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Thursday 12 February 2015

Sensex, Nifty open firm; SBI gains 2%, BHEL drags 5%

9:55 am Market outlook: Aggregate earnings of Sensex companies for FY16 is likely to see a downgrade, says Rajat Rajgarhia, MD-Institutional Equities, Motilal Oswal Securities.

On the positive side, earnings growth for next year could be in excess of 15 percent, says Rajgarhia in interview the sidelines of the Make in India conference hosted by Motilal Oswal.

He does not see any earnings recovery for the next couple of quarters, and sees FY15 earnings growing 5 percent against 10-11 percent estimated earlier.

At the broader level, earnings in the December quarter are down 3-5 percent, he says.

9:45 am Result poll: SBI will announce its third quarter earnings on Friday. Profit for the quarter is expected to jump 45.7 percent year-on-year to Rs 3,254 crore supported by treasury income, fee income and operating profit. The sharp rise in profitability is also on account of low base in the year-ago period. Profit in Q3FY14 fell 34 percent Y-o-Y to Rs 2,234 crore as provisions jumped 56 percent Y-o-Y to Rs 4,150 crore. Net interest income, the difference between interest earned and interest expended, may increase 8 percent to Rs 13,654 crore during October-December quarter from Rs 12,640 crore in same quarter last fiscal.

9:30 am Brokerages on BHEL: Most brokerages are negative on the stock and lowered target price. However, the stock closed with a gain of 5 percent in yesterday’s trade even after the earnings were announced before market closing.

Due to extremely weak December quarter, JP Morgan is underweight on BHEL, cutting target price by 25 percent at Rs 200. The brokerage has also reduced its FY15 and FY16 EPS estimates by 27 percent and 13 percent respectively on the back of severe execution challenges and possibility of deferral of order prospects. It states that either BHEL’s order book is slow moving or non-moving.

BHEL’s outstanding order book was at Rs 1,03,900 crore as on December 2014, increased marginally from Rs 1,03,700 crore in Q2FY15 and Rs 1,00,600 crore in Q3FY14.

Don't miss: New CPI moves up to 5.11% in Jan; Dec IIP slows to 1.7%   

The market has opened higher. The Sensex is up 71.07 points at 28876.17 and the Nifty is up 29.95 points at 8741.50. About 464 shares have advanced, 144 shares declined, and 136 shares are unchanged.

SBI is up 2 percent while ICICI Bank, Hero, Dr Reddy's Labs, and Sun Pharma. BHEL is down 5 percent and Coal India, ONGC, Infosys and M&M are losers in the Sensex.

The Indian rupee gained in early trade. It rose 18 paise to 62.13 per dollar against 62.31 Thursday.The dollar drops across the board after weaker-than-expected US economic data.

Pramit Brahmbhatt of Veracity said, “Today local indices are expected to trade strong as Asian markets have already opened in green taking cues from the news of a ceasefire in Ukraine. Rupee is also expected to appreciate with the support of strong local equities. Range for the day is seen between 61.90-62.70/dollar.”
Meanwhile, Asia was mixed in morning trade as a stronger yen curbed risk appetite in Japan.

The stocks in the US closed sharply higher as investors cheered a cease-fire agreement between Russia and Ukraine, amid firming oil prices and strong earnings reports. The Nasdaq closed up 1.18 percent to 4,857 its highest level since march 2000.

On the economic data front in the US, retail sales for January came in weaker than expected, down 0.8 percent and near December’s 0.9 percent decline. Jobless claims were at 304,000 last week, more than expected and an increase of 25,000 from last week

In Europe equities ended higher with investors cheering a peace deal agreed between Ukraine and Russia. The German DAX - which is exposed to the Russian market - ended up 1.5 percent higher. A slew of corporate earnings also helped to boost sentiment in the region.

In commodities, Nymex Crude rose above USD 51 per barrel as news of deeper industry spending cuts and a sinking u-s dollar revived buying. Brent crude rises to USD 59 per barrel.

From precious metals space, gold remained largely unchanged, hovering around USD 1220 an ounce. The metal is headed for its third weekly drop. More information please visit this site www.bigprofitbuzz.com

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