Further rally in Nifty, Sensex to depend on global clues – Wednesday closing report
Nifty will remain bullish as long its stays above 7,780
We had mentioned in Tuesday’s closing report that the short Nifty, Sensex rally may have ended and that Nifty will turn bearish again, if it goes below 7,740. Due to optimism in global stock markets and improvement in the political situation in India, the major indices in the Indian stock markets closed in the green with gains of just over 1% over Tuesday’s close. However, the gains were with thin trades and low volumes. The trends of the major indices in the course of Wednesday’s trading are given in the table below:
Positive global cues, coupled with the government's efforts to build consensus on the bankruptcy bill, cheered the Indian equity markets on Wednesday. Initially, the bellwether indices of the Indian equity markets opened on a positive note in sync with their Asian peers. Besides Asian markets, Tuesday's rally in the US stocks after a key macro-economic data indicated healthy growth in the world's largest economy cheered investors in India. In addition, government's efforts to build a consensus to pass the crucial bankruptcy bill restored investors' confidence. Furthermore, the bill has been referred to a joint parliamentary committee which will iron out any differences on the legislation before the budget session which is slated for February.
Bankers and insurers in different parts of the nation are gearing up for a long weekend, beginning December 24. Between December 24 and 27, branches of government-owned banks and insurance companies would remain shut due to festivals and weekly closures. Owing to Milad-un-Nabi and Christmas, Thursday and Friday will be holidays. Second and fourth Saturdays of a month are holidays for government-owned banks while it is a five-day week for government-owned insurance companies. In this context, the stock markets are unlikely to be overbought till Monday.
The US dollar fell against most major currencies on investors' profit-taking and negative housing data from USA. Total existing home sales fell considerably 10.5% in November, the slowest pace in 19 months, according to the National Association of Realtors Tuesday. Meanwhile, the US Commerce Department announced on Tuesday that the "third" estimate of real gross domestic product (GDP) increased at an annual rate of 2.0% in the third quarter of 2015, slightly down from the second estimate of 2.1%. A weaker dollar is likely to favour the bulls in emerging markets like India.
The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minster Narendra Modi on Tuesday approved a Rs3,000 crore umbrella scheme for integrated development and management of fisheries. "The central sector scheme covers development and management of inland fisheries, aquaculture, marine fisheries including deep sea fishing, mariculture and all activities undertaken by the National Fisheries Development Board (NFDB)," said a cabinet communique. The scheme has six broad components: National Fisheries Development Board (NFDB) and its activities; development of inland fisheries and aquaculture; development of marine fisheries, infrastructure and post-harvest operations; strengthening of database and geographical information system of the fisheries sector; institutional arrangement for fisheries sector; and monitoring, control and surveillance (MCS) and other need-based interventions. The umbrella scheme also provides linkages and convergence with the shipping ministry's Sagarmala Project, the Mahatma Gandhi National Rural Employment Guarantee Scheme, the Rashtriya Krishi Vikas Yojana and the National Rural Livelihoods Mission. The government with favourable policy decisions is also encouraging the bulls in the stock markets.
The Cabinet Committee on Economic Affairs on Tuesday approved an investment of Rs5,000 crore to be made by public sector explorer ONGC into the equity share capital of its foreign arm ONGC Videsh. "The Cabinet Committee on Economic Affairs has given its approval for investment of Rs5,000 crore by Oil and Natural Gas Company Limited (ONGC) into the equity share capital of ONGC Videsh by conversion of existing loan of equivalent amount into equity," a cabinet communique said. The approved investment will strengthen the capital base of ONGC Videsh, the statement said. "It will enhance the ability of ONGC to undertake overseas exploration and production business, thereby improving the energy security of the country," it added. ONGC shares closed at Rs235.40, up 2.04% on the BSE.
Shares of Tata Steel gained 3% intraday on Wednesday after the company’s subsidiary entered fresh negotiations to sell long products division in Europe. The move will allow partial deleveraging of the balance sheet and enhance profitability. “Tata Steel UK, an indirect subsidiary company of Tata Steel Europe signed letter of intent with Greybull Capital to enter exclusive negotiations for the potential sale of its Long Products Europe business. The memorandum covers several UK-based assets including TS UK’s Scunthorpe steelworks, mills in Teesside and northern France, an engineering workshop in Workington, a design consultancy in York and associated distribution facilities,” a company statement said. Tata Steel shares closed at Rs263.70, up 2.53% on the BSE.
Shares of Sun Pharma continued to rally for a second day after it lost almost 7% on Monday following a warning letter by US Food and Drug Administration (FDA) on Halol manufacturing unit. The drug major rose on Wednesday after analysts found no serious compliance breach in the warning letter. On December 22, the USFDA made public the warning letter which states that inspection 483 mentioned 23 observations. Out of the 23 observations, 10 were related to the injectables facility, 4 were on the oral solids facility, 8 were related to quality control labs and 1 was on warehousing. In its letter, the drug regulator said that Sun Pharma failed to establish and follow appropriate written procedures and all lapses are examples of serious current good manufacturing practice (cGMP) violations. It also added that the company's responsibility to ensure third party audit includes full evaluation of systems, operations and procedures. Sun Pharma shares closed at Rs791.05, up 3.52% on the BSE.
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: