The News International Team
11:55 am Market outlook: The big challenge for the market near term is the weakness in corporate earnings, says Sandeep Bhatia, ED & Head of Sales, Kotak Institutional Equities. In an interview with CNBC-TV18, Bhatia says market correction near term will be driven by concerns over earnings growth and not so much by election results. He expects a pre-Budget rally, but does not se the market giving more than 10-12 percent returns over the next couple of quarters. Bhatia is not expecting any major tax incentives from the government in this Budget, given the weak fiscal situation. He says the government needs to do something quickly to stimulate growth as the capex cycle is still showing no signs of recovery.
11:40 am Budget expectations: Mahesh Nandurkar, CLSA says opinion polls suggest that the upcoming elections in Delhi might throw a negative surprise for Narendra Modi.
“If that happens, it will be a small negative for the market, though we do not believe that one small election loss will impact Mr Modi’s policy making,” he adds.
He says CLSA believes the upcoming Budget will give a boost to infrastructure spending and yet drive fiscal consolidation. The brokerage also believes that the translation of improving macro into better corporate results is a matter of time and a potential near-term weakness will be a buying opportunity.
11:30 am Result analysis: CLSA maintains sell rating on GAIL with a reduced target of Rs 360 per share as further inventory writedown, consensus EPS downgrades and falling crude remain key risks even as lack of improvement in gas transmission limits triggers.
The brokerage has also trimmed FY15-17 EPS by 2-7 percent . “We see limited chances of recovery in its core gas transmission business where utilisation is sub- 50 percent. Rebound in domestic gas production and LNG regasification capacity expansions are at least two years away. A turnaround in this business will be crucial for Gail to sustain its high valuations,” it says in a note.
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Markets continue their streak of profit booking today with sentiment weighed down as exit polls have indicated an Aam Aadmi Party win in Delhi which if it does come through would mean the first election defeat for the BJP government after coming into power in May 2014.
The Sensex is down 354.08 points or 1.2 percent at 28363.83 and the Nifty slips 104.40 points or 1.2 percent at 8556.65. About 792 shares have advanced, 1528 shares declined, and 201 shares are unchanged.
Bajaj Auto, Sun Pharma, ONGC, Hindalco and Infosys are top gainers in the Sensex. Among the losers are Tata Steel, GAIL, Bharti Airtel, Tata Power and M&M.
Globally, Asia is mostly lower taking lead from the US close and weak Chinese trade data impacting sentiment. Chinese data released on Sunday showed exports fell 3.3 percent Y-o-Y while imports fell 19.9 percent Y-o-Y.