Benchmark indices remain positive amidst geo political tensions …
Friday, equity benchmarks gained for the fourth consecutive session with the
Nifty closing above 7650 level despite weak global cues on geo-political
tensions. Finance Minister Arun Jaitley’s comments on Budget also aided the market
in last hour of trade on Friday. He said the focus of Budget is to boost
infrastructure and manufacturing sectors, adding manufacturing is the sector
where most jobs need to be created. He saw pick-up in auto sales and
manufacturing sector. According to him, there is a need of more incentives for
power sector, saying FDI can add to resources in many sectors. “The government
should not tax companies retrospectively creating fresh liability. About Rs 4
lakh crore are stuck in tax disputes, he said.
banking and financials stocks along with technology counters supported the
market in late trade. The Sensex rose 80.40 points to close at 25641.56 and the
Nifty climbed 23.45 points to 7663.90 but the broader markets snapped three-day
gains. The BSE Midcap and Smallcap indices declined marginally. Experts advise
going long on Nifty if it crosses 7700 level, adding the index will not fall
below the 7400 level. For the week, the Sensex surged 2.5 percent and Nifty
gained 2.7 percent on easing crude prices and monsoon progress, easing worries
on inflation. Capital goods, banks and metals led the major support to market
while CNX Midcap and BSE Smallcap indices gained around 5 percent.
the global front, Asian markets closed mixed with the Nikkei falling over a
percent after investors turned cautious on news a Malaysian Airlines passenger
jet was shot down near the Ukraine-Russia border. On home turf, technology and
private banks saw huge buying interest. TCS rallied 2.6 percent after it
recorded 5.5 percent sequential growth in dollar revenue of April-June quarter.
CLSA upgraded FY16 EPS of the company with a target price of Rs 2,850/share.
Its rival Wipro gained nearly 2 percent as it entered into a strategic alliance
with Canada-based ATCO. Private sector lenders ICICI Bank and Axis Bank jumped
2 percent each followed by housing finance company HDFC with 0.8 percent while
State Bank of India fell 1.4 percent. Engineering and construction major
L&T and two-wheeler maker Hero Motocorp climbed 1 percent and 2.6 percent,
respectively. However, shares of BHEL, Tata Power and Hindalco Industries were
prominent losers in trade today, down 2-2.6 percent. Maruti Suzuki and Gail
were down 1.7 percent each. About 1441 shares advanced while 1507 shares
declined on the BSE.
deficit in monsoon rains is expected to narrow next week as the grain bowl in
northwest, oilseed areas of central parts and cotton belt of the western region
are set to get higher downpours.
monsoon rains were 15% below average in the past week, against 41% below
average rainfall in the previous week, the weather office data showed.
Thursday, the annual rains covered the entire country two days later than
schedule. Last year, monsoon covered the country almost a month ahead of
schedule, helping grain output hit a record level.
are vital to the farm sector, which accounts for about 14% of the country's
nearly $2 trillion economy. Two-thirds of its 1.2 billion population live in
late revival of monsoon after six straight weeks of poor rains should speed up
plantings of main summer crops such as rice, corn, cane, soybean and cotton.
active phase is likely to continue for next ten days," said B P Yadav,
head of the National Weather Forecasting Centre at the India Meteorological
rains since the start of the June-September season had raised concerns that
India would face its first drought in five years with coverage for most of the
main crops slipping below their half way marks.
predicted wet run in monsoon should improve the level of water in reservoirs
that is important for drinking purposes, hydro power generation and irrigation.
Gold prices dropped on
Friday on fears of higher US rates and as investors took profits after a 1.5%
jump on the downing of a passenger plane in eastern Ukraine. Gold, seen as a
hedge against risk in times of geopolitical and financial uncertainty, posted
its biggest daily gain in a month on Thursday after the loss of the Malaysian
airliner MH17, as Kiev and Moscow blamed each other for the tragedy.
At the global level,
market participants will be keeping a close watch on developments in West Asia
and its impact on oil prices. On the domestic front, however, corporate results
for the quarter ended June 2014 will be key events to track besides progress on
With the major event of Budget out of the way, the market will likely continue
to focus on issues like monsoons, global economy and quarterly results in the
short term and market will also look forward to the rate action from RBI in its
On Monday, HDFC
Bank, Hind Zinc, Idea, Hitachi Home, Somany ceramics, Tata Metaliks and
Hindustan Media are likely to announce their earnings.
ahead, we believe, that the new government has a given blue print for the next
five years in Union Budget 2014 -15. FY15 may not be the star year with 10
percent growth but definitely FY16 and FY17 can be pretty strong for earnings.
On a longer time frame, the 20 year growth in Sensex EPS is about 15 percent
and last six years we have been at a compound annual growth rate (CAGR) of 8
percent. On revival of the economy, earnings will go above the previous trend.
Considering the raft of economic data coming across over the last couple of
months like Index of Industrial Production (IIP), export growth, Purchasing
Managers' Index (PMI), car sales, two wheeler sales, all suggest positive
current levels, we would recommend buying in stocks in sectors like Banking,
NBFCs, Metals, Capital Goods and Infrastructure.