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Market Commentary - Mid Session
Market extends losses; PSU banks tumble
(06 Dec 2019, 13:47)

Key equity benchmarks extended losses and hit fresh intraday low in afternoon trade. At 13:45 IST, the barometer index, the S&P BSE Sensex fell 193.41 points or 0.47% at 40,586.18. The Nifty 50 index fell 57.95 points or 0.48% at 11,960.45.

Selling was broad based. The S&P BSE Mid-Cap index was down 0.97%. The S&P BSE Small-Cap index fell 0.58%.

The market breadth was weak. On the BSE, shares 806 rose and 1,374 shares fell. A total of 137 shares were unchanged.

The sentiment was subdued after the Reserve Bank of India (RBI) unexpectedly left interest rates unchanged on Thursday. In a surprise move, the RBI decided to hold the rates after delivering five consecutive rate cuts in 2019. The move was driven by the rising inflationary pressure and gradual improvement in monetary transmission.

RBI revised GDP growth downwards to 5% for 2019-20 from 6.1% projected in its October policy. The CPI inflation projection has also been revised upwards to 4.7-5.1% for the second half of FY20 and 3.8-4% for the first half of FY21.

Meanwhile, RBI's consumer confidence survey (CCS) released on Thursday reported a further drop in consumer confidence in November as households remained pessimistic about jobs and the general economic situation. The current situation index (CSI) dropped to 85.7 last month from 89.4 in September. The future expectations index (FEI) also fell to 114.5, down from 118 in September.

Consumers' sentiments on the general economic situation and the employment scenario weakened, but their one-year ahead expectations remained in the optimistic terrain for all parameters, except prices; expectations on income one-year ahead improved marginally over the previous survey round, said the RBI survey.

Derivatives:

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, fell 6.41% to 13.3875. The Nifty December 2019 futures were trading at 12,013, a premium of 42.4 points compared with the spot at 11,970.60.

On the options front, the Nifty option chain for 26 December 2019 expiry showed maximum call open interest (OI) of 20.31 lakh contracts at the 12,000 strike price. Maximum put OI of 33.57 lakh contracts was seen at 12,000 strike price.

The option chain indicates that Nifty will stay at 12,000 level till December expiry, 26 December 2019.

Top Gainers & Losers:

Bharti Infratel (up 5.14%), Kotak Mahindra Bank (up 1.60%), Asian Paints (up 1.32%), HCL Technologies (up 0.72%) and Ultratech Cement Company (up 0.69%) advanced.

Zee Entertainment Enterprises (down 4.45%), GAIL (India) (down 3.38%), State Bank of India (down 3.33%), Housing Development Finance Corporation (down 2.17%) and Eicher Motors (down 1.92%) declined.

Buzzing Index:

The Nifty PSU Bank index tumbled 3.68% to 2,479.05. Central Bank of India (down 7.62%), Union Bank of India (down 4.82%), Bank of Baroda (down 4.35%), Canara Bank (down 3.54%), Indian Overseas Bank (down 3.29%), Punjab National Bank (down 3.13%) and Bank of India (down 3.03%) tumbled.

Stocks in Spotlight:

Yes Bank tanked 8.70% to Rs 56.70. Yes Bank said Moody's Investors Service downgraded its long term foreign currency issuer rating to B2 from Ba3. Moody's has also downgraded the bank's long-term foreign and local currency bank deposit ratings to B2 from Ba3, foreign currency senior unsecured MTN program rating to (P)B2 from (P)Ba3, and Baseline Credit Assessment (BCA) and Adjusted BCA to b3 from b1. The outlook on the bank's ratings, where applicable, is negative. Moody's expects Yes Bank's common equity tier 1 (CET1) ratio of 8.7% at the end of September 2019 to come under significant pressure, unless the bank can raise new capital in the next few quarters.

Auto major M&M declined 2.15% to Rs 513.30. M&M said the company acquired 36.63% of the Equity Share Capital of Meru in the first tranche of investment. Consequently, Meru has become a subsidiary of the Company with effect from 5 December, 2019. Subsequently, Meru Mobility Tech Private Limited, V-Link Automotive Services Private Limited and V-Link Fleet Solutions Private Limited, subsidiary companies of Meru, have in turn, also become subsidiaries of M&M.

Bajaj Finance fell 0.10% to Rs 3,983.55. The NBFC said it participated in qualified institutions placement (QIP) of RBL Bank and have been allotted 42.73 lakh equity shares at a price of Rs. 351 per equity shares aggregating to approximately Rs 150 crore.

Telecom provider Bharti Airtel was up by 0.17% to Rs 447.95. S&P maintained its 'BBI' rating on long term-facilities with negative implications due to Rs 34,00 crore setback from Department of Telecom (DoT) litigation will adversely affect the company's growth prospects.

Tata Motors was down by 2.68% to Rs 161.65. The board approved the allotment of 20.16 crore ordinary shares and 23.13 crore warrants, with each warrant carrying a right to subscribe to one ordinary share per warrant, at a warrant price of Rs 150 per piece, on preferential basis to Tata Sons. The paid-up share capital of the firm stands increased to Rs 71,94,948,944 from Rs 67,91,702,130. The announcement was made after market hours yesterday, 5 December 2019.

Maruti Suzuki India fell 1.07% to Rs 6,930.80. The company will recall for certain petrol Smart Hybrid (SHVS) variants of Ciaz, Ertiga and XL6 vehicles manufactured between 1 January 2019 to 21 November 2019. The announcement was made during trading hours today, 6 December 2019.

Dr Reddy's Laboratories rose 2.24% to Rs 2,934.55 after it launched of Deferasirox film-coated tablets, 90 mg and 360 mg, a therapeutically equivalent generic version of Jadenu (Deferasirox) film-coated tablets, 90 mg, 180 mg, and 360 mg, approved by the United States Food and Drug Administration (USFDA). The announcement was made during market hours today, 6 December 2019.

Shares of CSB Bank slumped 9.09% at Rs 270.60 on profit booking after strong listing gains.

Foreign Markets:

Shares in Europe and Asia advanced as investors await employment data out of the U.S. and monitor trade developments between Beijing and Washington.

In US, stocks moved higher on Thursday as investors remained optimistic about prospects for a US-China trade deal despite a looming deadline for the imposition of fresh import tariffs by President Donald Trump.

In economics news, the Labor Department released a report on Thursday showing an unexpected decrease in first-time claims for U.S. unemployment benefits in the week ended November 30th. The report said initial jobless claims slipped to 203,000, a decrease of 10,000 from the previous week's unrevised level of 213,000. With the unexpected decrease, jobless claims fell to their lowest level since hitting 193,000 in the week ended April 13th.

US new orders for manufactured goods rose by 0.3% in October after falling by a revised 0.8% in September, according to a report released by the Commerce Department on Thursday.

Meanwhile, oil prices rose Thursday after OPEC members agreed in principle to another cut to output during the first quarter of 2020. OPEC members are starting their second day of talks on Friday.

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