Sensex struggles below 26000; PSU Bank tanks 5%, BoB loses 8%

Moneycontrol Bureau1:45 pm Delay in earnings recovery: Ajay Bodke of Prabhudas Lilladher says the surprise demonetisation move of higher denomination currencies by the government on 8th November 2016 took markets by surprise.After witnessing a tepid earnings growth for the last few years, markets were looking forward to a return to robust earnings jump in 2H FY17. The optimism stemmed from consumption-focused sectors riding on cash infusion in the economy due to the VII Pay Commission award to Central government employees and OROP to defence personnel (serving & retired) as well as a boost to rural consumption after a near-normal monsoon leading to bumper kharif harvest after two successive years of drought.The currency crunch in the wake of demonetisation and adjustments warranted due to shocks to supply chains and necessity to incorporate tweaks in the mode of conducting business would delay the demand recovery by atleast a quarter, he says.1:38 pm Europe opens: European markets opened higher as dollar strength took a breather and oil prices jumped.The pan-European Stoxx 600 started the day 0.14 percent higher, with most stocks moving north. Basic resources were outperforming their peers, rising more than 1 percent.1:32 pm Fund raising: Indian firms raised around Rs 18,600 crore through issuance of shares to promoters and shareholders on preferential basis in the first six months of the current fiscal, a slump of 11 percent from year-ago level.

The funds have been mobilised for business expansion, refinancing debt, working capital requirements and general corporate purposes.

Preferential allotment serves as an alternative mechanism of resource mobilisation, wherein a listed firm issues shares or convertible securities to a select group of shareholders on a private placement basis.

As per the latest data available with the Securities and Exchange Board of India, funds garnered by listed companies via preferential allotment stood at Rs 18,594 crore in the April-September period of 2016-17, compared to Rs 20,874 crore in the same period of the preceding fiscal.1:20 pm USFDA nod: Drug firm Zydus Cadila has received final approval from the US health regulator to market its Metronidazole tablets used for the treatment of infections caused by bacteria or parasites.

The company has received "final approval from the United States Food and Drug Administration (USFDA) to market Metronidazole tablets USP in strengths of 250 mg and 500 mg," Cadila Healthcare, the listed entity of the Zydus Group, said in a BSE filing.

The drug will be produced at the group's formulations manufacturing facility at Baddi, it added.

"The group now has more than 105 approvals and has so far filed nearly 275 abbreviated new drug applications (ANDAs) since the commencement of the filing process in FY 2003-04," Cadila Healthcare said.Also read - Demonetisation is welcome but timing is bad for farmers: CIFA1:00 pm Market Check

Bears kept complete control over Dalal Street in afternoon as equity benchmarks as well as broader markets were down between 1 percent and 2 percent despite mixed global cues.

The 30-share BSE Sensex was down 315.84 points or 1.21 percent at 25834.40 and the 50-share NSE Nifty declined 116.00 points or 1.44 percent to 7958.10. More than five shares slipped for every share rising on the BSE.

Deutsche Bank expects the remainder of 2016 to be highly uncertain, which will keep markets volatile with a downward bias. It cut December 2016 Sensex target to 25,000 (from 27,000 earlier).

Nifty PSU Bank fell the most among sectoral indices, down nearly 5 percent. Bank of Baroda plunged 7.5 percent and PNB was down 6.5 percent followed by OBC, SBI, Canara Bank, Union Bank, Syndicate Bank and Allahabad Bank with 3-4.5 percent losses.

Cash crunch after demonetisation hit realty stocks badly as analysts expect major impact on earnings. Nifty Realty lost over 4 percent.