Sensex ends 156 pts lower amid uncertain political landscape in Karnataka; PNB cracks 12%

Vinod Nair, Head of Research, Geojit Financial Services

Uncertainty over the formation of government in Karnataka and lower than expected quarter earnings have created concern about market direction. Fall in oil prices and appreciation in rupee helped to trim the day’s losses. Consumption oriented companies are performing well on the account of increased spending in rural market leading to better quarterly results.

Market Breadth Remains Negative

Market breadth, indicating the overall health of the market, remained negative. On the BSE, 1,603 stocks declined, 1,019 stocks rallied, while 135 stocks remained unchanged. 

Broader Market

In the broader market, the BSE Midcap slipped 0.3 per cent, while the BSE Smallcap remained little unchanged. 

Markets at Close

The Sensex ended at 35,387, down 156.06 points, while the broader Nifty50 ended at 10,741, down 60.75 points.

Narendra Modi win in General Elections 2019 already factored-in; here are key stocks you should invest in now

Global investors have already factored in PM Narendra Modi's victory in the Lok Sabha elections, said global brokerage UBS Securities. However, going by how things transpired in Karnataka Elections after BJP emerged the largest party, market still needs more data points to exactly predict general election outcome. Arithmetic can be more powerful than the narrative in Indian politics, said UBS.

"Our discussions with investors suggest that they presume Modi will win 2019 national elections. Market's recent performance and valuation multiples also suggest that this is priced in. In our view, opposition alliances will be a key element to track given fragmented votes and first-past-the-post system in India," said the brokerage. 

Markets at Close

Sensex today: The benchmark indices settled lower as doubts over the composition of the next government in Karnataka dampened investor risk appetite. Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) won 104 seats, falling marginally short of the 113 seats needed to form a government, while the opposition Congress clinched 78.

The Congress said it was ready to let regional party Janata Dal (Secular), which stood third with 37 seats, to form a government to stop the Hindu nationalist BJP from taking power.

However, analysts say the outcome of Karnataka’s election results only strengthens the BJP’s re-election prospects in 2019, something the markets will be optimistic about.

ITC Q4 net profit beats estimates 

India`s biggest cigarette maker ITC Ltd posted a better-than-expected quarterly profit on Wednesday, helped by a fall in excise duty. Profit for the quarter ended March 31 came in at 29.33 billion rupees ($432.44 million) from 26.69 billion rupees reported last year, the company, which also makes biscuits and noodles under the Sunfeast brand. Analysts on average expected a net profit of 28.45 billion rupees, according to Thomson Reuters data. Revenue from operations fell 28 percent to 108.13 billion rupees, while excise duty paid was down about 94 percent.

Source: Reuters

No more politics please (for some time). A six-month hiatus in India’s hectic election schedule will focus the minds of market participants on (1) India’s weak macro, (2) the market’s rich valuations and (3) low scope of earnings upgrades before the election frenzy swamps the market in 1HCY19. The Karnataka state elections resulted in a surprising outcome with the third-ranked party (JD(S)) likely to form the government with the support of the second-ranked party (INC) as largest party (BJP) did not get a majority.

Source: Kotak Securities

Market Update

At 12:50 pm, the Sensex was trading at 35,438, down 105.35 points, while the broader Nifty50 was ruling at 10,759, down 42.85 points. 

This Reliance firm cracked a whopping 20% in a day; stock slips below Rs 10

This beleaguered company is facing a torrid time in the stock markets and things are getting worse. It is none other than Reliance Communications share price, which tanked 20 per cent after the National Company Law Tribunal (NCLT) admitted an insolvency plea filed by Sweden's Ericsson against Reliance Communications, potentially delaying the RCom's plans to sell assets to lighten its debt load.

The stock tanked as much as 20 per cent to Rs 9.95 on the BSE. RCom shares have fallen over 65 per cent this year as of Tuesday’s close, compared with Bharti Airtel’s 27.9 per cent fall and Idea Cellular’s 51 per cent drop during the same period. 

Sectoral Trend: Nifty PSU Bank Index Tanks 4%

Source: NSE

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Punjab National Bank tanks 12%

Punjab National Bank share price tanked over 12 per cent to hit its 52-week low of Rs 75.65 after the public sector bank posted largest ever quarterly loss of Rs 13,416.91 crore for the January-March period. On Tuesday, the stock went down by 3.80 per cent to end at Rs 86 on BSE.

Markets Breadth Remains Negative

Market breadth, indicating the overall health of the market remained negative. On the BSE, 853 stocks slipped, 429 stocks gained, while 58 stocks remained unchanged.

Markets at Open

At 9:25 am, the Sensex was trading at 35,403, down 140.55 points, while broader Nifty50 was ruling at 10,757, down 44.80 points. In the broader market, the BSE Midcap index and the BSE Smallcap index slipped 0.2 per cent each.

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PNB (Sell)

Target: Rs 83
Stoploss: Rs 87

• More selling expected in stock after weak Q4 results
• PNB recorded Rs 13,417 crore loss in Q4
   

Asian markets today

Overseas, Asian markets fell after Pyongyang called off talks with Seoul, throwing a major US-North Korean summit into question, and a spike in the US 10-year Treasury yield to a seven-year high knocked sentiment on Wall Street. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.1 per cent.

South Korea's KOSPI was 0.4 per cent lower, Japan's Nikkei was down 0.3 per cent and Australian stocks edged up 0.1 per cent. On Wall Street, the Dow Jones Industrial Average fell 193.00 points, or 0.78 per cent, to 24,706.41, the S&P 500 lost 18.68 points, or 0.68 per cent, to 2,711.45 and the Nasdaq Composite dropped 59.69 points, or 0.81 per cent, to 7,351.63.

Markets on Tuesday

The benchmark indices Sensex and Nifty surrendered all their gains to end in the red today as investors resorted to fag-end selling after the BJP fell short of a clear majority in Karnataka elections. Besides, weak Chinese economic data and a lack of progress on trade tariff issue between the US and China further hit investor sentiments. Adding to the woes, the rupee today plummeted by 52 paise in intra-day to trade at 68.03.

The 50-share Nifty reclaimed the key 10,900-mark to touch a high of 10,929.20 in initial trade and fell back by 4.75 points, or 0.04 per cent, to end at 10,801.85. It touch a low of 10,781.40.

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