Sensex holds 19000; MMTC locked at 10% lower circuit again

Moneycontrol Bureau
Live Market Commentary

10:55am National Fertilisers gained 1.6 percent after the government sources say the divestment plan will be sent to the Cabinet next week.

MMTC is locked at 10 percent lower circuit again today, the government garnered over Rs 567 crore at Rs 60 a share via offer for sale that oversubscribed 1.33 times in previous session. The issue saw 65 percent participation from insurance companies and the rest from banks and retail.

Apollo Hospitals rose by 3 percent, after the group said that they will spend Rs 2,200 crore on expanding its facilities and will add 2,700 beds in the next three years. Apollo will be spending part of this on expanding the facility in Mumbai and opening Apollo Clinics there. Of the planned outlay, Apollo will spend about Rs 800-Rs 1,000 crore in the next 12 months.

Ambuja Cements soared 1.3 percent, after CLSA upgraded the stock to buy with a target price of Rs 205.

Meanwhile, BSE Sensex is up 220.52 points at 19047.68, and the Nifty is up 69.50 points at 5768.60. Nearly 3 shares advanced for every share declining on the National Stock Exchange.

10:50am Apollo Tyres slipped another 0.7 percent Friday on top of 26 percent fall in previous session, after it decided to acquire US-based Cooper Tire for Rs 14,500 crore on Wednesday. Brokerage house UBS has downgraded the stock to sell from buy and has halved its target price to Rs 60 as against Rs 120 earlier based on EV/EBITDA of 4.1Xfy14e EBITDA of USD 823 million. 

"While there are long term benefits of large scale presence in US/China markets and USD 100-120 million cost synergies, scenario analysis suggests significant earnings volatility on margins due to debt. Hence, the stock discount to peer group could widen over medium term given these uncertainties," UBS report said.

Kotak also downgraded the stock to reduce from buy with a revised target price of Rs 64 (Rs 110 earlier). "Given high the leverage, EPS estimates for the consolidated entity would be highly volatile. Hence, we value the existing operations at 0.8X one-year forward book value and attach zero equity value to the Cooper acquisition," Kotak in its report said.

10:40am BSE Sensex is up 235.93 points or 1.25 percent at 19063.09, and the Nifty is up 75.10 points or 1.32 percent at 5774.20.

Country's largest private air carrier Jet Airways gained nearly 6 percent ahead of FIPB meet today that will consider Jet-Etihad deal. The company appointed Gary Kenneth Toomey as its new CEO on Thursday.

At a time when there are repeated news flow of foreign instituitional investors (FIIs) pulling out capital from the Indian equity market, Tushar Pradhan, chief investment officer, HSBC says the market continues to be fairly attractive on a comparative basis. He says the outflows are on expected lines and are in a bottoming out phase .

10:25am Tata Coffee surged 6.55 percent after a slide of 29.5 percent in previous five consecutive sessions. Sharad Shah sold 1.08 lakh shares (a part of 3.76 percent stake) at Rs 892 a share and Kotak Mahindra prime (which was holding 2.73 percent stake as of March 2013) offloaded 3 lakh shares at Rs 880 on Thursday.

Meanwhile, Reliance MF purchased 1 lakh shares at Rs 880.

Tata Motors rallied 3.5 percent, after its subsidiary Jaguar Land Rover said its retail sales rose by 12 percent Y-o-Y to 32,477 units in May units mainly driven by Jaguar sales.

Jaguar sales were up 36 percent due to launch of new Jaguar f-Type and strong growth in XF model. However, Land Rover growth at 8 percent lagged expectations. Also, the important point to note is that for the third month in a row China growth has been sub-par at 11 percent Y-o-Y . Year-to-date growth in China is only 10.5 percent compared to expectations of 25-30 percent.

10:15am Short covering and positive global cues pushed Indian equities more than one percent higher in morning trade Friday. BSE Sensex is up 241.69 points at 19068.85, and the Nifty is up 76.05 points at 5775.15.

Advancing shares outnumbered declining ones by 988 to 346 on the Bombay Stock Exchange.

Asian markets recovered from multi-month lows following a rebound in US markets on the back of upbeat economic data. But investors remained cautious ahead Federal Reserve policy meeting that will be scheduled next week.

Back home, short covering continues in most beaten down stocks like financials, auto, metals and oil & gas.

Indian rupee appreciated by 18 paise to 57.79 per dollar as against 57.98. Shankar Sharma of First Global says extent of fall in rupee will be less than equity fall.

"We could see 10-20 percent downside in equity markets," Sharma added.