Sensex, Nifty close higher amid consolidation; IT stocks rally

3:30 pm Market Closing: Benchmark indices closed higher amid consolidation Thursday, with the Sensex rising 39.78 points to 28329.70. The Nifty failed to hold 8800 level, though it gained 9.35 points at 8778.40.

TCS, HCL Technologies, Tech Mahindra, ITC, M&M and Bharti Infratel rallied 1-2 percent.

Tata Steel, Cipla, PNB and L&T were down 1-3.5 percent.

3:20 pm FII View: Global brokerage firm Morgan Stanley said it expects the Sensex to touch the 39,000 mark in a 'bull case' scenario by this December.

"Domestic appetite for equities remains strong. Sentiment is off lows though yet to hit exuberant territory," Morgan Stanley India Strategist Ridham Desai and Sheela Rathi said in a research note.

The brokerage has a base case (50 per cent probability) target for BSE Sensex at 30,000, a bull case (30 per cent probability) of 39,000 and a bear case (20 per cent probability) of 24,000.

"Strong corporate payout (buybacks and dividends), a new M&A cycle, and robust household demand for equities combined with improving growth and reasonable equity valuations (versus emerging markets and bonds) bring our bull case into play," it said.

2:59 pm Results estimates: Aurobindo Pharma is expected to report a 14.4 percent growth year-on-year in profit at Rs 612.12 crore and 10.3 percent in revenue at Rs 3,857.2 crore, driven by US business that contributes over 58 percent to formulation sales.

Operating profit is seen rising 14 percent to Rs 937 crore and margin may expand 80 basis points to 24.3 percent compared with year-ago quarter, according to average of estimates of analysts polled by CNBC-TV18.

Analysts believe lack of high value launches should keep US growth restricted. Drugs such as Nuvigil, Tricor, Valcyte, Vimpat and Vfend generic may drive US business. Within injectables drugs such as Isosulfane Blue may drive hospital sales in US.

2:40 pm Hindustan Zinc share sale: Legal opinion on the proposed buying of government's residual stake in Hindustan Zinc Ltd (HZL) by Vedanta is expected within a month, the Mines Ministry said today.

The Supreme Court had last year restrained the government from going ahead with any further disinvestment of its stake in HZL.

Hindustan Zinc had submitted a proposal for buying the residual government stake.

"We are seeking legal opinion because there is a stay order by the Supreme Court," Mines Secretary Mines Secretary Balvinder Kumar told PTI.

2:20 pm Earnings: Bajaj Electricals reported a decline of 17.47 percent in standalone net profit at Rs 29.71 crore for the quarter ended on December 31, 2016, on account of fall in sales of consumer products.

The company had registered a net profit of Rs 36 crore in October-December period a year-ago, Bajaj Electricals said in a BSE filing.

Its total income during the quarter under review was also down 7.05 per cent to Rs 1,055.09 crore as against Rs 1,135.17 crore of the corresponding quarter of last fiscal.

Total expenses were down 5.97 per cent to Rs 995.67 crore in the third quarter of 2016-17 as against Rs 1,058.94 crore in the year-ago period.

2:00 pm Market Check
Benchmark indices remained rangebound in afternoon trade, with the Nifty gyrating in band of 8750-8800 levels as investors are on sidelines ahead of corporate earnings.

The 30-share BSE Sensex rose 36.05 points to 28325.97 and the 50-share NSE Nifty gained 6.85 points at 8775.90.

India's third largest drug maker by sales Lupin gained more than 1 percent after posting a 21 percent increase in its net profit to Rs 633 crore for the third quarter ended December, beating analysts' estimates on back of strong US generic sales.

Bank of India shares climbed 2 percent as the bank has turned profitable in October-December quarter, with net income at Rs 101.7 crore against loss of Rs 1,505 crore in year-ago period on account of fall in provisions and sharp jump in other income & operating profit.

Markets in Europe were slightly higher as investors focused on earnings and took a cautious approach amid rising political uncertainty.

1:50 pm Lupin Earnings: India's third largest drug maker by sales Lupin on Thursday posted a 21 percent increase in its net profit to Rs 633 crore for the third quarter ended December beating analyst estimates on back of strong US generic sales.

The company posted Rs 524.6 crore in the same period previous year. Revenues rose by 26 percent to Rs 4483 crore.

1:00 pm Market Check:
Equity benchmarks as well as broader markets continued to consolidate in afternoon trade as investors awaited third quarter earnings.

The 30-share BSE Sensex slipped 21.27 points to 28268.65 and the 50-share NSE Nifty declined 9.80 points to 8759.25.

Experts expect consolidated to continue in near term. According to them, after Q3 earnings season, which may end by next week, focus will be shifted to global cues and GST.

State Bank of India (down 0.85 percent), Bank of Baroda (down 1.5 percent), Lupin (up 1.35 percent), Tata Motors (down 0.18 percent) and Coal India (up 0.3 percent) are yet to announce quarterly earnings.

Asian shares climbed to their highest in more than 18 months, as investors grew more confident about China while the dollar slightly firmed in the wake of growing concerns over political instability in Europe.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.4 percent to their highest since July 2015 with Hong Kong, Taiwan and China among the region's best performing markets.

European stocks are set to follow Asia's cues, with key markets seen opening slightly higher.

12:40 pm FII View: Bharat Iyer of JPMorgan says it appears that the easing cycle may have ended, especially after monetary policy announced on February 8.

Market expectations of a 25 bps rate cut were belied but more importantly, the Monetary Policy Committee changed the monetary policy stance from accommodative to neutral, focusing on output gaps and inflation targeting, he adds.

Historically, equity markets have rallied considerably post bottoming of the rate cycle. The current event calendar suggests that positive news, particularly on the policy front, could now thin out over the next two months, according to him.

Iyer feels technical and momentum indicators also appear a tad stretched. Consequently, he expects a phase of consolidation in the equity markets near term.

A pick-up in growth over second half of FY17 should, however, pave the way for sustainable returns, he believes. He maintains a year-end Nifty target range of 9,300-9,600.

12:20 pm Interview: Thermax expects 3-4 segments to open up in Q4 and Q1 of FY18 supporting medium and large projects, which had gone dry in this financial year. In an interview to CNBC-TV18, MS Unnikrishnan, MD of Thermax says the Q4 of FY17 is likely to be better on-year.

Demonetisation hit the company's performance as customers in the cash-oriented sectors deferred taking deliveries, he said, adding, Thermax also cut production in December to maintain inventory and is working to trim operatiing expenses to lift margins.

He expects GST implementation to lead to inflationary pressure.

The company is a strong contender on six oil and gas projects that are coming up for Bharat VI implementation, he said.

12:00 pm Market Check
Equity benchmarks remained moderately under pressure in noon trade, with the Nifty hovering around 8750 level. The rupee gained past 67 against the US dollar, rising 0.31 percent to trade at 66.98, for the first time since November 11, 2016, on sustained selling of the American currency by exporters and banks.

Forex dealers said that besides increased selling of the American currency by exporters as well as banks, a higher opening in the domestic equity market supported the rupee. They said, however, the dollar's strength against other currencies overseas, capped the gains.

The 30-share BSE Sensex was down 43.48 points at 28246.44 and the 50-share NSE Nifty fell 15.10 points to 8753.95.

Technology stocks gained strength despite rupee strengthening. TCS surged 1.5 percent and Infosys gained 0.6 percent.

Lupin rose 0.7 percent and Aurobindo Pharma rallied 2 percent ahead of quarterly earnings due later today while Hero Motocorp was up 1 percent after Q3 numbers.

However, ICICI Bank, HDFC Bank, SBI, L&T, Tata Motors, Maruti and Tata Steel continued to weigh on market.

11:56 am Listing plan: India's JSW Infrastructure Ltd, owned by billionaire Sajjan Jindal, plans to list its shares on local bourses in 2018/19 as it draws an expansion plan to increase operating profit and cargo-handling capacity, a company official said.

"Right now the company is in expansion mode. We are looking for 15-20 billion rupees operating profit before the listing of our shares," Devki Nandan, its vice president for business development, told Reuters.

Nandan expects a 30 percent growth in his firm's operating profit in the current fiscal year over 5 billion rupees recorded in 2015/16, and targets cargo-handling capacity of 300 million tonnes by 2025.

JSW Infrastructure, a part of metals-to-cement conglomerate JSW Group, operates three ports and a jetty on India's west coast that can annually handle 36 million tonnes of cargoes.

11:40 am Interview: Dinesh K Sarraf, Chairman of the ONGC, said on Thursday that while the state-run firm would continue to invest in gas exploration, it was getting increasingly difficult owing to the "tough" pricing scenario.

Speaking to CNBC-TV18. Sarraf said gas prices were displaying a downward trend and that he had asked the government to revise gas prices upwards.

On the government's Budget proposal to merge all state-owned energy firms into a consolidated giant, Sarraf said the combine will have economies of scale.

He said while there are a number of ways in which a merger can be undertaken, a vertical integration would be best as it would ensure that the companies perform better irrespective of pricing trends. A horizontal integration, on the other hand, would lead to monopolies, Sarraf said.

11:20 am Earnings estimates: Drug major Lupin's third quarter profit is seen rising 15 percent year-on-year to Rs 609.5 crore and revenue may increase 19.2 percent to Rs 4,239 crore, driven by US business.

Profit growth could be dented by higher tax rate and interest costs.

According to average of estimates of analysts polled by CNBC-TV18, operating profit is expected to jump 15.3 percent to Rs 1,011.7 crore but margin may shrink 70 basis points to 24 percent on yearly basis.

US business (which contributed 43 percent to total revenue) is expected grow in the range of 20-40 percent in Q3 against 73 percent YoY at Rs 1,998 crore. The growth is expected to be led by diabetes drugs Glumetza, Fortamet generic and pregnancy drug Methergine and also Gavis. However, sequential US sales are likely to be flattish due to lack of any high value launches and also due to more competition in key drugs Glumetza and Fortamet. US pricing pressure may also be seen.

11:00 am Market Check
Benchmark indices wiped out early gains on account of profit booking in banks, FMCG and infra stocks. Index heavyweights Infosys, Reliance Industries and HDFC continued to support the market. Investors awaited corporate earnings, especially SBI numbers to check asset quality performance.

The 30-share BSE Sensex was down 68.47 points at 28221.45 and the 50-share NSE Nifty fell 27 points to 8742.05. The market breadth also turned negative as about 1259 shares declined against 1118 advancing shares on the BSE.

Bharat Iyer of JPMorgan expects a phase of consolidation in the equity markets near term. A pick-up in growth over second half of FY17 should, however, pave the way for sustainable returns, he believes while maintaining a year-end Nifty target range of 9,300-9,600.

ICICI Bank, Larsen and Toubro, HDFC Bank, SBI, Maruti Suzuki and Tata Steel were leading contributors to Sensex's losses, down 0.5-2 percent while Infosys, TCS, Reliance Industries, HDFC and Lupin gained 0.3-1 percent.

Oil prices stabilised, boosted by an unexpected draw in US gasoline inventories, although bloated crude supplies meant that fuel markets remained under pressure. Brent crude futures, the international benchmark for oil prices, were trading at USD 55.44 per barrel, up 0.58 percent from their last close.

10:30 am Rupee expert: Ananth Narayan, Head-Financial Markets at Standard Chartered Bank, said that Reserve Bank of India's monetary policy decision yesterday, which was announced on Wednesday, would in an oblique way help the rupee remain on the stronger side.

Speaking to CNBC-TV18, he said that foreign institutional investor (FII) money would flow into the country including into debt, as external participants would see the central bank's monetary policy as being credible and inflation-oriented.

He added, however, that this may not necessarily be good thing as there could be unhedged exposures in the short term.

Narayan said he does not expect short-term funding rates to move higher as compared to 10-year bond yields, adding that bonds and commercial papers will get anchored by the slush of liquidity.

10:00 am Market Check
Equity benchmarks erased some early gains, with Nifty hovering around 8800 level ahead of Q3 earnings. Technology, HDFC Group and oil stocks continued to support the market while metals and infra stocks were under pressure.

The 30-share BSE Sensex gained 95.92 points at 28385.84 and the 50-share NSE Nifty rose 24.95 points to 8794 while the broader markets continued to outperform benchmarks.

The BSE Midcap and Smallcap indices gained 0.3 percent and 0.6 percent, respectively. More than two shares advanced for every share falling on the exchange.

Ridham Desai of organ Stanley says strong corporate payout, a new M&A cycle, and robust household demand for equities combined with improving growth and reasonable equity valuations bring his bull case into play.

Metals stocks like Tata Steel and Hindalco were down more than 1.5 percent while HDFC, HDFC Bank, Infosys, TCS, Reliance Industries and Lupin continued to lead the market higher.

Asian shares were mixed today following a mild close in US markets and with gold prices at three-month highs.

9:45 am BoAML on NTPC: Bank of America Merrill Lynch has maintained buy rating on the stock, with unchanged target price of Rs 194 as Q3 numbers were broadly in-line while capacity addition lagged target.

According to the research firm, 50 Kcal per Kg decline in Coal GCV (gross calorific value), if not passed on, may impact earnings by 6 percent and decline in interest rate may lead CERC (Central Electricity Regulatory Commission) to cut FY20-24 regulated return on equity (RoE).

BoAML built 100 bps interest rate cut in regulated return on equity to 14.5 percent.

9:33 am Buzzing: Share price of Polaris added 4.4 percent intraday on the back of strong Q3 numbers.

The company's third quarter (Oct-Dec) consolidated net profit increased by 15 percent at Rs 47.6 crore against Rs 41.1 crore, reported in the quarter ended September 2016.

Total income of the company was up at Rs 515.4 crore versus Rs 506.7 crore.

In the board meeting held of February 8, the company has given in principle approval in respect of the investment to be made by Polaris Consulting Services Pte, Singapore in Virtusa Malaysia SDN BHD.

9:15 am Market Check
The market started off Thursday's trade on a positive note after three-day consolidation and pricing in Union Budget as well as RBI policy. Q3 earnings will be closely watched.

The 30-share BSE Sensex was up 150.45 points at 28440.37 and the 50-share NSE Nifty gained 47.40 points at 8816.45.

Hero Motocorp and Cipla rallied 1.5-2 percent after quarterly earnings. ICICI Bank, ONGC, SBI, Aurobindo Pharma, Bharti Infratel, Axis Bank and Tata Motors were other gainers.

BHEL, HUL and Asian Paints were early losers.

The Indian rupee gained further in early trade today. It has opened higher by 15 paise at 67.04 per dollar versus previous close of 67.19.

Mohan Shenoi of Kotak Mahindra Bank says US dollar is in a tight range against most currencies despite strong US payroll data indicating exhaustion in the rally.

He expects rupee to strengthen against the dollar in-line with other Asian currencies. The USD-INR pair is expected to trade in a range of 66.90-67.20/dollar, according to him.

The dollar pressured by the decline in US treasury yields amid uncertainty about President Donald Trump's economic policies.

Asian markets barring Japan traded higher today while the S&P 500 ended slightly higher on Wednesday as investors digested mixed earnings reports.