13:49
Moneycontrol Bureau Benchmark as well as broader indices saw consolidation with a negative bias for the second consecutive week amid ongoing Iraq crisis, further tapering by Federal Reserve and strong developments in new government.The 30-share BSE Sensex declined 122.66 points or 0.5 percent to close at 25105.51 while the 50-share NSE Nifty held the 7500 level, down 30.65 points or 0.4 percent to 7511.45. The CNX Midcap and BSE Smallcap were down 0.7 percent and 0.9 percent, respectively.
Though the rise in crude prices and fall in rupee because of Iraq conflict dampened the sentiments, the market will soon start avoiding this geopolitical tension as it is approaching to the Union Budget (likely in July) and Q1FY15 earnings, feel experts.
According to them, the market may see some correction going ahead if Brent crude goes above USD 120 a barrel (that is hovering around the 115 a barrel), which is unlikely in near term because most of oil fields are in southern part of Iraq and the current crisis is in northern part of the country.
"Going ahead, we see the monsoon progress and the budget to be the two most important triggers for the market. A progressive budget as well as other reform initiatives will likely lead to continued outperformance of Indian indices versus emerging market peers," says Dipen Shah, Head- Private Client Group Research, Kotak Securities.
However, if there is a continued rise in crude price, it will be a negative from the CAD, rupee and inflation perspective, he adds.
Saurabh Mukherjea of Ambit Capital says 23,000 is a strong base for the Sensex in this market. His year end target is 30,000.
On the global front, Iraq crisis escalated further during the week with the Sunni militants getting controlled of the largest oil refinery (Baiji) in Iraq. Reports suggested that militants (ISIS and its allies) and pro-government forces continued to be in fight for the Baiji oil refinery and Tal Afar airport.
On the positive side, Federal Reserve decided to reduce bond buying purchases by another USD 10 billion to USD 35 billion in its two-day meeting. It kept Fed funds rate unchanged at 0.0-0.25 percent but hinted of likely rate hike in 2015.
Back home, the rupee closed at 59.76 a dollar, up 43 paise compared to 60.19 last Friday on account of Iraq tension.
On the economic data front, the wholesale price index inflation in May shot up to a five-month high of 6.01 percent as against 5.2 percent in previous month and expectation of 5.3 percent, driven by spike in food, fuel as well as manufactured products prices.
Positive developments: Capital markets regulator Securities and Exchange Board of India (Sebi) announced a slew of reforms related to IPO and offer-for-sale in order to boost primary markets. The board of Sebi proposed that all listed PSUs must have at least 25 percent public shareholding in three years.
Power and Coal Minister Piyush Goyal met power producers on Friday. He discussed about the need to immediately enhance the supply of coal and increase linkages for power companies. He promised the problems will get resolved soon to make smooth supply of coal and reduce bottlenecks to boost power & coal sectors.
The government on Friday increased rail passenger fare by 14.2 percent and freight fare by 6.5 percent effective w.e.f. June 25.
Stocks in action
Energy, auto and infrastructure stocks saw selling pressure with the BSE Oil & Gas, Capital Goods, Auto and Power falling 1-2 percent while the IT index bucked the trend, gaining 3 percent.
The selling pressure in oil & gas sector was largely on account of some media reports, which suggested that the petroleum ministry is considering to allow higher gas price only for incremental production over and above the current levels.
Mahindra and Mahindra topped selling list, falling 7 percent as experts feel the weak monsoon may hit tractor sales of the company.
United Spirits was down 3.7 percent after reports indicated that acceptance ratio of the open offer by Diageo is estimated to be around 56 percent while traders were expecting it to be on the higher side of 70 percent. Goldman Sachs advises to sell the stock with a reduced target of Rs 2145 per share.
Reliance Industries slipped 4.2 percent on gas price concerns. Hero MotoCorp, ACC, BPCL, Tata Power, L&T, ICICI Bank, Hindustan Unilever and HDFC Bank were down 1.6-2.7 percent.
However, GAIL, Asian Paints, TCS, IndusInd Bank, Cipla and Axis Bank were prominent gainers among largecaps, up 2.6-5.7 percent. Infosys rose 4 percent as reports suggested that it may get US Treasure office deal. Cairn India gained 2 percent as Brent crude hit USD 115 a barrel.
In the midcap space, CEAT, MTNL, Natco Pharma, Sterlite Technologies, FACT, Dishman Pharma, Firstsource Solutions, Punj Lloyd, Suven Life, DCB Bank and TVS Motor were top gainers, rising 11-33 percent. However, Amtek India, Suzlon Energy, Era Infra, Tecpro Systems and McDowell Holding were down 13-22 percent.
Disclosure: Reliance Industries has made an open offer for the takeover of Network18, which owns Moneycontrol.com and other digital, print and TV channels.
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