Profit booking pulls Sensex down for 2nd day, Midcap outperforms
Equity benchmarks closed lower for second consecutive session Tuesday, dragged by further profit booking in private banking & financials, auto and FMCG stocks. Overall it was another consolidation day for the market as investors were cautious ahead of Q3 GDP data and US President’s speech.
The 30-share BSE Sensex fell 69.56 points to 28743.32 and the 50-share NSE Nifty slipped 17.10 points to 8879.60.
Experts say they expect consolidation to continue for couple of sessions, though overall market trend is positive.
“We suggest traders to wait on side lines and let the markets settle down first before initiating any fresh trade,” Jayant Manglik of Religare Securities says, adding globally, participants are eyeing the US President’s speech and hoping for some concrete plan this time.
UBS in its research report says retail flows into Indian equity market look bullish in the near term and indicate that the recent market strength may continue despite the expected sharp earnings decline ahead.
In its upside scenario, UBS expects Nifty to touch 9,700 as long as there are no global macro shocks; declines in global risk appetite; immediate local “negative catalysts” such as UP elections and fourth quarter of 2016-17 earnings, which is expected to disappoint.
The broader markets outperformed benchmarks, with the Nifty Midcap and Smallcap indices rising over half a percent.
Auto stocks were under pressure ahead of February sales figures that will be announced on March 1. Bajaj Auto and Hero Motocorp fell 1-1.5 percent. Tata Motors and Maruti Suzuki declined 0.25-0.5 percent.
Oil marketing companies shares lost ground after sources told CNBC-TV18 that ONGC may acquire HPCL in Rs 44,000 crore deal. HPCL lost 4 percent and BPCL fell 5 percent while ONGC was down 0.5 percent. Morgan Stanley sees limited impact on HPCL/BPCL if government transfers ownership to ONGC. ONGC’s leverage could rise in the near-term and HPCL/BPCL could lower ONGC’s leverage only by FY20-21, it feels.
Idea Cellular shares rebounded in last hour of trade, up 0.74 percent at close against loss of 6 percent in early trade. P5 Asia Investments, the investment arm of private equity fund Providence, sold its entire 3.3 percent stake in the company through block deals ahead of likely merger of the Aditya Birla Group company with Vodafone.
Among other largecaps, BHEL was biggest gainer among Sensex and Nifty stocks, up 6 percent followed by Bharti Airtel, Asian Paints, Adani Ports, M&M, Yes Bank and Hindalco while Coal India, Tech Mahindra, NTPC, ITC, ICICI Bank and TCS fell 0.8-2.5 percent.
In broader space, Reliance Communications surged 6 percent after sources told CNBC-TV18 that merger talks of the company with Aircel and Tata Teleservices entered into due diligence phase. Potential Tata-DoCoMo settlement may bring the deal a step closer, sources say.
Tata Teleservices shares were locked at 20 percent upper circuit after Tata Sons has withdrawn its application against NTT DoCoMo in Delhi High Court. Both companies have filed consent terms for perspective settlement in their long-standing dispute. Tata Sons has reportedly agreed to pay USD 1.17 billion in damages to Japanese company.
Morgan Stanley has initiated coverage on Future Retail with an overweight rating and price target of Rs 340 as the brokerage house has high conviction on strong earnings growth potential of the company after recent restructuring. The stock spiked 6 percent.
Sambhaav Media jumped 20 percent on winning FM radio channels for 13 cities of Gujarat and Jammu & Kashmir.
Lincoln Pharmaceuticals also shot up 20 percent. Sunidhi Research has recommended buying the stock with a target price of Rs 277 as the company expects to clock healthy revenue growth in the next 3 years. The demand for company’s products remains strong and has enabled the company to build a strong order-book, the brokerage house says.
On the global front, Asia markets finished mixed and European markets were also mixed as investors await a key speech from President Donald Trump.
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