Sensex & Nifty rally for 4th day, Fed meet outcome eyed
17 June 2015
The market continued its rally for the fourth consecutive session Wednesday, rising 0.55 percent ahead of outcome of Fed's two-day meeting tonight. Index heavyweights like Reliance Industries, L&T, ITC and HUL drove the market higher. The broader markets outperformed benchmarks. The 30-share BSE Sensex climbed 146.15 points to 26832.66 and the 50-share NSE Nifty rose 44.25 points to 8091.55.
It has been a relief rally after taking beating in earlier sessions, feel experts. Overall, the market has been in a range and that may continue for some more time due to lack of major triggers, they said.
Sanjeev Prasad of Kotak Institutional Equities does not see many triggers for market to move up in the near term. The improvement in the economy is yet to translate into real revenue numbers and chances for earnings upgrades are remote at the moment, he said.
The BSE Midcap and Smallcap gained 1.4 percent and 1.3 percent, respectively. The market breadth was positive as about 1716 shares advanced against 940 shares declined on the Bombay Stock Exchange.
Globally, every market is waiting for the outcome of two-day meeting held by Federal Open Market Committee. Experts don't see any rate hike tonight.
The Fed statement will be important, said Vivek Misra of Societe Generale. According to him, the US Federal Reserve may take one interest rate hike in 2015. As far as Greek crisis is concerned, Misra said it is unlikely to have any major impact on global markets.
Back home, the government braced for scanty rainfall today by raising minimum support prices (MSPs) for paddy by Rs 50 rupees per quintal and pulses by Rs 275. It said higher MSPs for kharif crops for 2015-16 is effective from October 1.
The government also said cabinet approved low-cost housing scheme with interest subvention. "Low-cost housing scheme will be a centrally sponsored scheme and interest rate subvention for low-cost housing revised to 6.5 percent," it explained.
03:15 pm Market closing: The market ended up 146.15 points or 0.5 percent at 26832.66 and the Nifty is up 44.25 points or 0.6 percent at 8091.55. About 1716 shares advanced, 945 shares declined, and 164 shares were unchanged. Cipla, HUL, Reliance, Hindalco and Tata Steel were top gainers while Vedanta, BHEL, Tata Power, Bajaj Auto and HDFC Bank were major laggards in the Sensex.
02:55pm Market Update: The Sensex gained 182.28 points at 26868.79 and the Nifty rose 51.40 points to 8098.70. About 1699 shares have advanced, 866 shares declined, and 179 shares are unchanged on the BSE.
02:45pm PTC India rallies: IFC, a member of the World Bank Group, has subscribed to USD 35 million worth of 10-year non-convertible debentures issued by infrastructure finance company, PTC India Financial Services. The company will use the funds to boost long-term financing for renewable energy, particularly in wind and solar projects.
The investment will help generate an estimated 129 GWh of clean energy over five years. PFS is focused on financing projects in India across the energy value chain, and renewable energy comprises 40 percent of its portfolio.
In 2011, IFC had provided PFS a senior loan of USD 50 million to fund four renewable energy projects.
"The funds from the issue will augment our long-term funding resources and help diversify our borrowing profile," said Pawan Singh, Chief Financial Officer, PFS. "The major focus of PFS remains on renewable energy space in India and we are committed to increase the renewable energy generation base in India."
02:25pm Adani Group in focus: India's mining giant Adani Group has launched an Indigenous Participation Plan (IPP) that could deliver benefits worth USD 250 million over the next 30 years to the traditional owners who are opposing the company's USD 16.5 billion project in Australia's Queensland state.
"Implementation of Adani's IPP will result in a direct benefit of at least USD 250 million in business development, jobs and training opportunities to traditional owner groups spanning Adani's operations over the half-life of the company's projects (30 years)," Adani Australia said.
02:00pm Market Check
The market extended rally in afternoon trade with the Nifty scaling above 8100 led by heavyweights like Reliance Industries, HUL, L&T, ITC and HDFC. The Sensex spiked 235.69 points to 26922.20 and the Nifty climbed 66.35 points to 8113.65.
The broader markets continued to outperform benchmarks, up more than 1.5 percent. About 1666 shares have advanced against 822 shares declined on the Bombay Stock Exchange.
Sanjeev Prasad of Kotak Institutional Equities does not see many triggers for market to move up in the near term. The improvement in the economy is yet to translate into real revenue numbers and chances for earnings upgrades are remote at the moment, he added.
Asian markets stayed cheerful ahead of FOMC outcome today. Shanghai gained 1.65 percent and Hang Seng rose 0.7 percent. However, European stocks were marginally lower as Greek jitters persisted.
Government sources said the cabinet has approved Rs 50 per quintal in minimum support price of paddy and also approved hike in import duty on long steel products to 7.5 percent from 5.5 percent.
Tata Steel topped the buying list on Sensex, up 5 percent followed by Cipla (up 4.4 percent) and HUL (up 3.7 percent). L&T, Reliance Industries, HDFC, ITC, Bharti Airtel, Wipro, Dr Reddy's Labs and Hindalco gained 1-3 percent. However, Vedanta and BHEL lost 1-2 percent.
1:55 pm Interview: The government has delayed all steps to revive public sector banks, says Suresh Ganapathy, banking analyst at Macquarie Capital Securities. "Despite being aware of the attrition issue, it took so much time. Also, the government is being naive in assuming that one person at the top can change the way forward for PSU banks," he told CNBC-TV18. He also stresses on the point that the government has completely failed to address the issue of bank recapitalisation.
According to him, till the time the government does not manage to address the issue, there is no point in owning any of the public sector banks. On private sector banks, especially ICICI Bank losing ground on NPA worries, Ganapathy says the risk reward is favourable at the moment.
He says investors are forgetting that despite the stress it faces on its books, the bank has the ability to handle a bad loan situation. He is positive on ICICI Bank though there may be some short-term stress ahead for the bank.
1:30 pm Buzzing: Shares of Ramky Infrastructure shot up 20 percent intraday after the company intended to monetise operational road assets. According to CNBC-TV18 reports, the Hyderabad-based infrastructure company has planned to sell the land owned by arm near industrial park in Hyderabad and to divest assets worth Rs 1,081 crore.
Additionally, the company (on June 12) executed its restructuring documents with six lenders comprising State Bank of India , State Bank of Hyderabad, Punjab National Bank , IDBI Bank , ICICI Bank and Axis Bank . However, other three lenders of the joint lenders forum viz Yes Bank , Kotak Mahindra Bank and Standard Chartered Bank have not participated to the restructure agreement, the company said in its filing.
The market holds its gains as the Sensex is up 145.74 points or 0.5 percent at 26832.25 and the Nifty is up 37.90 points or 0.5 percent at 8085.20. About 1561 shares have advanced, 807 shares declined, and 158 shares are unchanged.
Steel stocks are up as government has hiked import duty on long steel products to 7.5 percent from 5.5 percent while flat steel product import duty is increased to 10 percent from 7.5 percent.
Tata Steel, JSW Steel are up 3-5 percent each. Cipla, HUL, Bharti Airtel and Hindalco are other top gainers in the Sensex. Among the losers are Vedanta, BHEL, Tata Power, Hero MotoCorp and Bajaj Auto.
Meanwhile, economists believe the US Federal Reserve will most likely signal a September interest rate hike, says Indranil Sengupta, chief economist India at Bank of America Merrill Lynch (BOFA ML). Once the rates are hiked, capital flows into emerging markets will slow down, he says.
According to him, the Reserve Bank will try and defend rupee at 65 per dollar mark. He believes RBI will not want to give the impression that the rupee is a depreciating currency.
Sengupta says the entire cyclical recovery story hinges on how fast interest rates in India come down and how fast banks are able to cut rates. If the Fed is not hawkish and monsoon is fine, then there is a case for further rate cut, he adds.
12:45pm Interview: Nalco expects its alumina output to rise by 1 million tonne in next 4.5 years, of which 21.8 lakh tonne can be obtained in FY16, NR Mohanty, CMD, Nalco told CNBC-TV18. Nalco made a record profit of Rs 1322 crore last year but now the market is crashing due to Chinese dump entering the aluminum market, he said.
The company expects the 3 million tonne Pottangi bauxite mine to be alloted by FY17. There are talks of state government introducing new Corporate Social Responsibility (CSR) policy for the mines located in this region, he said. As of now, the company contributes 2 percent of its profits as CSR for District Mineral Fund (DMF).
Meanwhile, the un-auctioned Utkal-E coal block is likely to be re-allocated to Nalco soon.
12:25pm FII View: The US Federal Reserve may take one interest rate hike in 2015, says Vivek Misra of Societe Generale. He does not see any move on the rate front this time around. According to him, the Fed statement will be important.
Post the Fed rate hike, he expects outflow from the bond market to be higher than from equity market.
He expects the global market volatility to continue for some more time. He does not expect risk assets to do well in the next quarter. " Emerging markets typically tend not to do well in risk-off phases. But EMs in Asia are relatively more resilient," he told CNBC-TV18. However, he adds that the Indian market may remain volatile but the downside risk is limited.
On the ongoing Greek crisis, Misra says it is unlikely to have any major impact on global markets.
12:00pm Market Check: The market continued to see buying momentum, supported by index heavyweights like Reliance Industries, HDFC, ITC and Larsen & Toubro. The Sensex jumped 134.69 points to 26821.20 and the Nifty rallied 32.35 points to 8079.65.
The broader markets outperformed benchmarks with the BSE Midcap and Smallcap rising over 1 percent. About two shares advanced for every share declining on the Bombay Stock Exchange.
However, brokerages remained cautious on Indian equities. Deutsche Equities cut December-end Sensex target to 31,000.
Tata Steel climbed almost 2 percent. CNBC-TV18 learnt that Tata Steel UK Unions have said they will not go on strike on June 22 and are considering the company's revised offer.
The rupee traded marginally higher against the dollar today as caution ahead of the outcome of the Fed's two-day meet kept the greenback in a narrow range. The currency gained 12 paise at 64.12 a dollar.
Globally, asian markets remained mixed ahead of monetary policy decisions in the US tonight and Europe, while worries over greece also hurted sentiment. In commodities, Brent crude traded below USD 64 per barrel.
11:45 am Interview: Infrastructure firm NCC aims to bring down its debt to Rs 1800 crore by the end of this financial year, says YD Murthy, executive vice president- finance, NCC. Murthy says the company will be monetising one power and road project and the capital garnered will be used to reduce debt reduction and as working capital.
On the slowdown in the economy, Murthy says things are improving for the company and it has now started getting orders with better margins.
11:30 am Market outlook: Sanjeev Prasad, Senior Executive Director & Co-Head at Kotak Institutional Equities says the despite the tick of green on screen, it is advisable to wait out for a definite solution to global situation. Hopefully, there will not be much impact whatever happens with Fed or Greece, Prasad says but cautions that the Indian market does not have any triggers for the mid-term. He says the macro economic indicators look good, but those are already factored in.
As of now there are some green shoots, and order book are improving, but that is not translating into bump up in revenues, Prasad noted. He says most of the good quality stocks are very very expensive, particularly in consumers and pharma sector. He likes Reliance Industries for its valuations. The stock is trading at P/E Of 10x FY17 which is reasonable.
The market seems to be consolidating with major support from FMCG and pharma stocks. The Sensex is up 119.55 points or 0.4 percent at 26806.06, and the Nifty up 24.95 points or 0.3 percent at 8072.25. About 1328 shares have advanced, 673 shares declined, and 155 shares are unchanged.
Cipla and HUL are up 3 percent while Tata Steel, Bharti Airtel and Dr Reddy's Labs are top gainers in the Sensex. Among the losers are Vedanta, BHEL, Tata Power, Tata Motors and Bajaj Auto.
Crude oil futures prices rose 0.10 percent to Rs 3,853 per barrel today as speculators created fresh bets amid a firm trend in Asian markets. The rise in crude oil futures was due to a firming trend in Asian trade as dealers awaited the latest US energy report and Fed policy announcement later in the day that may shed light on its plans to hike interest rates, analysts said.
10.58am Market Update: The Sensex jumped 112.40 points to 26798.91 and the Nifty rose 23.80 points to 8071.10. About 1332 shares have advanced, 676 shares declined, and 151 shares are unchanged on the BSE.
10:40am Doubts over Cairn-Vedanta deal offer price: Notwithstanding the criticism of minority shareholders of Cairn India getting a raw deal, billionaire Anil Agarwal today ruled out his debt-ridden mining firm Vedanta Ltd raising the offer to absorb the cash rich oil firm.
Minority shareholders of Cairn, who have seen share prices almost halve to Rs 170-180 in past one year on back of the company cutting exploration expense and falling oil prices, have criticised the offer of one Vedanta Ltd share and one 7.5 percent preference share in Vedanta Ltd for every share they hold.
"This is a matter of detail. I think people are dealing with it. We have given the best of offer," Agarwal told reporters after meeting Oil Minister Dharmendra Pradhan here. He was asked if Vedanta Ltd will raise the offer in view of minority shareholders not being happy with the offer.
"I think everybody is happy. We have done it with best of intentions," he said. Agarwal, who had yesterday met Finance Minister Arun Jaitley, today explained the rationale of the deal to Pradhan.
The merger needs approval of at least half of the minority shareholders. State-owned Life Insurance Corp of India (LIC) holds 9.06 percent stake in Cairn India, second only to 9.82 percent of UK's Cairn Energy Plc, which had in 2011 sold majority stake in Cairn India to Vedanta for USD 8.67 billion. Agarwal needs approval of both LIC and Cairn Energy to get his proposal through
10:20am Market Expert: Ajay Bodke of Prabhudas Lilladher believes the market has made its low for the short-to-medium term, which fell partly due to IMD's deficient monsoon forecast. But from June 1 to date, monsoon has been 13 percent above normal and as of now it looks like Skymet's forecast is what is going to hold true, he told CNBC-TV18.
Globally too, there are talks that the US Federal Reserve may not raise interest rates in the fourth quarter because of confusing data emanating from the US, he says. There is growing consensus that a possible interest rate hike will happen in the first quarter of calendar year 2016.
Bodke also expects investors to soon realise the overvaluation in Chinese stocks and hence the outflow into China to see a possible reversal into countries like India. He sees a strong base created for the Nifty at 8000 due to these factors and expects to see a strong rally from here on
10:00am Market Check
The market remained marginally higher amid consolidation. The Sensex climbed 77.22 points to 26763.73 and the Nifty rose 12.25 points to 8059.55 led by FMCG, technology, pharma and select banking & financials.
The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising 0.6 percent each. About 1094 shares have advanced, 663 shares declined, and 132 shares are unchanged on the Bombay Stock Exchange.
Cipla and Hindustan Unilever (HUL) topped the buying list on Sensex, up 3 percent each followed by Dr Reddy's Labs with 1.7 percent upside. Tata Steel gained more than 2 percent after its UK Unions said they will not go on strike on June 22 and will be considering company's revised offer.
However, Vedanta dropped nearly 3 percent after sources told CNBC-TV18 that LIC seeks higher premium before giving Cairn India-Vedanta merger its blessing. LIC holds 9.06 percent in Cairn India & 1.77 percent in Vedanta.
Tata Motors, Reliance Industries, BHEL, NTPC, Tata Power and ICICI Bank declined 0.2-1 percent.
9:55 am FM's New York agenda: Finance Minister Arun Jaitley will hold meetings with FIIs and select top CEOs of American financial companies during his nine-day visit to the US. Jaitley, on June 18, will address portfolio managers from FIIs as well as executives of US companies operational in India, comprising banks, insurance and pension funds, the statement said.
"He will hold meetings (on June 18) with USIBC and FICCI executives and would discuss about reform measures put in place by the Government of India to make India a top investment destination," said the statement. During his visit, the Finance Minister will address at at the Columbia School of Business.
He will also meet about 150 members of Council for Foreign Relations (CFR) and would highlight about likely prospects of Indian economy, investment opportunities in India and development of infrastructure among others.
9:45 am Fed dove or hawk? Markets hope to hear from a dovish Fed, even though Fed Chair Janet Yellen may send a strong message that the central bank is likely to raise interest rates this year. The Fed is widely expected to hike rates for the first time in nine years in September. Ninety-two percent of the participants in CNBC's Fed Survey expect the central bank to begin raising rates this year, and the consensus is for 53 basis points this year, which would be the result of two quarter-point hikes.
9:30 am Buzzing: Shares of Jubilant Life Sciences climbed 8.5 percent intraday on raising price of Vitamin B3 products.
"Jubilant announced a price increase of 10 percent of Niacinamide, with immediate effect, for non-contract customers and wherever existing contracts permit,"said the company in its filing.
The company added that it delivers unmatched advantages of consistent quality and availability of vitamin B3 (Niacin and Niacinamide) to its customers globally. Its nutritional products business is backward integrated up to the initial raw material stage with global scale of operations.
The market has opened with smart gains. The Sensex is up 133.99 points or 0.5 percent at 26820.50, and the Nifty up 34.85 points or 0.4 percent at 8082.15. About 486 shares have advanced, 97 shares declined, and 67 shares are unchanged.
Tata Steel, Infosys, HDFC, Cipla and Axis Bank are top gainers in the Sensex. Among the losers are Vedanta, NTPC, M&M, Tata Power and GAIL.
The Indian rupee opened marginally higher at 64.18 per dollar against previous close of 64.24. The dollar edges higher, as US housing data encouraged speculation that the Federal Reserve will soon raise interest rates and it was further strengthened by worries that Greece was tilting towards debt default dragged on the euro.
The dollar index inches towards the 95 mark. Himanshu Arora of Religare said, "The rupee is expected to depreciate against the dollar today, amid expectations of interest rate hike that may happen sooner than later. This will prompt foreign investors to sell their investments in emerging markets, including India and channel their investments back to the US."
Globally, the US markets ended higher as investors await the outcome of the Federal Open Market Committee's two-day meeting.
A CNBC survey shows that an overwhelming 92 percent believe that the Fed will hike rates sometime this year. Most expect the rate hikes to begin from September.
European markets closed higher on Tuesday after cutting losses in earlier trade, with investors keeping watch for developments in Greece and the Fed meet. Asian markets, however, were mixed on Wednesday.
Brent Crude prices remained largely unchanged as global oversupply curbed gains but Nymex rose above USD 60 per barrel as a tropical storm approached the oil-producing state of Texas.
Gold held steady around USD 1180 an ounce as a looming Greek crisis failed to trigger sustained demand for safe-haven assets.