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Sensex Nifty fall 1%, midcap slips 3%; Bharti, ITC shine

14:00

The News International Team
Live Market Commentary

02:55pm Market Check

The market fell more than a percent weighed down oil & gas, banks, capital goods, power and metals stocks. The Sensex tumbled 284.07 points to 26532.49 and the Nifty lost 94.90 points to 7947.10.

About 780 shares have advanced, 2158 shares declined, and 110 shares are unchanged. The BSE Midcap and Smallcap indices crashed 3-3.5 percent.

Tata Power topped the selling list, falling more than 6 percent followed by Reliance Industries, Tata Motors, ONGC, State Bank of India, Axis Bank, Tata Steel, NTPC and Gail India with 2-3 percent.

Shares of L&T, HDFC Bank, HDFC, ICICI Bank, Cipla, Maruti, Coal India, Bajaj Auto, Hindalco Industries and BHEL declined 1-1.8 percent.

02:50pm Lupin In focus

Lupin said it has entered into a long term strategic partnership with Merck Serono, the  biopharmaceutical division of Merck. Lupin will support Merck Serono in the
implementation of the company’s general medicines portfolio expansion initiative in  emerging markets thus addressing local needs for affordable, high quality medicines, it added.

The agreement builds on an established working relationship between the two companies, and could add up to 20 new products to the current portfolio. The first launches are expected in 2016. 
 
02:40pm Marico at record high

Shares of Marico hit a new high of Rs 300 after Credit Suisse increased target price and earnings forecast.

The brokerage maintains outperform rating on the stock saying it is the top pick among FMCG midcaps. It raised target price to Rs 350 apiece and earnings estimates by 2-3 percent.

“The near-term trigger for earnings upgrades will be a correction in copra prices over the next 6-12 months. The company is also structurally shifting its portfolio towards value-added products,” it reasoned.

Copra prices have moved up sharply by 150 percent over the past 18 months. Credit Suisse expects copra prices to correct from February 2015, and Marico to witness strong gross margin tailwinds in April-September period of FY16 which is not built in estimates.

02:30pm Midcap, Smallcap performance

In the midcap space, Cox & Kings shot up 12 percent amid fall in markets. CARE, Triveni Turbine, Gujarat Flourochem and Bhushan Steel gained 3-4.5 percent while GMR Infra, Delta Corp, Chennai Petroleum, GSFC and Amtek India lost 7-9 percent.

Among smallcaps, Mastek extended gains for the second consecutive session, up another 15 percent (in addition to 15 percent rally in previous session) after the company decided to demerge insurance products and services business into a separate listed company.

Visagar Polytex, Spice Mobility, Rain Industries and Sharda Motor spiked 6-10 percent whereas Venus Remedies tanked 19 percent after Crisil downgraded the company’s long-term rating to D from BB+ due to to delay in repayment of term loan.

BS Limited, Himadri Chemical, Genus Power and HFCL were down 12-14 percent.

02:20pm Interview

NCC is planning a Rs 600 crore (Rs 598.7 crore to be precise) rights issue, allotting 29.93 crore shares at Rs 20 per share. It will issue 7 shares issued on rights basis for every 6 shares held. The company’s board has approved raising upto Rs 650 crore in April 2014.

YD Murthy, executive vice president of finance at NCC says the rights issue will most likely open on September 29, and close on October 7.

The funds raised from the company’s proposed rights issue will be used to repay its short-term debts, de-stress the balance sheet, raise the company’s ratings that can in turn help lower finance cost, says Murthy. At the moment, the company is working with Crisil for its ratings.

NCC has a consolidated debt of Rs 3700 crore. Its debt has been increasing due to an increase in working capital. Murthy says the rights issue will help lower working capital concerns. He adds that post the rights issue, the company’s net worth will go up to Rs 3000 crore and debt will come down to Rs 2000 crore from Rs 2,600 crore on a standalone basis. He expects to see debt reduction by this October end or November.

02:10pm Elections

BJP suffered a jolt in Rajasthan winning just one of the four seats and was losing ground in Uttar Pradesh where Samajwadi Party (SP) was ahead during counting of votes in the bypolls today exactly four months after it swept the two states in Lok Sabha elections.

In Gujarat, ruling BJP could retain only six of the nine seats while Congress bagged two and was ahead in one. All the nine seats were earlier held by BJP and were vacated after their sitting MLAs were elected as MPs.

The BJP, however, had a reason to smile in West Bengal where it made its debut in the state assembly on its own by winning the Basirhat Dakshin seat. The bypolls for 33 seats spread over 10 states were held on September 13.

02:00pm Equity benchmarks extended losses ahead of FOMC two-day meet that will begin today. Investors will closely watch the outcome of this meeting as they expect some hint about interest rate hike.

The Sensex dropped 207.66 points to 26608.90 and the Nifty fell 73.25 points to 7968.75 while the BSE Midcap tumbled close to 3 percent and Smallcap plunged 3.2 percent.

About three shares declined for every share advancing on the Bombay Stock Exchange.

Despite the slip in the Nifty and the Sensex, Mehraboon Irani of Nirmal Bang Securities does not think it is going to be a deep correction.

He with the US Federal Reserve meet round the corner, markets tend to become volatile. But he does not see the Fed hiking rates anytime soon. “It is going to be many quarters away according to me,” he told CNBC-TV18.

He believes the next positive triggers for the market will be the state elections, divestment dues and the gas price hike.

Bharti Airtel and Dr Reddy’s Labs bucked the trend, up over a percent followed by ITC, Infosys, TCS, Sun Pharma and Hero Motocorp with 0.3-0.6 percent.

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