Nifty reclaims 7,850; IT shares gain

Benchmark indices have erased some of the losses and are trading lower by 0.2% in the noon trades on sustained buying in technology and metal stocks along with fresh buying in select auto shares. However, investors are cautious ahead of the consumer inflation data and the Q2 earnings of Reliance Industries which will be released later during the day amid weak global cues.

 

At 12.55 PM, the Sensex is down 60 points at 26,237 and the Nifty has dropped 18 points to trade at 7,842.

 

Meanwhile, JP Morgan has cut its India GDP growth projection for 2014-15 to 5.1% from 5.3% after weak factory output data. A slower growth and a fall in oil and commodity prices increase the chance for the RBI to attain its challenging 6% consumer price inflation target by January 2016, JP Morgan said.

 

In the broader market, both BSE Mid cap index is trading flat with negative bias while BSE Small Cap index is down 0.2%.

 

Market breadth is weak with 1,481 declines against 1,164 advances on the BSE.

 

Rupee:

 

Rupee is trading higher at 61.24 against US Dollar which has strengthened against all major currencies.

 

Asian Markets:

 

Asian markets have remained subdued following a weak opening primarily due to persisting slump in global markets and economy captured most significant by fall in crude prices. Brent crude has dropped $25 since June and on Friday came quite close to $88 a barrel for the first time in nearly four years.

 

Hang Seng, Strait Times and Shanghai indices have lost around 0.7% each while NIkkei was spared the pain as Japanese market is closed on account of National Sports day.

 

Positive Chinese trade data, a rise of 15.3% in exports and 7% in imports, has failed to improve on market sentiments so far.

 

In the global market along with the lingering impact of weak German data, Standard & Poor's downgrade of France to a negative outlook is likely to result in a weak opening at the European markets.

 

Sectors & Stocks:

 

On the sectoral front, BSE IT index is leading the rally up over 1% followed by Teck and Metal indices up between 0.5-1%. However, BSE Realty, FMCG, Auto and Capital goods indices are losing sheen and are down between 0.5-2%. BSE Consumer Durables index is trading flat with a positive bias.

 

Shares of Mahindra and Mahindra are down nearly 4% as plans to stop tractor production for a period of four days raised concerns over high inventory levels because of weakening demand.  Also, Tata motors has declined around 1% after the overseas sales data of company's premium brands, Jaguar and Land Rover are below the market expectations.

 

Domestic passenger car sales declined 1.03% to 1,54,882 units in September on an annual basis, suggesting consumers are holding out on making big purchases just ahead of the festive season.

 

Heavy selling is evident in the healthcare space. Sun Pharma  has lost near 1% after the company was pulled up by US drug regulator for failing to take adequate corrective measures on the drugs which were recalled from the US market in this year. Following the tandem, Cipla and Dr Reddy’s Lab are trading lower between 1.5-2.5%.

 

Engineering conglomerate L&T and BHEL are declined over 1% after industrial production growth slowed to five-month low in August.

 

Cigarette maker and Index heavyweight ITC and HUL are trading lower between 0.3-1% on caution ahead of the consumer inflation data due later today.

 

RIL is trading with marginal losses ahead of the Q2 results later today.

 

Bharti Airtel, NTPC, GAIL and ICICI Bank are some of the notable names in red among others down between 1-2%.

 

On the flip side, Infosys is trading higher by nearly 2% at Rs 3,952, extending its Friday’s nearly 7% rally, after the company reported a better-than-expected consolidated net profit at Rs 3,096 crore for the second quarter ended September 30, 2014 (Q2) besides declaring 1:1 bonus. TCS is up over 1%.

 

Shares of Hero Motocorp  have gained over 1.5%. Motorcycle sales in September climbed 19.34% to 10,56,509 units from 8,85,309 units a year earlier. The total two-wheeler sales in September rose 23.81% to 15,67,351 units. Also, Bajaj Auto is trading with marginal gains.

 

After being asked by the government to prepare plans for the handling of de-allocated mines, Coal India has stepped to the task by announcing future strategy to focus on undrground mines to improve productivity while reducing procurement from less produtive mines. The stock is up over 1%.

 

Postive Chinese data has brought focus back to metal stocks. China, the world's second biggest economy, trade surplus has more than doubled to $31 billion in September as exports jumped and imports increased at a slower rate. Tata Steel has climbed over 1% while Hindalcois trading with marginal gains.

 

Tata Power, Axis Bank and HDFC are some of the prominent names in green up over 0.5%.