Profit booking at higher levels, pharma, defence stocks shine

R Indian markets witnessed mild profit-booking at higher levels on August 10 but closed comfortably in the green, as the S&P BSE Sensex rallied more than 100 points while the Nifty50 went past 11,250.

The S&P BSE Sensex ended the day 141 points higher at 38,182, while the Nifty50 rose 56 points to close at 11,270.

The broader markets outperformed the benchmarks. The S&P BSE Midcap index rose 1.4 percent, while the S&P BSE Smallcap index ended with gains of 1.47 percent.

Pharma stocks remained in the limelight as Dr Reddy’s (up 2.5 percent), Divi’s Laboratories (up 11 percent), Torrent Pharma (up 2.3 percent), Ipca Laboratories (up 7 percent), Lupin (up 8 percent), and Cipla (up 9 percent) hit a new 52-week high.

Defence stocks rallied after the ministry came out with a list of 101 items that will no longer be imported. Among Sensex constitutents, L&T was the top gainer, up nearly 5 percent.

“Sectoral news flow boosted positivity in the Indian markets, with the pharma index leading the gains. The gains were news-driven, with earnings results and government actions accounting for sectoral gains,” Vinod Nair, Head of Research at Geojit Financial Services told .

“Earnings results of select pharma companies drove gains in the sector while government actions to boost domestic defence productions helped gains in defence stocks. With valuations are going high, investors are advised to remain cautious and nimble with their investments,” he said.

Sectorally, action was seen in healthcare, capital goods, realty, industrials, and utilities, while profit-taking was visible in energy and oil & gas stocks.

Top Nifty gainers included Tata Motors, M&M, L&T and Cipla.

Top Nifty losers included RIL, Asian Paints and Eicher Motors.

Stocks & Sectors

Sectorally, the S&P BSE Healthcare index rose 4.6 percent followed by the S&P BSE Capital Goods index that was up 3.3 percent and the S&P BSE Realty index closed with gains of 2.7 percent.

Volume spike of more than 100 percent was seen in stocks like BHEL, Dabur India, Divi’s Laboratories, Amara Raja Batteries, and Container Corp.

Long buildup was seen in stocks like Bharat Forge, Motherson Sumi and Cipla.

Short buildup was seen in stocks like Container Corp, Bata India, and Bajaj Finance.

More than 200 stocks on the BSE hit their fresh 52-week high. Among them were Bharat Rasayan, Wabco India, SRF, Info Edge and VST Tillers.

Stocks in news

Cipla stock jumped almost 10 percent after the company reported its June quarter earnings after the market hours on August 7.

Tejas Networks shares jumped 5 percent after the company bagged a Rs 66-crore order from L&T Construction.

IPCA Laboratories stock jumped over 7 percent after the company reported a consolidated net profit of Rs 445.7 crore against Rs 129.4 crore YoY.

Cochin Shipyard share price gained over 3 percent as the company posted a 65 percent YoY fall in its consolidated net profit at Rs 41.4 crore against Rs 119 crore.

Shipping Corporation Of India stock price jumped almost 7 percent after the company reported a net profit of Rs 336.87 crore in the June quarter against a net loss of Rs 28.90 crore in June 2019.

Technical View

The Nifty formed a Doji candle on the daily scale, indicating the absence of follow-up action at key resistance zones.

It has to continue to hold above 11,200 to witness an upmove towards recent swing highs of 11,341 then 11,500. On the downside, support exists at 11,150 then 11,100 zones, said Chandan Taparia of Motilal Oswal Financial Services Limited.