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Sensex falls for 3rd day; IT pharma drag; oil, banks gain

16:40

The News International Team

Equity benchmarks saw consolidation on Wednesday after a percent fall in previous session. Technology and healthcare stocks hit hard while banks, oil & gas and capital goods stocks supported the market.

The 30-share BSE Sensex fell 25.18 points to 26246.79 and the 50-share NSE Nifty dropped below 7850 level, down 9.70 points to close at 7842.70, continuing decline for the third consecutive session weighed down slightly by weak global cues. Asian peers (barring Shanghai that hit 18-month peak) closed lower while European markets were down around 0.5 percent (at 16 hours IST).

Overall it was a directionless trade due to lack of triggers. The near term triggers for the market would be July-September quarter earnings that will start on Friday with Infosys and August industrial output data on Friday evening.

Though there has been profit booking from last two weeks, experts are not worried about this southward move.

Adrian Mowat, Chief Asian & Emerging Equity Strategist, JPMorgan says India looks extremely favourable moving in FY15, and believes it would be an outperformer in FY16.

According to him, the new government has done a lot of good things at an executive level and the brokerage is particularly excited about the proposal of managing food inflation.

Structurally, he is bearish on crude oil but thinks low crude oil prices would bode well for India per se.

Brent crude fell below USD 91 a barrel intraday on global growth and oil glut concerns. It was trading at 91.21 a barrel, down USD 0.9. Experts believe this may help oil marketing companies to improve profitability and this may reduce subsidy sharing burden on oil and gas explorers.

BPCL, HPCL and IOC surged 4-7 percent while ONGC gained 2.3 percent. Reliance Industries was up over a percent.

Engineering and construction major Larsen and Toubro was up 2 percent after its subsidiary L&T Technology Services announced the intent to acquire the assets of US-based Dell Product and Process Innovation Services (formerly eServ), the engineering services division of Dell.

Top lender State Bank of India rose 1.8 percent after brokerage house CLSA said it is the top pick among PSU banks given its strong deposit franchise, well capitalised balance sheet and focus on profitability. The brokerage maintains buy on the stock with a target price of Rs 3,160.

Tata Steel topped the buying list, up 3.5 percent followed by ICICI Bank, ITC, HDFC Bank, Tata Motors, Axis Bank, NTPC, M&M, BHEL and Tata Power with 0.7-2 percent.

However, the BSE IT and Healthcare indices plunged over 2 percent. In the technology space, Infosys, Tech Mahindra and Mindtree were down 4-5 percent after Citi downgraded Infosys to neutral with a target price of Rs 4,065 , and downgraded Tech Mahindra and Mindtree to sell with a target price of Rs 1,060 and Rs 2,375, respectively.

Wipro was down 4 percent and TCS declined 1.9 percent.

Pharma stocks were under pressure after the US Congress began investigation into price hikes of 10 select generic drugs involving players like Sun Pharma (stock down 4.3 percent), Dr Reddy’s Labs (down 4.4 percent) and Cadila Healthcare (down 0.14 percent). Ranbaxy Labs declined 3.8 percent and Cipla was down 2.5 percent.

In the broader space, fertiliser stocks like Rashtriya Chemicals and Fertilisers, National Fertilizers and Fertilisers and Chemicals Travancore (FACT) gained 2-5 percent after a CNBC Awaaz report indicated that the government notified new urea investment policy. Under this notification, the companies will get a subsidy only if the production starts in the next five years.

About 1348 shares advanced while 1561 shares declined on the Bombay Stock Exchange.

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