Monday, 1 February 2016

Nifty hits 7600, Sensex firm; ICICI plunges, Lupin & Bharti up

HDFC Bank, Infosys, Lupin, Adani Ports, Wipro, Cipla, Bharti Airtel and BHEL were up 1-2 percent while ICICI Bank fell 3 percent.

10:40 am Market Update: The 50-share NSE Nifty touched 7600 level, up 24.55 points to 7588.10. The 30-share BSE Sensex rallied 72.54 points to 24943.23.

About 1445 shares advanced against 666 declining shares on the BSE.

10:20 am Morgan Stanley on SBI: Morgan Stanley is worried about State Bank of India 's bad loan and has reduced target price to Rs 115 per share, implying 36 percent downside. It has also cut earnings per share (EPS) by 28-35 percent. The brokerage feels that average return on equity (ROE) of 7 percent (first half of FY16-FY17) and high capital need will keep stock under pressure. It has an underweight rating on the stock. Shares of SBI fell 2 percent intraday.

The brokerage says that increasing bad loan formation may reflect RBI's action on non-performing loans taking credit costs to 175 basis points in F16/F17. "Following ICICI Bank's earnings, we are building in much higher NPL formation estimates for the SBI parent up at Rs 35000 crore for first half of FY16 from earlier Rs 15000 crore. We also expect about Rs 10000 crore of restructured loans to be classified as perennial restructuring - implying higher provisioning at 15 percent than the current 5 percent," Morgan Stanley says in a note.

Also read - Don't overstay your welcome in current bounceback, warns Udayan 

10:00 am Market Check

The market gained marginal strength amid volatility, aided by infra, HDFC group, technology and pharma stocks. However, banks and oil stocks were under pressure.

The 30-share BSE Sensex rose 62.88 points to 24933.57 and the 50-share NSE Nifty climbed 26.35 points to 7589.90. The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising 0.5 percent and 0.9 percent, respectively.

About two shares advanced for every share declining on the Bombay Stock Exchange.

Larsen & Toubro surged 4 percent following Q3 earnings. With maintaining outperform on stock and target of Rs 1469, Macquarie says given the investors concerns, broadly maintaining guidance is a positive outcome and stock is likely to see a bounce back.

HDFC Bank, Infosys, Lupin, Adani Ports, Wipro, Cipla, Bharti Airtel and BHEL were up 1-2 percent while ICICI Bank fell 3 percent.

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