Sensex, Nifty remain under pressure; HDFC, ITC, banks drag

11:42 am FII View:Laurence Balanco of CLSA says most global markets are at a new 52-week highs and any short-term pullback in these markets are likely to be followed by further gains.

The Nifty has traced out an impressive long-term uptrend with the index set to extend its trend as price action tests overhead resistance provided by the March/September 2015 all-time highs at the 8,994-9,191 area, he adds.

A break above this resistance zone would extend the bullish uptrend channel which has been unfolding off the December 2011 lows and would open the door for a move up to the following target levels seen between 10,350 and 12,000, Balanco feels.

At the sector level, the NSE Nifty Bank index looks set to lead the Nifty’s breakout, he says.

11:30 am CLSA on Bharti Infratel: CLSA says risks for Bharti Infratel are overdone and rising tower merger & acquisition (M&A) is a positive catalyst for it. The stock is now pricing in a pessimistic scenario on growth, it adds.

Hence, the brokerage house has upgraded its recommendation to buy from outperform.

11:20 am Services PMI: India’s dominant services industry returned to growth in February for the first time in four months as demand slowly recovers after the government’s cash crackdown late last year, a private business survey showed on Friday.

The Nikkei/IHS Markit Services Purchasing Managers’ Index rose to 50.3 in February from 48.7 in January, marginally above the 50-mark that separates growth from contraction.

The index slumped to a near-three year low in November after Prime Minister Narendra Modi’s surprise decision to outlaw old 500 and 1,000 rupee banknotes to crack down on “black money” and tax evasion.

The decision sucked 86 percent of cash out of circulation, and everyone from street hawkers to big consumer goods firms suffered a slump in sales.

A sister survey on Wednesday showed manufacturing activity also expanded further in February, though at a lackluster pace.

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11:00 am Market Check

Benchmark indices continued to trade lower in morning as investors tread with caution ahead of assembly elections results due next week. Banking & financials, FMCG and technology stocks weighed but Reliance restricted losses.

The 30-share BSE Sensex was down 89.23 points at 28750.56 and the 50-share NSE Nifty fell 31.50 points to 8868.25. The market breadth was negative too, as about 1224 shares declined against 1069 advancing shares on the BSE.

Equities are poised for a breather following a breathtaking rally recently even as a sharp decline is unlikely, Nitin Jain of Kotak UK said.

Infosys slipped nearly 1 percent after Goldman Sachs has initiated its coverage on the stock with a sell call and target of Rs 829 as application services is shrinking led by swift contraction in BFSI.

Reliance Industries maintained its run up, rising 2.7 percent to trade near 52-week high after analysts meet. CLSA has retained its buy call on the stock, with increased target price at Rs 1,500 (from Rs 1,350) after the company guided on Jio’s FY21 EBITDA of over USD 11 billion and expects 50 percent rise in industry revenue to USD 45 billion by FY21.

Index heavyweights HDFC and ITC fell 1.7 percent each followed by HDFC Bank, L&T, ICICI Bank and TCS.