October starts well…Sensex, Nifty clock gains

iifl1st October, 2013 : Comments by Amar Ambani, Head of Research, India Infoline 


The US shutdown notwithstanding, the Indian equity market started off the month on a high with the NSE Nifty and the BSE Sensex registering healthy gains amid better than expected monthly auto sales numbers. After two days of sharp decline the benchmark indices staged a smart recovery with the NSE Nifty bouncing back from its 50 Day Moving Average.

Today’s recovery was led by the interest-rate sensitive stocks like the banking, realty and the auto.

Commenting on the auto sales numbers, Amar Ambani, Head of Research at IIFL said, “Auto sales for September 2013 were better than expectations for segments such as two-wheelers, tractors and passenger cars. However, UV sales continued to remain weak. Going ahead, macro concerns such as rising fuel prices, lower incomes and high interest rates would continue to weigh on the volume outlook. We expect two-wheelers to post a relative outperformance in H2 FY14 owing to better than normal monsoons which will drive rural demand. Our top picks include Hero Motocorp and M&M.”

Even the capital goods, telecom, consumer durables and healthcare stocks contributed to today’s rally. The mid-cap and the small-cap stocks also witnessed some smart buying.

On Monday the Reserve Bank of India announced that the current account deficit (CAD) increased to 4.9% of GDP to US$21.8bn in the April-June quarter of the current fiscal. CAD was 4.4% or US$16.9bn in the same quarter of last fiscal, 2012-13.

Finally, BSE Sensex closed at 19517 up 137 points, while NSE Nifty closed at 5,780 up 44 points over the previous close.

DLF, Ranbaxy, IndusInd Bank, Axis Bank, ICICI Bank, IDFC, HDFC Bank, BHEL and HDFC were among the major gainers in the Nifty.

Among the top laggards were, Tata Power, Sesa Goa, NTPC, ONGC, Hindustan Unilever, BPCL and Ambuja Cement.

The advance-decline ratio favoured the bulls. On the BSE, 1320 stocks advanced against 1010 declining stocks, while 156 remained unchanged. The INDIA VIX declined by 3.3% at 25.77. It hit a day’s high of 28.02 and low of 25.74.

Mahindra and Mahindra’s auto sector sales dipped 10% in September 2013 compared to the same month last year mainly on account of a 21% decline in the sales of its passenger vehicles (UVs and Verito). The company’s total domestic sales stood at 43,289 units versus 48,342 units, while exports at 2,719 units represented a decline of 12%. Shares of M&M closed flat at Rs831.

TVS Motors Company reported total sales of 1.97 lakh units, up 16%, Y-o-Y. Shares of TVS Motors shot up by 7.8% to close at 39.75

Maruti Suzuki reported 11.7% increase in total sales in September at 1,04,964 units as against 93,988 units in the same month last year. The company said its domestic sales increased by 1.8% during the month to 90,399 units as against 88,801 units in September last year. Shares of Maruti gained by 2% to close at Rs1382.

The Oil marketing companies dropped the petrol prices by Rs. 3.05 per litre and increased the diesel price by 50 paise per litre (excluding local taxes and VAT). This has been for the first time since May this year, the Oil Marketing companies have reduced the prices of petrol, while the diesel prices have been continuously increased since government partially de-controlled the diesel prices.

Shares of BPCL, IOC and HPCL were down by 1.2% each during the day.