Sensex snaps 6-day gains; banks drag Nifty below 8900; RIL up 5%
Mon Feb 27 2017
Rajesh Sharma (2003 articles)

Sensex snaps 6-day gains; banks drag Nifty below 8900; RIL up 5%

Equity benchmarks snapped six-day winning streak on Monday, with the Nifty closing below 8900 level on account of profit booking in banks, telecom and auto stocks. However, the consistent rally in index heavyweight Reliance Industries capped losses.

The 30-share BSE Sensex slipped 80.09 points to 28,812.88 and the 50-share NSE Nifty fell 42.80 points to 8,896.70 amid consolidation. However, the broader markets outperformed benchmarks despite weak breadth, closing flat with a positive bias.

Experts feel the market may decline further as it already rallied 7 percent in last five consecutive weeks, but that may not be a steep fall.

The current fall is a chance for those who had missed the bus earlier, says Jayant Manglik of Religare Securities who advising to use this phase to add quality stocks.

N Jayakumar of Prime Securities says he does not believe the market is “frothy” and sees a floor for the Nifty at 8,500.

Retail investors are quietly lapping up stocks without ostensibly creating any noise and that indicates the market could be “in the midst of a very powerful rally”, Jayakumar feels.

Reliance Industries continued its run up on first day of the week as well, up 4.74 percent to close at Rs 1,238.60, the highest closing level since May 29, 2008. The stock gained more than 16 percent in four consecutive sessions, especially after Reliance Jio announced tariff plans effective from April 1, 2017.

With retaining overweight rating on Reliance, Morgan Stanley raised its target price to Rs 1,506 (from Rs 1,280) to factor in higher energy earnings and increased clarity on telecom investments. RIL stock has underperformed peers by 60 percentage points in the past four years as its returns lagged peers’. This is set to change as earnings start from energy projects and telecom monetisation gathers pace, it feels.

Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes

All Nifty Bank stocks closed in the red. Axis Bank was biggest loser, down 3.56 percent followed by ICICI Bank and Kotak Mahindra Bank with 1.5-2 percent losses. Bank Nifty lost over a percent.

Telecom stocks slipped amidst tariff war. Bharti Airtel was down 2.83 percent after it announced free incoming calls/SMS and no premium on outgoing calls while roaming across India and no more data roaming charges. Idea Cellular was top loser, down more than 4 percent.

Among others, L&T, Maruti, Tata Motors and Dr Reddy’s Labs fell over a percent whereas Infosys, HUL, Lupin, TCS, Wipro and Coal India gained 0.3-1 percent.

In the broader space, Jindal Steel rallied further by 6.7 percent. Motilal Oswal has upgraded the stock to buy and also raised target price to Rs 180 (from Rs 88 earlier) on improving Global Ventures’ debt servicing.

RBL Bank added 2.5 percent on top of 9.5 percent rally in last week. Sources told CNBC-TV18 that the bank is in talks with non-banking finance company Bharat Financial for a merger. IndusInd Bank has also been negotiating deal valuations with Bharat Financial.

GMR Infrastructure rose 3.5 percent as company completed strategic debt restructuring of its subsidiary GMR Chhattisgarh Energy.

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.