RIL’s 11% run lifts Sensex 103pts despite fall in IT, HDFC twins
Reliance Industries, which posted biggest single day gain since May 18 (2009), propelled equity benchmarks to fresh five-month highs Wednesday ahead of expiry of February derivative contracts on Thursday. However, the correction in technology and HDFC Group stocks dragged the Nifty below 8950.
After rising as much as 202 points intraday, the 30-share BSE Sensex settled with 103.12 points gains at 28864.71 amid consolidation. The 50-share NSE Nifty failed to hold 8950 level, up 19.05 points at 8926.90. Both indices were at highest closing level since September 8, 2016, and continued uptrend for fifth consecutive session.
However, the broader markets underperformed benchmarks on negative breadth, snapping four-day winning streak. The BSE Midcap and Smallcap indices fell 0.58 percent each as about 1751 shares declined against 1096 advancing shares on the exchange.
Being expiry day, there could be high volatility in the trading session on Thursday as participants will rollover and unwind their derivatives positions, Jayant Manglik of Religare Securities says.
Saurabh Mukherjea of Ambit Capital says the market continues to inch up relentlessly with support from domestic fund flows, but he is circumspect considering the visible underlying macro weakness.
The Budget was not particularly expansionary, fourth quarter earnings are expected to be weak, and macro indicators suggest a sluggish economy with not much momentum in either consumer or capital expenditure, he says. “It is difficult to say why anyone would chase this market given the lack of macro or earnings momentum.”
Petrochemical major Reliance Industries was the biggest gainer and also the largest contributor to Sensex & Nifty gains. The stock jumped 11 percent to Rs 1,207.65, the highest closing level since May 29, 2008, especially after Mukesh Ambani, Chairman and Managing Director announced Reliance Jio’s new tariff plans. Sources told CNBC-TV18 that Reliance Jio set the target of 40 crore subscribers by March 2018 and aims for nearly Rs 1 lakh crore revenue for FY18.
Kotak says Jio, which crossed 100 million subscriber mark in 170 days, can breakeven at EBITDA (earnings before interest, tax, depreciation and amortisation) level in FY2018 itself if it is able to retain around 50 percent of subscribers. With retaining buy on Reliance Industries, CLSA feels Jio will likely achieve profit before tax breakeven in FY19.
Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com.
Axis Bank was other leading gainer, up 4 percent on hopes of likely merger with some leading private banks.
Idea Cellular also gained 4 percent after sources told CNBC-TV18 that the company and Vodafone may be open to sell 15-20 percent stake in merged company to financial investors to reduce debt and infuse cash for operations. Reports suggest that merger deal announcement is likely on February 24/25.
Coal India shares rose 2.6 percent. Company official today says the company will appoint lead investment bank in 15-20 days to identify coal assets. SBICAP and some foreign banks are among those that have shown interest.
Infosys and TCS fell 2 percent each after a media report indicated that US-based retail giant JC penny plans to reduce outsourcing of software business to both companies.
HCL Technologies declined 1.8 percent. An official familiar with the development told Moneycontrol that the company was open to the idea of a share buyback and was considering it. However, the company says buyback news was market speculation.
Asian Paints and Hero Motocorp were other gainers among Sensex stocks, up 1-3 percent while HDFC, HDFC Bank, NTPC, Adani Ports, Lupin and Cipla fell 1-3 percent.
Aviation stocks – Jet Airways and SpiceJet rallied 3-5 percent on top of more than 7 percent rally in previous session on value buying.
Bharat Electronics shares declined 3 percent on stake dilution by the government through offer for sale that will remain opened till Thursday. The portion reserved for institutional investors getting oversubscribed. The 2-day offer for sale (OFS) of the government’s 5 percent stake in BEL at a floor price of Rs 1,498 opened for non-retail investors today.
