Sensex, Nifty gain strength; HSBC PMI hits 21-month high

Moneycontrol Bureau

11:50am Asian Paints top gainer

Asian Paints is the biggest winner on the Nifty, up 5 percent as Bank of America Merrill Lynch upgraded the stock to buy from neutral and has upped target price to Rs 875 from Rs 680.

The brokerage sees growth accelerating by a compounded rate of 29 percent over FY15-17. It upgraded FY16/FY17 earnings per share by 11 percent/12 percent. BoAML also see margins rising 270 basis points in FY15-17 due to benign raw material costs and portfolio premiumisation.

11:40am Maruti in News

India's largest car maker Maruti Suzuki sold 1.1 lakh units in November, up 6.8 percent compared to previous month and 19.5 percent compared to same month last year. The sale of compact, super compact, mid-size cars and vans helped the company to report good growth in the month gone by.

Domestic sales grew by 17 percent on yearly basis to 1 lakh units while exports surged 52.7 percent to 10,123 units during the the same period.

Passenger vehicle sales rose by 14.9 percent to 82,306 units in November compared to corresponding period of last fiscal.

Compact cars like Ritz, Celerio, Swift and Dzire recorded a 13.8 percent sales growth while mid-size cars like SX4 and Ciaz (launched in October 2014) showed 2516 percent growth in sales at 5,232 units. Omni and Eeco's sales grew by 52.1 percent year-on-year to 12,203 units in November.

11:25am FII View

Brokerage house Citi has raised its Sensex target for December 2015 by 16 percent to 33,000, and has forecast a target of 9850 for the Nifty.

“We expect 2015 to be a good year; 2015 should be front-loaded with falling rate gains, back-loaded with an actual economic/investment recovery,” said the Citi note to clients.

The brokerage expects the RBI to reduce benchmark rates by 75 basis points during the year. Lower rates coupled with a rising economy and uptick in corporate earnings growth could fire the market even more, the brokerage said.

Citi is overweight on banks, oil & gas, cement and pharma stocks.

11:00am Market Check

The market gained some strength after HSBC PMI touched 21-month high today. The 30-share BSE Sensex advanced 79.53 points to 28773.52 and the 50-share NSE Nifty rose 25.45 points to 8613.70.

Advancing shares outnumbered declining ones by a ratio of 1268 to 1007 on the Bombay Stock Exchange. Manufacturing operating conditions in India improved for the thirteenth month in a row in November, supported by stronger growth of output and new work intakes. Foreign orders and buying activity also rose during the month, while employment remained broadly stable, said HSBC in its report.

Rising from 51.6 to 53.3, the headline seasonally adjusted HSBC India Purchasing Managers’ Index (PMI) - a composite indicator designed to give an accurate overview of manufacturing operating conditions – reached a 21-month peak in November.

"Manufacturing activity accelerated further in November led by higher output and new orders. Domestic orders saw the biggest increase, even as new export orders continued to be strong. The sharp rise in input prices was surprising, but future prints may be lower as falling commodity prices eventually lead to softer intermediate good prices," said Pranjul Bhandari, Chief India Economist at HSBC.

Maruti Suzuki, Axis Bank and Hindustan Unilever topped the buying list, up over 2 percent followed by TCS, Hero Motocorp, Dr Reddy's Labs, Sun Pharma and Wipro with more than 1 percent gain.

However, Reliance Industries, ONGC, BHEL, Sesa Sterlite, Tata Steel and Tata Power fell over a percent.