Sensex closes lower, Nifty ends below 9650; pharma stocks emerge as top gainers

3:32 pm Market at Close: Benchmark indices ended the session on a negative note, with the Nifty closing below 9650-mark.

The Sensex closed down 57.92 points at 31213.36, while the Nifty was lower by 16.65 points at 9647.25. The market breadth as negative as 1,326 shares advanced against a decline of 1,354 shares, while 177 shares were unchanged.

Pharma stocks Dr Reddy's Labs and Sun Pharma gained the most, while GAIL and TCS were the top losers on both indices.

3:30 pm Infosys declines: Selling pressure on Infosys continued for the second straight day, with less intensity though, as the stock fell over 1 percent against the 3 percent fall seen on Wednesday. The stock closed over half a percent lower.

Goldman Sachs retained its sell rating on the stock with a target of Rs 798.

''Infosys's high exposure to a shrinking application services business amid a shift to the cloud, low penetration in digital services and high vulnerability to potential changes in H1-B visa rules will remain key headwinds, in our view,'' the global brokerage firm said in its report.

Among key risks to the stock is the cyclical uptick in discretionary IT spending, rupee depreciation, higher than expected benefits from automation tools and potential buyback announcements.

3:15 pm Market update: Equity benchmarks fell again amid volatility. The Sensex was down 68.81 points at 31,202.47 and the Nifty slipped 18 points to 9,645.90.

3:05 pm Interview: The IT sector has not found favour among investors in the last one year but Mindtree in particular has taken a bigger hit as compared to other stocks. The company has been going through a period of uncertainty due to client specific issues in top accounts, pricing pressure and Brexit-related headwinds.

In an interview to CNBC-TV18, Rostow Ravanan, MD & CEO of Mindtree gave a sense of if FY18 will be better than FY17.

Business across the industry and even for Mindtree has had some ups and down, said Ravanan.

Clients are under pressure to reduce costs in the traditional business, he added.

He further said that digital continues to be a sweet spot for the company.

"We remain committed to the guidance we gave at the beginning of the year, both on revenue and on margin," he added.

Ravanan expects a margin improvement on year-on-year (YoY) basis.

2:45 pm Home loan drop unlikely? While borrowers are unlikely to secure cheaper loans, interest rates will continue to stay low as banks will now have additional capital after the RBI yesterday eased deposit norms with the regulator.

During the second bi-monthly policy announcement, as a counter cyclical measure, the central bank relaxed the risk weight requirements and loan to value (LTV) ratios of individual home loans above Rs 30 lakh.

Risk-weighted assets are used to determine the minimum amount of capital that must be set aside by banks and other institutions to reduce the risk of default on loans. For instance, a loan that was secured by a letter of credit is considered riskier and hence requires more capital than a mortgage loan that is secured with a collateral.

2:30 pm Bank capital: Moody's Investors Service said on Thursday the 11 Indian state-run banks that it rates could need up to 950 billion rupees ($14.76 billion) in equity capital by March 2019, far above the 200 billion rupees the government plans to inject into state banks by then.

Weak capitalisation levels will remain a key credit weakness for the 11 banks, the ratings agency said, adding that they had limited ability to raise external capital.

Moody's said it estimated that the 11 banks - including State Bank of India, Bank of Baroda and Punjab National Bank - will need external equity capital of 700 billion rupees to 950 billion rupees, over a two-year period ending March 2019, to fully meet Basel III capital rules.

2:15 pm Management Speak: In an interview to CNBC-TV18, ML Mittal, MD of Bharat Wire Ropes spoke about the latest happenings in his company.

New facility at Chalisgaon started production from March 2017.

He further said that the current order book is around Rs 60 crore but this time they booked additional Rs 37 crore mainly from domestic market and exports.

2:05 pm Tata Motors in focus: Kotak expects JLR's volume growth to pick-up strongly over the next few months led by rampup of the retails sales of new Discovery as the model gets launched across markets; and launch of Range Rover Velar in August 2017.

It noted that these two models will drive almost 10 percent YoY volume growth for JLR in FY2018. It expects JLR's overall volumes to grow by 13 percent YoY in FY2018.

The research house expects profitability to improve over the next two years led by lower forex losses and operating leverage benefits.

1:44 pm Market Check: Equity benchmarks recouped losses in afternoon trade while the broader markets extended gains amid consolidation.

The 30-share BSE Sensex was down 7.88 points at 31,263.40 and the 50-share NSE Nifty fell 0.80 points to 9,663.10.

Healthcare, HDFC Group and metals stocks continued to support the market whereas technology, FMCG and oil & gas stocks were under pressure.

The BSE Midcap and Smallcap indices gained 0.4 percent each.

Healthcare stocks like Sun Pharma, Dr Reddy's Labs etc gained 4 percent each on attractive valuations. Lupin was up 2 percent. HDFC continued to be leading contributor to Sensex' gains, up nearly 2 percent whereas TCS lost 3 percent on downgrade report from Nomura.

Markets in Europe edged higher as politics and monetary policy took center stage. France's CAC and Germany's DAX were marginally higher.

1:30 pm Goldman on HDFC Bank: HDFC Bank, India's largest private sector bank by loans, should see its market capitalisation rise to more than USD 100 billion by FY20, compared to it taking two decades to cross USD 50 billion, Goldman said.

The key driver would be doubling of profits to USD 5 billion by FY21 as HDFC Bank leverages (1) the market share shift from state-owned banks, (2) the retail under-penetration using its large distribution network, highest efficiency among retail peers, and low cost of funds; and (3) a shift of financial savings from deposits to other products, it added.

Under its bull case, the research house sees potential for market cap rising to around USD 137 billion, assuming valuations rerate on potentially higher growth and best-in-class profitability.

1:05 pm MOSt downgrades GAIL: GAIL India shares fell more than 3 percent intraday after Motilal Oswal downgraded the stock to sell, citing likely threat of losses from its US contracts.

The research house expects 11 percent downside in the stock price at Rs 357 (target price), saying the state-owned gas distribution company may face challenges to find customers for the 5.8mmtpa import contracts it has signed with US companies.

According to the report, threat of losses on US shale gas import contracts looms large and may wipe out around 20 percent of EBITDA for each USD 1 per mmBtu loss.

In the current pricing environment, US shale would be around USD 2 per mmBtu more expensive than prevailing spot prices in Asia-Pacific. Incremental benefits from transmission, trading and petrochemicals are limited, Motilal Oswal feels.

12:35 pm Market Check: Benchmark indices were in consolidation mode, with the Nifty hovering around 9650-mark.

The Sensex was down 40.95 points at 31230.33, while the Nifty was down 9.75 points at 9654.15. The market breadth was narrow as 1,237 shares advanced against a decline of 1,203 shares, while 154 shares were unchanged.

Dr Reddy's Labs and Sun Pharma gained the most, while TCS and GAIL lost the most.

12:15 pm Downgrade: Tata Power Company shares lost 1.4 percent intraday after the rating agency downgraded the company, citing concerns over under-recovery of Mundra power project.

The company said ICRA has revised long term rating for the company from AA to AA- while the short term rating has been reaffirmed at A1+.

The existing rating from the rating agency has a negative outlook in view of under-recovery of fuel cost at the 4,000 MW Mundra Ultra Mega Power Project operated by the company's subsidiary.

"The revision in long term rating takes into account disallowance of any relief to Mundra UMPP under 'force majeure' or 'change in law' clauses as per recent judgement of the Supreme Court," Tata Power said in its filing.

11:58 am Buzzing: Reliance Capital shares gained nearly 2 percent intraday following company's listing plans for Reliance Nippon Life Asset Management. The rally was in addition to 4 percent upside seen in previous session.

Reliance Nippon Life Asset Management (RNAM) informed exchanges on Wednesday that its board of directors has given approval for the plans to list equity shares of the company, subject to necessary regulatory and corporate approvals.

RNAM, the asset manager to Reliance Mutual Fund, is a subsidiary of Reliance Capital with Nippon Life Insurance Company as its strategic partner. Reliance Capital holds 51 percent of the total issued and paid-up equity share capital of RNAM.

11.40 am Market Check: Equity benchmarks remained under pressure among consolidation after investors digested RBI policy and maintained caution ahead of UK elections and Comey testimony.

The 30-share BSE Sensex slipped 39.18 points to 31,232.10 and the 50-share NSE Nifty was down 8.20 points at 9,655.70 while the broader markets marginally outperformed.

Dr Reddy's Labs was the biggest gainer among Sensex stocks, up 4 percent followed by HDFC (up 2 percent), Sun Pharma (up 2.4 percent), Tata Steel (up 3.16 percent) and Lupin (up 1.55 percent).

TCS and GAIL declined 3 percent each while ICICI Bank, Infosys, Reliance Industries and ITC dragged benchmarks.

11:20 am Steel outlook: CLSA is bullish on Indian steel industry, saying it sees potential for Indian steel valuation multiples to rerate.

"A confluence of positive factors should drive a rerating of Indian steel stocks. Confirmation of anti-dumping duties for the next four years has put a floor to Indian steel prices. Indian steel demand-supply is on the cusp of a multi-year tightening phase given lack of new capacity additions. Steel demand outlook is also improving with the government's affordable housing program and likely start of an investment cycle by FY19," it reasoned.

10:59 am CLSA ups target on Tata Steel: CLSA maintained its bullish stance on Tata Steel and raised its target price significantly to Rs 710 (implying 45 percent potential upside), citing better pricing in India and likely de-risking in Europe business.

"We see scope for Tata's valuation multiples to expand driven by improving Indian steel industry pricing and demand-supply outlook, and high visibility of a significant de-risking in Tata Steel Europe (TSE)," the brokerage house explained while retaining a buy call on the stock.

It feels global steel industry outlook is also better than before driven by supply-side reforms in China.

10:45 am Gold update: Gold edged lower on Thursday as investors awaited cues on market direction amid a number of geopolitical events later in the day that could boost the safe-haven demand for the metal.

Polls open in the UK national elections later on Thursday while the European Central Bank (ECB) may discuss dropping additional stimulus pledges at a meeting later and former United States Federal Bureau of Investigation director James Comey will testify before the U.S. Congress about his interactions with President Donald Trump later in the day.

"A lot of things are happening at the same time... There may be some kind of impact that may push up the volatility rather than the direction of price moves," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

10:30 am Management Speak: Bajaj Electricals' advertising spend in the ongoing financial year is likely to spike by almost a third with the company expected to extend more hand-outs in below-the-line promotional activities, according to the company's Chief Financial Officer Anant Purandhare. He attributed this to the company's rollout of its new distribution model for consumer products achieving the footprint.

The company could spend Rs 100 crore on advertising and sales promotion, 31.6 percent higher than the Rs 76 crore it spent on the same in the last financial year, Purandhare said.

''Our focus on advertising will be more on BTL (below the line) spending. We will have to spend more and more on BTL as we are doing secondary and tertiary distribution. There we have to do a lot of BTL activities like putting up hoardings on shops, giving them discounts to store our products. So that will increase the visibility of our products in the market,'' Purandhare told Moneycontrol.

10:10 am Rating downgrade: Indian market which has already risen nearly 18 percent to fresh record highs this week have unnerved some analysts at a global investment bank, UBS.

The broking firm downgraded its rating on India to 'neutral' from 'overweight' initiated earlier in the month of February, citing a sharp surge in valuations which offers limited risk to reward ratio from current levels.

Back in mid-February, UBS raised India's rating to Overweight post demonetisation trends which were beginning to improve, and earnings estimates which looked like hitting the bottom. The valuations were also looking the least high, relative to Asia ex-Japan, since PM Modi was elected in 2014.

9:57 am Market Update: Equity benchmarks erased opening gains due to further selling in technology, oil and select banks stocks. Investors maintained cautious stance ahead of UK elections and Comey testimony.

The 30-share BSE Sensex was down 31.13 points at 31,240.15 and the 50-share NSE Nifty fell 12.30 points to 9,651.60.

TCS fell 2.4 percent as Nomura downgraded the stock to reduce from neutral, with implied downside of 18 percent, citing mismatch between fundamentals and recent stock price rise.

Infosys extended losses, down 1 percent on top of 3 percent correction in previous session on pricing concerns.

ITC, Reliance Industries, ICICI Bank, SBI and ONGC were other losers whereas HDFC, HDFC Bank, Tata Steel, HUL, Tata Motors and L&T continued to support the market.

9:40 am Buzzing: Petronet LNG shares fell as much as 4.3 percent in morning trade Thursday after CNBC-TV18 reports said France-based investor offloaded its entire stake in the company.

Company's 7.6 crore equity shares (representing 10 percent of paid-up equity) traded on exchanges in the price range of Rs 424.90-430.15 in opening today.

GDF International proposed to divest its entire shareholding of 10 percent in the company for USD 512 million.

GDF, which distributes and markets liquefied natural gas, informed exchanges in March 2017 about its divestment to each of the promoter stating that it proposed to offer to each of the promoter a first right of purchase/refusal in relation to the proposed stake sale in the same proportion in which the promoter are holding equity shares in the company.

The Government of India through companies like ONGC, IOC, GAIL and BPCL has 50 percent shareholding in the company while the rest is held by public as of March 2017. GDF International was the largest shareholder among public.

9:25 am FII View: Mahesh Nandurkar of CLSA said Nifty trades at 18x 1-year forward or 20 percent premium to the last 10-year average and comes up as the key investor concern in most discussions.

Higher inflows are the reason for premium valuations, he feels.

Historical flow analysis implies if monthly net inflow remains at or above USD 400 million, the uptrend should continue, he said, adding this is also a base case assuming continued strong domestic flows, doubling of equity offering partially offset by higher buybacks over the next 12 months.

He feels the key risk is much higher equity raising than anticipated. Higher valuations, however, make the market look farther ahead, bringing the potential capex cycle recovery in sight, Nandurkar said.

9:15 am Market Check: Equity benchmarks extended gains in opening trade Thursday, with the Nifty eyeing 9700 level despite cautious trade in global peers ahead of UK elections and Comey testimony.

The 30-share BSE Sensex was up 52.93 points at 31,324.21 and the 50-share NSE Nifty gained 18.50 points at 9,682.40.

Tata Steel topped the buying list among Sensex stocks, up nearly 4 percent followed by Dr Reddy's Labs, HDFC, Tata Motors, Lupin, Aurobindo Pharma and Hindalco.

TCS, GAIL, ONGC, ITC, Infosys, Tata Power and Bharti Infratel were under pressure.

The Indian rupee retreated against the US dollar in early trade. It opened at 64.40, down 7 paise compared with previous closing level of 64.33 a dollar.

Mohan Shenoi of Kotak Mahindra Bank said the rupee closed marginally stronger in previous session (9 paise higher) on the back of inflows and dovish monetary policy.

However global markets are expected to be cautious today in view of the ECB meeting, UK elections and Comey testimony, according to him.

Shenoi expects the rupee to trade in range of 64.20-64.55 against the US dollar.

Asian markets traded sideways ahead of key risk events later in the day, with apparent land-to-ship missiles fired by North Korea in the morning added to the mix