Today’s Market Summarised

Nifty opened the day with a gap-up at 15,242 and struggled to sustain it. The index consolidated around the 15,240 line we had drawn yesterday with IT stocks going up and private banks moving down. Just after 11 am, even IT stocks came under selling pressure and Nifty was dragged down. The index broke yesterday’s low with ease and took support at last Friday’s low near 15,080. Nifty then consolidated to close at 15,118, down 89 points or 0.59% for the day.

Bank Nifty opened with a gap-up boosted by SBI and HDFC Bank opening with gaps. A clear trend was seen in the index with respect being given to yesterday’s low of 35,760. Once this line was broken strongly, almost every bank in the index fell and took Bank Nifty nearly 750 points down from day-high. Bank Nifty closed the day at 36,587, down 323 points or 0.88%.

Nifty PSU Banks has closed as the top gainer, now for the third day in a row, gaining 5.6% today. Nifty IT and Nifty Metal closed over 1% in the green, while Nifty Auto and Fin Nifty closed more than 1% in the red.

European markets are all trading mixed, just like other Asian markets. A negative bias is seen all around.

News Picks

Public Sector Companies were generally the outperformers of the day. Even if you look at Nifty, 7 out of top 10 gainers were PSUs. Read on for possible reason why.

Public sector banks continued their rally in hopes of privatisation. No stock in the Nifty PSU Bank index closed in the red today with multiple small bank stocks even hitting upper circuits. Bank of Baroda jumped 13.6% up. SBI opened with a huge gap-up as Morgan Stanley set a target of Rs 600 for the stock.

PM Narendra Modi had announced in a speech yesterday that investments in the gas sector to promote ‘One Nation One Gas Grid’ project. He had also mentioned natural gas will be brought under the GST Regime, thereby even reducing prices. Stocks related to gas flew, including ONGC(up 8.26%) who closed as Nifty’s top gainer.

Shares of GAIL jumped 6.5%, with Indraprastha Gas, Mahanagar Gas, Indraprastha Gas and even Petronet LNG shares jumped up.

PowerGrid continued its dream rally after the budget, again breaking many technical levels. NTPC shares gained 4% but took resistance at a good zone and 104-108 can be watched in the coming days.

Shares of petroleum retailers shares jumped up in the day, as PM Modi tried to defend the high prices of petroleum by blaming previous governments for not cutting import dependency. Petrol prices had also increased across the country. IOC, HindPetrol and BPCL gained 4-5% in the day.

Even as markets fell, metal shares held strong. HindCopper went up 12.28%, followed by SAIL at 3.5%. Private companies did not perform well.

Shares of Naukri jumped back 8%, just like we had hoped it would last day. Click here to read more about the company. IT companies also performed generally well in the day, after many days of losses. Infosys was strong in the morning as the company is closing a $1.5 Billion(~Rs 10,500 crore) with Pfizer.

Shares of HDFC and HDFC Bank were once again heavily sold in the day, with both of them closing nearly 2% down.

Remember GMM Pfaudler? Well, the stock has gone up nearly 17% today after jumping 5% up yesterday. The company had acquired a majority stake in the global business of Pfaudler Inc. Check out this article about the shares meteoric rise, and controversies.

Shares of Insurance Companies jumped up in the day as reports of them increasing premiums on life insurance plans hit the market. New India Assurance jumped 20%. Caught an opportunity in SBI Life today on our watchlist today!

Markets Ahead

One reason why all the top gainers today were PSUs could be that there were rumours regarding centre getting higher dividend incomes from profitable PSUs this financial year. This will help the government meet its growing need for funds. Finance Ministry also asked the RBI outrightly for higher dividend in the upcoming financial year, according to sources in Business Standard.

So as these government companies are likely to declare higher than usual dividends, investors piled up to buy more stocks and hence took them up. This was the reason why today’s most gainers(even check Nifty Metal gainers) were government-run. This could also be the reason why shares like ONGC, GAIL, SBI and PowerGrid went up in the last few days as insiders would have had this news.

Infosys pushed Nifty up by 9 points, closely followed by Asian Paints and ONGC.

HDFC and HDFC Bank did not reverse but fell further in the day. These two companies alone pulled Nifty down 53 points today. Hoping they will be the ones stopping the next round of falls. This will probably happen only as global markets turn green, as they are FII favourite stocks. On that note, Foreign Institutions would also have had less participation in the market leading to Nifty’s fall. Or did the smart money just move all-in to PSUs which have low weightages on many indices? Let’s wait for the NSE data to come out in the evening.

Nifty and Bank Nifty have clearly broken out of there uptrends. Let’s hope 15,000 is respected by Nifty or we may have to see further fall in the index even up to 14,500 levels.

Catch you all on The Stock Market Show tonight!