Sensex up 246 points; rate cut hope lifts banks on August WPI

It was a good start to crucial Fed week on Monday as the market rallied 1 percent. Banks drove market higher on hopes of rate cut. The BSE Midcap index outperformed benchmarks, rising 1.3 percent. The market breadth was in favour of advances with 2:1 ratio.

The 30-share BSE Sensex jumped 246.49 points to 25856.70 and the 50-share NSE Nifty rose 82.95 points to 7872.25.

Chris Wood of CLSA said India continued to be the top overweight market. CLSA has increased India's weightage by one percentage point to 23 percent in its Asia Pacific ex-Japan relative-return portfolio while weightage of China reduced by 2 percentage points to neutral.

Global markets were mixed ahead of the crucial FOMC meet outcome due on September 17. European markets like France's CAC, Germany's DAX and Britain's FTSE gained 0.3-0.7 percent. However, Asian markets ended in red on weak macro data. China's Shanghai Composite fell 2.7 percent after August industrial output rose 6.1 percent, missing estimates and fixed asset investment slowed to 10.9 percent, the weakest in 15 years. Japan's Nikkei dropped 1.6 percent.

It is prudent to wait for the FOMC meet to get over, but a sharp move based on one single event is unlikely, said Dipen Sheth, head institutional Research at HDFC Securities. He feels that a rate hike in unlikely at the moment. There are other global activities that may make the Fed to think of delaying a rate hike, Sheth said.

Back home, WPI inflation declined for the 10th straight month , coming in at minus 4.95 percent in August against 4.05 percent in July. The decline, however, was much more than analysts forecast of 4.43 percent. All eyes are now on August CPI data later today.

Consistent contraction in inflation raised hopes of rate cut by Reserve Bank of India in its forthcoming monetary policy on September 29. Bank Nifty rallied 1.8 percent as Axis Bank surged 3 percent. ICICI Bank, HDFC Bank, State Bank of India, Bank of Baroda and Punjab National Bank gained 1-2 percent. The rally in banks was also after media report indicated that Prime Minister Narendra Modi is set to fix power sector debt issue.

Metals also gained strength; Tata Steel, Vedanta and Hindalco Industries soared 3.5-4 percent. Sources told CNBC-TV18 that the 10-member panel on safeguard has approved Directorate General of Safeguards's recommendation of imposing a 20 percent provisional safeguard duty on select steel products. The duty will be imposed on select hot rolled coil grades for a period of 200 days from date of notification and notification circular is expected in next few days, sources added.

NTPC topped the buying list on Sensex, up 5 percent; media report indicated that the government will extend tripartite agreement to encourage private solar power players to sign deals with NTPC.

Sun Pharma was up 1.4 percent after Credit Suisse's note said Taro Pharma, the subsidiary of Sun, launched Keveyis at a high price of USD 163.8 per tablet of 50mg. The drug is used in the treatment of periodic paralysis.

Wipro, Bharti Airtel and GAIL were other prominent gainers, up 2 percent each while Bajaj Auto and Maruti Suzuki underperformed others, down marginally.

In the broader space, Kesoram Industries gained 1.4 percent as JK Tyre is all set to acquire company's tyre manufacturing unit at Haridwar for an enterprise value of Rs 2,200 crore. Kesoram will use sale proceeds for debt reduction.

Just Dial rallied 13.5 percent after launch of Android app Search Plus. Arvind Infrastructure gained 10 percent after ace investor Sunny Porinju Veliyath picked up 0.6 percent stake in company.

Amtek Auto rose another 13 percent after the company said it is considering various means to de-leverage the balance sheet including selling of non-core business, minority stake in overseas companies and some industrial real estate assets within the business.

Elder Pharma climbed 6 percent as the company is in talks with prospective lenders w.r.t its restructuring plan. L&T Finance Holdings advanced 4 percent on a media report that Bain Capital is set to buy stake in non-banking finance company.

3:30 pm Market closing: The market picked up pace at the last few hours. The Sensex ended up 246.49 points or 0.9 percent at 25856.70 and the Nifty was up 82.95 points or 1 percent at 7872.25. About 1691 shares have advanced, 965 shares declined, and 106 shares are unchanged.

About 1691 shares have advanced, 965 shares declined, and 106 shares were unchanged. NTPC, Hindalco, Vedanta, Tata Steel and Axis Bank were top gainers while Maruti, Bajaj Auto, Reliance and Tata Motors were major laggards.

3:20 pm: Balco, part of Anil Agarwal-led Vedanta, today said it has started the procedure to shut down its aluminium rolling business in Chhattisgarh - a move that will see 1,000 people losing jobs. Last month, the aluminium manufacturer had announced its decision to shut down the rolling mill in Korba (Chhattisgarh) on account of "steep fall" in the prices of the metal besides dumping from China and falling margins. "Balco has begun the official procedure to close down its Sheet Rolling Division and Foundry at Korba.

The company has issued the information to the Secretary, Labour Ministry, Government of Chhattisgarh as well as the BSE and NSE," the company said in a statement. Mining conglomerate Vedanta Ltd, earlier Sesa Sterlite, holds 51 per cent stake in Bharat Aluminium Company (Balco), while the remaining is held by the government. It produces about 30,000 tonnes per annum of rolled products like aluminium sheets and coils.

3:10 pm Market check: After rising over 250 points, the Sensex is up 155.11 points or 0.6 percent at 25765.32. The Nifty is up 78.35 points or 1 percent at 7867.65. About 1691 shares advanced, 947 shares declined and 93 shares are unchanged.

3:00 pm Market Expert: It is prudent to wait for the FOMC meet to get over, but a sharp move based on one single event is unlikely, says Dipen Sheth, head institutional Research at HDFC Securities. He guesses that a rate hike in unlikely at the moment. There are other global activities that may make the Fed to think of delaying a rate hike, Sheth said.

In addition, Sheth does not see a major shake up by domestic institution. He also sees a decent headroom for inflows from retail investors.

2:45 pm Market Update: Equity benchmarks extended rally with the Sensex rising 217.74 points or 0.85 percent to 25827.95 and the Nifty gaining 65.30 points or 0.84 percent at 7854.60.

About 1608 shares have advanced, 924 shares declined, and 101 shares are unchanged on the BSE.

2:40 pm Buzzing: Shares of Rolta India climbed 5.8 percent intraday on additional 13 million dollar contract for engineering information asset solution. It has designed, developed and deployed this solution for one of the world's largest petrochemical complexes.

The solution contains the integration of key engineering systems and information to support the complex work processes required by engineering studies, projects and management of change for as-built facilities.

The project is being managed by a global Rolta team working out of the United States, India and the Middle East, said the company in its filing to the exchange.

1:45 pm Market outlook: The ferocity and length of the recent stock market correction does not give positive signs but for active investors, it is a sign for you to go deeper into stocks where you have high conviction.

And that's what noted stock picker Basant Maheshwari suggests.

In an interview with CNBC-TV18, Maheshwari, founder of popular online investing community The Equity Desk, said with two dollar-positive events on the anvil -- the Fed rate hike and more RBI rate cuts -- the divergence in sector performance should become starker with only a handful doing well.

"In such a time, you have to summersault back into your bunker and hide behind the companies that you believe will give you growth," he told CNBC-TV18

1:30 pm Shares of Sun Pharma jumped 1.5 percent intraday as its subsidiary, Taro has launched Keveyis which is used to treat periodic paralysis.

Credit Suisse has build in USD 100 million in sales for Keveyis in FY17. ''Taro launched Keveyis at a high price of USD 163.8 per tablet of 50mg. This implies annual cost of USD 120,000 per patient. The size of the drug depends on how many patients shift to Keveyis. Super set is 5000 in the US and blue sky peak sales could be USD 600 mn,'' the brokerage firm says in a note.

Taro received approval for Keveyis (dichlorphenamide) on August 10 and launched Keveyis on September 9 priced at USD 16380 for a bottle of 100 tablets. Keveyis is approved to treat periodic paralysis and the dosage starts at twice a day of 50mg strength. Hence, the annual cost of Keveyis treatment is USD 120,000 per patient.

The market is holding early gains firmly as the Sensex is up 165.88 points or 0.6 percent at 25776.09. The Nifty gains 52.50 points or 0.7 percent at 7841.80. About 1566 shares have advanced, 819 shares declined, and 76 shares are unchanged.

Tata Steel, NTPC, Axis Bank, Vedanta and Hindalco are top gainers while Reliance, Bajaj Auto, HUL, ONGC and Dr Reddy's Labs are major laggards.

WPI declined for the 10th straight month in August, at minus 4.95 percent. All eyes are now on august CPI data later today. A CNBC-TV18 poll sees inflation at 3.47 percent versus 3.78 percent month-on-month.

Globally, Asian markets trade mixed as traders tread cautiously ahead of the Federal Reserve's policy meeting this week. Japan's Nikkei and China's Shanghai index see a cut for more than 1.5 percent.

12:59 pm Nifty nears 7850: The Sensex extended gains, up 172.42 points or 0.67 percent to 25782.63 and the Nifty rose 50.20 points or 0.64 percent to 7839.50.

About 1546 shares have advanced, 809 shares declined, and 83 shares are unchanged on the BSE.

12:45 pm Europe Update: European markets opened higher as investors await the result of the US Federal Reserve's interest rate decision on Thursday.
 
London's FTSE 100 index was over 0.4 percent higher, the German DAX was flat and the French CAC saw a 0.3 percent pop.

Investors in Europe are gearing up for the Fed's latest policy meeting and interest rate decision late this week. The central bank's Open Market Committee meets on Wednesday and will announce its rate decision Thursday.

According to a poll by Reuters in August, the US central bank is widely expected to raise short-term interest rates as early as September, having not raised rates since 2006 while maintaining them at near zero. However, volatility in global markets of late and renewed concerns about China have caused some analysts to doubt that the Fed will go ahead this month.

12:35 pm Asia Update: China's Shanghai Composite closes at 3,114.80, down 2.7 percent today.

Japan's Nikkei declined 1.6 percent. Singapore's Straits Times and South Korea's Kospi fell 0.5 percent each while Hong Kong's Hang Seng gained 0.2 percent.

12:30 pm Modi to meet utilities: Prime Minister Narendra Modi is set to meet bosses of loss-making electricity utilities today to debate a rescue package for a sector whose vast debts weigh on the banking system and undermine promises to provide power for all.

The government has identified USD 66 billion of troubled debt held by state-run utilities as a major obstacle to efforts to speed up growth in Asia's third-largest economy, hurting both credit growth and industrial performance.

Modi earned praise for fixing the power sector in Gujarat when he was chief minister. A national solution would burnish his reputation after a series of setbacks to his agenda of economic reform in recent months.

The pressure to act is rising as a three-year financial restructuring package introduced in 2012 comes to an end, with the utilities still selling power to consumers at below the cost of production and ignoring rampant theft.

The prime minister will chair a meeting with finance ministry officials and the head of individual state distribution companies, a top government source and an official in the power ministry told Reuters.

12:15 pm Will Fed raise rate?: The US Federal Reserve is unlikely to raise interest rates too fast and to a high level, feels Willem Buiter, Global Chief Economist, Citi.

Global markets are watching the Fed's move on interest rates on Thursday, as the economy continues to be on the mend.

In an interview with CNBC-TV18, Buiter says there is ample liquidity in global markets and does sees the recent downgrade of Brazil's rating as a country specific development.

He says India is among the better placed emerging markets because it is a big beneficiary of falling commodity prices.

12:00 pm Market Check
The market remained in a positive terrain following further contraction in WPI inflation. The Sensex gained 94.15 points at 25704.36 and the Nifty rose 26.10 points to 7815.40.

The broader markets continued to outperform benchmarks with the BSE Midcap and Smallcap indices rising 1 percent and 0.7 percent, respectively. About 1448 shares have advanced against 768 shares declined on the Bombay Stock Exchange.

WPI inflation in August came in at negative 4.95 percent against negative 4.05 percent in July and also better than CNBC-TV18 poll of negative 4.43 percent.

Banking stocks gained strength on hopes of rate cut post inflation data. Axis Bank, ICICI Bank and State Bank of India jumped 1-2 percent.

11:45 am Interview: Government's urbanistation initiatives and decrease in LED prices will lead growth over the next two to three years, says Amritanshu Khaitan, Managing Director (MD) of Eveready India . He expects the industry to grow at 15 percent in the near future.
 
In an interview with CNBC-TV18, Khaitan says that there has been a 10 to 15 percent increase in consumer demand for remotes. However, cheap Chinese batteries contribute nearly 7 to 8 percent to the 2.6 billion industry.

Anti-dumping laws need to be implemented soon to ensure accelerated growth for main players like Eveready, Nippon and Panasonic , Khaitan says. The earlier anti-dumping rules expired in 2013.

11:30 am Drug challenge: Drugmaker Abbott Healthcare is challenging West Bengal's accusation that a sample of the company's cough syrup contained excessive levels of codeine, the second multinational to question India's regulatory testing regime in recent months. Whether the sample of Abbott's popular "Phensedyl" was a genuine product or a fake has not been established, but the suspect batch of 80,000 bottles has not been recalled. The state laboratory in West Bengal first raised the alarm last November.

The market is making smart gains supported by banks, metals and pharma stocks. The Sensex is up 133.71 points or 0.5 percent at 25743.92, and the Nifty up 40.40 points or 0.5 percent at 7829.70. About 1374 shares have advanced, 631 shares declined, and 66 shares are unchanged.

NTPC, Tata Steel, Axis Bank, Wipro and GAIL are top gainers in the Sensex while Reliance, ONGC, Bajaj Auto, Hero MotoCorp and HDFC are among laggards in the Sensex.

Oil prices fell in Asian trading as weakening demand weighed on markets, although US futures received some support from reduced American drilling. Front-month Brent crude futures were down around 40 cents from their last settlement at USD 47.73 per barrel at 0402 GMT. US crude futures dipped 16 cents to USD 44.46. Several banks said the immediate outlook remained weak.

"Both the supply and demand pictures look less favourable over the coming months ... Outside the US, oil fundamentals appear to be slipping seasonally," Morgan Stanley said on Monday, adding that there was potential for floating storage within the second half of 2015.

Macquarie noted that falling global auto sales in August were dragging on demand.

10:58 am Interview: While the government tries to boost the economy and kickstart employment generation, it must focus on reviving demand, especially in rural markets, by "focussing on low-hanging fruits", L&T Finance Holdings chairman and managing director Y M Deosthalee has said.

"The biggest problem facing the economy is lack of demand. And only the government can help revive this as corporates have built up overcapacity in the past and are stretched financially now.

"To achieve this, it must focus more on the low-hanging fruits by picking those projects which can easily be restarted and generate jobs," Deosthalee told PTI in an interaction here.

It can be noted that most of the mass marketers like small car and bike makers, FMCG companies, whitegoods makers and tractor makers, among others, have all been reporting steady declines in rural sales for many months now.

Deosthalee, who heads one of the largest NBFCs, said sensing rural distress, his company has already cut down on its lending in rural markets.

10:45 am Market Update: Equity benchmarks gained strength with the Sensex rising 104.49 points to 25714.70 and the Nifty up 31.05 points to 7820.35.

About 1294 shares have advanced, 603 shares declined, and 66 shares are unchanged on the BSE.

10:30 am FII View: According to Sunil Garg, JPMorgan, major indices remained oversold, but considerably less than three weeks ago yet net change in index level has been modest. While oversold conditions will likely drive rally attempts, what is important to note is that the oversold status can change without much change in market levels, he said.

He said he remained concerned with the broader picture as evident on monthly charts, and continue to see rallies as selling opportunities.

Within Asia, he sees incremental underperformance in Japan & India and outperformance in Korea & Taiwan. Amongst sectors, switch from consumer staples to discretionary, Garg advised.

10:15 am Buzzing: Shares of Jubilant Life Sciences gained nearly 4 percent intraday today after its susbidiary signed term sheet to market Technegas in the US.

"Wholly-owned subsidiary Jubilant DraxImage Inc has signed a term sheet with Cyclopharm (CYC), providing DraxImage an exclusive license to market and distribute Technegas in the United States," said an integrated global pharmaceuticals and life sciences company in its filing to exchanges.

Technegas is an imaging agent primarily used in pulmonary embolism (blockage of lung arteries) and is currently being sold in 55 countries including EU, Japan and Canada by CYC.

Jubilant said DraxImage will assist CYC with the development and financing of the phase III clinical trials for Technegas, and any other steps required to file for and obtain USFDA approval.

DraxImage will pay CYC a 17.5 percent royalty on sale in addition to an agreed margin above the cost of goods sold, it added.

10:00 am Market Check
Equity benchmarks continued to consolidate ahead of FOMC's two-day meet outcome due on September 17. The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising 0.6-0.8 percent. The market breadth remained positive as about 1032 shares have advanced against 569 shares declined on the Bombay Stock Exchange.

The 30-share BSE Sensex declined 13.32 points to 25596.89 and the 50-share NSE Nifty fell 5.20 points to 7784.10.

Index heavyweights like HDFC, Reliance Industries, ICICI Bank, ITC and Infosys slipped 0.2-0.7 percent.

However, Tata Steel topped the buying list, up nearly 2 percent. Axis Bank, L&T, TCS, Sun Pharma, SBI and Wipro gained 0.4-0.7 percent.

9:55 am FII view: Chris Wood, CLSA said Greed & fear will make some further adjustments to the Asia and Japan portfolios.

For the Asia Pacific ex-Japan relative-return portfolio, the weighting in China will be reduced by two percentage points to neutral, while the overweight in India and the out-of-the-index allocation in Vietnam will be increased by a further one percentage point each, he added.

Greed & fear's India weightage is now at 23 percent against 7.8 percent in the MSCI Asia Ex-Japan index, Wood said.

9:45 am Market check: The Sensex is down 37.65 points at 25572.56, and the Nifty is down 12.95 points at 7776.35. About 891 shares have advanced, 553 shares declined, and 58 shares are unchanged.

Tata Steel, GAIL, Wipro, NTPC and TCS are big gainers while Lupin, ICICI Bank, Reliance, Hero Moto and M&M are major laggards.

9:40 am Buzzing: Shares of Kesoram Industries jumped 14 percent intraday as JK Group will acquire the BK Birla flagship firm's tyre manufacturing plant at Haridwar for up to Rs 2,200 crore.

JK Tyre and JK Asia Pacific Singapore, a wholly- owned subsidiary of the company, have signed a binding term sheet with Kesoram Industries Ltd (KIL) to acquire 100 percent equity in Cavendish Industries (CIL), JK Tyre said in a statement.

CIL houses a tyre business undertaking located at Haridwar (Laksar) which manufactures a range of tyres, tubes and flaps.
For JK Tyre, the acquisition will provide further impetus towards ready expansion in the truck and bus radials segment as well as its entry into the fast growing two- and three- wheeler tyre market.

9:30 am Poll: The consumer price index (CPI) is estimated to come in much lower at around 3.47 percent than the market and RBI estimate of around 4 percent. Range for CPI is seen between 3.3 percent and 3.6 percent. It would be a softer number compared to July, which was at 3.78 percent. Core CPI too is expected to come in at the same levels as last month at around 4.3 percent and the range is between 4.2 and 4.5 percent.

One of the reasons for the softening could be because of the base impact; in the same month last year that is August 2014, the CPI come in at around 7 percent, core CPI was at 6 percent, food inflation was at 8.6 percent, vegetable inflation was at 10.8 percent. However, from the month of August 2014, the base impact had started moderating.

The market has opened flat on Monday. The Sensex is down 30.66 points at 25579.55 and the Nifty is down 13.00 points at 7776.30. About 429 shares have advanced, 204 shares declined, and 34 shares are unchanged.

Tata Steel, Wipro, Sun Pharma, TCS and HUL are top gainers while ICICI Bank, Infosys, Reliance, Vedanta and HDFC are early losers.

The Indian rupee rose in the early trade. It has opened higher by 14 paise at 66.40 per dollar against Friday's close of 66.54.

Agam Gupta of Standard Chartered said, "We expect local government banks and other importers to be buyers of USD below 66.30/dollar. Upticks to 66.55/dollar will see exporter hedging going through."

The dollar, euro and yen all got off to a slow start with investors sticking to the sidelines as the countdown begins on whether the Federal Reserve will hike interest rates for the first time in nearly a decade.

Asian stocks kicked off mixed, as traders digest a slew of Chinese data released over the weekend and tread cautiously ahead of the Federal Reserve's policy meeting this week.

Growth in China's fixed-asset investment and industrial production missed expectations in August, data from the National Bureau of Statistics showed on Sunday, suggesting further cooling in the world's second-biggest economy that will likely prompt the government to roll out more support measures.