Nifty ends above 8850, Sensex up 184 points; Hero falls 5%
18 February 2015
03:30pm Market close
The Sensex ended up 184.38 points or 0.6 percent at 29320.26 and the Nifty was up 59.75 points or 0.7 percent at 8869.10. About 1622 shares advanced, 1301 shares declined, and 203 shares were unchanged.
HDFC was up 3 percent while Tata Power, TCS, Cipla and ICICI Bank were top gainers in the Sensex. Hero Motocorp dragged 5 percent. Among the losers were Sesa Sterlite, ONGC and Bajaj Auto.
Real estate companies in Mumbai get a boost as the BMC proposes a new 20-year development plan and recommends a substantial increase in FSI to a maximum of 8. This is positive for companies with large land parcels in the city like DB Realty, Bombay Dyeing and Oberoi Realty.
Discussing the details, NM Gattu, CFO of DB Realty, said the saleable potential goes up due to higher FSI.
02:30pm Crude at 2-month high
Since the end of January, all attention turned to decline in oil rig count in the United States and the recent Brent price spike is on account of just that, is the word coming in from Vandana Hari, Asia editorial director at Platts. She says oil production levels is also putting a downward pressure on West Texas Intermediate (WTI) crude.
According to her, the rally in oil futures is also on the back of short-covering. A lot of extremely short positions got built in December and January, which is when the news of US rig position came in and though right now there is oversupply, investors realise that 6-8 months down the line, the situation will be a lot more balanced, she adds.
Going ahead, if the Russian economy improves, demand situation will get better, says Hari. However, she adds that at the moment it is a little difficult to predict whether European demand will pick up.
02:00pm Market Check
The market gained further in afternoon trade supported by banking & financials, FMCG, power and technology stocks. The Sensex climbed 221.03 points to 29356.91 and the Nifty rose 63.05 points to 8872.40.
About 1564 shares have advanced, 1250 shares declined, and 199 shares are unchanged on the Bombay Stock Exchange.
Marc Faber says valuations are no longer compelling in India. He is not inclined to buy indian equities at this stage and says the Greek problem is more political than economic.
HDFC topped the buying list, up more than 3 percent. ICICI Bank, HDFC Bank, ITC, TCS, L&T, Tata Motors, M&M, NTPC, Tata Power, Coal India and GAIL gained 1-2 percent. However, ONGC, Bharti Airtel and Sesa Sterlite fell 1-3 percent.
Hero Motocorp dropped over 5 percent post promoters sold 3.5 percent stake or 71 lakh shares in multiple blocks between Rs 2,664 to Rs 2,718 a share. Promoters hold 36.4 percent stake post this block deal.
Defence stocks like Bharat Electronics and BEML rallied 4-10 percent post Prime Minister's push for the sector. Speaking at the Aero-India show, Narendra Modi committed to doubling output in defence manufacturing with preference to be given to 'Made in India' defence products.
In global markets, Nikkei raced to a multi-year high on low volumes as key markets like China and South Korea remained closed for the Lunar new year. Brent crude hit a 2-month highs of USD 63 a barrel on short covering as well as concerns regarding unrest in Libya.
European markets were trading with strength today. Greece surged 3 percent as government will submit loan extension request to eurozone today.
1:55 pm Market outlook: Market expert Deepak Shenoy, Capitalmind says the market has not yet reached frothy levels in terms of valuation numbers if you look at trailing price to earnings (PEs) from 2007 or 2000 levles, we are talking of forward PE now of 25. However, if one compares the consolidated results of Nifty companies for the December quarter of FY15 to that of December quarter of FY14 then profits have dropped minus seven percent and drop in revenues too, he said. So a lot depends on what the government does in the Budget and potentially through next few months to revive the economy.
1:45 pm FII view: The first full fledged Budget is most likely to announce a slew of reforms, but the key is in implementation since India has an history of bureaucratic red tapes that seal all efforts, says Marc Faber, who is editor and publisher of The Gloom, Boom and Doom report. Faber has been overweight on banks but right now Indian equities do not appear compelling due to steep valuations, he told CNBC-TV18 in an interview. He reminds foreign investment flows has a big role to play in equity market's performance, and right now global investment scenario appears shaky on the back of Chinese slowdown.
1:30 pm Buzzing: Shares of Mumbai-based real estate companies are up on Brihanmumbai Municipal Corporation's (BMC) stress on further construction in the island city. Stocks like HDIL and Oberoi Realty jumped 2-3 percent intraday on Wednesday.
In the new development plan for the next 20 years (2014-34), BMC has made a proposal to allow more floor space index (FSI) of 6.5 and 8 in the vicinity of major railway stations near central business districts and other employment nodes. FSI is the ratio of the permissible built-up area to the plot area.
Gulam Zia of Knight Frank says a new breed of developers too may rise to seize the opportunity.
The market is still holding gains as the Sensex is up 166.40 points or 0.6 percent at 29302.28. The Nifty up 44.40 points at 8853.75. About 1557 shares have advanced, 1168 shares declined, and 197 shares are unchanged.
HDFC, Tata Power, M&M, NTPC and Tata Motors are top gainers in the Sensex. Among the losers are Hero Moto, Bharti, Sesa Sterlite, Axis Bank and Tata Steel.
Meanwhile, Investors facing zero interest rates in the developed world are turning to Asian debt for higher returns through exchange traded funds (ETFs), driving a nearly 50 percent rise in assets under management last year.
At about a tenth of the size of Europe's volume and a fraction of the U.S. market, Asian bond ETFs have plenty of room to grow but may face limits from structural problems that they can only partly address by pooling bonds in an index. Sweden last week helped to accelerate the search for yield when it joined the global race to adopt negative interest rates to stave off deflationary pressures.
12:30pm Modi on Defence
Prime Minister Narendra Modi has asked global defence contractors to transfer more technology to India as part of the lucrative deals that they win to modernise its armed forces.
The country's offsets policy, which requires contractors to invest a percentage of the value of the deal in India, will be tweaked to encourage more technology transfer, and less simple assembly or production, Modi said at the opening ceremony of the Aero India airshow at Yelahanka air base in Bengaluru.
"We have the reputation as the largest importer of defence equipment. This may be music to the ears of some of you. But this is an area where we do not want to be number one," Modi said before an air display of Indian military planes.
"It will no longer be enough to buy equipment and simply assemble here."
India is forecast to spend USD 250 billion over the next decade to upgrade its military, which still largely relies on Russian equipment it bought from the 1960s to the 1980s, and catch up with strategic rivals like China, reports Reuters.
12:00pm Market Check
It is a stable session for the market with key indices gaining half a percent, aided by consumer durables, capital goods and realty names. The broader markets traded in-line with the frontliners; the BSE Midcap and Smallcap indices gained 0.7 percent and 1 percent, respectively.
The 30-share BSE Sensex climbed 153 points to 29288.88 and the 50-share NSE Nifty advanced 41.20 points to 8850.55. About 1507 shares have advanced, 1034 shares declined, and 191 shares are unchanged on the BSE.
Hero Motocorp slumped near 5 percent post a block deal where the promoters sold 3.5 percent stake or 71 lakh shares in multiple blocks between Rs 2,664 to Rs 2,718 a share. Promoters hold 36.4 percent stake post these block deals.
Defence stocks like Astra Microwave, Bharat Electronics and BEML rallied 5-10 percent post Prime Minister's push for the sector. Speaking at the Aero India show, Modi commits to doubling output in defence manufacturing with preference to be given to 'Made in India' defence products.
Pipavav Defence surged 13 percent on market buzz that Mahindra & Mahindra may soon announce buyout of 25-30 percent stake in the company followed by an open offer. Reports suggest that M&M may pump in Rs 3,000 crore into the deal which values Pipavav Defence at an enterprise value of Rs 12,000 crore.
Suzlon Energy jumped another 15 percent to take it's weekly winnings to 40 percent as the government stressed on renewable energy. Finance Minister Arun Jaitley hinted at a major push for green energy in the upcoming Budget. Experts too called Dilip Shanghvi's bet on Suzlon as a game changer for the beleagured stock.
In Asia, Nikkei raced to a multi-year high on low volumes as key markets like China and South Korea remained closed for the lunar new year. Brent Crude hit a 2-month highs of USD 63 a barrel on short covering as well as concerns regarding unrest in Libya.
11:55 am Market outlook: The market looks expensive as India's imporved macro position is yet to translate into earnings, feels broking firm Kotak Securities. Kotak sees downside risks to its earnings estimates for FY16, particularly its volume and profitability assumptions for sectors like auto,cement and capital goods, unless there is a meaningful pick-up in economic activity. "Given the market's heightened expectations from the Budget and five important economic bills before the Parliament, the Budget Session of Parliament is likely to set the tone for the market for the next few months," says the Kotak note to clients.
11:45 am Buzzing: Shares of HCL Infosystems gained nearly 9 percent on Wednesday on signing 3-year contract with NISPL to distribute mobile devices.
"NISPL, a subsidiary of Microsoft Mobile OY, and India's IT services and distribution company has signed a contract that will enhance the footprint of Microsoft Mobile devices across the Organised Trade and General Trade channels and rural India," said the company in its filing. The partnership also enables both companies to explore new channels to enhance their last-mile connect, it added.
11:30 am Result analysis: Brokerage firm Quant is betting big on Eicher Motors after it posted December quarter results. The Royal Enfield manufacturer's net profit jumped 59.76 percent to Rs 153.77 crore in Q3 FY15. Quant has increased target price on the stock to Rs 18700 from Rs 17100, reiterating a buy rating. According to Quant estimates, Eicher Motors' FY16E/FY17E earnings per share (EPS) may touch Rs 572/ Rs 759.1. It expects robust consolidated EPS CAGR (above 80 percent over CY14-FY17E) on back of commercial vehicle cycle recovery, robust demand in Royal Enfield and rising margins on an improving scale.
It's the sixth day of a pullback for the Nifty which is comfortably above 8800. The Sensex is up 158.72 points at 29294.60 and the Nifty up 36.75 points at 8846.10. About 1453 shares haveadvanced, 877 shares declined, and 187 shares are unchanged.
HDFC is up 3 percent while Tata Power, NTPC, M&M and HUL are top gainers. On the losing side are Hero, Bharti Airtel, Sesa Sterlite, Bajaj Auto and Wipro.
Globally markets are firm with the Japanese and Australian markets trading at multi-year highs. Brent crude is seeing profit booking today but is still trading above USD 60 per barrel. Risk appetite, tinged by optimism on Greece, hurt US Treasuries and sent the benchmark 10-year note's yield to a seven-week high, which in turn boosted the dollar versus the yen.
The dollar was steady at 119.21 yen after jumping from a low of 118.235 overnight. The euro was little changed at USD 1.1402 after gaining 0.4 percent the previous day on Greek optimism. Greece will remain an immediate concern for the financial markets as the European Central Bank decides later in the day whether to maintain emergency lending to Greek banks which have lost deposits at an unnerving rate.
10:59am Hero Motocorp block deals
Around 3.5 percent equity (71 lakh shares) of Hero Motocorp changed hands on exchanges through multiple block deals at Rs 2664-2718 apiece.
Currently promoter holds 39.9 percent stake in company.
10:45am Coal auction
Companies participating in the coal block auctions continue to be in focus. The latest results included BALCO winning the Chotia block in Chattisgarh at a price of Rs 3,025 per tonne whose previous owner was Prakash Industries, Jaiprakash Associates winning the Mandla North block, JP Power winning the Amelia North Coal block and OCL Iron & Steel winning Ardhagram coal block.
Brokerages such as JP Morgan say there have been aggressive bids for power and non power so far and expect aggressive bidding for the key Gare Palma coal block.
Jaiprakash Associates rallied 4 percent, Jaiprakash Power Ventures up 11 percent and OCL Iron shot up 17 percent.
10:30am Prime Minister says
Prime Minister Narendra Modi said the government did not want India to be the biggest importer of defence equipment in the world, and vowed to double output of defence manufacturing in the country.
India's annual defence import bill is roughly USD 20 billion. In contrast, India's domestic defence production output is around USD 7 billion.
Modi said even a 20-25 percent decrease in defence import can create 2 lakh jobs in the country. Also, a 25 percent hike in domestic defence output can create 1 lakh skilled jobs, he said.
Modi said the government was keen to expand the role of private sector for Indian defence production and that preference would be given to defence products made locally.
10:00am Market Check
The market extended gains with the Sensex rising 163.37 points to 29299.25 and the Nifty climbing 39.85 points to 8849.20. The broader markets outperformed benchmarks as the BSE Midcap and Smallcap indices gained 0.6 percent and 0.9 percent, respectively.
Two shares advanced for every share declining on the Bombay Stock Exchange.
Predicting the market movement in the short-term is always a challenge and dicey, says Dipen Sheth, head of institutional research at HDFC Securities. But on the brighter side, he says big money has started flowing into domestic mutual funds. He is constructive on the market.
Hero Motocorp fell over 4 percent. According to CNBC-TV18 sources, promoters of the two-wheeler manufacturer will sell 3.5 percent or 70 lakh shares of their 40 percent stake in the company via block deal today. It is learnt that the price band is decided at Rs 2664-2720 per share. Promoters are likely to raise around USD 300 million via the stake sale, say sources.
Bharti Airtel, Sesa Sterlite and Bajaj Auto declined 1-1.8 percent. Tata Motors slipped 0.7 percent as JLR global wholesales declined to 36,527 in January against 38,631 units sold in the year-ago period.
Technology stocks like TCS, Wipro and Infosys were down around 0.4 percent each. However, shares of HDFC, ITC, ICICI Bank, L&T, M&M, HUL, Sun Pharma, NTPC, Tata Power and GAIL gained 1-2.6 percent.
9:55 am Earnings analysis: Earnings of India's largest companies fell more than expected in the latest quarter, adding to scepticism over a stock market rally that started in early 2014 and official figures showing the country's economic growth outpaced China's. The combined net income of 100 firms with a market valuation of more than USD100 million dropped 6 percent in the three months ended in December from a year earlier. That compares with a 0.5 percent rise expected by analysts covering the companies.
It was the third consecutive quarter that profits had failed to match up to expectations, meaning companies have disappointed each quarter since Prime Minister Narendra Modi was elected in May last year, a victory that drove share prices to record highs.
9:45 am FII view: Timothy Moe, Goldman Sachs says the brokerage remains strategically positive on India, but thinks it makes sense to hedge potential downside around the Budget, especially since the current results season has been soft.
''We suggest short-dated put-spreads on the India banking sector, on which our India financials analyst has recently expressed caution, as a way of doing so. Overall, we find investors concerned about India. Stocks well positioned for a dividend increase include ITC, HCL Technologies and Tech Mahindra,'' Moe adds.
9:30 am Slide: Shares of Hero MotoCorp fell over 4 percent intraday as promoters are selling some stake in the company. According to CNBC-TV18 sources, promoters of the two-wheeler manufacturer will sell 3.5 percent or 70 lakh via block deal today. It is learnt that the price band is decided at Rs 2664-2720 per share.
According to sources, promoters are likely to raise around USD 300 million via the stake sale. Barclays and Kotak Mahindra are bank book runners of the sale.
It had posted 11.11 percent rise in its net profit at Rs 582.98 crore for the quarter ended December 31, 2014. Net sales of the company, however, declined marginally to Rs 6,792.51 crore during the October-December period.
The market has opened flat after a day break mid-week, but soon made a marginal gain. The Sensex is up 93.89 points at 29229.77 and the Nifty is up 25.80 points at 8835.15. About 771 shares have advanced, 276 shares declined, and 144 shares are unchanged.
Coal India, ITC, HDFC, NTPC and HUL are top gainers in the Sensex. Among the losers are Hero, Sesa, Tata Motors, Bharti and Bajaj Auto.
The Indian rupee opened flat at 62.20 per dollar against 62.16 Monday. The euro rebounds helped by a bounce in German investor sentiment and hopes that Greece will find a common ground with its euro zone partners for support beyond its current bailout programme.
Pramit Brahmbhatt of Veracity said, "Overnight US markets traded slightly strong and taking cues from this Asian markets which have also opened on a positive note. Though investors are expected to trade cautiously ahead of euro zone meeting."
Globally, US stocks ended higher after encouraging reports from Greece sent the S&P 500 to a record. Greece intends to ask for an extension of its loan agreement with the euro zone today.
Meanwhile, European stocks closed mixed as fears over Greece's debt problems continued to make investors nervous.
Asian markets, however, are smartly in the green with the Nikkei surging to new eight-year highs as the yen weakened to 119.1. Trading volumes in Asia will be light ahead of the Lunar New Year holiday. Singapore, Malaysia markets will be open for half a day while China, Taiwan and South Korea will be shut today.
In commodities, Brent Crude hit a 2015 high of USD 63 per barrel in trade on Tuesday. It is currently trading at around USD 62 per barrel.
Precious metals gold and silver fell to six-week lows, while platinum fell to the lowest since 2009, on signs that Greek banks will continue to get emergency funding despite a breakdown in debt talks between their government and euro zone partners.