11:55 am FII view: As a global investor, Geoff Dennis of UBS will be focusing on fiscal deficit and whether it can be reigned within 3.5-4 percent of GDP, structural reforms once again focusing on the fiscal side and significant increases in infrastructure spending.
“What’s important is the trajectory of fiscal deficit and whether it is coming down… As long as it is lower than 4 percent of GDP, the market will not be too worried,” he told CNBC-TV18.
Despite high valuations, Dennis remains overweight on India. He believes valuations should be high as he expects earnings growth to be 15-16 percent in dollar terms in two years. He says earnings growth continues to remain a challenge for many emerging markets, further justifying the high valuations in India.
11:45 am Buzzing: Shares of Aurobindo Pharma gained 3 percent intraday as Bank of America Merrill Lynch (BoAML) reiterated its buy rating on the stock. The brokerage house sees 38 percent upside potential from current price level.
Aurobindo corrected 20 percent over the past few days due to weak Q3FY15 operational performance. Operational performance was hit due to one-off expenses such as mark-to-market losses on inventory and one-time penalty for non-supply of products.
The brokerage believes the drug maker has multiple levers of growth such as strong US pipeline, turnaround of WE business and positive contribution of Natrol acquisition. Hence, it sees the current weakness in the stock as a particularly good buying opportunity.
11:30 am Interview: RG Rajan, CMD of RCF says gas prices will go up by USD 2-3/mmBtu post gas-pooling. The USD 4.2 per million British thermal unit price of domestic gas is about one-third of cost of LNG. The cost of gas, which is the most important component for production of urea, varies from plant to plant owing to differential rates at which imported LNG is contracted as well as cost of transportation.
The proposal moved for inter-ministerial consultations, before being put up to the Cabinet Committee on Economic Affairs (CCEA), calls for averaging of different rates of domestic and imported gas to ensure supply of fuel to all urea plants at a uniform delivery cost, sources said.
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The market is still under pressure as the Sensex is down 199.41 points or 0.6 percent at 29262.86 and the Nifty is down 54.90 points or 0.6 percent at 8840.40. About 1251 shares have advanced, 1022 shares declined, and 176 shares are unchanged.
BHEL, Hindalco, Dr Reddy’s Labs, Tata Steel and SBI are top gainers in the Sensex. Among the losers are Reliance, ICICI Bank, HDFC, Wipro and Tata Power.
Globally, Asia is mixed with Nikkei at a fresh 15-year high. However caution prevails on Greece and whether it will apply for an extension of its bailout programme before the Friday deadline.