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Sensex, Midcap trade higher; Cipla, Glenmark, Lupin jump

10:00

The News International Team

10:58am Market Update

The market continued to trade higher with the Sensex rising 63.96 points to 28869.06 and the Nifty climbing 25 points to 8736.55.

About 1308 shares have advanced, 943 shares declined, and 184 shares are unchanged on the BSE.

10:30am Expert on Earnings

Aggregate earnings of Sensex companies for FY16 is likely to see a downgrade, says Rajat Rajgarhia, MD – Institutional Equities, Motilal Oswal Securities.

On the positive side, earnings growth for next year could be in excess of 15 percent, says Rajgarhia in interview to CNBC-TV18 on the sidelines of the Make in India conference hosted by Motilal Oswal.

He does not see any earnings recovery for the next couple of quarters, and sees FY15 earnings growing 5 percent against 10-11 percent estimated earlier.

At the broader level, earnings in the December quarter are down 3-5 percent, he says.

Rajgarhia is hopeful that the ‘Make in India’ theme will instill confidence in Indian companies. He sees state playing an important role in the success of this project.

10:00am Market Check

The market remained higher for the fourth consecutive session today. The Sensex rose 106.78 points to 28911.88 and the Nifty climbed 42.25 points to 8753.80 led by metals, IT, auto, FMCG and select banks stocks.

The broader markets continued to outperform with the BSE Midcap and Smallcap indices rising 0.65 percent each. About 1251 shares have advanced, 723 shares declined, and 164 shares are unchanged.
 
While Kunj Bansal of Centrum Wealth Management expects overall positivity to remain in the market, he expects the upcoming Budget to be light. Therefore, in case the Budget is light because the government has already announced a lot of policy measures through the ordinance route. Then the market could be some correction post the event.

Cipla gained 2.5 percent despite Q3 numbers missed estimates and cutting FY15 growth guidance. Brokerages are positive on FY16 prospects of the company. Exports are expected to pick from Cipla supplying Nexium formulations to Teva with profits to start reflecting from Q1FY16. Bank of America Merrill Lynch retains buy rating on Cipla and expects 18 percent CAGR in sales and 200 basis points EBITDA expansion over FT15-17.

Similarly, Glenmark rallied nearly 4 percent as Q3 adjusted operating profit margin was around 21 percent after adjusting for the forex loss the company reported due to the ruble depreciation. The company in its conference call indicated the guidance is maintained as it is in constant currency terms and it expects US approvals to pick up now on.

BHEL slipped 3 percent after reporting disappointing numbers. JP Morgan maintains underweight rating on the stock with target price of Rs 200 per share and cut cut FT15 and FY16 EPS estimates by 27 percent and 13 percent while Credit Suisse maintains underperform with a target price of Rs 200/share as current valuation at 20 times FY17e EPS is expensive.

Lupin rose 4 percent as the RBI says FIIs can now invest up to 49 percent in company. As of December 2014 FIIs held 31.77 percent in the company.

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