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Sensex ends below 36,000! Top 5 factors that weighed on equity market

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Mumbai: It is the second session of the new year and the benchmark indices are in a downtrend. The S&P BSE Sensex has slipped below its crucial support placed at 36,000 in intraday trade and ended below it.
The Nifty50 is not far behind. It has broken below Tuesday’s intraday low of 10,807 to hit a fresh low of 10,781 before regaining some strength on Wednesday. The index managed to close with losses of over a percent and below 10,800.
The S&P BSE Sensex saw a steep drop of over 500 points in intraday trade while Nifty50 saw a cut of 1 percent to trade below 10,800.
Technically, a close below 10,800 could put further pressure on the index, suggest experts.
“On the downside, index has support at 10,800-10,777 zones. Till it holds above 10,777 zones, overall bias could remain positive to range bound while a decisive move above 10,985 could start the fresh up move towards 11,176 levels,” Chandan Taparia, Associate Vice President, Analyst-Derivatives, Motilal Oswal Financial Services told Moneycontrol.
Here is a list of top five factors which could be weighing on D-Street:
Weak Asian Cues:
Overnight, US markets were closed while most of the Asian markets resumed trading on Wednesday after the New Year holiday. The cues were not supportive from the beginning of the session as most of the Asian markets were trading with a negative bias.
The Shanghai blue-chip index quickly shed 1.2 percent and South Korea fell 1.5 percent. Japan’s Nikkei was closed for a holiday.
China Slowdown weigh on metal stocks:
The S&P BSE Metal index slipped more than 2 percent in the second half of the trading session weighed down by losses in Vedanta, JSW Steel, Tata Steel, Hindalco on concerns of a slowdown in China.
China’s factory activity contracted for the first time in 19 months in December as domestic and export orders continued to weaken, a private survey showed, pointing to a rocky start for the world’s second-largest economy in 2019, Reuters reported.
The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for December, released on Wednesday, fell to 49.7 from 50.2 in November, marking the first contraction since May 2017.
“Aluminium demand growth in 2019 is pegged at 2.5-3.5% YoY. However, weak Chinese demand in H2CY18 and further uncertainties expected in CY19 remain a cause of concern,” Edelweiss Securities said in a report.
“Driven by an expected deficit of ~2mt (~3% of overall demand), we see limited downside for LME Al prices. If costs dip post Alunorte resuming full production and/or thermal coal prices receding, LME Al prices could come under pressure,” it said.
CLSA has downgraded the metal sector which is also acting as an overhang for the sector. Deteriorating Chinese demand outlook is likely to weigh on commodity prices, it said.
The global investment bank slashed FY20-21 EPS estimates by 9-38 percent factoring in lower commodity prices and a stronger rupee.
Auto stocks under pressure:
The S&P BSE Auto index slipped over 2 percent weighed down by losses in Eicher Motors, M&M, TVS Motor, Tata Motors, Hero MotoCorp, as well as Ashok Leyland.
For Eicher Motors, December 2018 dispatches decline steeply by 13 percent on a YoY basis to 58,278 units. The numbers are below our estimates of 65,000 units and also sharply below market expectations.
Ashok Leyland December 2018 sales at 15,493 units have declined 20 percent YoY and are broadly in-line with our estimates of 15,950 units.
Hero MotoCorp December 2018 sales stood at 453,985 units, down 4 percent YoY and marginally below our estimates of 465,000 units. Increased competitive pressures and high channel inventory due to a weak festive season sales lead to the decline.
Indian manufacturing growth slows:
Indian manufacturing activity expanded at a slower pace in December as growth in new orders and output waned, despite factories cutting their prices, a private survey showed on Wednesday.
The Nikkei Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, declined to 53.2 in December, below November’s 54.0 reading and a Reuter’s poll median of 53.6.
December saw the weakest increase in input costs for nearly three years, giving factories room to cut their prices for the first time since July 2017, Reuters reported.
GST collections drop for December:
Revenue collection from Goods and Services Tax (GST) fell to Rs 94,726 crore in December from Rs 97,637 crore a month ago, as per data released by the Finance Ministry on January 1.
Out of the total collection, Central GST (CGST) was Rs 16,442 crore, with states garnering Rs 22,459 crore State GST (SGST). At least Rs 7,888 crore was received as cess, with Rs 47,936 crore collected as Integrated GST (IGST), which is levied on the inter-state supply of goods and services and is divided between states and the Centre.
The government has set a target of over Rs 12 lakh crore for the financial year 2018-19, which can be achieved if the average monthly mop up is around Rs 1 lakh crore, as compared with Rs 89,885 crore in 2017-18.


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Lenders propose to revive Jet Airways by management change: Sources

Press Trust of India

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New Delhi: Lenders, led by the SBI, are trying to revive debt-laden Jet Airways by change in management as they feel collapse of the airline will not be good for consumers and competition, a source said after the SBI chief met Finance Minister Arun Jaitley on Wednesday.
With Jet flying just about a third of its fleet, defaulting on interest payments and delaying salaries to pilot, State Bank of India Chairman Rajnish Kumar along with Aviation Secretary Pradip Singh Kharola and Principal Secretary to Prime Minister Nripendra Misra met Jaitley Wednesday afternoon.
Kumar said the meeting was to apprise the government, which is an important stakeholder, about the happenings in what was once India’s second-biggest airline, and not to discuss a bailout package.
He, however, emphatically stated that it was in the interest of the lenders and consumers to keep Jet Airways flying, and dragging the debt-ridden firm under bankruptcy proceedings is the last option.
Jet Airways has a debt of over Rs 8,200 crore and needs to make repayments of up to Rs 1,700 crore by the end of March. In case the airline collapses, 23,000 jobs would be at stake.
Though Kumar refused to share details of the lenders’ resolution plan, the source said that the lenders have proposed to change the management of the beleaguered air carrier as they feel it is not possible to run the company with present management. Jet Airways is headed by Naresh Goyal, who currently holds 51 per cent stake.
Abu Dhabi based Etihad Airways has 24 per cent. There were media reports that Etihad has approached the SBI to purchase its 24 per cent stake in the airline. On getting a new player in Jet Airways, Kumar said, “No possibility is ruled out”.
“The dialogue with Etihad is on. It is not that they have conclusively decided that they will go out. But there are certain conditions which they want to be fulfilled and it is nothing but that the airline should be professionally managed and without any interference,” he said.
Lenders of Jet Airways have been working on a resolution plan for last five months and it is almost ready, Kumar said, adding “We will make every effort to keep Jet Airways flying and in no manner it is a bailout for any individual or any promoter whatsoever”.
The SBI chief said that resolution of a service industry, like airline, is nearly impossible under Insolvency and Bankruptcy Code (IBC) and is the last option.
“IBC means that we are grounding the airline. We will keep trying till such time we believe that all hope is lost. But as on date, I can say that not all hope is lost. We have not reached that decision point where we say enough is enough and nothing can be done,” Kumar said.
Chairman of the country’s largest bank said that the government is the most important stakeholder and it is the duty of the lenders to keep the government informed.
“It is in the lender’s Interest, the country’s interest, the aviation sector’s interest that Jet Airways continues to fly,” Kumar added. The pilots union of Jet Airways had on Tuesday threatened to stop flying from April 1 if their salaries are not paid by March 31.
The Directorate General of Civil Aviation (DGCA) said only 41 aircraft of the Jet Airways were currently available for operation and there may be “further attrition” of flights “in coming weeks”. 41 aircraft is just one-third of Jet’s fleet of 119 planes.

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Sebi asks exchanges dealing in agri-commodity derivatives to create fund for farmers

Press Trust of India

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New Delhi: Sebi on Wednesday asked the exchanges dealing with agri-commodity derivatives to create a fund for farmers and FPOs in which the regulatory fee forgone by the regulator would be deposited.
Besides, it has issued framework including action plan and guiding principles for the utilisation of fund. In September last year, the regulator had decided to levy a nominal fee of Rs 1 lakh per exchange instead of levying charges based on turnover slab rates and proposed to set up a fund with the fee foregone by it.
Sebi on Wednesday said, “it has been decided that the stock exchanges dealing with agricultural commodity derivatives shall create a separate fund earmarked for the benefit of farmers/FPOs (farmers producer organisations) in which the regulatory fee forgone by Sebi shall be deposited.”
For the fund, Sebi said the exchange needs to draw an action plan for full utilisation of foregone fee in any financial year to be utilised during the succeeding financial year. Such action plan shall be drawn up by the 10th of April of the year in which the fund has to be utilised, it added.
The exchanges would be required to disseminate the details of the action plan on their websites under intimation to Sebi.
The earmarked fund shall not be clubbed with any other funds such as Investor Protection Fund, Investor Services Fund, and Corporate Social Responsibility Funds, Sebi said.
Factors like waiver or subsidy in warehousing charges, reimbursement of cost of bags provided to farmers and FPOs for deposits on exchange platform, and subsidising of broker fee for farmers, amongothers, should be considered by exchanges for preparing action plan.

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Telecom subscriber base crosses 120 cr; Jio, BSNL, Airtel add customers

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New Delhi: The country’s telecom subscriber base for the third time crossed 120-crore mark with Reliance Jio, BSNL and Airtel adding new customers in January, according to a report released by telecom regulator Trai.
“The number of telephone subscribers in India increased from 1,197.87 million at the end of December 2018 to 1,203.77 million at the end of January 2019, thereby showing a monthly growth rate of 0.49 per cent,” the Telecom Regulatory Authority of India said in monthly subscriber report for January 2019.
Earlier, the subscriber base crossed the 120-crore mark in July 2017 and May 2018. The mobile customer base grew to 118 crore in January from 117 crore in December.
The wireline connection in the country slid to 2.17 crore in January from 2.18 crore in December. Reliance Jio dominated growth by adding over 93 lakh new mobile customers.
State-run telecom firm BSNL followed Jio by adding 9.82 lakh mobile subscribers. Bharti Airtel returned to growth track, after losing mobile customer in December, by adding over 1 lakh new customers.
The net increase of telecom subscriber in January was 59 lakh, compared to over 1 crore subscribers added by the three players. However, Vodafone Idea and Tata Teleservices jointly lost close to 44 lakh mobile customers.
The country’s biggest telecom operator Vodafone Idea lost 35.8 lakh mobile customers, Tata Teleservices 8.4 lakh and state-run MTNL 4,927 mobile customers. The wireline connections declined mainly because of BSNL losing 90 thousand connections.
Private operators Bharti Airtel and Vodafone added 29,930 and 6,386 connections. Broadband connections in the country grew 4.15 per cent to 54 crore in January from 51.8 crore in December.
The mobile devices-based broadband connections accounted for over 96 per cent of total base with over 52.1 crore subscribers while wireline connections reached 1.82 crore.
Top-five service providers constituted 98.63 per cent market share of the total broadband subscribers at the end of January.
Reliance Jio led the market with 28.94 crore broadband subscribers. It was followed by Bharti Airtel with 11 crore connections, Vodafone Idea 10.98 crore, BSNL 2 crore and and Tata Teleservices Group 22.6 lakh connections.
BSNL maintained lead in the wireline broadband segment with 91.7 lakh connection. It was followed by Airtel with 23 lakh connections, Atria Convergence 14 lakh, Hathway Cable & Datacom 7.9 connection and MTNL 7.7 lakh connections.

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