Nifty ends above 8,350 on Greece bailout hopes

Despite a rally in Capital Goods shares, the upside was capped amid weakness in TCS and FMCG majors

Markets gained pace in late trades to snap a three-day losing streak and the Nifty ended above the 8,350 on hopes of a bailout deal to keep Greece in the euro zone at a weekend summit of European leaders.

Further, rally in the capital goods shares on expectations of higher industrial growth in May further boosted sentiment.

The Sensex gained 88 points to end at 27,573 and the Nifty climbed 28 points to close at 8,357. In the broader market, the BSE Mid-cap and Small-cap indices gained 0.2% each.

However, weakness in TCS shares after posting a meager 2.1% growth in its June quarter net profit coupled with loss in the FMCG on slowdown of monsoon capped the upside gains.

At 3:30 PM the rupee was trading at 63.45 against the dollar on sustained dollar demand due to firm US dollar in the overseas market.

MARKET VIEW

"After 3 weeks of consecutive rally, this week was a breather for the index, which corrected by almost 1.5%. Globally, most of the major markets did witness a late recovery, thereby calming the unnerving situation. Even though, it was a subdued week for the index, stock specific action were abound, and I believe that over the start of next week it could be similar trend for the broader market" said Kunal Bothra, Head-Advisory, LKP Securities.

"Technically, Nifty did manage to support the crucial 8200-8250 support zone, which was a key reversal few weeks back. We believe that Nifty can consolidate between 8200-8500 over the next few days. Impact of IIP numbers and the earnings expected for frontline stocks could be the key events to watch out for in the coming week" he added.

"Though the start to Q1FY16 result is tepid, the markets would like to see the subsequent set of numbers next week before taking a final view of the results. The expectation for Q1FY16 is low largely due to the sharp fall in commodity prices. But it is expected to stabilize the earnings outlook, compared to the complete washout in Q3FY15 and Q4FY15, which had led to a sharp earnings downgrade. The Market is optimistic of an end to the earnings downgrade and the prospects of a new agreement between Greece and the Eurozone" said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services.

TCS Q1 RESULTS

TCS lost over 2% after the company reported a net profit of Rs 5,708.9 crore, up 12.8% from Rs 5,057.8 crore in the first quarter of FY15. The stock is has slipped by 0.6%.

At Rs 25,668 crore, revenue was up 16.1% on a year-on-year basis and six per cent sequentially. But revenue growth in dollar terms was below the Street’s estimates.

According to Reliance Securities, “TCS’ revenue was a slight-miss on vertical-specific count while profitability was tad-better on efficiencies and strong performance in core geo. We believe that strong digital adoption (digital revenue at 12.5% of 1Q revenue and growth at double-digit on sequential basis) and large transformational infrastructure deals (improvement in client metrics and infrastructure services) will drive growth ahead mitigating headwinds in energy/insurance/telecom; maintain BUY with Target Price of Rs 3,030.”

GLOBAL EVENT

Finance ministers of the 19-nation euro area will meet on Saturday to decide whether to recommend opening negotiations on a third bailout programme for Athens despite widespread exasperation at the five-year-old Greek debt crisis.

European markets are gaining on the improved prospects for a last-ditch deal to keep Greece in the currency area, with CAC 40, DAX and FTSE up between 1-3%.

Meanwhile, Chinese stocks rose strongly for a second day on Friday, buoyed by a barrage of government support measures, but worries persist about the long-term impact that four weeks of stock market turmoil may have on the world's second-largest economy.

STOCK TRENDS

On the sectoral front, BSE Bankex, Metal and Capital Goods indices gained 1% each while BSE FMCG, IT, Consumer Durables and Realty indices lost up to 1%.

Capital Goods shares are among the top gainers on expectations of higher industrial growth in May, the data for which is expected later today. L&T was up 1.3% while BHEL gained 1.7% after the state-owned company said it has successfully commissioned the second 500 megawatts (MW) unit at Tuticorin Thermal Power Station (TPS).

Bank shares showed an uptrend as investors bought the shares at attractive valuations. HDFC Bank, ICICI Bank, Axis Bank and SBI gained between 0.7-2%.

Shares of telecom companies ended lower after the government ordered special audit of mobile networks to check call drops, according to media reports. Bharti Airtel fell over 3%, Idea Cellular lost over 2% while Reliance Communications ended flat with negative bias

IT shares ended mixed with Wipro up 0.6%. while TCS lost over 2% post its first quarter earnings. Wipro is set to acquire Designit, a Denmark-based global strategic design firm, for Euro 85 million (Rs 595 crore, or $94 million).

Maruti pared early gains and ended flat. The passenger car major announced that its Celerio model that was launched in 2014 has sold over 1,00,000 units.

FMCG majors lost ground on concerns that an uptick in inflation amid fears of poor monsoon and unfavorable business environment in the rural markets hurt the sentiments. HUL was down 2.6% while ITC ended with marginal losses.

Vedanta and Cairn India jumped on hopes their planned merger may get delayed amid concerns by minority shareholders. Vedanta zoomed 5% while Cairn India gained 2%.

Shares of Monnet Ispat & Energy were locked at the upper circuit of 20% at Rs 42.90 on the NSE after the company announced that it has signed a memorandum of understanding with JSW Energy to sell the controlling stake in its subsidiary, Monnet Power Company.

R S Software India tanked 16% after the company reported a 26% quarter-on-quarter (QoQ) decline in consolidated net profit at Rs 11.10 crore for the quarter ended June 2015 (Q1).

The market breadth ended positive with 1,433 advances versus 1,375 declines on the BSE.