Nifty closes below 8550; Tata Motors drags, pharma rallies

It was another consolidation day for the market on Tuesday with the Nifty gyrating in a 100-point band but it finally ended flat. Banks continued to see selling pressure while pharma and oil stocks saw buying interest.

The 30-share BSE Sensex fell 30.30 points to 28161.72 and the Nifty closed below the 8550, down 7.95 points at 8542.95. The BSE Midcap and Smallcap indices lost 0.4-0.6 percent.

Experts continued to see consolidation in near term though they are positive in medium to long term.

JP Morgan's chief global strategist Joyce Chang prefers developed market equities over emerging markets but she says India story stood out among emerging markets. Chang sees near term consolidation in Indian equities but is positive on India in the medium term.

Meanwhile, the Asian Development Bank is also bullish on India. The resident commissioner Johanna Boestel told CNBC-TV18 that the government's reforms drive will help the country grow at 7.8 percent in 2015-16 and will surpass China going forward.

Banks stocks dragged again; State Bank of India, ICICI Bank and HDFC Bank were down around a percent each whereas rival Axis Bank gained 0.6 percent. Housing finance company HDFC remained major contributor to the Sensex, up 1.5 percent.

Tata Motors extended losses in late trade, falling 3.4 percent. Infosys and TCS too lost ground in late trade, down more than 0.5 percent. Among metals, Hindalco Industries and Tata Steel fell 1-2 percent while Sesa Sterlite gained 1.6 percent.

Jindal Steel rebounded today with 1.5 percent upside after the Delhi High Court issued notice to the government asking why the company's winning bids for two blocks have been cancelled. The court also restrained the government from allotting Tara coal block to Coal India.

Healthcare stocks were in focus. Sun Pharma and Ranbaxy Labs climbed more than 1.5 percent after CCI approved their plan to divest all 7 brands to Emcure Pharma. The Reserve Bank of India also allowed Sun to transfer Ranbaxy's overseas investments.

Shasun Pharma and Strides Arcolab gained 3-4.5 percent after the CCI gave its approval to the proposed merger between the 2 pharma companies. Dr Reddy's Labs advanced 1.7 percent on agreement with Hetro to accelerate access to hepatitis C treatment. Suven Life Sciences rallied 6.4 percent on getting three product patents for NCEs in Canada, Japan and Korea.

However, Aarti Drugs tanked 7 percent after the US Food and Drug Administration issued an import alert on company's Palghar unit in Maharashtra, though the company says it won't have major impact on earnings.

Oil marketing companies like BPCL, IOC and HPCL gained 3.4 percent, 1.7 percent and 1.6 percent, respectively. Goldman Sachs added BPCL to its conviction buy list with a 12-month target price of Rs 996 (37 percent upside). The brokerage also upgraded IOC to buy from neutral with a 12-month target price of Rs 427 (24 percent upside) and reiterated buy on HPCL.

Among others, Bharti Airtel, Wipro, NTPC, Cipla, GAIL and BHEL were up 1-3 percent.

In the broader space, NIIT Technologies tanked 6 percent as the company will have to make a provision of USD 10 million against unbilled revenue in the March quarter which is around 2.5 percent of FY15e dollar revenue.

The market breadth was in favour of declines. About 1090 shares advanced and 1719 shares declined on the Bombay Stock Exchange.

Global markets were subdued today. Asian stocks were mixed over China growth concerns as Chinese PMI fell to 11-month low of 49.2 while European markets traded sideways today.

03:30pm Market Closing: The market extended its southward journey for the fifth consecutive session today. The Sensex lost 30.30 points to 28161.72 and the Nifty fell 7.95 points to 8542.95.

About 1111 shares have advanced, 1701 shares declined, and 182 shares are unchanged on the BSE.

Banks pulled the market down again. HDFC Bank, ICICI Bank and State Bank of India shed around a percent each. Tata Motors plunged 3.4 percent.

03:10pm: Essar Group in focus: Essar Power will commence mining at its Jharkhand coal block in next few months to help the company restart its Mahaan power plant, lying idle due to lack of fuel since last 18 months.

"Essar Power MP, an arm of Essar Power, today announced signing the Coal Mine Development and Production Agreement with the central government for the Tokisud North coal block in Jharkhand," Essar Power said in a statement.

Essar Power MP owns and operates the 1,200 MW coal based power plant in Mahan, Madhya Pradesh, which has been set up with an investment of Rs 8,000 crore.

02:50pm Market Update: The market has been volatile in afternoon trade. The Sensex shed more than 200 points from day's high, up 21.41 points at 28213.43 and the Nifty rose 8.55 points to 8559.45.

About 1053 shares have advanced, 1668 shares declined, and 187 shares are unchanged on the BSE.

02:25pm FII View: The weakening in the Indian markets is on the back of the earnings cut seen over the past few months. The market has seen 5 percent cut in earnings in the last three months, is the word coming in from Neelkanth Mishra, head of equity strategy, India at Credit Suisse. He believes earnings could see further cuts post the March quarter.

According to him, investors are worried about weak demand across the economy. Cement, paints and consumer discretionary sales have seen weakness, he says.

Mishra feels the weakness is also on account of government's fiscal tightening. But on the brighter side, he believes there will be a government spending pick up from April 1, due to which the economy too will see an uplift. He sees the economy reviving in April-May. "India is not in a structural slowdown," he told CNBC-TV18.

He says other economies such as Europe and Japan have started to look attractive at this point, but that won't lead to much of a waning in interest in Indian markets from FIIs. FII interest towards the Chinese market is increasing too, he adds. However, the interest for Indian equity market among institutional investors remains intact, he feels.

02:00pm Market Check
The market extended gains with the Nifty climbing above the 8600-mark supported by HDFC and Reliance Industries. The broader markets also recovered losses.

The Sensex rallied 255.01 points to 28447.03 and the Nifty climbed 73.50 points to 8624.40 while the BSE Midcap and Smallcap indices were flat with negative bias.

About 1088 shares have advanced, 1574 shares declined, and 182 shares are unchanged on the Bombay Stock Exchange.

Housing finance company HDFC, utility vehicle maker Mahindra & Mahindra and telecom operator Bharti Airtel jumped nearly 3 percent. Petrochemical major Reliance Industries also gained further, up 1.3 percent.

In the technology space, Wipro surged nearly 2 percent while rivals TCS and Infosys gained half a percent.

Pharma companies continued to be in focus today. Sun Pharma and Ranbaxy Labs gained 2 percent each after CCI approved their plan to divest all 7 brands to Emcure Pharma and the RBI allowed Sun to transfer Ranbaxy's overseas investments. Shasun Pharma and Strides Arcolab rallied 4-5 percent after the CCI gave its approval to the proposed merger between the 2 pharma companies. Dr Reddy's Labs advanced 1.5 percent on agreement with Hetro to accelerate access to hepatitis C treatment. However, Aarti Drugs tanked 6 percent after the US Food and Drug Administration (USFDA) issued an import alert on company's Palghar unit in Maharashtra.

Shares of Sesa Sterlite, Cipla, NTPC, GAIL and BHEL rose over 1 percent while Tata Motors, SBI, HUL, Hero Motocorp, Tata Steel and Hindalco trimmed losses, down 0.7-1 percent.

01:40pm Market Update: Equity benchmarks came off day's high amid consolidation due to fall in banks while the broader markets extended decline in afternoon trade.

The Sensex rose 3.79 points to 28195.81 and the Nifty advanced 2.25 points to 8553.15 whereas the BSE Midcap and Smallcap indices declined 0.5 percent each.

About 970 shares have advanced, 1666 shares declined, and 180 shares are unchanged on the BSE.

01:25pm Sun-Ranbaxy in focus: Sun Pharmaceutical Industries has received RBI nod for transfer of overseas investments of Ranbaxy to it and issue its shares to the non-resident shareholders of the latter as part of their USD 4-billion merger deal.

In a filing to the BSE, Ranbaxy Laboratories said Reserve Bank of India on Monday gave approval for transfer of overseas investments held by Ranbaxy in its joint venture and wholly owned subsidiaries to Sun Pharma, pursuant to the proposed merger of Ranbaxy with Sun Pharma through a Scheme of Arrangement.

The central bank also approved issue of equity shares of Sun Pharma to the non-resident holders of equity shares of Ranbaxy Laboratories, the filing added.

The two firms have received nod from the Competition Commission for sale of seven brands to Emcure Pharma to comply with the fair trade watchdog's conditional nod for their merger.

01:00pm Market Check:
The market continued to see buying interest in afternoon trade. The Sensex advanced 99.74 points to 28291.76 and the Nifty gained 29.90 points at 8580.80 led by HDFC group, pharma, telecom and select technology stocks.

However, the broader markets fell 0.2 percent as declining shares outnumbered advancing ones by a ratio of 1484 to 1070 on the Bombay Stock Exchange.

Lupin and BPCL topped the buying list in Nifty, up 3.5 percent followed by Bharti Airtel, Mahindra & Mahindra and HDFC with 2-3 percent upside.

Sun Pharma and Ranbaxy Labs gained more than 1.5 percent each after CCI approved their plan to divest all 7 brands to Emcure Pharma. Shasun Pharma and Strides Arcolab gained 4-5 percent after the CCI gave its approval to the proposed merger between the 2 pharma companies. Dr Reddy's Labs advanced 1 percent on agreement with Hetro to accelerate access to hepatitis C treatment. However, Aarti Drugs tanked 9 percent after the US Food and Drug Administration (USFDA) issued an import alert on company's Palghar unit in Maharashtra.

Maruti Suzuki climhed 1 percent after CLSA reiterated buy on the stock with a target price of Rs 4400. The brokerage believes that improving acceptability of Maruti's brand at higher price-points mitigates the risk to its franchise from an inevitable shift in demand profile to higher-priced segments. This warrants higher valuation multiples for Maruti's stock, it adds.

However, Tata Motors, SBI, HUL, Hero Motocorp, Hindalco and Tata Steel fell more than 1 percent.

12:30pm Market Expert: With the macroeconomic situation favouring India and the political mandate in favour, every correction is a good buying opportunity, says Swati Kulkarni, vice-president and fund manager, UTI MF.

She believes valuations of banking stocks continue to be supportive and the sector is likely to outperform. From a growth perspective, private sector banks are better placed in terms of capital adequacy, but from a valuation point of view, large public sector banks may gain more.

She also sees initial signs of a pick-up in medium-to-heavy commercial vehicles (MHCV) segment in the auto space.

12:00pm Market Check
The market maintained its uptrend amid volatility. The Sensex rose 107.58 points to 28299.60 and the Nifty climbed 33.50 points to 8584.40.

However, the broader markets underperformed benchmarks with the BSE Midcap and Smallcap indices trading lower and the market breadth turned in favour of declines.

JP Morgan's chief global strategist Joyce Chang prefers developed market equiteis over emerging markets; but says India story stands out among emerging markets. Chang sees near term consolidation in Indian equities but he is positive on India in the medium term.

Shasun Pharma and Strides Arcolab gained 4-5 percent after the CCI gave its approval to the proposed merger between the 2 pharma companies.

Shares of Aarti Drugs plunged nearly 17 percent intraday after the US Food and Drug Administration (USFDA) issued an import alert on company's Palghar unit in Maharashtra. However, the stock recovered some losses to trade 8 percent lower post clarification by the company saying this import alert won't have major impact on earnings.

Sun Pharma and Ranbaxy Labs gained 2 percent each after CCI approved their plan to divest all 7 brands to Emcure Pharma.

Jindal Steel and Power gained 2 percent. The Delhi High Court issued notice to the government asking why the company's winning bids for two blocks have been cancelled. The court Also restrained the government from allotting Tara coal block to Coal India.

Globally Asian markets traded mostly lower post weak China PMI data. China's HSBC flash manufacturing PMI fell to 49.2, marking an 11-month low.

11:40am FII View: Mahesh Nandurkar, CLSA said interactions with 80 investors in the USA suggest FIIs' incremental interest in India is near a short-term peak. With most being overweight, there is an increasing unease about weak earnings, he added.

The brokerage still expects profit to improve, just not in the next couple of seasons, he said.

"The macro triggers of Land/GST bills also seem to be some time away. The structural story remains compelling for long-term investors but the risk of a near-term pullback is rising. We lower our weights on banks and capital goods," he explained.

11:25am Gammon Infra under pressure: Sebi refused to withdraw the ban on Abhijit Rajan, former CMD of Gammon Infrastructure Projects, from the securities market and said the prohibition will continue till further directions in a case related to insider trading.

The market regulator, in its order in July last year, had barred Rajan after prima-facie finding him to have violated insider trading regulations. This would be one of the few cases where CMD of a company has come under the scanner in an insider trading case.

In an order passed on Monday, Sebi has confirmed the directions issued in respect of Rajan vide ad-interim ex-parte order dated July 17, 2014. The directions issued vide the interim order "shall continue to be in force till further directions," it added.

11:00am Market Check:
The market remained firm with the Nifty bouncing back after 4 days of consecutive losses. The broader markets gained marginally more than the frontline indices with a firm advance:decline ratio.

The Sensex rose 109.22 points to 28301.24 and the Nifty advanced 31.20 points to 8582.10.

From the frontliners, Jindal Steel gained 2 percent on news of the Delhi High Court staying the transfer of Tara coal block and asking the government to file reasons for transferring the Gare-Palma IV 2 & 3 blocks by March 26.

Sun Pharma rallied 2 percent along with Ranbaxy Labs. The CCI approved Sun-Ranbaxy's plan to divest all 7 brands to Emcure Pharma. Strides Arcolab and Shasun Pharma too gained 3-5 percent as the CCI gave its approval to the proposed merger between the two entities. However, Aarti Drugs plunged 9 percent as the USFDA issued an import alert on the company's Palghar unit.

10:50am China Data: Activity in China's factory sector dipped to a 11-month low in March as new orders shrank, a private survey showed, signalling persistent weakness in the world's second-largest economy that will likely fuel calls for more policy easing to support growth.

The flash HSBC/Markit Purchasing Managers' Index (PMI) dipped to 49.2 in March, below the 50-point level that separates growth in activity from a contraction on a monthly basis.

Economists polled by Reuters had forecast a reading of 50.6, slightly weaker than February's final PMI of 50.7.

10:30am Market Expert: UR Bhat, director, Dalton Capital Advisors out rules a further collapse in the market going forward and believes that the market may consolidate or stagnate at current levels. According to him the institutional investors are still buying although may not be buying in large quantity.

On the economic front too there are signs of improvement with the government passing some of the key bills like Insurance and mining. Diesel and petrol volumes too have shown a pick up.

On the rate cut front, he does not expect another cut from RBI in April policy but thinks that the market may react in anticipation of a cut. With regards to corporate earnings, he believes September quarter to be the inflection point although some signs could be visible in the June quarter.

10:00am Market Check
The market gained strenth in morning trade supported by HDFC group, pharma, capital goods and select technology stocks. The Sensex climbed 120.44 points to 28312.46 and the Nifty rose 31.05 points to 8581.95.

The broader markets gained too; the BSE Midcap and Smallcap indices advanced 0.3 percent each. About 1006 shares have advanced, 787 shares declined, and 137 shares are unchanged on the BSE.

After the kind of run-up Indian equities have seen in the past several months, one shouldn't be surprised they have going into a sort of consolidation, believes JPMorgan global head of research Joyce Chang.

Joyce said that even as she preferred developed markets over emerging markets – ''simply because we taken down the EM growth forecast in so many countries,'' – investors would focus on India's medium-term growth story.

Housing finance company HDFC was the major contributor to Sensex' gains, up 1.5 percent. Sesa Sterlite and BHEL gained 1.4 percent each. L&T, HDFC Bank, Reliance Industries, Sun Pharma, TCS and Bharti Airtel saw marginal gains.

However, Infosys, Tata Motors, ONGC, HUL, Hindalco Industries, Hero Motocorp and Coal India fell 0.3-0.9 percent.

09:56am Market Update: The Sensex is up 104.22 points at 28296.24, and the Nifty up 27.75 points at 8578.65.

About 960 shares have advanced, 787 shares declined, and 130 shares are unchanged on the BSE.

09:50am India's GDP: The Asian Development Bank (ADB) today projected India's growth rate to surpass China and improve to 7.8 percent in next fiscal and further to 8.2 percent in 2016-17.

India's growth and investor confidence will improve on the back of government's structural reform agenda and improved external demand, the Asian Development Outlook (ADO), an annual publication of the ADB, said. It forecast that India's growth will improve from 7.4 percent in current fiscal to 7.8 percent in 2015-16 and further to 8.2 percent in 2016-17.

As regards China, the ADB projected the economic growth to decelerate from 7.4 percent in current fiscal to 7.2 percent next fiscal and 7 percent in 2016-17. "India is expected to grow faster than the People?s Republic of China in the next few years.

The government?s pro-investment attitude, improvements in the fiscal and current account deficits, and some forward movement on resolving structural bottlenecks have helped improve the business climate and make India attractive again to both domestic and foreign investors," ADB Chief Economist Shang-Jin Wei said.

09:35am FII View: The weakening in the Indian markets is on the back of the earnings cut seen over the past few months. The market has seen 5 percent cut in earnings in the last three months, is the word coming in from Neelkanth Mishra, head of equity strategy, India at Credit Suisse. He believes earnings could see further cuts post the March quarter.

According to him, investors are worried about weak demand across the economy. Cement, paints and consumer discretionary sales have seen weakness, he says.

Mishra feels the weakness is also on account of government's fiscal tightening. But on the brighter side, he believes there will be a government spending pick up from April 1, due to which the economy too will see an uplift. He sees the economy reviving in April-May. "India is not in a structural slowdown," he told CNBC-TV18.

09:15am Market Check
The market opened flat amid consolidation on Tuesday as the Nifty is heading towards March expiry scheduled to be taken place on Thursday.

The Sensex fell 3.90 points to 28188.12 and the Nifty declined 2.80 points to 8548.10. About 345 shares have advanced, 282 shares declined, and 90 shares are unchanged on the BSE.

Jindal Steel bounced back with 2 percent gains as the Delhi HC issued notice to government on plea with respect to cancellation of blocks and restrained government from allotting Tara coal block to Coal India.

Sun Pharma gained more than 1 percent as CCI approved Sun Pharma-Ranbaxy's plan to sell brands to Emcure.

TCS, ITC, Reliance Industries, Wipro and Maruti Suzuki marginally gained while ICICI Bank and ONGC fell over a percent.

The Indian rupee has opened higher at 62.20 a dollar today against previous day's closing value of 62.27 a dollar.

Ashutosh Raina, HDFC Bank said the dovish comments from the Fed after the last week's FOMC meet resulted in dollar plunging from recent highs. The USD-INR pair has been consolidating in the Rs 62-63/USD range, supported by strong intervention, he added.

The bank expects the currency pair to consolidate around current levels.

The US dollar fell against a basket of major currencies after traders unwound bullish dollar positions on the likelihood that Federal Reserve policy will be accommodative over the near term.

Globally, stocks in the US closed lower as investors looked ahead to a light week of economic reports amid some consolidation in currency and oil prices. The US 10-year treasury yield traded near 1.91 percent.

Meanwhile vice chair of the Fed Board of Governors, Stanley Fischer said that a Fed Fund rate increase is likely this year. A hike will be appropriate when the Fed sees "further improvement in the labor market" and is "reasonably confident" that inflation is moving back to 2 percent, he said before the economic club of New York.

Greece was in the spotlight as Greek and German leaders meet amid tensions over Athens' bailout program.