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Market drops on Karnataka political crisis
16-May-18   15:41 Hrs IST

Key benchmark indices logged modest losses in a highly volatile session of trade. The barometer index, the S&P BSE Sensex, lost 156.06 points or 0.44% at 35,387.88. The Nifty 50 index lost 60.20 points or 0.56% at 10,741.65. The undertone of the market was negative due to political uncertainty in Karnataka and subdued Asian stocks.

ITC rose after declaring good Q4 result. Hindalco Industries fell after declaring poor Q4 result.

Local stocks began trading for the day on a weak note as US and Asian shares declined amid rising geopolitical tensions in the Korean peninsula. Key benchmark indices extended early slide and hit fresh intraday low in morning trade. Stocks cut losses in mid-morning and early afternoon trade. Recovery continued in afternoon trade on positive European stocks. Key benchmark indices once again extended losses in mid-afternoon and late trade on fresh selling.

The S&P BSE Mid-Cap index fell 0.27%. The S&P BSE Small-Cap index was up 0.06%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was weak. On the BSE, 1,024 shares rose and 1,597 shares fell. A total of 136 shares were unchanged.

ICICI Bank (down 3.28%), RIL (down 2.34%) and SBI (down 2.19%) edged lower from the Sensex pack.

ITC rose 1.74% after net profit rose 9.86% to Rs 2932.71 crore on 26.48% decline in total income to Rs 11329.74 crore in Q4 March 2018 over Q4 March 2017. The result was announced during trading hours today, 16 May 2018.

Hindalco Industries fell 1.91%. The company's net profit fell 24.98% to Rs 376.97 crore on 0.69% decline in total income to Rs 11866.02 crore in Q4 March 2018 over Q4 March 2017. The result was announced during trading hours today, 16 May 2018.

Reliance Communications lost 15.26% after an insolvency tribunal reportedly ordered bankruptcy proceedings against the telecom company on a petition filed by Ericsson.

According to reports, the Mumbai bench of the National Company Law Tribunal on Tuesday, 15 May 2018, admitted three petitions filed against Reliance Communications (RCom) and its subsidiaries by Swedish telecom equipment maker Ericsson under the Insolvency and Bankruptcy Code. The latest development could affect RCom's deal to pare debt by selling its wireless assets to Reliance Jio Infocomm, media reports suggested.

Meanwhile, RCom clarified after market hours yesterday, 15 May 2018, that the company and two of its subsidiaries Reliance Telecom and Reliance Infratel, await the detailed orders of the National Company Law Tribunal (NCLT), Mumbai, allowing the Ericsson application for admitting the companies to debt resolution under IBC. The companies will decide the next course of action after studying the orders.

On the political front, Karnataka delivered a hung Assembly on Tuesday with no party getting a clear majority to form government in the state. While the Bharatiya Janata Party (BJP) emerged as the single-largest party, winning 104 seats, falling marginally short of the 113 seats needed to form a government. The Congress and the Janata Dal Secular (JDS) stood second and third with wins on 78 and 38 seats respectively.

All eyes are now on Governor Vajubhai Vala as both the BJP and the post-poll combine of the Congress and the JDS have staked a claim to form the government. Meanwhile, BJP's Karnataka unit chief B S Yeddyurappa reportedly met the Governor Vajubhai Vala, and asked him to allow him to take oath as chief minister. H D Kumaraswamy reportedly said thate he is going to meet the governor with the state Congress president and formally stake claim to form the government.

Overseas, most European stocks were trading higher as investors monitored surging interest rates in the bond markets. Most Asian stocks fell as geopolitical developments and rising benchmark US yields spurred a return of risk aversion. North Korea canceled high-level talks with Seoul, denouncing military exercises between South Korea and the United States, breaking from several months of easing relations on the peninsula. This has also raised concerns about the planned summit between US President Donald Trump and his North Korean counterpart leader Kim Jong Un scheduled next month.

US stocks halted a four-day rally yesterday, 15 May 2018 with the steepest slide in almost two weeks as healthcare and tech shares retreated. Investors are weighing the prospect for higher Federal Reserve rates as strong US retail and factory data on Tuesday fueled bets the Fed may raise rates three more times this year.

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