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Sensex, Nifty extend rally; Midcap, Smallcap outperform


The News International Team

10:52am Market Update: The Sensex rose 317.15 points or 1.16 percent to 27775.79 and the Nifty climbed 85.35 points or 1.02 percent to 8426.75.

About 1660 shares have advanced, 451 shares declined, and 118 shares are unchanged on the BSE.

10:40am Market Expert: Sandeep S Shenoy of Pioneer Investcorp is of the strong belief that fundamentals in the market are not in sync with valuations, so choppiness could continue for some more time.

According to Shenoy, market is in a zone which suggests sell on all bounce back because valuations have gone ahead of fundamentals. However, he clarifies that the capital inflows into the market have not got impacted and continue to come in.

With regards to fundamentals there are already some downgrades happening, says Shenoy. There are some talks of FY15 EPS being slashed downwards and one might also see a down tick of 7-8 percent for the FY16 EPS compared to what was projected last September believes Shenoy.

According to Shenoy, even a 7-10 percent draw down from the current levels may not impact the extreme long-term investors so much and it may also not impair the structural bull run but the short-term investors could get slaughtered. However, one can insulate from this draw down by staying away from cylicals and sticking to cash flow positive companies, he adds.

10:20am Railway stocks in focus: The ministry has been relying on Finance Ministry for financial support, but the Railways has adequate funds for at least 5 years, said Railway Minister Suresh Prabhu.

In an exclusive interview to CNBC-TV18, Prabhu said the national transporter is losing money due to lack of investment in scale of operations. He feels dedicated freight corridors will help bring in more investments. Even tax-free bonds are a good avenue available to Railways, he said.

Prabhu said the ministry is in advanced stage of negotiations with agencies like IMF and World Bank. Stating that the ministry is not ruling out any avenue of fund raising at this stage, the Prabhu said he is even open to talking to sovereign funds and private equity firms for funding. “The cycle of under-investing in Indian Railways is hopefully behind us,” the minister said.

10:00am Market Check

The market extended gains led by banking & financials, FMCG, telecom, capital goods and technology stocks. The Sensex climbed 246.48 points or 0.90 percent to 27705.12 and the Nifty jumped 67.70 points or 0.81 percent to 8409.10.

The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising 1.4 percent and 2.2 percent, respectively. More than 4 shares advanced for every share declining on the Bombay Stock Exchange.

Rakesh Arora, Macquarie says, “Downside risks to the market are limited to 3-4 percent from here, while we forecast 15 percent upside potential for the Nifty to 9,600 from 9,940 earlier.”

Telecom stocks rebounded today after the sell-off seen on Friday. Idea Cellular and Bharti Airtel gained 2.5 percent each.

Shares of HDFC, ITC, L&T, SBI, Axis Bank, M&M, HUL, Cipla, Wipro, NTPC, Tata Steel, Sesa Sterlite and BHEL were prominent gainers in trade, up 1-2 percent. ICICI Bank, HDFC Bank, Infosys and Sun Pharma advanced over half a percent.

However, Reliance Industries, Hindalco Industries, Bajaj Auto, Dr Reddy’s Labs and GAIL underperformed.

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