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Sensex snaps 5-day rally but mid, smallcap run continues


The News International Team

Bulls took a breather on Friday as the market closed flat with the Sensex snapping five-day rally but the broader markets maintained upmove – in fact outperformed benchmarks for the second consecutive week.

The 30-share BSE Sensex fell 5.83 points to 28879.38 while the Nifty gained 2.05 points at 8780.35. However, the BSE Midcap advanced 0.4 percent and Smallcap jumped 1.1 percent.

Though the consolidation may continue in near term, the long term bull market is intact, feel experts.

Vibhav Kapoor of IL&FS expects more consolidation in the market. According to him, the downside range for the Nifty is 8000-8300, while the index may hit 9,000 on the upside.

Kapoor said that some major steps taken by the government may help revive the economy but feels the rural consumption may still take some time to improve.

Hartmut Issell, head of equity at UBS said the brokerage is overweight on India. It looks like the best investment in Asian markets, however reforms like GST has to be successful for markets to give better returns, he added.

For the week, the Sensex climbed 2.2 percent and Nifty rallied 2.3 percent while CNX Midcap Index jumped 3.5 percent and BSE Smallcap Index rose 6.3 percent. BSE Realty, Metal, FMCG, CNX PSU Bank, BSE Power and IT surged 3-6 percent.

January-March quarter earnings season will kick off next week with ACC, IndusInd Bank, TCS and Reliance Industries numbers.

Globally it was a sea of green today. In Asia, Hang Seng and Nikkei hit multi-year highs intraday, up 1.2 percent and down 0.15 percent at close. Shanghai rallied 2 percent as China’s consumer inflation held steady at 1.4 percent for March. European markets were up 0.4-1.2 percent (at 16 hours IST). In commodities, Brent crude was down 0.2 percent at USD 56.5 a barrel.

Meanwhile, Prime Minister Narendra Modi will hold talks with French president Fracois Hollande in Paris today, the first leg of his three nations Europe tour. There is optimism that a deal will be reached between India and France on the supply of 126 Rafale fighter jets. The 20-billion dollar deal has been stuck since 2012 over price and delivery guarantees.

E-commerce giant Snapdeal has been exploring options to list in the US at a valuation of USD 5.2 billion, say sources. Listing will give private equity players like Temasek and Blackrock an exit and help Snapdeal tap into additional capital to expand its footprint.

Index heavyweight Reliance Industries gained 1 percent, taking four consecutive days’ gains to 10 percent on buying interest.

Among banks, country’s biggest lender State Bank of India rallied 1.9 percent as Barclays maintained its overweight on the stock with a target price of Rs 353. The brokerage said SBI is a significant outperformer in two key franchise products – savings accounts and credit cards.

IndusInd Bank was in focus today as the company announced acquiring RBS’s diamond and jewellery financing business with a loan book size of approximately Rs 4,500 crore. Ramesh Sobti, MD & CEO of the bank said the jewellery financing business has been growing at 25-30 percent and will be margin accretive.

IDFC climbed over 2 percent as the company received shareholders’ approval for the scheme of arrangement between the company and IDFC Bank. Rajiv Lall, MD & CEO said he expects the bank to begin banking operations on October 1 with a total of 20 branches and the total balance sheet size on October 1 will stand at Rs 70,000 crore.

However, private sector lenders were under pressure. HDFC Bank, ICICI Bank and Axis Bank lost 0.7-1.5 percent with HDFC falling a percent.

Cipla lost further, down 2.66 percent (in addition to 2.3 percent loss in previous session) after CLSA downgraded the stock to sell from underperform with a target price of Rs 619. According to the brokerage, inhalers may offer only gradual upside in EU contrary to market expectations.

Aluminium major Hindalco Industries lost 1.5 percent. Alcoa, the world’s third largest aluminium producer, reported numbers in the US with revenues disappointing even as profits topped estimates. JP Morgan said Alcoa’s commentary around the auto segment continued to remain positive which highlighted revenue visibility for Hindalco’s Novelis unit.

Among others, Sesa Sterlite jumped nearly 4 percent followed by Dr Reddy’s Labs and Bharti Airtel with 1-1.6 percent upside whereas Hero Motocorp, L&T, NTPC and Tata Steel declined 0.5-1 percent.

In the midcap space, OnMobile Global, Kesoram Industries, Fedders Lloyd, Shalimar Paints, Intellect Design, Technocraft Industries, Indian Metals, Century Enka, Helios & Matheson and Zee Media rallied 7-20 percent.

The market breadth remained positive with the 1647 shares advancing against 1171 shares declining on the Bombay Stock Exchange.

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