Broader market jumps in volatile trade

After a volatile trade on Monday, the Sensex ended almost flat while the Nifty crawled higher. Negative global shares and high crude oil prices spoiled investors sentiment. Selling in ICICI Bank, Infosys and TCS restricted gains while firmness in HDFC Bank and ITC supported the benchmarks.

The barometer index, the BSE Sensex, fell 17.14 points or 0.04% to 41,558. The Nifty 50 index gained 10.05 points or 0.08% to 12,255.85.

After a rousing start, key benchmarks slipped into negative terrain in mid-morning trade. Indices declined further and hit fresh intraday low in afternoon trade. Barometers came off day's low in mid-afternoon trade and ended near flat line.

The broader market was bullish. The S&P BSE Mid-Cap index rose 0.29% and the BSE Small-Cap index gained 0.75%.

The market breadth was positive. On BSE, 1454 shares advanced while 1117 shares declined. A total of 196 shares were unchanged.

Economy:

The Reserve Bank of India (RBI) released the 20th issue of the Financial Stability Report (FSR) on Friday, 27 December 2019. The report said India's financial system remains stable notwithstanding weakening domestic growth; the resilience of the banking sector has improved following recapitalisation of public sector banks (PSBs) by the government. Risks arising out of global/domestic economic uncertainties and geopolitical developments, however, persist.

Scheduled commercial banks' (SCBs) credit growth remained subdued at 8.7% year-on-year (y-o-y) in September 2019, though private sector banks (PVBs) registered double digit credit growth of 16.5%. SCBs' capital adequacy ratio improved significantly after the recapitalisation of public sector banks (PSBs) by the Government. SCBs' gross non-performing assets (GNPA) ratio remained unchanged at 9.3 per cent between March and September 2019. Provision Coverage Ratio (PCR) of all SCBs rose to 61.5% in September 2019 from 60.5% in March 2019 implying increased resilience of the banking sector.

Further, the report said that the Insolvency and Bankruptcy Board of India (IBBI) continued to make steady progress in the resolution of stressed assets. The Insurance Regulatory and Development Authority of India (IRDAI) has taken initiatives for growth of InsurTech and strengthening insurers' corporate governance processes. The Pension Fund Regulatory and Development Authority (PFRDA) continued to bring more citizens under the pension net.

Numbers to Track:

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was trading at 71.325, compared with its previous closing low of 71.35.

In the commodities market, Brent crude for February 2020 settlement was up 14 cents at $68.30 a barrel. The contract rose 24 cents 0.35% to settle at $68.16 a barrel during the previous trading session.

India is heavily dependent on oil imports for satisfying its domestic demand. A high crude price directly maps into a high trade deficit and in turn a high current account deficit (CAD). Higher crude prices also leads to a spike in domestic inflation.

Foreign Markets:

European markets continued to trade lower while Asian stocks ended mostly lower on Monday as investors locked profits after strong gains last week.

US stocks drifted higher on Friday, setting up the major indexes for a strong end to the week. Investor sentiment was buoyed by reports of strong holiday sales and a report on Chinese industrial production, but some year-end tax related selling pressured the market late in the day.

As per reports, China's industrial firms grew at the fastest pace in eight months in November. Industrial profits in November rose 5.4% from a year earlier to 593.9 billion yuan ($84.93 billion), compared with a 9.9% drop in October.

As per reports, investors saw the Chinese data as a sign that a slowdown in the world's second-largest economy, amid a trade policy conflict with the U.S., may not produce as severe a downturn as feared.

China's central bank over the weekend said that it will use the loan prime rate as a new benchmark for pricing current floating-rate loans, which analysts say could lower borrowing costs and boost growth, media reports said.

Markets in Europe, Japan and South Korea will be closed tomorrow, on New Year's Eve. Australia, Hong Kong and Singapore will close early by around mid-day.

Trending Indian Sectors:

The Nifty Auto index rose 1.51% to 8,329.50. The index has risen 2.46% in two sessions.

Tata Motors (up 4.26%), TVS Motor Company (up 3%), Eicher Motors (up 2.65%), Ashok Leyland (up 2.63%), Hero Motocorp (up 1.43%), Escorts (up 1.32%), Mahindra & Mahindra (up 1.22%), Maruti Suzuki India (up 0.89%) and Bajaj Auto (up 0.45%) advanced.

The Nifty Metal index rose 1.20% to 2,793.40. The index has risen 3.22% in four sessions.

Jindal Steel & Power (up 3.81%), SAIL (up 2.25%), Vedanta (up 1.68%), Hindalco Industries (up 1.23%), Tata Steel (up 1.05%), NALCO (up 0.8%) and NMDC (up 0.71%) jumped.

JSW Steel rose 0.91%. The steel major said that its wholly-owned subsidiary, JSW Steel (Netherlands) B.V., entered into an agreement for selling 39% out of its 49% stake held in Geo Steel LLC, a joint venture (JV) based in Georgia, to its JV partner - Georgian Steel Group Holdings. Post the completion of the aforesaid sale, JSW Steel (Netherlands) B.V. will continue to hold 10% stake in Geo Steel LLC.

Stocks in Spotlight:

ICICI Bank (down 0.99%), Infosys (down 0.54%) and TCS (down 0.69%) declined.

HDFC Bank (up 0.47%), ITC (up 0.51%) and Reliance Industries (up 0.13%) advanced.

Bharti Airtel advanced 1.14% after the media reported that the telecom major raised the minimum monthly recharge for prepaid users to Rs 45 with immediate effect from Sunday. According to media reports, it will be mandatory to recharge with a voucher of Rs 45 or above every 28 days to avail services. Prior to this Rs 45 plan, consumers could get an additional 28-day validity through a recharge of Rs 23 which included only incoming calls and messages.

Adani Ports and Special Economic Zone (APSEZ) rose 0.56% to Rs 365.70. APSEZ said that its wholly-owned subsidiary, Adani Logistics (ALL), acquired 6,72,54,119 equity shares representing 40.25% stake of Snowman Logistics from Gateway Distriparks (GDL) at Rs 44 per equity share, aggregating to Rs 295.92 crore. The acquisition gives ALL platform to double its capacity in next 5 years.

Adani Logistics will also make an open offer for a maximum of 26% of the public shareholding in Snowman Logistics at Rs 44 per share.

Gateway Distriparks surged 11.53% to Rs 122.40 while Snowman Logistics rose 1.76% to Rs 43.40.

RITES rose 1.54% after the board of directors approved investment of Rs 48 crore for acquiring a 24% in Indian Railways Station Development Corporation. The company also declared an interim dividend of Rs 6 per share. The record date for the dividend is 10 January 2020.

Inox Wind rose 2.51% after the company signed a term sheet for an EPC contract of 250 MW from Continuum Power Trading (TN).

Punjab & Sind Bank slumped 5.74%. CARE Ratings reaffirmed its rating on various debt instruments of the company but revised its rating outlook to negative from stable.

Shares of Prince Pipes and Fittings settled at Rs 166.60 on BSE, at a discount of 6.40% over the initial public offer (IPO) price of Rs 178.

The stock debuted at Rs 160, a discount of 10.11% to IPO price. The stock hit a high of Rs 177.95 and low of Rs 152.60. On BSE, 20.37 lakh shares were traded on the counter.

The IPO of Prince Pipes and Fittings received bids for 4.37 crore shares, as against 1.97 crore shares on offer. The issue was subscribed 2.21 times. The issue opened for bidding on 18 December 2019 and it closed on 20 December 2019. The price band was fixed at Rs 177 to Rs 178 per share.

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