Sensex rallies 205 pts, Midcap at record close; all eyes on Fed meet, Gujarat polls
The market started off the week on a positive note Monday as the Sensex rallied more than 200 points, taking the total three-day gains to 850 points. The rally was driven by positive global cues, taking lead from Wall Street after stronger-than-expected jobs report.
All sectoral indices ended in green barring realty. Nifty IT, FMCG, Pharma and PSU Bank gained around 1 percent each; followed by bank, auto, metal that settled trade with mild gains.
PSU banks, HDFC twins and ITC led the market higher but gains were capped by Reliance Industries (down 0.5 percent).
The market rallied for the third consecutive session today as the 30-share BSE Sensex gained 205.49 points at 33,455.79 and the 50-share NSE Nifty closed above the 10,300-mark, rising 56.60 points to 10,322.30.
The sharp upside may be indicating that equity benchmarks may have started pricing in early the outcome of Gujarat assembly elections that is scheduled to be announced on December 18. The first phase of polling ended on December 9 and the second phase will take place on December 14.
Recent surveys suggested that the BJP is likely to get majority in Gujarat, though there could be some loss of votes to Congress due to demonetisation and GST, experts said.
Federal Reserve policy meeting, which will begin on Tuesday midnight, is another key event that market is watching closely. Experts largely expect the rate hike by 25 basis points but the key to watch out for would be commentary.
“There is a possibility that the mandate could tilt in the BJP’s favor, as the Patels don’t vote en block, and the state has seen a cleaner and senior Keshubhai Patel being humbled by the Modi juggernaut in 2012,” Dhiraj Relli, MD & CEO, HDFC Securities told Moneycontrol.
According to Udayan Mukherjee, Consulting Editor, if the result is good then there is room for an upside and the market may make a top above 10,500 on Nifty although it depends on where the market is by Friday.
“However, if the result is of a middling kind where the BJP wins but not with a huge majority then the correction may not be severe. If BJP gets less than 100 seats, then there will be correction in the market but may not break 10,000 on the downside. In the unlikely event of BJP losing, there could be a significant year-end correction and that could take us back to 9,600-9,700 levels of Nifty,” Udayan said in an interview to CNBC-TV18.
UltraTech Cement gained 1.8 percent on greenfield expansion at Rajasthan with an investment of Rs 1,850 crore and board approval for proposal of incresing FII investment limit to 40 percent from 30 percent.
Bharti Airtel was up 1.4 percent. While maintaining buy call on the stock with a target price of Rs 575 per share, HSBC said it believes company’s operations in Africa have further upside.
Mauti Suzuki ended at another record closing high, up 1 percent after Morgan Stanley retained its overweight call on the stock with increased target price at Rs 10,563 (from Rs 9,102 per share).
State Bank of India gained 1.7 percent. Global investment firm Goldman Sachs has upgraded the country’s largest lender to buy from neutral rating with a target price at Rs 396 per share. The research house feels the bank is best positioned to benefit from improving asset quality cycle.
The Nifty Midcap Index ended at record closing high and held above 20,100 for the first time at close. The gap between advances and declines narrowed as the day progressed. About 1,453 shares advanced against 1,271 declining shares on the BSE at close, against 5:1 ratio in early trade.
Gandhi Special Tubes surged 19 percent ahead of board meeting to consider share buyback on December 18.
Jet Airways was up 4.6 percent, Repro India rallied 20 percent and Lumax Auto Tech gained 10 percent on positive management commentary. Ucal Fuel was up 20 percent and Sharda Motor up 11 percent post second quarter earnings.
Arvind was up 3 percent. CLSA bet big on the stock, upgrading the stock to buy and revised target upward to Rs 538 per share.
Granules India rallied 4 percent after the US Food and Drug Administration completed the inspection of Virginia unit, US with one observation. Parag Milk Foods gained 10 percent on partnership with TajSATS Air Catering for supply of cow milk-based products on international flights.
Unitech closed up 10 percent as Ministry of Corporate Affairs will submit its list of 10 directors for the company on December 20 to National Company Law Tribunal. The Supreme Court will hear Unitech’s plea against NCLT order w.r.t government takeover, tomorrow.
Max India was down 5 percent as Delhi health ministry cancelled the license of Max Hospital, Shalimar Bagh.
Ruchira Papers, Star Paper, JK Paper, Aegis Logistics, M&M Financial, Wockhardt, Tata Communications, PC Jeweller, Tata Global, Tata Chemicals and Tata Coffee among others gained 3-20 percent.
On the global front, Asian markets ended higher as investors focused their attention on an upcoming Federal Reserve meeting that’s slated for later in the week. Japan’s Nikkei, China’s Shanghai Composite and Hong Kong’s Hang Seng ended up 0.5-1 percent. European stocks were mildly higher at the time of writing this article.
