Sensex, Nifty end flat but post first weekly loss since Jan 22
Late recovery helped equity benchmarks close Friday’s session on a flat note but posted weekly loss for the first time in last six consecutive weeks. Value buying in Reliance Industries and short covering in Infosys offset weakness in banking & financials stocks and ITC. Investors were cautious ahead of GST Council meet in the weekend, assembly elections results next week and Federal Reserve policy meeting on March 14-15.
The 30-share BSE Sensex was down 7.34 points at 28,832.45 while the 50-share NSE Nifty failed to hold 8,900 level touched in late trade, down 2.20 points at 8,897.55. Weak global cues weighed on the market.
Further profit booking and some consolidation can be possible but sharp fall is unlikely, Nitin Jain of Kotak UK feels.
He says after this consolidation, the market may look for a reset of the rally closer to both earnings season and goods & services tax (GST) implementation data, which will be next key trigger.
Before that, assembly elections results could either be a bit of a dampener or could be a trigger for rally, he feels.
The broader markets outperformed benchmark indices for the day as well as week, with the Nifty Midcap rising half a percent.
For the week, the Sensex was down 0.2 percent and the Nifty fell half a percent, dragged by banks and infrastructure stocks. IT and metals stocks outperformed during the week.
Meanwhile, India’s services industry returned to growth in February for first time in four months, with the Nikkei/IHS Markit Services Purchasing Managers’ Index rising to 50.3 from 48.7 in previous month as demand slowly recovered after demonetisation. Manufacturing activity also expanded further in February, though at a lacklustre pace.
Reliance Industries hit fresh 52-week high intraday, closing up 2 percent as analysts remained bullish on Jio prospects. 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.
Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com.
Bharti Infratel surged 6 percent on value buying after reasonable valuations. CLSA has upgraded the stock to buy from outperform with a target price of Rs 356 as it feels with recent sharp correction (of 20 percent) in stock, risks related to tenancy impact due to likely Vodafone-Idea merger are overdone now. These M&A deals in telecom space would be a positive catalyst for Infratel’s growth and strengthen its position in the tower space in India, it believes.
Infosys recouped losses in last hour of trade, up 1 percent on short covering. The stock had fallen 2 percent intraday after Goldman Sachs 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.
Aluminium major Hindalco Industries gained 5 percent after a launch of QIP to raise USD 500 million. These issue proceeds will be used for working capital, debt repayment and acquisitions.
Biocon shares gained 3.8 percent after Delhi High Court allowed the company to make & sell cancer drug, Canmab.
Sugar stocks rallied 3-12 percent after sugar deficit has risen to 18.54 percent in the space of a fortnight from about 15 percent in the middle of February.
GAIL gained 3.5 percent after a media report indicated that the company signed a swap deal with Swiss trader Gunvor to sell some of its US LNG.
Axis Bank, Sun Pharma and Hero Motocorp gained over a percent while HDFC, ITC, ICICI Bank, Asian Paints and SBI among others were down 0.7-1.9 percent.
European markets were lower by 0.3 percent as investors digested recent record highs and the prospect of the US Federal Reserve raising interest rates. Asian stocks also ended lower on profit booking, tracking a weak lead from Wall Street.