Nifty cools off after hitting 9,900 level; Sensex breaches 32,000 mark

Continuing their bullish run, Sensex opened at a new high of over 32,100 mark in opening trade, while Nifty too hit a new peak of 9,900 mark for the first time ever in initial trade on strong buzz that a policy rate cut may be on the anvil after inflation touched a ‘record low’. However, markets failed to hold on to their gains and entered into red terrain, breaching their respective crucial levels, as traders opted to book their profit at higher levels. Traders remained concerned with disappointing earnings by the Tata Consultancy Services, India's largest software services exporter whose quarterly profit fell 10 percent sequentially, while revenues declined 0.2 percent. Moreover, another IT bellwether firm Infosys reported a 3.3 per cent sequential drop in net profit at Rs 3,483 crore for June quarter. Traders also remained on sidelines ahead of high-profile meeting chaired by Prime Minister Narendra Modi to review the country’s foreign direct investment policy, where further easing of restrictions may also be discussed.

On the global front, the Asian markets have made a mixed start and some of the indices are marginally in red, though others are heading for strongest week since March at this point of time. The US markets managed another positive close in last session despite a lackluster trade, as traders seemed reluctant to make more significant moves ahead of the release of some key economic data and earnings news.

Back home, GVK Power and Infrastructure edged higher by around four percent on concluding sale of residual stake in BIAL for Rs 1,290 crore. Shares of Biocon were trading jubilantly after USFDA advisory committee approves Mylan, Biocon’s proposed biosimilar Trastuzumab. The market breadth indicating the overall health of the market was weak, with 756 shares gaining and 1,225 shares declining, while a total of 83 shares were unchanged.

The BSE Sensex is currently trading at 31961.69, down by 75.69 points or 0.24% after trading in a range of 31951.92 and 32109.75. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index rose 0.06%, while Small cap index was down by 0.29%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.08%, Telecom up by 0.43%, Utilities up by 0.31%, Oil & Gas up by 0.29% and Consumer Durables up by 0.21%, while Capital Goods down by 0.63%, Industrials down by 0.44%, Realty down by 0.43%, Bankex down by 0.38% and FMCG down by 0.36% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.38%, Sun Pharma up by 0.95%, Cipla up by 0.89%, Dr. Reddys Lab up by 0.70% and ONGC up by 0.60%. On the flip side, TCS down by 2.04%, HDFC down by 0.88%, Tata Motors down by 0.87%, Larsen & Toubro down by 0.86% and ITC down by 0.81% were the top losers.

Meanwhile, after the government’s decision to increase import duty on sugar from 40% to 50%, the rating agency ICRA in its latest report has said that a 10% increase in import duty on sugar is a positive for the industry, which is likely to support the domestic prices in the near term. The Centre has increased the import duty on sugar following the recent decline in the global sugar prices and improved outlook for domestic sugar production for the coming sugar season SY2018.

ICRA said that this move in turn will help sugar mills clear cane arrears to farmers. It also said that given the recent increase in the fair and remunerative (FRP) cane price for the coming season, a significant fall in domestic sugar prices, was a possibility had further imports (in addition to the recent 0.5 million tons duty free imports) been allowed, same could have adversely impacted the margins and the liquidity of sugar mills.

According to the report, the sugar production in India is set to increase by 16-20% in SY2018, to around 23.5 million tons (MT) to 24.5 MT. This growth will be driven largely by the increase in sugar production in Maharashtra and Uttar Pradesh. The closing stocks for SY2018 are likely to be around 4.0-4.5 MT, which would be sufficient before the production of the following season comes into the market, limiting the need for sugar imports into the country.

Moreover, global sugar prices have largely followed expectations on global supplies. The lower sugar import demand from India, coupled with an expectation of a global surplus in 2017/18 on account of increased production from Brazil and India, has resulted in a decline in the global sugar prices from around $540-$550/MT in January-February 2017 to $510/MT in March 2017 and further down to $445/MT in May 2017.

The CNX Nifty is currently trading at 9864.70, down by 27.00 points or 0.27% after trading in a range of 9860.90 and 9913.30. There were 20 stocks advancing against 30 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Aurobindo Pharma up by 3.60%, Infosys up by 1.27%, Sun Pharma up by 1.10%, Bharti Infratel up by 0.95% and BPCL up by 0.91%. On the flip side, TCS down by 2.16%, Ambuja Cement down by 1.24%, Tata Motors down by 1.08%, Tata Motors - DVR down by 1.03% and Asian Paints down by 0.95% were the top losers.

Asian markets were trading mixed; Jakarta Composite decreased 21.3 points or 0.37% to 5,808.74, Shanghai Composite shed 5.7 points or 0.18% to 3,212.46, FTSE Bursa Malaysia KLCI slipped 1.96 points or 0.11% to 1,751.82 and Taiwan Weighted was down by 1.19 points or 0.01% to 10,458.96.

On the flip side, KOSPI Index rose 4.75 points or 0.2% to 2,414.24, Hang Seng increased 18.04 points or 0.07% to 26,364.21 and Nikkei 225 was up by 43.29 points or 0.22% to 20,143.10.