Sensex gains for 6th straight day, Nifty fails to hold 10,100; Pharma index rallies
Equity benchmarks ended volatile session on a positive note amid tepid global cues due to disappointing China’s economic data on Thursday. Investors also looked for geopolitical developments.
The market opened on a strong note but erased gains in late morning trade and continued to gyrate in narrow range. The 30-share BSE Sensex was up 55.52 points at 32,241.93, continuing uptrend for the sixth consecutive session.
The 50-share NSE Nifty failed to hold 10,100 level, up 7.30 points at 10,086.60. Healthcare and select banks stocks gained while metals, auto and HDFC Group stocks saw selling pressure.
Experts said they expect the consolidation to continue for a while but this may help the market to hit fresh record high soon.
“The market is facing resistance at around the all-time high as investors are awaiting favorable global cues to move forward,” Vinod Nair, Head of Research, Geojit Financial Services said.
US CPI data will be released today which is a key trigger to get cues on FED rate hike trajectory, he added.
“Unless this resistance point (10,137 on Nifty) is taken off in next trading session this rally may not get extended further there by paving the way for fresh leg of downside,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in said.
The broader markets ended off day’s high but outperformed benchmarks as the BSE Midcap and Smallcap indices gained 0.6 percent each despite balanced breadth. About 1,303 shares advanced while 1,312 shares declined on the exchange.
Meanwhile, wholesale inflation grew at 3.24 percent during August, up from 1.88 percent in July due to an increase in foods articles and vegetable prices.
Healthcare stocks hogged limelight today as the Nifty Pharma index spiked 2.6 percent. Sun Pharma rallied 4 percent as Credit Suisse upgraded the stock to outperform from neutral and hiked target price to Rs 595, citing potential upside of 23 percent. The research house expects specialty pipeline to boost profit CAGR to 20 percent over FY19-22.
Cipla, Dr Reddy’s Labs, Aurobindo Pharma, Divis Labs and Lupin gained 1-5 percent.
Axis Bank was second biggest gainer among Sensex stocks, up 4 percent after Deutsche Bank has upgraded the stock to buy from hold and also increased target price to Rs 600 (from Rs 560), citing favorable risk-reward. Tailwinds could be stronger than headwinds, it feels.
BHEL gained nearly 4 percent as the firm, along with Kawasaki, will make rolling stock for the Mumbai-Ahmedabad bullet train.
Oil marketing companies gave up early gains in late morning trade due to profit booking but managed to regain some strength in last couple of hours of trade. HPCL, BPCL and IOC trimmed gains to 0.3-1 percent at end, from 4-5 percent in early trade.
The government ruled out intervention in daily price revision of fuel prices, which is a positive but the government’s intent to maintain higher excise duties despite a sharp jump in fuel prices over the past few months, may rule out any possibility of expansion in marketing margins even in a reasonable crude price and exchange rate environment and thus, defy the thesis of higher multiples for marketing profits, Kotak said while maintaining negative view on oil marketing companies.
Vedanta lost 2 percent as Odisha Pollution Control Board has directed the company for temporary closure of its 3 units of 1215 MW.
Among other largecaps, Tata Motors, Adani Ports, Infosys, Bank of Baroda and HCL Technologies rose 1-4 percent whereas Wipro lost over 4 percent as it traded ex-buyback today. Reliance Industries, Kotak Mahindra Bank, L&T, HDFC and Maruti were other losers.
Jubilant Foodworks rallied nearly 4 percent after company’s assurance that all its food ingredients were safe for consumption. While maintaining buy call with a target price of Rs 1,450, Deutsche Bank said it expects this incident to have no material impact on operations. It has estimated 35 percent EBITDA growth in FY17-19. Jubilant Foodworks remains its top pick.
In broader space, Thermax surged 7 percent on export contract worth USD 43 million while Graphite India and HEG rallied 7-10 percent after Jefferies initiated coverage with buy rating on these stocks.
Global markets were sluggish in trade today. European markets were mixed as investors assessed geopolitical developments and looked ahead to the Bank of England’s latest policy decision. Asian markets ended flat with a negative bias following weaker-than-expected economic data out of China.
