Sensex rises 117 points, F&O expiry eyed; JSPL gains 3%

27 Aug 2014

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Equity benchmarks gained strength on Wednesday after two-day of consolidation and correction, ahead of expiry of August derivative contracts on Thursday, the last day of truncated week.

The cabinet committee members will be meeting in evening today, which also drove the market higher. Report suggested that the cabinet may clear divestment of government's 5 percent stake in ONGC via offer for sale (OFS) and may approve coal supply linkages to power plants.

The 50-share NSE Nifty continued to hold the 7900-mark, up 31.30 points to close at 7936.05 while the 30-share BSE Sensex climbed 117.34 points to 26560.15. The BSE Midcap and Smallcap indices outperformed benchmarks, up over 0.7 percent.

Market experts expect the Nifty expiry around 7950-8000 levels. According to them, if the index surpasses 8000 level, there may be 100-200-point correction, which is short term, but the market remains positive in long term.

Devang Mehta - SVP & head equity advisory & retail sales, Anand Rathi Financial Services believes all signs of a structural bull market seem to be in place as market has been showing great bit of resilience.

''Macroeconomic parameters seem to have bottomed out. The negative events are digested & ignored after a day or two & focus shifts to sectors which have shown robust earnings growth,'' he elaborates.

Meanwhile, Atul Suri of Rare Enterprises expects Nifty to hit 10,460 by May 2015 .

State-run ONGC topped the buying list in the Sensex, up 2.3 percent on reports that the petroleum ministry has formulated a plan to cut ONGC and Oil India's oil subsidy burden by 40-50 percent to Rs 39,200 crore. Oil India was up 2.7 percent while BPCL, HPCL and IOC gained 0.8-2.6 percent.

Top private sector lender ICICI Bank and its rival IndusInd Bank climbed over 2 percent. Shares of Tata Motors, Hindustan Unilever, Hero Motocorp, Wipro and Dr Reddy's Labs were up 1-1.6 percent.

Two-wheeler maker Bajaj Auto rose 1.5 percent on hopes of strong growth in premium motorcycles business. Deutsche Bank upgraded the stock to hold from sell earlier with a 17 percent increase in target price to Rs 2100 apiece.

HCL Technologies shot up 3.02 percent after Jefferies maintains a buy on the stock and has raised target price to Rs 1,860 from Rs 1,650 earlier. The brokerage says the slowdown in infra management servies was a concern but it believes the company will show quick turnaround.

Jindal Steel & Power rebounded today after a 20 percent fall in previous two sessions, topping the gainers list in Nifty, up 3.08 percent.

However, DLF fell 4.6 percent on Supreme Court order asking company to pay Rs 630 crore fine within three months.

Private sector lender HDFC Bank declined 0.7 percent as sources said the matter related to increase in FII investment limit may not be taken up by Foreign Investment Promotion Board in its meeting scheduled on August 29.

Shares of Sesa Sterlite, NTPC and BHEL were other prominent losers, down more than a percent.

In the broader space, defence stocks Bharat Electronics, BEML and Astra Microwave Products surged 5-20 percent after the Department of Industrial Policy and Promotion notified increase in foreign direct investment limit to 49 percent through approval route in the defence sector.

GVK Power and Infrastructure gained 5 percent after the Hyderabad-based company said the subsidiary Mumbai International Airport (MIAL) has started monetisation of its commercial real estate by finalising lease of one of the parcel to Oasis Realty Private Limited for Rs 580 crore.

Shriram EPC shot up 20 percent after media reports suggested that the corporate debt restructuring (CDR) cell approved a Rs 2,530-crore debt recast proposal of the company.

Shares of Venus Remedies jumped nearly 15 percent on signing agreement with Israel-based generic drug maker Teva for selling anti-cancer drug in Canada while UCO Bank fell more than 8 percent on reports that the finance ministry ordered for forensic audit in case of non-performing assets (NPA) of the bank.

About 1603 shares advanced while 1376 shares declined on the BSE.

03:30pm Market Closing
Equity benchmarks gained strength on Wednesday after two-day of consolidation and correction, ahead of expiry of August derivative contracts on Thursday, the last day of truncated week.

The cabinet committee members will be meeting in evening today, which also drove the market higher. Report suggested that the cabinet may clear divestment of government's 5 percent stake in ONGC via offer for sale (OFS) and may approve coal supply linkages to power plants.

The 50-share NSE Nifty continued to hold the 7900-mark, up 31.30 points to close at 7936.05 while the 30-share BSE Sensex climbed 117.34 points to 26560.15.

02:55pm Liberty Shoes on buyers' radar
Fast-moving consumer goods company Liberty Shoes is likely to undertake a consolidation exercise to increase operational efficiencies and eliminate royalty. According to sources, the consolidation will possibly complete in three years in three different phases.

The company will merge with partnership firms, Liberty Enterprises & Liberty Group Marketing Division and is likely to acquire 10 sub-brands, distribution network, manufacturing facilities of partnership firms, say sources.

Liberty had entered into a two-year agreement with partnership firms in FY13. Sources told CNBC-TV18 that the proposal is likely to be submitted to the board after clarity on tax implication, evaluation of assets.

The stock gained 4 percent.

02:30pm Interview
In an interview to CNBC-TV18, Ravi Uppal, MD, JSPL, said investments worth around Rs 250,000 crore is at stake. ''Hundreds of thousands of people are employed by this group so I don't think Supreme Court has done any consolation.''

The company's blocks in question are Gare-Palma-IV/1 (allocated in 1996), Gare-Palma-IV/2 (1998), Gare-Palma-IV/3 (1999), Utkal B1 (2003), Jitpur (2007) and Amarkonda Murgadangal, allocated in 2008.

''The coal blocks given to us had coal of extremely inferior quality with ash running between 45 percent and 50 percent. And when the list was drawn up in 1993, these coal blocks were among the list which were not on the agenda of production of Coal India and its subsidiary SECL. So they were not even considered worthy of production. That is why it was given to private companies. We happened to be the one who took the coal out of this ash. Normally you talk of ash in coal, but here in the blocks we had coal in ash,'' he said.

02:00pm Consistent buying in banking & financials, technology, FMCG and auto stocks helped the market stay higher. The Sensex rose 133.53 points to 26576.34 and the Nifty gained 33.55 points at 7938.30.

About 1513 shares have advanced, 1318 shares declined, and 122 shares are unchanged.

Jindal Steel & Power, which fell 20 percent in previous two sessions post SC order on coal block allocation case, managed to bounce back today, up 2 percent on short covering.

Realty major DLF fell over 4 percent after the Supreme Court asked DLF to submit penalty of Rs 630 crore within three months. The company will submit undertaking of interest of 9 percent on payment and pay Rs 50 crore of penalty within 3 weeks, says the court.

On July 11, the company had moved the apex court against the Competition Appellate Tribunal or COMPAT order announced in May that upheld competition regulator Competition Commission of India's (CCI) ruling, which imposed Rs 630 crore penalty with 9 percent interest alleging abuse of dominant position in Gurgaon.

01:45pm Venus Remedies in demand
Shares of Venus Remedies jumped 15 on signing agreement with Israel-based generic drug maker Teva for selling anti-cancer drug in Canada.

Under this collaboration, Venus Remedies will be initially manufacturing the drug at the Venus Medicine Research Centre, its research unit, for assisting Teva in registrations. Thereafter, Venus will also use its manufacturing capabilities to support Teva in enhancing the business from this drug in the Canadian market, said a company statement.

"We already have an agreement with Teva for two Cephalosporins in the European Union market. The signing of this deal for the Canadian market has further strengthened our relationship and widened the scope of our products. This agreement will enable Venus to penetrate the Canadian market for the first time," said company's Joint MD Manu Chaudhary.

01:25pm Next trigger for global markets
The next big trigger for the global markets is expected to come from the European Central Bank's stimulus package, and Benoit Anne, managing director and head of EM strategy at Societe Generale expects it to come as early as September.

From that point of view, he is bullish on risky assets. He believes, central Europe might benefit the most from it. He says though good things are happening in Asia, he is still betting on central Europe. He sees downside risks to the euro.

01:00pm Positive momentum continued in the market in afternoon trade with the Sensex soaring 115.21 points to 26558.02 and the Nifty jumping 29.65 points to 7934.40. The broader markets continued to outperform benchmarks with the BSE Midcap and Smallcap indices gaining 0.7 percent and 0.9 percent, respectively.

Advancers beat decliners on the Bombay Stock Exchange by a ratio of 1491 to 1203.

Dipan Mehta, Member, BSE & NSE is bullish on Indian indices and says that macro and market-related data continues to be positive.

Cabinet, Cabinet Committee on Economic Affairs, Cabinet Committee on Investment and Cabinet Committee on Security will meet today evening. Report suggested that the CCEA may clear divestment of government's 5 percent stake in ONGC (up 1.65 percent) via offer for sale (OFS) and may approve coal supply linkages to power plants.

The power and finance ministries are set to meet today to discuss stake sale in PFC (down 2 percent) and REC (down 0.7 percent) and possibly appoint bankers for the NHPC (up 0.24 percent) issue.

12:58pm Defence stocks in demand
Buyers lapped up shares of Bharat Electronics, BEML and Astra Microwave Products on Wednesday on hike in foreign direct investment limit in defence space. These stocks gained as much as 5-8 percent intraday.

The Department of Industrial Policy and Promotion (DIPP) on Tuesday released a press note on defence FDI, saying foreign investment will be allowed through the FIPB route and foreign institutional investors (FIIs) will also be allowed to invest.

It has notified increase in foreign direct investment (FDI) limit to 49 percent through approval route in the defence sector. FDI ceiling in the sensitive defence sector has been raised from current 26 percent to 49 percent. However, the caveat is that company seeking permission of the government for FDI up to 49 percent should be an Indian company owned and controlled by Indians.

According to the DIPP press note, foreign direct investment proposals above 49 percent will have to ask for Cabinet Committee on Security's permission.

12:25pm Real estate in demand?
Samantak Das, chief economist and director-Research, Knight Frank India is bullish on Mumbai and Bangalore's realty and expects it to post the best returns among all other metros.

Speaking to CNBC-TV18, Das says that the Tier-2, 3 cities in India are smoother markets in terms of demand and supply. These are the cities that don't see steep spikes in their prices and have lesser houseless people, he explains.

''The prices here (in Tier-2,3 cities) rise in the 5-10 percent range and hence, the returns on investment are far too less,'' he explains.

Das' comments come a day after the realty consultant released its bi-annual report that saw a 25 percent decline in H1CY14 demand but expects H2CY14 to be positive.

So, Das is placing his bets on Mumbai and Bangalore, but says one should steer clear of the national capital region (NCR).

12:00pm The market maintained positive momentum in noon trade supported by banks, FMCG, technology and auto stocks. The Sensex rose 109.15 points to 26551.96 and the Nifty advanced 26.20 points to 7930.95. About 1443 shares have advanced, 1111 shares declined, and 92 shares are unchanged.

ICICI Bank topped the buying list in the Sensex, up 2.5 percent while HCL Technologies kept top position in the buying list in Nifty 50, up over 3 percent to touch a record high of Rs 1,652.95.

Jindal Steel & Power bounced back after 2-day of intense selling pressure. The stock saw some buying at lower levels after the management remains confident that the massive investments they have made will get required coal blocks for existing as well as new projects.

Shares of Tata Motors, ONGC, Hindustan Unilever, Bajaj Auto and Dr Reddy's Labs were other prominent gainers while NTPC, BHEL and Sesa Sterlite fell 1-2 percent followed by HDFC Bank, Reliance Industries, Hindalco, Tata Steel and Coal India with 0.3-0.7 percent.

11:55am Bajaj Auto in focus
Shares of Bajaj Auto gained 1.5 percent on hopes of strong growth in premium motorcycles business. Deutsche Bank upgraded the stock to hold from sell earlier with a 17 percent increase in target price to Rs 2100 apiece.

"Premium motorcycles (150- 250cc) are showing early signs of revival and should grow faster than the industry over the next three years. Bajaj's dominance (42 percent share) in this segment should aid its market share (17.7 percent in Q1FY15) and a model launch in its Pulsar line-up would strengthen its presence," says the brokerage house.

The rating upgrade by brokerage was on the bank of likely market share gains for Bajaj in domestic motorcycles (+230 basis points by FY17E) and current valuation at 15xFY16E PE coupled with a one-year stock underperformance of 15 percent (versus Sensex) which reflects balanced risk-reward.

11:25am Shriram EPC on buyers' radar
Shriram EPC shares gained 16.5 percent after media reports suggested that the corporate debt restructuring (CDR) cell approved a Rs 2,530-crore debt recast proposal of the company.

The company has also sought additional funding from the banks, says the report quoting unnamed sources.

"Bankers said the firm's contribution to the restructuring package would be Rs 160 crore as promoters' equity; banks have been assured by the company that it hopes to obtain its receivables in the next 2-3 years. The company has been paying its 21 lenders, led by Oriental Bank of Commerce, at the rate of 13-14 percent but now would be charged only 11.25 percent. There would also be a two-year moratorium on interest payments," it added.

11:00am Equity benchmarks maintained early gains with the Sensex rising 125.19 points to 26568.00 and the Nifty climbing 30.30 points to 7935.05. About 1395 shares have advanced, 929 shares declined, and 72 shares are unchanged.

ONGC gained 1.8 percent on media reports that the petroleum ministry has formulated a plan to cut ONGC and Oil India's oil subsidy burden by 40-50 percent to Rs 39,200 crore as oil marketing companies' losses may be shared equally by government and upstream firms. This news came ahead of the meeting scheduled between CCEA and cabinet to consider a 5 percent divestment in ONGC via offer for sale.

HCL Technologies shot up over 3 percent after Jefferies maintains a buy rating and has raised target price to Rs 1860 from Rs 1650. The brokerage said the slowdown in infra management services was a concern but it believe the company will show quick turnaround and current valuations is at the low end of peers and hence reflects an opportunity.

Defence stocks like Bharat Electronics, BEML and Astra Microwave Products rallied 3-7 percent as the DIPP released a press note on defence FDI via which 49 percent FDI in defence allowed through FIPB route. For above 49 percent FDI in defence, a Cabinet Committee on Security (CCS) nod on case to case basis.

GVK Power surged 5 percent on news that GVK Mumbai International Airport (MIAL) awarded land parcel to Oasis Realty worth Rs 580 crore.

10:55am FII View
Ridham Desai, Morgan Stanley says Indian stocks continue to register gains, helped by improving corporate performance, growing faith expressed by investors in the India story, and a benign global environment. Corporate balance sheets are improving, backed by real money flows over the past year or so, he adds.

''India's macro environment is getting a helping hand from weak oil prices, and fund flows appear to be on the verge of a structural shift. Indeed, a cyclical uptick in fund flows is already underway, but weakening net real money flows due to a likely rise in equity supply plus some tightening in financial conditions are challenges to overcome,'' says Desai.

10:25am Interview
GVK Mumbai International Airport Limited has inked a commercial property development deal with Oasis Realty for Rs 580 crore. Sanjay Reddy, vice chairman, GVK Power says the deal comes as the realty sector is seeing signs of revival under the Modi-led government.

''We sold the land for Rs 5000 per square feet and we hope to get a better rate in the upcoming deals,'' adds Reddy.

Reddy says the company will be focusing on real estate development and this pact is only the first step towards monetizing value at the Mumbai Airport. The company is looking to monetize about 2 million square feet of land of the total 22 million they own.

10:00am The market remained firm in morning trade supported by broadbased buying. The Sensex climbed 129.88 points to 26572.69 and the Nifty advanced 32.30 points to 7937.05 while the broader markets outperformed benchmarks.

The BSE Midcap and Smallcap indices gained 0.6 percent and 1 percent, respectively. Advancing shares outnumbered declining ones by a ratio of 1342 to 635 on the Bombay Stock Exchange.

Atul Suri of Rare Enterprises goes gung-ho over the Indian market and expects Nifty to hit 10,460 by May 2015. According to him, the Nifty has gained around 48 percent in the past one year and the upside trend is likely to continue with the next bull run being EPS driven.

He, however, will be worried if the Nifty violates the 7540 mark.

In an interview to CNBC-TV18, Suri says the Bank Nifty is likely to outperform going ahead as there is still a lot of steam left in the private banks. The Bank Nifty has witnessed nearly 80 percent gain in last one year, all thanks to private banks, he adds.

ONGC, HCL Technologies, Bajaj Auto, Dr Reddy's Labs, ICICI Bank and Tata Motors topped the buying list, up 1-2 percent. NTPC, Hindalco Industries, GAIL, Kotak Mahindra Bank and Ambuja Cements dropped 1-1.8 percent.

Among midcaps, Havells India, MphasiS, SKS Microfinance, eClerx Services and Bharat Electronics gained 6-7 percent while UCO Bank, PS IT Infra, Bhushan Steel, Prism Cement and Risa International fell 4-5 percent.

09:59am Jindal Saw in News
Shares of Jindal Saw rallied 2 percent on signing agreement to restructure transhipment business of one of the subsidiary.

The flagship company of OP Jindal group said the memorandum of understanding has entered into between the company and SULA Shipping and Logistics Private Limited in relation to restructuring of transhipment business of Jindal ITF, a wholly owned subsidiary.

The definitive agreement(s) will be entered between the parties in due course, it added.

09:40am FII View
Jyotivardhan Jaipuria, Bank of America Merrill Lynch says FIIs continued to invest in India in the June quarter. The strong inflow from the FIIs over the last five years has resulted in the all-time high FII ownership of the Indian market, he adds.

''India overweight is at an all-time high for GEM funds and in our view, the consensus bullishness creates the biggest risk to the market. The good news, however, is that domestic mutual funds have seen positive flows and have been buyers post-elections after being net sellers past few months,'' says Jaipuria.

09:15am After two-day of consolidation, equity benchmarks opened higher with the Sensex rising 112.87 points to 26555.68 and the Nifty eyeing 7950 leve, up 29.30 points at 7934.05.

About 732 shares have advanced, 187 shares declined, and 22 shares are unchanged.

ICICI Bank, State Bank of India, ONGC, Tata Motors, Bharti Airtel, Dr Reddy's Labs and BHEL gained 1-1.5 percent whereas TCS, Infosys, HUL, GAIL and Wipro fell 0.2-0.6 percent.

The Indian rupee opened lower at 60.48 per dollar, down 5 paise compared to previous day's closing value of 60.43 a dollar.

The dollar hovered just under a 13-month peak against a basket of major currencies early with the euro still struggling amid expectations of further policy easing from the European Central Bank.

Himanshu Arora, Currency Analyst at Religare said, "USD-INR pair is expected to trade higher today. Mass de-allocation of coal blocks could probably push imports higher leading to widening of the trade deficit given the impact on domestic production."

"Rupee may also weaken ahead of the GDP data for the April-June quarter expected on Friday. Expect USD-INR to trade in the range of 60.22-60.75/dollar," he added.

On the global front, Asia was trading with a positive on the back of positive US markets. The Dow Jones hit an all-time record high with the S&P 500 reclaiming the 2,000 mark to close above it for the first time ever over better-than-expected economic data comprising  a surge in orders for durable goods.

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