India : Sensex gains for 2nd day, up 2% for wk; Fed meet, IIP, CPI eyed
Overall it was a consolidation day, though equity benchmarks ended at one-month closing high on Friday. Investors turned cautious ahead of key events – interest rate decision by Federal Reserve, November CPI inflation and October industrial output data.The 30-share BSE Sensex gained 52.90 points at 26747.18 and the 50-share NSE Nifty rose 14.90 points to 8261.75, driven by further rally in banks, oil and FMCG stocks. However, the selling in HDFC group stocks limited upside.
Experts feel the market is expected to consolidate, especially ahead of two-day Federal Reserve policy meeting that will start on December 13. The markets have already priced in a 25 basis points increase in interest rate. The Federal Reserve chair Janet Yellen’s commentary will be key to watch out for.
Gautam Shah of JM Financial feels the Nifty has not made a strong bottom yet and the current up move is only a recovery.
He sees 7,700-7,800 as a strong bottom for the Nifty and believes the index will resume its downtrend once it hits 8,350-8,400. However, he is fairly confident that 2017 is going to see the second phase of the bull run that was halted in November following demonetisation.
Ridham Desai of Morgan Stanley also says Indian equities are likely to deliver 14 percent rupee returns in 2017, compared with negative 3 percent in 2015 and 2016.
He believes India will exit the low return environment of the past two years, thanks to better equity valuations.
The week gone by was quite strong for the market, especially due to Thursday’s relief rally. The Sensex surged 2 percent and Nifty jumped 2.2 percent. The Nifty Bank gained 2.5 percent and Metal surged 5.4 percent.
European stocks were mixed after the European Central Bank announced an extension of at least nine months of its massive bond-buying program – albeit at a lower monthly amount. Asian markets also ended mixed as gaming shares tumbled in Hong Kong and South Korea’s main index ended down before parliament voted to impeach President Park Geun-hye over an influence-peddling scandal.
Meanwhile, foreign institutional investors (FIIs) continued their buying in Indian equities for the third consecutive sessions after offloading shares worth Rs 17,000 crore in previous 18 straight sessions. They bought nearly Rs 1,100 crore worth of shares in three days (December 6-8).
State Bank of India rose 2.4 percent. After market hours, the PSU bank said the board of directors approved divestment of 3.9 percent stake in its insurance subsidiary SBI Life at Rs 460 per share that will fetch Rs 1,794 crore.
The news of likely filing of NSE IPO papers with SEBI this month also lifted SBI shares as well as IFCI (up 16 percent) and IDBI Bank (up 4.7 percent) higher. IFCI along with its associate held 4 percent stake in NSE. SBI has 5.19 percent and IDBI Bank 1.5 percent stake in the exchange as per September quarter shareholding pattern.
Nifty PSU Bank gained the most among sectoral indices, up 2.5 percent.
ICICI Bank, ONGC and Axis Bank gained 1-2 percent followed by Reliance Industries and ITC with over half a percent upside while HDFC, Bajaj Auto, M&M and Hero Motocorp fell 1-2 percent.
In the broader space, small cap stocks offering digital solutions staged a mega rally today after the government announced discounts to boost cashless payments. Tanla Solutions, aurionPro Solutions, TVS Electronics and Bartronics India rallied 10-20 percent.
Strides Shasun rose 3 percent on acquisition of Perrigo’s US FDA approved API facility in India for Rs 100 crore.
Sheela Foam rallied 41 percent on debut. The stock closed at Rs 1,032 against issue price of Rs 730.
The market breadth was positive as about 1443 shares advanced against 1178 declining shares on the BSE.
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