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Wednesday, 18 March 2015

Fed outcome lifts Sensex 200 pts; banks rally, NTPC falls

9:45 am Buzzing: Shares of United Spirits jumped over 2 percent intraday on Thursday. CLSA retains buy rating on the stock with a target of Rs 4100 per share. The brokerage is positive on Indian spirits and USL remains its best play in the sector. The stock is up 36 percent in the past 3 months and CLSA feels it may remain range-bound in the near-term.

It says that addition of Diageo portfolio may further add to growth from Q1FY16. Over the next 12-15 months, USL plans to monetise some of the non-core assets to deleverage the balance sheet. “The revenue growth in recent quarters was impacted due to price cuts in brands like Royal Challenge in north but this is now in the base and revenue growth should now improve,” it states in a report.

However, CLSA also points out that concerns on wet goods’ prices persists while glass prices are stable. Over the next 3-4 years, EBITDA margins should rise to high double digits even while higher advertising & promotions (A&P) spends would moderate FY16 margins to 8-10 percent.

9:30 am Market outlook: Harendra Kumar, head of institutional broking and global economy at Elara Capital believes if the market continues to stay higher, long-term investors and traders will look to book profits and the market will go into a consolidation phase. According to Kumar, the market will once again become a buy once the Nifty hits 8400-odd levels. He recommends investors to sell on every rally. Inflows into India can remain flattish, he says and hence is worried on financials in the interim. Kumar says the resumption of mining activity is a big positive for the Indian economy. He is bullish on Sesa Sterlite due to resumption on mining in Goa.

The market rallied in early trade following the dovish statement from the US Federal Reserve. The Sensex rose 187.74 points to 28809.86 and the Nifty rose 47.65 points to 8733.55. About 617 shares have advanced, 102 shares declined, and 81 shares are unchanged on the BSE

The FOMC last night removed the word ‘patient’ from the text as expected, opening the door for rate increases, bolstering the bullish tone as it lowered its growth and inflation forecast and said hikes won't start until the labourmarket has healed further and the 2 percent inflation target looks achievable.

The Fed also noted that the change in rate guidance did not mean the FOMC had decided on the timing of a hike. Jannet Yellen added that the timing of initial increase in target range will be data dependant.

Back home, banking & financials, capital goods, auto, pharma and metals stocks gained. However, NTPC was the only loser on Sensex, down 1.4 percent.

The Indian rupee gained in the early trade following outcome of the Federal Reserve two-day meeting. The currency has opened higher by 31 paise at 62.38 per dollar against 62.69 a dollar Wednesday.

Mohan Shenoi of Kotak Mahindra Bank said, “The Fed outcome has halted the dollar rally against major currencies along with stock and bond market rally. Markets in India are expected to follow suit. The rupee is expected to trade today in a range of 62.35-62.70/USD.

Globally, Asian stocks were mixed as investors reacted to a dovish statement from the US Federal Reserve. Dollar had its worst day versus the yen since December 2014. The Kospi opened up to a near six-month high led by brokerages and IT-related shares.

Stocks in the US closed sharply higher as investors cheered the Fed's statement. Dow Jones recovered a 150-point loss to close above 18,000. The CBOEVIX, fell more than 10 percent to trade below 14.

In Europe, equities closed mixed as investors digested the annual UK Budget statement in which finance minister George Osborne upped his economic growth forecast for 2016 to 2.3 percent but revised down growth figures for last year. Oil and gold prices gained after the Fed removed 'patient' from its statement. More information please visit this site

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