The market reversed two-rising streak amid broad based selling pressure on Friday. Sentiment was affected after Moody's cut India's credit ratings outlook to negative from stable, citing the government's struggle to lift economic growth and narrow the budget deficit.
Investors also mirrored negative global stocks amid uncertainty about the ongoing China-US trade war. The media reported that an agreement between the United States and China to roll back existing tariffs as part of a "phase one" trade deal faces fierce internal opposition in the White House and from outside advisers. The idea of a tariff rollback was not part of the original October "handshake" deal between Chinese Vice Premier Liu He and U.S. President Donald Trump, reports added.
The barometer index, the BSE Sensex fell 330.13 points or 0.81% to close at a 40,323.61. The Sensex scaled fresh all time high of 40,749.33 in afternoon trade.
The Nifty 50 index fell 103.90 points or 0.86% to 11,908.15. The index hit an intraday high of 12,034.15 in afternoon trade.
In the broader market, the S&P BSE Mid-Cap index fell 0.79% while the S&P BSE Small-Cap index declined 0.53%.
The market breadth was negative. On the BSE, 1040 shares rose and 1482 shares fell. A total of 175 shares were unchanged.
Credit rating agency Moody's lowered nation's outlook to negative from stable, while retaining the issuer rating at Baa2. The rating agency said its decision to change the outlook to negative reflects increasing risks that economic growth will remain materially lower than in the past, partly reflecting lower government and policy effectiveness at addressing long-standing economic and institutional weaknesses, leading to a gradual rise in the debt burden from already high levels. Moody's cited a growing debt burden and the government's struggle to narrow the budget deficit.
Finance Minister Nirmala Sitharaman on Thursday chaired a meeting with members of the Financial Stability and Development Council (FSDC). The FSDC is an apex-level body constituted, with an aim to strengthen and institutionalise the mechanism of maintaining financial stability and financial sector development among others, by the government of India with the finance minister as its head.
The body also includes the Reserve Bank of India (RBI) governor and chairpersons of the Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA) as its members along with finance ministry officials. The last meeting of the FSDC was held on June 19, in which the global and domestic economic situation and financial stability issues including, inter-alia, those concerning banking and NBFCs were reviewed among others.
Crude & Currency:
In the foreign exchange market, the Indian rupee edged lower against the dollar. In the spot currency market, the Indian unit was last seen trading at 71.205. On Thursday, it closed at 70.97 against the US dollar.
In the commodities market, Brent crude for January 2020 settlement was down 91 cents at $61.38 a barrel. The contract rose 55 cents or 0.89% to settle at $62.29 a barrel during the previous trading session.
European stocks declined while most Asian markets ended lower amid uncertainty about the fate of the trade negotiations between the United States and China. Worries the pact could fall apart are now prompting some investors to sell heading into the weekend.
China's Commerce Ministry said Thursday that the world's two largest economies had agreed to lift existing tariffs in phases. Shortly thereafter, a White House spokesperson told Fox News that she was very optimistic that Washington and Beijing would reach a trade deal soon.
It prompted a surge of optimism in financial markets on Thursday, but worries that the pact could fall apart has since dampened investor sentiment.
German exports posted their biggest rise in almost two years in September, data showed on Friday.
China's exports and imports declined less than expected in October.
In US, the Dow and S&P 500 notched record closing highs on Thursday as the latest signs of progress in U.S.-China trade relations relieved investors, but a report raising fresh worries about the outlook for a deal limited the day's gains.
The Nifty Pharma index fell 2.24% at 7,787.40, snapping its 2-day winning streak.
Sun Pharmaceutical Industries (down 4.23%), Aurobindo Pharma (down 2.89%), Lupin (down 2.54%), Glenmark Pharmaceutical (down 2.37%), Cipla (down 2.06%), Dr. Reddy's Laboratories (down 1.77%), Piramal Enterprises (down 1.26%), Divi's Laboratories (down 0.99%) and Cadila Healthcare (down 0.92%) declined.
Wockhardt tumbled 4.79%. The company reported a consolidated net loss of Rs 94.24 crore on a net loss in Q2 September 2019, higher than net loss of Rs 30.84 crore in Q2 September 2018. Net sales declined 28.7% to Rs 802.18 crore on YoY basis. The company announced its Q2 2019 earnings after market hours yesterday.
Mahindra & Mahindra (M&M) slipped 0.07%. M&M reported 24% decline in combined profit after tax (after EI) to Rs 1,355 crore on a 15% decline in revenues to Rs 10,935 crore in Q2 September 2019 over Q2 September 2018.
The company reported a combined operating margin of 14.1% in Q2 FY20 as against 14.5% in Q2 FY19.
The company sold 1.10 lakh vehicles in Q2 FY20, lower by 21% from 1.41 lakh units in Q2 FY19. The total tractors sales decrease by 6% to 68,359 units in Q2 FY20 as against 73,012 units in Q2 FY19. Total exports slumped 21% to 10,540 units in Q2 FY20 as compared to 13,377 units in Q2 FY19.
The results include the combined results of M&M and Mahindra Vehicle Manufacturers (MVML), which is a manufacturing unit of M&M.
Eicher Motors rose 1.26%. On consolidated basis, the company's net profit rose 1.19% on YoY basis backed by corporate tax rate cut during the current quarter. The company reported profit after tax at Rs 573 crores in Q2 September 2019 as compared to Rs 549 crores in Q2 September 2018. Total revenue from operations fell 9% amid slowdown in auto segment. The company reported revenue from operations stood at Rs 2,192 crore in Q2 2019 compared with Rs 2,408 crore in Q2 2018. EBITDA stood at Rs 541 crore in Q2FY19, down by 26% compared to Rs 729 crore in Q2FY2018.
GAIL (India) fell 3.86%. On consolidated basis, the company's net profit declined 34.73% YoY to Rs 1167.58 crore in Q2 September 2019. Total revenue from operations fell 6% to Rs 18249.90 crore in Q2 2019 compared with Rs 19352.98 crore in Q2 2018.
Power Grid Corporation of India shed 1.26%. The company reported 9.49% rise in consolidated net profit to Rs 2571.10 crore on 2.34% fall in total income to Rs 9659.79 crore in Q2 September 2019 over Q2 September 2018.
Bharat Petroleum Corporation (BPCL) declined 2.03%. BPCL reported 2.68% rise in consolidated net profit to Rs 1502.63 crore on 10.99% fall in total income to Rs 65015.28 crore in Q2 September 2019 over Q2 September 2018.
GlaxoSmithkline Consumer Healthcare slipped 2.80%. The company reported 25.34% rise in net profit to Rs 345.31 crore on 4.57% rise in total income to Rs 1423.22 crore in Q2 September 2019 over Q2 September 2018.
UPL fell 4.18%. The company's consolidated net profit fell 59.4% to Rs 126 crore on 83.6% surge in net sales to Rs 7,817 crore in Q2 September 2019 over Q2 September 2018.
Stocks in Focus:
Morgan Stanley Capital International (MSCI) announced the results of the November 2019 semi-annual index review for the MSCI equity indexes. All changes will be implemented as of the close of 26 November 2019.
HDFC Asset Management Company (up 5.65%), DLF (up 5.59%), ICICI Prudential Life (up 0.31%), SBI Life Insurance Co (down 0.44%), Siemens India (down 1.08%) and Berger Paints India (down 4.19%) were included in the MSCI India Domestic Index.
Indraprastha Gas (up 6.44%) and Info Edge (India) (up 0.76%) were also added in the MSCI India Domestic Index. Simultaneously, these two stocks were excluded from the MSCI India Domestic Small Cap Index.
Meanwhile, Indraprastha Gas reported 101.25% rise in consolidated net profit to Rs 415.82 crore on 19.93% rise in total income to Rs 1773.84 crore in Q2 September 2019 over Q2 September 2018.
DLF reported 140% rise in consolidated net profit to Rs 414.72 crore on 11.7% decline in net sales to Rs 1331.19 crore in Q2 September 2019 over Q2 September 2018.
Bajaj Finance fell 1.58% to Rs 4160.55. The company allotted 2.17 crore shares to eligible qualified institutional buyers at the issue price of Rs 3,900 per equity share, aggregating to Rs 8,499 crore. The issue opened on 4 November 2019 and closed on 7 November 2019.
Reliance Industries fell 0.92%. Reliance Strategic Business Ventures (RSBVL), a wholly owned subsidiary of the Reliance Industries has acquired further shares in SkyTran Inc. on 6 November 2019, to increase its shareholding in SkyTran Inc. to 17.37% on a fully diluted basis.
Raymond hit 20% upper circuit at Rs 808.40. The company announced the demerger of its core lifestyle business into a separate entity that will be listed through mirror shareholding structure. Every shareholder of Raymond will be issued the shares of the new company in the ratio of 1:1. The move will create a clear demarcation of lifestyle & other businesses leading to the simplification of the group structure.
In another development, Raymond announced the allotment of equity shares and compulsorily convertible preference shares (CCPS) to J. K. Investo Trade (India) (JKIT), an associate company, against the infusion of net proceeds of JKIT land sale that was announced in October 2019. A total of Rs 350 crore will be used to repay the debt thus deleveraging the balance sheet of Raymond.
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