It was a good start to crucial Fed week on Monday as the market rallied 1 percent. Banks drove market higher on hopes of rate cut. The BSE Midcap index outperformed benchmarks, rising 1.3 percent. The market breadth was in favour of advances with 2:1 ratio.
The 30-share BSE Sensex jumped 246.49 points to 25856.70 and the 50-share NSE Nifty rose 82.95 points to 7872.25.
Chris Wood of CLSA said India continued to be the top overweight market. CLSA has increased India’s weightage by one percentage point to 23 percent in its Asia Pacific ex-Japan relative-return portfolio while weightage of China reduced by 2 percentage points to neutral.
Global markets were mixed ahead of the crucial FOMC meet outcome due on September 17. European markets like France’s CAC, Germany’s DAX and Britain’s FTSE gained 0.3-0.7 percent. However, Asian markets ended in red on weak macro data. China’s Shanghai Composite fell 2.7 percent after August industrial output rose 6.1 percent, missing estimates and fixed asset investment slowed to 10.9 percent, the weakest in 15 years. Japan’s Nikkei dropped 1.6 percent.
It is prudent to wait for the FOMC meet to get over, but a sharp move based on one single event is unlikely, said Dipen Sheth, head institutional Research at HDFC Securities. He feels that a rate hike in unlikely at the moment. There are other global activities that may make the Fed to think of delaying a rate hike, Sheth said.
Back home, WPI inflation declined for the 10th straight month , coming in at minus 4.95 percent in August against 4.05 percent in July. The decline, however, was much more than analysts forecast of 4.43 percent. All eyes are now on August CPI data later today.
Consistent contraction in inflation raised hopes of rate cut by Reserve Bank of India in its forthcoming monetary policy on September 29. Bank Nifty rallied 1.8 percent as Axis Bank surged 3 percent. ICICI Bank, HDFC Bank, State Bank of India, Bank of Baroda and Punjab National Bank gained 1-2 percent. The rally in banks was also after media report indicated that Prime Minister Narendra Modi is set to fix power sector debt issue.
Metals also gained strength; Tata Steel, Vedanta and Hindalco Industries soared 3.5-4 percent. Sources told CNBC-TV18 that the 10-member panel on safeguard has approved Directorate General of Safeguards’s recommendation of imposing a 20 percent provisional safeguard duty on select steel products. The duty will be imposed on select hot rolled coil grades for a period of 200 days from date of notification and notification circular is expected in next few days, sources added.
NTPC topped the buying list on Sensex, up 5 percent; media report indicated that the government will extend tripartite agreement to encourage private solar power players to sign deals with NTPC.
Sun Pharma was up 1.4 percent after Credit Suisse’s note said Taro Pharma, the subsidiary of Sun, launched Keveyis at a high price of USD 163.8 per tablet of 50mg. The drug is used in the treatment of periodic paralysis.
Wipro, Bharti Airtel and GAIL were other prominent gainers, up 2 percent each while Bajaj Auto and Maruti Suzuki underperformed others, down marginally.
In the broader space, Kesoram Industries gained 1.4 percent as JK Tyre is all set to acquire company’s tyre manufacturing unit at Haridwar for an enterprise value of Rs 2,200 crore. Kesoram will use sale proceeds for debt reduction.
Just Dial rallied 13.5 percent after launch of Android app Search Plus. Arvind Infrastructure gained 10 percent after ace investor Sunny Porinju Veliyath picked up 0.6 percent stake in company.
Amtek Auto rose another 13 percent after the company said it is considering various means to de-leverage the balance sheet including selling of non-core business, minority stake in overseas companies and some industrial real estate assets within the business.
Elder Pharma climbed 6 percent as the company is in talks with prospective lenders w.r.t its restructuring plan. L&T Finance Holdings advanced 4 percent on a media report that Bain Capital is set to buy stake in non-banking finance company.