Nifty hovers around 8,650; Smallcaps outshine

Investors have turned cautious ahead of the policy meetings of global central banks

Benchmark indices are off day’s high on account of profit booking after the Nifty index hit 15-month high.

By 10:55 am, the S&P BSE Sensex gained 149 points to trade at 28,126 and the Nifty50 rose 51 points at 8,642.

Top gainers from the Sensex pack are ICICI Bank, Maruti Suzuki, HDFC, Tata Motors and L&T, all surging between 1%-3%.

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Updated at 9:57 am

Markets firmed up after a cautious start with bank and auto shares leading the gains even as investors are awaiting the outcome of the policy meetings of global central banks.

By 9:57 am, the S&P BSE Sensex gained 180 points to trade at 28,204 and the Nifty50 rose 68 points at 8,659.

Broader markets are outperforming the benchmark indices- BSE Midcap and Smallcap indices are up almost 15 each.

According to Anand Rathi's morning report, "Nifty has to hold above 8,600-8,620 zones to witness an up move towards 8,680-8,700 zones while on the downside holding below 8,580 may drag it towards 8,550 then 8,510 levels."

On Tuesday, benchmark indices which hit their 52-week highs in the previous session retreated on amid profit taking. Stocks also dropped as concern mounted that the rally that pushed up the benchmark index to near a one-year high on Monday isn't supported by corporate earnings.

"With earnings season failing to sizzle so far, and GST poised to face hurdles, stocks faced a confidence crunch and came off the lofty peaks seen on Monday. With a string of firm US economic data and positive surprises on the earnings front, the chances of rate hike, though less likely in July, have also vastly improved, putting global equities under a cloud of caution ahead of FOMC rate decision tomorrow. This is in stark contrast to a month earlier, Brexit uncertainties had all but ruled out further US rate hikes any time soon," Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services said yesterday post market closing.

In overseas stock markets, Asian stocks witnessed a mixed trend. In Japan, the Nikkei 225 Average was currently up 1.39%. Investors are hoping for further easing of monetary policy from the Bank of Japan (BOJ) after the conclusion of a two-day monetary policy meeting on 28-29 July 2016.

Strength in the yen against the dollar post last month's Brexit vote and data showing a slowdown in the Japanese economy have triggered expectations of further easing of monetary policy from the BOJ. A stronger yen hurts the competitiveness of Japanese exporters.

US stocks closed marginally higher yesterday amid major earnings reports and ahead of the central bank meeting. The Federal Open Market Committee (FOMC) is widely expected to keep the benchmark fed funds rates unchanged after the conclusion of two-day monetary policy later in the global day today.

Market participant will scrutinize the Fed statement for clues on policy direction. The Fed has kept the benchmark fed funds rate unchanged after raising it for the first time in nearly a decade in December 2015.

Back home, foreign portfolio investors (FPIs) bought shares worth a net Rs 670.89 crore yesterday, as per provisional data released by the stock exchanges.

Bharti Airtel, HDFC, Asian Paints, Yes Bank and Bajaj Auto are scheduled to unveil Q1 June 2016 results today.

Shares of Dr Reddy’s Labs have extended yesterday’s losses and have tanked by 9% after its quarterly profit slumped 75%, hurt by fierce competition in its largest market, the United States.

Maruti Suzuki has gained by 3%. The company reported a 23% jump in its net profit for the quarter ended June 30, 2016. The net profit at Rs 1,486 crore was also the result of other factors like favourable Rupee-Yen rate and higher non-operating income.  

Axis Bank slipped in trade today after rising by almost 3% yesterday. The private lender reported 21% year on year (YoY) decline in net profit at Rs 1,556 crore for the quarter ended June 30, 2016 (Q1FY17), due to higher provisioning for bad loans.

German carmaker Volkswagen is in talks with Tata Motors to partner for a small car development programme, a German business magazine Manager Magazin has reported. Shares of Tata Motors are up 3%.

Zee Entertainment Enterprises Ltd (ZEEL) consolidated revenue of Rs 1,571.6 crore for the first quarter of the current fiscal (Q1FY17), up 18.5% from Q1FY16’s Rs 1,326.7 crore. The consolidated operating profit (EBITDA) for the quarter grew 44.1% at Rs 453.2 crore as compared to Rs 314.6 crore last year.  The stock is up 3%.

Ambuja Cements gained 3% after the company’s net profit rose 76.5% to Rs 399.51 crore on 2.44% growth in total income to Rs 2677.93 crore in Q2 June 2016 over Q2 June 2015.

Other notable losers are Lupin, Sun Pharma, Coal India, Cipla and Tata Steel.