Nifty closes lower on FO expiry day, but rallies 2.5% in December series; PSU banks drag

Benchmark indices closed lower for the second consecutive session Thursday as the Nifty failed to hold 10,500 level on the last futures & options contracts expiry of the year. Investors also looked cautious due to rising crude oil prices and SEBI board members meeting.

The 30-share BSE Sensex fell 63.78 points to 33,848.03 and the 50-share NSE Nifty declined 12.90 points to 10,477.90. Both frontline indices lost more than 2 percent in December series.

“It’s going to be an important session tomorrow, being the last trading session of the calendar year. We reiterate our positive view on markets and suggest maintaining “buy on dips” approach. Be selective now and avoid contrarian trades,” Jayant Manglik, President, Retail Distribution, Religare Securities said.

Nifty Metal (up 2 percent) and Realty (up 3 percent) gained most among sectoral indices whereas PSU Bank slipped 2 percent on rising bond yields.

Karthikraj Lakshmanan, Senior Fund Manager – Equities, BNP Paribas Mutual Fund said long positions were built in several mid-cap stocks of infrastructure companies, while short positions were built into most shares of banking majors.

PSU banks like Canara Bank, Punjab National Bank, SBI and Bank of Boarda were down 2 percent each whereas private banks barring Axis ended higher. HDFC Bank and ICICI Bank were up around a percent.

Axis Bank lost 1.4 percent after the Securities & Exchange Board of India directed the bank to conduct an internal inquiry in the WhatsApp leak case. The inquiry needs to be conducted within a period of 3 months from the date of order and the bank will need to file a report on it within 7 days from the completion of the inquiry.

Meanwhile, the 10-year government bond yield increased to 7.38 percent, up 17 basis points from 7.21 percent at close in previous session.

Markets regulator Sebi today decided to put a 10 percent cross-shareholding cap in mutual funds, but decided to hold further discussions on its proposed norms mandating listed companies to make immediate disclosure about their loan defaults.

Dr Reddy’s Laboratories shares gained over 1 percent on receiving approval from the US health regulator for Sapropterin Dihydrochloride tablets that indicated to reduce blood phenylalanine concentrations in patients.

Metals stocks like Hindalco Industries (up 3.57 percent), Tata Steel (up 1.77 percent) and Vedanta (up 2 percent) were top gainers among largecaps after rally in global metals prices.

Oil retailers IOC (down 2.4 percent), HPCL (0.75 percent) and BPCL (1.35 percent) extended losses on rising crude oil prices. Brent crude futures were trading at USD 66.57 a barrel at the time of writing this article.

HDFC, Tata Motors, Adani Ports, Eicher Motors, Bajaj Finance, Hero MotoCorp, Sun Pharma and Kotak Mahindra Bank among others were down 0.7-2 percent.

The broader markets outperformed benchmark indices as the Nifty Midcap index was up 0.06 percent and BSE Smallcap gained 0.32 percent. About 1,464 shares advanced against 1,293 declining shares on the BSE.

Star Cement gained 5 percent on receiving Rs 158.82 crore towards capital investment subsidy claim from the government. Mahindra CIE Automotive rose 3.6 percent after Motilal Oswal initiated coverage with a Buy call on the stock and set a target price of Rs 297 per share, implying a 19 percent upside from Wednesday’s closing price.

Anil Dhirubhai Ambani Group stocks were most active on the NSE. Reliance Communications gained 7.7 percent, taking total three consecutive days’ gains to 90 percent. Reliance Capital rallied 10 percent and Reliance Infrastructure rose 4 percent.

Monnet Ispat shares jumped 9.5 percent after a media report indicated that Aion Capital and JSW Steel submitted a Rs 3,500-crore resolution plan for the company.

Redington India rose 3.6 percent after ICRA upgraded long-term ratings to AA from AA- with stable outlook.

On the global front, Asian markets closed mostly higher amid thin trade, following a rally in oil and copper prices this week. European stocks were trading mildly lower at the time of writing this article.