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Sensex Nifty hold gains, China falls; infra oil support

13:00

The News International Team

1:50 pm Outlook: Geoff Lewis, JPMorgan AMC sees huge inflow of foreign money into Indian equities in the coming days, despite headwinds like appreciating dollar and the trickle down impact of weak commodity prices. Lewis says India will not face the wrath of global liuidity crunch primarily due to the domestic economics (that is on the mend) and a take off in US economy.

The next event is ECB meet where analysts expects Mario Draghi to announce a QE package that will stem the fall of eurozone prices. Lewis however feels that Draghi won’t announce an aggressive QE scheme. Most analysts fear that if the size of QE is not sizeable, then eurozone may enter a deflationary spiral from which it would be tough to wriggle out.

1:30 pm Downgrade: Bank of America Merrill Lynch has downgraded Bharat Electronics (BEL) to underperform from buy after it saw a sharp 48 percent outperformance versus its peers in the last three months. The brokerage’s target price at Rs 2720 per share remains unchanged. “We now expect BEL to underperform as investors look beyond the 23 percent FY14-17E order CAGR toward earnings growth, which should be subdued, at a 9.5 percent CAGR in FY15-17E. Our FY17 estimates are 7 percent below consensus,” it says in a report.

BEL has been enjoying investors’ favouritism as defence remained a key focus area under the new government led by Narendra Modi. The company has bagged orders worth Rs 11300 crore since November 2014 and BoA ML expects approval for a further Rs 4200 crore in 1H15.

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The market is still holding gains as the Sensex is up 164.17 points or 0.6 percent at 28286.06. The Nifty is up 42.20 points at 8556.00. About 1673 shares have advanced, 1108 shares declined, and 284 shares are unchanged.

Capital goods and oil & gas stocks are lending major support to the indices. Wipro remains to be the top gainer in the Sensex while GAIL, Axis Bank, BHEL and Bharti Airtel are other gainers. On the losing side are HUL, Hero, TCS, HDFC and Infosys.

China stocks suffered their biggest one-day percentage drop in more than six and a half years, dragged down by record tumbles in financial stocks as authorities battled excessive market speculation.

Regulators cracked down on margin trading, which has been blamed for fuelling a wave of speculation over the past three months. Bank stocks were hit after the banking regulator issued draft rules to tighten supervision of entrusted loans, a kind of shadow banking. The banks sub-index plummeted 9.97 percent and the financial sub-index sank 9.62 percent.

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