Nifty holds 8,500 ahead of March F&O expiry

Markets ended lower for the sixth straight session, amid volatile trades, as traders turned cautious and booked profits ahead of the March F&O expiry tomorrow. 

A sharp decline among the infrastructure, metals & mining and oil & gas stocks was evident on the bourses after the Standard & Poor's (S&P) Ratings Services suggested that Indian companies in the aforementioned sectors have high debt levels.

The 30-share Sensex ended 50 points lower at 28,112 and the 50-share Nifty declined 12 points to close at 8,531.

Meanwhile, foreign institutional investors were net buyers in equities worth Rs 738 crore as per provisional stock exchange data.

The rupee fell by six paise at 62.32 against the dollar today at the Interbank Foreign Exchange due to appreciation of the US currency overseas.

“After registering all time high, Nifty is continuously showing pressure on every high level and trading in lower highs and lower lows on daily charts. However, still it is trading above the psychological level of 8500 which is the 100EMA on daily chart. In a nut shell, short term bounce can be expected, if nifty trade above 8500 levels.  Any breakdown of 8500 levels can drag the index upto 8340 levels. The stocks likely to remain in focus in the forth coming week are Wipro, IRB Infra and Hexaware,” said Mudit Goyal, technical analyst with SMC Global Securities.

SECTOR WATCH

A latest report titled 'India Credit Spotlight' by Standard & Poor's (S&P) Ratings Services suggested that Indian companies in sectors like utilities & infrastructure, metals & mining, oil & gas and telecom sectors still have high debt levels.

According to the report, the debt in utilities & infrastructure sector has increased more than 2.5x and by more than 1.5x in the metals & mining sector over the past five years to fiscal 2014. That's compared with an increase of less than 1.5x by the top Indian corporates overall. CLICK HERE TO READ THE REPORT

KEY STOCKS

On the sectoral front, BSE Capital Gods, Metal, Oil & Gas, Power indices ended lower up to 1.7%. However, BSE Healthcare, IT and Auto indices gained up to 1%.

Mortgage lender HDFC which gained in the morning session ended the day 1.4% lower as investors booked profits at higher levels.  The stock was quoted ex-dividend today. The board had announced an interim dividend of Rs 2 per equity share and fixed March 26, 2015 as the record date. ICICI Bank has gained over 1.5% and HDFC Bank and Axis Bank are marginally higher by 0.2%. SBI is down 0.8%.

Tata Motors gained over 1% after the board approved issue of  6 fully paid-up Ordinary shares for every 109 fully paid-up Ordinary shares held at a price of Rs 450 per shareand 26.5 million 'A' Ordinary shares at Rs 271 per share. The company's board also approved the buy-back of Secured Non-Convertible Debentures worth Rs 1250 crore issued by it in May 2009, maturity date being March 31, 2016.

Commenting on the development, Piyush Jain, a research analyst with Morningstar Investment Adviser said: "We view this 4-star rated stock as undervalued with the shares trading at a 20% discount to our fair value estimate.  Our fair value is based on our five year discounted cash flow forecast and is based on premise of i) Higher operational leverage from higher number of models on fewer platforms ii) New models in new price segments will ensure incremental volumes over the next couple of quarters."

From Capital goods space, L&T declined 2.5%, BHEL dipped 1%.  In the metal and mining pack, Hindalco lost 0.2%, Tata Steel dropped 1.4% and Coal India slumped 2.5%.

In the oil and Gas segment, ONGC, GAIL and RIL ended lower up to 3%. Power stocks tripped in today’s trading session. NTPC and Tata Power lost 2.9% and 1.5% each.

On the flip side, pharma stocks continued to surge on a slew of positive news with mergers and acquisitions of new product patents, Cipla and Sun Pharma gained up to 1.5% while Dr Reddy’s Lab ended with marginal losses. 

Sun Pharmaceutical Industries has completed its merger with Ranbaxy. The integration, planned by Sun Pharma over many months, will focus on supporting strong growth.

"In terms of market share, the combination of Sun Pharma and Ranbaxy creates the fifth-largest specialty generics company in the world (just behind Teva, Sandoz, Activas and Mylan), the largest pharmaceutical company in India with a market share of 9.2% with a sales of US $1.1billion. In terms of asset base, the combined entity will have operations in 65 countries, 47 manufacturing facilities across 5 continents, and a significant platform of specialty and generic products marketed globally, including more than 600 ANDAs," said Sarabjit Kour Nangra, VP Research - Pharma, Angel Broking.

Ipca Laboratories dipped 12.5% to Rs 665 on the BSE on media reports that the U.S. Food and Drug Administration (FDA) issued an import alert on the company's manufacturing facilities at Pithampur and Silvassa.

Unitech, Prism Cement, PS IT Infra, Westlife Development, AIA Engineering slumped up to 10% from the mid-cap space. Pine Animation, Binny, Atlanta, Zen Technologies plunged up to 20%  from the smallcap space.

In the broader market, both the BSE Midcap index, down 0.5% and Smallcap index, down 0.7% underperformed the front-liners. Market breadth on the BSE ended weak with 1,889 declines against 906 advances.