India : Sensex, Nifty open flat; Tata Motors ITC up, Reliance slips
The market has opened flat as the Sensex is up 15.33 points at 28467.50. The Nifty is up 5.65 points at 8791.85. About 486 shares have advanced, 298 shares declined, and 42 shares are unchanged.
Tata Motors, Hero MotoCorp, ICICI Bank, Tata Steel and ITC are top gainers while Reliance, Bharti Airtel, Dr Reddy’s Labs, HDFC Bank and L&T are losers in the Sensex.
The Indian rupee opened lower at 67.04 per dollar against previous close 66.96.
Global financial services major Citigroup has maintained year-end Sensex target at 28,800 amid expected rise in interest rates by the US Fed post its chair Janet Yellen saying the case for rate hike was strengthening.While estimating the US Fed rates hike only by December, this year, Citigroup in a note analysing the impact of such an increase on Indian equities said in the past, period post the hikes showed that the markets had given positive returns in most cases.
According to the US-based firm, its Sensex target of 28,800 “remains unchanged” and it expects “domestic fundamentals (corporate earnings) to drive markets in the medium term and would use any consolidation post-Fed as an opportunity to buy”.
Shares of airline companies rallied on aviation fuel price cut. Shares of InterGlobe, Jet Airways and SpiceJet were up 1-3 percent intraday on Thursay as aviation turbine fuel (ATF) price was cut by 3.8 percent by 3.8 percent to Rs 45411/kl. This is second consecutive ATF price cut after August.
Earlier in August, ATF prices were reduced by 4.2 percent. This impacts all aviation companies positively as ATF forms 40% of operating costs. This follows five ATF price hikes till July. ATF price was hiked by 5.5 percent in July for the fifth month in a row. In the five increases, ATF rates had gone up by 25 percent, or Rs 9,985.87, per kl since March.
ATF rates vary at different airports because of differential local sales tax or value-added tax (VAT).
The Competition Commission of India (CCI) imposed Rs 6,700 crore penalty on 11 cement companies and their lobby group Cement Manufacturers Association (CMA) for alleged cartelisation and price collusion.
But analysts say that the order is based on circumstantial evidence and are confident it would not hold up to scrutiny if challenged.
As such, they believe that it is unlikely that the penalty will eventually be enforced and so, a material impact on companies earnings in the future is unlikely.
In an interview with CNBC-TV18, Mahesh Bhadang of Nirmal Bang and Sanjay Ladiwala, Chairman of Cement Stockists & Dealers Association of Bombay, say that cement prices are determined by forces of demand and supply and said they do not expect any fall in cement prices in the wake of the order.
Mohan Shenoi of Kotak Mahindra Bank said, “In the backdrop of Jackson Hole speeches, the focus is now on US Non-Farm Payroll data due tomorrow. The odds of a September Fed rate hike has now gone up. This has resulted in mild dollar rally against major currencies though rupee has been steady.”
The US dollar rose to three-week highs against a basket of currencies after data showed that jobs gains in August were roughly in line with expectations, before paring gains on weak manufacturing data.
Asian shares dipped after lower crude oil prices dented Wall Street, as markets waited to see if US employment data could put the Federal Reserve on track to hike interest rates.
Crude oil futures steadied after skidding on data showing a large surprise weekly build in US crude and distillate stockpiles and a smaller-than-expected drawdown in gasoline.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.2 percent in early trading, while Australia’s S&P/ASX 200 index was down 0.2 percent.
Stocks ended lower on Wall Street, as energy shares tracked oil prices lower, and the S&P posted a loss for August, the first negative month for the benchmark index since February.
The Nasdaq gained 1 percent in August and the S&P shed 0.1 percent, speaking to stocks’ resiliency after the S&P hit an all-time high mid-month. It ended within 1 percent of its record close.
Crude oil prices fell 3 percent, paring their big gains for August, after government data showed a larger-than-expected weekly build in US crude and distillate stockpiles and a smaller-than-expected drawdown in gasoline.
From the precious metals space, gold slid to a two-month low after forecast-beating US jobs data stoked speculation that the Federal Reserve would move ahead with plans to raise interest rates, briefly propelling the dollar index to its highest in three weeks.
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