The News International Team
Equity benchmarks snapped three-day gains on Monday with the Sensex falling over 100 points as investors looked cautious ahead of RBI policy. Profit booking also pushed the market lower; oil, capital goods, metals, power and HDFC group stocks lost ground whereas FMCG, auto and select technology stocks supported the market.
The 30-share BSE Sensex fell 134.37 points to close at 28559.62. The 50-share NSE Nifty slipped 32.35 points to 8555.90 after hitting a record high of 8623 in early trade.
The market may be nervous ahead of RBI policy, but the uptrend remains intact, feel experts.
Ridham Desai of Morgan Stanley expects the Sensex to hit 32,500 by end of December 2015.
“Indian equities are benefiting from the start of a new growth cycle, a benign global environment resulting in a positive shift in terms of trade and reforms, which can lift India’s potential growth rate,” he said.
Mark Matthews, Bank Julius Baer and Co is also bullish on Indian equities. He sees 50 percent upside from the current levels in the Indian market in the next 18-24 months on the back of improving economy and earnings growth.
However, according to Gautam Shah, Associate Director & Technical Analyst, JM Financial, it is time for investors to book serious profits as the market is showing signs of making a near term top. He expects the market to correct over the next 4 to 8 weeks.
Meanwhile, the Reserve Bank of India will unveil its fifth bimonthly monetary policy review on Tuesday. As the crude (one of the major contributors to inflation) has consistently been falling, investors feel the RBI may consider rate cut or may indicate rate cuts in next policy meets. A CNBC-TV18 poll shows that 95 percent economists don’t expect a rate cut on Tuesday while 60 percent expect the governor to sound dovish.
The HSBC PMI hit a 21-month high in November at 53.3 versus 51.6 in October. Manufacturing operating conditions in India improved for the thirteenth month in a row in November, supported by stronger growth of output and new work intakes.
On the global front, Asian markets (barring Japan) closed lower with the Hang Seng falling 620 points while the Nikkei index hit a 7-year high. China’s manufacturing PMI hit six-month low at 50 in November from 50.4 in October.
European markets like France’s CAC, Germany’s DAX and Britain’s FTSE were down 0.4-0.8 percent (at 16 hours IST) after Germany’s November manufacturing PMI was lowest in 17-month at 49.5 versus 51.4 in October.
The commodity collapse continued as oil saw its longest losing streak since 2008 crisis. Brent crude slumped further to USD 68 a barrel, down almost 3 percent today. Both Nymex and Brent have fallen for five straight months.
Back home, shares of ONGC and Hindalco Industries plunged 4 percent each followed by Reliance Industries, HDFC, Tata Steel, BHEL, Sesa Sterlite and Tata Power with 2-3 percent fall.
Infosys was down 0.2 percent as it will trade ex-bonus from Tuesday onwards. The software services exporter had announced the issue of bonus shares in the ratio of 1:1.
However, Asian Paints was the biggest gainer on the Nifty, up 7 percent after Bank of America Merrill Lynch upgraded the stock to buy from neutral and raised target price to Rs 875 from 680 (18 percent potential upside).
Auto stocks remained in focus today. Car maker Maruti Suzuki was up 1.6 percent after it recorded a 19.5 percent growth in November sales. However, the company decided to recall 3796 Ciaz cars to replace the relevant part of clutch operation system.
Ashok Leyland was up 2.5 percent as the commercial vehicle maker sold 7,732 units in November, up 44 percent year-on-year led by strong growth in medium and heavy commercial vehicles sales. TVS Motor Company jumped 3 percent on reporting a 36 percent sales growth in November. Mahindra & Mahindra declined 2 percent as it recorded a 13 percent degrowth in November sales.
Hero Motocorp climbed 3.7 percent and Tata Motors gained 0.6 percent ahead of monthly sales data in evening today.
TCS, Hindustan Unilever, Axis Bank and Wipro were other gainers on the Sensex, up 1-3 percent.
Drug makers Sun Pharma and Ranbaxy Labs gained 2-4 percent intraday after Foreign Investment Promotion Board cleared Sun Pharma-Ranbaxy merger deal. But the comments from Competition Commission of India on the deal report dragged Sun Pharma half a percent. Ranbaxy trimmed gains to 0.7 percent.
Sources told CNBC-TV18 that CCI sent back merger deal to companies to make changes and asked both companies to divest some brands to avoid monopoly.
Crude impact continued on stocks. HPCL gained 1.2 percent while Cairn India lost 1.3 percent. Aviation stocks like SpiceJet and Jet Airways also continued to fly high on the back of declining crude prices, up 16.5 percent and 8 percent respectively. Berger Paints surged 12 percent.
In the broader space, shares of Shree Ganesh Jewellery and Gitanjali Gems were up 20 percent after the Reserve Bank of India announced the government had scrapped the 80:20 scheme, which mandated that 20 percent of raw gold imported into the country had to be exported as finished product. Tribhovandas Bhimji Zaveri, Tara Jewels, Titan Company and PC Jeweller gained 3-5 percent.
Mangalore Chemicals gained 9 percent on news that Vijay Mallya has resigned as a director from the company. This development brought more clarity and is likely to strengthen the case for Deepak Fertiliser in the ongoing race for Mangalore Chemicals.
Declining shares outnumberd advancing ones by a ratio of 1693 to 1213 on the Bombay Stock Exchange.