Benchmark indices gained strength on Friday after a consolidation in previous two consecutive sessions, tracking rally in global peers on hopes of another fiscal stimulus package from European Central Bank. Banks and FMCG stocks drove today’s rally but broader markets underperformed benchmarks.
The 30-share BSE Sensex rose 183.15 points or 0.67 percent to close at 27470.81 and the 50-share NSE Nifty climbed 43.75 points or 0.53 percent to 8295.45 after hitting an intraday high of 8328.10. However, the BSE Midcap index lost 0.3 percent and Smallcap fell 0.4 percent.
Experts feel current rally in equity markets, which is largely driven by hopes of liquidity injection through quantitative easing by ECB, is for short term and advised selling on every rally, though they are bullish for long term.
Pramod Gubbi of Ambit Capital says corporate earnings have not yet bottomed out, and there are no signs of any improvement in the economy at the ground level.
Global markets remained upbeat throughout the session today after European Central Bank chief Mario Draghi on Thursday hinted at further quantitative easing in December policy. He says euro zone’s trillion-euro bond-buying program will need to be “re-examined in December” as inflation remains stubbornly low amid emerging market weakness. Major Asian markets like Nikkei, Shanghai and Hang Seng surged 1-2 percent. European markets like FTSE, CAC and DAX also gained 1-2 percent (at 16 hours IST).
Back home, Bank Nifty pushed market higher, rising 1.3 percent. HDFC Bank, ICICI Bank, Axis Bank and State Bank of India gained 1-3 percent. Housing finance company HDFC also rose 1.9 percent.
ITC was biggest contributor to Sensex’ gains, up 2.8 percent. The cigarette major will announce its September quarter earnings on October 30.
Lupin was up 0.9 percent after getting tentative approval from USFDA for Milnacipran hydrochloride – an antidepressant drug.
Larsen & Toubro, Maruti Suzuki, Vedanta and Bharti Airtel, which will announce its second quarter earnings next week, were biggest losers among Sensex stocks, down 2-3.5 percent.
In earnings, Wipro lost 1.7 percent after company missed Q3 guidance expectations of 1.5-3.5 percent. The IT company expects dollar revenue in December quarter to be in range of USD 1,841-1,878 million, a growth of 0.5-2.5 percent over Q2.
Idea Cellular tanked more than 7 percent on a tepid second quarter performance. Revenue declined 1.2 percent and profit slipped around 13 percent quarter-on-quarter, impacted by seasonality and as pricing remains weak. Kotak cut FY16-18 EBITDA estimates by 4-7 percent which drives a lower target price of Rs 180 crom Rs 220 per share.
KPIT Technologies surged 9 percent on solid numbers in Q2 with a dollar revenue growth of 5.3 percent and profit jump of 69 percent aided by higher margin. Kishor Patil, CEO and MD says margin expansion in Q2 is sustainable.
Cadila Healthcare was up 2.6 percent after reporting healthy earnings in September quarter. Revenue grew by 16.7 percent and margin improved by more than 500 basis points driving a PAT jump of 44 percent. VIP Industries rallied 19.5 percent after a four-fold jump in profit led by operational growth and Symphony rose 8 percent after profit jumped 33 percent as weak monsoon drove air cooler sales volume. However, Inox Leisure plunged 9 percent after sequential 18.8 degrowth in profit.