Indices ended a roller-coaster session with losses on Monday. The Nifty managed to regain the 11,400 mark after slipping below this level in intraday trade. As per provisional closing data, the barometer index, the S&P BSE Sensex lost 158.12 points or 0.41% at 38,696.55. The Nifty 50 index fell 47.15 points or 0.41% at 11,417.45.
HDFC (down 1.75%), HDFC Bank (down 1.91%) and Reliance Industries (down 0.71%) dragged the indices lower.
Investors were concerned as the Securities and Exchange Board of India (SEBI)'s new upfront margin collection norm in the cash market kicks in from 15 September 2020. SEBI had changed the margin collection norm from 1 September 2020. However, the process was marred by technical glitches. Later, the National Stock Exchange (NSE) extended the deadline for the imposition of penalty on brokers for not collecting adequate margins by fifteen days till 15 September 2020.
SEBI's new regulations stipulate that all investors need to bring in upfront margins for selling their stocks or for making any purchases. Any client failing to do so will attract a penalty. The stocks lying in the investors' demat account, which were equivalent to margin available till now, will now be replaced with the pledging of these shares to the broker.
Meanwhile, the broader market surged after SEBI on 11 September issued a circular mandating multi cap funds to allocate least 25% of their portfolios in large-, mid- and small-caps each by February 2021. The S&P BSE Mid-Cap index was up 1.45% while the S&P BSE Small-Cap index jumped 4%.
The market breadth was strong. On the BSE, 1823 shares rose and 931 shares fell. A total of 182 shares were unchanged.
The Ministry of Commerce & Industry announced Wholesale Price Index (WPI) for August 2020. The annual rate of inflation, based on monthly wholesale price-based inflation (WPI), increased 0.16% from a year earlier in August 2020, after a 0.58% decline in July 2020. The index rose 1.17% during the corresponding month of the previous year. The government will announce Consumer Price Index (CPI) inflation later today.
S&P Global Ratings has forecast India's economy to shrink by 9% in FY21. It said that rising COVID-19 cases in India will keep private spending and investment lower for longer.
To achieve the desired objective of true to label and appropriate benchmarking, SEBI issued a circular dated 11 September 2020 on multi cap schemes of mutual funds, requiring them to invest a minimum of 25% each in large, mid and small cap stocks, with the balance 25% giving flexibility to the fund manager.
SEBI on 13 September 2020 clarified that mutual funds have many options to meet with the requirements, based on the preference of their unit holders. Apart from rebalancing their portfolio in the multi cap schemes, they could facilitate switch to other schemes by unit holders, merge their multi cap scheme with their large cap scheme or convert their multi cap scheme to another scheme category, for instance Large cum mid cap scheme.
SEBI is conscious of market stability and therefore has given time to the mutual funds till 31 January 2021 to achieve compliance, through its preferred route of which rebalancing of the portfolio is only one such route.
Monsoon Session of Parliament:
The Monsoon session of the Parliament kicked off today (14 September). In view of the COVID-19 pandemic, the session will be held in two shifts - 9 AM to 1 PM and 3 PM to 7 PM. Except for the first day, the Rajya Sabha will sit in the morning shift and the Lok Sabha will sit in the evening. The Session will take up 47 items during its 18 sittings till 1st October. It will take up eleven Bills to replace the ordinances. These includes the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, the Indian Medicine Central Council (Amendment) Bill, 2020, the Essential Commodities (Amendment) Bill, 2020, the Banking Regulation (Amendment) Bill, 2020, the Epidemic Diseases (Amendment) Bill, 2020 and the Salary and Allowances of Ministers (Amendment) Bill, 2020.
Total COVID-19 confirmed cases worldwide stood at 28,902,170 with 9,22,735 deaths. India reported 9,86,598 active cases of COVID-19 infection and 79,722 deaths while 37,80,107 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India. India's recovery rate has improved to 77.88%. The COVID-19 case fatality rate has further dropped to 1.65%.
Stocks in Spotlight:
Tata Motors rose 3.36%. Tata Motors' wholly owned subsidiary, Jaguar Land Rover (UK) said retail sales totaled 36,421 in July and 28,887 vehicles in the seasonally lower month of August.
Notably UK retail sales in July and August were up significantly year-on-year, 29.1% and 14.3% respectively.
Mahindra and Mahindra (M&M) rose 0.58%. M&M said that share purchase agreement entered into for sale of 93,15,000 equity shares of Neo Solren (NSPL) held by Mahindra Renewables (MRPL), a step-down wholly owned subsidiary of M&M, to CLP India stands terminated on 10th September 2020.
Yes Bank added 0.89%. Credit rating agency ICRA upgraded its ratings assigned to various debt instruments of Yes Bank on improved liquidity. ICRA said the rating upgrade factors in the sizeable capital raise of Rs 15,000 crore in July 2020, which has resulted in an improvement in the capital ratios of Yes Bank.
JBM Auto jumped 3.91% after the company said it bagged an order from Delhi Integrated Multi-Modal Transit System (DIMTS) for supplying 116 BS6 AC low floor CNG buses. JBM Auto will be supplying 116 Citylife BS6 buses to operator which will be running under the DIMTS Cluster in New Delhi. Deliveries of the first batch of these buses shall start this month end onwards, the company said during trading hours today, 14 September.
Adani Enterprises slipped 0.69% Adani Land Defence Systems and Technologies, a step down subsidiary of Adani Enterprises, has acquired 51% equity of PLR Systems from Fouraces Systems India on 10 September 2020. PLR Systems was incorporated in 2013 and is engaged in the manufacture and supply of indigenously manufactured defence equipment to the Armed Forces countries. PLR Systems has an authorised share capital of Rs 13 crore and paid up share capital of Rs 12.04 crore.
HCL Technologies jumped 10.6% after the company said it expects the revenue and the operating margin for the September 2020 quarter to be meaningfully better than the top end of the guidance provided in July 2020. It added that the revenue growth for the current quarter is expected to exceed 3.5% quarter on quarter in constant currency, enabled by broad based momentum across all service lines, verticals and geographies. The company expects EBIT margin for the current quarter to be between 20.5% and 21%.
Bharat Heavy Electricals (BHEL) fell 2%. On a consolidated basis, BHEL reported a net loss of Rs 893.14 crore in Q1 June 2020, higher than net loss of Rs 218.93 crore in Q1 June 2019. Consolidated net sales tanked 57% to Rs 1,896.57 crore in Q1 June 2020 over Q1 June 2019.
US Dow Jones futures were up 236 points, indicating a strong opening in US stock market today.
European shares were mixed on Monday. The media reported that Phase III trials of AstraZeneca's coronavirus vaccine have resumed in the U. K. after trials were halted last week over safety concerns. AstraZeneca received confirmation from the United Kingdom's Medicines Health Regulatory Authority that it was safe to resume clinical trials.
Asian shares closed higher, with investors watching shares of Japanese conglomerate Softbank Group following an announcement of its sale of U. K. chip designer Arm to U. S. chip firm Nvidia. Chipmaker Nvidia has agreed to buy Arm Holdings, a designer of chips for mobile phones, from Softbank in a deal worth $40 billion, the companies announced Sunday. The deal will be for a mix of $21.5 billion in Nvidia stock and $12 billion in cash, including $2 billion payable at signing.
Developments in Japanese politics were also watched as the search for the successor for Prime Minister Shinzo Abe continues. The ruling Liberal Democratic Party is set to hold an election to choose its new leader on Monday.
In US, the Nasdaq Composite Index fell 66.05 points, or 0.6%, finishing at 10,853.55 in another volatile session on Friday on continuing sell-off in tech stocks. The Dow Jones Industrial Average rose 131.06 points, or 0.5%, ending at 27,665.64; while the S&P 500 rose 1.78 points, or 0.1%, to close at 3,340.97. Apple dropped 1.3% and Amazon fell by 1.9%. Facebook, Alphabet and Microsoft were all down. ByteDance rejected Microsoft's bid to buy TikTok's U. S. operations.
The Labor Department said Friday its U. S. consumer price index rose by 0.4% in August. The Treasury Department said the federal budget deficit officially surpassed $3 trillion in August, and is on pace to hit $3.3 trillion when the fiscal year ends this month.
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