If the Nifty breaks the level of 5,775, it may head sharply down
The market closed near the lows of the day on concerns that quarterly earnings from corporates would come in below expectations. If the Nifty breaks the level of 5,775, it may head sharply down. The National Stock Exchange (NSE) recorded a volume of 51.42 crore shares and advance-decline ratio of 577:740.
The Indian market opened in the positive on supportive global cues. Most markets in Asia were higher in morning trade, but weak trade data from China capped the gains. The US markets closed in the green on Tuesday in anticipation of better earnings reports from corporates.
The Nifty opened 11 points up at 5,870 and the Sensex started the day at 19,483, a gain of 44 points over its previous close. Buying in consumer durables, realty, banking and power sectors soon lifted the indices to their day’s highs. The Nifty touched 5,879 and the Sensex rose to 19,506 at their respective highs.
Meanwhile, the International Monetary Fund (IMF) on Tuesday marginally scaled down India's growth rate projections to 5.6% for the current fiscal and 6.3% for the next financial year. This was slightly lower by 0.2% and 0.1%, respectively, than the previous forecast released by the IMF in its report in April.
Profit taking in metal, auto, refinery and realty sectors amid choppy trade saw the indices paring their gains and remaining range-bound near their previous closing levels in morning trade.
Sporadic buying saw the indices emerge in the positive terrain in noon trade. However, the gains were short-lived as the market slipped into the red in the post-noon session on pressure from oil & gas and auto stocks and concerns about first quarter earnings from corporates.
The benchmarks touched their lows at around 2.30pm with the Nifty falling to 5,803 and the Sensex slipping to 19,238. The market settled near the lows as the key European indices pared opening gains and selling in oil & gas, realty and auto sectors.
The Nifty settled 42 points (0.72%) lower at 5,817 and the Sensex ended at 19,294, down 145 points (0.75%).
The broader indices also settled lower today, as the BSE Mid-cap index declined 0.40% and the BSE Small-cap index slipped 0.04%.
BSE Consumer Durables (up 1.95%); BSE IT (up 0.66%); BSE TECk (up 0.27%) and BSE Healthcare (up 0.11%) were the sectoral gainers today. The top losers were BSE Oil & Gas (down 1.82%); BSE Auto (down 1.50%); BSE Realty (down 1.32%); BSE PSU (down 1.02%) and BSE Capital Goods (down 0.98%).
Out of the 30 stocks on the Sensex, eight stocks settled higher. The gainers were Wipro (up 1.33%); Tata Power (up 0.88%); Jindal Steel & Power (up 0.74%); TCS (up 0.60%) and ICICI Bank (up 0.34%). The main losers were Mahindra & Mahindra (down 2.63%); Hindalco Industries (down 2.58%); Bajaj Auto (down 2.13%); Tata Steel (down 1.97%) and Reliance Industries (down 1.95%).
The top two A Group gainers on the BSE were—Emami (up 5.49%) and Wockhardt (up 5.12%).
The top two A Group losers on the BSE were— Strides Arcolab (down 8.09%) and GlaxoSmithKline Consumer Healthcare (down 5.19%).
The top two B Group gainers on the BSE were—Dolat Investments (up 20%) and Asian Hotels West (up 19.94%)
The top two B Group losers on the BSE were—Agro Dutch Industries (down 18.85%) and Sancia Global Projects (down 18.69%).
Of the 50 stocks on the Nifty, 13 ended in the in the green. The major gainers were Lupin (up 2.87%); HCL Technologies (up 2.28%); UltraTech Cement Co (up 1.64%); NMDC (up 1.26%) and Tata Power (up 1.23%. The key losers were Hindalco Ind (down 3.12%); BPCL (down 3.07%); Bank of Baroda (down 3.05%); M&M (down 2.79%) and Cairn India (down 2.46%).
Markets across Asia, with the exception of Japan and South Korea, closed higher on speculations that the Chinese government might announce some new measures to boost growth on the back of falling exports. Chinese exports fell 3.1% in June from a year earlier, the first decline since January 2012. Meanwhile, imports also were 0.7% lower, lower than expectations for an 8% gain.
The Shanghai Composite jumped 2.17%; the Hang Seng surged 1.07%; the Jakarta Composite climbed 1.70%; the KLSE Composite rose 0.13%; the Straits Times gained 0.30% and the Taiwan Weighted advanced 0.51%. Among the losers, the Nikkei 225 declined 0.39% and the Seoul Composite lost 0.34%.
At the time of writing, the key European markets were down between 0.27% and .56% and the US stock futures were marginally in the red ahead of the minutes of the release of the FOMC June meeting.
Back home, institutional investors—foreign as well as domestic—were net buyers in the equities segment on Tuesday. While FIIs bought shares totalling Rs165.61 crore, DIIs invested Rs37.83 crore.
The indefinite strike by employees of Neyveli Lignite Corporation (NLC) against the Centre's move to divest 5% of its stake in the PSU entered the eighth day today. About 30,000 workers, including 13,000 contract employees, are on the strike since July demanding that the government withdraw its decision to sell its stake as part of disinvestment process. The stock rose 0.17% to Rs58.65 on the NSE.
Sterlite Technologies has entered into a 50:50 joint venture agreement with Conduspar Condutores Eletricos Limitada (Conduspar), to build a greenfield facility in Curitiba in Parana state (Brazil) to produce optical fibre cables for the Latin American markets. The joint venture is expected to start commercial production by the first quarter of fiscal 2015. Sterlite Tech gained 4.29% to settle at Rs23.10 on the NSE.
Tide Water Oil Co (India), now the owner of global rights for the lube brand Veedol, has set up subsidiary in the Netherlands—Veedol International BV—to re-launch the branded products in Europe. Tide Water, which earlier only had the rights to the iconic brand for India, acquired Veedol International, UK, from BP Plc in October 2011 along with the brand rights, its logos and sub brands in 126 countries. The stock gained 0.92% to close at Rs7,220 on the NSE.
Nomura is positive on RIL and Cairn. Among oil PSUs, it believes that upstream PSUs are vulnerable to higher subsidy share
With a sharp decline in oil prices and continued monthly diesel price hikes, Nomura Equity Research estimates first quarter (1Q) under-recoveries (U/Rs) to decline 27% q-o-q at Rs263 billion. While upstream companies are demanding a lower subsidy share (currently billing at same $56 per barrel as last year), the brokerage believes it is unlikely a decision will be made soon. This may lead to a sharp decline in net realisations for ONGC and Oil India (OIL).
Nomura estimates nearly flat gas transmission volumes for GAIL & GSPL. It expects Petronet LNG’s (PLNG) utilisation to improve sequentially to near 100%, but well below earlier highs of 110%-114%. For Indraprastha Gas (IGL), volume growth is likely to recover but EBITDA/scm could moderate due to an increasing share of LNG and weaker currency. The brokerage expects Gujarat Gas (GGAS) to report good results, as it should benefit from price hikes and softer LNG prices, believes Nomura.
Nomura estimates Reliance Industries’ (RIL) PAT at Rs52.2 billion (up 18% y-o-y, but down 7% q-o-q), with the sequential decline driven by weaker refining margin ($8.5/bbl, down 16% q-o-q) and a further decline in E&P EBIT. For Cairn India, the brokerage estimates a 9% q-o-q drop in EBITDA due to lower oil realisation, but the bottomline would likely be boosted by forex gains.