Market Live: Sensex, Nifty continue to trade higher; HDFC falls again, Pharma down
11:05 am Market Outlook: Devarsh Vakil, Head Advisory – Private Client Group, HDFC Securities said Nifty surpassed an important landmark of moving beyond 10000 this week. Nifty has risen at 18 percent CAGR since 2003 when it was last seen near 1000 levels.
This shows that Indian markets are in a structural long term bull markets. It is also heartening to see this rise is in back of money flow from India’s retail investors in form of Systematic Investment Plans. Indian retail investor is just warming up to the possibilities of investing in equities over the long term as many of their traditional investment areas like real estate and gold have been underperforming.
He expects Nifty to remain buoyant in the extreme short term on the back of short covering. August series of derivatives is likely to be the most interesting as many weak players will be forced to cover their shorts, while many others will choose to book profits on their long positions which are already reached their targets.
Short term target in Nifty is 10300. Traders are advised to keep 9900 in nifty as the stop loss for the short term or leveraged trading long positions.
For medium term, in global markets, we detect some signs of complacency. Volatility has collapsed across markets. There seems to be tremendous faith that central banks like US Fed, European central bank and Bank of Japan. Many market players believe these banks will keep pumping liquidity and will not allow large losses in the markets. The danger is that this complacency is not about markets, but rather the power of central banks and their ability to prevent a sharp downturn. If history is of any lesson, such faith has always turned out be a false hope. So it is better to be safe than sorry.
Long term investors should keep gradually raising cash as and when markets rally to newer heights. This dry powder will be used to buy stocks aggressively as and when the short term correction sets in. It is better to be safe than sorry.
10:45 am Rate cut likely?: Andrew Holland, CEO at Avendus Capital expects a 25 bps rate cut by the Reserve Bank of India on August 2. This is given, but there is room for the central bank to cut more and surprise the Street with a 50 bps cut.
With liquidity continuing across the globe and weak dollar all favours a rate cut.
A 25 bps rate cut is already priced in the market, but a 50 bps cut could lead to a sharp rally, suggests Holland.
10.22 am Market Check: Equity benchmarks continued to trade higher, with the Sensex rising 84.66 points to 32,394.54 and the Nifty up 17.30 points at 10,031.80.
The rally was driven by Kotak Mahindra Bank, L&T, ICICI Bank, Maruti Suzuki, ONGC and Tata Steel that gained up to 3 percent.
Healthcare stocks were under pressure today, with Sun Pharma, Dr Reddy’s Labs, Lupin and Cipla down up to 2 percent.
HDFC slipped 0.5 percent again after recovery in early trade. FMCG majors ITC and HUL were also down up to 1 percent.
The market breadth was positive as about 1,161 shares advanced against 899 declining shares on the BSE.
10:10 am FII View: Sakthi Siva of Credit Suisse said percentage of negative returns in August over the last ten years for MSCI Asia ex-Japan and MSCI Asia Pacific ex-Japan is 71 percent.
MSCI Asia ex-Japan has passed the year-end target of 640, and investors may be tempted to lock in profits given this year’s gains exceeding 25 percent in dollar terms, she added.
While it is only four days, foreigners have turned net sellers of Emerging Asia ex-China of USD 1.01 billion over the last four days, he said.
With the theme being the best return on equity fundamentals in six years with Asia Pacific ex-Japan return on equity rising from a low of 10 percent to 10.6 percent, continue to suggest buying the dips, he feels.
9:55 am IPO: HDFC announced that it is going to divest 9.57 percent of its stake in HDFC Life.
We are not supposed to discuss the timeline but our intention is to get the initial public offering (IPO) out as soon as possible, said Amitabh Chaudhry, MD & CEO of HDFC Life.
Had started work on HDFC Life’s IPO last year itself, he added.
He further said that a lot of the general insurance companies have been filing for IPOs lately.
Chaudhry said that chairmen of both HDFC Life and Max Life mentioned that merger is off the table.
9:37 am Analysts on L&T post earnings: Bank of America Merrill Lynch has maintained buy call on the stock with a target price of Rs 1,322, saying Q1 surprised positively on strong domestic execution. Large order backlog & execution pick-up would help meet FY18 guidance, it feels.
Jefferies has also retained its buy rating on L&T, with 32 percent upside to target price of Rs 1,533. It said order pipeline of USD 50 billion should help co meet the full year guidance and macro tailwinds needed for the next leg of upside.
9:26 am Rupee opening: The Indian rupee started off the week on a positive note. It has opened at 64.11 against the US dollar, up 4 paise from Friday’s closing value of 64.15.
Pramit Brahmbhatt of Veracity feels the rupee will trade positive below 64.20 against the US dollar.
Weak Dollar Index will help rupee to appreciate further, he said.
Trading range for the spot USD-INR pair will be 63.80-64.20 per dollar, according to him.
9:15 am Market Check: Equity benchmarks started off the week on a positive note, with the Nifty holding 10,000-mark. Investors awaited the decision of two-day monetary policy committee meeting that will begin on Tuesday.
The 30-share BSE Sensex was up 45.59 points at 32,355.47 and the 50-share NSE Nifty rose 10.05 points to 10,024.55. About two shares advanced for every share falling on the BSE.
L&T was top gainer among Sensex stocks, up 2.2 percent followed by Lupin, ICICI Bank, Vedanta, Kotak Mahindra Bank with moderate gains. HDFC rebounded after initial fall.
Sarda Energy, Coromandel, Capital First and Cholamandalam Finance gained up to 5 percent.
Central Bank of India, Dena Bank, Equitas Holdings, Oberoi Realty and Kitex Garments fell up to 5 percent.
