Moneycontrol Bureau
The market gained strength in late trade Tuesday supported by short covering in healthcare, FMCG and select metals stocks. The hope of solution to Greece's debt issue before its deadline ends also aided sentiment. The broader markets outperformed benchmarks throughout the session today.
Equity benchmarks snapped two-day fall today. The 30-share BSE Sensex gained 135.68 points or 0.49 percent at 27780.83 and the Nifty closed above 8350 level, up 50.10 points or 0.60 percent to close at 8368.50. The BSE Midcap and Smallcap indices climbed over 1 percent and the market breadth remained positive as about 1720 shares advanced against 979 shares declined on the Bombay Stock Exchange.
Experts expect the market to remain volatile till the Greece story gets discounted fully. After this event, June quarter earnings will be in focus.
Volatility in the Indian markets is likely to continue till the Greek referendum and then there will be some reaction based on the referendum vote, said Neeraj Deewan of Quantum Securities. However, the downside to the markets is limited, he feels.
According to Nilesh Shah, MD, Kotak Asset Management Company, valuations became attractive below 8,000.
On the global front, major European markets remained under pressure, though hopes of last-minute deal raised after reports indicated that Greece may consider the European Union proposal on reforms for cash. Today (June 30) is the last day for debt-laden Greece to pay euro 1.6 billion debt to International Monetary Fund.
France's CAC, Germany's DAX and Britain's FTSE slipped 1 percent each while Spanish and Italian markets turned positive. However, Asian benchmarks ended in the green with the Shanghai Composite rallying 5.5 percent and Hang Seng rising 1 percent.
Citi's chief economist Willem Buiter said Greece is most likely to vote yes for reforms; post referendum financial markets will slip back to business as usual.
Back home, Coal India was the biggest gainer on Sensex, up 3.11 percent to end at record closing high of Rs 421.05. Brokerage Morgan Stanley upgraded price target on the stock to Rs 530 from Rs 499 per share. It said the company looks much better positioned for growth with low volatility versus coal peers, and is now at the top of its pecking order in the Indian mining group.
Pharma stocks were in focus today. Sun Pharmaceutical Industries rallied 2.9 percent as brokerage Credit Suisse said the drug maker has taken price increases in six of Ranbaxy's branded products in the US in May 2015. Dr Reddy's Labs was up 0.6 percent as the brokerage said the Hyderabad-based pharma company also has taken a 15 percent price increase in Sumatriptan Autoinjector on June 2, 2015. Additionally the impact of recent product recalls (anti-seizure drug Divalproex and anti-hypertension drug Amlodipine & Atorvastatin) should be low as Bachupally plant has already cleared FDA inspection in April 2015, it believes. Lupin spiked 3 percent on value buying.
In the broader space, Marksans Pharma surged 8.4 percent on acquisition of US-based Time-Cap Laboratories. Glenmark Pharma rallied 2 percent on receiving approval from US Food & Drug Administration (USFDA) for its cholesterol drug Ezetimibe. Suven Life rose 3 percent on product patent each in Israel, Japan and South Africa. Cadila Healthcare surged 5 percent as Credit Suisse said Ranbaxy's re-launch of Hydroxychloroquibe Sulphate (anti-malarial drug) only at a 20 percent discount means lower price erosion and higher share retention for Cadila. This could boost Cadila's FY16 EBITDA by 10 percent, it added.
Bharti Airtel climbed 1.55 percent after Sunil Mittal-led Airtel has become the world's third largest mobile operator with 303 million subscribers.
However, technology stocks saw selling pressure. After Tech Mahindra's Q1 revenue warning on Monday, Gartner has slashed IT spending forecast for CY15 from 1.3 percent decline to 5.5 percent decline. It sees IT spending declining is due to the rise in US dollar. TCS dropped 1.6 percent and Wipro declined 1.4 percent. Infosys was down 0.5 percent. Tech Mahindra slipped 1.3 percent.
Among others, ITC, HDFC Bank, Reliance Industries, Tata Motors, HUL, State Bank of India and Tata Steel gained 1-3 percent. However, ICICI Bank, Hero Motocorp and GAIL lost over a percent.
Auto stocks will be in focus on Wednesday ahead of their June sales data.
Among midcaps and smallcaps, Brigade Enterprises jumped nearly 11 percent and Kansai Nerolac was up 1 percent after Brigade decided to acquire approximately 16 acre property in Chennai from Kansai for Rs 550 crore. Brigade told CNBC-TV18 that the purchase will be funded via internal accruals. Kansai is set to use the sale proceeds for their Gujarat unit.
Nestle India rallied 4.6 percent after media report said the Bombay High Court has allowed the company to export Maggi noodles.
However, Voltas slipped 4.6 percent after Nomura downgraded the stock to reduce with a reduced target of Rs 265 per share. The brokerage has also cut FY16 earnings per share (EPS) estimate by 12-16 percent to factor in weaker growth in room AC sales as well as further delays in the electro-mechanical projects (EMP) segment’s recovery.
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