Closing Bell: Sensex ends on a sluggish note, Nifty ends below 9600; TCS, LT down 2%

3:30 pm Market at Close: Equity benchmarks ended the session on a negative note, with the Nifty closing below 9600.

The Sensex was down 80.18 points at 31075.73, while the Nifty was down 44.30 points at 9573.85. The market breadth was narrow as 1,379 shares advanced against a decline of 1,268 shares, while 177 shares were unchanged.

Tata Consultancy Services (TCS), Larsen & Toubro, Indian Oil and BPCL lost the most on both indices, while Reliance, Aurobindo Pharma and Cipla gained the most.

Midcaps, however, ended in the green zone along with infrastructure stocks, while the rest ended in the red.

3:25 pm Buzzing: ICICIdirect has initiated coverage with a buy rating on Prabhat Dairy and expects the stock to hit Rs 140 as it is a strong player to bet on value addition in dairy industry. The stock was up 4.5 percent intraday.

The research house believes that with improving capacity utilisation levels and initiatives undertaken to expand the distribution as well as procurement network, Prabhat is all set to take off with its gears in place.

It expects company’s revenue and adjusted PAT to grow at a CAGR of 14.3 percent and 45.1 percent, respectively, in FY17-19 with an operating margin of 10 percent in FY19.

With the end of the investment phase and increasing capacity utilisations across categories, earnings visibility and improving return ratios provide comfort, it feels.

Established in 1998, Prabhat Dairy has evolved from a specialty dairy ingredients company to an emerging brand in the dairy industry. It sells its products as ingredient products or co-manufactured products to institutional clients, which currently constitute 70 percent of its sales; and retail consumer brands (Prabhat, Prabhat Milk Magic, Prabhat Flava, Volup), which comprise the remaining sales.

3:10 pm Market Check: Benchmark indices trimmed losses in last hour of trade, with the Sensex down 70.86 points at 31,085.05 and the Nifty down 37.20 points at 9,580.95.

2:50 pm Swaraj Engines at life high: Swaraj Engines shares jumped to fresh record high at Rs 2,401.90, up nearly 5 percent intraday after ICICIdirect upgraded the stock to buy on outstanding balance sheet and robust earnings growth.

“The tractor engine manufacturer has a superlative balance sheet with nil debt, negative working capital cycle and robust return ratios. Average return on capital employed, return on equity & return on invested capital over FY17-19 is expected at 36 percent, 28 percent & 206 percent, respectively,” the research house explained.

It feels recently accounted farm loan waivers by key agrarian states will certainly aid tractor growth, however it is not the optimum solution to address farm distress. Incorporating the same and positive monsoon momentum, the brokerage house upgraded its estimates and valuation multiple.

2:30 pm Drug launch: Pharma major Lupin announced the launch of its Bupropion hydrochloride extended-release tablets USP, 150 mg and 300 mg having received an approval from the US Food and Drug Administration.

Bupropion is the AB rated generic equivalent of Valeant Pharmaceuticals North America, Wellbutrin XL tablets.

The drug is indicated for the treatment of major depressive disorder and prevention of seasonal affective disorder in adults. It had US sales of USD 758 million, as per IMS MAT May 2017.

2:15 pm Market Check: Benchmark indices were sluggish, with the Nifty trading below 9600 mark.

The Sensex was down 80.19 points at 31075.72, while the Nifty was down 38.85 points at 9579.30. The market breadth was narrow as 1,364 shares advanced against a decline of 1,204 shares, while 156 shares were unchanged.

M&M, TCS, BPCL and IOC were the top losers, while Reliance, Wipro and Aurobindo Pharma gained the most.

1:43 pm Market Outlook: V Srivatsa of UTI MF said market is underestimating the impact of GST on the near-term financials of most of the companies on the manufacturing side.

There could be earnings surprises on the downside for manufacturing companies at least for one quarter or even two.

However, the market is flooded with inflows from domestic institutions which point out to a long-term trajectory. So market may consolidate while trying to digest the impact of GST in the short-term, and may not move up much. However, it may also not see the falls we witnessed 5-10 years back on back of this kind of event.

So, the risk to the market remains the impact of GST on earnings and the risk-off global rally, where FIIs may withdraw money but the impact of that would be much less than it used to be five years back, said Srivatsa.

1:27 pm Market Check: Equity benchmarks extended losses in afternoon trade, following weak trade in European peers.

The 30-share BSE Sensex was down 82.49 points at 31,073.42 and the 50-share NSE Nifty declined 41.15 points to 9,577, weighed by banking & financials, technology and PSU oil stocks.

The market breadth remained positive as about 1,333 shares advanced against 1,185 declining shares on the BSE.

Bourses in Europe moved lower as investors digested comments from the US Federal Reserve and waited to hear from the Bank of England. The Swiss National Bank left its rate unchanged.

France’s CAC, Germany’s DAX and Britain’s FTSE were down 0.5-1 percent.

1:15 pm MF holding: At a time when there is a lot of regulatory overhang in the public sector banks (PSU), fund managers were busy pouring money into private sector banks in the month of May for second consecutive month in a row to a 1 year high of 17.3 percent.

The month of May saw a notable change in the sector and stock allocation of funds. On a month-on-month basis (MoM), the weights of private banks rose, Motilal Oswal said in a report.

Private Banks maintained its positive momentum for the second consecutive month to attain a high of 17.3 percent up over 90bps on a MoM basis and 30 bps above May 2016 weight of 17 percent.

Top three gainers in the private banking space include names like ICICI Bank, Kotak Mahindra Bank, and HDFC Bank which saw huge buying interest by fund managers in the month of May.

12:39 pm Demonetisation impact: India Ratings feels microfinance institutions, non-bank financial companies and small finance banks are likely to face significant credit costs and capital erosion in FY18, following demonetisation and political interferences.

12.23 pm Market Check: Benchmark indices were marginally lower amid consolidation, with the Nifty struggling below 9600 level, weighed by HDFC Group, technology, banks and PSU oil stocks.

The 30-share BSE Sensex was down 32 points at 31,123.91 and the 50-share NSE Nifty fell 26.95 points to 9,591.20 despite positive market breadth.

About 1,327 shares advanced against 1,101 declining shares on the BSE.

HDFC Bank, TCS, HDFC, L&T, ICICI Bank, M&M, Infosys, ONGC and Coal India were down 0.4-1 percent while Reliance Industries extended gains to 2.2 percent followed by Wipro, Sun Pharma and Dr Reddy’s Labs.

In broader space, HPL Electric and Dredging Corporation gained around 10 percent.

12:01 pm Cadila in focus: Cadila Healthcare shares rose as much as 2.5 percent after receiving approval from the US health regulator for anti-retroviral drug.

“Zydus Cadila has received final approval from the US Food and Drug Administration to market Acyclovir injection USP strengths of 500 mg/vial and 1,000 mg/vial,” the pharma company said in its filing.

Acyclovir, which caters to anti-viral segment, will be produced at the group’s formulations manufacturing facility at Moraiya in Ahmedabad that was cleared by the US health regulator in February 2017.

The group, so far, has received approvals for four drugs that have been filed from its Moraiya facility, including Levofloxacin (used for bacterial infections), Mesalamine (used to treat mild to moderate ulcerative colitis) and Ezetimibe tablets (used to reduce high cholesterol).

11:56 am Buyback: Oil India has completed its buyback of 4.5 crore shares at a price of Rs 340 per share and thus the total amount utilised in the buyback of shares is Rs 1,527 crore.

The buyback would result in accretion to FY2018 and FY2019 EPS by 5.9 percent, owing to the reduction in the share count to 75.7 crore against 80.2 crore currently.

11:36 am USFDA approvals: Alkem Laboratories rallied as much as 2.2 percent and Wockhardt gained 4.5 percent intraday after companies received drug approvals from the US health regulator

Alkem has received approval from the US Food and Drug Administration for Itraconazole capsule, which is used in treatment of fungal infection.

Meanwhile, another healthcare company Wockhardt has received tentative approval from US FDA for Bendamustine Hydrochloride injectable, which is used in treatment of different types of cancer.

11.20 am Market Check: Benchmark indices continued to be volatile in morning trade, with the Nifty hovering around 9600 level after digesting Federal rate hike.

The 30-share BSE Sensex was down 14.45 points at 31,141.46 and the 50-share NSE Nifty fell 16.65 points to 9,601.50.

The market breadth turned strong as about 1,359 shares advanced against 903 declining shares on the BSE.

Reliance Industries was the biggest contributor to Sensex’ gain again, up 1.5 percent. Healthcare stocks were buzzing as Sun Pharma, Lupin, Dr Reddy’s Labs, Cipla and Aurobindo Pharma surged 1-6 percent.

11:00 am Buzzing: Inditrade Capital share price hit a 52-week high of Rs 59.20, rallying 20 percent intraday after the wife of ace investor Porinju Veliyath picked up a stake in the company.

As per bulk deals data on the Bombay Stock Exchange, Shilpa Porinju Veliyath has purchased 1.42 lakh equity shares (representing 0.6 percent of total paid up capital) at Rs 45.74 per share.

Foreign portfolio investors also have 2.84 percent shareholding in the company, out of which 2.16 percent stake is held by CLSA Global Markets as of March 2017.

Incorporated in 1994, Inditrade Capital (formerly known as JRG Securities) is engaged in equity and commodity broking businesses, with strong presence in South India.

10:45 am SAMCO on Fed rate hike: Irrespective of the short term knee jerk reaction, there is no direct correlation between interest rates hikes and adverse stock market reactions, Jimeet Modi, CEO, SAMCO Securities feels.

For example: During Dow’s bull journey in 1994 to 1995 the interest rates were increased from 3.75 to 5.75 over a period of 15 months – 18 months wherein still the Dow rose from 3500 to 5000 by December 1995. There are many instances wherein no such meaningful correlation is found.

However when interest rate hikes reaches an extreme in the range of 5-6 percent, that’s the time US markets have cranked substantially. Thus there is more room for interest rate hikes from the current 1 percent which may not impact the markets in the short term. But if the US market succumbs to deep sell off, Indian market too will be adversely impacted, Jimeet Modi said.

10:25 am Buzzing: Repco Home Finance shares rallied as much as 4.4 percent intraday after the housing finance company raised Rs 272 crore from the World Bank subsidiary.

“Securities allotment committee of the board of directors, on June 14, has approved the allotment of 2720 secured, redeemable, non-convertible, non-cumulative debentures (SRNCD) of face value of Rs 10 lakh each aggregating to Rs 272 crore on private placement basis to International Finance Corporation,” the company said in its filing.

Repco raised funds at the rate of 8.05 percent on a semi-annual basis, for a tenure of 7 years. The fund allotment date is June 14, 2016 and maturity date would be May 18, 2024.

These debentures are rated as AA by rating agency CARE and are secured by book debts & pari-passu charge on immovable property.

10.07 am Market Check: The broader markets outperformed equity benchmarks after Federal Reserve hiked interest rate by 25 basis points to 1.25 percent, which was on expected lines.

The 30-share BSE Sensex was up 18.30 points at 31,174.21 and the 50-share NSE Nifty fell 12.25 points to 9,605.90.

The BSE Midcap index was up 0.2 percent and Smallcap gained 0.5 percent on positive market breadth. About 1,148 shares advanced against 713 declining shares on the BSE.

Aurobindo Pharma was top gainer among Nifty stocks, up 3.5 percent followed by NTPC, Adani Ports, Bharti Airtel, Dr Reddy’s Labs and Sun Pharma whereas GAIL, Coal India, Asian Paints, TCS, L&T, Bank of Baroda and BPCL were under pressure.

9:59 am Market Outlook: The Federal Open Market Committee (FOMC), the policy making arm of the US Federal Reserve, hiked its rates on expected lines, by 25 basis points.

The FOMC also said that it will begin reducing its USD 4.5 trillion balance sheet this year.

VK sharma, Head – Private Client Group, HDFC Securities feels the US Fed statement is apparently hawkish.

While the FOMC has laid out a plan to reduce its balance sheet size, it has not said when they would begin reducing the balance sheet, Sharma said.

The yields on the 10-year have risen yesterday in the US. Crude has fallen afresh. This should further help Indian markets, he feels.

9:45 am Stake sale: Shipping Corporation of India shares hit a 52-week high of Rs 92, up as much as 16 percent in morning trade after NITI Aayog recommended the government to cut stake in the company by 38.75 percent.

The NITI Aayog has drafted a recommendation which proposes to bring down the government’s stake in the company to 25 percent from current 63.75 percent. The deal could potentially earn the government around Rs 960 crore for the exchequer.

The recommendation will soon be sent to cabinet committee of economic affairs.

NITI Aayog has recommended the Ministry of Shipping to divest stake in SCI in multiple tranches.

Government should sell 26 percent stake in SCI in first round and subsequently, government should transfer management control, it said in its draft.

9:30 am FII View: Mahesh Nandurkar of CLSA said analysis of agri stress indicates that Tamil Nadu, Karnataka and Haryana may follow up with farm loan waivers, taking the total farm loan waivers to about USD 28 billion from USD 10 billion.

Assuming these are staggered over five years, the annual rise in consolidated fiscal deficit works out to 25 bps of GDP. Else, other developmental expenditure would be compromised, potentially softening a capex cycle upturn, he added.

He feels this would dampen investor sentiment on PSU banks and NBFCs.

Also read – Buy, Sell, Hold: 4 stocks, 1 sector & 1 event on analysts’ radar

9:15 am Market Check: Equity benchmarks started off trade on a flat note again, as investors digested 25 basis points rate hike by Federal Reserve in its latest policy meeting.

The 30-share BSE Sensex was up 18.21 points at 31,174.12 and the 50-share NSE Nifty fell 7.65 points to 9,610.50.

Reliance Industries extended gains, up 0.75 percent on top of 3 percent rally in previous session.

Adani Ports, ITC, Bharti Airtel, Tata Motors, Hero Motocorp and ONGC were others gainers while TCS, L&T, ICICI Bank, Infosys and HDFC were under pressure.

In midcap space, City Union Bank, PNB, IDBI Bank, Bhushan Steel, Balaji Telefilms and Prism Cement were down over a percent while Ginni Filaments surged nearly 12 percent. Emkay Global was up 5% and SPARC gained 4 percent.

Shipping Corporation of India rallied 12 percent on stake sale buzz.

Meanwhile, the Indian rupee opened marginally higher at 64.27 per dollar versus previous close of 64.30.

Mohan Shenoi of Kotak Mahindra Bank said as expected, US FOMC hiked the rate by 25 bps, hinting one more rate hike in 2017. As the event was already priced-in, global currency market reaction was muted.

He expects the rupee to trade in a range of 64-64.35/dollar today.
Asian equities turned cautious after the US Federal Reserve raised interest rates for the second time this year, as was widely expected by markets. Hong Kong’s Hang Seng and Australia’s ASX 200 slipped over a percent.