Sensex, Nifty off opening highs; ICICI Bank, InterGlobe rally

Asian stocks recoup morning losses to trade higher with Japan’s Nikkei rising over half a percent.

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Technical Outlook by Dharmesh Shah of ICICIDirect.

The lack of faster retracement on either side makes us believe that Nifty would extend ongoing consolidation in the range of 10,930-10,650 over the next couple of weeks.

We believe that this consolidation would form a higher base which would set the stage for testing the upper band of the current consolidation levels placed around 10,930.

Structurally, Nifty midcap and small cap have approached their key value area, as both have filled the positive gap (recorded on 7th June) and retraced 61.8 percent of their respective recent up move along with oversold placement of stochastic indicator.

Thus, we believe the Nifty midcap and small cap are approaching their key value area being the placement of Hammer candle (witnessed on early June), signifying limited downside.

Thus investors should focus on accumulating quality beaten down stocks in a staggered manner.

Market Update: The market is off its opening highs following mixed trade in Asian peers amid elevated trade tensions between the US and China.

The sectoral indices are also mixed in trade while the Nifty Midcap is trading flat.

ICICI Bank gained a percent after a media report indicated that the bank may appoint former Bank of Baroda CMD MD Mallya as a sucessor to the current ICICI Bank Chairman MK Sharma when his term ends on June 30.

Brokerage Call: Credit Suisse has maintained a neutral call on L&T Finance with a target of Rs 200 on the back of heightened provisioning requirements.

The global research firm said that the withdrawal of February 18 circular by the Reserve bank of India has resulted in faster recognition of NPAs.

It also said that while the management is targeting 60 percent provisioning cover, but the requirement could be higher as well. Going forward, the provisioning requirement for wholesale sector will be a drag. Adding to the impact would be a transition to Ind-AS accounting system as well.

Further, the pain points are the fact that nearly half of the firm’s pre-2012 stressed book of under construction power projects.

​Shares of InterGlobe Aviation gained around 6 percent in the morning trade as a relief rally was seen on the stock post the management’s clarification.

The company, in a filing to the exchanges, clarified that the management did not receive any summons from the Enforcement Directorate with respect to the FEMA violation case.

Its shares had fallen 8 percent to close at Rs 1,136.15 on Wednesday as investors turned cautious of summons by investigating agencies to its top management.

Source had told CNBC-TV18, the Enforcement Directorate has summoned the top management of the carrier in a case related to violations related to foreign exchange management act (FEMA).

Market Opening: Benchmark indices started off the day on a positive note Thursday, tracking positive Asian cues.

The 30-share BSE Sensex rose 92.13 points to 35,639.46 and the 50-share NSE Nifty gained 25.70 points at 10,797.70.

ICICI Bank gained 1 percent.

Nifty Midcap index rose 45 points.

InterGlobe Aviation, Adani Transmission, Adani Ports, Arvind, PFC, Havells, Jubilant Foodworks, NIIT Tech, PTC India Financial, CG Power, Delta Corp, Gruh Finance and Cummins India gained 1-3 percent.

Bank of Maharashtra, Opto Circuits, Ruchi Soya, Jindal Saw, Welspun Corp and Strides Shasun are under pressure.

Near-month dollar-rupee June contract on the NSE was at 68.13 in the previous session. June contract open interest declined 3.35% in the previous day, said ICICIdirect.

We expect the USD-INR to meet supply pressure at higher levels. Utilise upsides in the pair to initiate short positions, it added.

Stocks in News:

State Bank of India’s Managing Director B Sriram given additional charge of MD and CEO of IDBI Bank for three months.

International Finance Corporation to invest Rs 200 crore in Mahindra Lifespace Developers’ Jaipur Project.

InterGlobe Aviation clarified that it has not received summons from the Enforcement Directorate for FEMA violation.

Majesco selected by Singapore insurance company for distributing solutions.

Bayer-Monsanto takeover approved by Competition Commission of India.

Gayatri Projects’ EPC order worth Rs 1,111 crore cancelled by Uttar Pradesh government.

Adani Transmissions acquired 100 percent stake of REC subsidiary for Rs 17.93 crore.

Prabhat Telecom announced bonus issue at 1:5. Record date at June 29.

Axiscades Engineering Technologies signed joint venture pact with Assystem in energy and other sectors.

Market Pre-Opening: Benchmark indices were higher in pre-opening trade, tracking recovery in Asian peers from subdued trade.

The 30-share BSE Sensex gained 111.84 points at 35,659.17 and the 50-share NSE Nifty rose 35.80 points to 10,807.80.

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