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The rally in IT major Infosys could not provide the comfort cushion to the markets.
Benchmark indices ended lower, amid choppy trades, weighed down by selling pressure in Sun Pharma and FMCG shares even as Infosys rallied on encouraging first quarter earnings.
The barometer index, S&P BSE Sensex ended 238 points or 0.84% down at 28,182 levels and the CNX Nifty could not hold on to its psychological level of 8,600 slipping 74 points or 0.86% at 8,529 levels.
The broader markets, however, underperformed their larger peers with BSE Midcap and Smallcap indices down 1.4 -1.6% each.
The health of the markets was extremely weak with 1,883 declines against 947 advances on the BSE. The monsoon session of the Parliaments started on a rocky note, failing to impress the market participants.
The session, which will function for 3 weeks, is expected be volatile as the opposition likely to target the government over multiple scandals that erupted in the recent past.
However, the government would like to pass the key bills that include the rollout of GST Bill as well as the passage of the controversial Land Acquisition Bill.
Further, the India Meteorological Department (IMD) in its daily report said that the country has received 7% below Long Period Average (LPA) rainfall till date.
The progress in monsoon would be keenly watched by the traders and the central bank.
Meanwhile, the Foreign Portfolio Investors (FPI) were the net buyers to the tune of Rs. 714 crore as per provisional stock exchange data.
Rupee
The Indian rupee is quoting at 63.55, strengthening by 11 paise against the greenback.
Market outlook
"After two days of consolidation, benchmarks witnessed profit taking on Tuesday and lost close to a percent by the end.
In reaction to better than expected results from the IT major, Infosys ltd, the bias was initially on positive side; however, cautiousness among the participants with the beginning of the monsoon session in parliament and depreciation in currency capped upside in index.
As a result, index kept trading in a narrow range for most of the session but sudden decline in last one and half hour pushed the index in red.
Barring IT, all the sectoral indices closed in red and the market breadth was also reflecting the same bias," said Jayant Manglik, President, Retail Distribution, Religare Securities.
He further said, "We observed that the fall in index on Tuesday was accompanied by profit taking in Midcap and Smallcap segment.
At the same time, banking index was also underperforming and lost close to two percent. All this indicates lack of strength in benchmark at higher levels.
Having said that, Nifty has crucial support zone between 8380-8450 and we are closer to that zone so maintain positive bias till it uphold above these levels."
TRENDING STOCKS
The session was dominated by Information Technology, Pharma and FMCG majors. BSE IT index ended with 4.5% gains while BSE Healthcare tanked nearly 6%.
FMCG index dipped 1.6%. Other major indices on the BSE lost over 1%. Infosys, India’s second largest IT Company soared 11.3% on the Sensex after the company reported better-than-expected net profit and a robust volume growth for 2015-16.
Net profit for April-June 2015 was up 5% on a year-on-year basis at Rs 3,030 crore, against average analyst estimates of Rs 2,993 crore.
However, on a sequential basis profit was down 2.1%. The company reported a strong volume growth of 5.4% q-o-q, which is the highest in 19 quarters. Its peer Wipro ended nearly 2% up.
On the other end of the spectrum, Sun Pharma tanked over 15% after the drug maker issued a profit warning saying profit might be "adversely impacted" in financial year 2015-16 (FY16), owing to expenses related to its integration with Ranbaxy, as well as remedial action at plants under the scanner.
Other stocks from the pharma pack are also under pressure with Lupin losing over 4% while Dr. Reddy’s down 2%.
Index Heavyweight HDFC Bank reported a 21% growth in the net profit to Rs 2,695.7 crore on the back of an increase in net interest income.
However, bad loans rise marginally. The stock ended with 1.7% losses on the Sensex.
FMCG sector witnessed some pressure post disappointing Q1 results of Hindustan Unilever (HUL).
The FMCG major has reported profit of 0.2% year-on-year to Rs. 1,059 crore, which was below the street’s expectations.
The net sales reported a growth of 5.3% at Rs. 7,973 crore against Rs 7,571 crore in the corresponding quarter of the previous fiscal. However, analysts expected t net profit of Rs 1,110 crore and net sales of Rs 6,710 crore for the quarter.
The stock dipped 2% Bharti Airtel surged over 3% after the company said it has entered into exclusive talks with France's Orange to sell its subsidiaries in Africa.
Other notable losers on the Sensex were ITC (2.3%), Reliance Industries (1.6%), Axis Bank (2.5%), ONGC (3.5%)
Among other results, Asian Paints reported a growth of 34.4% in its profit to Rs. 455.18 crores y-o-y. The fall in crude oil prices, and lower raw materials supported the gross margins.
The paints company transferred its holding of 89.78% to Berger International limited, Singapore to consolidate its investments in foreign subsidiary, Asian Paints (international) Limited.
The stock slipped 4% Cairn India ended down by 3% ahead of its Q1 results. The company said its merger with Vedanta is very much on tracks.
