The News International Team
It was another day of red on Monday with the Sensex closing below 28500-level, dragged by heavyweights. However, banks and technology supported the market. The broader markets too were under pressure.
The 30-share BSE Sensex fell 65.59 points to 28437.71 and the 50-share NSE Nifty declined 14.60 points to 8633.15. The BSE Midcap and Smallcap indices were down 0.3 percent and 0.9 percent, respectively as nearly two shares declined for every share rising on the Bombay Stock Exchange.
Saurabh Mukherjea of Ambit Capital says the bullishness in the market is abating and there is a great deal of unwarranted optimism now.
He expects a pullback in Sensex earnings in FY15 and FY16. Therefore, he says the Sensex target will be slashed from 36000 to 34000.
Meanwhile, WPI inflation fell sharply to all-time low at negative 2.06 percent in February against negative 0.39 percent in previous month. A sharp fall in manufacturing goods inflation (to 0.33 percent vs 1.05 percent M-o-M) triggered growth concerns. Experts believe that despite sharp fall in WPI, a rising CPI may keep RBI wary of rate cuts.
Siddharth Sanyal, chief India economist at Barclays, said that while he expects CPI inflation too to trend lower during the first half of the year, it may spike up during the second half — especially if oil or vegetable prices increase.
“This may give reason for the Reserve Bank of India to go slow on its rate cut cycle,” he said, adding that he expects only one 25 basis points rate cut before June and a pause thereafter.
Sesa Sterlite topped the selling list on Sensex, down over 5 percent. Hindalco Industries shed 3.6 percent and Usha Martin lost 2.55 percent. CNBC-TV18 learnt that the government will re-examine bids for 5 more coal blocks auctioned in schedule 3. Government is also likely to skip signing agreement with the 5 coal block allottees.
Shares of HDFC, ITC, Reliance Industries, Bharti Airtel, Dr Reddy’s Labs, NTPC and HUL fell 1-3 percent. However, Infosys saw smart gains, up more than 2 percent. Sun Pharma and Tata Power climbed 1.6 percent each.
Wipro was up 1.4 percent as the software services exporter has appointed Abid Ali Neemuchwala as group president and COO w.e.f April 1. State-run power equipment maker BHEL rallied 1.5 percent as it commissioned fifth 270 MW thermal unit at Amravati.
HDFC Bank, ICICI Bank and State Bank of India were up 0.3-0.8 percent.
DLF was the biggest gainer on Nifty, adding another 4 percent after rising 6 percent on Friday following a favourable verdict from the Securities Appellate Tribunal (SAT) in capital markets case. Ashok Tyagi, group CFO says DLF is considering issuance of commercial mortgage backed securities, which will help reduce its cost of borrowing by 1.5-2.0 percentage points.
Deferral of CCPS conversion also pushed DLF higher. UBS raised target price on the stock to Rs 190 from Rs 175 earlier after the promoters deferred conversion of compulsorily convertible preference shares into shares by 1 year and reduced dividend coupon rate of 9 percent to 0.01 percent for extended period. “This increased visibility of the company raising capital,” said UBS.
In the broader space, Suven Life Sciences shot up over 19 percent on getting product patents in US and New Zealand. Diamond Power Infrastructure rallied 20 percent on orders worth Rs 332 crore from Assam and Nagaland government.
On the global front, Asian markets mostly closed higher with the Shanghai rising more than 2 percent, hitting 5-year highs after comments from Premier over the weekend heightened expectations for a stimulus. European markets too were in the green. Germany’s DAX climbed over 12000 for the first time, up 1.1 percent. France’s CAC gained 0.93 percent and Britain’s FTSE advanced 0.2 percent (at 16 hours IST. All eyes are on the 2-day FOMC policy meeting that will begin on Tuesday.