Short covering...Nifty up for 3rd straight day

India Infoline News Service | Mumbai | June 16, 2015 16:25 IST

"As far as markets are concerned, Nifty 8000 Jun call witnessed a 10% decrease in open interest, indicating traders were caught on the wrong foot. Nifty futures which were trading at discount for most part of the day, ended at par suggesting short covering in Nifty futures," said Amar Ambani, Head of Research, IIFL.

Late recovery led to reversal of trend on Dalal Street on Tuesday as investors lapped up fundamentally strong but cheap stocks in the dying hours of trade. Indices closed near days high on account of short covering witnessed in the oil & gas and auto stocks. Sentiments also were buttressed after the release of three month low May trade data. India’s exports continuing six consecutive months’ declining trend although contracted 20.2% Year-0n-Year in May, left a three month low trade deficit at $10.41 billion for the month under review as compared to $10.99 billion in April and $11.23 billion in May, 2014.
 
"As far as markets are concerned, Nifty 8000 Jun call witnessed a 10% decrease in open interest, indicating traders were caught on the wrong foot. Nifty future which were trading at discount for most part of the day, ended at par suggesting short covering in Nifty futures," said Amar Ambani, Head of Research, IIFL.
 
Commenting on the WPI data which was released on Monday, Mr Ambani said, "India's wholesale prices during May contracted at an annual rate of 2.36%, the seventh monthly consecutive decline. Softness in wholesale inflation is attributed to sharp descent in oil prices. Earlier, Indian government reported that food inflation remains contained, with the May reading dipping to a five month low of 5.1% from 5.4% in April. On interest rate outlook, the next move is primarily dependent on the developments on the monsoon and ensuing effects on inflation. Of late, there have been positive developments in the monsoon, which can assuage the concerns regarding the probability of a spike in food prices. RBI may not act on the interest rates during the next monetary policy meetings, considering that June cut is proclaimed to be front loaded. Nevertheless, better fiscal consolidation, proper food management policies and effective reforms by the government should ensure additional rate cuts to the tune of 50-75 basis points by the end of this fiscal year."
 
Gains in today’s session were also led by banking stocks, which witnessed strong demand on reports that government will infuse fresh capital in the government-run banks this year to bolster risk buffers and credit growth.
 
However, weakness in the global equities on fears over Greece debt defaulting coupled with a depreciating rupee kept investors edgy. Meanwhile, caution ahead of two-day policy meeting of the US Federal Reserve's monetary committee due later during the day also kept the gains in check.
 
By close of trade, Sensex accumulated gains of around four tenths of a percent; while Nifty too gained around the similar magnitude finished little shy off the crucial 8050 mark. Nevertheless, the session clearly belonged to Midcap index, which outperforming larger counterparts went home with gains of around 0.70%, while Smallcap index performing more or less in line with larger counterparts settled with gains of around 0.40%.
 
On the global front, Asian shares extended their selloff on Tuesday, as Greece's debt talks and the upcoming two-day Federal Reserve meeting ate into investors’ risk appetite. Equity markets in China extended Monday's steep declines, with China's benchmark Shanghai Composite skidding 3.4 percent, clocking its biggest fall in nearly 3 weeks. Meanwhile, European stocks slipped for a third straight day on Tuesday as investors grew increasingly worried about lack of progress in negotiations between Greece and its creditors. Greece and its creditors hardened their stances on Monday after talks aimed at preventing a default and possible euro exit faltered. That prompted Germany's EU commissioner to say the time had come to prepare for a "state of emergency".
 
Closer home, most of the sectoral indices on BSE concluded into positive territory, nevertheless stocks from Consumer Durables, Auto and Banking counters outperformed rest of the peers. On the flip side, stocks from Oil & Gas and Fast Moving Consumer Goods counters were the only exception of trade.
 
In stock specific activity, telecom stocks declined after reporting their monthly subscriber’s numbers. However Reliance Communications (RCom) shares rose after announcing that the company and AFK Sistema entered into exclusive discussions on a potential merger between the Indian telecom business of Sistema Shyam TeleServices (SSTL) and RCom through a stock swap.
 
Meanwhile, exports in May contracted sharply by 20.19 percent to $ 22.34 billion when compared with $ 28 billion in the same month a year ago. Total exports in the first two months of FY16 have also contracted by 17.21 percent at $ 44.40 billion as against $ 53.63 billion in the corresponding period a year ago.
 
Coming back to today’s trade, the BSE Sensex rallied to a high of 26,731 up 351 points from the day's low. The Sensex finally ended 100 points higher to close at 26,687.
 
The NSE Nifty too managed to regain the coveted 8,000-mark and settle with gains of 33 points higher at 8,047.
 
The India VIX (Volatility) index declined by 2 percent to 17.1675.
 
The broader market also recouped losses and bounced back into the positive zone towards the close. The CNX Nifty Junior jumped 0.6 percent to 19,027. The Midcap and Smallcap indices added 0.3 percent each to 12,477 and 5,147, respectively.
 
The breadth too turned positive - out of 1,724 stocks traded on the NSE, 783 advanced and 674 declined today.
 
Thanks to the late recovery all sectoral indices managed to finish with gains. The CNX PSU Bank index surged over 1.5 percent to 3,168 and was the major mover. The Auto and Media indices rallied over a percent each at 8,091 and 2,239, respectively. The Bank Nifty gained 0.8 percent at 17,602.
 
IndusInd Bank was the top gainer in the Nifty-50, up 3.7 percent at Rs. 824.
 
Tata Power, Bajaj Auto and Power Grid rallied around 2.5 percent each to Rs. 74, Rs. 2,393 and Rs. 145, respectively.
 
NMDC, Bank of Baroda, SBI, Ambuja Cements and Zee Entertainment advanced over 2 percent each to Rs. 118, Rs. 143, Rs. 255, Rs.220 and Rs. 346, respectively.
 
Yes Bank, Hindustan Unilever, Hero MotoCorp and Punjab National Bank gained 1.7 percent each at Rs. 818, Rs. 836, Rs. 2,550 and Rs. 133, respectively.
 
Tata Motors and UltraTech Cement added 1.5 percent each to Rs. 433 and Rs. 2,751, respectively.
 
Mahindra & Mahindra jumped 1.3 percent to Rs. 1,236 on reports that Airbus Group has awarded its aero-components production contract to Mahindra Group.
 
ACC, ICICI Bank, Maruti, Hindalco, NTPC, Asian Paints, Coal India and Cipla were the other prominent gainers.
 
On the flip side, Idea Cellular tanked nearly 4 percent to Rs. 169.
 
Cairn India plunged over 3 percent to Rs. 182, and Vedanta slipped 1.8 percent to Rs. 178, amid reports that one of the minority stake holders in Cairn India - LIC of India is likely to ask for a better merger deal.
 
BPCL, Lupin, Dr.Reddy's, Tata Steel and HDFC were the other notable losers.
 
Among others - Shares of Oil marketing companies (OMCs) logged gains after on the back of hike in petrol prices. The OMCs raised petrol price by 64 paise per litre, while cut diesel price by Rs. 1.35 a litre. This is the third increase in petrol since May. HPCL and Indian Oil (IOC) managed to end the day with gains of 1.5 percent and 1.2 percent each at Rs. 704 and Rs. 357, respectively. BPCL, however, reversed its course and ended 1.6 percent lower at Rs. 821 amid reports of the government planning 3 percent stake sale in the company.
 
HCL Infosystems zoomed 5.5 percent to Rs. 33.70 after the company announced a strategic distribution tie-up with world's fastest growing IT player Dell India.
 
Aurobindo Pharma surged 3.5 percent to Rs. 1,320 on receiving US FDA approval to manufacture and market Extended Phenytoin Sodium Capsules.
 
Suven Life Sciences gained a percent at Rs. 245 on securing three new patents. According to a release issued by the company to the BSE, the company has secured one product patent from Israel (198821), Macau (J/001515) and USA (9018231) each corresponding to their New Chemical Entities (NCEs) for the treatment of disorders associated with Neurodegenerative diseases.
 
Nestle India slipped over 3 percent to Rs. 5,760 on reports that the company is in the process of destroying 'Maggi' noodles worth Rs. 320 crore following recent product ban and recall over food safety measures.
 
Biocon rallied 1.5 percent to Rs. 453 on reports that the company's research arm Syngene International received capital market regulator Sebi's approval to launch an Initial Public Offer (IPO).
 
Ramky Infrastructure was up a percent at Rs. 29.65 amid reports that the company is in talks to sell four road assets worth around Rs. 1,000 crore.
 
Tata Communications soared over 3 percent to Rs. 425 following reports that Vodacom's $ 565 million bid for Neotel has been approved by South Africa's communications regulator. Vodacom agreed to buy Neotel from Tata Communications in May 2014.
 
Reliance Communications (RCom) rallied to a high of Rs. 60.60 on buzz that the company RCom is in talks with the Indian telecom arm of Sistema Shyam TeleServices for a possible merger. The stock, however, ended wee bit in red at Rs. 58.65.
 
Essar Oil declined 2.7 percent to Rs. 143 in volatile trade owing to profit-taking following the recent four-day 45 percent rally. Meanwhile, media reports stated that the company is likely to sign a final term sheet with Russia's OAO Rosneft to import 10 million tonnes of Crude Oil a year for the next 10 years this week. Reports also indicated that the companies are in talks for Rosneft to buy a large stake in Essar Oil.
 
National Building Construction Corporation (NBCC) jumped 2.3 percent to Rs. 773 after the company informed BSE that it has procured 7,612.86 sq.mts plot in Jaipur for Real Estate project.
 
PI Industries zoomed 4 percent to Rs. 635 after Cartica Capital yesterday bought around 5.2 million shares of the company in a bulk deal from Citigroup Global Markets Mauritius and Ironwood Investment Holdings.
 
Following yesterday's 20 percent upper circuit, Unity Infraprojects extended gains and was up over 10 percent at Rs. 14.90 in morning deals after the company signed a Shareholders’ Agreement for the purpose of setting up 'Terminal Market Complex' at Kalyan, Maharashtra for Deepak Fertilisers. The stock, however, pared gains towards the end and ended 2.2 percent lower at Rs. 13.20.
 
A handful of 13 stocks touched a fresh 52-week high in trades today, as many as 109 tanked to register a new 52-week low on the NSE.
 
Astec LifeSciences, AstraZeneca Pharma, Chennai Petroleum, Cambridge Technology, Emkay Global, HPCL, Lambodhara Textiles, Palred Technologies, Relaxo Footwears, Signet Industries, TIL, Thirumalai Chemicals and Uniply Industries logged a fresh 52-week high today.
 
Adani Power, Adhunik Metaliks, Allahabad Bank, Ansal Properties, Astra Microwave, Balrampur Chini, Bank of Baroda, Dena Bank, EID Parry India, Emco, Financial Technologies, Future Lifestyle Fashions, Geometric, Gitanjali Gems, Gujarat Narmada Valley Fertilizers, Himadri Chemicals, HCL Infosystems, Helios and Matheson, Hindalco, Hindustan Motors, IL&FS Transportation Networks, Jayshree Tea, JSW Steel, Karur Vysya Bank, KSK Energy Ventures, Lovable Lingerie, Lumax Industries, Mahindra Lifespace Developers, Mastek, McNally Bharat, McDowell Holdings Limited, MMTC, MTNL, State Bank of Mysore, Oriental Bank of Commerce, Punjab National Bank, Raj Television Network, Reliance Industrial Infrastructure, SAIL, State Bank of Bikaner and Jaipur, SPML Infra, Tata Coffee, Tata Steel, UCO Bank, Uttam Galva Steels and Vijaya Bank were some of the prominent stocks to record a new 52-week low on the NSE.

 

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