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Sensex, Nifty at record closing high; HDFC twins, TCS fall

14:00

The News International Team

03:30 pm Market closing

The market ends on another record high level. The Nifty ended at 7897.50, up 23.25 points while the Sensex was up 29.71 points at 26420.67. Both the benchmark indices were up for sixth day in row. M&M, Tata Motors, BHEL, Bajaj Auto and Dr Reddy’s Labs were top gainers in the Sensex. Among the losers were HDFC twins, TCS, Hindalco and Sun Pharma.

03:00pm Maruti hits all-time high

Shares of Maruti Suzuki hit a record high of Rs 2,750 on Tuesday, up over a percent after Deutsche Bank believes the fall in gasoline prices will be beneficial for the company.

The brokerage house maintains Maruti as its top pick in the Indian auto sector with a target price of Rs 3000 a share.

Gasoline prices in India have declined 4 percent since the beginning of FY15 after rising by 11 percent per annum during FY11-14. Deutsche believes this is a positive development for entry-level car (Alto/WagonR) demand as the buyers in this segment have been most impacted by high gasoline prices and elevated levels of inflation and interest rates over the past three years.

The entry-level market fell 10 percent, 13 percent and 6 percent during FY12, FY13 and FY14 and its volume share reduced from 32 percent to 23 percent of industry volumes.

According to the brokerage, Maruti will be the key beneficiary of a recovery in entry level cars as it has a 74 percent share in this segment compared to its overall marketshare of 42.1 percent.

02:45pm FII View

Neelkanth Mishra, Credit Suisse says the less than earlier feared impact on agricultural output may not help control inflation.

“We continue to believe rising labour costs are the root cause of food inflation. Spot power tariffs have increased partly due to the drop in hydro power output. This effect should fade post August, but can help September 2015 results for generators with high spot sales. We stay underweight PSU banks, industrials and metals,” he adds.

02:25pm Sesa Sterlite on buyers’ radar

Sesa Sterlite shares remained in demand as the Goa government decided to renew 27 mining leases after chief minister Manohar Parrikar informed the state assembly that the government will not oppose the high court order. The high court had earlier called for renewal of licences.

According to Parrikar, it is not the fault of lease-holders if the previous government failed to renew their mining leases. The Goa bench has ruled out the process of auctioning mining leases.

The 27 lease-holders have already paid stamp duty. Ritesh Shah of Espirito Santo believes the Goa government has been rather pro-active on mining, considering it has already collected stamp duty for 27 leases. “It is a positive thing and it is already there in the price,” Shah told CNBC-TV18.

The Goa bench has said that it will take a call on granting leases for remaining leases in three months. It added that renewed leaseholders can’t claim net proceeds of e-auction.

The bench also said that the Goa government can renew leases under the law. The renewal of leases is equivalent to grant of new leases and miners don’t need to approach the Supreme Court again.

Companies like Sesa Sterlite have gained a lot on the back of this order. Shah has a ‘Buy’ rating on the stock with a fair value of Rs 368, which is a 20 percent upside from current levels.

02:00pm The market continued to see buying interest with the benchmarks heading towards positive close for the sixth consecutive session today. The Sensex rose 62.92 points to 26453.88 while the Nifty gained 27.40 points at 7901.65.

The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising over a percent. About 1550 shares have advanced, 1245 shares declined, and 110 shares are unchanged.

Jyotivardhan Jaipuria of Bank of America Merrill Lynch says the market would be driven by reform newsflow rather than earnings growth in the near term. However, he expects a strong rebound in earnings from the second half of CY15. He thinks that the Sensex earnings per share growth may now aggregate 15 percent for the year, marginally lower than their current bottoms up number of 18.5 percent.

Shares of Tata Motors, Mahindra and Mahindra, Sesa Sterlite and Dr Reddy’s Labs topped the buying list, up 2-3 percent followed by ICICI Bank, Larsen and Toubro, ONGC, Axis Bank, Bajaj Auto, Maruti, Coal India, Hero Motocorp and BHEL with over a percent.

Oil marketing companies like HPCL, BPCL and IOC continued to trade with gains of almost 4 percent each due to Brent crude near 14-month lows and the Indian crude basket fell by more than USD 5 to USD 100.04 per barrel. Reports also suggest that the diesel under-recovery might get wiped out by September.

Global cues too remained positive today as Europe traded with more than 1 percent gains. FTSE rose for the fifth straight session ahead of July inflation data.

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