L&T Lifts Market Sentiment

Erasing opening losses, the Indian markets today managed to close in the black. The Sensex closed higher by 0.58% while the Nifty closed up 0.53%. Heavy engineering and capital goods major, L&Ts September quarter results helped lift the market sentiment after it had opened on a weaker note earlier this morning.

Among other Asian markets, the Hang Seng closed with up 0.67% while the Nikkei was almost flat. The Shanghai Composite closed the day with a 0.21% rise. Earlier, Japan posted dismal trade figures for the month of September. Not in the last 30 years had it reported such bad numbers in the month of September.

In Europe the Spanish Prime Minister Mariano Rajoy’s win in elections in his home region was seen as a positive by the markets. The European markets are however concerned on the corporate earnings front.  As of now, the FTSE and the CAC are trading with small gains while the DAX is flat in trades.

 As of now, Dow Futures are signaling a positive bias for the US market. On the earnings front, tech giant Yahoo will be reporting its September quarter earnings today and this will be keenly watched for getting some cues on the corporate performance front.

Back home, among the sectoral indices, the BSE IT index kept up its upward move intact till the end and was followed by the BSE CG Index which was up 1.39 per cent and the BSE HC Index which up 0.9%. Among other sectoral indices, the BSE Teck, BSE Oil & Gas and the BSE Power Index were also trading in the green. The BSE FMCG Index along with the BSE CD Index was among losers, with each reporting a 0.6% intraday loss.

Amongst Sensex stocks, Capital goods major L&T hit a fresh high on its robust September quarter numbers beating street estimates. The company achieved a 42% growth in the net profit to Rs 1137 crore.  L&Ts results changed the mood for capital goods stocks with most of them ending in the positive. After hitting an intraday low of Rs 238.25, shares of BHEL closed at Rs 242.20. Housing finance giant HDFC, also posted a 19% jump in its net profit to Rs 1151 crore. Shares of HDFC however declined by 0.2% as it disappointed the street.

IT giant TCS closed up by 2% riding on the positive sentiment that its September quarter results have managed to put in place. Many analysts have increased the target price on this stock due to which the it saw some good gains.  Gaining strength from where it was trading during the afternoon session Dr Reddy’s Laboratories (DRL) ended up 1.2% triggered by news that it was buying out European Pharma Company OctoPlus. DRL has made a cash offer to buy out the company which is at a premium of 30% to the market capitalization of OctoPlus.

Among others, NTPC, HDFC Bank, ICICI Bank gained over 1.5% while Jindal Steel and Sterlite Industries shed over 1%. Hero Motocorp has turned volatile ahead of its results tomorrow, shedding 1% by day end today. Meanwhile, Bajaj Auto jumped 0.7% after the management gave out a better festive season guidance.

Kingfisher Airlines tanked 4.8% by day end after a very weak opening and dull day throughout primarily driven by DGCAs suspension of its license on Saturday. Bank of Baroda ended with a 1.7% decline over the day.

Meanwhile, all eyes are set on the RBI monetary policy due on 3oth October 2012. HSBC has said that it expects RBI to maintain the repo rate at the current levels and to cut the CRR. RBI Deputy Governor Anand Sinha however said that the central bank is looking at changing the current SLR guidelines giving a hint that another SLR cut may just be around the corner.

The total market breadth remained mixed with 1360 advances against 1472 declines.

Going ahead in the week we expect the market to remain volatile due to the October series expiry as well as due to the earning season which is already underway.