Live: Sensex erases gains but Hindalco is on fire

12:45 pm Indian equity markets erased all morning gains and currently in the redon profit-taking after earlier touching its highest intraday level since November 2010.

While the BSE Sensex is down0.32 percent at 20815, Nifty is down 0.19 percent at 6177.

However,Hindalco Industries Ltd gained 3 percent after Prime Minister Manmohan Singh’s office says he is satisfied with the outcome of the process of allocating coal blocks to certain companies, dealers say.Hindalco had said earlier this month it was being investigated for the coal block allocation case.

Federal Bank surged nearly 10 percent after reporting strong Q2 earnings. Asset quality improved with gross bad loans falling and margins rising 20 basis points to 3.3 percent. The management in a boardroom said that they expect to maintain margins at current level.

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UltraTech Cement recovered from early falls and is up 0.3 percent. The stock fell as much as 4.6 percent after it posted a 52 percent fall in net profit for the July-September quarter.

Sensex rally may fade in 1 week, cherry pick good Q2 performers

10:30 am Indian markets are volatile this morning. After opening in the green, equity markets erased the gains and plunged into red.

At 10:30 am, the markets were or less flat. The BSE Sensex was down7 points at 20875, while Nifty was down 6 points at 6192.

Most analysts believe that even thoughvaluations of most largecap companies look stretched, liquidity-driven rally may push them to higher levels.

Rajat Rajgarhia, head-Research, Motilal Oswal Securities believes the Indian market is currently favouring the earnings momentum and so, one must pick stocks of companies that have performed well in Q2 (July-Sep) as that will push the market higher.

“Right now it is very important to be lot stock specific because markets are just respecting wherever the earnings momentum is picking up so this year technology, healthcare, telecom, consumer, wherever the earnings growth has been double digit plus, technology in particular, 30 percent plus earnings growth, those sectors have done well,” he said in an interview with CNBC-TV18.

Rajgarhia further said that election momentum in the next one and half months at the state level will also push the market higher.

However,Mohammed Kazmi, emerging market research, RBS believes thecurrent market rally is likely to last just one more week

He expects the inflows into the Indian shares to continue for a couple of weeks more.

However, emerging markets are on a strong wicket as far as inflows are concerned. “Inflows into emerging markets will continue this year as growth picks up. There is room for huge inflows into emerging market equities,” he said in an interview with CNBC-TV18.

Sensex inches away from 21000; foreign liquidity fuels rally

9:30 am Indian markets opened in the green this morningafter touching a three-year high on Friday on the back of strong earning from technology sector and foreign liquidity. US Fed tapering will likely be delayed and that’s prompting global investors to increase allocations to riskier assets and Indian equities are likely beneficiary of that.

The BSE Sensex opened about a quarter of a percent higher at 20919, while the Nifty was up 0.15 percent at 6197.

L&T is the biggest winner, its shares are up 3 percent after reporting better-than-expected results on Friday evening. The Q2 net profit was Rs 978 crore against expectations of Rs 890 crore.

UltraTech, however, is down around 3 percent after reporting weak earnings on Saturday. The cement maker’s profit more than halved, it biggest drop since 2010.The company reported on Saturday net profit of Rs 260 crore for the quarter ended September 30, falling short of market estimates of Rs 410 crore.

The rupee opened at 61.37 against the USD after closing at 61.27 on Friday.

“There is still a little more juice left in the markets,” said Saurabh Mukherjee of Ambit Capital. He excepts another 5 percent upside to the markets between now and the end of 2013, which will be fueled by a liquidity driven rally. And given the good run in stocks, Mukherjee thinks it is a good time to book profit in stocks.

While Ambit retains 21,000 as the year-end target of for the Sensex, the brokerage believes it can even touch 25000 in the long term.

Globally, too the cues are positive.The US markets closed out the week in positive territory with the S&P 500 extending gains to a new high. The Wall Street cheered some better-than-expected corporate earnings. Google soared nearly 14 percent to top $1000 a share for the first time.

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Asian markets are mixed. Japan’s Nikkei is up 0.6% and Hong Kong’s Hang Seng has gained half a percent. South Korea’s Kospi is marginally lower while China’s Shanghai is a tad higher. Chinese manufacturing activity, Japanese inflation numbers, South Korea’s gross domestic product (GDP) data, September US non-farm payrolls report, Taiwan September export numbers and Singapore inflation data are among the data on tap.

“The start is set to be strong with the Nifty set to cross the 6200 mark with relative ease.The recent run-up has again been too fast to absorb and there is every chance of a quick round of profit-booking setting in,” said IIFL in a report.

Markets will take cues from September quarter earnings, with HDFC and ICICI Bank among the blue-chips set to report results this week, and investors would also closely track overseas fund flow movement for further direction.

Besides, the next major event on the domestic front is the Reserve Bank of India’s monetary policy review on October 29.

“Markets will continue to be volatile as elections arealso approaching and RBI’s monetary policy is slated later inthe month. In coming sessions, 6,050 shall be crucial decidinglevel for Nifty in near-term, and the index is likely towitness further buying above this level,” said Nidhi Saraswat,

Senior Research Analyst, Bonanza Portfolio.

The BSE Sensex is likelyto hit the much awaited psychological level of 21,000 thisDiwali, driven by robust foreign fund inflow, good quarterlyearnings from corporates so far and favourable global cues,say analysts.

The Sensex touched its one-year high level of 20,932.23on Friday triggered by global cues as concerns about the UStapering eased and China’s economic growth picked up.

The 30-stock index is 323.88 points away from its all-time peak of 21,206.77 hit on January 10, 2008.

Meanwhile, foreign institutional investors (FIIs), themain driver of the Indian stock market, have poured in nearlyRs 7,000 crore ($1.12 billion) in the domestic equitymarket since the beginning of this month.With this, the total foreign investment in the Indianstock market has reached Rs 80,174 crore ($14.77 billion)

so far in 2013, as per data available with market regulatorSebi.

“Markets rose sharply on Friday, buoyed by thepostponement of the debt ceiling issue and on likelyexpectations that the Fed will not taper the stimulus

programme in its next meeting, pending final resolution of thedebt ceiling programme,” said Dipen Shah, Head of PrivateClient Group Research at Kotak Securities.

The Sensex has gained 1,365.74 points or 6.99 percent sofar this month to 20,882.89.

According to analysts, the way things are lookingpositive for the country and the liquidity force will takemarkets to higher levels.

“The Sensex is likely to remain strong in near-term. Thekind of inflows and liquidity that we are seeing indicatesthat the Sensex may scale new highs in the days to come. TheSensex is likely to touch its all-time high by Diwali as theglobal set-up is good, results by Indian Inc is reasonablydecent and most importantly FII inflows are robust,” saidParas Bothra, Research Head at Ashika Stock Brokers.

The sentiment in the market last week was boosted onspeculation that Federal Reserve could maintain monetarystimulus next year on concerns that the 16-day partial USgovernment shutdown may curb growth in the world’s largesteconomy.

With inputs from PTI