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Short covering lifts Sensex 214 amid weak monsoon forecast


The News International Team

Short covering lifts Sensex 214 amid weak monsoon forecast

After a volatile trade, the bulls finally took the charge of Dalal Street on Wednesday despite fears of weak monsoon forecast. Equity benchmarks snapped five-day losing streak with the Nifty closing above the 8400-mark, driven by short covering in private banks, capital goods, FMCG and pharma stocks. However, the index fell below the 8300-mark intraday.

The 30-share BSE Sensex rose 214.09 points to 27890.13 after hitting an intraday low of 27385.48. The 50-share NSE Nifty hit a day’s low of 8284.70, before climbing 51.95 points to close at 8429.70.
According to Vibhav Kapoor of IL&FS, the range for the Nifty has moved lower to 7600-8600 over next 2 months. Earnings season will be more difficult than anticipated, he believes.

“The analysts are being too slow with the Q4 downgrades. With these performances, we expect to see a large number of downgrades coming in, in the next few quarters.”

Meanwhile, the Indian Met Department released its first official monsoon forecast for 2015 and predicted below normal monsoon this year. MET said rainfall is seen at 93 percent of long term average in 2015, adding 35 percent probability of monsoon rainfall will remain below normal.

On the crucial subject of restrospective tax payment for FIIs, minister of state for finance Jayant Sinha said the government cannot withdraw MAT notices sent to FIIs, The government is going by the authority of advance rulings which clearly stated that FIIs need to pay MAT and foreign investors are free to appeal against it.

The rupee weakened to 62.91 against a close of 62.85 a dollar yesterday due to fresh dollar demand from importers and strong dollar against other currencies overseas. Weak equity market also dampened sentiment.

Larsen and Toubro was the biggest contributor to Sensex’s gains, up 3.43 percent on orders worth Rs 2,674 crore in transportation infra, power transmission & distribution and solar businesses.

Sun Pharma bounced back, up 1.8 percent today after falling 9 percent in previous session. JP Morgan put an overweight stance on the stock, saying the large correction was driven by supply due to the Daiichi’s stake sale and they would use the weakness as a buying opportunity.

Mahindra and Mahindra gained 2 percent after CNBC-TV18 learnt that the company is planning to hike its stake in Ssangyong to 85 percent from the existing 72.8 percent. The company is likely to spend up to Rs 1,500 crore to increase its stake in Ssangyong, say sources.

FMCG major HUL topped the buying list, up 4 percent followed by Axis Bank with 3.5 percent rally and Dr Reddy’s Labs & Hero Motocorp with 3 percent gains. HDFC Bank, HDFC, TCS, Tata Steel, BHEL, Coal India and Tata Power gained 1-2 percent.

However, Wipro extended fall in last trade, down over 6 percent after the company reported revenue growth that missed street estimates. The tech major also guided for a weak Q1FY16. Goldman Sachs maintained a sell on Wipro and cut FY15-17 EPS estimates by 1-4 percent. ONGC and SBI were other prominent losers, down 2.6 percent and 1.7 percent, respectively.

In earnings, YES Bank beat street expectations today with the Q4 net profit rising 28.1 percent year-on-year to Rs 551 crore, driven by strong other income and net interest income despite spike in provisions and tax cost. The stock gained 1.5 percent.

Smallcap IT firm Mastek fell over 3 percent on disappointing earnings. Profit after tax dropped 26 percent sequentially to Rs 6.44 crore on account of weak operational performance and lower other income.

Globally, it was a mixed picture today. Benchmarks in China and Japan built on recent gains with Shanghai rallying another 2.44 percent and Nikkei 1.1 percent. European markets, however, fell amid March quarter earnings. France’s CAC, Germany’s DAX and Britain’s FTSE declined 0.6-1 percent. Oil fell 0.7 percent as geo-political concerns eased with Saudi Arabia ending its strikes against rebels in Yemen.

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