We had mentioned in Tuesday’s closing report that Nifty, Sensex were in the firm grip of bulls. The major indices of the Indian stock markets were range-bound on Wednesday and closed with gains over Tuesday’s close. On the NSE, there were 609 advances, 1,132 declines and 336 unchanged. The trends of the major indices in the course of Wednesday’s trading are given in the table below:
The 30-scrip Sensitive Index (Sensex) on Wednesday opened on a slightly positive note during the morning session of the trade but soon turned negative. The Sensex of the BSE opened at 37,608.29, touched a high of 37,639.54, and a low of 37,478.87 points. It is trading at 37,516.51 down by 19.15 points or 0.05% from its Tuesday's close at 37,535.66. On the other hand, the broader 50-scrip Nifty at the National Stock Exchange (NSE) opened at 11,326.20 after closing at 11,301.20. The Nifty is trading at 11,279 in the morning.
Lower food prices eased India's February retail inflation to 2.57%, while a sharp decline in manufacturing output slowed industrial production in January to 1.7%, official data showed on Tuesday. Lower food prices halved India's retail inflation in February to 2.57% from 4.44% in the year ago month. Sequentially the Consumer Price Index (CPI) in February (2.57%) was higher than January's retail inflation rate of 1.97%.
As per the data, the rate of manufacturing sector output growth slowed to 1.3% in January from year-on-year rise of 8.7%. On the YoY basis, mining production edged higher 3.9% and the sub-index of electricity generation inched up 0.8%. Additionally, among the six use-based classification groups, the output of primary goods, which has the highest weightage of 34.04, rose just 1.4%. On the other hand, the output of intermediate goods, which has the second highest weightage, declined (-)3%. In contrast, the output of consumer non-durables rose 3.8% and that of consumer durables 1.8%. In addition, output of infrastructure, or construction goods, increased 7.9%, whereas the output of capital goods declined (-)3.2%. "It is now seventh consecutive months of CPI inflation being lower than the RBI's inflation target of 4%," said Devendra Kumar Pant, Chief Economist, India Ratings and Research (Fitch Group). "With inflation remaining below the RBI's target, inflationary expectations declining and growth profile weakening, the central bank may front load its monetary easing in the beginning of FY20," Pant said. According to Ranen Banerjee, Partner and Leader, public finance and economics, PwC India, though the IIP has returned a lower number on a sequential basis, the year-to-date (YTD) growth rate average is still higher than the previous year and is also reflecting the base effect given the higher growth rates numbers in the second half of last year. "The lower IIP numbers and inflation slightly over 2.5% gives headroom for further monetary policy action by the central bank," Banerjee said.
Defying a flat-to-negative trend in the IT (information technology) stocks, Mindtree shares rose over 1% on Wednesday after reports emerged that Larsen and Toubro (L&T) was preparing for a hostile takeover of the infotech (IT) company. According to a media report, L&T is set to sign a binding agreement to buy Cafe Coffee Day founder VG Siddhartha's stake in the company. An announcement of this in the coming weeks is like to trigger a hostile takeover bid, which may make an open offer to increase its stake to 51% in Mindtree. It may eventually lead to the current management losing control of the company, reports said. At 1.40 p.m., shares of Mindtree traded at Rs928.05, higher by Rs11.55 or 1.26% from its previous close. When contacted by IANS regarding the reports, a spokesperson of L&T said: "We do not wish to comment on market speculation." Mindtree shares closed at Rs923.95, up 0.81% on the BSE. Larsen & Toubro shares closed at Rs1,378.70, down 0.75% on the BSE.
The stock of Budget carrier SpiceJet, which operates the largest fleet of Boeing 737 MAX aircraft in India, fell 8% during the early trade on Wednesday, a day after the Indian civil aviation regulator ordered grounding of all such planes. Shares of SpiceJet, which has 12 of the total 17 Boeing 737 MAX aircraft in India, fell 7.9% to touch an intra-day low of Rs72.50 per share on the BSE around 10.30 a.m. The Directorate General of Civil Aviation (DGCA) late on Tuesday ordered "grounding the Boeing 737-MAX planes immediately" after aviation authorities across the globe, with the notable exception of the US, decided to ground the particular aircraft following Sunday's crash of an Ethiopian Airlines' aircraft of the same model killing all 157 people on board.
Following the DGCA order, SpiceJet on Wednesday said it has cancelled multiple flights. "SpiceJet has presently announced cancellation of 14 flights for today (Wednesday) and will be operating additional flights from tomorrow. Of the 76 planes in our fleet, 64 aircraft are in operation and we are confident of minimizing the inconvenience," an airline statement said. The DGCA has said that the Boeing 737 MAX planes will be grounded till appropriate modifications and safety measures are undertaken to ensure their safe operations. It came just months after an Indonesian Boeing 737 MAX aircraft met the same fate. India is the latest country to ground this aircraft, joining the European Union, Australia, Italy, China, and Singapore, which restrained their airlines from operating the Boeing 737 MAX planes. Following the global grounding of flights, Boeing shares also logged steep fall on the Dow Jones Industrial Average. SpiceJet shares closed at Rs77.15, down 2.09% on the BSE.
British American Tobacco or BAT which is ostensibly the parent of ITC with 29.54% shareholding has suffered a massive meltdown in its parent market in recent times. While the stocks of standalone tobacco majors have seen a decline, BAT's year-on-year market cap between December 2017 and December 2018 was down sharply from 115 billion pounds to 59 billion GBP, an crash of 48.7%. Incidentally, with India being a growth market for such transnational companies, ITC's contribution to BAT's market cap is an astounding 15 billion GBP. Seen very much as an Indian company despite BAT being a substantive shareholding, Domestic Financial Institutions and SUTTI between them hold 30.17% which is more than the parent BAT's. ITC from a pure play tobacco major has become a diversified conglomerate with a market cap of nearly $50 billion on its own.
Fears of tighter regulation have weighed on BAT's shares, equally a new CEO is due to take charge next month which leaves the future trajectory open ended. A likely ban on menthol cigarettes it sells under the Newport brand have contributed in the share price erosion, as the segment accounts for 50% of its US volumes and 25% of group profits. Another key reason in BAT taking a hammering on the bourses has been the RAI acquisition. BAT which owned 42% of RAI acquired the remaining stake of 58% for $49 billion effective July 25, 2017, subsequently rating agencies downgraded the company, impacting it on the bourses.
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: