HUL keeps Sensex, Nifty in the green

The benchmark indices swung in and out of positive territory but managed to close in the green powered by buying in FMCG counters especially HUL. The market opened gap up after the government hiked foreign direct investment in 13 sectors, including 100% in telecom and higher caps in insurance and defence sectors. However, the indices saw a free-fall post lunch. It staged a stellar recovery from the day's lows thanks to index heavyweight Hindustan Unilever.

The FMCG behemoth shot up over 9% on account of FTSE rebalancing. From July 22, its float increases to 33% from 24% in FTSE's All-World and All Emerging indices. Meanwhile, the company has hiked prices of some of its best selling products in the soap category by up to 15%.

If we exclude the rally in Hindustan Unilever, the overall market breadth was weak. Interest rate sensitives like banking, auto and realty continued to witness heavy selling post measures announced by the Reserve Bank to curb the rupee's volatility on Monday. The central bank curbed speculation in the currency market by making short-term funds more expensive for commercial banks to access. The move is aimed at making the debt markets more attractive to foreign investment.

The other major laggards were capital goods, metals and healthcare stocks.

The Sensex closed at 19, 948, up 97 points, while the Nifty shut shop at 5, 973, up 18 points, over Tuesday's close. The BSE Smallcap and Midcap indices ended lower by 0.2% and 0.5%, respectively.

The advance-decline ratio favoured the bears. On the Bombay Stock Exchange, 1,288 stocks declined against 1,032 advances, while 146 stocks remained unchanged.

It was a volatile day of trade as gauged by the intra-day range of the India VIX. It ended up 2% at 19.36 after hitting a high of 19.59 and low of 17.76.

On the earnings front, HDFC Bank's Q1 FY14 results were in line with IIFL’s expectations. However, the stock plummeted 2.36% at Rs. 662.65 on asset quality issues.

The Axis Bank scrip declined 3% to close at Rs. 1,193 ahead of its Q1 FY14 results on Wednesday. Commenting on the same, Amar Ambani, Head of Research at IIFL, sees Axis Bank posting a net interest income of Rs. 27.87bn, a gain of 27.9% year-on-year. On the net interest margin front, Ambani sees a 23 bps YoY rise at 3.6%. He forecasts a 24.4% YoY growth in net profit at Rs. 14.35bn.

Stocks in News:

The gainers pack was led by Hindustan Unilever, Asian Paints, Ambuja Cements, NTPC, ITC, Tata Power, ACC and Reliance Industries while Tata Steel, Bank of Baroda, Axis Bank, Ranbaxy, HDFC Bank, Cairn India, NMDC and IndusInd Bank lost out.

Ranbaxy closed at Rs. 331.9, down Rs. 9.5 or 2.7%, on reports that its Toansa and Mohali plants in Punjab are under the US Food and Drug Administration's scanner.

Telecom shares, which were in the spotlight for the last couple of days saw huge profit-booking. The government raised the FDI cap in telecom sector to 100%. Bharti Airtel and Reliance Communications dipped 2% each while Idea Cellular tanked 4.2%. MTNL bucked the trend and ended in the green up 1.4%.