Bulls were on the back foot Monday as profit booking dragged indices below their psychological levels after a 518-point upside in previous session. Oil and private banking & financials saw selling pressure while PSU banks continued to see buying interest after the government launched a revamp plan ‘Indradhanush’.
The 30-share BSE Sensex lost 189.04 points to 27878.27 and the 50-share NSE Nifty ended below the 8500, down 41.25 points to 8477.30. However, the broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising 0.2-0.3 percent.
Experts believe the market may continue to be in broad range of 27000-29000 on the Sensex.
Sandeep Bhatia of Kotak Institutional Equities expects the market to be rangebound for some time and feels 8000 on the Nifty is a good buying opportunity and 9000 is the time to book profits.
The Indradhanush programme by government is a good effort for PSU banks, he feels
Optimism surrounding project Indradhanush powered a rally in bank stocks with CNX PSU Bank index surging more than 6 percent. Bank of Baroda was the biggest gainer among PSU banks, up 15 percent as the market cheered appointment of MD and Chairman of bank from the private sector. Ravi Venkatesan is appointed as non executive chairman and PS Jaykumar appointed as MD and CEO of Bank of Baroda.
Punjab National Bank surged 4 percent after Usha Ananthasubramanian, formerly the MD of Mahila Bank, is appointed as MD and CEO of the bank. SBI climbed 4 percent as the country’s largest lender cut deposit rates by 25-50 basis points on certain maturities.
Cipla topped the selling list on Sensex, down 5 percent on fears of likely slow growth in gastro drug Esomeprazole (the generic of Nexium owned by AstraZeneca). Subhanu Saxena, MD & CEO said Esomeprazole sales impact will taper off in balance of this fiscal. However, June quarter earnings were strong with the revenue growth of 41.6 percent and profit growth of 120.8 percent year-on-year, driven by sales of Esomeprazole in US (through partner Teva).
HDFC dropped 1.5 percent as the HDFC Life stake sale to Standard Life was done at a slightly lower valuation against the sale to Azim Premji Trust in June quarter. HDFC Vice Chairman and CEO Keki Mistry said the company may look to bring IPO of HDFC Life in 2016.
Among others, Reliance Industries, L&T, Axis Bank, ONGC, M&M, Dr Reddy’s Labs, Hero Motocorp and Bajaj Auto were down 1-2 percent while Tata Steel rallied 4 percent. Tata Motors and ICICI Bank rebounded to close with marginal gains.
Meanwhile, the rupee closed at 65.31 a dollar (down 31 paise) on the back of dollar demand from importers and weak equity markets domestically.
Globally, European equities were mixed with the France’s CAC and Germany’s DAX up 0.4 percent while Britain’s FTSE declined. Investors will be keeping an eye on developments on the conclusion of a third rescue plan for Greece, with national parliaments voting this week on whether to ratify the deal.
Asian markets closed mixed. The Nikkei 225 gained 0.5 percent as the Japanese economy contracted less than expected in June quarter. Kospi and Hang Seng ended in negative terrain, down 0.75 percent. The mainland Chinese market (Shanghai Composite) rose 0.7 percent.