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Sunday, 12 April 2015

Sensex, Nifty consolidate; Midcap, Smallcap extend uptrend

10:50am HCL Tech on brokerage radar: Brokerage firm UBS has retained its neutral rating on HCL Technologies, citing strong dollar revenue growth. It has raised its target price for the stock to Rs 1100 from Rs 875.

Going ahead, UBS expects HCL to report 13 percent YoY (year-on-year) growth in dollar revenue in FY16. This in turn will make it the fastest growing large-cap India-listed IT company, it adds.

"Stronger than expected revenue growth reported in 2Q FY15 has assuaged growing concerns on tapering revenue growth. The company continues to operate well above its intended margin target of 21-22 percent," UBS said in a report.

With focus shifting to engineering services as the next growth driver, the stock is expected to see good support at current valuation, UBS added.

10:20am Crude Update: Oil prices inched up today following a strong session on Friday, as financial traders increased their bets on higher prices amid a slowdown in US drilling, but analysts warned fundamentals remained weak.

Front-month Brent crude futures were trading at USD 57.89 a barrel, up 2 cents since their last settlement, while US crude was up 14 cents at USD 51.78.

Many money investors are calling a bottom in oil prices, as speculators in US crude oil futures and options raised net long positions by some 52 million barrels in the week to April 7, data from the US Commodity Futures Trading Commission showed. That was the biggest one-week rise in bullish bets since 2011, according to CFTC data.

Reuters data shows that open interest in WTI strike options for USD 60, USD 70, USD 80, USD 90 per barrel on Nymex has risen steadily since the beginning of the year, showing that many traders are betting on rising prices. Even options volumes for USD 100 a barrel have increased by almost 20 percent this year.

10:00am Market Check

The market remained in a consolidation mode ahead of January-March quarter earnings that will be kicked off with TCS and IndusInd Bank numbers on April 16. The Sensex rose 19.64 points to 28899.02 while the Nifty declined 1.25 points to 8779.10.

The BSE Midcap and Smallcap indices continued to outperform benchmarks, up 0.7-1 percent. More than two shares advanced for every share declining on the Bombay Stock Exchange.

The current rally in the market is on expectation of things improving in the second half of the year, says Krishna Kumar Karwa, MD, Emkay Global Financial Services. He, however, does not see much in terms of earnings in the fourth quarter. Sentiment and expectation are the reasons behind the robust FII and domestic flows seen in recent times, he adds.

Karwa believes it is possible to see the market take out new highs before the first half of FY15. But for it to sustain, it has to be supported by earnings growth, he cautions.

Shares of L&T, Sun Pharma, HUL, Bharti Airtel, Tata Steel and BHEL gained 1-1.5 percent while Tata Motors, Infosys, HDFC Bank, TCS, M&M and Dr Reddy's Labs fell 0.5-1 percent. For More information please visit this site

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