Sensex, Nifty end lower ahead of RBI meet; Mid, Smallcap up

Rakesh Arora, Macquarie says the earnings season has been mixed so far and the market's focus is shifting towards the highly anticipated Union Budget and rate cuts.

“That said, the pre-budget rally appears to be tiring. The flurry of new stock issuance worth over USD 7 billion in next 2-3 weeks will suck out some liquidity. Expect some consolidation in the market,” he adds.

The Reserve Bank of India will announce its first credit policy (of the calendar year 2015) on February 3. According to a CNBC-TV18 poll, RBI may not go for rate cut tomorrow, but the governor may act post the Union Budget. Governor Raghuram Rajan already surprised the street with a repo rate cut of 25 bps on January 15, 2015 on the premise that inflation number has come down and would remain largely range bound in the next few months.

Auto companies reacted to the January sales data today. January showed weakness for 2-wheeler and tractor sectors while commercial vehicle sales improved further. Bajaj Auto reported a 9 percent drop in January auto sales while TVS Motor posted just a 1.1 percent Y-o-Y growth in sales. Mahindra & Mahindra’s sales declined 6 percent and its tractors sales slipped 26 percent while Escorts’s tractors reported a 29 percent decline.

On the other hand, Maruti recorded a 14 percent jump in total sales led by the near doubling in export sales. Eicher Motors posted a 25 percent rise in total sales. Tata Motors’s total commercial and passenger vehicles sales (including exports) in January 2015 grew 5 percent led by M&HCV and passenger cars. Ashok Leyland reported a 36 percent growth in total sales driven by M&HCV.

Maruti Suzuki, Tata Motors, Ashok Leyland and Eicher Motors gained 0.6-1.8 percent whereas TVS Motor fell 7 percent. Bajaj Auto and Mahindra & Mahindra dropped over 1.5 percent.

Sun Pharma (up 1.4 percent) and Ranbaxy (up 2.4 percent) ended at record closing highs. The US Federal Trade Commission has given a conditional nod to the USD 4 billion merger based on divestment of anti-bacterial drug. The merger now just needs approval from Punjab and Haryana High Court which will be hearing on the merger today.

HCL Technologies added another 5.5 percent to Friday's rally as brokerages appeared bullish on the stock. CLSA raised target price to Rs 2,200 and expects to see continued earnings surprises & re-rating potential. Citi too raised the target to Rs 2,175 on their sole 'buy ' call in the Indian IT services space.

Shares of ICICI Bank, ITC, Hindustan Unilever, Bharti Airtel and Dr Reddy’s Labs slipped 2-3.5 percent.

However, Axis Bank topped the buying list in last hour of trade, up 4.8 percent. L&T, TCS, Wipro, Hindalco Industries and GAIL gained 1-4 percent.

In the broader space, Future Retail surged 12.5 percent as the company announced its plans to apply for a payment bank license. Sources indicated that IDFC too may pick up a stake in the payments bank. Aditya Birla Nuvo and Vakrangee also applied for payment bank license.

McNally Bharat surged 13 percent on its fund raising plans. The board of directors today has decided to raise upto Rs 95 crore through preferential allotment.

Despite posting a weak set of Q3 earnings, Monsanto rallied over 13 percent and posted a fresh 52-week high on reports that genetically modified crops could soon become a reality in India. Advanta too gained about 4 percent.

Jet Airways and SpiceJet gained 2-4 percent after jet fuel prices cut for the seventh time since August last year. HSBC expects Jet to post a profit of Rs 430 crore in FY16.

In earnings, JSW Energy climbed 2.7 percent after its Q3 numbers beat street estimates at bottomline and operating level. Consolidated net profit spiked 86.9 percent year-on-year to Rs 380 crore during October-December quarter.

Indian Bank climbed 0.9 percent as the public sector lender’s third quarter net profit increased 4.9 percent year-on-year to Rs 277.5 crore aided by other income and operating profit. However, slow growth in net interest income and higher provisions restricted the profit growth.

Bharat Forge surpassed street expectations today by reporting 108.8 percent growth in the bottomline during October-December quarter. The stock surged 3 percent to end at record closing high.

In macro data, HSBC manufacturing PMI indicated the economy is expanding but at a slower pace with the figure slowing to a 3-month low of 52.9 in January 2015 against 54.5 in December 2014.

Advancing shares outnumbered declining ones by a ratio of 1627 to 1287 on the Bombay Stock Exchange.