Markets: Sensex closes at 35,850, up 155 points

RBI likely to pay interim dividend to govt

 

The Reserve Bank of India (RBI) is likely to transfer an interim dividend of Rs 30,000-40,000 crore ($4.32 billion-$5.8 billion) to the government by March. Read more on the RBI's interim dividend payment to the government here

Closing bell

The 30-share BSE index Sensex climbed 155.06 points or 0.43 per cent to close at 35,850.16, tracking positive cues from global markets coupled with a dovish tone from the Federal Reserve and hopes of better China-US trade relations.

The index opened higher and continued its upward march to regain the 36,000-mark, hitting a high of 36,076.95. It, however, lost some ground towards the fag-end due to profit-booking and a weak trend in european markets.

Among the major gainers were Axis Bank (2.84 per cent) and Tata Motors (2.64 per cent) followed by Infosys, Maruti and NTPC. The scrip of Bajaj Auto was the major loser (-2.82 per cent).

Realty and telecom stocks supported the index followed by TecK, utilities and Information and Technology. Healthcare and metal indices ended in the negative zone among sectoral indices.

The 50-share NSE index Nifty gained 44.45 points to end at 10,771.80. While Axis Bank, Infratel, Tata Motors, Titan and Grasim were the major gainers, IBUL Housing Finance, Bajaj Auto, Dr Reddy's, Yes Bank and Eicher Motors ended in red.

Traders said supportive global cues following robust US jobs data for December and Federal Reserve chairman Jerome Powell’s comments that the Fed would be flexible in policy decisions this year and optimism ahead of Q3 earnings season which begins this week also bolstered trading sentiments.

Read the global markets report here

Top software services exporters TCS and Infosys scheduled to report their results for the December quarter on January 10 and January 11, respectively.

Investor sentiment also got a boost after China’s central bank announced an easing in policy Friday, with 100 basis points of cut to bank reserve requirements freeing up around USD 116 billion for new lending, they said.

Meanwhile, domestic institutional investors bought equities to the tune of Rs 240.60 crore, while FIIs sold shares a worth Rs 157.72 crore Friday, according to provisional data. (With inputs from PTI)

S&P removes ratings of IDBI Bank from CreditWatch

 

Global rating agency, S&P, on Monday affirmed ‘BB’ long-term and ‘B’ short-term foreign currency issuer credit ratings on IDBI Bank, while removing them from CreditWatch, after the recent capital infusion from Life Insurance Corporation (LIC). Read more on the capital infusion and credit rating of the IDBI Bank here

Major gainers and losers at Sensex

Major gainers and losers at Nifty

 

Securitisation volumes at all-time high

The securitisation market volumes in the country touched a life-time high of Rs 1.44 trillion in the nine months of the current fiscal, with around Rs 78,000 crore generated in the third quarter, says a report. The securitisation market remained buoyant in the third quarter, driven by the prevailing liquidity crisis, following defaults by IL&FS and its subsidiaries. Click here to read more on the domestic securitisation market

Pending large hydropower projects face cost overrun

 

Stalled under-construction hydro electric projects that are above 25 MW are facing a cost overrun of ₹28,881 crore according to data compiled by the Central Electricity Authority. The CEA has identified 16 such large hydropower projects and their anticipated cost is now ₹55,803 crore. Read more on the stalled hydrpower projects here

The power index at BSE is trading in the positive zone higher by 1.18 per cent or 23.21 points at 1,989.39.

Essar settles debt

 

Essar Global Fund Ltd (Essar Global), the holding company of the Essar Group of companies, said it has repaid the last tranche of debt of Rs 12,000 crore ($1.75 billion) to its various Indian and foreign lenders. More on this

Metals market

 

While 2018 was a hugely challenging and volatile year for the commodities market in general, base metals were buffeted by a series of events during the year. Those included several rate hikes by the US Federal Reserve that strengthened the dollar; escalating trade friction between two of the world’s largest economies — the US and China — that resulted in imposition of tariffs and retaliatory tariffs; and without doubt, signals of a slowdown in China, the mover and shaker of the global metals market. Here's what the new year hold for the industrial metals market.

The 30-share BSE index Sensex surged 271.54 points and was trading at 35,966.64 against the previous close of 35,695.10. While the scrips of Reliance, Infosys and Axis Bank were supporting the index, Bajaj Auto was trading in the red, lower by 1.86 per cent.

Realty index was the major gainer among the sectoral indices, trading higher by 2.27 per cent or 41.45 points at 1,866.65. Consumer durables, telecom, information and technology, Utilities and power were also trading higher by over one per cent. The healthcare index was trading in the negative zone among the sectoral indices.

The 50-share NSE index Nifty was trading higher by 63 points at 10,791. Bajaj Auto was the major loser (-2.16 per cent) and Tata Motors the top gainer (+3.10 per cent).

Major gainers and losers

 

Commodity call

 

The aluminium futures contract on the Multi Commodity Exchange (MCX) fell in the past week breaking below the crucial support level of ₹127 per kg. The contract has to breach this hurdle decisively to turn the outlook completely positive. Click here to read more on the weekly outlook of MCX-Aluminium here

Farm sector

 

Farm sector distress is expected to worsen, cautioned S Narayan, who was the Economic Adviser to former Prime Minister Atal Bihari Vajpayee. Read more on the expert's opinion on the farm sector here

Direct tax collection

 

The Centre’s net direct tax collection grew 13.6 per cent in April-December 2018 to Rs 7.43 lakh crore, official data released on Monday showed. The net direct tax collections represent 64.7 per cent of the total Budget Estimates of Direct Taxes for financial year 2018-19. More on the direct tax collection data here

IL&FS Transportation defaults on dividend payment

 

IL&FS Transportation Networks, a group company of the troubled IL&FS group, on Monday said that it has defaulted on dividend payment of Rs 7.12 crore due on redemption of cumulative non-convertible redeemable preference shares.

The stocks were trading at Rs 12.68, higher by 0.63 per cent in the BSE-index Sensex. Read more on the dividend payment defaults by the company here

Nifty Call

 

The Nifty January futures contract started the session on a positive note opening at 10,861 with an upward gap. Make use of dips to buy with stop-loss at 10,800. Key supports below 10,800 are placed at 10,775 and 10,750. Read the Nifty 50 January Futures report here

Markets update

The 30-share BSE index Sensex is trading at 35,948.99, higher by 253.89 points. The stocks of Tata Motors and Axis Bank gained more than 3 per cent while the stock of Bajaj Auto was the major loser trading lower by 1.29 per cent.

Among the sectoral indices, the realty sector was supporting the index trading higher by 2.43 per cent at 1,835.49 points. The other top gainers were consumer durables (1.58 per cent) and telecom (1.13 per cent). The healthcare index was trading in the negative zone, down by 0.16 per cent.

The 50-share NSE index Nifty was trading at 10,798.90 points, higher by 71.55 points or 0.67 per cent. The major gainers were Tata Motors, Axis Bank, Infratel, Titan and Grasim and the stocks of Bajaj Auto, Dr Reddy's, IBUL Housing Finance, Coal India and IOC were the major losers.

Forex market

 

The dollar weakened against its peers on Monday, as investors wagered that the Federal Reserve would put its policy tightening on pause in 2019, which eased market concerns about a slowing for US growth. Read the forex market report here

Your Stock Portfolio

The stock of Wockhardt has been on a long-term downtrend since encountering a key resistance at ₹1,000 in January 2018, forming lower peaks and troughs.

The stock has been on a long-term downtrend since registering a high at ₹150 in January 2018. But the vital support at ₹60 halted the downtrend and it has been on a sideways consolidation phase in the ₹60-75 band since then.

Here's more on the long term outlook for the stocks of Wockhardt and Jain Irrigation Systems

Future perfect: Bull-call spread on SAIL

 

Though the long-term outlook of Steel Authority of India (SAIL) remains bearish, we expect the stock to show a sideways trend. The stock (at ₹53.40) rules at a crucial level. Read more on the stock performance of SAIL here

Six out of 50 Nifty stocks trading lower

The shares traded higher on Monday, reflecting relief witnessed in broader markets, after jitters about a global economic slowdown were pacified by strong US jobs data and a dovish tone by the Federal Reserve.

Risk appetite got a huge boost on Friday when the US payrolls report showed 312,000 net new jobs were created in December, and Federal Reserve Chairman Jerome Powell said the Fed would be flexible in policy decisions this year.

Another corporate results season is set to kick off this week with top software services exporters Tata Consultancy Services Ltd and Infosys Ltd scheduled to report their results for the December quarter on January 10 and January 11, respectively.  At about 12.25 pm, the Sensex was quoting up 253.38 points or 0.71 per cent at 35,948.48. Similarly, the NSE Nifty was higher by 73.20 points or 0.68 per cent at 10,800.55.

Titan Company Ltd and Tata Motors Ltd were among the biggest gainers on the NSE index.

 

Shares of watch producer Titan Company Ltd hit their highest since May, rising as much as 3.83 per cent after the company said it expects a 22 percent growth in full year jewellery business on Friday.

HDFC Bank's shares were up as much as 0.85 per cent. Earlier in the day, the bank said deposits aggregated as of Dec 31 was about Rs 8.53 billion ($123.01 million).

Only six out of the fifty stocks on the NSE benchmark index Nifty were trading lower, with shares of Dr. Reddy's Laboratories Ltd slipping nearly one per cent.

Among the BSE sectoral indices, realty was the top gainer, moving up 2.5 per cent or 46.35 points to 1,871.55.

(With inputs from agencies_

News Analysis

 

‘Invest systematically in mutual funds for the long term to ride out volatility’, is an advice often given by fund managers and advisors. But even as investors pour in over ₹7,000 crore in mutual funds through the SIP (systematic investment plan) route every month, the returns across most equity categories have been sub-optimal in recent years. Click here to know the reason for under-performance of the mutual funds and the what the experts say

BSE major gainers and losers

 

Backdated GDP series

 

The 2011-12 base backdated GDP series led to much discussion. The new series data cannot really be faulted. But it is important not to repeat the policy mistakes that hit industrial growth. Read our Opinion on the backdated GDP series and future growth

Stock analysis: Mahindra Holidays and Resorts India

 

The stock of vacation ownership provider Mahindra Holidays and Resorts India is down more than 50 per cent since its July 2017 high. The stock’s fall, though, presents a good buying opportunity for investors with a long-term perspective. Read our analysis on the stock performance of Mahindra Holidays and Resorts India here

Markets update

The 30-share BSE index Sensex surges 292 points higher to 35,988.05 against the previous close of 35,695.10. The scrips of Reliance, Axis Bank and ICICI Bank support the index, the stocks of Kotak Mahindra Bank and Bajaj Auto are trading in red.

Among the sectoral indices, realty is the major gainer with 2.49 per cent, followed by consumer durables (1.40 per cent) and power (1.06 per cent). The healthcare sector is down by 0.01 per cent.

The 50-share NSE index Nifty was trading at 10,811.65, higher by 84.30 points. The major gainers and losers are

 

Analysis: Anti-abuse provisions

 

Now that the CBDT’s move to withdraw its December 31 circular has created a furore in political circles, time is ripe for the Revenue Department to revisit the scope and intent of Section 56(2) (viia) or 56(2)(viib) of the Income Tax Act 1961— the deeming income provision which sought to curb abusive transactions related to valuation. Click here to know what the tax experts' view on the Anti-abuse provisions

Personal Finance: Voluntary Provident Fund

 

It’s a big election year and the powers that be are likely to go the extra mile to keep voters of all manner happy.

Already, interest rates on small savings schemes have been left untouched for January-March, despite a dip in G-Sec rates to which they are supposed to be linked. The largesse could extend to other investment avenues. VPF mirrors EPF on interest rate and almost all rules including those on lock-ins and tax breaks. Read more on the Voluntary Provident Fund here

Commodities market

 

Oil prices rose by more than 1 per cent on Monday, lifted by optimism that talks could soon resolve the trade war between the United States and China, while supply cuts by major producers also supported the market. Read the commodities market report here

Sensex crosses 36,000 points

The 30-share BSE index Sensex surged 360 points and is trading at 36,056.04 points against the previous close of 35,695.10. While the Tata Motors gained almost 4 per cent and trading at Rs 177.45, the stocks of Axis Bank and Indus Ind Bank gained around 2.6 per cent. Bajaj Auto and Kotak Mahindra Bank were trading marginally low .

The 50-share NSE index Nifty was trading at 10,826.10 points. Tata Motors, Axis Bank, Titan, IndusInd Bank and Infratel were the major gainers and Dr Reddy's, Zee Entertainment Ltd, IBUL Housing Finance, Bajaj Auto and Coal India were the major losers

Broker's call: Gujarat Gas

Equirus Securities

Gujarat Gas (Add)

CMP: ₹662.75

Target: ₹774

 

Post our recent upgrade on Gujarat Gas to ‘Add’ from ‘Reduce’, margin tailwinds have grown stronger amid falling oil prices and rupee stability. While the oil price decline will make liquid fuels attractive to some industrial users and affect industrial volume growth, the stock price is unlikely to see as sharp a correction as during the last oil-price softening cycle.

Gujarat Gas has always been expensive to peers despite poor and volatile earnings, partly due to investor expectations on its long-term volume growth and margin recovery potential. We expect it to deliver on both fronts, with EBITDA/scm set to touch ₹4.3 in next 2 years and a 15 per cent EBITDA CAGR over FY19-FY21E. Strong operating profit and steady capex would sharply bring down interest costs, driving a 32 per cent EPS CAGR and about 400 bps RoE expansion over FY19-FY21E. We raise FY20E EPS by 6 per cent and revise our March 2020 DCF-based TP to ₹774 (from ₹718).

Risks to our view: a) Higher LNG prices and significant INR depreciation; b) Delayed industrial recovery.

Currency market

 

The rupee appreciated by 33 paise to 69.39 against the US dollar in opening trade on Monday, driven by strong gains in domestic equities and weakening of the greenback in overseas markets. Read more on the rupee market here

Sensex raises 288 points

The BSE benchmark Sensex rose by about 288 points and the NSE Nifty claimed the 10,800 mark, in early trade on Monday, extending gains for the second straight session on continued buying by domestic investors and positive cues in global markets.

Traders said, the domestic equities mirrored a firm trend at other Asian bourses, while market sentiments were also lifted by US-China trade talks. Both US and China, have expressed an interest in settling their tariff fight. Envoys of both nations will have discussions during meetings Monday and Tuesday.

The 30-share index rose 287.74 points, or 0.81 per cent, to 35,982.84 after hitting a high of 36,033.20. The gauge had gained 181.39 points in the previous session. The NSE Nifty too edged higher by 84.90 points, or 0.79 per cent, to 10,812.25.

Sectoral indices led by metal, consumer durables, capital goods, IT, bankex, healthcare, infrastructure and power were trading higher by up to 1.75 per cent.

 

Vedanta Ltd emerged as top gainer in the Sensex kitty rising by 2.56 per cent, followed by Tata Steel at 2.31 per cent.

Other gainers include Tata Motors, Yes Bank, Axis Bank, Maruti Suzuki, HCL Tech, IndusInd Bank, RIL, M&M, Sun Pharma, ITC Ltd, L&T, Bharti Airtel, TCS, SBI, Infosys, HDFC Bank and HDFC Ltd, rising by up to 2.30 per cent.

Traders said, sentiments were buoyed largely in tandem with a firming trend at other Asian markets, tracking weekend gains at the Wall Street on a dovish turn by the Federal Reserve and robust US jobs data for December.

Meanwhile, domestic institutional investors bought equities to the tune of Rs 240.60 crore, while FIIs sold shares a worth Rs 157.72 crore Friday, according to provisional data.

Among other Asian markets, Japan’s Nikkei was trading higher by 2.82 per cent, while Hong Kong’s Hang Seng gained 0.76 per cent in their early deals. The Shanghai Composite index was up by 0.49 per cent. The US Dow Jones Industrial Average ended 3.29 per cent higher in Friday’s trade.

Gainers and losers at BSE

 

Bullion cues for 2019

 

Gold-silver ratio indicates that silver could outperform the yellow metal. After posting a strong rally for two consecutive years (2016 and 2017), gold prices ended in the red in 2018. Though the yellow metal began the year on a positive note, it failed to sustain higher. Click here to read what’s in store for gold and silver in 2019?

Asian markets

 

Asian shares sped ahead on Monday as a dovish turn by the Federal Reserve and startlingly strong US jobs data soothed some of the market's worst fears about the global outlook. Read the Asian markets report here

2019 outlook

 

With general elections around the corner, a trade war that threatens to derail global growth and tightening monetary conditions, investors in equity and debt are likely to face a rocky time this year. Gold could, however, gain some sheen as the dollar weakens. Click here to read the outlook for 2019

Opening bell

The 30-share BSE index Sensex opened at 35,971.18 against the previous close of 35,695.10, higher by 276.05 points. The 50-share NSE index opened higher by 88.20 points at 10,815.55 against the previous close of 10,727.35.

Weekly Trading Guide

SBI (297.5)

SBI has been struggling over the last few weeks for strong follow-through buyers to take it decisively above ₹300. But, at the same time, the stock is also not attracting fresh sellers to drag it sharply lower. This leaves the bias bullish. The 21-day moving average at ₹289 is a key near-term support. As long as SBI trades above this support, the possibility of the stock breaching the ₹300-₹302 support zone is high. Such a break will take the stock higher initially to ₹310 and ₹312. A further break above ₹312 can then target ₹320 and ₹322. As mentioned last week, a crucial long-term resistance is poised around ₹322. As such, the price action around it will need a close watch to get a cue on the direction of the next move. The near-term view will turn negative if SBI declines decisively below ₹289. In such a scenario, a fall to ₹282 or ₹280 is possible. Traders who have taken long positions above ₹294 can hold it with a stop-loss at ₹282. Move the stop-loss higher to ₹301 as soon as the stock moves up to ₹307. Book profits at ₹318.

ITC (₹280.7)

ITC was stuck in a sideways range between ₹277 and ₹284 last week. The resistance at ₹284 is continuing to cap the upside for the third consecutive week. A strong break above this hurdle is needed to ease the downside pressure for the stock. Such a break can take ITC higher initially to ₹287 and ₹290 — the next key resistance levels. If ITC manages to breach ₹290 decisively, the stock can gain momentum and target ₹296 and ₹300. But a pull-back from ₹290 can drag the stock lower to ₹285 and ₹280 again. On the other hand, if ITC continues to trade below ₹284 in the coming days and declines below ₹277, it can test ₹275 and ₹274. The outlook will turn completely negative if the stock breaks decisively below ₹274. In such a scenario, there is a strong likelihood of the stock tumbling towards ₹270 and ₹268. But the price action on the chart makes the bias bullish for ITC to break above ₹284. Medium-term investors who have taken long positions at ₹282 and ₹278 can hold it. Retain the stop-loss at ₹262.

Infosys (₹660.7)

Infosys seems to be lacking strength. The stock inched up in the initial part of the week but failed to sustain higher. Infosys made an intraweek high of ₹677 and came-off sharply giving up almost all the gains made during the week. The near-term outlook is unclear. The 200-day moving average at ₹650 is a crucial support to watch out for. If Infosys manages to sustain above this support, a bounce to ₹675 and ₹680 is possible in the near term. A strong break above ₹680 will ease the downside pressure and take the stock higher to ₹700 and ₹710 levels thereafter. The region around ₹710 is a significant resistance. A strong break and a decisive close above ₹710 is needed to turn the outlook completely to positive. Such a break will then pave way for the next targets of ₹750 and ₹760. On the other hand, if Infosys declines decisively below the 200-day moving average, it can come under renewed pressure. In such a scenario, a fall initially to ₹630 can be seen. A further break below ₹630 can then drag the stock lower to ₹600 and ₹590.

RIL (₹1,099)

RIL has been stuck in a sideways range between ₹1,050 and ₹1,150 over the last one month. Within this range, the stock fell 2 per cent in the past week. A breakout on either side of ₹1,050 or ₹1,150 will determine the direction of the next move. The 200-day moving average support is at ₹1,069. A decisive close below this support will increase the possibility of the stock declining below ₹1,050. A break below ₹1,050 will take RIL initially lower to ₹1,020. A further break below ₹1,020 will then increase the possibility of the stock tumbling towards ₹900 or even ₹980 thereafter. On the other hand, if RIL sustains above the 200-day moving average support, the bias will remain positive. A strong break above ₹1,150 will ease the downside pressure. The next targets are ₹1,190 and ₹1,200. A strong break above ₹1,200 will turn the outlook to positive and will pave way for a revisit of ₹1,250 and ₹1,300. Medium-term investors can hold the long positions taken at ₹1,125 and ₹1,095. Retain the stop-loss at ₹1,025.

Tata Steel (₹487.7)

Tata Steel tumbled 5 per cent last week. The sharp fall last week indicates that the long-term downtrend in the stock is intact. Though there is a support near current levels at ₹480, Tata Steel looks vulnerable to break below it. A break below ₹480 can take the stock lower to ₹460. A further break below ₹460 will then increase the likelihood of the stock extending its fall to ₹430. Cluster of significant supports are poised in the broad ₹460-₹430 region. There is a strong likelihood of the current downtrend halting in this support zone. A strong upward reversal from this ₹460-₹430 support zone could be a good buying opportunity for investors with a long-term perspective. As such, the price action around the ₹460-₹430 support zone will need a close watch to get a cue on the next trend. On the other hand, if Tata Steel sustains above ₹480, a bounce to ₹500 or ₹510 can be seen. But the upside is likely to be capped as fresh sellers are likely to emerge at higher levels.

Index Outlook

 

The third quarter earnings season, to kick-off this week, could lend direction to the market. Macro-economic data and rupee movement will also be keenly watched. Strong December jobs report also lifted sentiments. China’s central bank lowering banks’ reserve requirement could cheer Asian markets this week. Read the full market outlook for the week here