Markets kick off Q3 on a positive note; Sensex, Nifty end higher

The Sensex closed higher by 66.12 points at 26220.95 and the Nifty gained 2 points at 7,950.90.

Markets closed marginally higher on the first day of Q3 FY16, amid positive global cues, led by IT majors Infosys and TCS Markets made a strong opening tracking firm global cues.

However, they could not hold to their gains post the announcement of Indian manufacturing activity which slowed more than expected to a seven-month low in September due to softening demand and output, a business survey showed on Thursday.

The Sensex closed higher by 66.12 points at 26220.95 and the Nifty gained 2 points at 7,950.90.

The broader markers performed in line with the benchmark indices- BSE Midcap and Smallcap indices were up almost 0.2% each.

Market breadth was neutral on the BSE with 1,365 advances and 1,321 declines. Indian stock markets will remain closed on tomorrow, 2 October 2015, on account of Gandhi Jayanti.

In the currency front, the rupee appreciated by 4 paise to 65.62 against the dollar on sustained selling of the American currency by exporters and banks amid increased foreign fund inflows.

Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 116.08 crore yesterday, as per provisional data released by the stock exchanges.

Further, IMF chief Christine Lagarde has said that India remains a bright spot in the world economy amid sluggish global growth this year with only a modest acceleration expected in 2016.

MARKET VIEW

According to Ranak Merchant, Technical Analyst - Strategies of Sushil Financial Services, "The RBI's magic wand's effects lingered for yet another day as markets cheered with gains amidst positive trending global indices. With no negative news to dampen the rally NSE Nifty had a brief stint above the 8,000 mark before it retraced to near 7,950.

With most events now behind us market cues would be derived from World Equity Markets and the results season that would commence shortly.

She further adds, "On technical parameters, NSE Nifty has formed a bullish pattern on Daily and Weekly charts and a close above 7981 would confirm the same. T

he current upmove is expected to gain momentum above multiple top resistance zone of 8,043-8,050. Keep an eye on the said levels for the next move to unfold."

MACRO- ECONOMIC DATA

Indian manufacturing activity slowed more than expected to a seven-month low in September due to softening demand and output, a business survey showed on Thursday.

The Nikkei Manufacturing Purchasing Managers' Index, compiled by Markit, fell to 51.2 in September from 52.3 in August and against predictions of 52.0.

A reading above 50 indicates expansion. Foreign investment inflows during January-June 2015 stood at $19.4 billion, compared to $14.94 billion in the year-ago period.

GLOBAL MARKETS

World stocks and commodities got 2015's final leg off to a solid start on Thursday after a bruising third quarter, as surveys of Chinese factory activity proved sounder than many global investors had feared.

The Purchasing Managers' Index data nevertheless showed China's vast manufacturing sector contracted again in September, suggesting the world's second-largest economy is still cooling more rapidly than expected a few months ago.

Relief the figures were not worse sparked 0.5-0.7% gains for Chinese stocks ahead of a week-long holiday, though it was a near 2% jump for the Nikkei in Tokyo that set the pace as the whole of Asia made gains.

There were rises too of 1.3 to 1.6% on Britain's FTSE, Germany's DAX and France's CAC in early European trading as the global rally, which had begun on Wednesday, kept rolling. Investors increased bearish bets on most emerging Asian currencies in the last two weeks after Federal Reserve officials kept open the possibility of an interest rate hike in 2015 and as worries of a global economic slowdown lingered.

SECTORS & STOCKS

Rate-sensitive sectors like banks, auto and realty witnessed selling pressure, all down between 0.2-1.5%.

However, BSE Healthcare and Capital Goods indices are up 1-2%. Shares of pharmaceuticals companies ended higher in otherwise subdued market with CNX Pharma index gaining 2% on the National Stock Exchange (NSE). Lupin, Sun Pharmaceutical Industries, Dr Reddy’s Laboratories, Cadila Healthcare and Aurobindo Pharma from the CNX Pharma index were up 1-4%.

Lupin rallied to its record high of Rs 2,125, up 4.5% on the NSE.

The stock of drug maker has outperformed the market by appreciating 31% from its recent low of Rs 1,618 on July 27.

The top gainers from the Sensex pack were Lupin, Sun Pharma, TCS, Dr Reddy’s Labs and L&T. Infosys gained around 1% on reports that the company will design new solutions that can derive practical benefits and help generate data from connected devices in industrial enterprise. The stock has gained 1.1%.

Infosys has become the third most-valuable company as market capitalization soaring to over Rs 2.70 lakh crore as its shares price hit a record high on the Bombay Stock Exchange (BSE). L&T Construction has bagged Power T&D orders valued Rs 1,376 crores. Shares of L&T were up 1%.

On the losing side, BHEL, GAIL, Maruti Suzuki, Vedanta and HDFC slipped between 1-3%.

The government on Wednesday announced an 18 per cent reduction in the price of domestic natural gas to $3.82 per unit from $4.66 a unit, in line with the decline in the global gas prices.

Maruti Suzuki India dipped 2% at Rs 4,582, falling 3% from its intra-day high of Rs 4,721 on the NSE, after the carmaker reported 3.7% year-on-year (Y-o-Y) growth in sales for the month of September.

Vedanta is looking at options to source alumina from the domestic market to cut its dependence on high cost alumina imports.

M&M ended lower by almost 1% after reporting 5% decline in the total sales at 42,848 vehicles in September.

Mortgage lender Housing Development Finance Corp (HDFC)’s offering simultaneous issue of non-convertible debenture (NCDs) and warrants will open for book building on Thursday.

The housing finance company is raising money up to Rs 5,000 crore. Shares of HDFC were up almost 2%.

SMART MOVERS

Indian Metals & Ferro Alloys was locked in 20% upper circuit at Rs 156 on the National Stock Exchange (NSE) after the company said that the State Pollution Control Board (SPCB) has issued 'Consent to Operate' for the company's Sukinda & Mahagiri Chromite Mines valid till March 31, 2016 Ashok Leyland was up over 2% at Rs 94 after the company announced robust sales in September 2015 compared to the same month last year.

Shares of Reliance Communications (RCom) rallied 10% in two days after the company stated that it has plans to join hands with Mukesh Ambani led Reliance Jio Infocomm to offer fourth-generation (4G) services via spectrum sharing and trading route in the 800-850 Mhz band.

HCL Technologies dipped 13% to Rs 856 on the NSE after the information technology services company has given a pre-quarter guidance indicating that revenues to be reported in US dollar to have an adverse impact of 80bps on account of sharp depreciation of multiple currencies against US dollar.

Shares of IDFC were trading at Rs 70.35 on the NSE after the stock turned ex-demerger of IDFC Bank from IDFC today. The stock was closed at Rs 141 (pre-demerger) on Wednesday.