Nifty will trend up if it stays above 7,685
We had mentioned in Tuesday’s closing report that Nifty, Sensex were headed lower and that Nifty might move down towards 7,550. However, the major indices in the Indian stock markets rallied and made healthy gains to close more than 1.75% higher than Tuesday’s close. The trends of the major indices in Wednesday’s trading are given in the table below:
Short-covering ahead of derivatives expiry, coupled with lessened chances of a US rate hike and a recent economic reform buoyed the Indian equity markets on Wednesday. The BSE market breadth favoured the bulls - with 1,724 advances and 694 declines. Initially, both the key indices of the Indian equity markets opened on a positive note, in-sync with their Asian peers, especially the Chinese indices and a firm close of the US exchanges on Tuesday. Market observers cited that short-covering ahead of the derivatives expiry and increased chances of a rate cut by the Reserve Bank of India (RBI) supported share prices. Investors expect the RBI to cut key lending rates on the back of the union budget's fiscal prudence measures, reduction in small savings interest rates and low inflation. The RBI will conduct its first bi-monthly monetary policy review for 2016-17 on April 5. In addition, Tuesday's economic reform measure to allow 100% foreign capital in e-commerce with some riders cheered investors. The move is expected to benefit not just foreign multi-brand retail entities like Amazon and e-Bay, but also single-brand overseas chains like Adidas, Ikea and Nike.
Besides, dovish comments from the US Federal Reserve chairman Janet Yellen on Tuesday indicated lessened chances of a US rate hike. A hike in the US interest rates is expected to have led away Foreign Portfolio Investors (FPIs) from emerging markets such as India. Further, an appreciating rupee boosted investors' sentiments. The rupee opened the day's trade at 66.49 to a US dollar from its previous close of 66.54 to a greenback. Bank Nifty has been trading sharply higher after Vijay Mallya of Kingfisher Airlines submitted a repayment plan of Rs4,000 crore to the Supreme Court.
Having suffered nearly $3 billion in losses on its UK operations, Tata Steel is exploring to put its entire portfolio there up for sale, some 10 years after it forayed into Europe by acquiring Anglo-Dutch Corus for over $8.1 billion). The decision comes less than a week after Tata Steel UK said it has reached an agreement to sell its Clydebridge and Dalzell steel facilities in Scotland to the local government, which will, in turn, hive it off to Liberty House, an international steel and non-ferrous metals group. "The Tata Steel board today reviewed the recent performance of the European business of the, more specifically of Tata Steel UK. It noted with deep concern the deteriorating financial performance of the UK subsidiary in the last 12 months," a company statement said. "Following the strategic view taken by the Tata Steel Board regarding the UK business, it has advised the board of its European holding company, Tata Steel Europe, to explore all options for portfolio restructuring including potential divestment of Tata Steel UK, in whole or in parts." The company said while the global steel demand, especially in developed markets like Europe, has remained muted following the financial crisis of 2008, trading conditions in the UK and Europe have rapidly deteriorated more recently. "These factors are likely to continue into the future and have significantly impacted on the long term competitive position of the UK operations in spite of several initiatives undertaken by the management and the workers of the business in recent years," it said. "Even under these adverse market conditions, Tata Steel group has extended substantial financial support to the UK business and suffered asset impairment of more than £2 billion in the last five years," it said. "Given the severity of the funding requirement in the foreseeable future, the Tata Steel Europe board will be advised to evaluate and implement the most feasible option in time bound manner." Tata Steel shares closed at Rs324.40, up 6.75% on the BSE.
Biopharmaceutical company AstraZeneca will increase the headcount in its global technology centre (GTC) here while it is on the lookout for acquisitions of information technology (IT) companies in the drug development space, said a senior official on Wednesday. He said the company is focusing on in-housing of IT related activities to bring down its spend on IT to around $600 million in a couple of years from the current $900 million. "We will be increasing the headcount at our global technology centre to over 2,000 by the end of this year from the current strength of around 1,500," David Smoley, chief information officer-information services, told reporters here on Wednesday. "More than 50% of AstraZeneca's IT workforce will be located in Chennai," he added. According to him, the overall IT strategy of AstraZeneca is to in-source IT activities to cut costs by carrying out the work largely at the company's centre here and also in other locations. The massive $400 million cost savings in the company's IT spend happened by switching the strategy in favour of in-housing or in-sourcing from outsourcing and reducing the number of IT applications. Astrazeneca Pharma India shares closed at Rs1,145.00, up 1.19% on the BSE.
Commercial vehicle major Ashok Leyland Ltd on Tuesday said it has received a Rs800 crore order from the Indian Army for supply of various vehicles. In a statement issued here, the company said it would supply advanced-technology products - 450 units of field artillery tractors 6x6 and other similar Super Stallion vehicles and 825 units of ambulance 4x4 wheel drive. The field artillery tractor 6x6 on Super Stallion platform will function as a common gun tower for all artillery guns. The vehicle can be used for a variety of applications across logistics and tactical segments. "The orders for Field Artillery Tractor (FAT) 6x6 and Ambulance 4x4 are in keeping with the momentum witnessed recently in the area of upgradation of technology and resources by the defence forces," the statement quoted managing director Vinod K Dasari as saying. Ashok Leyland shares closed at Rs108.10, up 1.36% on the BSE.
US stocks posted solid gains on Tuesday, as investors digested the dovish comments from US Federal Reserve Chair Janet Yellen. The Dow Jones Industrial Average added 97.72 points, or 0.56%, to 17,633.11. The S&P 500 gained 17.96 points, or 0.88%, to 2,055.01. The Nasdaq Composite Index jumped 79.84 points, or 1.67%, to 4,846.62, according to Xinhua. Speaking at the Economic Club of New York, Yellen reiterated on Tuesday that only gradual increases in the federal funds rate are likely to be warranted in coming years, and global developments have increased the risks associated with the Fed's economic outlook. Although the baseline outlook has changed little on balance since December, global developments pose ongoing risks. These risks appear to have contributed to the financial market volatility witnessed both last summer and in recent months, said Yellen. "Given the risks to the outlook, I consider it appropriate for the FOMC to proceed cautiously in adjusting policy," she said. Federal Open Market Committee (FOMC) is the policy-making panel of the Fed, the US central bank.
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: