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Sep 16, 2013 08:02 PM IST | Source:

Sensex ends flat; inflation disappoints, Ranbaxy dives 30%

Overall it was the fourth consecutive day of consolidation for the market after more than 1700 points rally in earlier four straight sessions and ahead of RBI monetary policy & FOMC meet later this week.

Moneycontrol Bureau

The 30-share BSE benchmark closed flat on Monday after erasing 344 points from its day’s high of 20086.43 on higher-than-expected August inflation and profit booking.

Overall it was the fourth consecutive day of consolidation for the market after more than 1700 points rally in earlier four straight sessions and ahead of RBI monetary policy & FOMC meet later this week.

The Sensex rose 9.71 points to close at 19742.47 while the Nifty lost 15.55 points to 5835.05, but the broader markets underperformed benchmarks with the BSE Midcap and Smallcap indices fall more than 0.5 percent.

Experts are cautious at this point in time and advise profit booking ahead of two major events – RBI & FOMC.

Ambareesh Baliga, Managing Partner-Global Wealth Management at Edelweiss Financial Services said he is a bit cautious at this point of time because of over exuberance in the market for the last few days.

From a monetary policy point of view, it is best to possibly book out to a certain extent and wait as to what Rajan announces for, Baliga added.

Also Read - Now is great chance to exit mkt, stick to largecaps: Kotak

Meanwhile, Sandeep Bhatia of Kotak Institutional Equities believes fundamentally nothing has changed to warrant a market rally and will take around two-three years before things improve structurally.

August WPI inflation came in higher at 6.10 percent as against 5.79 percent in previous month, led by rising food and fuel prices. June inflation revised higher to 5.16 percent from 4.86 percent reported earlier. Now all eyes are on RBI monetary policy that is scheduled for September 20.

The Reserve Bank of India will perhaps not ease rates in the near term, says Taimur Baig, India Economist, Deutsche Bank. He believes it will take another 2-3 months for RBI to rollback measures.

Ranbaxy Labs shares plunged 30 percent after the USFDA announced an import alert on Mohali plant. While there is no financial impact on account of this import alert, it can delay in new product approvals.

HSBC downgraded the stock to underweight and also cut target price to Rs 421 from Rs 440 while Citi says that such import alerts take up to two years to get resolved, and till then the company's margins will remain suppressed.

Technology stocks lost ground on rupee appreciation; IT major TCS dropped 2.5 percent followed by Wipro and Infosys with a percent loss.

BHEL and Sesa Goa were major losers in the Sensex, falling 4.6 percent and 3.6 percent, respectively.

Top lender State Bank of India fell 0.8 percent whereas its rivals ICICI Bank and HDFC Bank gained 2-3 percent.

Among others, ITC, Bharti Airtel, ONGC, Maruti and Hero MotoCorp rallied 1-3 percent. However, Reliance Industries lost 1 percent.

Among midcaps, Financial Technologies tanked 7 percent. Forward Markets Commission interim report on NSEL stated that only 15 percent stock found in NSEL's 16 warehouses. The value of stock in 16 warehouses is only Rs 358 crore, which is much lower than what NSEL had stated the value at Rs 2,389 crore.

Strides Arcolab declined 3.5 percent after its sterile manufacturing facility 2 (SFF) at Bangalore of Agila Specialties, a wholly owned subsidiary of the company, has received a warning letter from the US FDA.

Meanwhile, the rupee closed at 62.83, up 66 paise from previous close. The currency gained 597 paise in seven sessions from its record low of 68.80 touched on August 28.

Globally, European markets hit a five-year high today on the news that Lawrence Summers withdrew his name from the race for the next Federal Reserve chairman.

This is positive news for the markets, says Patrick Legland of Societe Generale. Speaking to CNBC-TV18, Legland says that the leading contender for the title, Janet Yellen, has a good working experience in Europe and is well-known by the markets.

He expects the week to be good for the risky assets and rally to continue. “It is very clear that the Fed will have a smooth communication in terms of tapering. The Fed has prepared the markets,” Legland elaborated.

France’s CAC, Germany’s DAX and Britain’s FTSE were trading 0.8-1.3 percent higher (at 16:25 hours IST) while Asian markets closed higher.

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