Profit booking drags Sensex 152 pts; Nifty ends week below 9600; Midcap cracks

The market fell sharply on last day of the week, with the Sensex down more than 150 points as investors preferred profit-booking ahead of the long weekend. They also maintained a cautious stance as the GST implementation date is approaching fast and ahead of Modi-Trump meet on Monday.

The 30-share BSE Sensex was down 152.53 points at 31,138.21 and the 50-share NSE Nifty slipped 55.05 points to 9,574.95 but the loss was more in broader markets on negative breadth.

The BSE Midcap index lost 1.2 percent and Smallcap index fell 1.5 percent as about three shares declined for every share rising on the exchange.

Experts expect mild correction in the next few sessions as the market already saw a significant rally (without sharp correction) on the back of liquidity. According to them, expected GST fears seem to have already priced in.

“Investors and traders should brace themselves for slightly more negative trends over next few trading sessions, until the June quarter earnings come out in next month as they currently don’t see major trigger,” Dipan Mehta, Member BSE and NSE said in an interview with CNBC-TV18.

Laurence Balanco of CLSA also feels recent divergence suggests the market is due to a pause/correction in the short term.

“As we edge closer to the GST rollout date, i.e., July 1, the biggest worry is whether businesses are ready and geared towards implementing GST in an efficient manner. Like in any new regime, there are bound to be teething issues. However, these do not eclipse the many long-term benefits that will accrue to businesses and the country, on implementation of the GST,” Karthikraj Lakshmanan of BNP Paribas Mutual Fund said.

European bourses were under pressure as investors monitored oil prices and focused on developments from the EU Summit in Brussels. France’s CAC, Germany’s DAX and Britain’s FTSE were down 0.4 percent each at the time of writing this article. However, Asian bourses closed mostly higher with moderate gains as oil prices stabilised after sharp fall.

Back home, the Sensex gained 0.3 percent while the Nifty lost 0.1 percent during the week.

The market will remain shut on Monday for Ramzan Id holiday.

All sectoral indices barring pharma ended lower today, with Nifty Bank, Auto, Metal and Realty down 0.7-1.7 percent.

BHEL was down 1.5 percent after JP Morgan slashed 12-month target price to Rs 128 (from Rs 128 earlier) despite stock’s underperformance to Sensex. It cut its earnings estimates for FY18 / FY19 to 6 percent / 10 percent as it feels the replacement of old thermal plants is not as big a catalyst as it is made out to be.

Tata Motors lost 2.14 percent as CLSA has maintained sell rating with a price target of Rs 405 despite strong outlook on Jaguar Land Rover volume. It remained a worry on company’s margins given a softening demand environment and weakening model/regional mix.

Metals stocks especially JSW Steel, Tata Steel and SAIL were down 1-2 percent. Jefferies maintained an underperform rating as contrary to consensus it believes domestic steel prices should fall further driving margins lower; and import parity rather than domestic demand-supply drives domestic steel prices – softer regional prices would weigh on domestic prices.

ICICI Bank gained 0.7 percent after recovering from its day’s low, as Joint Lenders Forum of 23 lenders approved the sale of Essar Oil’s Gujarat refinery to Russia’s Rosneft & Trafigura-UCP consortium.

Among others, HDFC Bank, TCS, SBI, Kotak Mahindra Bank, Maruti Suzuki, Hero Motocorp and M&M were down 1-2 percent while Infosys, Sun Pharma, Reliance Industries, Wipro and Dr Reddy’s Labs were moderately higher.

In the broader space, Fortis Healthcare tanked 13 percent after media reports quoting sources indicated that Malaysia-based Integrated Healthcare Holdings (IHH) terminated exclusive talks with the company on risk owing to Daiichi case.

Among midcaps, LIC Housing Finance, Emkay Global, Videocon Industries, IIFL Holdings, Motilal Oswal, PFC, Delta Corp, Eros International and India Cements were down 2-7 percent.

Tata Teleservices gained 6 percent as sources told CNBC-TV18 that the company is likely to have approached SBI for recast of Rs 32,000 crore loans and likely to have sought extended maturity of 20 years.
Reliance Communications was up 5.5 percent as sources told CNBC-TV18 that lenders approved loan relief package for company.