Sensex, Nifty consolidate further at open; Tata Motors down 7%


9:56 am FII View: Michael Hartnett of Bank of America Merrill Lynch says Fund Manager Survey’s cash level has dipped in February to 4.9 percent from 5.1 percent, but is still higher than the 10-year average.

“Our Bull & Bear indicator moves up to 6.3 and we remain long stocks & commodities until the ‘sell’ signal is triggered, it says.

Hartnett further says Fund Manager Survey shows macro optimism surging – 23 percent say ‘boom’ versus 1 percent one year ago and 18 percent say ‘goldilocks’ against 6 percent one year ago. Meanwhile 15 percent say ‘stagflation’ and while 43 percent expect ‘secular stagnation’, it is down sharply from 88 percent one year ago, he adds.

9:30 am Analysts on Tata Motors: CLSA has downgraded the stock to sell and lowered target price to Rs 405 from Rs 650 after cutting FY18-19 EPS estimates by 25-31 percent after dismal performance in Q3FY17.

Management commentary on JLR margins has weakened significantly, it says, adding hedging losses are likely to continue at high levels for longer.

JPMorgan also reduced its target price on the stock to Rs 570 from Rs 610 after cutting FY17/18 JLR EBIT estimates by 26 percent/17 percent and consolidated earnings estimates by 33 percent/23 percent. It advises buying on dip as margin miss was not as bad as it seems.

9:15 am Market Check

Equity benchmarks continued to consolidate in early trade Wednesday after investors digested third quarter earnings.

The 30-share BSE Sensex was up 35.23 points at 28374.54 and the 50-share NSE Nifty gained 12.50 points at 8804.80.

Adani Ports, ITC, Infosys, Larsen & Toubro, ONGC, Tech Mahindra and Grasim were early gainers while Tata Motors tanked 7.5 percent after CLSA downgraded the stock to sell from buy due to weak earnings.

NTPC, Sun Pharma, Maruti Suzuki, Dr Reddy’s Labs and BHEL were other losers.

The Indian rupee has opened flat at 66.92 per dollar against previous close of 66.93.

NS Venkatesh of Lakshmi Vilas Bank says the Janet Yellen testimony shows a higher probability of a rate increase sooner than later and hence will impact both the equity and currency markets.

The USD-INR is expected to trade in a range of 66.78-67.08/dollar today, he feels.

The dollar rose to a three-week peak against a basket of major currencies as investors raised their outlook on a faster pace of us interest rate increases.
Asian markets traded mostly higher today, tracking US gains following remarks from Federal Reserve Chair Janet Yellen.

Major US stock indexes established record highs on Tuesday, led by bank stocks after Federal Reserve Chair Janet Yellen said it would be unwise to wait too long to raise interest rates