Sensex, Nifty fall for 2nd day; TCS rebounds, Dr Reddy’s drags
Benchmark indices closed rangebound session moderately lower on Monday as investors awaited December quarter earnings and macro data later in the week.The 30-share BSE Sensex was down 32.68 points at 26726.55 and the 50-share NSE Nifty fell 7.75 points to 8236.05 while the broader markets outperformed with the BSE Midcap and Smallcap indices rising 0.2-0.5 percent.
Now all eyes are on third quarter earnings season (that will kick start by Infosys and TCS) and macro data (December CPI inflation and November factory data) that will be announced later in the week. Overall analysts will closely watch the impact of demonetisation on Q3 earnings while for IT companies, Q3 is generally a tepid quarter but their outlook will be key.
Jayant Manglik of Religare Securities suggests keeping a close watch on the earning announcements and management guidance for further cues.
As of now, 8300 is acting as hurdle in Nifty and needs some decisive trigger for further up move. Traders should limit their positions only to the quality stocks and keep them hedged at least before their result announcements, he says.
Sanjay Mookim of Bank of America Merrill Lynch says the consensus Sensex earnings growth expectation for FY17 has come down to 8 percent from 20 percent at the beginning of the fiscal, FY18 earnings growth expectations at 18 percent is still high.
Factoring the impact of demonetisation, on a top down basis, he expects Sensex FY18-19 EPS growth to be 12-14 percent. This relatively robust earnings growth could drive Sensex to 29,000 by December 2017, Mookim feels.
Technology stocks barring Infosys rebounded on short covering. The Nifty IT index was up nearly a percent after a 3-percent fall last week. HCL Technologies surged 2.4 percent followed by TCS (up 0.88 percent) and Wipro (up 0.6 percent).
Healthcare stocks were under pressure today. Dr Reddy’s Labs was biggest loser among Sensex stocks, down more than 3 percent followed by Cipla, Sun Pharma and Lupin with a percent loss.
Granules India tanked 10 percent after its Gagillapur plant in Telengana received 11 observations after inspection by Portugal health regulator INFARMED. The same plant in October was cleared by US Food and Drug Administration. However, Aurobindo gained 0.3 percent on acquisition of Portugal-based Generis Farmaceutica SA for 135 million euro.
Tata Motors gained 0.5 percent after Jaguar Land Rover’s sales in December increased 12 percent with China growing 36 percent and Europe 8 percent. Tata Steel rose 0.6 percent after Q3FY17 sales grew by 27.5 percent YoY to 29.9 lakh tonne.
Among other Sensex stocks, ITC rose over a percent whereas Asian Paints, ONGC, L&T and Mahindra & Mahindra were down 1-2 percent.
PSU company BEML surged 16 percent as the government decided to sell 26 percent stake in the company to strategic investor/s.
The market breadth was positive as about 1574 shares advanced against 1246 declining shares on the BSE.
European bourses were lower, bucking the trend seen across other global markets, as investors focused on fresh data from the euro zone and volatility in oil markets. Germany’s DAX and France’s CAC were down half a percent at the time of writing this article. Asia closed mostly higher with the China’s Shanghai and Australia’s ASX 200 rising 0.5-0.9 percent.
