Sensex, Nifty end at 2016 closing high; Wipro, Sun Pharma drag

02 Jun 2016

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3:30 pm Closing high: The market ended at 2016-closing high in a late rally spurted by index heavyweights. The Sensex closed  up 129.21 points or 0.5 percent at 26843.14, and the Nifty was up 39 points or 0.5 percent at 8218.95. About 1252 shares have advanced, 1364 shares declined, and 158 shares are unchanged.

Coal India, Tata Steel, Axis Bank, HUL and Hero MotoCorp were top gainers while Wipro, Sun Pharma, Lupin, ITC and Bajaj Auto were losers in the Sensex.

3:00 pm Buzzing: CLSA has downgraded Asian Paints to high-conviction sell with a revised target of Rs 900 per share. According to the brokerage firm, Asian Paints is an 'expensive diamond' with valuations ignoring imminent earning risks. CLSA says that recent 87 percent rally in crude oil prices from the recent lows poses a threat to the elevated gross margins the company has enjoyed recently. It adds Asian Paints' volume growth has been reasonably volatile, with a 6-12 percent range in the past five years. It warns that a high base in FY16 could act as a dampener for FY17 volume numbers, though there is the possibility of higher contribution from product price hikes now that input costs are firming up.

2:45 pm Market Update: The Sensex extended upside in late trade, rising 74.36 points to 26788.29 and the Nifty reclaimed 8200 level, up 19.95 points at 8199.90.

2:35 pm Yes Bank gains 2%: Private sector Yes Bank is likely to raise USD 1 billion from overseas investors in the current fiscal as it has recently got government approval for increasing foreign investment to 74 percent.

"We have now headroom of about 32 percent with the approval. There is no immediate need for raising capital but depending on market conditions, we can raise during the current fiscal," Yes Bank Managing Director Rana Kapoor told PTI.

The bank already has an enabling approval from its board of directors to raise an additional USD 1 billion of equity capital and it will be done in single tranche, he added.

2:25 pm BoM's fund raising plan: State-owned Bank of Maharashtra today said it will raise capital of Rs 1,000 crore by various modes.

The Pune-headquartered lender however did not specify any time-frame for the same.

"The Bank has decided to raise capital through Follow on Public Offer/Rights issue/Qualified Institutional Placement up to Rs 1,000 crore," it said in a regulatory filing.

The fund raising plans are subject to the necessary approvals.

2:00 pm Market Check
Banking & financials, telecom, metals and select auto stocks helped equity benchmarks turn positive in afternoon trade. The 30-share BSE Sensex rose 25.57 points to 26739.50 and the Nifty gained 6.55 points at 8186.50.

The broader markets outperformed benchmarks despite weak market breadth. The BSE Midcap index gained 0.4 percent and Smallcap rose 0.2 percent while about 1366 shares declined against 1115 advancing shares on Bombay Stock Exchange.

Coal India (up 4 percent), Tata Motors (up 1.25 percent), Axis Bank (up 1.39 percent), SBI (up 1.4 percent), Tata Steel (up 1.5 percent), Bharti Airtel (up 1 percent), Adani Ports (up 1.6 percent) and Hero Motocorp (up 1.5 percent) were leading gainers while ITC, Wipro, Lupin and Bajaj Auto fell 1-2 percent.

1:50 pm Interview: IDFC Bank has made requisite amount of provisioning on its stressed asset book, says CFO Sunil Kakkar highlighting that there is unlikely that any further provisioning will be required even if there is an asset quality review by the Reserve Bank. In an interview to CNBC-TV18 from the sidelines of the IDFC conference in London, Kakar said provisioning has been done for up to 50 percent of the stress on its legacy books, largely in the infrastructure space. On expansion plans in the rural and semi-urban areas, he said the bank is not looking only at traditional branch-based expansion but also leveraging other mediums like bank-in-a-box or micro-ATMs which provide access to these markets without necessarily having a branch there.

1:30 pm Market outlook: The equity markets have seen a steady run-up, thanks to a turn in global sentiment and hopes that the macro situation in the country has bottomed out, but Gautam Chhaochharia, Head - India Research, UBS, is not feeling very confident. In an interview with CNBC-TV18, Chhaochharia said the just-gone-by fourth quarter earnings season was decent but a large part of the improvement was led by margin rather volume expansion. This leads to questions whether it can sustain going forward, he said. For the overall market, UBS's base case fair value for the Nifty stands at 7,500 while the best case is at 8,400. With the market close to the latter levels, Chhaochharia said the risk-reward ratio was turning unfavourable for the market.

The market is still under pressure as the Sensex is down 26.23 points or 0.1 percent at 26687.70. The Nifty down 10.35 points or 0.1 percent at 8169.60. About 1024 shares have advanced, 1316 shares declined, and 137 shares are unchanged.

Coal India, Tata Motors, Bharti Airtel, Tata Steel and Hero MotoCorp are top gainers while Wipro, ITC, Sun Pharma, Lupin and Bajaj Auto are major losers in the Sensex.

Crude prices are expected to a see small decline after the Organization of the Petroleum Exporting Countries (OPEC) meeting to be held today in Vienna, says David Lennox, Analyst, Fat Prophets, as no key announcements are expected from the meet.

Oil prices were flat as investors awaited the outcome of an OPEC meeting later in the day in Vienna. Few people are expecting a deal to cap production, with Iran already declaring it is unwilling to take part in any such deal at the Organization of the Petroleum Exporting Countries talks. Iran stayed away from a disastrous meeting in Doha on April 4 between OPEC and other major producers, including Russia, that failed to agree a coordinated output freeze.

12:59 pm Market Update: The Sensex remained under pressure, down 37.62 points to 26676.31 and the Nifty fell 14.45 points to 8165.50.

12:45 pm Europe opens: European stocks opened lower as investors look ahead to the latest monetary policy decision from the European Central Bank (ECB) and an OPEC summit in Vienna.

The pan-European Stoxx 600 index opened 0.1 percent lower with the majority of sectors in negative territory, Basic resources and oil and gas stocks were the best performing sectors, up around 0.3 percent respectively.

12:40 pm Buzzing: Rolta India shares fell nearly 5 percent intraday after international rating agency Standard & Poor's has lowered credit rating again.

The IT solutions provider said S&P Ratings, on Wednesday, has lowered long term corporate credit rating on the company to 'SD' (selective default) from 'CCC-' after the company failed to pay dues to banks.

The rating agency also lowered rating on senior unsecured notes of Rolta Americas LLC & Rolta LLC to 'CC' from 'CCC-' each while another agency India Ratings & Research has revised long term corporate credit rating on Rolta India to 'D' (default) from 'BBB-'

"Due to an unprecedented stretched working capital situation, the company could not pay certain dues to banks and the wholly owned subsidiary India LLC missed payment of interest on 10.15% senior unsecured notes, which was due on May 16, 2016," Rolta said, adding there is a grace period of 30 days for this payment of interest.

12:18 pm Dolat on economy & earnings: Most of the important parameters are turning positive for the economy, says Amit Khurana, Co- Head Equities & Research, Dolat Capital Market. ''Trajectory, now, is positively set,'' he says.

With expectations of economic growth, earnings too are expected to improve in another two to three quarters.

Visibility is now improving for non-banking finance companies (NBFCs). Once economy improves, the space will see growth. However, banks are still impacted by stressed corporate cycle. Consumer side is slightly better, he says.

12:00 pm Market Check
Equity benchmarks continued to consolidate with a negative bias in noon trade due to lack of global as well as domestic cues. RBI monetary policy (June 7) and Federal Reserve two-day meeting (June 14-15) are key events in near term.

The 30-share BSE Sensex declined 46.95 points to 26666.98 and the 50-share NSE Nifty fell 15.10 points to 8164.85. The market breadth was also negative as about 1219 shares declined against 987 advancing shares on Bombay Stock Exchange.

Gautam Chhaochharia of UBS says base case fair value for the Nifty stands at 7,500 while the best case is at 8,400. With the market close to the latter levels, he feels the risk-reward ratio is turning unfavourable for the market.

ITC, HUL, Wipro, Sun Pharma, Lupin and Bajaj Auto dropped 1-2 percent while Coal India topped buying list on Sensex, up 3.5 percent followed by Tata Motors, Hero Motocorp and Tata Steel.

11:45 am Buzzing: Share prices of Bank of Maharashtra rose 4 percent intraday Thursday as it has decided to raise capital through FPO/Rights issue/QIP etc., upto Rs 1000 crore, subject to the necessary approvals.

The company has posted a net loss of Rs 119.84 crore for the fourth quarter ended March 2016 due to rise in bad loans.

11:30 am Downgrade: CLSA has downgraded Asian Paints to high-conviction sell with a revised target of Rs 900 per share. According to the brokerage firm, Asian Paints is an 'expensive diamond' with valuations ignoring imminent earning risks. CLSA says that recent 87 percent rally in crude oil prices from the recent lows poses a threat to the elevated gross margins the company has enjoyed recently. It adds Asian Paints' volume growth has been reasonably volatile, with a 6-12 percent range in the past five years. It warns that a high base in FY16 could act as a dampener for FY17 volume numbers, though there is the possibility of higher contribution from product price hikes now that input costs are firming up.

The market is still slipping away as the Nifty is struggling to hold 8150. The 50-share index is down 17.70 points or 0.2 percent while the Sensex is down 49.18 points or 0.2 percent at 26664.75. About 935 shares have advanced, 1075 shares declined, and 113 shares are unchanged.

Coal India, Hero MotoCorp, Tata Motors, Bharti Airtel and Infosys are gainers while HUL, ITC, Asian Paints, Wipro and Lupin are losers in the Sensex.

Oil prices were flat as investors awaited the outcome of an OPEC meeting later in the day in Vienna.

Few people are expecting a deal to cap production, with Iran already declaring it is unwilling to take part in any such deal at the Organisation of the Petroleum Exporting Countries talks. Crude prices briefly topped USD 50 last week for the first time this year as short-term production disruptions in Canada and Nigeria eased concerns about abundant global supplies, but they remain less than half of their 2014 peaks.

10:35 am FII View: Prabhat Awasthi of Nomura says according to him, there are four key takeaways from Q4FY16.

First, the sequential QoQ aggregate sales growth excluding commodities and banks is the best in four years. Second, the number of positive surprises in earnings outpaced negative surprises for the first time in at least the last one year.

Third, operating margins excluding commodities and banks have now risen to 22.3 percent, among the highest seen in 27 quarters. Fourth, domestic cyclicals are continuing to outpace global sectors handsomely in-line with the dichotomous business environment of local recovery and global weakness in growth.

10:20 am May sales: Maharashtra-based two-wheeler maker Bajaj Auto has sold 3.47 lakh units in May that registered a growth of only 1 percent over 3.45 lakh units sold in year-ago period. Lower-than-expected growth in motorcycles and weak exports hit overall sales.

The company said motorcycle sales increased 2 percent year-on-year to 3.07 lakh units while commercial vehicles (3-wheeler) sales declined 7 percent to 40,311 units in month gone by.

Domestic business has registered a 9.4 percent growth at 2.04 lakh units while exports fell 10 percent to 1.43 lakh units in May.

10:00 am Market Check
The market continued to be marginally lower with the Sensex falling 43.21 points to 26670.72 and the Nifty down 14.95 points at 8165. The broader markets were also lower as about 930 shares declined against 674 advancing shares on Bombay Stock Exchange.

Nitin Raheja, CIO, Rada Advisors, says it is difficult to take a call on which direction the market it going and so once again the focus should be back on bottom-up stock picking.

He thinks the Fed rate hike is already discounted but the commentary remains key, and if that is hawkish then markets may correct.

Infosys, Coal India and Tata Motors topped buying list on Sensex, up 1-2 percent while ITC, L&T, Bajaj Auto and GAIL fell 1 percent each.

9:55 Divestment: The disinvestment department has a "roadmap" for diluting government stake in public sector enterprises and it will be implemented, Economic Affairs Secretary Shaktikanta Das said.

"They (Department of Investment and Public Asset Management) have a roadmap. They have a plan and the revenue should be mobilised by mix of instruments by disinvestment as well as by disposal of certain assets of individual public sector companies...There is a roadmap, it will be implemented," he told reporters in reply to a question.

The government has set a disinvestment target of Rs 56,500 crore for the current fiscal. Of this, Rs 30,000 crore will come from minority stake sale and the remaining Rs 26,500 crore from strategic stake sale. It has already raised Rs 2,700 crore through 11.36 percent stake sale in NHPC.

9:45 am Ticket fare: With the Government affecting a steep over nine percent hike in aviation turbine fuel (ATF), airlines may increase the price of tickets.

"With the price of Aviation Turbine Fuel (ATF) increasing by a steep 9.2 percent, this could result in an increase in airfares as fuel constitutes approximately 40 percent of an airline's operating costs," travel portal Yatra.com president Sharat Dhall said.

The fuel cost accounts for about 40-50 percent of the operating expenditure for airlines in India. Flying has already become costlier from following the introduction of a new tax. Finance Minister Arun Jaitley had in his Budget for 2016-17 proposed a 0.5 percent Krishi Kalyan Cess on all taxable services, which came into effect from today.

9:30 am Big Interview: Global consumer goods giant, Henkel AG, is likely to exercise its option and invest in Jyothy Laboratories , a media report today said. As per the option agreement, Henkel can buy up to 26 percent stake in Jyothi and the deal will have to be exercised before March 2017. Speaking to CNBC-TV18 in an interview, K Ullas Kamath, Joint MD and CFO of Jyothy Laboratories said the deal was not yet done but, if it were to go through, it would be a "strategic" investment rather than financial. Price at which stake can be bought will be decided mutually and it cannot be less than Sebi guidelines, he said.

The market has opened flat on Thursday. The Nifty is below 8200, down 0.95 points at 8179 and the Sensex is up 6.33 points at 26720.26. About 415 shares have advanced, 305 shares declined, and 37 shares are unchanged.

Infosys, Adani Ports, M&M, Tata Steel and Wipro are top gainers while Axis Bank, Bajaj Auto, Bharti Airtel, ITC and Hero MotoCorp.

The Indian rupee opened marginally higher at 67.42 per dollar versus 67.45 Wednesday.

Mohan Shenoi of Kotak Mahindra Bank said, "Uncertainty over the second term to RBI governor resulted in weak rupee and bonds. However, the rupee weakness is expected to be capped today by exporter selling."

The US dollar hit its lowest level in two weeks against the yen after Japan delayed a sales tax hike for longer than expected, raising concerns about the lack of Japanese monetary stimulus to halt the yen's rise. Also the latest economic readings in US, weren't strong enough for the Fed to justify tightening monetary policy again, traders are now watching out for the May jobs data.

Asian shares were steady on Thursday as Wall Street eked out modest gains after the latest batch of US data provided few clues on when the Federal Reserve might raise rates, while a resurgent yen pressured equity markets in Japan.

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