The benchmark BSE Sensex and NSE Nifty ended in green on Thursday for a second consecutive day after the cabinet approved a bill on the goods and services tax that incorporates recommendations from a parliamentary panel, and after the Federal Reserve meeting ended with no major surprises.
The BSE Sensex closed 141.92 points or 0.51% higher while the NSE Nifty was up by 46.75 points or 0.56% on Thursday.
Market Outlook by Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services
The Indian market fortified ahead of the derivatives expiry day, aided by positive signs that the FED did not provide any indication to hike interest rates in the near future. This is positive for EMs as any FED indication to the contrary would have led to some outflows to the US in the short-term. Today we have seen some churn in blue-chip stocks in Pharmaceutical and Banks sectors. There was also high Interest seen in PSU Bank stocks led by signs that the asset quality is likely to improve in the near-term. RBI Deputy Governor S S Mundra on Wednesday said ‘initial trends from banks first quarter results indicate some stability on asset quality’. In the meantime ease in volatility in India led to smart movement in mid and small caps.
The session was good for Pharma shares as the BSE Healthcare index went up by 0.8%. Shares of Dr Reddy’s laboratories surged 5.49% as the company declared its quarterly earnings report. As per the report, the net profit of Dr Reddy’s Laboratories went up by 14% year-on-year.
Shares of Cipla went up by 4.9% as the company announced the launch of asthma treatment medicine in partnership with Sandoz. Experts feel buying activity in Indian pharma shares is benefiting from the pick up in the US FDA approvals.
Market Wrap Up by Alex Mathews, Head Research, Geojit BNP Paribas Financial Services
Ahead of the July F&O expiry our markets opened with a gap up, global markets were also supported in the morning session. The US central bank’s policy meet was in focus where the US Federal Reserve said that the US labour and housing markets are improving and reduced the chances of an interest rate hike for the year. In the domestic front, the news of the Cabinet approval of the GST bill that incorporates recommendations from a parliamentary panel was also acted as a strong positive trigger.
Nifty closed at 8421 up around 46 points. The market breadth stood positive as there were seen 1743 stocks advancing against 1120 stocks declining. The Nifty volatility index, India VIX stood at 15.3250 down around 3.47%. The mid-cap and small cap sectors ended up around 0.79% and 0.90% respectively.
Barring IT and Capital goods, which ended down around 0.77% and 0.24% respectively all other sectors ended in green. The major gainers for the day were Realty and FMCG which ended up around 3.48% and 2.74% respectively.
The gainers in the stocks’ front were PNB and Bank of Baroda, closed up around 9.73% and 9.27% respectively. Selling was seen in NMDC and Sun Pharma, which ended down around 2.11% and 1.84% respectively.
The FIIs were net sellers in the cash market segment on 29 July 2015, Wednesday, sold shares worth Rs 186.24 crore. The DIIs on the other hand were buyers on 29 July, bought shares worth Rs 642.69 crore in the capital markets segment.
The European markets were little changed as of the mixed earnings report. The US index futures were also trading lower.
Companies like Bharat Gear, LT, Titan, Sun TV, APLLTD, ICICI Bank, Philip Carbon, Raymond, CESC and Aarti Drugs may announce their earnings tomorrow.
Swiss based Investment banking firm Credit Suisse had said in an investor note published in the first week of July said that approval data for the last three months shows approvals for Indian players have picked up however, proportion of total approvals going to Indian firms has fallen due to outstanding 483s at several companies.
Increase in approvals shows some benefit of GDUFA has started showing up. The real benefit is yet to be realised as FDA has so far utilised only 55% of GDUFA funds raised over last two years.
Market View by Anand James, Co Head Technical Research Desk, Geojit BNP Paribas
Though FOMC held rates as expected, improved chances of a September rate hike did bring in some nervousness in early trades. However, SEBI Chairman’s clarification that SIT does not recommend for a ban on p-notes, added momentum to up moves. DIIs which had invested over 32000 crores in the June quarter have been net buyers in the last four days. A mild uptick in roll over of f&o positions, when compared to last month’s expiry is less suggestive towards investors’ decisiveness, as the figure is still at a modest 61.7.
Shares of major IT sector companies closed in the red as the BSE Information and Technology was down by 0.8%. Shares of TCS and Infosys slumped by 1.14% and 1.47% respectively. US investment banking firm Jefferies said in a research note published in the second of July that it expects IT industry revenue to pick up Quarter on Quarter due to seasonality and FX tailwinds however on Year on Year basis the results will show a slowdown.
Shares of Tata Steel fell by 0.86% on Thursday. Infact stock of Tata Steel has lost nearly 8% in the last one week. “ Weakness in the domestic business earnings profile from sluggish demand and higher imports will continue to put earnings of Tata Steel under pressure. With Europe and South East Asia far from out of the woods and Indian margins set to remain low in FY16, losses for Tata steel could continue,” said Kunal Agrawal, Analyst at BNP Paribas in a note to investors.
Market View by Gaurav Jain, Director, Hem Securities
Indices shut the derivative expiry day on a firm note. Sentiment turned cheerful on US Fed not hiking the interest rate in its meet last night. Further, there were renewed hopes that GST (Goods and Services Tax) bill can pass in this monsoon session of Parliament.
Foreign Portfolio Investors(FPIs) have been net sellers during the last three sessions. The Indian equity market has witnessed an outflow of more than $320 million during the week so far, as per Bloomberg data. However, market experts say this would be a temporary setback as in the long run India will continue to receive significant FPI outflows. Sakthi Siva, MD and head of Asia-Pacific Equity Strategy, Credit Suisse said, “With the sharp falls in Chinese markets, investors are switching to India as a safe heaven for investments.”.
China’s Shanghai Composite which was trading in the green during the entire session collapsed in the last hour of trading to close 2.2% lower. As per a Bloomberg report, the 100-day price swings touched the highest level in the last six years on Thursday while trading volumes fell by 50% compared to the peak in June.
The report also said fall in the Shanghai markets raises questions about viability of government efforts to push up the share prices as economy slows down. Majority of the Asian markets closed in the red on Thursday as the Hang Seng (Hong Kong) and Kospi(South Korea) fell by 0.5% and 0.95% respectively.