Sensex up 139 points, Nifty firm ahead of FOMC meet outcome
17 September 2014
03:30 pm Market closing: The market ended with some smart gains on hopes that FOMC meeting outcome will be favourable as Fed Reserve indicated that there may be no rate cuts till 2015. The Sensex was up 138.78 points at 26631.29 and the Nifty was up 42.60 points at 7975.50. About 1530 shares have advanced, 1482 shares declined, and 104 shares are unchanged.
Dr Reddy's Labs, Infosys, Tata Power, BHEL and Wipro are top gainers in the Sensex. Among the losers are Cipla, Coal India, HDFC Bank, Sun Pharma are major laggards.
03:15 am Outlook: The head of the Employees' Provident Fund Organisation (EPFO) says it has "no option" but to change its rules and put money into riskier investments by buying stocks for the first time to seek higher returns.
KK Jalan, chief of the EPFO, said that to get better returns, the fund with about USD125 billion in assets needs to diversify investments, the bulk of which are in government debt.
"The way our fund size is increasing, and the way it is bound to increase, there is no other option," Jalan told Reuters in an interview.
Prime Minister Narendra Modi's government also wants the 80 million-member EPFO, the world's ninth largest by assets in 2012, to invest in stocks, which could support buoyant Indian markets.The Nifty has been a star performer so far in 2014, rising more than 26 percent.
02:50pm Kotak on Hero and Bajaj Auto
Kotak raised target price on Hero Motocorp to Rs 3,200 from Rs 2,800 earlier and Bajaj Auto to Rs 2,550 from Rs 2,250.
"Hero Motocorp will increase market share as Honda runs into capacity constraints while Bajaj Auto will surprise with export growth with entry into new markets," said the report.
Honda has current capacity of 4.6 million units, which will be fully utilised in FY15. Capacity expansion of 1.2 million units in Gujarat is delayed to end of Q4FY16, it added.
02:25pm Cairn India in focus
Cairn India said it had made three new oil discoveries in its exploration block in Rajasthan, taking its total oil discoveries in the block to 36.
One of the wells is in close proximity to the company's Mangala field and it is planning fast track appraisal to commercialize the discovery, Cairn India, part of London-listed Vedanta Resources Plc , said in a statement on Wednesday.
The company is spending USD 3 billion over three years to boost oil production and natural gas output from its Rajasthan block, which had an output of 66.3 million barrels of oil equivalent in the year ended March 31.
Cairn India has a portfolio of nine blocks, one in Rajasthan which contains multiple assets, two on the west coast and four on the east coast of India, and one each in Sri Lanka and South Africa, reports Reuters.
02:00pm Equity benchmarks remained firm amid consolidation in afternoon trade. The Sensex rose 76.97 points to 26569.48 and the Nifty gained 24.35 points at 7957.25 but the BSE Midcap and Smallcap indices declined marginally.
About 1208 shares have advanced, 1678 shares declined, and 92 shares are unchanged.
Vineet Bhatnagar, MD, Phillip Capital believes that if Nifty does not close above 8030, on a weekly basis, it is headed for a very sharp correction. 8200 could be high for Nifty in 2014, he adds.
Two-wheeler maker Hero Motocorp topped the buying list, up 3 percent followed by Infosys, TCS, Mahindra and Mahindra, Dr Reddy's Labs, Tata Steel, Wipro, Bajaj Auto, Tata Power and BHEL with 1-2 percent. Index heavyweights Reliance Industries, ITC and ICICI Bank gained 0.3-0.9 percent.
However, Jindal Steel fell 4 percent and Sesa Sterlite lost 2 percent. Shares of Cipla, Coal India and Gail India declined over a percent.
Meanwhile, global stocks and commodity prices rose, boosted by speculation the US Federal Reserve will maintain a pledge on low rates later in the day and by a report China's central bank will provide the country's biggest banks with fresh loans.
1:55 pm International markets: Ahead of the US Federal Reserve meeting outcome, Steve Brice, chief investment strategist - group wealth management at Standard Chartered Bank says Fed is very cautious of ending the quantitative easing programme. He expects Fed to reaffirm its focus on growth. He says the US economy is doing well and inflation expectation has moderated. He believes Fed will guide people in the right direction – focus on growth and any movement in interest rates is going to be gradual.
1:35 pm Buzzing: Shares of Apollo Hospitals Enterprises rallied as much as 2.9 percent intraday after the Chennai-based hospital chain acquired pharmacy store business of Hetero Med Solutions, the third largest pharma retail chain in India.
Apollo has entered into an memorandum of understanding (MoU) with Hetero Med Solutions (HMSL) for the acquisition of its retail pharmacy stores currently operated in Telengana, Andhra Pradesh and Tamilnadu, said the company in its filing, adding the acquisition will further strengthen its leadership position in the industry.
The acquisition will be in the form of purchase of the business undertaking, on a slump sale basis and comprises of 320 pharmacy stores, at an overall consideration not exceeding Rs 146 crore.
The market is consolidating as the Sensex is up 87.37 points at 26579.88 and the Nifty is up 28.35 points at 7961.25. About 1097 shares have advanced, 1683 shares declined and 86 shares are unchanged.
IT stocks are lending support to the indices with TCS, Infosys and Wipro gaining 1-2 percent each. Other gainers in the Sensex are Hero and M&M. Metals are weak while Sesa Sterlite, GAIL, Cipla, Coal India and Hindalco are major laggards in the Sensex.
In the global market front, the US Federal Reserve could offer fresh clues on when it plans to begin lifting interest rates and how quickly it will move, as it prepares for a momentous policy turn after years of aggressive monetary stimulus.
Although a tightening of monetary policy is not expected until mid-2015, the central bank could use a policy statement on Wednesday to lay important groundwork. In particular, speculation is rife the policy-setting Federal Open Market Committee may change its guidance on how long it is likely to keep rates near zero. The panel may also alter its depiction of the labor market to suggest further progress toward its goal of full employment.
Both would signal that a six-year freeze on rates is thawing. Although the market is betting on a policy change, the Fed could also stick to its script.
01:00pm Apollo Hospitals in News
Healthcare major Apollo Hospitals Enterprise has inked a pact with Hetero Med Solutions to acquire it's pharmacy stores business for about Rs 146 crore.
"Apollo Hospitals Enterprise has entered into an MoU with Hetero Med Solutions Ltd for the acquisition of its retail pharmacy stores currently operated in Telengana, Andhra Pradesh and Tamilnadu," the company said in a filing to BSE.
The acquisition would be in the form of purchase of the business undertaking on a slump sale basis and comprises of 320 pharmacy stores, at an overall consideration not exceeding Rs 146 crore, it added.
12:30pm Surplus sugar production?
India, the world's second biggest sugar producer after Brazil, is likely to churn out a surplus for the fifth straight year despite erratic rainfall in key growing areas, a leading industry body said.
The south Asian country is likely to produce 25 million tonnes to 25.5 million tonnes in 2014/15 year starting October 1, compared with local demand of about 23 million tonnes, the Indian Sugar Mills Association said in a statement.
The surplus production could depress local prices and increase losses of debt-ridden sugar mills, prompting the country to maintain exports to trim rising inventory.
12:00pm Equity benchmarks as well as broader markets continued to consolidate as investors cautious ahead of outcome of FOMC meet tonight. The Sensex rose 83.44 points to 26575.95 and the Nifty climbed 26 points to 7958.90 while the BSE Midcap and Smallcap indices declined 0.4 percent and 0.05 percent, respectively.
Declining shares outnumbered advancing ones on the Bombay Stock Exchange by a ratio of 1450 to 1201.
For the near-term, Sanjay Sinha, Founder, Citrus Advisors sees the Nifty hovering in 7,850-8,150 range. However, in the long run, he sees the Sensex and Nifty heading to 35,000 and 11,000 respectively, by December 2015. In this rally, midcaps are expected to outperform largecaps by a significant margin, he added.
Wipro, Infosys, Hero Motocorp, Dr Reddy's Labs, Tata Power and NMDC topped the buying list, rising 1.5-2 percent whereas Coal India, Cipla, Sesa Sterlite, Gail, ONGC, Jindal Steel and BPCL lost 1-5 percent.
11:50 am Gold check: Gold inched up for a third straight session on Wednesday as speculation mounted that the Federal Reserve would vow to maintain interest rates at low levels when the US central bank concludes its policy meet later in the day.
The Fed is expected to make a statement on policy decision at 1800 GMT, with markets awaiting hints on when the Fed would increase rates. Any increase in interest rates would dim the appeal of non-interest-bearing assets such as gold.
The Fed had said earlier that it would keep rates near zero for a "considerable time" after ending its bond-buying program, with the markets believing that no change would be made until mid-2015. Talk of an earlier rate hike have increased due to strong economic data.
11:30 am FII view: Adrian Mowat, chief Asian economist, JP Morgan prefers Indian market among other emerging markets (EMs) and believes it's the most compelling story among the BRIC nations too (Brazil, Russia, India, China and South Africa).
Mowat says the markets are likely to rally further as he sees a significant fall in inflation in the next year. ''I see inflation trending downwards in the next CY 2015. If brent crude prices continue to fall, we might even see fuel deflation. So there's a lot going in favour of inflation reduction and economic acceleration,'' he says.
Hence, his stock picks remain cyclicals and he believes any weakness should be used to buy into the stocks. He is long property stocks, consumer discretionary and auto, but prefers avoiding pharma and IT stocks.
The market is picking up its pace as the Sensex is up 144.78 points at 26637.29 and the Nifty is up 44.50 points at 7977.40. About 1345 shares have advanced, 1098 shares declined, and 83 shares are unchanged.
Wipro, Infosys, Tata Power, M&M and TCS are major gainers in the Sensex. Among the laggards are GAIL, Cipla, Sesa Sterlite, Tata Motors and Hindalco.
Biocon surges 2 percent after the company announced start of global phase 3 trials for insulin Glargine in partnership with Mylan.
Asian markets trade mixed as investors tread cautiously ahead of the FOMC meet outcome due later today. US crude futures edged lower in early Asian trade as US crude and distillate inventories rose more than expected, easing after steep gains in the previous session on talk of an OPEC production cut and news of lower output in Libya.
11:00am Eros International in demand
The Sensex rose 148.87 points to 26641.38 while Eros International shares gained 2.5 percent in addition to 1 percent upside in previous session on the back of ongoing public issue of its rival Shemaroo Entertainment.
Mumbai-based media and entertainment company Shemaroo Entertainment opened its initial public offering of Rs 120 crore for subscription on Tuesday. The issue will close on September 18, 2014.
The issue price is fixed at Rs 155-170 per equity share. The company is an established integrated media content house in India with activities across content acquisition, value addition to content and content distribution. Together with filmbased copyrights and other entertainment rights, the brand "Shemaroo" is synonymous with quality entertainment.
10:40am FII view
The market extended gains with the Sensex rising 164.20 points to 26656.71 and the Nifty climbing 51.45 points to 7984.35.
Despite the current weakness seen in the market, India continues to be a favourite for Adrian Mowat, chief Asian economist, JP Morgan.
Speaking to CNBC-TV18, Mowat says he prefers Indian market among other emerging markets (EMs) and believes it's the most compelling story among the BRIC nations too (Brazil, Russia, India, China and South Africa).
Mowat says the markets are likely to rally further as he sees a significant fall in inflation in the next year.
''I see inflation trending downwards in the next CY 2015. If brent crude prices continue to fall, we might even see fuel deflation. So there's a lot going in favour of inflation reduction and economic acceleration,'' he says.
10:30am Clariant Chemicals in News
Clariant Chemicals (India) doubled its capacity for pigments and pigment preparations at its Roha plant, in south east of Mumbai.
The world leader in specialty chemicals said the increased output will enable the company to increase its market coverage in India and the neighboring countries of Bangladesh and Sri Lanka, and to provide products better tailored to customer needs.
The improved plant, in which Clariant has invested Rs 20 crore (CHF 3.2 Mio), forms part of a strategic program that the company has been carrying out in recent years to support customers in emerging markets with high quality pigments and pigment preparations.
10:00am Equity benchmarks gained half a percent in morning trade supported by banks, technology, metals and healthcare stocks. The Sensex rose 128.60 points to 26621.11 and the Nifty climbed 38.80 points to 7971.70.
About 1086 shares have advanced, 998 shares declined, and 60 shares are unchanged. The broader markets saw consolidation after 4 percent loss in previous session.
Sun Pharma, Tata Steel, Hindalco Industries, Coal India and Tata Power topped the buying list, up 1-1.6 percent followed by ITC, Reliance Industries, Infosys, TCS, ICICI Bank, HDFC and State Bank of India with 0.4-0.9 percent.
However, Tata Motors, L&T, HDFC Bank, Sesa Sterlite, Maruti Suzuki and HUL declined 0.2-0.9 percent. Drug maker Cipla lost a percent as Nomura downgraded the stock to reduce with a price target of Rs 569/share. "Valuation seems expensive, so we prefer Dr Reddy's Labs," the brokerage said.
10:00 am Market outlook: According to Mithil Pradhan of Violet Arc Global Managers, 7790-7800 is the ideal trend decider, or like he calls it the "make or break level" for the market. ''As long as this level is active I don't think a bear market even in the short-term is going to begin,'' he told CNBC-TV18 in an interview. But a correction was long overdue, says KR Bharat, MD, Advent Advisors.
"This market has run up way ahead of itself. It has run up because of abundance of public liquidity. Now that abundance of liquidity still continues. So maybe this is not the correction we are talking about; the market was looking for a reason to correct. It got a reason today in terms of the by-election results and therefore it has corrected,'' he told the channel.
9:40 am Buzzing: Shares of Aurobindo Pharma jumped 3 percent intraday as it received US drug regulator's nod for generic version of Amoxicillin for oral suspension.
"US Food & Drug Administration (US FDA) has given final approval to manufacture and market Amoxicillin. The product has a market size of around USD 19 million for the 12 months ending July 2014, according to IMS," the company said in a statement.
Amoxicillin for oral suspension is the generic equivalent to the reference listed drug product (RLD) of Teva and indicated in the treatment of infections due to susceptible Betalactamase-negative strains of the designated micro-organisms.
After a massive cut the market has managed to gather some steam on back of positive global cues as Fed has said it doesn't expect to raise rates until 2015. The Sensex is up 156.61 points at 26649.12 and the Nifty is up 45.20 points at 7978.10. About 611 shares have advanced, 135 shares declined, and 22 shares are unchanged.
Tata Power, Hindalco, L&T, Tata Steel and Wipro are top gainers in the Sensex.
The Indian rupee opened higher by 8 paise at 60.97 per dollar on Wednesday versus previous day's closing of 61.05 a dollar.
US dollar nursed modest losses ahead of the fed decision. According to traders, sellers emerged after the Wall Street Journal's Fed watcher said the US Central Bank may keep the words "considerable time" in its policy statement.
Pramit Brahmbhatt of Veracity said, "Global equities traded positively overnight and overcame the negativity which forced them to trade lower. Today, local indices are expected to trade strong as Asian markets have already opened in the green."
Also, Chinese President Xi Jinping arrives in Ahmedabad today for a three day visit, making it only the third time when a Chinese President is visiting India. Apart from contentious issues like international boundary and incursions, both nations are likely to focus on avenues to boost commerce and investment.
Wall Street stocks jumped, lifting the Dow industrials to a record, as oil and other commodities surged on a report that China's central bank would increase stimulus and on the view that the Federal Reserve would not rush to hike rates.
In Europe, shares closed lower with investors looking ahead to a key Federal Reserve policy meeting as well as a referendum on Scottish independence. In Scotland, concerns regarding the upcoming vote are likely to curb risk sentiment in the near term.
Brent crude prices steady around 98 dollars per barrel on the prospect of an open production cut as well as on a weakening dollar and news that Libya had curbed output after rockets hit an area near a refinery.
Gold prices hold steady around 1235 dollars an ounce ahead of the FOMC decision.