Tuesday, 21 February 2017

Sensex, Nifty may open slightly up; TCS could see profit booking

The market may look to build on the bullish momentum from previous sessions on Tuesday. Stocks to watch would be Ambuja Cements as well as TCS. The cement major posted strong earnings in December quarter, while TCS announced a major buyback of Rs 16,000 crore. 

The market on Tuesday may look to continue the momentum from its previous sessions in a truncated, expiry-laden week. The trend on SGX Nifty indicates a flat opening with a positive bias.

Asian markets were higher in early trade on Tuesday. The Nikkei was up nearly half a percent, while the Korean market was trading with smart gains—up over half a percent as well. The Taiwan index was marginally higher, while Straits was down 0.30 percent.

In Europe, markets finished Monday’s trade mostly higher, after investors digested a raft of earnings and economic data, while remaining watchful for any more details from US President Donald Trump regarding his economic policies. Gains in telecom and banks offset a big fall in Unilever, the focus in euro zone debt markets was on politics. Looking ahead for Tuesday would be the Euro zone PMI data for February, which should draw traders' attention.

In India, the market started the expiry week on a strong note, with the Nifty rising over five-month closing high on Monday. The rally was aided largely by TCS, Infosys and HDFC Bank. GST Council's approval to a law for compensation to states as well as positive global cues supported the market that gained strength in afternoon trade after having consolidated in the morning.

The 30-share BSE Sensex rose 192.83 points or 0.68 percent to 28661.58, the highest closing level since September 23, 2016. The 50-share NSE Nifty was up 57.50 points or 0.65 percent at 8879.20, the highest closing level since September 5.

Among stocks to watch on Tuesday would be TCS as well as Ambuja Cements. The Tata Group firm announced a massive share buyback of Rs 16,000 crore for over 5 crore equity shares just before market closing hours on Monday. The buyback offer constitutes 2.85 percent of total paid-up equity share capital. The buyback price has been set at Rs 2,850 per share, a 11 percent premium to the current market price.

“The buyback is proposed to be made from the shareholders of the Company on a proportionate basis under the tender offer route using the stock exchange mechanism in accordance with the provisions contained in the SEBI (Buy Back of Securities) Regulations, 1998 (hereinafter referred to as the "Buyback Regulations") and the Companies Act, 2013 and rules made thereunder,” TCS told stock exchanges. The promoters currently hold 73.33 percent stake in the company. Reacting to the development, the stock ended 4 percent higher on Monday.

New Tata Sons boss N Chandrasekaran will take over the reins at Bombay House on Tuesday. The biggest challenge that he would face is to rekindle growth as well as revive Tata’s weaker units.

Meanwhile, Ambuja Cements posted an operationally strong quarter on back of higher realisations and lower operating costs. The company’s net profit rose 60 percent to Rs 176 crore. On challenges, Deutsche Bank said that lack of volume growth remained a worry.

The euro was on the defensive - under pressure from fears that the French presidential election could upset the status quo, as rising anti-establishment sentiment surfaced after last year's Brexit and the US elections. Uncertainty over political developments and the timing of a US interest rate hike kept the dollar in check.

Crude prices inched higher as investor optimism over the effectiveness of producer cuts encouraged record bets on a sustained rally. However, growing US output and stubbornly high stockpiles kept price gains in check. Top OPEC exporter Saudi Arabia's crude oil shipments fell in December to 8.014 million barrels per day

Gold prices held steady on Monday as traders awaited further clues on the pace of interest rate rises from Federal Reserve officials due to speak this week. The heads of five regional US Federal Reserve banks are scheduled to speak before Friday.
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