Market erases early gains amid volatile session

Buying in IT stocks such as Infosys, TCS and others like ITC, Larsen & Tubro and Tata Steel gave support to benchmark sensex index while losses in RIL, ICIC Bank and Tata Motors capped the gains

 

Market erased early gains in afternoon trades amid a volatile session that saw key benchmark indices moving in a broad range. Buying in IT stocks such as Infosys, TCS and other heavyweights like ITC, Larsen & Tubro and Tata Steel gave support to benchmark sensex index while losses in RIL, ICIC Bank and Tata Motors capped the upside.

Rating agency Standard & Poor's on Thursday affirmed their sovereign credit rating on India, adding that the outlook on Asia's third-largest economy remains negative.

Standard & Poor's hinted at a possible rating downgrade next year if the new government failed to push economic growth.

"The outlook remains negative, indicating that we may lower the rating to speculative grade next year if the government that takes office after the general election does not appear capable of reversing India's low economic growth,
" the report said.

At 02:25 pm, the 30-share BSE Sensex was trading at 20928.13 up 33 points while the broader 50-share Nifty index was up 3 points at 6,218 levels.

The partially convertible rupee recovered to 62.54-a-dollar after hitting an intraday low of 62.73.  

The rupee will struggle to gain any ground in the next 12 months due to uncertainty around elections, the external deficit and the impact of a possible tapering in the Federal Reserve's stimulus programme, a Reuters poll showed.

The rupee has rebounded a little more than 10% since falling to a record low of 68.8 against the dollar at the end of August, boosted by inflows after the Fed refrained from reducing its $85 billion a month bond purchase programme and as the Reserve Bank of India tightened liquidity.

But that rally came after a 20% plunge since mid-May when rising interest rates in the United States and fears of Fed tapering led investors to dump emerging market assets.

On the sectoral front, IT, Metals and Healthcare indices were up over 0.9-1.5% on the BSE while consumer durables, power and realty were the laggards, tanking more around 1% each.

Broader markets came under selling pressure too; BSE Small-cap and mid-cap indices were down 0.3-0.4%.    

OTHER STOCKS

The state run capital goods major Bharat Heavy Electrical Ltd posted weak Q2 numbers after which the stock was downgraded by many brokeages. BHEL's Q2 FY14 numbers were quite weak due to one-off items worth Rs 5oo cr bn and high fixed costs. The profit after tax (PAT) declined by 64% YoY and 2% quarter on quarter (QoQ) to Rs455 crore. sales which stood at Rs8,980cr shrunk by 15% yoy and was marginally lower than street expectations. Operating margins sipped by 13.4 yoy due one-offs related to BHPV merger (Rs1.9bn) and provisioning for doubtful debtors worth Rs3bn.

The stocks is trading lower by nearly 4% at Rs 135 in otherwise firm market after posting earnings numbers for the second quarter ended September 30, 2013.

Auto major Ashok Leyland which also came out with its results yesterday, reported a net loss of Rs 25.05 crore in the second quarter ended September, with the commercial vehicles segment remaining hit by a demand slump. The stock crashed 3.11% today and is currently trading at Rs. 17.
 
Tech Mahindra, India's fifth biggest software manufacturer by market capitalisation, and pharma major Aurobindo pharma are set to come out with their September quarter results later in the day. Other resutls lined up in the day are Tata Coffee and Eicher Motors.

"Aurobindo pharma is in a strong up trend and long positions could be held. one can have a trailing stop loss at 235, Eicher motors also looks good one can have a stop loss at 3850 and continue to hold longs, Tech Mahindra is also in an uptrend and the rupee falling is helping it, have a stop loss of 1520 and trade on the long side" said Technical analsyt, Mohit Gaba.

Tech Mahindra is up almost 6% at Rs 1579 while Aurobindo pharma is down 2.5% at Rs 236.45 on the BSE currently.