Nifty opens above 8150, Sensex up over 100pts; Tata Motors gains
Wed Jun 29 2016
Rajesh Sharma (2003 articles)

Nifty opens above 8150, Sensex up over 100pts; Tata Motors gains

The market has opened on a strong note supported by strong global cues. The Sensex is up 138.86 points or 0.5 percent at 26663.41 and the Nifty  is up 40.50 points or 0.5 percent at 8168.35. About 660 shares have advanced, 98 shares declined, and 39 shares are unchanged.

Tata Motors, ICICI Bank, Dr Reddy’s Labs, L&T and Sun Pharma are top gainers while GAIL and HDFC Bank are losers in the Sensex.

The Indian rupee opened higher by 17 paise at 67.78 per dollar on Wednesday versus previous close 67.95. The pound was little changed at USD 1.33 versus the dollar after gaining 0.9 percent last session, halting a two-day selloff.

Pramit Brahmbhatt of Veracity said, “Positive cues from global equity market will govern today’s move in the rupee and it is likely to appreciate for the day.”

Asian share markets joined a global rally on Wednesday as the immediate impact of Britain’s vote to leave began to wane and investors wagered central banks would have to ride to the rescue with more stimulus measures. In Japan, the Nikkei 225 added 1.06 percent, while across the Korean Strait, the Kospi was up 0.4 percent. Australia’s ASX 200 added 1.04 percent in early trade.

In the US, Dow Jones industrial average closed up 269.48 points, or 1.57 percent, at 17,409.72; the S&P 500 index added 35.55 points, or 1.78 percent, to 2,036.09 and the Nasdaq composite gained 97.42 points, or 2.12 percent, to 4,691.87.

Oil rose early as financial traders poured money back into commodities following the initial shock of Britain’s vote to leave the European Union, and as a potential strike in Norway and crisis in Venezuela threatened to cut supply.

Gold slipped below USD 1320 an ounce as buyers cashed in gains from the biggest two-day rally in the metal since late 2008 made last week.

L&T Infotech IPO is set to open on July 11 and close on July 13. The company contributes about 8 percent of the consolidated revenue of the entire L&T business. CNBC-TV18’s Kritika Saxena learns that this IPO kicks of a series of consolidations that the L&T group is looking at doing.The compay has spoken about Project Lakshya which is a five-year debt reduction plan of the government. As part the plan, the group wants to list both their IT arms.

L&T Infotech IPO wil have an offer price of around Rs 90 a share. Roughly the amount the company would be looking to raise from the IPO would be USD 125-150 million. On the heels of this IPO will be L&T Technology Services’ Draft Red Herring Prospectus.

It is believed both the IPOs would bring down the group’s debt by USD 400 million.

Banks financial stability report:
Foreseeing worsening situation of bad loans in the country, Reserve Bank said the gross non- performing assets of the banks can rise to as high as 9.3 percent in 2016-17 after hitting 7.6 percent in March 2016.

Banks’ gross NPA had stood at 5.1 percent in September 2015, a report released by RBI said.

“Gross NPAs of banks’ sharply increased to 7.6 percent of gross advances from 5.1 percent between September 2015 and March 2016 after asset quality review,” according to the Financial Stability Report (FSR) released by RBI.

Net non-performing advances as a percentage of the total net advances increased to 4.6 percent in March 2016 from 2.8 percent in September 2015.

FII view: While the global markets are facing uncertainty over Brexit, it is not a systematic shock for the world economy, says Geoff Lewis of Manulife Asset Management.

The current rally in the market is because of investors bouncing back after the initial shock.

The US Fed postponing the rate hike on back of volatility is good news for the global markets especially emerging markets (EMs), he says. While the fall in sterling is positive for UK, a further decline is not likely. Any recession in UK will be mild, Lewis says.

Rajesh Sharma

Rajesh Sharma

Rajesh Sharma is Correspondent for Stock Market of South East Asia based in Mumbai. He has been covering Asian markets for more than 5 years.