Auto shines in a lacklustre market; banks, financials bleed

After a rangebound session, Indian equity benchmark Sensex and Nifty ended mixed on September 5 as investors remained cautious in the absence of any fresh positive trigger for the market at home.

The market remained torn today, supported by positive global cues and rupee’s rise against the US dollar, and pressured by losses in shares of bank and financial majors after the Reserve Bank of India (RBI) made it mandatory for the banks to link all new floating-rate loans to specified external benchmarks.

Experts say the net interest margin (NIM) of banks will be impacted by this move, at a time when credit cost due to their asset quality is increasing.

Sensex closed the day 80 points, or 0.22 percent, down at 36,644.42, with 18 stocks in the green and 12 in the red.

The Nifty index settled 3 points up at 10,847.90. Among the 50 stocks in the index, 34 ended higher.

BSE Midcap and Smallcap indices outperformed benchmark Sensex, ending 0.15 percent and 0.72 percent up, respectively.

Barring BSE Realty (down 1.77 percent), Finance (down 0.99 percent) and Bankex (down 0.91 percent), all sectoral indices closed the day in positive. Indices of oil & gas, metal, auto and utilities closed over 2 percent higher.

Big names from the IT sector, including Tata Consultancy Services (down 1.35 percent), HCL Technologies (down 1.26 percent), Tech Mahindra (down 1.07 percent) and Wipro (down 0.21 percent) declined amid rupee’s rise against the dollar. Infosys, however, bucked the trend and closed the day with a gain of 1.60 percent.

Auto majors, including Tata Motors (up 7.81 percent), Maruti Suzuki (up 2.41 percent), Mahindra & Mahindra (up 2.23 percent), Bajaj Auto (up 1.62 percent) and Hero MotoCorp (up 1.54 percent) logged healthy gains on hopes of a GST rate cut.

Top news of the day:

Prime Minister Narendra Modi has announced a $ 1 billion line of credit for the development of the Far East of Russia.

FIRs have been lodged against National Register of Citizens (NRC) coordinator Prateek Hajela, accusing him of deliberately excluding genuine Indian citizens from the updated citizenship roll, The Hindu has reported.

Union Minister Nitin Gadkari has said that the government has no plan to ban petrol and diesel vehicles.

Foreign direct investment (FDI) into India grew by 28 percent to $ 16.33 billion during the first quarter of the current fiscal, according to government data.

Congress leader P Chidambaram got some relief as a Delhi court granted bail to him and his son Karti in the Aircel-Maxis case. However, the Supreme Court refused to grant him pre-arrest bail in the INX Media case.

Stocks in news:

Shares of Tata Motors surged 7.81 percent to Rs 118.05 on BSE even as the company said its August JLR UK sales dropped 20.8 percent at 2,726 units against 3,444 units in the same period last year.

“A double bottom formation is seen on the chart at the levels of 107 while largely the trend remains extremely bearish. There may be some short-covering in prices but we believe it would take a lot of evidence to play a contrarian bet at this point in time. One should avoid Tata motors at present,” said Mustafa Nadeem, CEO, Epic Research.

Shares of Yes Bank jumped 4.12 percent to Rs 61.90 after media reports suggested the private lender settled a case with markets regulator SEBI which was related to the alleged disclosure lapses to the exchanges.

Shares of Laurus Labs rose 3.06 percent to Rs 336.50 after the company received an establishment inspection report from the US Food and Drug Administration (USFDA).

Shares of Power Grid Corporation of India added 1.27 percent to close at Rs 199.35, a day after the company was declared successful bidder for projects in Madhya Pradesh.

Shares of Lupin jumped 3.24 percent to Rs 765.55 after global research firm Morgan Stanley maintained overweight call on the stock with the target of Rs 1,003 per share.

Shares of Bajaj Finance climbed 1.38 percent to Rs 3295 after media reports suggested the company is planning $ 1 billion share sale by December.

Shares of Punjab National Bank (PNB) climbed 2 percent to Rs 61.10 after the global rating agency Moody’s Investors Service said it has affirmed the local and foreign currency deposit ratings of PNB at Ba1/NP, and affirmed the bank’s baseline credit assessments (BCAs).

Global update:

European shares rose for a second straight day after China said it would hold trade talks with the United States, raising hopes that the two countries will make progress on a dispute that has put major economies at risk of recession, reported Reuters.

Asian markets ended higher on September 5. Shanghai Composite closed 0.96 percent up at 2,985.86, Nikkei gained 2.12 percent and Kospi rose 0.82 percent at 2,004.75.

Technical view on the market:

The Nifty index made a ‘Doji’ patterns on the daily candlestick charts. The index witnessed profit-taking at higher levels near 5-days EMA but found support near 10,800 levels.

“For the next few days, Nifty should trade in the range of 10,770 and 10,870. Below 10,770, Nifty would correct to 10,730 or 10,630. Above 10,870, Nifty could rally to 10,970 or 11,040. Technically, we are of the view that index is at an inflection level and major activity on the higher side is more likely in the near-term,” said Shrikant Chouhan, Senior Vice-President – Equity Technical Research at Kotak Securities.Get access to India’s fastest growing financial subscriptions service Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the website or mobile app.