28th August, 2013 : Comments by Amar Ambani, Head of Research, India Infoline
Finally, Sensex stages smart recovery
After days of weakness, the key indices staged a smart recovery from the day’s low powered by gains in metals and IT stocks. Some short covering was also seen in the broader markets ahead of the F&O expiry on Thursday, which led to today’s turnaround.
Finally, BSE Sensex closed at 17996 up 28 points over the previous close, while NSE Nifty closed at 5,285 down 2 points over the previous close.
RIL, Infosys, Wipro, Tata Power, Sun Pharma, Tata Steel, Tata Power, NTPC, Cipla, BHEL, Hero MotoCorp, Dr Reddy’s Lab were among the major gainers .
Bharti Airtel, ICICI Bank, Gail India, Maruti Suzuki, SBI, Bajaj Auto, L&T, HDFC Bank, ONGC, HDFC were on the losing side.
The BSE Small-Cap index was trading flat, while BSE Mid- Cap index was trading down at 1%.
IT, Healthcare, Power indices were the major gainers.
Oil and gas, PSU, Realty, Auto, Consumer Durables, Metal, FMCG indices were the losers.
The advance-decline ratio was marginally in favour of the bears. On the BSE, 1347 stocks declined against 862 advancing stocks, while 128 remained unchanged.
The INDIA VIX surged 10% at 32.38. It hit a day’s high of 36.02 and low of 29.42..
Stocks which hit a 52-week high during the week were Infosys, JCT, Coastal Corp, Pasupati Spg while HDFC, Bajaj Hind, BAJFINANCE, Balrampur Chini hit a 52-week low during the week.
Strides Arcolab surged 7% at Rs888 on reports that the Foreign Investment Promotion Board (FIPB) has cleared $1.8-billion investment proposal by Mylan Inc, to acquire Strides Arcolab’s injectible unit, Agila Specialities.
Earlier in the day, the main indices and the INR fell to record lows. In the morning trade, the rupee continued its free-fall breaching the 68-mark against the dollar. The depreciating rupee and rising crude oil prices had a cascading effect on the Indian equities as the Nifty hit a low of 5,119 in the morning trades. All sectoral indices, barring the technology stocks, were in the red, with banks, realty and oil & gas leading the decline.
Oil prices rose on concerns over possible US military action against Syria after Washington warned Syrian President Bashar al-Assad’s regime that it would face action over an alleged chemical weapons attack.
However, the rupee pared some of its intra-day losses after hitting an all-time low of 68.75 against the US dollar.
Market participants will look forward to the GDP data which is scheduled to be released on 30th August. Commenting on the same, Amar Ambani, Head of Research, at IIFL said, “Given the overwhelming negatives of the current environment, we are staring at a sub-5% GDP growth this year and probably the next. Corporate earnings and valuations reflect this gloom in good measure. The last quarter witnessed one of the worst earnings growth phase after FY07. This quarter is likely to follow suit. The forex losses consequent to a sliding rupee will also cause excruciating pain for many companies. Sub-14x FY14 valuations also reflect the poor sentiment.”
Shares of Wipro rose by 4% after the company replaced Anil Ambani promoted-Reliance Infrastructure in the National Stock Exchange’s 50-stock Nifty.
Meanwhile, Gold prices jumped to a record high of Rs 34,500 per ten gram.
Asian stocks fell while Brent crude surged to over 2-year high on brewing tensions between Syria and US. Japan’s Nikkei fell 1.5% to 13,338, Singapore’s Straits Times fell 1% to 3,002, China’s Shanghai Composite index was down 0.1% at 2,101 while Hong Kong’s Hang Seng fell 1.6 % to 21,52 4 today.
European markets also opened lower. France’s CAC was tad up 0.1% to 3,973.Germany’s DAX shed 0.4% to 8,204 while UK’s FTSE was down 0.3% to 6,422.