Sensex Closes in the Red; Idea Slumps 9.6%

Mon, 20 Mar Closing

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Indian share markets continued to trade below the dotted line in the afternoon session amid mixed global cues. At the closing bell, the BSE Sensex stood lower by 130 points, while the NSE Nifty finished down by 33 points.

Meanwhile, the S&P BSE Mid Cap & the S&P BSE Small Cap finished up by 0.2% and 0.3% respectively. Losses were largely seen in energy stocks, IT stocks and banking stocks.

Idea share price fell almost 10%, after the company said it would merge with Vodafone Plc's Indian operations. Although traders had initially reacted positively to the news, doubts about Idea's valuations after the merger sent shares downward.

IT stocks languished in red in today's trade on reports that Cognizant may reduce at least 10,000 jobs, representing 5% of its total workforce, as the company looks to shift its focus from traditional IT services to digital.

BSE Small Cap Index 2007-17

According to a study by Horses for Sources, India is likely to lose 640,000 low-skilled IT positions to automation by 2021. This is considering the amount of back office processing and IT support work that are likely to be automated. The previous twelve months have seen some of the biggest names in technology and e-commerce ranging from Microsoft and Cisco to Infosys and FlipKart taking decisions to downsize their workforce.

The news has come at a time when the domestic IT giants are bracing for tougher rules for H-B1 visas in the US, disruptions due to new technologies and a steep appreciation in the rupee post the US Fed meet.

Infosys share price fell 1.9% as the company decided not to apply for H-1B visas for junior employees. The company has decided to not raise visa requests for systems engineers and senior systems engineers, among the lowest rungs in the Infosys corporate ladder.

Kotak Mahindra Bank share price closed on an optimistic note (up 0.7%) after the bank stated that it would seek approval from shareholders to raise the foreign shareholding limit up to 49%.

Meanwhile, private equity firm Oman India Joint Investment Fund has sold its entire stake in Kotak Mahindra Bank Ltd for over Rs 1.2 billion.

Asian stock markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.79% and the Shanghai Composite rose 0.41%. The Nikkei 225 lost 0.35%. European markets are lower today with shares in France off the most. The CAC 40 is down 0.36% while Germany's DAX is off 0.29% and London's FTSE 100 is lower by 0.24%.

The rupee was trading at Rs 65.38 against the US$ in the afternoon session. Oil prices were trading at US$ 48.68 at the time of writing.

According to a leading financial daily, the government is considering the option of permitting foreign supermarket players to open retail stores but only for sale of 'Made in India' products in order to attract more funds and generate more jobs.

The FDI policy also imposes several conditions for foreign players like mandatory sourcing of goods from MSMEs and a certain percentage of investment in the back end infrastructure. These conditions have acted as constraints for foreign retailers. However, if they can retail 'Made in India' goods in the country, these mandatory rules may not be imposed on them.

In addition, with a view to attracting more global players, a proposal to allow 100% FDI through automatic route in single brand retail is also under consideration. Foreign investments are considered crucial for India, which needs around US$ 1 trillion to overhaul its infrastructure such as ports, airports and highways to boost growth.

Foreign investments will help improve the country's balance of payments situation and strengthen the value of the rupee against global currencies, especially the US dollar. FDI inflows into India firmed up by 22% to US$ 35.85 billion during April-December 2016.

Moving on news from stocks in power sector. NTPC share price finished the trading day on an encouraging note (up 0.9%) after the company recorded highest ever annual cumulative gross power generation of 263.95 BU (billion unit) so far, this fiscal surpassing the 262.42 BU achieved in the entire 2015-16. The power producer has registered an annual growth of 4.71% over last year.

As per the reports, NTPC pit head coal stations, having capacity of 25,840 MW, recorded day plant load factor (PLF) or capacity utilization of 95.71% as on March 16, 2017 and cumulative monthly PLF of 91.4% till date. As many as 29 units of NTPC coal plants have generated a PLF of more than 100% on March 16, 2017.

The sentiments also remained upbeat after it was reported that NTPC has commissioned the 25 MW of Bhadla Solar Power Project. With this, the installed capacity of Bhadla Solar Power project has become 185 MW and that of NTPC's solar power projects has become 545 MW.

NTPC has also commissioned the 2nd unit of 660 MW of Mouda Super Thermal Power Station Stage-II (2 X 660 MW). With this, the commissioned capacity of Mouda Super Thermal Power Station of NTPC and NTPC group has become 2,320 MW, 41,907 MW and 48873 MW respectively.

In news from stocks in engineering sector, Larsen & Toubro's (L&T) wholly-owned subsidiary L&T Hydrocarbon Engineering has won a Rs. 16.56 billion contract from ONGC.

The scope includes one new process platform having gas processing and compression facilities, three new well-head platforms, a 32-km pipeline and modification work on eight existing platforms in the Neelam Field in the western offshore basin in India, among others.

The project is part of ONGC's strategy to enhance the field life and increase recovery of the Neelam field which is scheduled to be completed by April 2019.

L&T share price finished the day down by 0.8%, while ONGC share price closed up by 0.4%.

And here's a note from Profit Hunter:

Idea Cellular Ltd was the most active stock in the market today. It hit a high of Rs 123.5, a 14.24% move. It then slipped 25.22% from its high to hit a low of Rs. 92.35. It broke the 10% circuit filter on both the sides in a single day, a rare event in the stock market.

Idea cellular merger talks with Vodafone ushered volatility in the stock. It is down 10% for the day.

In an earlier note, we mentioned 110 level as a strong resistance for the stock. The stock did close above the 110 level twice, but couldn't sustain up there for long and slipped lower on both occasions.

But now, it is trading slightly below its support level of 100, the level we told you to watch in our earlier note.

If the stock sustains below that level, we can expect more selling pressure. On the flipside, if it gets back above 100, 110 is the level to watch.

Idea Traded Volatile for the Day

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