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Sensex Finishes Firm; Software & FMCG Stocks Gain
Wed, 21 Feb Closing | Karan Janani, TM Team

Indian share markets finished the trading session well above the dotted line, snapping a three-day falling streak amid firm Asian markets. At the closing bell, the BSE Sensex closed higher by 141 points and the NSE Nifty finished higher by 37 points. The S&P BSE Mid Cap finished down by 0.1% while S&P BSE Small Cap finished down by 0.2%.

Gains were largely seen in software stocks, FMCG stocks and energy stocks.

Asian stock markets finished broadly higher today with shares in Hong Kong leading the region. The Hang Seng is up 1.81% while China's Shanghai Composite is up 0.45% and Japan's Nikkei 225 is up 0.21%. European markets are lower today with shares in Germany off the most. The DAX is down 0.44% while France's CAC 40 is off 0.25% and London's FTSE 100 is lower by 0.10%.

Rupee was trading at Rs 64.81 against the US$ in the afternoon session. Oil prices were trading at US$ 61.19 at the time of writing.

The Market cap to GDP ratio for Indian companies too is close to dangerously high levels. While this is still some way off the peak of FY-08, when it had once reached close to 150, it's relatively high.

FY17 saw this ratio reach close to 80. It is also expected to increase further given the moderate growth expectations in India's GDP for FY18. Warren Buffett once considered this as one of the best valuation metrics to gauge the markets.

Past history shows some correlation between the ratio and the share market. 2008 saw Sensex decline by 38%, when this ratio crossed the 100 mark. Also, the market has bounced back sharply when this ratio was low.

The Warren Buffett Indicator Suggests Indian Equity Market Is Overvalued

The basic assumption in this ratio is that whenever the GDP of the country grows, the market performance will reflect it. Also, when stocks do well, it can be extrapolated to assume the Indian economy is doing well.

Software stocks finished the day on a strong note with Tech Mahindra share price and TCS share price leading the gains.

As per a leading financial daily, the National Association of Software and Solutions Companies (NASSCOM) has forecasted India's Information Technology (IT) industry will grow at 7-9% in the next financial year 2018-19 as against 7.8% in 2017-18, despite of multiple global headwinds and uncertainties in the software services space.

Noting that the next year will be better for the technology industry at large, it has projected a flat growth revenue scenario for the second year in a row. According to the industry body, the export revenues will grow to US$135-137 billion from the US$126 billion estimated for the current year.

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Nasscom president R Chandrashekhar has said that the domestic revenue may grow at slightly higher pitch of 10-12%, while exports may lag in FY19.

He added that the industry may hire 100,000 new hands in FY19, which again 50% lower than what it had projected for this year. For the current fiscal, he said that the industry may register lower-than-projected 7.8% growth, and may touch US$167 billion in revenue size during the year in terms of exports and 10% in domestic revenue.

Expressing optimism, Chandrashekhar said that the mood is upbeat and the trend is positive, which should translate into better business opportunities.

Moving on to news from pharma sector. Biocon share price is in focus today after the drug major said that the United States Food & Drug Administration (USFDA) made six observations after inspecting its Malaysia plant.

Biocon said that the USFDA completed a pre-approval inspection of the facility and issued a Form 483 with six observations.

As per USFDA, observations are made in Form 483 when investigators feel that conditions or practices in the facility are such that products may become adulterated or render injuries to health.

Biocon share price finished up by 2.3%.

In another development, as per an article in The Economic Times, Aurobindo Pharma has expressed early stage interest in the European business of the US$1.7-billion privately held Canadian drugmaker Apotex.

Known for its high profile litigations in the US against MNC pharma players, Apotex has put on the block its European operations as part of a wider consolidation effort.

The deal may be valued at around US$100 million and fits in with Aurobindo's strategic road map of upping its presence in eastern Europe through bolt-on acquisitions.

Aurobindo pharma share price finished the trading day down by 0.6% on the BSE.

In news from engineering sector, state-run power equipment maker Bharat Heavy Electricals Ltd (BHEL) on Wednesday said it has bagged a Rs 10.34 billion gas turbine-based captive power plant order from Hindustan Petroleum Corp. Ltd (HPCL).

The order has been placed for its Visakh Refinery expansion project at Visakhapatnam, Andhra Pradesh.

BHEL said this captive power plant is being set up to meet the power and steam required by HPCL for its planned refinery expansion from 8.33 to 15 MMTPA.

BHEL share price finished the day down 1.2%.

In another development, Eros international share price surged 4.7% after Reliance Industries Ltd (RIL) said it will buy a 5% stake in NYSE listed Eros International Plc (Eros) through a subsidiary.

RIL will pay US$ 15 per Eros International share, which represents an 18% premium to Friday's closing price. Further, the two parties will equally invest up to Rs 10 billion to produce and acquire Indian films and digital originals across all languages.

And here's a note from Profit Hunter:

Sun Pharma -- the top loser in the Nifty 50 Index -- is down 6% today.

The last time we reviewed the stock, it had broken out of the inverse head and shoulder pattern which indicated that the stock will head higher. But as we mentioned earlier, the stock was trading in a falling channel line which indicated that it was still in a downtrend. And only a decisive break above the channel's resistance line would mark the start of an uptrend.

Now the stock found resistance from the channel's resistance line several times in the past two months. Today, the stock is down 6% with strong volumes. It has also broken below the channel support line (blue lines) which indicates weakness in near-term.

So will this drag the stock to a new 52-week low or it is just the matter of time before we can see the stock moving up again? Let's wait and watch.

Sun Pharma Plunges 6% for the Day
Sun Pharma Plunges 6% for the Day 

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Stock Market Updates

Most Active Small-Cap Stocks Today; JET AIRWAYS the Most Traded (Today's Market)

Dec 17, 2018 04:19 PM

Here's a list of most active small-cap stocks today. It also includes information on BSE Smallcap index and the broader benchmark indices.

Top 5 Mid-Cap Gainers Today; INDRAPRASTHA GAS Leads the Pack (Today's Market)

Dec 17, 2018 04:18 PM

Here's a list of 5 stocks that gained the most in the BSE Mid-Cap Index today. It also includes information on BSE Mid-Cap index and the broader benchmark indices.

The BSE METAL Index has hit an all-time high at 11,898 (up 2.1%) (Today's Market)

Dec 17, 2018 03:33 PM

The BSE METAL Index has hit an all-time high at 11,898 (up 2.1%). Among the top gainers in the BSE METAL Index today are JINDAL STEEL & POWER and COAL INDIA. Meanwhile, the BSE Sensex has surged 0.9% to 36,312.

PIDILITE INDUSTRIES at 52 Week High; BSE 500 Index Up 1.0% (Today's Market)

Dec 17, 2018 03:21 PM

PIDILITE INDUSTRIES share price has hit a 52-week high. It is presently trading at Rs 1,195. BSE 500 Index is up by 0.7% at 14,530. Within the BSE 500, PIDILITE INDUSTRIES (up 2.1%) and BALMER LAWRIE (up 12.8%) are among the top gainers, while top losers are RELIANCE NAVAL & ENGINEERING LTD and PRESTIGE ESTATES.

PRESTIGE ESTATES Plunges by 6%; BSE REALTY Index Down 0.2% (Today's Market)

Dec 17, 2018 03:11 PM

PRESTIGE ESTATES share price has plunged by 6% and its current market price is Rs 224. The BSE REALTY is down by 0.2%. The top gainers in the BSE REALTY Index are SOBHA LIMITED (up 2.2%) and INDIABULLS REAL EST (up 2.1%). The top losers is PRESTIGE ESTATES (down 5.9%)..

Sensex Trades Over 250 Points Up; Tata Motors & Power Grid Top Gainers (Today's Market)

Dec 17, 2018 12:30 pm

The BSE Sensex is trading up by 252 points, while the NSE Nifty is trading up by 59 points.

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