BSE Sensex weak, Bank Nifty falls 3%; TCS, Wipro gainers

Moneycontrol Bureau
Live Market Commentary

10:00 am Buzzer: Shares of Dr Reddys Laboratories (DRL) were under pressure, falling more than 1 percent as US-based Genzyme Corporation filed an infringement suit against the company.

Genzyme, a fully-owned subsidiary of drug major Sanofi-Aventis, alleged that the Indian drug maker infringed patents of its blockbuster cancer drug Mozobil on three counts.

In its petition filed in the District Court of Delaware, Genzyme alleged that DRL intimated though a letter that it had submitted an Abbreviated New Drug Application with US FDA seeking approval to engage in the commercial manufacture, importation, use, and sale of 20 mg/ml Plerixafor injection as a generic version of Mobozil drug.

9:45 am FII views: Ridham Desai of Morgan Stanley told CNBC TV18 that most of the positive news are price in at current levels and Nifty can drift down to test its previous low of 5300. He doesn't see much upside at current levels and will use the rally to sell. While Fed’s decision to differ taper is positive for EM equities, India’s fundamentals are still weak and the turf wont be easy for equity investors over the next 3 months, he said.

Similar caution was voiced by Jyoti Jaipuria of BOA-ML in his strategy note this morning where is said, "We expect the market to correct 6-8 percent from current levels and will be in the 18,500-20,500 range as weak economic and earnings growth to cap the upside."

However, he feels, hopes of rate cuts and policy measures protect the downside. He continue to favour global plays (software, pharma) over domestic plays and within sectors he maintains overweight on telecom and prefers to play a better monsoon demand through autos.

For BOAML their top buy are Lupin, TCS, Idea, Hero Motocorp, ICICI and their top Under-performs are BHEL, NTPC, HUL.

Even Bharat Iyer of JP Morgan feels, Investors need to brace for volatility and stay hedged and stick to benchmark. "We expect a more decisive stake into late Oct/early November," he added.

 9:34 am Market check: The market has recovered a bit after the panic selling in opening. The Sensex is down 124.70 points or 0.62 percent at 20139.01, and the Nifty is still below 6000, down 37.95 points or 0.63 percent at 5974.15.  About 496 shares have advanced, 450 shares declined, and 58 shares are unchanged.

HDFC twins, SBI, ICICI Bnak and Bharti Airtel are top losers in the Sensex. On the gainers list are Hero Motocorp, HUL, Hindalco, Wipro and Coal India.

Meanwhile, Angela Merkel won a landslide personal victory in Germany's general election. However, leftist rivals may have to join a coalition government due to short of the votes needed to rule to be majority.

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The market has opened on a lower note as rate sensitive stocks are under selling pressure buoyed down by Raghuram Rajan's maiden monetary policy. The Sensex is down 201.87 points or 1 percent at 20061.84, and the Nifty down 66.30 points or 1.10 percent at 5945.80.

About 98 shares have advanced, 224 shares declined, and 32 shares are unchanged.

SBI, L&T, ICICI Bnak, Dr Reddy's Labs and HDFC are top losers in the Sensex.  On the gaining side are technology stocks with Infosys leading the pack.

Meanwhile, the Indian rupee opened lower by 31 paise at 62.54 per dollar against 62.23 Friday. Agam Gupta, Standard Chartered said, "Rupee will probably open between 62.60-62.70/USD. We saw nationalised banks sell dollars on Friday after the RBI repo rate hike and we need to see whether they follow it up with more sales. The range for the day is seen between 62.35-62.85/USD."

On the global front, Japan and Hang Seng are shut for trade. Other Asian markets were mixed in morning trade today ahead of the release of China's manufacturing PMI. Experts are waiting to see if China's positive growth momentum will extend into this month, after rising to 50.1 in August.
 
In the currency space, the dollar is subdued ahead of China's PMI data. The euro-dollar traded at 1.35 levels and the yen stood at 99/USD levels. It was a volatile Friday for the rupee as well. Post RBI’s announcement, the rupee slipped further from that level. The currency finally ended the day at 62.23/USD.

In commodities, Brent prices traded flat at USD 109/bbl levels while Nymex slipped to sub USD 105/bbl levels as Friday’s expiration of the contract for October delivery prompted liquidation selling. From precious metals space, gold slid 3 percent on Friday on hints that the Fed may taper in October although it pared some losses in early Asian trade today morning.