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Nifty reclaims 11,850 level; Sensex rises 170 pts amid volatility
14-Nov-19   17:03 Hrs IST

Key equity barometers ended with decent gains on Thursday after oscillating between gains and losses for the first half of the trading session. The Nifty 50 index managed to close above the 11,850 level. Trading was volatile due to weekly expiry of index options.

Sentiment was fragile after Moody's cut India's GDP growth forecast to 5.6% for 2019. However, easing wholesale inflation in October triggered hopes that the Reserve Bank of India (RBI) may further cut interest rates.

The barometer index, the BSE Sensex, rose 170.42 points or 0.42% to close at a 40,286.48. The Nifty 50 index rose 30 points or 0.25% to 11,870.45.

In the broader market, the BSE Mid-Cap index rose 0.14% and the BSE Small-Cap index fell 0.01%. Both these indices underperformed the Sensex.

The market breadth was weak. On the BSE, 1004 shares rose and 1506 shares fell. A total of 172 shares were unchanged.

Domestic Macro:

Moody's Investors Service on Thursday cut India's economic growth forecast for current year to 5.6% from 5.8% estimated earlier, saying GDP slowdown is lasting longer than previously expected. It expected economic activity to pick up in 2020 and 2021 to 6.6% and 6.7%, respectively, but the pace to remain lower than in the recent past.

India's wholesale inflation, or Wholesale Price index (WPI), dipped marginally for the month of October at 0.16% compared to 0.33% in September 2019 and 5.28% in October 2018. The index was supported by higher food prices which prevented the index from falling into negative territory.

India's retail inflation for the month of October breached the Reserve Bank of India's (RBI) medium-term target of 4% for the first time since July 2018 due to higher food prices. The all-India general consumer price index (CPI) inflation touched 4.62% in October, according to the data released by the statistics office on Wednesday, compared to 3.99% in September. The CPI was 3.38% in October last year.

Crude & currency:

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 71.8975, compared with its close of 72.09 during the previous trading session.

In the commodities market, Brent crude for January 2019 settlement was rose 67 cents at $63.04 a barrel. The contract rose 56 cents or 0.90% to settle at $62.56 a barrel during the previous trading session.

Overseas

Most shares in Europe and Asia declined after China's October industrial production data missed expectations. Sentiment was soured after trade negotiations between the U.S. and China are understood to have hit a roadblock.

German GDP (gross domestic product) grew by 0.1% in the third quarter, exceeding the -0.1% contraction expected and narrowly avoiding a technical recession.

Chinese industrial production data for October grew 4.7% year-on-year as compared against expectations of a 5.4% growth, media reports said.

Japan's economic growth touched a 1-year low in the third quarter, the media reported on Thursday citing government data. GDP grew 0.2% on an annualized rate in the third quarter, well lower than a median market forecast of a 0.8% rise.

The US stock market finished session modest higher on Wednesday, 13 November 2019, on the back of Federal Reserve Chair Jerome Powell testimony that U.S. central bankers see a sustained expansion ahead for the country's economy. Also, factors supporting the rally include the resumption of short dated debt buying to add liquidity to money markets and a surge in government spending. However, market gains were capped amid lingering uncertainty about a potential U.S.-China trade deal.

In U.S. economic news, the Labor Department released a report showing consumer price index climbed by 0.4% in October after coming in unchanged in September. Excluding food and energy prices, core consumer prices edged up by 0.2% in October after a 0.1% uptick in September.

The U.S. federal government's budget deficit in October rose 34% from a year earlier to $134.5 billion, putting the U.S. on course to top the $1 trillion mark in fiscal 2020 for the first time in eight years, or nearly 5% of gross domestic product.

Buzzing Index:

The Nifty IT index rose 0.96% to 15,388, reversing its three-day losing streak. The index fell 2.45% in three sessions to 15,240.95 on Wednesday, from a recent high of 15,624.40 on 7 November 2019.

Persistent Systems (up 6.57%), Infosys (up 2.04%), Mindtree (up 1.29%), Hexaware Technologies (up 1.08%), TCS (up 0.78%), Tech Mahindra (up 0.65%) and HCL Technologies (up 0.25%) advance.

Oracle Financial Services Software (down 2.48%) and MphasiS (down 0.26%) declined.

The Nifty Metal index fell 1.89% to 2,508.35, extending decline for fourth straight session. The index has fallen 5.67% from a recent closing high 2659.05 on 7 November 2019.

Hindalco Industries (down 2.43%), NMDC (down 2.23%), Jindal Steel & Power (down 1.62%), Steel Authority of India (down 1.45%), Tata Steel (down 1.23%), Hindustan Copper (down 1.15%) and JSW Steel (down 1.09%) declined.

National Aluminium Company (Nalco) fell 2.99% after the company reported a consolidated net loss of Rs 28.25 crore in Q2 September 2019 compared with net profit of Rs 510.55 crore in Q2 September 2018. Consolidated net sales tumbled 22.27% to Rs 2,363.55 crore in Q2 September 2019 over Q2 September 2018. The result was announced after market hours yesterday, 13 November 2019.

Vedanta 2.90%. The company's consolidated net profit rose 44% to Rs 2,730 crore on a 3% decline in net sales to Rs 21,739 crore in Q2 September 2019 over Q2 September 2018.

Revenue declined primarily due to lower commodity prices partially offset by additional volumes from commencement of Gamsberg operations and higher sales at iron ore Karnataka. The result was announced during market hours today, 14 November 2019.

Stocks in Spotlight:

Telecom stocks tumbled after media reported suggested that the department of telecommunications (DoT) has issued a notice to telecom operators to pay their adjusted gross revenue (AGR) dues within three months as directed by the Supreme Court.

The Supreme Court (SC) on 24 October 2019 ruled in favor of the government on the AGR (adjusted gross revenue) issue, with grave revenue implications to the tune of over Rs 92,000 crore for the ailing telecom sector.

Bharti Airtel fell 1.59% to Rs 362.65. The telecom operator will be in focus as it will announce its Q2 2019 earnings today.

Vodafone Idea slumped 20.27% to Rs 2.95. The media reported that Aditya Birla Group will not infuse any fresh equity into Vodafone Idea, its telecom joint venture with Vodafone Group of UK, and let it opt for insolvency if the government does not provide substantial relief, including on the telco's adjusted gross revenue (AGR)-based dues.

Grasim Industries slipped 0.64% to Rs 734.30. The company has exposure to the telecom sector via its 11.55% stake in Vodafone Idea.

Separately, Grasim Industries reported a consolidated net profit of Rs 1002 crore in Q2 September 2019 as against a net loss of Rs 1468 crore in Q2 September 2018. Net revenue rose 3% to Rs 18,430 crore while EBITDA increased by 7% to Rs 3,180 crore in Q2 September 2019 over Q2 September 2018. The result was announced during market hours today, 14 November 2019.

Index heavyweight Reliance Industries (RIL) declined 0.58% to Rs 1463.40. Moody's Investors Service has affirmed RIL's Baa2 domestic long-term issuer rating and foreign currency senior unsecured rating.

At the same time, Moody's has affirmed the Baa2 backed domestic currency senior unsecured debt ratings on the USD denominated bonds issued by Reliance Holding USA, Inc., with a guarantee from RIL. The outlook on the ratings above is stable.

Aurobindo Pharma fell 8.73% to Rs 395.55. The U.S. Food and Drug Administration (USFDA) inspected the company's unit IV, a general injectable formulation manufacturing facility situated at Pashamylaram, Hyderabad, from 4th to 13th November 2019. At the end of the inspection, the company has been issued a 'Form 483' with 14 observations. The pharma company said that it will respond to the USFDA within the stipulated timeline.

Cadila Healthcare rose 4.25% to Rs 234.20. On a consolidated basis, net profit fell by 74.3% to Rs 107.20 crore in Q2 September 2019 from Rs 417.50 crore in Q2 September 2018. Net sales, however, recorded a growth of 14.1% to Rs 3244.20 in Q2 September 2019 over Q2 September 2018.

SpiceJet fell 5.94% to Rs 106.95. The airline company reported a consolidated net loss of Rs 461.21 crore in Q2 September 2019 as against a net loss of Rs 382.71 crore in Q2 September 2018. Revenue from operations for quarter ending September 2019 jumped by 51% to Rs 2848 crore on YoY basis.

IRCTC fell 2.68% to Rs 906.85. IRCTC announced its first ever quarterly result after getting listed on exchanges on 14 October 2019. IRCTC's net profit rose 14.01% to Rs 172.15 crore on 3.77% rise in net sales to Rs 972.61 crore in H1FY2020 over H1FY2019.

ARSS Infrastructure Projects jumped 3.13% to Rs 24.75. The company has received a work order of Rs 75.42 crore from Rail Vikas Nigam.

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