Sensex, Nifty slip into red after touching record levels in opening trade; Reliance Industries, TCS, HDFC among major losers

The Sensex dropped 118.74 or 0.28 percent at 41,826.63. The Nifty was down 33.05 points or 0.27 percent at 12310.30. HCL Tech, TCS, Reliance were among major losers.

FP Staff January 20, 2020 10:29:42 IST
Sensex, Nifty slip into red after touching record levels in opening trade; Reliance Industries, TCS, HDFC among major losers
  • At opening trade, the Sensex and Nifty opened at record peaks on Monday tracking strong quarterly results by index heavyweights Reliance Industries and HDFC Bank

  • Sensex rallied 328.50 points to hit record high of 42,273.87 while the Nifty jumped 78.15 points to a lifetime peak of 12,430.50

  • Asian shares neared a 20-month top on Monday as Wall Street extended its run of record peaks on solid U.S. economic data and lashes of liquidity from the Federal Reserve

After opening at record levels, Sensex and Nifty slipped into red around 10.00 AM.  The Sensex dropped 118.74 or 0.28 percent at 41,826.63. The Nifty was down 33.05 points or 0.27 percent at 12310.30. HCL Tech, TCS, Reliance were among major losers. HCL Tech was down 1.57 percent at Rs 589.40; TCS was 1.46 percent down at Rs 2185.65; Reliance Industries was down 1.35 percent at Rs 1559.25.

At opening trade, the Sensex and Nifty opened at record peaks on Monday tracking strong quarterly results by index heavyweights Reliance Industries and HDFC Bank. Sensex rallied 328.50 points to hit record high of 42,273.87 while the Nifty jumped 78.15 points to a lifetime peak of 12,430.50, according to a PTI report.

After rallying over 300 points to hit a fresh lifetime high of 42,273.87, the 30-share BSE index pared gains to trade 31.32 points or 0.07 percent higher at 41,976.69. Similarly, the broader NSE Nifty scaled an all-time high of 12,430.50, up 12,430.50 points or 0.63 percent. It, too, pared early gains to trade marginally higher.

In the previous session, Sensex settled 12.81 points, or 0.03 per cent, higher at 41,945.37, while the Nifty ended 3.15 points, or 0.03 per cent, down at 12,352.35.

Sensex Nifty slip into red after touching record levels in opening trade Reliance Industries TCS HDFC among major losers

Representational image. Reuters.

PowerGrid was the top gainer in the Sensex pack, rallying up to 4 percent, followed by ITC, Asian Paints, M&M and HDFC.

Shares of Reliance Industries (RIL) and HDFC Bank jumped up to 2 percent in the early session following the announcement of their corporate earnings over the weekend.

RIL on Friday posted a record quarterly net profit of Rs 11,640 crore as a turnaround in oil refining business together with the continued rise in the share of its consumer businesses of retail and telecom countered lower profitability in petrochemicals.

HDFC Bank on Saturday reported a 32.8 percent growth in net profit to Rs 7,416.5 crore for the third quarter ended December 31 driven by interest and non-interest income.

On the other hand, TCS was the top laggard, shedding over 1 percent, after the country's largest software exporter reported a flat December quarter net profit at Rs 8,118 crore and also made it clear that it will not be able to notch a double-digit revenue growth in 2019-20.

HCL Tech, Kotak Bank and Hero MotoCorp too fell up to 1.44 percent.

According to traders, domestic investors are reacting to corporate results released after market hours last week, and also booking profits at higher levels.

Bourses in Shanghai, Tokyo and Seoul were trading on a positive note in their early sessions, while Hong Kong was in the red.

Brent crude oil futures rose 0.14 percent to $65.59 per barrel.

Rupee slips 4 paise to 71.12 against US dollar

The rupee opened on a weak note and declined 4 paise to 71.12 against the US dollar in opening trade on Monday, as concerns over rising crude oil price weighed on the investor community.

Forex traders said the weakness in the rupee was largely due to spurt in crude oil prices following rising tensions in the Middle East and North Africa.

The rupee opened weak at 71.07 at the interbank forex market and fell further to 71.12, down 4 paise over its last close.

The rupee had settled at 71.08 against the US dollar on Friday.

Meanwhile, foreign fund inflows and positive opening in domestic equities supported the local currency.

Foreign institutional investors remained net buyers in the capital markets, putting in Rs 264.26 crore on Friday, as per provisional data.

Brent crude futures, the global oil benchmark, rose 1.14 percent to $65.59 per barrel.

Domestic bourses opened on a positive note on Monday with benchmark indices Sensex trading 185.17 points up at 42,130.54 and Nifty rose 19.70 points to 12,372.05

Meanwhile, on a net basis, foreign institutional investors bought equities worth Rs 264.26 crore, while domestic institutional investors offloaded shares worth Rs 500.17 crore on Friday, data available with stock exchanges showed.

Asia shares camp on high ground, oil jumps on Libya shutdown

Oil prices jumped as oilfields in southwest Libya began shutting down after forces loyal to Khalifa Haftar closed a pipeline, potentially reducing national output to a fraction of its normal level.

Early turnover in Asian shares was light with U.S. stock and bond markets closed for the Martin Luther King Jr. holiday.

MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.1 percent, after notching its highest close since June 2018. Japan’s Nikkei added 0.2 percent to be near its highest in 15 months.

Chinese shares opened firm with the blue-chip CSI300 index up 0.2 percent.

Australia’s main index scored another all-time peak and South Korea was near its best level since October 2018. E-Mini futures for the S&P 500 edged up 0.1 percent.

Eyes will be on U.S. corporate earnings with Netflix Inc, Intel Corp and Texas Instruments Inc set to report this week, while central banks in the European Union, Canada and Japan hold policy meetings.

Sentiment was supported by the relentless run of record highs on Wall Street. Only three weeks into the new year, the S&P 500 has gained just over 3 percent and the NASDAQ almost 5 percent.

Ray Attrill, head of foreign exchange strategy at National Australia Bank, suspects the strength on Wall Street owes much to the Federal Reserve’s decision in September to rein in rising repo rates by flooding markets with cash.

“The relationship between the size of the Fed’s balance sheet, now some 11 percent bigger than where it was in late September, and the performance of US risk assets is uncanny,” he said, noting the balance sheet had just hit a three-month top of $4.18 trillion.

Analysts at BofA Global Research noted global stock market capitalization had ballooned by $13 trillion since its September lows and the S&P was only 5 percent away from marking the biggest bull run in history.

“We stay irrationally bullish until peak positioning and peak liquidity incite a spike in bond yields and a 4-8 percent equity correction,” they said in a note.

The Fed’s buying binge on Treasury bills has kept bonds bid even as stocks surged and economic data stayed healthy. Yields on two-year notes are dead in line with the overnight cash rate at 1.56 percent, compared to 2.62 percent this time last year.

The string of mostly solid US data has underpinned the dollar, particularly against the safe-harbor yen. The dollar stood at 110.19 yen on Monday, having hit an eight-month peak of 110.28 last week.

The euro was stuck at $1.1095, while sterling idled at $1.3000 after poor British economic news fanned speculation about a cut in interest rates.

Against a basket of currencies, the dollar was flat at 97.616, moving away from the recent trough of 96.355.

Spot gold stood at $1,557.75 per ounce, having hit a seven-year top earlier this month of $1,610.90 at the height of Iran-U.S. tensions.

Concerns about a cut in supply from Libya sent oil prices higher. [O/R]

Brent crude futures rose 76 cents to $65.61 a barrel, while U.S. crude jumped 61 cents to $59.15.

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