After 1,200-point swing, Sensex ends 138 pts up, volatility index down as BJP wins Gujarat
Mon Dec 18 2017
Rajesh Sharma (1997 articles)

After 1,200-point swing, Sensex ends 138 pts up, volatility index down as BJP wins Gujarat

The BSE Sensex witnessed a swing of 1,200 points in early trade and finally settled trade with half a percent gains on Monday after elections results indicated that BJP will form its government in Gujarat as well as Himachal Pradesh. Positive global cues also supported sentiment.

The 30-share BSE index fell 867 points in opening as early voting counts suggested that the BJP and the Congress were in a close race to win Gujarat, but as the vote counts moved in favour of BJP it recovered immediately to rally 339 points intraday.

In late trade, the market lost more than half of gains on profit-booking as BJP did not get a landslide victory and also did not get vote counts as per predictions of Exit Poll, though has a majority to form a government in Gujarat.

The BSE Sensex gained 138.71 points to close at 33,601.68; and the NSE Nifty 50 index rose 55.50 points to 10,388.80 after hitting day’s high of 10,443.55 and low of 10,074.80.

Investors digested the BJP’s victory in Gujarat as well as Himachal Pradesh and will now shift focus to global cues. From the beginning of next month, the market will start focussing on December quarter earnings and Union Budget.

After the end of major events, experts expect some consolidation in the market for couple of weeks due to lack of domestic cues. Even the volume may recede a bit due to low trade at FIIs desk on holidays ahead of Christmas and year-end.

Participants will now be at ease as there’s no major event ahead and global cues will take over, Jayant Manglik, President, Retail Distribution, Religare Securities said.

Sanjeev Zarbade, Vice-President, PCG Research, Kotak Securities also said going ahead, with future direction of the market would be influenced by global monetary developments and fund flow from domestic and foreign investors.

Central bank tightening and high oil prices would be the key risks, he feels.

Manglik suggests keeping stock specific trading approach with bias on the positive side.

Global markets were higher amid heightened expectations that US lawmakers could pass a long-awaited tax bill. Most Asian stocks ended higher, with Japan’s Nikkei rising 1.55 percent followed by Hong Kong’s Hang Seng and Australia’s ASX 200 that fell 0.7 percent each. European markets – France’s CAC and Germany’s DAX traded higher with more than 1 percent gains at the time of writing this article.

Back home, the market breadth was positive as well. About 921 shares advanced against 824 declining shares on the NSE at close, which was far better than opening advance:decline ratio of 1:6.

The broader markets outperformed benchmarks, with the Nifty Midcap index rising 0.84 percent. All sectoral indices ended higher barring Realty. PSU Bank gained most, rising 2.35 percent followed by Auto, Pharma and Metal that climbed over a percent.

HDFC Bank shares touched a fresh record high of Rs 1,900.10 (up 1.4 percent intraday), before closing up 0.3 percent. Global research house Nomura has maintained its buy rating on the stock with increased target price at Rs 2,350 (from Rs 2,200 per share).

Maruti Suzuki (up 1.56 percent at close), HUL (up 0.54 percent), and M&M (2.57 percent) also hit record highs intraday.

Cipla was up 2.6 percent on receiving tentative approval from US FDA for HIV drug, Darunavir Hydrate (75-800 mg). ICICI Bank rallied nearly 2 percent after ICICI Securities filed IPO papers with SEBI.

Vedanta, SBI, TCS, L&T, Bajaj Finance, Hindalco, Sun Pharma, Eicher Motors, Bharti Airtel and Wipro ended 1-3 percent up, whereas IOC, Infosys, ITC, Yes Bank, HPCL, Kotak Mahindra Bank, HDFC and HCL Technologies were under pressure.

JMC Projects gained 4 percent on winning new orders worth Rs 790 crore. Orchid Pharma was up 5 percent after a media report indicated that pharma majors Aurobindo and Dr Reddy’s labs are in race to buy the company.

Eros International Media rose nearly 3 percent on signing a co-production deal with leading production house, Drishyam Films for four films.

Rajesh Sharma

Rajesh Sharma

Rajesh Sharma is Correspondent for Stock Market of South East Asia based in Mumbai. He has been covering Asian markets for more than 5 years.