Sensex lower, Nifty breaks 8750; rupee gains past 67/$

Moneycontrol Bureau12:40 pm FII View: Bharat Iyer of JPMorgan says it appears that the easing cycle may have ended, especially after monetary policy announced on February 8.

Market expectations of a 25 bps rate cut were belied but more importantly, the Monetary Policy Committee changed the monetary policy stance from accommodative to neutral, focusing on output gaps and inflation targeting, he adds.

Historically, equity markets have rallied considerably post bottoming of the rate cycle. The current event calendar suggests that positive news, particularly on the policy front, could now thin out over the next two months, according to him.

Iyer feels technical and momentum indicators also appear a tad stretched. Consequently, he expects a phase of consolidation in the equity markets near term.

A pick-up in growth over second half of FY17 should, however, pave the way for sustainable returns, he believes. He maintains a year-end Nifty target range of 9,300-9,600.12:20 pm Interview: Thermax expects 3-4 segments to open up in Q4 and Q1 of FY18 supporting medium and large projects, which had gone dry in this financial year. In an interview to CNBC-TV18, MS Unnikrishnan, MD of Thermax says the Q4 of FY17 is likely to be better on-year. Demonetisation hit the company’s performance as customers in the cash-oriented sectors deferred taking deliveries, he said, adding, Thermax also cut production in December to maintain inventory and is working to trim operatiing expenses to lift margins.He expects GST implementation to lead to inflationary pressure. The company is a strong contender on six oil and gas projects that are coming up for Bharat VI implementation, he said.

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Equity benchmarks remained moderately under pressure in noon trade, with the Nifty hovering around 8750 level. The rupee gained past 67 against the US dollar, rising 0.31 percent to trade at 66.98, for the first time since November 11, 2016, on sustained selling of the American currency by exporters and banks.

Forex dealers said that besides increased selling of the American currency by exporters as well as banks, a higher opening in the domestic equity market supported the rupee. They said, however, the dollar's strength against other currencies overseas, capped the gains.

The 30-share BSE Sensex was down 43.48 points at 28246.44 and the 50-share NSE Nifty fell 15.10 points to 8753.95.

Technology stocks gained strength despite rupee strengthening. TCS surged 1.5 percent and Infosys gained 0.6 percent.

Lupin rose 0.7 percent and Aurobindo Pharma rallied 2 percent ahead of quarterly earnings due later today while Hero Motocorp was up 1 percent after Q3 numbers.

However, ICICI Bank, HDFC Bank, SBI, L&T, Tata Motors, Maruti and Tata Steel continued to weigh on market.