Sensex, Nifty sluggish as investors await exit polls; Idea falls

12:10 PM Market Update:
The market was trading flat after entering the green zone for a brief period as investors are keenly eyeing exit polls.

The 30-share Sensex was down 16 points at 28886.16, while the Nifty was down by 10 points at 8914.25. The market breadth was in the negative territory with 1,172 shares having advanced, 1,271 shares having declined and 140 shares remaining unchanged.

Dr Reddy’s, GAIL and Idea Cellular were the top losers, while Maruti Suzuki and Axis Bank were the top gainers on both the indices.

Tracking a weak trend overseas, gold prices declined by 0.36 percent to Rs 28,598 per 10 grams as participants trimmed positions. At the Multi Commodity Exchange, gold for delivery in far-month June shed Rs 104, or 0.36 percent, to Rs 28,598 per 10 grams, in a business turnover of 31 lots. In a similar fashion, the metal for delivery in April fell by Rs 99, or 0.35 percent to Rs 28,530 per 10 grams in 1,042 lots.

(With inputs from PTI)

11:55 am Inflation: Indian inflation likely picked up for the first time in seven months in February as rising food prices began to bite, but it remained below the central bank’s medium-term target, a Reuters poll found.

Prime Minister Narendra Modi’s ban on high-value bank notes in November hurt demand in the largely cash-driven economy and consumer price inflation has since been below the Reserve Bank of India’s 4 percent target.

According to the poll of over 25 economists, the inflation rate for February rose to a three-month high of 3.58 percent from 3.17 percent in January.

“The food component is largely seen responsible for the expected upswing in inflation trajectory, with core inflation also likely to pick up pace faster than what it has been in the last couple of months,” said Anjali Verma, chief economist at PhillipCapital India.

11:37 am Merger: Macquarie believes Bharat Financial Inclusion merger, if it happens, will be yet another instance of IndusInd Bank (IIB) buying a niche growth portfolio after it acquired Deutsche Bank’s credit card portfolio in 2011 and RBS’ diamond financing book in 2015.

It also believes acquisition enhances the return on assets (RoA) profile of the bank and thus is a medium-term positive if executed well. However, this time, given the size of the book and signs of stress in the micro finance institution segment, execution remains key, the brokerage house says.

11:25 am Budget session resumes: The second part of the Budget Session of parliament began today.

In the run-up to the second part of the Budget Session, the passage of legislations related to Goods and Services Tax (GST) has been expected. The session will continue till April 12. The Finance Bill is also expected to be passed during the month-long session.

Meanwhile in the Lok Sabha, Maternity Benefit (Amendment) Bill, 2016 and The Admiralty (Jurisdiction and Settlement of Maritime Claims), 2016 are slated for consideration and passage today.

11:15 am Drug launch: Drug firm Lupin today announced the launch of pain relief drug Hydrocodone Bitartrate and Acetaminophen in the US market.

In a BSE filing, Lupin announced “the launch of Hydrocodone Bitartrate and Acetaminophen tablets USP, in the strengths of 5 mg/300 mg, 7.5 mg/300 mg and 10 mg/300 mg having received an approval from the United States Food and Drug Administration (USFDA) earlier.”

In November last year, Lupin said it had received final approval from the US health regulator for its Hydrocodone Bitartrate and Acetaminophen tablets used for providing pain relief.

The company’s product is a generic equivalent of Mikart Inc’s Hydrocodone Bitartrate and Acetaminophen tablets.

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11:00 am Market Check: Equity benchmarks remained sluggish in morning trade as investors eagarly awaited exit polls for assembly elections that ended yesterday. All eyes are on results of Uttar Pradesh that gives parliament most number of representatives.

The 30-share BSE Sensex was down 21.30 points at 28,880.64 and the 50-share NSE Nifty fell 8.55 points to 8915.75.

Dr Reddy’s Labs fell 4 percent after the US Food & Drug Administration has issued Form 483 with 13 observations for Duvvada facility.

GAIL, Idea Cellular, Adani Ports, Bharti Infratel, Wipro and ONGC were other losers whereas Maruti Suzuki, Asian Paints, Axis Bank, SBI, Tata Motors and ACC were gainers.

10:56 am Kishore Biyani Interview: Future Group will become debt free in less than 4-5 years and has completed the reorganisation of businesses and is working towards strengthening the balance sheet to grow faster.

The group is looking to return investors 20 percent return on capital every year, says Kishore Biyani, CEO of Future Group. Speaking to CNBC-TV18, Biyani said that he expects an 80 percent growth in Future Consumers which has built multiple products and brands having its own distribution system that is coming on stream this year.

The company has launched new brands and started many factories which are operating at full capacity. Future Consumer to see revenue crossing to Rs 20,000 crore by 2020-2021.

10:45 am Aviation stocks take off: Aviation stocks on Thursday, riding on the developments of cut in jet fuel tax as well as fall in crude prices. Jet Airways rose 1.66 percent intraday, while SpiceJet rose 6.2 percent intraday on Thursday. Meanwhile, InterGlobe Aviation, the company that operates IndiGo, was trading flat with a slightly negative bias.

10:39 am FII view: Sanjay Mookim of Bank of America Merrill Lynch says while the GST (goods & services tax) should be beneficial in the long term, it will likely disrupt the economy during the transition period.

At a 17x 12-month forward P/E, Sensex valuations are nearly 15 percent above the long-term average and are likely ignoring this disruption, it feels.

Coupled with the residual impact of demonetisation, Sensex consensus earnings are likely to be cut by 6-8 percent over FY18-19, Sanjay Mookim says.

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10:29 am Market check: The market is now in the green, with the Sensex up 16 points at 28917.92, while the Nifty is up 2.1 points at 8926.40.

10:20 am Expert Speak: While the global scenario is looking up, certain hurdles like the upcoming elections in France in next 2-3 months will be in focus.

The upcoming rate hike by the US Federal Reserve next week is already factored in, said Andrew Holland, Chief Executive Officer at Avendus Capital Alternate Strategies. Rather, eyes are on what Mario Draghi will do in the next ECB meet. The US dollar, which has not done much in past few weeks, will continue to rise in the first half on this year.

In the second half, other currencies like yen will be more in focus. No big move on currencies is expected this year.

10:00 am Market check: The market continued to be cautious ahead of key exit poll data for assembly elections in five states that will be announced later in the day.

The Sensex was down 4.55 points at 28897.39, while the Nifty was down 4.45 points at 8919.85. About 1,011 shares have advanced, 877 shares declined, while 91 shares remain unchanged.

Dr Reddy’s Laboratories, GAIL were the top losers on the index, while Asian Paints, SBI and Axis Bank gained the most on both the indices.

Tata Teleservices plunged 6 percent intraday after the Reserve Bank of India (RBI) opposed its settlement deal with DoCoMo in the Delhi High Court. The central bank opposed the consent terms filed by Tata Sons and NTT DoCoMo in their long-standing dispute.

The RBI opined that the put clause agreement in the settlement is illegal and may lead to extra short-term gains for the Japanese partner.

Last month, Tata Sons agreed to pay USD 1.17 billion in damages to Japan’s DoCoMo, following which, both the sides decided to approach the Delhi High Court to accept their settlement.

Shares of Dr Reddy’s Laboratories plummeted 3.5 percent intraday as investors turned cautious on its plant getting 13 observations from the US drug regulator.

The US Food and Drug Administration (FDA) issued these observations for its Duvvuda oncology formulation facility. The site manufactures cytotoxic and hormonal injectables and is an important plant given Dr Reddy’s focus on complex generic filings.

9:55 am Auto industry: The automobile industry is fully geared up to commence production of vehicles compliant with BS-IV emission norms from April 1 across the country, SIAM said today.

The Bharat Stage IV (BS-IV) emission norms will become applicable to all kinds of vehicles across the country from April 1 this year.

Society of Indian Automobile Manufacturers (SIAM) President Vinod Dasari in a statement said that the auto industry has not sought any deferment or delay in the implementation of the BS-IV emission norms.

“Contrary to the misinformation being perpetuated by certain sections of the society, specially environmental activists, the auto industry is fully committed to commence manufacturing of BS-IV vehicles from April 1, 2017, across the country,” he added.

9:45 am FII view: Bharat Iyer of JPMorgan says equity markets are going into these elections results expecting the BJP to do well.

Consequently he expects the market’s reaction to the results to be asymmetric. A win for the BJP should result in a positive reaction but a weak showing will likely result in a more adverse reaction, Iyer feels.

It may be a coincidence, but it is important to note that state election results have had a meaningful bearing on the reform agenda over the past, Iyer says.

He further says one interpretation for this trend could be that a positive verdict emboldens the ruling party to pursue the agenda with more confidence and vigour and it fragments the opposition.

9:30 am Buzzing: Shares of Dr Reddy’s Labs plummeted 3.5 percent intraday as investors turned cautious on its plant getting 13 observations from the US drug regulator.

The US Food and Drug Administration (FDA) issued these observations for its Duvvuda oncology formulation facility. The facility, called Unit-7, is located in Visakhapatnam Special Economic Zone (VSEZ). The site manufactures cytotoxic and hormonal injectables and is an important plant given Dr Reddy’s focus on complex generic filings.

The Unit-7 had received a warning letter in November 2015 for batch failures, a probable microbial contamination and certain lapses quality control procedures.

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9:15 am Market Check: Benchmark indices opened lower, with the Nifty breaking 8900 in early trade as investors remained cautious ahead of exit polls for assembly elections later today.

The 30-share BSE Sensex was down 86.46 points at 28815.48 and the 50-share NSE Nifty fell 21.90 points to 8902.40.

GAIL and Dr Reddy’s Labs were top losers among Sensex and Nifty stocks, down 3 percent followed by BHEL, ONGC, HUL, Wipro and Infosys.

Asian Paints, Hero Motocorp, Maruti Suzuki, Sun Pharma, Bajaj Auto, BPCL and TCS were early gainers.

The Indian rupee opened lower by 11 paise at 66.81 per dollar versus previous close of 66.70.

Mohan Shenoi of Kotak Mahindra Bank said, “A US Fed rate hike in March looks almost certain and currency markets seem to have fully priced it in. The rupee however is resilient on the back of FII flows into Indian equity markets.”

He expects the USD-INR pair to trade in a range of 66.70-67/dollar for the day.

The dollar held gains as a stronger-than-expected US private-sector jobs figures in February sealed expectations that the Federal Reserve will raise interest rates next week.

The ADP national employment report showed that private payrolls grew the most since December 2015. Traders now price in an 85.2-percent chance of a Fed rate hike next week.

Asian equities were a mixed picture, as traders digest China’s February inflation data and track crude oil prices.