Sensex, Nifty50 start on a positive note; Infosys, TCS down 1% each

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NEW DELHI: The S&P BSE Sensex started flat with a positive bias on Friday led by gains in RIL, L&T, ITC, Maruti Suzuki, Axis Bank, and Tata Motors.

The Nifty50 pared some gains but was still trading above its crucial support level of 8,550, supported by gains in oil & gas, capital goods, autos, and power stocks.

At 09:20 am: The 30-share index was trading 25 points higher or 0.09 per cent at 27,668. It touched a high of 27,712.79 and a low of 27,658.88 in morning trade.

The Nifty50 was trading at 8,583 up 10 points or 0.11 per cent. It touched a high of 8,596.05 and a low of 8,572.95 in the first 30 minutes of trade.

The S&P BSE Midcap Index was up 0.38 per cent and BSE S&P Smallcap Index was trading 0.47 per cent higher.

GAIL (up 1.06 per cent), RIL (up 0.97 per cent), L&T (up 0.79 per cent), and ONGC (up 0.7 per cent) were the major Sensex gainers.

HUL (down 0.76 per cent), Lupin (0.7 per cent), Infosys (down 0.67 per cent), HDFC Bank (down 0.4 per cent) and Bharti Airtel (down 0.24 per cent) were the major Sensex losers.

Domestic equity indices are likely to trade on a flat to positive note on Friday, as investors would react to TCS results and consumer price inflation data released post market hours on Thursday, ahead of quarterly numbers by Infosys scheduled to be released later in the day.

Investors would react to overnight fall in US equities. The domestic wholesale price inflation print and data on Chinese inflation scheduled for release later in the day may influence market sentiment.

Cues from Singapore positive: At 7.45 am, Nifty50 futures on the Singapore Stock Exchange were trading 17 points higher at 8,593, indicating a positive opening for the domestic market.

“The Nifty50 has a very good support at the 8,520 level. I do not think that will be broken in a jiffy. My sense is that as we enter the results season this week, the market will go down after lacklustre results of Infosys and TCS. We could see some bounce back later on,” said VK Sharma, Private Client Group, HDFC Securities.

TCS results a mixed bag: Tata Consultancy Services (TCS) reported 4.3 per cent quarter-on-quarter (QoQ) growth in net profit at Rs 6,586 crore for the quarter ended September 30 and 8.8 per cent growth on a year-on-year (YoY) basis.

“We continue to believe that the sector (including TCS) continues to face a mix of structural and cyclical changes, which have resulted in a very tough FY17 for the industry as a whole. While TCS’ revenue estimates will get cut a tad, FY17-18E EPS at Rs 128/141 might get a boost driven by the Q2 beat. We would expect a modest negative reaction to these results in Friday’s trade,” Emkay Global said in a note.

All eyes on Infosys results: The second largest domestic IT firm, Infosys, is likely to report a 3 per cent sequential growth in September quarter revenues in constant currency terms, while it is expected to cut its FY17 revenue guidance for the second time this year to 8-9.50 per cent against 10.5-12 per cent forecast earlier.

“Although we expect higher sequential growth in Q2, the annual guidance is likely to be revised downward,” said brokerage Motilal Oswal Securities.

CPI inflation eased to 4.3%: CPI inflation eased sharply to 4.3 per cent YoY in September from nearly 5 per cent YoY in August.
“Going ahead, more disinflation is in store as pulses prices ease further. Ergo, we expect headline CPI to head towards 4 per cent or below before inching back to 4.5 per cent by March 2017, which will still be below RBI’s 5 per cent target. Given the benign inflation outlook, we continue to expect another 25bps cut by the central bank before March 2017. The probability of a 50 bps cut is certainly on the rise,” said Edelweiss Securities.

Nifty50 formed ‘Large Bear’ candle on Thursday: The Nifty50 formed a ‘Large Bear’ candle on the daily charts, which signified that the bears kept the selling pressure throughout Thursday’s trading session.
If the index fails to hold on to its support of 8,550-8,500, further decline towards its 200 DMA cannot be ruled out. Hence, traders are advised not to create any long position on declines. History suggests whenever the market tried to bounce back, the bears have taken control of it.

Asian markets stay mixed: The Chinese CSI300 down 0.26 per cent to 3,294 on Friday morning. Japan’s equity benchmark Nikkei was trading 0.03 per cent lower at 16,766. Other Asian indices, including Hong Kong’s Hang Seng (up 0.45 per cent), South Korea’s Kospi (up 0.52 per cent) and Taiwan’s TWSE (down 0.34 per cent), were trading mixed.

US markets settled lower on Thursday: The Dow Jones Industrial Average dropped 45.26 points, or 0.25 per cent, to 18,098 in overnight trade. The S&P500 index lost 6.63 points, or 0.31 per cent, to 2,132 while the Nasdaq Composite index dropped 25.69 points, or 0.49 per cent, to 5,213.