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Nifty above 8400, Sensex volatile; Maruti up 1%, LT gains


The News International Team

9:55 am Q3 earnings expectations: Brokerage house Morgan Stanley feels that inventory losses because of the steep fall in crude oil prices could distort the aggregate corporate earnings picture for the December quarter.

“In the ongoing quarter, several companies might suffer from inventory losses given the swing in oil and oil related commodity prices and hence headline numbers which get reported in January/February may be misleading,” says the brokerage in its note to clients.

“The earnings revisions breadth is still in the negative zone but consensus has lifted its 2-year forward earnings CAGR by about half a point (0.5 percentage point) over the past three months. The market may be more focused on guidance for the coming quarters which thus far has remained tepid,” the note says.

The brokerage expects a repeat of the volatility seen last month, in the current quarter.

9:45 am What to buy in 2015?  Some near term hiccups—especially on the reforms front—notwithstanding, India still stands out as a good investment destination for global investors, feels brokerage house Credit Suisse.

“In a world struggling for growth, India stands out. Even as reform expectations get tempered, particularly as constitutional amendments (e.g., GST) cannot be passed in joint sessions, and repeated promulgation of ordinances shows legislative difficulties, a low base and slower but structural changes help steady growth,” says the Credit Suisse note to clients.

“India’s better medium-term growth outlook for earnings economy should also support the broader market,” says the note.

The brokerage has rated Gujarat Pipavav, Havells, HCL Technologies, HDFC Bank, Kajaria Ceramics, Maruti, Shriram Transport Finance and Sun Pharma as its top picks.

9:30 am Upgrade: Shares of Larsen & Toubro jumped 2 percent intraday after Citi upgraded it to buy from neutral rating. The brokerage has also increased its target price to Rs 1849 per share on strong order inflow doubling from last year’s level to USD 75 bn.

It also adds that a domestic rebound is already apparent in strong Q2 inflows, driven by domestic wins (83 percent of wins). “L&T won Rs 732 bn of orders in first half, up 14 percent year-on-year. It needs R s792bn of orders in second half to meet its over 20 percent guidance,” it says in note.

Citi also feels that L&T’s preparedness to exploit the evolving India defence opportunity; and the stock’s 20 percent underperformance versus the BSE Sensex over the past six months will drive it.

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The market has opened with gains. The Sensex is up 92.99 points at 27980.89 and the Nifty is up 25.25 points at 8420.70. About 800 shares have advanced, 181 shares declined, and 622 shares are unchanged.

L&T, Tata Power, Tata Steel, Maruti and Sesa are top gainers in the Sensex. Coal India, HDFC Bank, Dr Reddy’s Labs, ONGC and GAIL are among thle laggards.

The Indian rupee slipped in the early trade. It has opened lower by 14 paise at 63.43 per dollar versus 63.29 Friday.

The euro fell to its lowest since June 2010, after Draghi told the German financial newspaper that the ECB was less likely to preserve price stability than it was six months ago, suggesting it was ready to take bolder steps on monetary stimulus early this year.

NS Venkatesh of IDBI Bank said, “The rupee is expected to take cues from external factors. The strengthening dollar will put pressure on the Indian Rupee. We expect it to trade between a range of 63.20-63.40/dollar.”

Asian markets re-opened on a weak note this morning with the Nikkei losing more than a 1 percent as yen gains some strength. Japanese markets have been shut since last Wednesday for the holiday season Kospi dropped to a one-month low as losses in blue-chips weighed on the bourse. Posco lost 3 percent while Samsung Electronics which has the heaviest weighing on the Kospi losing more than 1 percent

The Taiwanese Index as well has lost more than half a percent this morning.

In commodities, Nymex crude futures extended declines to a third day to stay near their lowest level in more than five years, hurt by a slew of weak economic data. From precious metals space, gold trades around USD 1190 as dollar continues to show strength.


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