in tandem with a weak broader market. ■ The Securities and Exchange Board of India (Sebi) relaxed know-your-client (KYC) requirements norms for foreign portfolio investors (FPIs).■ The tax department has slapped ONGC Videsh Ltd a service tax demand of ₹7,666.10 crore on remittance the firm makes to its overseas subsidiaries for past one decade, sources in know of the development told PTI.■ Assuring lending support to non-banking financial companies, SBI Chairman Rajnish Kumar said there was no concern on liquidity of such firms, amid ongoing debt crisis in IL&FS Group.■ Tata Steel announced it will acquire the steel business of Usha Martin Ltd for Rs 4,300-4,700 crore.■ IL&FS Investment Managers, a unit of Infrastructure Leasing & Financial Services (IL&FS) which announced debt defaults this week, said its Managing Director Ramesh Bawa had resigned.■ Yes Bank Ltd is staring at a lengthy search for a new boss after the Reserve Bank of India (RBI) cut short the tenure of managing director and chief executive officer Rana Kapoor, who has led the private sector lender since its founding in 2004. Harsha Jethmalani/MintWith inputs from Reuters