Sensex, Nifty end flat; FMCG & cap goods up, oil, banks dip
24 February 2015
Equity benchmarks closed second session of the Budget week on a flat note on Tuesday as investors preferred to stay on the sidelines till the Budget gets announced (on Saturday). The consolidation in market was also ahead of expiry of February derivative contracts and Railway Budget that both will take place on Thursday.
The 30-share BSE Sensex reclaimed 29000-mark, up 29.55 points to 29004.66 while the 50-share NSE Nifty advanced 7.15 points to 8762.10. However, the broader markets underperformed equity benchmarks as the BSE Midcap and Smallcap indices declined 0.2 percent and 0.8 percent, respectively.
Investors remained in wait and watch mood ahead of Union Budget and they also believe that the market already run up a lot, say experts.
The investor mood is very positive at the moment and investors are looking for more buy ideas than sell, says Prabodh Agrawal, president and head of research at IIFL Institutional Equities. He feels the market may remain in a consolidation phase from now to the Budget.
He is of the opinion that investors should not get distracted by the Budget and continue buying the market. He does not see a major correction in the market.
Meanwhile, the Centre has accepted the 14th Finance Commission's recommendation to allow states greater freedom in tailoring their schemes. The Centre has decided to devolve a much higher share of 42 percent of union's tax receipts to the states, a significant jump from the previous figure of 32 percent.
''If the states and the chief ministers of the states are empowered with additional resources, there is every reason to believe that this money will be well spent on poverty alleviation and infra. Therefore, every spending within the territory of India whether by central government or states governments is going to add to the growth process,'' says Finance Minister Arun Jaitley.
FMCG, capital goods and technology stocks supported the market today while oil, banking & financials, metals and telecom were under pressure.
FMCG major Hindustan Unilever topped the buying list, up 3 percent. Larsen & Toubro, ITC, Maruti Suzuki, Cipla, BHEL and GAIL were other prominent gainers, up 1-2 percent.
However, ONGC and Sesa Sterlite shed 3-3.5 percent. Tata Motors, ICICI Bank, Reliance Industries, Tata Steel and Bharti Airtel were down 1-1.5 percent.
In the broader space, HOEC rallied 17 percent after sources told CNBC-TV18 that Sun Pharma's promoter may buy ENI group's stake in company. Jubilant Life climbed 4 percent as its subsidiary Jubilant Generics received USFDA nod for Cetirizine hydrochloride.
Moser Baer, Adani Enterprises, Kesoram Industries, Unitech, Central Bank, Adani Ports, Sintex and Fortis Healthcare gained 2-8 percent.
However, railway stocks like Kalindee Rail, Titagarh Wagons and Texmaco Rail plunged 9-13 percent ahead of Railway Budget (to be presented in the parliament on Thursday).
The market breadth was remained weak as 1722 shares declined compared to 1155 shares advanced on the Bombay Stock Exchange.
On the global front, Asian markets except Hang Seng closed higher. Japan's Nikkei gained 0.7 percent. European markets were flat. All eyes are on Greece as the Eurogroup is expected to mull Greece's revised list of reform proposals. Investors are also cautious ahead of US Fed chairperson Janet Yellen's testimony before Congress over next 2 days.
03:30 pm Market close: The market has ended on flat note. The Sensex was up 29.55 points at 29004.66 and the Nifty ended up 7.15 points at 8762.10. About 1165 shares have advanced, 1717 shares declined and 201 shares are unchanged.
HUL, L&T, BHEL, ITC and Cipla were top gainers in the Sensex. Among the top losers were Sesa Sterlite, ONGC, Tata Steel, Bharti Airtel and Tata Motors.
03:20pm Budget Expectations: ICICIdirect says revving up growth via capacity creation will take precedence over demand led growth as reversing the decline in the capex cycle will be the key prerogative of the NDA government. Hence, according to the report, Budget 2015-16 will clearly attempt to contain expenditure and divert resources optimally to kick start the investment cycle, going ahead.
"The Budget should clearly lay down a roadmap on critical issues like GST and reviving the capex cycle by optimum utilisation of surplus PSU cash. Further, clarity on international taxation issues like GAAR, newer initiatives like 'Make in India' and 'Smart Cities' along with mentioning avenues for raising long-term funds for creating infrastructure and measures to attract/increase financial saving in the economy would be the key things to watch out for in this Budget. This intent/roadmap will provide more clarity on the prerogative of the government and requisite direction to the markets, which, in turn, will raise the confidence of the private sector," the report says.
03:10pm Market Update: The Sensex rose 43.55 points to 29018.66 and the Nifty advanced 12.25 points to 8767.20 led by capital goods, IT and FMCG stocks.
The market breadth remained weak as about 1137 shares have advanced and 1724 shares declined on the BSE.
02:55pm FII View: The stock market has been resilient to weak corporate earnings for the December quarter, and the trend could continue for a while, feels brokerage house JP Morgan.
"The street cut earnings estimates for FY15E and FY16E by 3-4 percent. Despite these cuts, we think current estimates for earnings growth for the next two years at 10 percent and 18 percent look vulnerable to further downgrades," says the JP Morgan note to clients, adding that an earnings recovery could take 4-6 quarters to gain momentum.
Yet, the brokerage feels the market is not vulnerable to earnings cuts and that the divergence between market performance and corporate earnings could continue in the near term.
"We have seen this narrative twice over the last decade – continuing for four quarters each over 2007-08 and over 2012-13. During these phases also the changes in earnings expectations and the market performance were inversely correlated," the JP Morgan note says.
According to JP Morgan, the key driver of market performance in the current cycle has been surplus global liquidity and relative appeal within emerging markets.
"We would expect markets to remain well supported until these drivers remain in place, with investors extending the timeframe for their investments to pay off," the note says.
02:25pm Interview: Naresh Bhansali, CEO-Fin, strategy & business development & CFO, Emami is confident of surpassing their earlier growth guidance of 15-17 percent.
With the ramp-up in production of the recently launched products in the next fiscal, there would be marked improvement in the finances of the company, he said.
According to Bhansali, the company is actively looking for global and domestic acquisitions.
The company is all set to strengthen its Zandu Healthcare base and expand its brand portfolio in FY16. It would be looking at new launches to help increase consumer spending.
02:00pm Market Check
The market gained strength amid consolidation in afternoon trade as FMCG, capital goods, technology and banks stocks extended gains. The 30-share BSE Sensex rose 139.17 points to 29114.28 and the 50-share NSE Nifty advanced 38.90 points to 8793.85.
However, the broader markets remained marginally under pressure. Declining shares outnumbered advancing ones by a ratio of 1594 to 1087 on the BSE.
The government tabled the 14th finance commission report. It recommended that the centre should transfer 42 percent of the divisible pool to the states, including taxes and grants against 32 percent earlier.
Prabodh Agarwal of IIFL says investor mood is very positive at the moment. He advises not to be distracted by the Budget and keep buying this market. Government should look at higher spending in infrastructure which should be funded by increasing tax rates this Budget, he adds.
Shares of ITC, L&T, HUL, Cipla, BHEL, NTPC and GAIL gained 1-2 percent while ONGC, Tata Motors, Reliance Industries, Sesa Sterlite, Bharti Airtel, Tata Steel and Hindalco declined 1-3 percent.
On the global front, Japan closed with gains of more than 0.7 percent while Europe traded flat. All eyes are on Greece as the Eurogroup is expected to mull Greece's revised list of reform proposals. Investors were also cautious ahead of US Fed chairperson Janet Yellen's testimoney before Congress over next 2 days.
1:50 pm Market outlook: The India story continues to be strong despite the recent dip in the market, says Chandresh Kumar Nigam, MD and CEO of Axis Mutual Fund. The market has been rallying for more than a year and with it comes the usual ups and downs, he says. According to him, investors are expecting the finance minister to continue with investments needed for growth of the economy, make announcements on how to get investments back on track and build business confidence. If he manages to deliver on all those fronts, the long-term rally in the market will continue, he adds. Another thing that is aiding India at the moment is the fact that globally, there aren't many places to invest, says Nigam.
1:30 pm Budget session: Even as a united opposition and anti-corruption activist Anna Hazare continue with their vociferous protests against the Centre's economic agenda and "pro-rich" stand, the Narendra Modi government on Tuesday tabled the Land Acquisition Amendment Bill 2015. It will replace the ordinance promulgated by the government in December 2014, which had brought changes in the earlier bill passed in 2013 by the UPA government.
The government had promulgated the ordinance making significant changes in the Land Acquisition Act including removal of consent clause for acquiring land for five areas -- industrial corridors, PPP projects, rural infrastructure, affordable housing and defence.
The market is still sluggish as the Sensex is down 19.03 points at 28956.08. The Nifty down 3.85 points at 8751.10. About 964 shares have advanced, 1629 shares declined, and 204 shares are unchanged.
HUL, ITC, BHEL, L&T and Coal India are top gainers in the Sensex. Among the losers are ONGC, Sesa Sterlite, Tata Steel, Tata Motors and Hindalco.
Shares of Suzlon Energy surged over 4 percent amid reports that Sun Pharma's Dilip Shanghvi will provide as much as Rs 3,800 crore of security that will help the wind turbine maker in availing credits. Dilip Shanghvi is the founder and managing director of Sun Pharmaceuticals. As per reports, Dilip Shanghvi will provide as much as Rs 3,800 crore (USD 610 million) of security for Suzlon Energy to help the maker of wind turbines fill orders and return to profit.
Japan's Nikkei share average rose for a fifth straight day and scored another 15-year high after the yen weakened, while investors were cautious awaiting comments from US Federal Reserve Chair Janet Yellen later in the day.
The Nikkei rose 0.7 percent to 18,603.48 points, the highest point of the day and the highest close since April 2000.
12:50pm Suzlon in News: Shares of Suzlon Energy gained over 7 percent intraday amid reports that Sun Pharma's Dilip Shanghvi will provide as much as Rs 3,800 crore of security that will help the wind turbine maker in availing credits.
Dilip Shanghvi is the founder and managing director of Sun Pharmaceuticals. As per reports, Dilip Shanghvi will provide as much as Rs 3,800 crore (USD 610 million) of security for Suzlon Energy to help the maker of wind turbines fill orders and return to profit.
The security from the Shanghvi family will make it easier for Suzlon to obtain more bank guarantees and letters of credit to ramp up its business, it said.
Meanwhile, earlier this month, Suzlon signed definitive pacts with DSA for equity investment of Rs 1,800 crore in the company, amounting to 23 percent stake. DSA also announced an open offer to acquire 26 percent stake in Suzlon at Rs 18 per share aggregating to Rs 2,837 crore, reports PTI.
12:25pm Nikkei at fresh 15-year high: Japan's Nikkei share average rose for a fifth straight day on Tuesday and scored another 15-year high after the yen weakened, while investors were cautious awaiting comments from US Federal Reserve Chair Janet Yellen later in the day.
The Nikkei rose 0.7 percent to 18,603.48 points, the highest point of the day and the highest close since April 2000. The broader Topix gained 0.4 percent to 1,508.28, and the JPX-Nikkei Index 400 advanced 0.3 percent to 13,680.93.
12:00pm Market Check: The market remained rangebound. Oil, metals and select banks were under pressure while FMCG, capital goods and technology stocks continued to support the market.
The 30-share BSE Sensex rose 29.05 points to 29004.16 and the 50-share NSE Nifty advanced 9.05 points to 8764 while the broader markets underperformed. The BSE Midcap and Smallcap indices declined marginally.
Declining shares outnumbered advancing ones by a ratio of 1461 to 993 on the Bombay Stock Exchange.
Bharat Iyer, JP Morgan says equity markets remained well supported. "Equity markets are not vulnerable to earnings cuts in the near-term. The divergence between market performance and corporate earnings could continue in the near-term," he adds.
Shares of Tata Motors, ONGC, Reliance Industries, Sesa Sterlite and Tata Steel slipped 1.5-2.5 percent followed by HDFC Bank and ICICI Bank with marginal loss. However, ITC, Larsen & Toubro, HUL, NTPC and BHEL gained more than 1 percent.
Telecom companies were in focus, reacting to the TRAI cutting termination charges for local calls to 14 paisa against 20 paisa. Termination charges for international incoming calls raised to 53 paisa per minute against 40 paisa earlier. Bharti Airtel declined 0.8 percent and Idea Cellular fell 1.7 percent.
Railway stocks like Texmaco Rail, Kalindee Rail and Titagarh Wagons fell 10-13 percent ahead of the Railway Budget which will be presented in parliament on February 26.
Globally, Asian markets except Hong Kong hit new highs today but traders traded cautiously ahead of Fed chairman Janet Yellen's two-day testimony before Congress, which could give clues on the possible timeline of a rate hike in the US. Brent crude, however, traded below USD 60 a barrel.
11:50 am FII holding: Foreign institutional investors' holdings in 30 Sensex companies have reached an all-time high of over 23 percent of the total market cap, as per data collated by Bank of America Merrill Lynch. In March 2009, the same stood at 15 percent of the total market cap and 36 percent of free float, which rose to 23 percent and 47 percent respectively at the end of December The steep rise was driven by the optimism about Narendra Modi Government unleashing reforms, BofA-ML Global Research said in a report today.
11:30 am Buzzing: Shares of Maruti Suzuki gained 1 percent intraday as brokerage house CLSA maintains buy on the stock with a target price of Rs 4400. It expects Maruti's premium valuation multiples to sustain.
The brokerage forecasts strong 41 percent earnings per share CAGR (compounded annual growth rate) over FY15-17 in India's largest car maker, driven by gradually improving passenger vehicle (PV) industry growth, multiple product triggers, accelerating exports and expanding margins.
Demand profile trends in India's passenger vehicle (PV) industry shows that demand has been moving to higher-priced segments where Maruti is relatively weak. Despite this, Maruti's PV market share has been rising as it has gained substantial market share in its strong segments.
The market is still flat. The Sensex is down 14.73 points at 28960.38 and the Nifty down 5.35 points at 8749.60. About 912 shares have advanced, 1367 shares declined and 198 shares are unchanged.
ITC, HUL, L&T, Maruti and Wipro are top gainers in the Sensex. Among the losers are Sesa Sterlite, ONGC, Tata Steel, Tata Motors and Tata Power.
Globally Asian markets are mostly higher shaking off earlier cautious sentiment following a mixed close on Wall Street.
Gold futures prices today rose by 0.31 percent to Rs 26,418 per 10 grams as speculators enlarged positions after the metal gained in the global market. At the Multi Commodity Exchange, metal prices for delivery in far-month June contracts gained Rs 81, or 0.31 percent, to trade higher at Rs 26,418 per 10 gram in a turnover of 12 lots.
Analysts attributed gains in the precious metal at futures trade to a firming trend in the overseas markets. In the international market, gold rose to USD 1,203.976 an ounce in Singapore from USD 1,201.83 yesterday.
10:59am CLSA on Maruti
Shares of Maruti Suzuki gained 1 percent as brokerage house CLSA maintains buy on the stock with a target price of Rs 4400. It expects Maruti's premium valuation multiples to sustain.
The brokerage forecasts strong 41 percent earnings per share CAGR (compounded annual growth rate) over FY15-17 driven by gradually improving passenger vehicle (PV) industry growth, multiple product triggers, accelerating exports and expanding margins.
10:30am Market Expert
The investor mood is very positive at the moment and investors are looking for more buy ideas than sell, is the word coming in from Prabodh Agrawal, president and head of research at IIFL Institutional Equities. However, he adds that investors may hold off for a bit as the market has already run up quite a bit and may remain in a consolidation phase from now to the Budget.
He is of the opinion that investors should not get distracted by the Budget and continue buying the market. He does not see a major correction in the market.
Agrawal is expecting announcements pertaining to increase in spending in physical and social infrastructure in the Budget. He adds that this increase will partly be funded through increase in taxes – primarily indirect taxes.
He expects the government to target subsidies successfully and chalk a clear roadmap of subsidies and social spending. He also feels the government should do something to recapitalize public sector banks. According to him, if finance minister Arun Jaitley manages to deliver on these fronts, the market will be very happy.
10:00am Market Check
The market continued to consolidate today with the Sensex hovering around 29000 level, up 21.65 points at 28996.76. The Nifty rose 0.55 points to 8755.50.
The broader markets were also in consolidation mode ahead of Union Budget 2015 (to be announced on Saturday). About 957 shares have advanced, 975 shares declined, and 182 shares are unchanged on the Bombay Stock Exchange.
FMCG, technology, capital goods, healthcare and select auto stocks supported the market whereas banks and oil & gas stocks remained under pressure.
Shares of ITC, Larsen & Toubro, Hindustan Unilever, Wipro and Cipla gained 1 percent each. Infosys, TCS, HDFC, Maruti Suzuki, Coal India and Hero Motocorp traded with marginal gains.
However, Tata Motors, ICICI Bank, Reliance Industries, State Bank of India, ONGC, Axis Bank, Sesa Sterlite, Bharti Airtel and Tata Steel fell 0.6-1.8 percent.
9:50 am Buzzing: Shares of SpiceJet jumped 3 percent intraday. After getting the Competition Commission of India (CCI) nod last week, Ajay Singh has finally completed takeover process of the cash-trapped airline.
''The entire shareholding of Kalanithi Maran and Kal Airways (the existing Promoters) aggregating to 350,428,758 equity shares (58.46 percent) has been transferred to Singh Consequently, Singh has become the promoter of the company and Maran and Kal Airways Private have ceased to be promoters of the company,'' SpiceJet said in a statement to the exchanges.
9:30 am Rating upgrade? India must boost growth, cut its fiscal deficit and fulfil promises of financial and fiscal reforms in order to justify an upgrade in a credit rating, currently lodged one rung above junk bond territory, rating agency Standard & Poor's said on Monday. S&P raised India's credit rating outlook to 'stable' from 'negative' in September, citing the prospect of reforms. The agency on Monday listed what it needed to see to upgrade India's sovereign debt credit rating from 'BBB-minus'.
"Crucial factors include higher growth in real per capita GDP, stronger fiscal and debt metrics, and a stronger external position or improved monetary policy setting, and the government's ability to fulfil its promises on key reforms will be critical to the country's success," S&P said.
The market has opened quietly after the late sharp slide on Monday. The Sensex is down 8.35 pointsat 28966.7 and the Nifty is up 1.60 points at 8756.55. About 503 shares have advanced, 208 shares declined, and 122 shares are unchanged.
Tata Power, Coal India, Hindalco, L&T and Wipro are top gainers in the Sensex. Among the losers are Sesa Sterlite, HDFC, Bharti, SBI and Dr Reddy's Labs.
The Indian rupee has opened higher at 62.25 per dollar against previous day's closing value of 62.32 a dollar. The dollar holds steady against the yen ahead of congressional testimony by Federal Reserve Chair Janet Yellen.
Anant Narayan of Standard Chartered said, "We expect the rupee to be rangebound between 62.20-62.35/dollar levels today. Yesterday, there was a lot of supply of dollars in the market which Indian banks bought. The rupee market is expected to open at 62.25/dollar as crude is lower today."
Global cues, meanwhile, are mixed with the Wall Street pulling back from Friday's records to close narrowly mixed on Monday ahead of Fed Chair Janet Yellen's remarks over the next two days.
European equities though finished higher on Monday, after touching a seven-year high, as investors cheered a deal to extend Greece's bailout programme by four months.
Asian indices too rallied early Tuesday, shaking off earlier cautious sentiment following a mixed finish on Wall Street.
Nymex crude prices held steady sub USD 50 per barrel while Brent Crude trades below USD 60 per barrel. Precious metal gold prices were largely unchanged at USD 1200 per ounce.