Nifty slides below 12,250; IT shares correct

The market declined for second consecutive session on Tuesday, as investors locked in some of the recent gains in thin trading ahead of the Christmas holiday on Wednesday. Significant selling in the last hour of trade pushed the Nifty below 12,250 level.

An improving outlook on the global economy and optimism surrounding US-China trade deal had sent domestic equities to an all-time high last week.

The barometer index, the BSE Sensex, fell 181.40 points or 0.44% to 41,461.26. The Nifty 50 index lost 50.75 points or 0.41% to 12,212.

In the broader market, the S&P BSE Mid-Cap index fell 0.02% while the S&P BSE Small-Cap index rose 0.02%.

 

The market breadth was negative. On BSE, 1147 shares advanced while 1337 shares declined. A total of 174 shares were unchanged.

Economy:

The Union Cabinet on Tuesday approved Atal Bhujal Yojana, a central sector scheme with total outlay of Rs 6000 crore. The scheme will be implemented over a period of 5 years in identified areas in Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh. The sceme will boost income of farmers.

The Cabinet also approved conduct of Census of India 2021 and updation of National Population Register. Cabinet approved expenditure of over Rs 8,754 crore for the exercise of Census of India 2021 and over Rs 3, 941 crore for updation of National Population Register. The NPR exercise is to commence from April next year. The NPR is a list of "usual residents" of the country.

Cabinet also approved Promulgation of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019.

In a big move for Indian Railways, the Cabinet today approved the restructuring of the Railway Board. Under the new approved structure, the Railway Board will now consist of 4 members and a chairperson, a reduction from the present number of eight. The Railway Board will now have Members for Infrastructure, Rolling Stock and Traction, Finance, Operations and Business Development. The Cabinet also approved the merging of railway cadres, which will now be called Indian Railway Management Service (IRMS).

Meanwhile, the International Monetary Fund (IMF) said on Monday, that India's government must take steps quickly to reverse the economic slowdown of an economy that has been one of the engines of global growth. Declining consumption and investment, and falling tax revenue, have combined with other factors to put the brakes on one of the fastest growing economies in the world, the IMF said in its annual review.

IMF chief economist Gita Gopinath last week said India's slowdown had "surprised to the downside," and said the fund is set to significantly downgrade its growth estimates for the Indian economy in the World Economic Outlook which will be released next month.

Politics:

Bharatiya Janata Party (BJP)'s political troubles deepened with the party losing control of the mineral-rich eastern state of Jharkhand just months after losing the crucial state of Maharashtra.

The Jharkhand Mukti Morcha's (JMM) legislature party will reportedly elect its leader at a meeting in Ranchi on Tuesday. JMM fought the election in alliance with Congress and Lalu Prasad's Rashtriya Janta Dal (RJD) to win a comfortable majority with 47 seats.

Jharkhand Mukti Morcha's (JMM) won 30 seats, Congress 16 and RJD one seat in the election. BJP, which went solo, won 25 seats.

Legislative Assembly elections were held in Jharkhand from 30 November to 20 December 2019 to elect the 81 members of Legislative Assembly. The election results were declared on Monday.

Foreign Markets:

Shares in Europe and Asia witnessed mixed trend on Tuesday ahead of the Christmas holiday on Wednesday.

In US, stocks recorded closing records on Monday as investors focused on a report that China will cut import tariffs for frozen pork, pharmaceuticals and some high-tech components starting 1 January 2020. The S&P and Nasdaq both hit new intraday highs Monday morning.

Investors cheered the news that China will cut import tariffs on a wide range of goods. China's finance ministry announced starting January 1, it will lower import tariffs on over 850 products ranging from frozen pork to some types of semiconductors. China is making efforts to boost imports amid a slowing economy and a trade war with the U.S.

Buzzing Domestic Indices:

The Nifty IT index fell 0.54% to 15,780.25. The index corrected after rising 5.96% in the preceding seven trading sessions.

HCL Technologies (down 1.88%), Mphasis (down 1.11%), Mindtree (down 0.84%), TCS (down 0.78%), Tech Mahindra (down 0.75%), Wipro (down 0.59%), Infosys (down 0.35%) and Oracle Financial Services Software (down 0.22%) declined.

The Nifty Metal index rose 0.52% to 2,720.35, outperforming other sectoral indices on the NSE.

NALCO (up 3.88%), Jindal Steel & Power (up 1.49%), JSW Steel (up 1.1%), NMDC (up 0.73%), SAIL (up 0.24%), Tata Steel (up 0.18%) and Vedanta (up 0.17%) advanced.

Hindalco Industries gained 0.58%. The aluminum and copper manufacturing company said its Muri refinery in Jharkhand restarted production of Alumina after receiving consent to operate from Jharkhand State Pollution Control. On 10 April 2019 the company had informed that operations of Alumina plant were suspended due to the spillage in the red mud cake storage area. Going forward, the company may not need to import Alumina.

Stocks in Spotlight:

NIIT Technologies rose 1.26% to Rs 1,597.70. The company said its board approved buy-back of up to 19,56,290 fully paid equity shares at a price of up to Rs 1,725 per share aggregating up to Rs 337 crore. The number of securities proposed to be bought back represents 3.1% of the existing paid up equity share capital of the company.

GE T&T India rose 2.39%. GE T&T India said it has executed an agreement to sell its undertaking at Naini, Allahabad to Shirdi Sai Electricals. This will result in optimising the utilisation level of the transformer manufacturing factories in the company and consolidation of company's transformer manufacturing related operations in India.

Indian Railway Catering and Tourism Corporation (IRCTC) rose 2.65% after the railway company revised tariff structure on standard meals on static units on Indian Railways. IRCTC has also signed a Memorandum of Understanding (MoU) with Hotel and Restaurant Association of Northern India (HRANI) on Monday, 23 December 2019 for listing the of HRANI member hotels and their room rate inventory for sales on IRCTC portal. The disclosure made after trading hours yesterday, 23 December 2019.

Lemon Tree Hotel rose 3.72%. The hotel chain company informed that it has signed a license agreement for a 55 room upcoming Hotel at Hill Cart Road in Darjeeling under the company's brand Lemon Tree Hotel. The hotel will add to the portfolio of hotels in West Bengal which include operating hotels in Kolkata and Siliguri. The Hotel shall be operated through its subsidiary and management arm, Carnation Hotels.

Sterling Tools (STL) hit an upper circuit limit of 20% at Rs 215 after the company entered into a joint venture (JV) agreement with China's Jiangsu Gtake Electric Company (GTAKE) to provide the Indian electric vehicle OEM's with best-in-class motor control units (MCUs). In the proposed joint venture company (JVC), STL will hold 51% stake while the remainder 44% stake will be held by GTAKE. The joint venture company would be a subsidiary of STL and will commence production by Q1 FY2021.

IFCI surged 7.64% after the company said it sold its entire 2.44% stake in NSE. IFCI in an exchange filing during market hours said that it has divested its entire stake in National Stock Exchange (NSE), comprising of 1.20 crore equity shares, or 2.44% equity. The company said it has realized approximately Rs 805.60 crore, representing about 82% of the total committed amount. Process for receipt of approval for remaining quantity is underway, it added.

United Breweries rose 4.79%. Heineken may reportedly make offer to raise stake in the company.

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