Nifty, Sensex close at record highs; banks sizzle

Indian markets traded with strong gains, with the Nifty recording a fresh all-time high but closing marginally short of the 8,500 mark it has never scaled.

At close, the Sensex rose 0.95 percent, or 267 points, points to 28,334 while the Nifty jumped 0.9 percent, or 75 points, to 8,477.

Banks led the charge all day with Kotak Mahindra Bank rising 3.67 percent to hit a record high after it announced a USD 2.5 billion worth all-share merger deal with ING Vysya that would make it India's fourth largest private bank behind ICICI, HDFC and Axis. ICICI (up 2.53 percent) too hit fresh lifetime highs.

Brokerages were largely positive on the Kotak-ING deal with many saying that while it may immediately pressure some of Kotak's metrics such as return on equity, it would help it in the long term by boosting its presence in the South where ING is focused, as well as by incorporating its SME lending book.

How ferocious was the bank rally today can be judged by the fact that the top four gainers in the Nifty and the top eight gainers in the futures space were all banks. The much-watched Bank Nifty sector index jumped 2.33 percent to end at a record closing of 18,056 for the first time.

Among other sector gainers were autos, capital goods and banks, rising between 0.3 percent and 0.8 percent while pharma had a dull day despite Cipla rising 1.9 percent on a positive brokerage call.

IT shares too traded lower with Infosys leading the losses with a 1.9 percent decline. The IT outsourcer was recently hit by an overbilling scandal in which a top executive from its BPO unit was found involved.

Power shares climbed marginally - Power Grid was up 0.3 percent while NTPC gained 0.1 percent - after the government announced a Rs 33,000 crore infusion into a scheme aimed at splitting electricity feeders for agriculture and to strengthen transmission and distribution in the country.

In news-driven stocks, Yes Bank was up 4.1 percent after the central bank allowed fresh FII buying in the counter, JM Financial was up 1 percent after announcing an infusion in its realty subsidiary and appointing former Citi chief Vikram Pandit to its board and Financial Technologies, which gained 2.5 percent after Jignesh Shah, accused of being involved in the NSEL scam, stepped down from its board.

Consumer non-durable shares were also muted, with leader HUL falling 0.8 percent.

Tech Mahindra, the other player that announced an M&A deal with its USD 240 million buyout of US-based telecom service provider LCC, fell 1.1 percent.

03:30pm Market Closing
Equity benchmarks saw fresh record closing high on Friday aided by banking and financials stocks. The 30-share BSE Sensex rose 267.07 points or 0.95 percent to close at 28334.63 and the 50-share NSE Nifty climbed 75.45 points or 0.90 percent to 8477.35.

However, the broader markets underperformed benchmarks with the BSE Midcap and Smallcap indices falling 0.1 percent each. About 1371 shares advanced while 1644 shares declined on the Bombay Stock Exchange.
 
ICICI Bank, BHEL, SBI, Hindalco Industries, Axis Bank, Kotak Mahindra Bank and Punjab National Bank rallied 2-4 percent whereas Infosys, Tata Power, Sun Pharma, HUL, Tata Steel, Jindal Steel and Tech Mahindra fell 1-2 percent.

3:00 pm: Market Check
It's been a breathless rally for the Indian stock market today, with both the Sensex and the Nifty venturing into uncharted terrain and scaling fresh all-time highs, not for the first time through this year's rally.

At the time of this writing, the Nifty has surged 1.02 percent, or 85 points, to 8,487 and is within sniffing distance of 8,500. The Sensex is also up 1.02 percent, or 287 points, to 28,355.

Banks have led the charge all day with Kotak Mahindra Bank rising 4 percent a day to hit a record high after it announced a USD 2.5 billion worth all-share merger deal that would make it India's fourth largest private bank behind ICICI, HDFC and Axis. ICICI (up 2.5 percent) too is trading at fresh lifetime highs,

How ferocious is the bank rally today can be judged by the fact that the top five gainers in the Nifty and the top eight gainers in the futures space are all banks. The much-watched Bank Nifty sector index has jumped 2.5 percent.

Among other sector gainers are autos, capital goods and banks, rising between 0.3 percent and 0.8 percent while pharma is having a dull day despite Cipla rising 1.9 percent on a positive brokerage call.

In news-driven stocks, Yes Bank is up 4 percent after the central bank allowed fresh FII buying in the counter, JM Financial is up 1.8 percent after announcing an infusion in its realty subsidiary and appointing former Citi chief Vikram Pandit to its board and Financial Technologies, which gained 3.2 percent after Jignesh Shah, accused of being involved in the NSEL scam, stepped down from its board.

2:30 pm: The Nifty is now a full percentage point up, and is away a mere 10 points from a new record high of 8,500. Will the level be taken out with the one hour of trading left to go?

2:00 pm: Shares extended their gains Friday, with banks powering part of the rally, as the Nifty mounted a bid to scale the uncharted 8,500 level.

At the time of writing, the Sensex was up 240 points (0.83 percent) to 28,301 while the Nifty was up 75 points (0.85 percent) to 8,477.

The rally in banks, which were on average 2.5 percent higher, was triggered by the mega merger deal yesterday between Kotak Mahindra Bank and ING Vysya Bank.

Kotak hit a lifetime high early, before retreating marginally to trade 5.25 percent higher to Rs 1217. ICICI Bank too was trading at a record high.

IT shares, however, traded lower with Infosys leading the losses with a 2 percent decline. The IT outsourcer was recently hit by an overbilling scandal in which a top executive from its BPO unit was found involved.

Power shares climbed marginally - Power Grid was up 0.4 percent while NTPC gained 0.6 percent - after the government announced a Rs 33,000 crore infusion into a scheme aimed at splitting electricity feeders for agriculture and to strengthen transmission and distribution in the country.

Sugar stocks were lower with Balrampur Chini losing 3.75 percent.

1:30 pm Railway stocks in focus
Raliway stocks saw huge buying interest, up 6-12 percent intraday today after the Narendra Modi Government released its first order for railway wagons.

Media report suggested that the Railways board issued orders to listed wagon manufacturers including Texmaco Rail, Titagarh, Cimmco, and also to unlisted entities such as Modern Industries, Hindustan Engineering, Besco and Jupiter Wagons, informing them of the decision to release 50 percent of their respective withheld allocations.

The allocation to individual manufacturers was done in April when 50 percent of that allocation was immediately ordered and the balance withheld, to be issued at a future date at the discretion of the Railways board, the report added.

1:00 pm: Stocks continued to trade steadily higher in afternoon Mumbai trading, slightly off the day's fresh all-time highs hit early.

Bank stocks were buoyant following a merger deal between Kotak Mahindra and ING Vysya announced yesterday.

At the time of writing, the Sensex was up 0.65 percent, or 183 points, to 28,254 while the Nifty gained 0.69 percent, or 58 points, to 8,460.

The top five gainers in the Nifty were all banks: Kotak, SBI, Axis Bank, ICICI and PNB, surging 2.3 percent to 6 percent.

Among the laggards, Jindal Steel was down 2.6 percent, Infosys was off 1.7 percent while Tata Steel erased 1.3 percent.

Consumer non-durable shares too were muted, with leader HUL falling nearly 1 percent.

Traders attributed the up move to expectations increasing confidence in the economy and easy liquidity would trigger a fresh bout of merger and acquisition activity, following yesterday's Kotak deal and Tech Mahindra's USD 240 million acquisition of US-based LCC.

12:30 pm: A lot is being written about the loan given by SBI to the Adani Group to finance its project in Australia. SBI chairman Arundhati Bhattacharya spoke about the deal yesterday , defending the decision.

Meanwhile, here's what CNBC-TV18's Anuj Singhal has to say about it.

SBI shares are up 2.7 percent in Mumbai trading while Adani Enterprises is flat.

12:00 pm: Shares were trading higher in afternoon trade with the Sensex and Nifty holding on to a 0.7 gain each.

At the time of this writing, the Sensex rose 191 points to 28,258 while the Nifty climbed 59 points to 8,460, retreating marginally from fresh intra-day alltime highs reached early today.

Banks, which comprise a little over one-fifth of the Nifty and Sensex by weightage, powered a part of the rally. The Bank Nifty, the most widely-tracked sector index, was up 2.4 percent.

The bank rally was prompted majorly by a merger deal between Kotak Mahindra and ING Vysya announced yesterday.

The high-beta trade came back into play today with metals & mining, capital goods and oil & gas sectors also rising over 2 percent while defensives IT and pharma shares were off about 0.75 percent on average.

Sugar stocks, which had witnessed a rally early this weeks on hopes of government action on exports sops that did not come through, continued to witness selling, with a 1 percent cut.

11:30 am: The market has added to its strength, with the benchmark indices now up about 0.9 percent. 23 of the 30 Sensex stocks are trading in the green.

More on the mega bank merger that took place yesterday: read this exclusive interview with the two Udays who brought the deal together -- Uday Kotak of Kotak Mahindra and Uday Sareen of ING Vysya .

11:00 am: Indian stocks held on to early gains with banks powering the move up, a day after Kotak announced a merger deal with ING Vysya Bank.

At the time of this writing, Sensex was up 0.6 percent, or 175 points, to 28,243 while the Nifty gained 0.64 percent, or 54 points, to 8455.

Equities climbed after a flattish start as investors bought into shares of Kotak Mahindra Bank (up 5.88 percent) and ING Vysya Bank (rose 2.7 percent).

The deal has triggered sentiment that the Indian banking industry is likely to consolidate and traders picked up shares of smaller private sector lenders such as South Indian, Dhanlaxmi and City Union. These were up between 3.7 percent and 6.4 percent.

The other counter that saw deal buzz, Tech Mahindra (acquired US-based telecom service provider LCC for USD 240 million), however saw profit booking with the stock losing 1.1 percent after a positive start.

As as his been the case with several deals over the past few years, rumours about the impending announcements had witnessed both shares run up strongly a few days ahead.

Infosys fell 1.6 percent as more details over the overbilling fraud committed at its BPO unit came out. Latest media reports said the tech giant is conducting investigations, and more employees may be asked to leave, after the CFO of the unit was sacked and the CEO resigned.

Consumer non-durable shares saw some profit booking after standing out for their resilience during the market consolidation earlier this week. Heavyweight HUL was off 0.6 percent.

In other news-driven movers, Cipla jumped 3.2 percent after a positive brokerage call, Gammon india was up 2.3 percent after announcing stake divestment in Gammon Infra, JM Financial was up after infusing capital into a realty subsidiary, while Yes Bank gained 3.5 percent after the RBI allowed fresh FII buying into it.

10:30 am: Shares are holding on to their early gains, with the 0.6 percent upmove on both key benchmarks sustaining.

In key news-driven movers, investment bank JM Financial is up 5 percent after it infused Rs 360 crore into a real estate arm and said former Citi CEO Vikram Pandit would join it as non-executive chairman.

Banks are witnessing the most buying interest following the Kotak-ING deal.

While mid- and small-cap shares too are gaining ground. However, one should be careful while betting on midcaps in a big way, believes Ajay Srivastava of Dimensions Consulting.

10:00 am: Equity benchmarks hit fresh record high in morning trade with the Sensex rising 184.95 points to 28252.51 and the Nifty climbing 59.45 points to 8461.35.

The broader markets gained too with the BSE Midcap and Smallcap indices rising 0.7 percent each. About 1246 shares have advanced, 626 shares declined, and 61 shares are unchanged on the Bombay Stock Exchange.
 
Kotak Mahindra Bank kept its top position in the buying list, up 5.53 percent after it decided to buy ING Vysya Bank. Cipla surged 2.67 percent as brokerage house Bank of America Merrill Lynch said Cipla will triple its sales by FY20. "Profit after tax of the pharma company will jump 5-fold and margins will expand sharply," it added.

Tata Motors, IndusInd Bank, UltraTech Cement, Axis Bank, SBI and Hero Motocorp gained 1.5-2 percent. However, Infosys, Tata Power, Tech Mahindra and Asian Paints fell 0.5-1.5 percent.

9:15 am: Indian shares opened mildly higher, amid mixed cues from global peers and as yesterday's mega M&A action spurred some sentiment.

At open, the BSE Sensex was up 0.02 percent, or 7 points, to 28,070 while the Nifty rose 0.02 percent, or 3 points, or 8,405.

Among early movers, Kotak Mahindra Bank was up 7 percent after it announced a merger with smaller peer ING Vysya Bank in an all share-deal that valued the latter at USD 2.5 billion. ING shares were up 1.6 percent.

Shares of other small private sector banks such as South Indian Bank, Dhanlaxmi Bank and City Union Bank jumped 3.6-4 percent amid hopes Kotak's deal would trigger a wider consolidation in the banking industry and make them potential acquisition candidates.

Tech Mahindra rose 0.5 percent, after announcing the acquisition of Lightbridge Communications for USD 240 million. Shares such as Geometric and MindTree slumped 6.8 percent and 1.8 percent, respectively, after they ran up over the past few days on speculation by traders they would be Tech Mahindra's takeover candidates.

Among other movers, Yes Bank was up 2.4 percent after the RBI announced FIIs could buy fresh shares in the counter.

Gammon India rose 3 percent after announcing divesting stake in Gammon Infra.

Ranbaxy was down 1.2 percent after it lost a bid to bring a temporary court injunction to have the US FDA reverse its decision to revoke the firm's exclusive right to launch Nexium generic.

While Financial Technologies jumped 3.6 percent after Jignesh Shah, accused of being involved in the NSEL scam, stepped down from its board.

Sectorally, the market made a positive move overall. Barring IT, most sectors were marginally in the green.

In other news, US markets ended higher to close at fresh record highs, while Asian markets were mixed.

The rupee gained 0.18 percent to climb back above 62 to the dollar, trading at 61.83. Gold fell 1.1 percent, or Rs 270, to Rs 26,440. The 10-year yield little changed from 8.16 percent it closed at yesterday.