Sensex, Nifty struggle; Tata Motors, Infosys lead decline3 min read . Updated: 24 Jan 2019, 03:59 PM IST
- Yes Bank shares surged after announcement of new CEO
- Heavyweights RIL and TCS supported the markets
Indian shares edged higher today, with heavyweights TCS and RIL leading the advance. But the broader markets were however under pressure with BSE midcap and small indices ending in the red. Investors remained cautious ahead of interim budget, to be presented next week. Uncertainty over the partial US government shutdown, slowing global economic growth and the yet-unresolved trade standoff between the United States and China also kept the sentiment muted in global markets. The Sensex ended 86 points higher at 36,195 while Nifty settled at 10,849, up 18 points.
Yes Bank shares surged 8% to ₹214 after the company announced Ravneet Singh Gill as its new CEO while RIL and TCS shares rose over 1%.
"Before the national election, markets are going to remain range-bound ... political risk is something foreign institutional investors will especially be wary about," said Sumit Pokharna, vice president, Kotak Securities.
"There is less participation in the market, as retail investors are wary now, having burnt their fingers in mid-caps which are hardly moving," added Pokharna.
Domestic brokerage retained Buy on ITC after the cigarette-to-FMCG major reported its third-quarter earnings. In a note the brokerage said: “We expect non-cigarette business to accelerate on expected margin expansion in FMCG, paper and Hotels business. ITC trades at 22.4xFY21 EPS, 35-40% discount to our coverage universe, which limits downside in the stock. We believe that stable cigarette taxation regime can accelerate volume growth and re-rate the stock. Retain "Buy" with SOTP based target price of Rs364."
Domestic brokerage Motilal Oswal has maintained Neutral on ITC with target price of ₹300. In the note the brokerage said: “Even after a year and half since the last GST hike, Cigarette EBIT growth does not seem to gain traction. We expect moderate 11.9% earnings CAGR over FY18-21. Due to the uncertain outlook around cigarettes (which accounts for 86% of EBIT), we maintain our Neutral rating with a target price of ₹300."
ITC Ltd, India's biggest cigarette maker, had posted a 3.85% rise in December-quarter profit. The Kolkata-based company, which also makes Sunfeast biscuits and Classmate stationery items, reported a jump of 14.9% in revenue from operations, while revenue from its cigarettes segment witnessed a 9.6% growth.
Shares of Ujjivan Financial Services rose 5% after the lender reported 54% increase in its consolidated December quarter profit to ₹45.20 crore due to higher loan growth and margins. Loan book stood at ₹9,249 crore, rising at 31.8%, helping net interest margin to settle at 11.8% in the reporting quarter. "The quarter was very good for us. Net profit rose to ₹45.2 crore on account of a 35% growth in disbursement at ₹2,885 crore," managing director and chief executive Ittira Davis said.
The European Central Bank is widely expected to stay on hold at its first monetary policy meeting of 2019 that ends later today, but may acknowledge a sharp slowdown in growth, raising the prospect that any further policy normalisation could be delayed. The ECB's meeting will come a day after the Bank of Japan cut its inflation forecasts on Wednesday but maintained its massive stimulus programme, with Governor Haruhiko Kuroda warning of growing risks to the economy from trade protectionism and faltering global demand.
Asian shares were muted today as worries about weakening global economic growth continued to make investors wary of riskier assets. Japan's Nikkei was last down 0.42% while markets in China and Korea remained higher. On Wall Street, all three major U.S. equity indexes closed in positive territory, with the Dow Jones Industrial Average booking the largest gains on upbeat quarterly results from IBM and other major firms. The S&P 500 gained 0.22%. But gains were capped by uncertainty over the partial U.S. government shutdown, slowing global economic growth and the yet-unresolved trade standoff between the United States and China.
White House economic adviser Kevin Hassett said in a CNN interview the US economy could see zero growth in the first three months if the partial government shutdown lasts for the whole quarter. On Wednesday, U.S. President Donald Trump said that the United States was doing well in trade talks with China, saying at a White House event that China "very much wants to make a deal."
Indian rupee was trading higher against the US dollar. Other Asian currencies also strengthened as dollar held steady amid optimism about improvements in the US-China trade relations. In early trade, the currency was trading at 71.22 a dollar, higher than its previous close of 71.33. The home currency opened at 71.26 a dollar.