Profit booking, global cues subdue markets; Nifty holds 8,900

Markets ended marginally lower amid consolidation on profit taking after sharp gains in the previous sessions which lifted the benchmark share indices to their fresh 52-week highs supported by strong FII flows.

Downbeat US ISM non-manufacturing report for the month of August further reduced the scope of an early rate hike by the US Federal Reserve. Market participants are now awaiting Thursday’s meeting of the European Central Bank.

The S&P BSE Sensex slipped 52 points to end at 28,926, after touching an intra-day high of 29,068. The Nifty50 fell 25 points to close at 8,918, after hitting a high of 8,969. Among broader markets, BSE Midcap index dipped by 0.1% while the Smallcap index inched up 0.4%.  

"Over the past month, the broader market rose another 1.7% and is now up 10.8% YTD as net FII inflows topped US$1.5bn for the month and to US$4.8bn YTD. As is well articulated by now, the 12m forward market PE at 17.7x remains supported more by compression of cost of capital than growth reset. In 1QFY17, the PAT for Nifty grew by 9% YoY (ex. financials at 14%) vs. 1% in 4Q16 and above muted expectations but still fell short of the double-digit run rate expected for the full year," adds JM Financial in its research report.

Data released by the stock exchanges showed that foreign funds made substantial purchases of Indian stocks yesterday. Foreign portfolio investors (FPIs) bought shares worth a net Rs 1438.72 crore on Tuesday.

Further, the rupee appreciated further by 19 paise to trade at over 4-month high of 66.33 against the US dollar on increased selling of the American currency by banks and exporters.

"After strong surge in the previous session, markets remained in consolidation mood on Wednesday and ended slightly lower. However, jubilation continued on stock specific front, which kept the traders busy," said Jayant Manglik, President, Retail Distribution, Religare Securities in an emailed note.

"We're bullish on markets and now eyeing new record high in Nifty in coming days so use pause or consolidation in index to add fresh longs. However, traders should remain cautious on sector and stock selection. As anticipated, we've started seeing recovery in pharma and infra space of late and expect them to gain momentum ahead. So, alongside the existing leaders, traders can consider quality counters from the above two sectors for fresh buying," he adds.

Globally, European stocks were trading higher as investors digested weaker US data which lowered the chances of the US Federal Reserve hiking interest rates later this month. Asian stocks ended on a mixed note.

STOCKS & SECTORS

Back home, SBI, ICICI Bank, ONGC, L&T and Tata Steel surged between 1%-4%. State Bank of India (SBI), India’s largest lender, has raised Rs 2,100 crore through additional Tier-1 (AT1) bonds to boost its capital base as well as business growth. The stock was the top Sensex gainer and hit 52-week high.

The Rs 890-crore initial public offering (IPO) of L&T Technology Services will hit the market on September 12. The company has fixed a price band for the IPO at Rs 850-860 per share. The entire issue is an offer for sale by promoter Larsen & Tourbo (L&T), which is looking to offload its 10.2% stake. Shares of L&T rose by almost 1%.

Tata Steel had urged Chhattisgarh government to return the money it had deposited for purchasing land in Bastar where company had planned to set up mega steel plant. Shares of Tata Steel gained by nearly 1%.

Shares of Vedanta and Cairn India rose by up to 4% in intraday trade today after the shareholders of mining conglomerate Vedanta Resources approved merger of the two group firms.

BHEL zoomed by over 14% after reporting strong Q1 numbers. The company has posted a net profit of Rs. 777.70 million for the quarter ended June 30, 2016 as compared to Rs. 504.30 million for the quarter ended June 30, 2015.

On the losing side, HDFC, Asian Paints, Axis Bank, TCS and NTPC slumped between 1%-2%. HDFC dropped 2% on the BSE, with the stock sliding on profit booking after recent rally.

Among other shares, SpiceJet jumped by 20% after the company’s first quarter net profit doubled to Rs 149 crore. Subex rose 4% after the company said its board will consider fund raising on September 12, 2016.

Simplex Infrastructure, Gujarat Industries Power Company, GE T&D India and Sunil Hitech Engineers were among the other stocks that saw a surge in volumes on the BSE today.