Buy at dips. Uptrend on Sensex, Nifty may continue unless the previous day’s low is broken
The market closed in the green for the ninth day in a row on optimism from the government on the reforms front and the RBI’s 25 basis point CRR cut today. Today’s upmove helped the Nifty close at the highest since 26 July 2011. We see the uptrend continuing, subject to the index holding itself above the previous day’s low. The NSE saw a huge volume of 100.10 crore shares, the highest since 27 February 2012, and the advance decline ratio of 850:597.
The market opened on a positive note following the government’s move, after the market closed on Friday, to approve foreign direct investment (FDI) in multi-brand retail, aviation and cable TV and DTH sectors. Markets in Asia, which were in the green in morning trade, also supported the gains in the local market.
The NSE Nifty opened 54 points higher at 5,632 and the BSE Sensex surged 156 points to start the day at 18,620. The market hit its intraday high in initial trade itself with the Nifty rising to 5,652 and the Sensex scaling 18,715. Capital goods, banking and realty stocks were in demand in early trade.
However, profit booking ahead of the Reserve Bank of India’s (RBI) policy review saw the benchmarks paring some of their gains. The market continued to drift lower despite the central bank cutting the cash reserve ratio (CRR) rate by 25 basis points to 4.5%. The reduction will lead to an infusion of Rs17,000 crore into the system.
Selling pressure in FMCG, IT and healthcare sectors pushed the market to the day’s low in noon trade. At the lows, the NSE Nifty fell to 5,586 and the BSE Sensex retracted to 18,481.
The indices were range-bound in post-noon trade as the key European markets opened lower on fresh concerns from Spain and Portugal as the two nations witnessed protests against spending cuts.
The government’s move to initiate economic reforms and the RBI’s CRR cut helped the market notch gains for the ninth day in a row. At the close, the Nifty gained 32 points (0.58%) to 5,610 and the Sensex climbed 78 points (0.42%) to settle at 18,542.
The broader indices outperformed the Sensex today. The BSE Mid-cap index surged 1.14% and the BSE Small-cap index climbed 1.13%.
Among the sectoral gauges, BSE Realty (up 6.21%); BSE Capital Goods (up 3.74%); BSE Bankex (up 3.24%); BSE Power (up 2.19%) and BSE Oil & Gas (up 1.95%) were the top performers. The losers were BSE Fast Moving Consumer Goods (down 3.66%); BSE IT (down 3.18%); BSE TECk (down 1.86%) and BSE Healthcare (down 1.81%).
Eighteen of the 30 stocks on the Sensex closed in the positive. The top gainers were Jindal Steel (up 5.99%); ICICI Bank (up 5.39%); State Bank of India (up 5.36%); Larsen & Toubro (up 4.35%) and BHEL (up 4.30%). The major losers were ITC (down 5.48%); TCS (down 5.03%); Dr Reddy’s Laboratories (down 4.30%); Hindustan Unilever (down 2.76%) and Infosys (down 2.67%).
The top two A Group gainers on the BSE were—Pantaloon Retail (up 19.04%) and HDIL (up 13.58%).
The top two A Group losers on the BSE were—Hexaware Technologies (down 5.94%) and IPCA Laboratories (down 5.60%).
The top two B Group gainers on the BSE were—NCC (up 21.04%) and Man Industries India (up 20%).
The top two B Group losers on the BSE were—JPT Securities (down 13.25%) and Rishiroop Rubber (down 11.53%).
Out of the 50 stocks listed on the Nifty, 29 stocks settled in the positive. The key gainers were Reliance Infrastructure (up 8.34%); IDFC (up 6.87%); DLF (up 6.76%); Bank of Baroda (up 6.65%) and Jaiprakash Associates (up 6.04%). ITC (down 5.57%); TCS (down 5.37%); Dr Reddy’s (down 4.03%); BPCL (down 3.30%) and Ranbaxy Laboratories (down 2.95%) were the main losers on the benchmark.
Markets in Asia closed mostly higher on the back of the recent moves by central banks across the world to boost growth. However, stocks in China settled lower after private data revealed a decline in home sales following the government’s restrictions.
The Hang Seng rose 0.14%; the Nikkei 225 surged 1.83%; the Straits Times gained 0.27% and the Taiwan Weighted climbed 0.31%. Among the losers, the Shanghai Composite tumbled 2.14%; the Jakarta Composite lost 0.04% and the Seoul Composite declined 0.26%.
At the time of writing, the key European indices were down between 0.20% and 0.57% and the US stock futures were trading with minor losses.
Back home, foreign institutional investors were net buyers of shares totalling Rs2,833.72 crore on Friday while domestic institutional investors were net sellers of stocks amounting to Rs688.80 crore.
Pharma major Wockhardt today said it has received approval from American health regulator to market Lansoprazole, a drug used in treatment of ulcers, in the US market. Lansoprazole is the generic name for the brand Prevacid, marketed in the United States by Takeda. The stock tanked 4.17% to close at Rs1,280 on the NSE.
Reliance Power today said its 4,000 MW Sasan ultra mega power project in Madhya Pradesh has been connected to the national grid. The project is now ready to draw power from the grid to provide start-up power for the first 660 MW unit which is nearing completion, the company said. Reliance Power jumped 6.35% to close at Rs87.10 on the NSE.
Tech Mahindra on Monday acquired 51% stake in Comviva Technologies for Rs260 crore. According to the agreement, Tech Mahindra will make an upfront payment of Rs125 crore towards the stake acquired and the balance Rs135 crore will be paid over a period of five years. Tech Mahindra declined 0.73% to close at Rs904 on the NSE.