Sensex flat, mid & smallcap outshine again; Sesa soars 8%

Equity benchmarks saw consolidation on Tuesday after heavy run-up in previous sessions owing to BJP's landslide victory in Lok Sabha election but the broader markets outperformed benchmarks again.

Indices ended at another record closing high today, continuing upmove for the fourth consecutive session. The Sensex rose 13.83 points to close at 24376.88 and the Nifty advanced 11.95 points to 7275.50 while the BSE Midcap and Smallcap indices gained 1.7 percent and 3 percent, respectively.

The market may continue its run-up but short-term correction is likely, feel experts. According to them, the market is still not expensive compared to the long-term average and sectoral rotation is likely to continue.

Manishi Raychaudhuri, managing director, BNP Paribas Securities India has upped its 2014 year-end Sensex target to 28,000 but he cautions that a short-term correction is likely in the market on the back of factors like El Nino effect.

BSE Realty Index hogged the limelight with 5 percent gains followed by IT, Metal and Healthcare with 1.5-2 percent. However, Oil & Gas and PSU saw profit-taking, losing 3 percent and 1.5 percent, respectively.

Sesa Sterlite was the biggest gainer, soaring 8 percent. Tata Steel gained 3.5 percent and Hindalco rose over 2 percent but top coal mining company Coal India tanked 6 percent on profit booking.

Shares of Infosys, TCS, Wipro, M&M, ITC, Hindustan Unilever, Dr Reddy's Labs and Cipla, which saw heavy selling pressure in previous session, rebounded with 1-3.6 percent gains.

Housing finance company HDFC and private sector lender HDFC Bank maintained upmove, rising 3 percent and 0.5 percent, respectively. However, rivals State Bank of India and ICICI Bank were down more than 1.4 percent.

Top telecom operator Bharti Airtel was up 2.8 percent. Department of Telecommunication sources told PTI that DoT has issued letter of intent for unified licence to Airtel for Delhi and Kolkata.

State-run power equipment maker rallied 3.6 percent, in addition to 17 percent rally in previous session.

However, shares of Reliance Industries and ONGC tumbled 4 percent each followed by L&T, Hero Motocorp, NTPC and GAIL with 1-3 percent.

In the midcap space, DB Realty, Unitech, IL&FS Transport, AIA Engineering and Carborundum Universal rallied 11-20 percent. Among smallcaps, Hanung Toys, Capital First, BGR Energy, Gitanjali Gems and Aban Offshore shot up 18-20 percent.

Advancing shares outnumbered declining ones by a ratio of 2143 to 760 on the Bombay Stock Exchange.

03:50 pm Rupee outlook
Nizam Idris, head of EM FX Strategy, Macquarie expects the rupee to strengthen in the next one month from the current 58.60 level to 57.50/USD.  In an interview to CNBC-TV18, he said that he has revised the rupee forecast higher.

He further added that the next key trigger for the market would be allocation of cabinet portfolios. He said that the market would be eyeing who bags the position of finance minister and Arun Jaitley appointed for that position would come as a positive surprise.

"The big question the market is asking is who will be the Finance Minister. If we think about the finance ministry post, Arun Jaitley has been spoken about as the preferred candidate by Modi himself, but Arun actually lost his election in Amritsar, so the question is whether Arun would take an upper house position and then be appointed as Finance Minister," he said.

His year-end target for the Indian currency is 58/USD.

03:40 pm Market closing
After a volatile session, the market ended at a flat note but Nifty clung to 7250-levels. The Nifty was up 11.95 points at 7275.50 while the Sensex closed at 24376.88, up 13.83 points. Rally in small and midcap sectors continued as Jaiprakash Power, Triveni Turbine, Voltas, Sadbhav Engg and Bhusan were leaders.

Among the gainers in the Sensex were Sesa Sterlite, M&M, Tata Steel, Bharti Airtel and BHEL. Stocks that made hefty gains on Monday were under profit booking pressure. Coal India, ONGC, Reliance, Hero MotoCorp and GAIL were major laggards in the Sensex.

03:30 pm European market
European shares and southern European bonds made tentative progress , as expectations the European Central Bank will provide fresh support in coming weeks helped counter uncertainty over European Union elections.

The region's main bourses inched up 0.15 percent after a mixed day in Asia, where Thailand declared martial law and the Australian dollar dropped.

After a tough past week, Spanish, Italian and other euro zone periphery bonds steadied in early European trading, along with their stock markets.

They were helped by growing expectations the ECB will cut interest rates and may take up some unconventional policieswhen it next meets, at the start of June.

03:20 pm  Boardroom
Prem Hinduja, CEO said that its diamond business segment, which contributes about 25 percent, saw margins slightly falling from 34 percent to 33 percent quarter-on-quarter (Q-o-Q) basis. Hence, the company is focusing on upping revenue generated via diamond business.

The company's net profit in Q4 slipped 53 percent to Rs 11.7 crore versus Rs 25 crore reported in the same quarter a year earlier. However, its total income remained unchanged at Rs 447 crore in Q4FY14. Hinduja said that the quarter gone by was challenging for the company given the poor consumer sentiment.

"We are waiting for the consumer sentiment to improve before undertaking expansion". TBZ currently operates 27 stores across 21 cities in eight states. Meanwhile, he added that 80:20 rule on gold imports has created some shortage in the raw material market, but procuring raw material wasn't a challenge for TBZ.

03:10 pm Result
Pune-based real estate company Kolte-Patil Developers' consolidated net profit fell 71 percent to Rs 13 crore in the quarter ended March 2014 from Rs 45.1 crore in same quarter last fiscal due to lower revenue and higher finance cost.

Consolidated total income from operations slipped 18.5 percent to Rs 171.1 crore in March quarter from Rs 210 crore in corresponding quarter of previous fiscal.

Operating profit dropped 40.3 percent on yearly basis to Rs 40 crore and margin plunged 860 basis points to 23.2 percent.

During the quarter, other income declined significantly to Rs 4.9 crore from Rs 17.6 crore year-on-year while finance cost jumped to Rs 11.9 crore from Rs 7.6 crore.

02:59pm Reliance Power gains 2%
Reliance Power announced that the fourth 660 MW unit of the 3,960 MW Sasan Ultra Mega Power Project has commenced power generation thus making 2,640 MW capacity operational at the project. Balance two units are in advanced stages of construction and will be commissioned over the next few months.

With this unit, Reliance Power's generation capacity has increased to 4,525 MW which includes 4,440 MW of thermal capcity and 85 MW of renewable energy based capacity.

02:52pm Market Update: Benchmarks gained strength amid volatility with the Sensex rising 79.51 points to 24442.56 and the Nifty advancing 37.55 points to 7301.10.

02:50pm Welspun India up 5%
Consolidated net profit of the company jumped to Rs 81.7 crore in Q4FY14 from Rs 63.2 crore in same quarter last year.

Total income from operations increased to Rs 1,185 crore from Rs 757 crore and other income rose to Rs 29 crore from Rs 19 crore year-on-year.

02:40pm SKS Microfinance up 3%
Investors continued to buy shares of micro finance lender SKS Microfinance after the company has fixed floor price for its QIP (qualified institutional placement) issue at Rs 235.06 apiece. The stock gained as much as 4.5 percent intraday on Tuesday.

SKS Microfinance says the board of directors has decided to open a QIP issue by way of issue of equity shares on May 19, 2014. "Further, the board has fixed May 19 as the 'relevant date' for the purpose and accordingly the floor price is Rs 235.06 per equity share," it adds.

02:30pm CNN-IBN reported quoting sources that Narendra Modi will take oath as Prime Minister on May 26. He elected as parliamentary party leader today.

02:20pm SpiceJet in news
India's second largest budget carrier SpiceJet, which reported a record Rs 1,003 crore net loss last fiscal, may soon receive the much-needed capital infusion as talks with an overseas investor have reached "very advanced stages".

Media baron Kalanithi Maran-promoted carrier has been in need of cash for quite some time to keep it afloat.

"We are in very advanced stages of a capital infusion discussion with an external entity that when completed will help us clean up our arrears and rebuild with confidence," the
airline said in a statement, with inputs from PTI.

02:10pm FII View
India is one of the best markets in the world post the election result that came out on Friday, says Mark Mathews, head- Research, Bank Julius Baer.

However, it doesn't mean that all stocks will shoot the roof, he adds. The stocks that are currently at all-time highs, he says, aren't significantly above their previous all-time highs.

On sectoral performances, Mathews says public sector units (PSUs) are likely to garner smart profits once the economy starts looking up.

02:00pm Equity benchmarks continued to consolidate after hitting record highs but the broader markets maintained outperformance with the BSE Midcap and Smallcap indices rising 2 percent and 2.8 percent, respectively.

The Sensex slipped 17.08 points to 24345.97 while the Nifty rose 0.80 point to 7264.35. Advancers beat decliners by a ratio of 1999 to 800 on the BSE.

BSE Realty Index rallied nearly 6 percent. Unitech jumped over 17 percent and HDIL gained 7 percent followed by DLF and Indiabulls Real Estate over a percent.

Sesa Sterlite topped the buying list with 7 percent gains. Shares of HDFC, Infosys, Bharti Airtel, M&M, Tata Steel, BHEL, Hindalco Industries and Dr Reddy's Labs slipped 2-4 percent.

However, Oil & Gas Index lost nearly 3 percent. Reliance Industries and ONGC slipped 3 percent each. GAIL dipped 2 percent.

Top lenders State Bank of India and ICICI Bank declined 1.8 percent each. Coal India tanked 5 percent while Tata Motors and L&T slipped a percent.

2:00 pm Expectations from new government: S Naren, CIO-Equity of ICICI Prudential AMC is hopeful of seeing a significant improvement in Indian economy over the next three years.

In an interview to CNBC-TV18, he said, all economic indicators will improve drastically in the medium-term and a double-digit industrial production growth is likely in next three years. India's industrial production shrunk at a slower pace at 0.5 percent in March.

He recommends investors to increase their exposure to equities since the risk factor in this asset class is low as of now. He finds most sectors as reasonably valued at this point of time. ''FMCG, technology and pharma stocks have been beaten to a pulp in last one month. We have seen huge allocation to realty and under-allocation in equities,'' he says.

1:50 pm Gold update: India's gold demand is likely to pick up in the second half of the year as curbs on bullion imports are expected to be eased by the country's new government, top officials at the World Gold Council (WGC) said.

Struggling with a ballooning trade deficit, India in 2013 imposed a record high duty of 10 percent on overseas purchases of gold, the second-biggest expense in its import bill, and introduced a rule tying import quantities to export levels.

Any roll back in these restrictions and stronger demand from India, the world's No.2 buyer of gold after China, could support a recovery in global prices of the precious metal that slumped 28 percent last year - the first drop in 13 years.

"The change (in gold policy) is inevitable because Modi seems to be pro-gold," said Albert Cheng, WGC's head of the Far East region, referring to Narendra Modi who romped to a landslide victory in the recently concluded general elections in India. "It's just a matter of when he is going to do it."

1:40 pm SpiceJet Ltd  said it was in "advanced" talks to get funding, days after the country's fourth-biggest carrier by domestic market share reported its biggest annual loss.

"We are in very advanced stages of a capital infusion discussion with an external entity that when completed will help us clean up our arrears and rebuild with confidence," SpiceJet said in a statement, without naming any company.

SpiceJet, controlled by billionaire Kalanithi Maran's Sun Group, has been seen as a potential target by foreign airlines after rules were eased in 2012 to allow foreign carriers to buy up to 49 percent in local airlines.

Last week, it reported net loss widened for the three months to March, and posted a record full-year net loss of 10.03 billion rupees (USD 171.5 million).

1:30 pm RBI measures: The Reserve Bank of India (RBI) under an agreement with the newly formed state of Telangana will manage its rupee public debt and act as the sole agent for investment of government funds from June 2, it said in a statement on Tuesday.

The agreement follows the reorganisation of the state of Andhra Pradesh into two separate states earlier this year.

The market consolidates further but Nifty manages to hold 7250 levels. The Nifty is up 7.20 points at 7270.75. The Sensex is up 2.49 points at 24365.54. About 1914 shares have advanced, 796 shares declined, and 101 shares are unchanged.

Sesa Sterlite and BHEL are up 5-6 percent. Other gainers in the Sensex are Tata Steel, Hindalco and M&M. Among the losers are Coal India, ONGC, Reliance, Hero MotoCorp and GAIL.

Japan's Nikkei share average rose, snapping a four-day losing streak supported by a slightly weakening yen, while Yahoo Japan Corp soared after dropping its plan to buy mobile network operator eAccess Ltd from SoftBank Corp.

The Nikkei rose 0.5 percent to 14,075.25 points. The broader Topix gained 0.3 percent to 1,153.38, while the new JPX-Nikkei Index 400 gained 0.3 percent to 10,522.16.

Finance ministry officials are likely to meet the DIPP and RBI officials today to discuss HDFC Bank's proposal to hike FII limit. Both RBI and the DIPP are not in favour since the parent HDFC's stake of 22 percent is being counted as foreign investment.

The BJP parliamentary party formally elects Prime Minister designate Narendra Modi as their leader. Modi will meet president Pranab Mukherjee along with an NDA delegation later in the afternoon today.

12:57pm HCL Technologies bags order
Country's fourth largest software services firm HCL Technologies has bagged a deal estimated to be around USD 500 (around Rs 3,000 crore) from beverage giant PepsiCo for offering infrastructure management services (IMS).

Though the value of the 7-year deal was not disclosed, sources said the size of the agreement is about USD 500 million, reports PTI.

12:50pm Reliance Power up 2.5%
Reliance Power announced that the fourth 660 MW unit of the 3,960 MW Sasan Ultra Mega Power Project has commenced power generation thus making 2,640 MW capacity operational at the project. Balance two units are in advanced stages of construction and will be commissioned over the next few months.

With this unit, Reliance Power's generation capacity has increased to 4,525 MW which includes 4,440 MW of thermal capcity and 85 MW of renewable energy based capacity.

12:40pm Modi becomes parliamentary party leader
The Bharatiya Janta Party (BJP) on Tuesday unanimously elected Narendra Modi as its parliamentary party leader.

BJP president Rajnath Singh and senior leader LK Advani proposed Modi's name at the parliamentary board meet, which convened at the central hall of the Parliament.

Senior leaders Murli Manohar Joshi, M Venkaih Naidu, Nitin Gadkari, Sushma Swaraj and Arun Jaitely have second the proposal.

After being appointed as BJP's Parliamentary leader, Modi will head to meet President Panab Mukherjee to stake a claim to form the government.

BJP posted a historic win in the Lok Sabha elections, bagging 282 seats, a clear majority, on its own.

12:30pm Nikkei gains
Japan's Nikkei share average rose on Tuesday, snapping a four-day losing streak supported by a slightly weakening yen, while Yahoo Japan Corp soared after dropping its plan to buy mobile network operator eAccess Ltd from SoftBank Corp.

The Nikkei rose 0.5 percent to 14,075.25 points, reports Reuters.

12:20pm UBS downgrades Cipla
UBS has downgraded it to sell from buy. The brokerage has also slashed its target to Rs 370 from Rs 470, as weak earnings poise a threat.

''We expect only a 5 percent EPS CAGR over FY14E-16E period. We believe Cipla's valuation at 20.4x FY16 PE at 22 percent premium to the sector are unjustified and stock is likely to de-rate with consensus earnings cuts,'' it said.

The brokerage is also cautious that ramp up of Cipla's R&D may add pressure to its margins. It sees R&D spend rising from 4.1 percent in FY14E to 5.8 percent by FY16 as Cipla is looking to set up front ends in various markets in US, EU and ANZ. According to UBS, it will take another three years to see a meaningful ramp up in its US revenues.

12:10pm FII View
The Indian equity market valuation is 14.5 to 15.7 times up post the election result, says Manishi Raychaudhuri, managing director, BNP Paribas Securities India.

Speaking to CNBC-TV18, Raychaudhuri says the market is still not expensive compared to the long-term average and sectoral rotation is likely to continue.

While the brokerage firm has upped its 2014 year-end Sensex target to 28,000, Raychaudhuri cautions that a short-term correction is likely in the market on the back of factors like El Nino effect.

12:00pm Equity benchmarks remained in tight range after hefty run-up in previous sessions but the broader markets maintained strong momentum with the BSE Midcap and Smallcap indices rising around 2 percent.

The Sensex advanced 24.50 points to 24387.55 and the Nifty rose 11.30 points to 7274.85. Advancing shares outnumbered declining ones by a ratio of 1822 to 767 on the BSE.

Petrochemical major Reliance Industries and state-run oil & gas major ONGC dropped nearly 3 percent on profit-taking. Top coal mining company Coal India lost 5 percent after rising 13 percent in previous session. Other public sector undertakings like GAIL and NTPC slipped 1-3 percent.

Top lenders State Bank of India & ICICI Bank and engineering & construction major L&T declined more than a percent.

12:00 pm FII view: India is one of the best markets in the world post the election result that came out on Friday, says Mark Mathews, head- Research, Bank Julius Baer.

However, it doesn't mean that all stocks will shoot the roof, he adds. The stocks that are currently at all-time highs, he says, aren't significantly above their previous all-time highs. On sectoral performances, Mathews says public sector units (PSUs) are likely to garner smart profits once the economy starts looking up.

11:50 am Boardroom: Reliance Infrastructure reported a mix bag of numbers in the fourth quarter. Its consolidated net profit dipped 13.86 percent year-on-year to Rs Rs 621.42 crore for the January-March quarter mainly on the back of decline in total income. The company had reported a net profit of Rs 721.44 crore in the fourth quarter of FY'13. However, the company's other income boosted profitability.

Lalit Jalan, CEO, Reliance Infrastructure said the company's income from EPC (Engineering, Procurement and Construction) and contract business plunged 61 percent to Rs 882.81 crore because the first phase of the EPC projects are nearing completion, which is reflected in the order book and topline, as per the company's guidance.

Jalan said the margins are in line with the 8-10 percent EBITDA range the company had guided for.

He also said on a level playing field, Reliance Infrastructure is the most competitive power supplier in Mumbai among the four suppliers in the city.

11:40 am Buzzing: Shares of Cipla fell over 1 percent intraday as UBS has downgraded it to sell from buy. The brokerage has also slashed its target to Rs 370 from Rs 470, as weak earnings poise a threat.

In a note to clients, UBS explains that their original expectation of earnings accretion through Medpro acquisition has not played out while SG&A selling, general and administrative) ramp up has been much stronger than anticipated. The drug major had purcahsed South African pharma firm Medpro for an aggregate consideration of Rs 2,707 crore. Cipla Medpro is the third largest South African pharmaceutical company founded in 1993 and is a leading provider of chronic medicines to the public and private sectors.

As earnings in FY14 have also been supportedby one-off tech fees from Meda and forex gains, it warns that Cipla's earnings may decline in FY15.

11:30 am FII view: Geoffrey Dennis, head, Global Emerging Market Strategy, UBS, believes the Indian equity market is likely to see a further upside of 10 percent on the back of the election result. Speaking to CNBC-TV18, Dennis says while the market has had a good run, the momentum is likely to slowdown now and reforms will take centre-stage. A

Dennis further adds that emerging markets (EMs) look attractive now and India is likely to outperform the basket.

"We certainly expect India to continue rallying. According to our local team, there is another 10 percent upside in the Indian market over the rest of the year. In our emerging markets portfolio, we classified it as neutral because the market already had a very good run and the election result was partly priced in before it came out," he said.

It is a day of consolidation after the massive rally seen in last few trading sessions. The Sensex is down 25.46 points at 24337.59 and the Nifty is down 2.90 points at 7260.65. About 1631 shares have advanced, 756 shares declined, and 99 shares are unchanged.

Tata Steel, Sesa Sterlite, Infosys, Wipro and Dr Reddy's Labs are top gainers in the Sensex. Coal India, ONGC, Reliance, Hero MotoCorp and SBI are major laggards.

Rupee is marginally higher tracking firm equities and dollar sales by foreign banks. Gilts rise due to value buying with some market players citing the recent fall as overdone

Crude prices traded higher on fears of likely disruption in global fuel supplies due to continuing political chaos in Ukraine and Libya. Gold price is hovering close to 1300 per ounce.

Asian markets are mixed today. Japanese stocks bounced back on Tuesday after four straight sessions of losses. Caution prevailed as Thailand's armed forced declared martial law.

10:59am J Kumar Infraprojects surges 11%
GMO Emerging Domestic Opportunities Fund has picked up 4 percent equity stake in company on Monday.

The fund house purchased 6,44,707 shares at Rs 215.06 apiece on the National Stock Exchange and 475,037 shares at Rs 215 on the Bombay Stock Exchange. These block deals were worth Rs 24 crore.

However, Cresta Fund and Long Life Realtors cut their stake by selling 4 lakh equity shares at Rs 215 apiece and 2 lakh shares at Rs 215.25, respectively.
 
Sai Prasad Estate Ventures LLP offloaded its entire stake, selling 1.5 lakh shares at Rs 215.10 and 1.5 lakh shares at Rs 220.89. Prakhar Advisors & Traders Private Limited sold 1,77,900 shares at Rs 215.02 and Priti Ravindra Lad sold 1.4 lakh shares at Rs 215.03 on same day.

10:50am Market Update
Equity benchmarks continued to be choppy in trade but the broader markets gained more than a percent.

Reliance Industries and ONGC extended losses, falling 3-4 percent on profit-taking. Coal India, which rallied 13 percent on Monday, fell 5 percent.

10:40am Gold demand to improve
India's gold demand is likely to pick up in the second half of the year as curbs on bullion imports are expected to be eased by the country's new government, top officials at the World Gold Council (WGC) said.

Struggling with a ballooning trade deficit, India in 2013 imposed a record high duty of 10 percent on overseas purchases of gold, the second-biggest expense in its import bill, and introduced a rule tying import quantities to export levels.

Any roll back in these restrictions and stronger demand from India, the world's No.2 buyer of gold after China, could support a recovery in global prices of the precious metal that slumped 28 percent last year - the first drop in 13 years, reports Reuters.

10:30am Reliance Infrastructure slips 1%
Reliance Infrastructure's fourth quarter (January-March) consolidated net profit fell 14.3 percent year-on-year to Rs 621 crore on lower revenue despite higher other income.

Consolidated total income declined 18.6 percent to Rs 5,036 crore in the quarter ended March 2014 from Rs 6,187 crore in same quarter last year while other income doubled to Rs 328.3 crore from Rs 165.8 crore during the same period.

Operating profit slipped 20.5 percent on yearly basis to Rs 674 crore but margin expanded 60 basis points to 14.3 percent during the January-March quarter.

10:20am IRB Infrastructure recovers
IRB Infrastructure gained over a percent after Bank of America Merrill Lynch has upgraded the target price on the stock to Rs 180 from Rs 119. The brokerage house increased FY16e earnings per share by 12 percent as recent project wins improve revenue visibility for their E&C division.

The brokerage though has downgraded the stock to a neutral as it believes lack of near-term triggers may cap upside potential.

10:10am Market Expert
Prabodh Agarwal, IIFL expects current bull-run to continue. ''Clearly earnings & economic growth have bottomed out and are expected to pick up in FY15,'' he adds.

He further says large cap stocks with significant earnings upgrade and re-rating potential include Coal India, Maruti, ICICI Bank, L&T and Rural Electrification Corporation.

''Our preferred smallcap stocks include Bharat Forge, IRB Infrastructure, Sobha Developer, Shriram Transport Finance and Crompton Greaves," he adds.

10:00am Equity benchmarks recovered with the Sensex rising over 100 pts and the Nifty trading above the 7300 level supported by banks, technology, FMCG and metals stocks.

The Sensex rose 135.37 points to 24498.42 and the Nifty climbed 50.40 points to 7313.95. The broader markets continued to outperform benchmarks with the BSE Midcap and Smallcap indices rising 2.3 percent and 2.8 percent, respectively. Advancing shares outnumbered declining ones by a ratio of 1551 to 402 on the BSE.

Sesa Sterlite and Tata Steel topped the buying list, gaining 4 percent each Hindalco Industries with 3 percent. FMCG majors ITC and Hindustan Unilever surged 1-2 percent while IT majors TCS, Infosys and Wipro advanced 1.6-2.6 percent.

Housing finance company HDFC climbed 1.9 percent. Axis Bank rose 1.6 percent while rival HDFC Bank advanced 0.5 percent.

10:00 am Betting on oil stocks: International brokerage Jefferies expressed hope that incoming government will speed up decision-making in oil sector, especially on the production and exploration front.

"We expect election impact to be positive for the oil & gas sector as reforms that are underway, such as diesel subsidy elimination and gas price hike, are likely to continue and decision-making, particularly in E&P, is likely to be expedited," Jefferies said in a note today.

Key decisions pending in the E&P sector include a policy on product sharing contract (PSC) extension, resolution of the DST issues, approvals for budgets and investment proposals, new PSC model for future Nelp rounds. These decisions will have the maximum impact on Cairn India and Reliance, said the report, adding the real boost would come if the new government takes up more bold steps such as full elimination of fuel subsidy and privatisation of some of the state-run oil marketing companies.

9:50 am Downgrade: UBS has downgraded Cipla to sell from buy as its original expectation of earnings accretion through Medpro acquisition has not played out while SG&A ramp up has been much stronger than we anticipated.

"Earnings in FY14 have also been supported by one-off tech fees from Meda and FX gains. We therefore expect Cipla's earnings to decline in FY15 on this high base, given further margin pressure with ramp up of R&D," it said in a brokerage report. The brokerage firm expects earnings acceleration only in FY18 and beyond as US pipeline starts will kick in more meaningfully only then.

9:40 am FII view: Investment guru Marc Faber said his outlook on the Indian market has turned more bullish than what he was a while back.

He has been accumulating India for a while and although he doesn't believe that this is a multi-year bull run for Indian equities, he does believe that India will outperform other global equities for the next six-12 months.

''We don't know whether this will be a multi-year bull market or whether much of improvement in prices since the lows late last year are essentially already discounting a lot of the good things that could happen. We don't know whether they will happen but they could happen,'' he told CNBC-TV18.

9:30 am  Midcap gainers: Top gainers in the midcap index are Unitech, Chennai Petroleum, MMTC, Oberoi Realty and Max India pocketing 8-12 percent gains.

Tirthankar Patnaik of Religare finds value in midcap stocks and recommends them to investors. The broking firm has added stocks like Oberoi Realty, Ashok Leyland and Crompton Greaves from the midcap space.

The market seems to be in good mood as it opens at higher levels. The Sensex is up 132.52 points at 24495.57 and the Nifty is up 46.40 points at 7309.95. About 644 shares have advanced, 84 shares declined, and 20 shares are unchanged.

Midcap index is at record high, breaching 10,000 levels (up 1 percent from previous close) for the first time.

NTPC, Tata Power, Hindalco, ITC and SBI are top gainers in the Sensex. Among the losers are Hero MotoCorp, Dr Reddy's Labs and TCS.

The rupee has opened flat at 58.58 per dollar on Tuesday as against previous day's closing value of 58.59 a dollar. Dollar slid to its weakest against the yen in more than three months on Monday as expectations of higher US interest rates faded.

Ashutosh Raina, HDFC Bank says USD-INR currency pair has settled in 58-59/USD range with aggressive Central Bank intervention at lower levels. He expects the trend to continue with more FII/FDI flows expected to pour in.

Asia shares opened mixed this morning as the Nikkei snapped its four-day losing streak while the Kospi retreated from fresh 2014 highs after economic data showed that producer prices fell for the 19th straight month in April.

China's Shanghai Composite was up 10.82 points or 0.54 percent to 2,016.01 and Hong Kong's Hang Seng rose 179.03 points or 0.79 percent to 22,883.53, while Japan's Nikkei 225 Average climbed 86.04 points or 0.61 percent to 14,092.48 and Singapore's Straits Times was up 4.30 points to 3,266.73.
 
Taiwan Weighted advanced 27.48 points or 0.31 percent to 8,927.38 while South Korea's Seoul Composite fell 9.85 points or 0.49 percent to 2,005.29.

All eyes will be on central bank action as the Bank of Japan will kick off its two-day policy meeting later in the day and the Reserve Bank of Australia is due to release the minutes from its latest meeting.

Globally, US markets closed flat as investors remained cautious amid recent mixed economic reports. US stocks eked out marginal gains after hovering around the flatline for much of the session, as investors remained cautious amid recent mixed economic reports. The Nasdaq rallied, thanks to a strong performance in internet stocks.

In commodities, Brent prices fell as concerns about China's slowing economy dragged global equities down and outweighed low Libyan output.

From the precious metals space, gold prices traded slightly higher on the back of a weak dollar.