Markets erase gains; Sun Pharma falls nearly 4%

Benchmark indices have erased early gains and have turned extremely choppy with Sensex and Nifty swinging between negative and positive zone.

At 14:12PM, the 30-share Sensex was up 8 points at 28,716 and the 50-share Nifty was up 7 points at 8,722.


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Updated at 1:25 PM

Benchmark indices are set to register gains for the fifth straight session led by a rally in banking stocks after global rating agency Moody's revised India's sovereign ratings outlook to positive and index heavyweight Reliance Industries.

However, the upside gains are capped as healthcare stocks dropped with Sun Pharmaceutical Industries falling 2.5% after Bank of America Merrill Lynch (BoFA-ML) downgraded several pharma stocks.

At 1.25 pm, the Sensex is at 28,806, higher by 98 points and the Nifty is at 8749, up 34 points.

MOODY'S OUTLOOK

The Finance Ministry today said the NDA government has restored the faith of investors and rating agencies on the growth outlook of the Indian economy.

"Moody's decision continues to reaffirm that rating agencies, global investors and our own domestic businesses have faith in India's growth outlook and our financial strength as a sovereign," Minister of State for Finance, Jayant Sinha told reporters here.

Rating agency Moody's today upgraded India's credit outlook to positive from stable, saying that the measures taken by the policymakers would enhance economic strength.

SATYAM CASE

A Hyderabad-based special court set up to try the Satyam Satyam Computer Services fraud case has convicted former chairman B Ramalinga Raju and other nine accused following a seven-year trial. The court will announce the quantum of punishment on Friday. Reacting to the news, Tech Mahindra which has acquired the company is trading flat with a negative bias on the BSE. 
 

CRUDE OIL

Oil prices inched up after falling nearly 7% on Wednesday after the Energy Department reported oil in storage was about triple what analysts had estimated. Brent crude gained 67 cents to $57.36 after falling $3.55 overnight to close at $55.55 in London.

RUPEE

The rupee is trading flat against the US dollar after opening higher at the Interbank Foreign Exchange following rating agency Moody’s upgraded India’s outlook from stable to positive.

KEY STOCKS

On the sectoral front, BSE Bankex is the top gained up 2% followed by Metal index. However, BSE Healthcare, Realty, Capital Goods indices are trading lower up to 2%.

Banking shares are trading higher up to 5% on the bourses after Moody's Investors Service changed India's outlook to 'positive' from 'stable' earlier and affirmed 'Baa3' credit rating on Thursday.

Kotak Mahindra Bank has rallied 5% to Rs 1,439, while Punjab National Bank (PNB) gained 4% at Rs 159 on the National Stock Exchange (NSE). IndusInd Bank, Bank of India, YES Bank, Axis Bank, Bank of Baroda, ICICI Bank and Canara Bank up 2% to 3%.

Healthcare shares fall after the Bank of America said in a report that absolute returns on pharma stocks are unlikely in the next 12 months after recent rally. Sun Pharma was cut to underperform from buy, while Lupin, Cipla, Cadila Healthcare to neutral from buy.Sun Pharma is down 2%, Lupin dropped 3% while Cipla lost 1.6%.

India's summer monsoon rains are expected to be normal this year, the chief economic adviser at the finance ministry said on Thursday.

Monsoon rains are vital for India's farm sector, which accounts for 14 per cent of the $2 trillion economy, as half of the country's farmland lacks irrigation. Weak monsoon rains have cut farm output in the past, stoking inflation. Tracking the news FMCG major HUL firmed up and gained over 1%.

In the oil space, RIL has extended the gains of the previous session, soaring by 2% on reports that the company has discovered massive gas reserves at MJ-1 block in its KG-D6 basin. However, HPCL and BPCL, besides ONGC are trading marginally in the red.

The broader markets are almost in line with the large counterparts. BSE Midacp and Smallcap indices are trading higher up to 0.8%. The market breadth is strong with 1,513 advances versus 1,110 declines on the BSE.