Tuesday, 26 August 2014

Choppy Sensex, Nifty close flat; metals rebound, power down

Choppy Sensex, Nifty close flat; metals rebound, power down
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It was another day of consolidation for equity benchmarks on Tuesday as investors remained cautious after Supreme Court’s verdict on coal block allocation case. August series expiry, which will be on Thursday, also caused volatility in the market.

Indices fell nearly half a percent intraday before showing recovery in late trade. The 30-share BSE Sensex advanced 5.79 points to 26442.81 while the 50-share NSE Nifty managed to hold the 7900 level, down 1.55 points to close at 7904.75.

Domestic problems may not have any major impact on equity market going ahead but geopolitical concerns may be a cause for correction, believe experts.

Neelkanth Mishra, Credit Suisse says with the market at an all-time high, many investors are turning cautious. “We, however, still believe risks to the market remain global, not local. India has primarily gained from a global expansion of P/E multiples. Elections just reduced tail risks,” he adds.

Metals rebounded in late trade with the BSE Metal Index up 0.75 percent on short covering. FMCG and healthcare stocks remained supportive for another day while banks closed marginally lower after recouping losses from day’s low. Power stocks remained under pressure while auto stocks were mixed.

After seeing a sharp knock from previous session due to Supreme Court’s verdict saying all coal block allocations post 1993 illegal were arbitrary and illegal, metals stocks managed to get back into positive terrain. Tata Steel gained 2.6 percent after brokerages see no impact of this SC verdict because all coal blocks were allocated before 1993 .

Hindalco Industries gained 3.6 percent and Sesa Sterlite was up 0.4 percent on short covering but Jindal Steel lost another 6 percent (in addition to 14 percent loss in previous session) as brokerages believe the company will be hardest hit by this ruling.

Shares of ITC, Sun Pharma, HDFC, HUL, TCS, Cipla and GAIL gained 0.5-1.5 percent. Tata Motors rebounded, up 0.9 percent, which was down more than 2 percent intraday after Competition Commission of India (CCI) imposed penalty of Rs 1,346 crore for indulging in unfair practices in spare parts market
However, Maruti Suzuki and Mahindra & Mahindra fell 0.5-1 percent after CCI imposed fine of Rs 471 crore and Rs 292 crore, respectively.

Engineering and construction major Larsen and Toubro lost 1.3 percent whereas rival state-run BHEL recouped losses, up 1.6 percent in late trade. State-controlled oil major ONGC topped the selling list, down 2.5 percent.

Top lender State Bank of India (down 0.6 percent), Power Finance Corporation (down 1 percent) and Rural Electrification Corporation (down 0.7 percent) recovered sharply too. Brokerages worried about their asset quality as these lenders have huge exposure to the coal mines deemed illegal by the Supreme Court. SBI cut interest rates on home loans by 5-15 basis points.

In the power sector, Tata Power fell another 2.8 percent on the Supreme Court’s order that stayed an interim order of the Appellate Tribunal for Electricity (APTEL) to allow payment of compensatory tariffs. Reliance Power tanked another 6.8 percent after SC disallowed exploitation of captive mines by UMPPs.

The broader markets underperformed benchmarks with the BSE Midcap and Smallcap indices falling 0.2 percent and 0.8 percent, respectively. Declining shares beat advancing ones by a ratio of 1831 to 1123 on the Bombay Stock Exchange.

On the global front, Asian markets closed loser with the Shanghai down 1 percent as investors will keenly watch for cues from the Ukrainian president meeting with Russian leader, Vladimir Putin later today. European markets were mixed (at 16:15 hours IST).

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