Market snaps 4-day rising streak

Key benchmark indices snapped four-day rising streak on Monday. The trading sentiment took a hit as trends showed Congress, Jharkhand Mukti Morcha (JMM) and Rashtriya Janata Dal (RJD) alliance ahead of the ruling BJP in Jharkhand Assembly election. The Nifty 50 index slipped below 12,250 level. Gains in HDFC twins and Infosys were eclipsed by losses in index major Reliance Industries (RIL).

The barometer index, the BSE Sensex, fell 38.88 points or 0.09% to 41,642.66. The Nifty 50 index lost 5.65 points or 0.05% to 12,266.15.

Indices opened lower and hovered in a tight range with small losses for most part of the session. Steep selling pressure dragged the benchmarks to the day's low in mid-afternoon trade. The barometers erased most of the losses in late trade as buying emerged at lower levels.

In the broader market, the S&P BSE Mid-Cap index fell 0.09% while the S&P BSE Small-Cap index lost 0.07%.

The market breadth was positive. On BSE, 1118 shares advanced while 1410 shares declined. A total of 193 shares were unchanged.

The Sensex and the Nifty rose 1.81% each in four consecutive sessions till Friday, 20 December 2019.

Politics:

Jharkhand Assembly election results will be declared today. BJP government went solo this time. The opposition alliance of the Jharkhand Mukti Morcha (JMM), the Congress and the Rashtriya Janata Dal (RJD) seems to be having an edge in the 81-member Assembly.

While the BJP is ahead on 27 seats, JMM is leading in 29 seats. Congress is ahead on 13 seats and RJD is leading in 2 seats. The majority mark for winning the election is 41 seats.

Legislative Assembly elections were held in Jharkhand from 30 November to 20 December 2019 to elect the 81 members of Legislative Assembly.

Buzzing Index:

The Nifty PSU index fell 1.29% to 2,537.70 on profit booking after a stellar rally in the previous session. The index surged 2.28% to end at 2570.90 on Friday.

Indian Bank (down 2.47%), UCO Bank (down 2.42%), Canara Bank (down 2%), United Bank of India (down 1.92%), Syndicate Bank (down 1.68%), Central Bank of India (down 1.63%), State Bank of India (down 1.63%), Punjab National Bank (down 1.62%), Corporation Bank (down 1.38%), Union Bank of India (down 1.35%), Punjab & Sind Bank (down 1.04%), Bank of Baroda (down 0.99%), Bank of Maharashtra (down 0.93%), Andhra Bank (down 0.57%) and Bank of India (down 0.57%) declined.

The rally in PSU bank stocks was triggered by the Reserve Bank of India (RBI) announcing a special open market operationsimultaneously buying long-tenor bonds and selling short-tenor government bondsdubbed 'Operation Twist' by the market.

The simultaneous sale and purchase operation has a two-pronged objective: Lowering the steep term premium at the longer end of the yield curve despite the RBI's accommodative monetary policy, and surplus systemic liquidity and correcting yields at the shorter end.

Stocks in Spotlight:

Shares of Titan Company, UltraTech Cement and Nestle India were in the limelight ahead of their entry in the BSE Sensex post market hours today, 23 December 2019.

As a part of rejig, Titan Company (up 0.54%), UltraTech Cement (down 0.74%), Nestle India (down 2.20%) will be added to BSE Sensex whereas Tata Motors (up 0.03%), Tata Motors DVR (up 1.17%), Vedanta (up 2.46%), Yes Bank (down 3.31%) will be deleted from the BSE Sensex. Any change in index weights can result in portfolio churns for major funds. The BSE will also rejig 14 other indices. However, there will be no change in the S&P BSE Bankex.

IT major Infosys rose 0.53% to Rs 735.85. Index giant TCS rose 0.45% to Rs 2232.45.

Shares of HDFC twins jumped. Housing Development Finance Corporation (HDFC) rose 1.09% to Rs 2430.95 while HDFC Bank rose 0.47% to Rs 1302.30.

Index heavyweight Reliance Industries (RIL) fell 1.78% on reports that the government has sought to block RIL selling a 20% stake in its oil and chemical business to Saudi Aramco. According to the report, the Delhi High Court on Friday (20 December) asked RIL and British Gas to disclose their assets after the Centre sought to restrain them from disposing of the same. In an application filed in September, the government had sought curbs citing the failure of the two companies to honour their payment under a $4.5 billion international arbitral award in the Panna-Mukta and Tapti production sharing contracts.

In August, RIL announced its plans to sell 20% stake in its refining and petrochemicals business for $15 billion to Saudi Aramco. The deal, which values the oil-to-chemicals (O2C) business at $75 billion, is part of a plan to make RIL a zero-debt company in the next 18 months.

KEC International rose 1.56%. The company said it has secured new orders of Rs 1,520 crore across its various businesses.

Emami rose 1.15% after media house reported that UltraTech Cement has emerged as the front-runner to buy the cement business of Emami Group in an all-cash deal worth Rs 6,500-7,000 crore.

BASF India surged 4.54% after the company's German parent signed a purchase agreement with an affiliate of Lone Star, a global private equity player, for acquisition of BASF's construction chemicals business. The purchase price on a cash and debt free basis is 3.17 billion euros. The transaction is expected to close in the third quarter of 2020, subject to regulatory approvals.

Ramco Systems jumped 3.11%. Hong Kong Aircraft Engineering Company (HAECO Group), announced it will continue to work with Ramco Systems to bring the global software specialist's advanced Aviation solutions to four more business units in Hong Kong, Xiamen and Jinjiang, the company said in a filing to the exchanges.

HAECO's partnership with Ramco began last year when HAECO ITM, a HAECO Group company which provides inventory technical management solutions, adopted Ramco's Aviation Suite.

Foreign Market:

Most shares in Europe and Asia edged higher amid greater optimism for U.S.-China relations.

U.S. President Donald Trump on Friday said he had "a very good talk" with China's leader Xi Jinping about the so-called phase one trade deal they struck in mid-December. That indicated more progress has been made after they reached the initial agreement.

The president said in a tweet that China has started large scale purchases of U.S. agricultural products, and a formal deal signing is being arranged. On Saturday, he said both countries would very shortly sign the deal.

In other positive trade developments, China on Monday said it will lower import tariffs on over 850 products from Jan.1, including frozen pork, as well as some information technology products starting July 1.

In US, stock indexes set records highs on Friday, after encouraging US economic data and optimism about international trade deals.

On economic front, the Commerce Department's third estimate of third-quarter GDP, published on Friday, left growth unchanged 2.1%, with strong consumer spending offset by weaker business investment in inventories.

In other US economic data, Americans increased spending in November at the fastest rate in four months.

Wall Street sentiment also remains supported by progress on international trade policy, after the US House passed the United States-Mexico-Canada Agreement (USMCA) bill to replace North American Free Trade Agreement (NAFTA) on Thursday and the US and China agreed on a partial deal last Friday.

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