Sensex, Nifty, Bank Nifty end at 2016 closing high; infra up 9%

26 May 2016

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3:30 pm Market closing: The market has ended with stellar gains with the benchmark indices and Bank Nifty at 2016 closing high. The Nifty ended the May F&O series at 8070, up 134.75 points or 1.7 percent while the Sensex was up 485.51 points or 1.9 percent at 26366.68.

L&T was up 14 percent, its biggest one-day gain in last 7 years. Capital goods index climbed 9 percent

3:15 pm Results: ONGC's fourth quarter profit and revenue beat analysts' expectations but operational performance was a miss. Profit increased more than 3-fold to Rs 4,416 crore while revenue declined 11.4 percent to Rs 16,385 crore compared to preceding period.

The state-run oil & gas explorer's Q4 profit was expected to be in range of Rs 1,500-2,500 crore in Q4 against Rs 1,286 crore in Q3. Revenue was seen falling 15 percent to Rs 15,682 crore compared to preceding quarter.

3:05 pm Market chcek: The Sensex is up 453.78 points or 1.7 percent at 26334.95, and the Nifty up 121.25 points or 1.5 percent at 8056.15. About 1345 shares have advanced, 1141 shares declined, and 197 shares are unchanged.

2:58 pm Market Update: The Sensex jumped 380.07 points or 1.47 percent to 26261.24 and the Nifty climbed 97.75 points or 1.23 percent to 8032.65 but the market breadth was not strong.

About 1325 shares advanced against 1153 declining shares on BSE.

Andrew Holland of Ambit Capital said that monsoons will be the real catalyst for Nifty to keep growing stronger in the months ahead.

2:40 pm Earnings: Shree Cement's January-March quarter earnings matched analysts' expectations on Thursday with profit rising 86.5 percent to Rs 223.3 crore compared to year-ago period, driven by power business. Higher other income also boosted bottomline.

Revenue increased 28 percent to Rs 2,017 crore year-on-year, led by both businesses (cement and power) but operationally power segment was strong and not cement.

Cement business grew by 23 percent to Rs 1,801.4 crore with loss of Rs 38.65 crore at EBIT level (against loss of Rs 36.67 crore YoY) while power segment registered a whopping 44 percent growth at Rs 426 crore with EBIT rising 86 percent to Rs 220.6 crore.

2:20 pm Interview: VIP Industries reported steady fourth quarter numbers with net profit rising to Rs 13 crore from Rs 10.3 crore year-on-year and total income coming in at Rs 275.3 crore against Rs 246 crore.

Fourth quarter revenues, which grew at near 12 percent, were aided by a 2-3 percent rice in prices and by an increase in volumes, says the company's Dilip G Piramal, Chairman of VIP Industries.

However, Pirmal expects some impact on revenue in the first quarter of FY17 due to dull demand in the current wedding season. Despite this, the company's market share continues to strengthen, he adds.

Piramal expects FY17 revenue to be in the range of 10-15 percent. A tentative big institutional order from the government could contribute 3-4 percent to revenues, he said.

2:00 pm Market Check
Equity benchmarks touched fresh 2016 high today, driven by infra, banks, FMCG and IT stocks, despite mixed global cues. The broader markets underperformed with the BSE Midcap and Smallcap indices rising 0.6 percent each.

The 30-share BSE Sensex surged 336.44 points or 1.30 percent to 26217.61 and the 50-share NSE Nifty jumped 89.55 points or 1.13 percent to 8024.45 while the market breadth was marginally positive as about 1313 shares advanced against 1122 declining shares on Bombay Stock Exchange.

L&T continued to be leading contributor to benchmarks' gains, up over 12 percent as brokerages upgraded as well as raised target price after Q4 earnings beat expectations.

State Bank of India was up nearly 4 percent ahead of quarterly earnings that will be announced on May 27. ONGC, too, gained 2.7 percent ahead of earnings later today.

Infosys, ICICI Bank, Axis Bank, M&M, Maruti and HUL rose 1-2 percent while Sun Pharma and NTPC fell a percent each.

Across Asian markets, the energy sector saw gains as oil prices hit the USD 50-a-barrel mark for the first time since early November, but broader markets were mixed. European markets too were mixed with DAX rising 0.3 percent.

1:45 pm Market check: The Sensex is up 315.04 points or 1.2 percent at 26196.21, and the Nifty up 84.40 points or 1 percent at 8019.30. About 1284 shares have advanced, 1127 shares declined, and 175 shares are unchanged.

1:30 pm Rajan's warning: Reserve Bank of India (RBI) Governor Raghuram Rajan has warned that a "sharp" slowdown in China's growth posed a threat to the global economy, highlighting possible impact from the shadow banking system of its neighbour, the Reserve Bank of India said. Raghuram Rajan's comments were made in India's financial capital in a speech on Thursday to central bank governors from the nations of the South Asian Association for Regional Cooperation (SAARC) grouping, the RBI said in a statement. "Bad loans in the banking system were likely to grow over current levels, and, in addition, there might be serious weaknesses in the shadow banking system, which could feed back to banks," the RBI summarised Rajan as saying on China.

The market gathered more steam in afternoon trade with the Nifty reclaiming 8000 level for the first time since November 6, 2015. In fact, it is trading at fresh 2016 high.

The Sensex rose 247.64 points or 0.96 percent to 26128.81 and the Nifty rose 65.55 points or 0.83 percent at 8000.45. About 1274 shares advanced against 1088 declining shares on BSE.

L&T, BHEL, Adani Ports, ONGC and SBI are top gainers while Sun Pharma, HDFC, Tata Steel, Asian Paints and NTPC are losers in the Sensex.

European stocks turned higher amid a rebound in oil prices. Brent oil futures climbed above USD 50 a barrel for the first time in nearly seven months, boosted after US government figures showed a sharper-than-expected drawdown in crude stocks last week.

US crude stocks fell 4.2 million barrels to 537.1 million in the week to May 20, the steepest weekly drop in seven weeks, the US Department of Energy's Energy Information Administration said on Wednesday.

12:59 pm Market Update: Equity benchmarks extended rally in afternoon trade. The Sensex surged 219.13 points or 0.85 percent to 26100.30 and the Nifty is inching towards 8000, up 57.20 points or 0.72 percent at 7992.10.

About 1275 shares advanced against 1067 declining shares on BSE.

12:50 pm Buzzing: Investors are falling over each other to buy shares of Larsen and Toubro after its surprising January-March results. Shares of the infrastructure and engineering major rose over 11 percent intraday as its fourth quarter earnings beat analysts' expectations on all counts.

Its consolidated profit rose 18.6 percent to Rs 2454 crore compared to year-ago period, driven by strong revenue and operational performance despite higher finance and tax cost. Revenue increased 18.3 percent to Rs 33,157 crore on the back of good progress in project execution and more than 50 percent of revenue was contributed by infrastructure segment.

Analysts are also bullish on the stock and upgraded it with increased target price.

Morgan Stanley has an overweight rating on the stock with an increased target price of Rs 1596 per share factoring in a rise in market multiple.

12:40 pm Earnings estimates: Shree Cement's third quarter profit is seen rising by 42 percent to Rs 170 crore and revenue may increase 28 percent to Rs 2,016 crore compared to year-ago period, according to average of estimates of analysts polled by CNBC-TV18.

Operating profit is expected to jump 46 percent to Rs 498 crore and margin may expand 310 basis points to 24.7 percent against corresponding period of last fiscal, driven by low pet coke prices and high operating leverage.

Shree Cement has changed its reporting year from June to March from FY16.

Volume growth is likely to be at 30 percent YoY (5.35 million tonne) led by capacity addition in Bihar and Chhattisgarh.

12:20 pm Oil at $50: Brent oil futures climbed above USD 50 a barrel today for the first time in nearly seven months, boosted after US government figures showed a sharper-than-expected drawdown in crude stocks last week.

Brent LCOc1 had climbed 37 cents to USD 50.11 a barrel, its highest since November 4. It ended the previous session up USD 1.13, or 2.3 percent.

US crude futures CLc1 rose 33 cents to their strongest since October 12 at USD 49.89 a barrel, after settling the last session 94 cents higher.

"Geopolitical issues in West Africa and the Middle East, supply outages, increased demand and maybe a touch of a weaker dollar have all helped push prices higher," said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance.

"I don't think the rally will last because prices will reach a level that will bring US shale oil output back into the market," he added.

12:00 pm Market Check
The 30-share BSE Sensex continued to hold 26000-mark in noon trade, supported by capital goods, auto, select banks and IT stocks. The 50-share NSE Nifty is also inching towards 8000 level ahead of expiry of May derivative contracts.

Anish Damania of IDFC Securities believes Nifty may touch 8900 levels by end of this year.

Following an above-average earnings report of corporate India in the last quarter of FY16, this fiscal year could see a growth of 20 percent in earnings, he says.

The Sensex rallied 156.96 points or 0.61 percent to 26038.13 and the Nifty jumped 40.60 points or 0.51 percent to 7975.50. The market breadth was marginally positive as about 1208 shares advanced against 1012 declining shares on BSE.

Goldman Sachs has upgraded Infosys to buy with a target price of Rs 1,420, implying a 20 percent upside. The brokerage feels the company is in the middle of a multi-year transformation and accelerating growth & expanding margins will drive outperformance against peers.

The brokerage also upgraded Mindtree to neutral with target of Rs 660. The stock has underperformed the sector and Sensex by 13 percent/16 percent on profit warning, it says.  Post the correction, it believes the stock is trading at fair valuations.

11:45 am NTPC: State-run power generator NTPC Ltd has raised Rs 1,072 crore through 15-years bonds issue, which were oversubscribed by 1.74 times. "Another indicator of robust power sector: NTPC raises Rs 1,072 crore at 8.10 per cent. 15 year bond issue oversubscribed 1.74 times," Power Minister Piyush Goyal tweeted. The 61st series bonds issued today has a door-to-door maturity of 15 years. Bids amounting to Rs 1,305 crore were received against issue size of Rs 750 crore.

11:30 am Earnings review: Fourth quarter earnings are much better as estimates were moderated post December quarter numbers. Sectors that have been slow in the last one to two years have shown growth this time around, says Rajat Rajgarhia, MD of Institutional Equities at Motilal Oswal Securities. Sectors like cement, non-banking finance companies and retail lenders have reported positive numbers. The only sectors that are still subdued are corporate lenders -- mainly public sector banks and some private banks, he said. ''We have to pick companies where growth rates are turning positive,'' he said, adding that midcaps rather than largecaps are creating alphas in this market. In largecaps, the story remains same -- companies that were doing well continue to do well.

Buying spree continues on Dalal Street as the Nifty attempts to touch 8000. The 50-share index is up 41.50 points or 0.5 percent at 7976.40 and the Sensex is up 172.36 points or 0.7 percent at 26053.53.

L&T, Adani Ports, BHEL, Dr Reddy's Labs and ONGC are top gainers while Sun Pharma, NTPC, HDFC, Tata Steel and Asian Paints are losers in the Sensex.

Brent crude passed USD 50 a barrel for the first time in 2016 today after data showed a fall in US crude inventories, adding to expectations of a tightening global market.

The USD 50 price point is a key level and traders are watching to see if it can be sustained. The gains came as markets digested news that US commercial crude oil inventories fell by 4.2 million barrels in the week to May 20, according to US Department of Energy data.

This is largely due to wildfires in the western provinces of Canada - the biggest supplier of crude to the US market - which have curbed oil production.

10:59 am Market Update: Equity benchmarks sustained gains in morning with the Sensex rising 165.31 points to 26046.48 and the Nifty climbing 43.85 points to 7978.75.

About 1215 shares advanced against 798 declining shares on BSE.

10:45 am Earnings estimates: State-run electric utilities company Power Grid Corporation of India's fourth quarter profit is expected to jump 24 percent to Rs 1,752 crore and revenue may increase 24.5 percent to Rs 5,854 crore compared to year-ago period, according to analysts polled by CNBC-TV18.

Operating profit is seen rising 26 percent to Rs 5,111 crore and margin may expand 100 basis points to 87.3 percent against corresponding period of last fiscal.

Analysts expect strong earnings momentum to continue as they capitalisation of transmission projects worth Rs 3,500 crore, down 30 percent (one of the lowest in four years).

They estimates capex of Rs 6,500 crore in the quarter, driving full year capex to Rs 22,500 crore as against Rs 22,400 crore in FY15.

10:30 am Citi on Fed rate: Markus Rosgen of Citi said the last two instances of Fed rate hike fears fuelled more risk-on than risk-off trades in equity markets. Value and EPS revisions have outperformed the more defensive quality and low-risk strategies, he adds.

Given the valuation differential, positioning and EPS growth sensitivities, he expects the trend to continue. Prior periods of tightening have entailed EPS growth not EPS declines, so investors need not fear the Fed, Rosgen said.

10:20 am UN on India's GDP: India could lose USD 49 billion in GDP if global food prices double in future, according to a new UN report which said the world will likely suffer from more volatile food prices due to rising populations.

The UN Environment Programme-Global Footprint Network report, entitled 'ERISC Phase II: How food prices link environmental constraints to sovereign credit risk', features countries according to how badly they will be affected if global food commodity prices double.

The report said if global food prices double then China could lose USD 161 billion in GDP and India could lose USD 49 billion.

"In the future, the world will likely suffer from higher and more volatile food prices as a result of a growing imbalance between the supply and demand of food. Rising populations and incomes will intensify the demand for food while climate change and resource scarcity will disrupt food production," it said.

10:00 am Market Check
The market continues to rise on May Futures & Options expiry day with support from infra, auto and bank stocks. The Sensex is up 166.04 points or 0.6 percent at 26047.21, and the Nifty up 42.55 points or 0.5 percent at 7977.45. About 1054 shares have advanced, 633 shares declined, and 84 shares are unchanged.

L&T is still up 10 percent while BHEL, ONGC and Bajaj Auto are other gainers in the Sensex. NTPC, Sun Pharma, SBI, Wipro and Cipla are losers in the Sensex. Capital Goods index is up 6 percent.

Currencies across the globe seem to be largely guided by actions of the US Federal Reserve, with rupee witnessing only moderate volatility, says a report by Care Ratings.

According to the credit rating agency, the single most important factor that is affecting the course of currencies is the Fed action or inaction related to interest rates.

The Indian rupee has witnessed a moderate volatility so far this year and its movement towards Rs 68-69 during the year looks likely, it said. The volatility (on annualised monthly basis) has been really high for some of the currencies such as those of Argentina, Russia, South Africa, Brazil, Australia and Mexico.

9:55 am Circuit limits: Leading stock exchange BSE revised circuit limits for share movement of VRL Logistics and and five others as part of its surveillance action.

The new limits which ensure stock prices do not go up or down beyond a level during a trading session will be effective today.

The exchange has set an upper limit of 10 percent for VRL Logistics.

Shares of VRL Logistics today plunged by over 12 percent on BSE amid worries over its promoters' proposed investment in regional airline venture and its impact on the firm's balancesheet. Yesterday, the stock tumbled by 18 percent.

9:45 am Boardroom: In an interview with CNBC-TV18, Gopal Mahadevan, CFO of Ashok Leyland, said that the company will not raise any funds in FY17 and will only take enabling resolutions to raise funds. The company is sufficiently funded and it has a healthy debt-to-equity ratio of 0.24, he said.

Giving an outlook for this fiscal, he said that a volume growth of 15-20 percent is expected in FY17 and there will be no equity dilution this fiscal year.

9:30 am SEBI on MFs: Refusing to budge on mandatory disclosure of commissions and other agent payouts by mutual funds, regulator Sebi said it is in favour of a model where investor buys these products directly without any middlemen and a new online platform for buying and selling these instruments would be in place very soon.

The distributors and financial advisors have been lobbying hard against mandatory disclosure of commissions by fund houses, which have also been asked by the regulator to disclose to investors salaries and other payouts to top management.

"We should worry more about the investors than about those doing business of mutual fund distribution. Globally, the mutual fund is moving towards direct buying. Anyway, IFAs account for less than ten per cent of mutual fund industry's asset under management," Sebi Chairman UK Sinha said.

9:15 am Market Check
Equity benchmarks started off Thursday's trade on a positive note, continuing upside for third consecutive session. The Sensex rose 138.25 points to 26019.42 and the Nifty climbed 31.55 points to 7966.45.

L&T shares rallied 9 percent in early trade as brokerages turned bullish on the stock after better-than-expected earnings in January-March quarter. Citi has upgraded the stock to buy from neutral and target price raised to Rs 1,640 from Rs 1,230 apiece.

Tata Steel fell nearly a percent after reporting a loss of Rs 3,279 crore in Q4.

The Indian rupee has opened flat at 67.32 per dollar today against previous day's closing of 67.33.

Mohan Shenoi of Kotak Mahindra Bank said, "Post FOMC minutes, the market is reassessing a possible Fed rate hike in June resulting in dollar strength."

"The rupee weakened initially but recovered on the back of a bounce back in stock markets and large custodial inflows."

"The USD-INR trading range for the day is seen between 67.10-67.40/dollar," he added.

The US dollar rose against the yen for a second straight day and hovered near its highest level in roughly 10 weeks against the euro on expectations for a Federal Reserve rate hike in the near term.

Asian markets were mixed despite overnight gains in oil prices pushed US stocks higher.

Oil prices gained in the US session after US government data showed a larger-than-expected drop in crude inventories. Global benchmark Brent futures settled up 2.3 percent at USD 49.74 a barrel, while US crude futures added 1.93 percent to USD 49.56.

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