Bulls were in full control of Dalal Street Thursday as equity benchmarks snapped three-day losing streak, rising more than a percent led by short covering in most beaten down stocks like banking & financials, capital goods, auto and metals. The rally in Europe ahead of ECB meet also supported Indian equities.
The 30-share BSE Sensex climbed 311.22 points or 1.22 percent to 25764.78 and the 50-share NSE Nifty rose 106.00 points or 1.37 percent to 7823. The BSE Midcap and Smallcap indices, too, saw recovery today, up nearly 1.2 percent. Even the market breadth was strong as about 1715 shares advanced against 971 shares declined on the Bombay Stock Exchange.
Today’s rebound was only led by short covering, the market is yet to see more selling pressure despite support from domestic institutional investors, feel experts.
Gaurav Mehta of Ambit Capital says that in the days to come the 30-share index Sensex can correct to 23,000- 24,000 and the Nifty at 7200.
Sanjeev Prasad of Kotak Institutional Equities has cut FY16 earnings growth for Nifty 50 companies to 12 percent from 18 percent earlier.
Asian shares staged a mild recovery today and trading was relatively calm as China and Hang Seng markets shut for local holidays. Nikkei, Straits Times and Taiwan Weighted gained 0.5-1 percent. European markets remained strong with the FTSE, CAC and DAX rising around 1.5 percent ahead of the ECB’s latest monetary policy decision. All eyes are also on US monthly jobs report due on Friday.
Back home, it was a quiet day for the currency market. Traders were cautious ahead of US monthly jobs report which may indicate whether Fed will raise rates in September policy or not.
Meanwhile, Central Board of Direct Taxes (CBDT) has issued a circular on minimum alternate tax. He advised its field officers not to pursue outstanding tax demands on FIIs. Minister of State Finance Jayant Sinha says the government will introduce an amendment to the Income Tax Act in the winter session of parliament to operationalise the Shah panel’s recommendation of not levying MAT on FIIs.
Cairn India surged 5.6 percent after CLSA advised buying the stock as it feels concerns on cash leakage as related party loan are overdone. The brokerage expects 59 percent upside in the stock.
Ambuja Cements gained 4 percent. Nomura has upgraded stock to buy with implied upside of 22 percent, citing increase in cement price & demand; synergy benefits from ACC-ACEM merger; capacity expansion announcement. Macquarie has maintained outperform rating on ICICI Bank with a target price of Rs 455 apiece, citing stable profitability and earnings growth going ahead; the stock rose 0.6 percent.
Wipro gained 2 percent. The IT firm has formed partnership with Chelsea Football Club, saying it will support the club by bringing together strategy, design & technology. The news announced after market hours.
HDFC, Axis Bank, Tata Steel and Vedanta were other prominent gainers on Sensex, up more than 4 percent followed by L&T, HDFC Bank, Tata Motors, Maruti Suzuki, ONGC and Hindalco with 1.5-3 percent upside. However, Lupin, Sun Pharma and Hero Motocorp lost 0.6 percent each.
In the broader space, Amtek Auto crashed 35 percent on heavy selling pressure. It lost more than 80 percent in calender year 2015, especially after reporting first time ever loss in June quarter and NSE’s decision to remove stock from F&O segment with effect from November. Amtek group companies like Metalyst Forging, Castex Technologies (erstwhile Amtek India), JMT Auto and Rollatainers plunged 5 percent each.