Sensex, Nifty consolidate ahead of IIP, CPI data; Midcap up

10:59am Market Expert

Independent market expert Dhiraj Agarwal sees a high risk of correction post-Budget. According to him, the Nifty may even break 8000 support, slipping to 7500 level, if the Budget disappoints. However, on the upside he sees the index breaking 9000 on a satisfactory verdict.

The market needs public spending at this point, said Agarwal, adding that India looks solid from a 3-year horizon, but the investment cycle needs to pick up. He remains bullish on IT.

10:30am Buzzing Stocks

Power Grid gained 1.5 percent after reporting strong numbers with total income up 18.2 percent at Rs 4,354 crore, margin up 170 basis points to 85.9 percent while PAT up 17.9 percent at Rs 1,229 crore. 

The company continues to deliver strong execution and strong commissioning of assets during last 1 year.

Zee Entertainment rallied 3.5 percent after a large trade was seen on the NSE in which 22 lakh shares changed hands in 6 block deals.

India Cements gained 11 percent after they delivered a good operational performance with margins expanding 170 basis points to 15.7 percent in Q3. Additionally they have approved a proposal for reorganisation of Chennai Super Kings Cricket limited and the ownership of the franchise will be held by shareholders of the India Cements.

Grasim Industries rose 0.9 percent and Aditya Birla Chemicals rallied 3.7 percent after Grasim proposed the acquisition of Aditya Birla Chemicals with a swap ratio of 1 share of Grasim for every 16 shares of Aditya Birla Chemicals held. The swap ratio is favouable for AB Chemicals shareholders. Edelweiss says they are positive on the merger.

Fortis Healthcare climbed 0.9 percent after Rakesh Jhunjhunwala bought over 34 lakh shares in the company yesterday while Claris Lifesciences gained 20 percent on reports of many Indian companies such as Zydus Cadila, Lupin and Cipla along with global majors such as Pfizer being interested in the company's sterile injectibles business.

10:00am Market Check

The market remained in a consolidation mode ahead of December industrial output and January CPI data (to be announced later today). The broader markets outperformed equity benchmarks with the BSE Midcap and Smallcap indices gained 0.8 percent each.

The Sensex fell 22.71 points to 28511.26 and the Nifty rose 3.35 points to 8630.75. More than two shares advanced for every share declining on the Bombay Stock Exchange.

The January consumer price index (CPI) data will be the first CPI data on a new base. The government has revised the CPI data base year from 2010 to 2012 couple of weeks ago due to which there are varied expectations. The CPI data for January is likely to be in the range of 5.3 to 5.8 percent on the upside against 5 percent reported in December.

The index of industrial production (IIP) data for December may come in at around 1.8 to 2 percent against 3.8 percent on a month-on-month basis.

Sensex up over 100 pts, Nifty over 8550; SBI, Hindalco gain

9:50 am Buzzing: Shares of DLF skid 6 percent intraday after it posted disappointing December quarter results. The realty firm reported 9 percent decline in its consolidated net profit at Rs 131.79 crore for the quarter ended December on lower sales.

Its net profit stood at Rs 145.29 crore in the year-ago period. Income from operations fell by 5 percent at Rs 1,956.72 crore for the third quarter of this fiscal from Rs 2,058.42 crore in the corresponding period of the previous year.

Besides lower sales, DLF's net profit fell because its other income dropped to Rs 123 crore during October-December quarter of this fiscal from Rs 531.78 crore in the year-ago period.

Finance cost, too, increased to Rs 648 crore from Rs 633 crore during the period under review.

9:40 am Delhi election results: AAP crosses the halfway mark, all set to form government in Delhi. AAP leads in 53 seats, BJP in 10 seats. Congress not ahead on even a single seat. t's day of hope, the passion is winning Delhi, says AAP leader Yogendra Yadav. AAP's SK Bagga leading in Krishna Nagar by 1065 votes against BJP's Kiran Bedi.

9:30 am FII view: Abhay Laijawala, Deutsche Equities says the brokerage believes that the recent trend of strong inflows into equity mutual funds is indicative of a long-pending shift in the nature of Indian households' savings, from physical assets to financial assets.

“As India's macroeconomic distortions correct, non-productive physical assets would continue to lose their allure, relative to financial assets,” he adds.

Deutsche believes that the financial sector should be the biggest beneficiary of this transition, says Laijawala. Hence the brokerage maintains financials as the biggest overweight in model portfolio.

9:22 am Market check: The market quickly recovered from early weakness. The Sensex is up 123.55 points at 28350.94 and the Nifty is up 36.95 points at 8563.30. About 695 shares have advanced, 450 shares declined, and 149 shares are unchanged. Hindalco is up 3 percent. Tata Motors, Tata Steel, SBI and Axis Bank are gainers in the Sensex. Among the losers are Dr Reddy's Labs, Tata Power, L&T, ONGC and Bharti Airtel.

Don't miss: Delhi Elections: Counting begins, AAP senses victory, BJP jittery

The market is weak as the Nifty opened below the 8500-mark but quickly pull up strength. The 50-share index is up 5.45 points at 8531.80. The Sensex is down 101.37 points at 28126.02. About 363 shares have advanced, 478 shares declined, and 151 shares are unchanged.

Hindalco, Tata Motors, Tata Steel, Infosys and HUL are gainers in the Sensex. Among the losers are L&T, Tata Power, ICICI Bank, Hero and NTPC.

The Indian rupee has opened flat at 62.15 per dollar on Tuesday against previous day's closing value of 62.17 a dollar.

The dollar slips somewhat after a payrolls-inspired rally ran out of steam. The dollar index is a tad softer but not far from an 11-year peak scaled last month.

Pramit Brahmbhatt of Veracity said, "We expect rupee to depreciate today as Asian markets have already opened on a weak note which will force local equities to trade low. Also, the gain in dollar may hurt the rupee. The USD-INR is expected to be in a range of 61.70-62.70/dollar."

Stocks in the US closed lower despite oil settling higher, as concerns about Greece continued to weigh. The CBoE VIX closed around 18 levels.

In Europe too equities closed lower, as negotiations over Greece’s bailout program continued and the crisis in Ukraine re-escalated

Greek stocks tumbled 5 percent and bond yields spiked after Greek Prime Minister Alexis Tsipras said his election pledge to restructure Greece’s debt was "irrevocable" in his inaugural speech

In commodities, crude prices dipped slightly with Brent crude trading below USD 58 dollars per barrel. Meanwhile, the OPEC has hiked its demand forecast for 2015, predicting that low prices would help boost demand later in the year. However, the organization still said that oil demand growth was "yet to show any signs of accelerating."

From precious metals space, gold prices remained largely unchanged at around USD 1240 an ounce.

Sensex falls 300 pts, Nifty below 8600; banks, L&T fall

10:30am Market Expert

The big challenge for the market near term is the weakness in corporate earnings, says Sandeep Bhatia, ED & Head of Sales, Kotak Institutional Equities.

In an interview Bhatia says market correction near term will be driven by concerns over earnings growth and not so much by election results.

He expects a pre-Budget rally, but does not see the market giving more than 10-12 percent returns over the next couple of quarters.

Bhatia is not expecting any major tax incentives from the government in this Budget, given the weak fiscal situation.

He says the government needs to do something quickly to stimulate growth as the capex cycle is still showing no signs of recovery.

10:00am Market ChecK

The market fell more than 1 percent in morning trade on fall in rupee post exit polls indicated that BJP may not get majority in Delhi elections. Banks, capital goods, auto and metals drag.

The Sensex dropped 338.46 points to 28379.45 and the Nifty fell 101.40 points to 8559.65. The BSE Midcap and Smallcap indices declined nearly a percent.

More than two shares advanced for every share declining on the Bombay Stock Exchange.

Shares of ICICI Bank, HDFC Bank, HDFC, ITC, Tata Motors, M&M and Hero Motocorp were down 1.5-2.5 percent. Larsen & Toubro dropped 2 percent ahead of Q3 earnings today. A poll expects muted earnings during the quarter with profit rising 1.1 percent and hydrocarbon business reporting losses.

Tata Power and Reliance Infrastructure lost 3-4.5 percent as AAP promised in its manifesto to reduce electricity bills by 50 percent.

Tata Steel shed 3 percent after their Indian and South East Asian operations had a weak quarter though European operationally showed improvement. Deutsche Bank maintains buy rating but cut FY15/16 earnings by 31 percent/24 percent and target price by 29 percent to Rs 480/share as India EBITDA per tonne is the lowest in 23 quarters and the steel price overhang persisted.

GAIL lost more than 4 percent as inventory losses weighed on Q3 earnings but siliver lining was that there was no subsidy paid in Q3. CLSA says GAIL is a conviction sell in Asian utility space with a target of Rs 360 as it is trading 35 percent above historical average PE and building USD 90 a barrel on Brent crude price.

Appollo Tyres tanked 15 percent as the stock reacted to weak earnings as its revenue fell 13 percent to Rs 3,104.8 crore while profit dropped 45 percent at Rs 184.2 crore. Results were also impacted by one time provision of Rs 79 crore on account of retrenchment expenses for South African business.