Market Live: Sensex trims some gains; PNB loses 3%, Gitanjali falls 10%
Tue Feb 20 2018
Rajesh Sharma (1997 articles)

Market Live: Sensex trims some gains; PNB loses 3%, Gitanjali falls 10%

12:25 pm Moody’s on PNB: Following the biggest scam in the country’s banking sector to the tune of Rs 11,340 crore at state-run Punjab National Bank (PNB), Moody’s today placed the lender under review for downgrade.

The agency has a Baa3/P-3 rating on the Delhi-based lender now while it has a Baa3 rating on its foreign currency issuer rating. The bank overall has a Baa2 rating with a stable outlook now from Moody’s.

The review for downgrade will focus on: (1) the timing and quantum of the financial impact of the fraudulent transactions, (2) any management actions taken to improve the capitalization profile of the bank, and (3) any punitive actions taken by the regulator on the bank, Moody’s Investor

Service said.

It has also placed the bank’s baseline credit assessment (BCA) and adjusted BCA of Ba3 and the counterparty risk assessment (CRA) rating of Baa3(cr)/P-3(cr) under review for downgrade.

12:10 pm Oil markets mixed: Oil markets were split, with US crude pushed up by reduced flows from Canada while international Brent prices eased.

US West Texas Intermediate (WTI) crude futures were at USD 62.34 a barrel, up 66 cents, or 1.07 percent, from their last settlement.

Outside North America, Brent crude eased on the back of a dip in Asian stocks and a stronger dollar, which potentially curbs demand as it makes fuel more expensive for countries using other currencies domestically.

Brent crude futures were at USD 65.49 per barrel, down 18 cents, or 0.27 percent, from their last close.

Here are the top headlines at 12 pm from Moneycontrol News’ Anchal Pathak

11:58 am Order Win: CMI said the wholly owned subsidiary CMI Energy India Private Limited has bagged an initial order for supply of high voltage power cables by Engineers India Limited.

11:45 am Under review: Moody’s places PNB’s rating under review for downgrade, reports CNBC-TV18. The impact of the fraudulent transactions is likely to be the key driver for the downgrade rating review.

11:29 am Management Speak: Gold prices have softened over the last few months. After a recent meet with the MCX management, a Motilal Oswal Securities note highlights that demonetisation, goods and services tax (GST) etc. have cut bullion volumes to nearly half in the span of a year though encouraging trends are seen in base metals.

In an interview to CNBC-TV18, Mrugank M Paranjape, MD & CEO of Multi Commodity Exchange of India (MCX) spoke about the latest happenings and gave his outlook for the future.

Paranjape said that we have seen positive increase in volume in the 45-50 days of Q4.

He further said that volumes up 16 percent so far and Q4 average volume is close to pre-demonetisation levels.

11:15 am Nirav Modi case: The Supreme Court will hear on Friday a PIL, which has sought direction to the central government to ensure Punjab National Bank (PNB) scam accused Nirav Modi is brought back to India within two months, apart from the issuance of fresh guidelines on grant of big loans.

Chief Justice of India Dipak Misra agreed to list the PIL by Vineet Dhanda after it was mentioned for urgent hearing. Advocate JP Dhanda mentioned the matter before the CJI.

Juxtaposing poor farmers’ inability to repay agricultural loans with the recent Rs 11,300 crore PNB fraud, the PIL has sought intervention of the Supreme Court to protect the people’s rights.

11:05 am Fitch on PNB: Fitch placed Punjab National Bank on ‘Rating Watch Negative’ (RWN), reflecting a possibility of downgrade following the USD 1.77 billion fraud.

The fraud– the biggest ever in the banking history– has raised questions on both internal and external risk controls as well as the quality of management supervision considering that the fraud went undetected for several years, it said.

“Fitch Ratings has placed Punjab National Bank’s (PNB) Viability Rating of ‘bb’ on Rating Watch Negative (RWN), following the large fraud reported by PNB,” the US-based agency said in a statement.

The Viability Rating measures credit worthiness of a financial institution and reflects the likelihood of the entity to fail, as per Fitch.

Here are the top headlines at 11 am from Moneycontrol News’ Sakshi Batra

10:59 am IndusInd Bank clarifies on exposure PNB fraud case: Private sector lender IndusInd Bank said it has no direct or indirect credit exposures to Nirav Modi with regards to the LoUs issued by the scam-hit Punjab National Bank.

The bank, however, added that it has a “small, two-digit exposure” to Gitanjali Gems not linked to any LoUs”, without disclosing the exact amount.

Shares of the bank were trading 1 per cent higher at Rs 1,648.35 on BSE in morning.

“IndusInd Bank has no direct credit exposures to Nirav Modi nor any indirect credit exposures basis the LoUs issued by PNB. As regards Gitanjali Gems, the Bank has a small, two digit exposure, not linked to any LOUs,” the bank said in a regulatory filing.

10:47 am Market Update: Benchmark indices continued to trade higher, with the Sensex rising more than 100 points supported by private banks, technology, metals stocks.

Tata Steel was among top Sensex gainers after CLSA bet big on the Indian steel industry, saying tightening demand-supply will aid stock performance. Macquarie too maintained outperform rating on the stock, saying the recent correction has made the risk-reward attractive.

PNB fell for fifth consecutive session, falling another 3 percent after 3 new arrests were made in the fraud case. Gitanjali Gems was locked at another 10 percent lower circuit, taking total loss to more than 56 percent in February so far.

10:37 am Buzzing: JSW Energy shares gained as much as 2.5 percent in morning on signing pact with Maharashtra government for setting up manufacturing unit for electric vehicles (EV) and energy storage systems in the state.

“The company has now entered into another MoU with the Government of Maharashtra for setting up facilities for the manufacturing of EV and Energy Storage Systems in the state of Maharashtra, subject to receipt of internal corporate approvals,” Sajjan Jindal-led company said in a BSE filing.

This agreement was in addition to the earlier MoU with the Government of Gujarat with respect to EV manufacturing and associated businesses.

10:32 am Drug Patent: Suven Life Sciences announced that the grant of one product patent from India and one product patent from South Korea corresponding to the new chemical entities (NCEs) for the treatment of disorders associated with Neurodegenerative diseases.

These patents are valid through 2029 and 2033, respectively.

10:22 am Top Gainers:

10:12 am Market Update: Benchmark indices extended gains with the BSE Sensex rising over 157 points and the Nifty recapturing the 10,400-level on buying by investors in metal, capital goods and IT stocks amid a mixed trend at other Asian markets.

The 30-share Sensex was up by 157.24 points, or 0.46 percent, to 33,931.90. The index had lost 522.81 points in the previous two sessions.

Overseas, Asian stocks were trading mixed as Treasury yields climbed back toward recent four-year highs. Chinese markets will reopen on Thursday, 22 February. US markets remained closed yesterday, in observance of Presidents Day.

Here are the top headlines at 10 am from Moneycontrol News’ Anchal Pathak

9:59 am Buzzing: Kaya shares rallied as much as 5.5 percent intraday after Porinju’s Equity Intelligence picked up minor stake in the company.

Portfolio Management clients of Equity Intelligence India Private Limited and EQ India Fund, which are owned by ace investor Porinju Veliyath, acquired 13,350 shares (representing 0.1 percent of total paid up equity) of the company, as per disclosure available on the exchange.

Shares were bought through open market transactions.

Kaya is a provider of skincare, haircare and beauty solutions in India and overseas markets.

9:52 am Market Update: Benchmark indices recouped early losses, with the Sensex rising more than 100 points led by private banks, technology and metals stocks.

Nifty50 traded above 10,400 levels while all sectoral indices were trading in the green.

Nifty Metal was the biggest gainer among sectoral indices, rising 1.5 percent.

About two shares advanced for every share falling on the BSE.

9:45 am Rupee Trade: The rupee depreciated 21 paise to 64.42 against the US dollar at the interbank forex market today on increased demand for the greenback from importers and banks.

A strong dollar in overseas markets weighed on the Indian rupee, a currency dealer said.

On Friday, the rupee had ended 30 paise lower at 64.21 against the US dollar on rising global crude prices and worsening trade deficit.

On a net basis, foreign investors withdrew Rs 895.79 crore from stocks yesterday, according to provisional FPI data.

The dollar recovered from a 15-month low against the yen to trade at 106.75, up 0.15 percent for the day.

9:40 am Nirav Modi to PNB: Throwing up his hands, beleaguered businessman Nirav Modi, the alleged kingpin of the largest banking scam in the country’s history, has said PNB’s ”overzealousness” shut the doors on his ability to clear the dues.

He also said the dues were much less than what the bank has claimed, and that his relatives booked in the cases filed by the central agencies had nothing to do with the operations of the firms under their scanner.

In a letter Modi wrote on February 15/16 to the Punjab National Bank management, a copy of which PTI has seen, he pegged the money his companies owe to the bank under Rs 5,000 crore.

“The erroneously cited liability resulted in a media frenzy which led to immediate search and seizure of operations, and which in turn resulted in Firestar International and Firestar Diamond International effectively ceasing to be going-concerns.

“This thereby jeopardised our ability to discharge the dues of the group to the banks,” Modi, who left the country along with his family in the first week of January, before the alleged scam became public, wrote in the letter.

“In the anxiety to recover your dues immediately, despite my offer (on February 13, a day before the public announcement, and on 15) your actions have destroyed my brand and the business and have now restricted your ability to recover all the dues leaving a trail of unpaid debts,”he said.

9:29 am Q3 Earnings Analysis: Ridham Desai of Morgan Stanley said in Q3FY18, earnings growth weakness was led by public sector banks and PSU oil companies. Improving revenue and earnings breadth was a key positive.

Morgan Stanley coverage revenue growth rose to a 3-quarter high at 15 percent YoY and beat MS analysts’ expectations by 4 percent, he added.

He said the strongest growth came from energy and materials. EBITDA growth at 15 percent YoY was 3 percent behind MS analysts’ estimates.

Healthcare sector saw the most decline in EBITDA growth combined with margin compression of 430 bps, he added.

9:21 am Buzzing: Fortis Healthcare shares rallied 3.7 percent after ace investor Radhakishan Damani’s firm Derive Investments picked up half a percent equity stake in the company.

Derive Investments has bought 26.5 lakh equity shares of the company at Rs 144.5 per share through block deals on Monday, as per bulk deal data on the National Stock Exchange.

Meanwhile, promoters holding in the company reduced to 8.85 percent from 34.33 percent earlier after lenders revoked 25.58 percent equity of promoter group.

9:15 am Market Check: Benchmark indices opened mildly higher with the Sensex rising over 100 points but immediately trimmed gains to trade flat as volatility continued ahead of expiry of February futures & options contracts later this week.

The 30-share BSE Sensex was up 19.27 points at 33,793.93 and the 50-share NSE Nifty fell 3 points to 10,375.40.

Nifty Midcap index fell 73 points.

PNB, Allahabad Bank, Union Bank, Bank of Baroda, Bank of India, GMR Infrastructure, Adani Power, JSPL, Nalco and Jaiprakash Associates were down 1-4 percent.

Fortis Healthcare, Bhushan Steel, Amtek Auto, Kaya and JSW Energy gained 1-5 percent.

Rajesh Sharma

Rajesh Sharma

Rajesh Sharma is Correspondent for Stock Market of South East Asia based in Mumbai. He has been covering Asian markets for more than 5 years.