Sensex erases early gains; FMCG drags, banks & cap goods up

Moneycontrol Bureau

10:55am Market Update

The Sensex fell 24.64 points to 27183.97 while the Nifty rose 1.60 points to 8175.70.About 1167 shares have advanced, 993 shares declined, and 76 shares are unchanged on the Bombay Stock Exchange.

10:40am Japanese bank picks up stake in RCap

Reliance Anil Dhirubhai Ambani Group (ADAG) on Thursday announced a strategic alliance with Sumitomo Mitsui Trust Bank in which the Japanese bank would pick up 2.77 percent stake in Reliance Capital, the group’s non-banking financial company that has interests in financing, asset management and insurance.

The deal, valued at Rs 371 crore and to be carried out via a preferential allotment, will give Japan’s is part of a long-term alliance and Sumitomo may increase stake in Reliance Capital further, CEO Sam Ghosh told CNBC-TV18.

“India is one of the favourable destinations for Sumitomo and this is a token investment,” he said, adding that Rel Cap will be looking to set up a joint mergers and acquisition desk.

In 2011, Reliance Capital, which had total debt of about Rs 18,305 crore as of September, had sold 26 percent stake in its life insurance business to Japan’s Nippon. Nippon also picked up 26 percent stake in its asset management business in 2012 and increased it to 35 percent in November this year.

10:25am Japanese economic data

Japanese annual core consumer inflation slowed for a fourth straight month in November due largely to sliding oil prices, highlighting the challenges the central bank faces in achieving its 2 percent inflation target.

Factory output unexpectedly fell and real wages marked the steepest drop in five years, underscoring the fragility of the recovery and dealing a blow to premier Shinzo Abe's stimulus policies aimed at pulling the economy out of stagnation.

The core consumer price index (CPI), which excludes volatile fresh food but includes oil products, rose 2.7 percent in November from a year earlier, matching a median market forecast, government data showed on Friday.

Stripping out the effects of a sales tax hike in April, core consumer inflation was 0.7 percent, slowing from 0.9 percent in October and far below the Bank of Japan's 2 percent target, reports Reuters.

10:00am Market Check

Equity benchmarks erased early gains with the Sensex falling 38.04 points to 27170.57 and the Nifty declining 2.70 points to 8171.40 weighed by FMCG, metals, oil & gas and select technology stocks. However, banks and capital goods stocks remained firm.

About 870 shares have advanced, 873 shares declined, and 68 shares are unchanged on the Bombay Stock Exchange.

Sandip Sabharwal of asksandipsabharwal.com is very skeptical of the market for the first few months of 2015. According to him the market is likely to enter a difficult phase. The upcoming earnings season could be one of the worst in past several years and some of the global headwinds with regards to liquidity also remain, feels Sabharwal.

Shares of ITC, Tata Motors, Hindustan Unilever, Wipro, Sesa Sterlite and GAIL declined 1 percent each while Infosys, State Bank of India, Axis Bank, HDFC Bank, L&T, ICICI Bank, Sun Pharma, Coal India, Tata Power and BHEL gained 0.2-1 percent.

Power Grid gained 2 percent as reports suggest that power ministry invoked provision of “compressed time schedule” to award 8 new transmission projects to the company. The estimated cost for these 8 projects is seen at Rs 36,000 crore.

SpiceJet surged 9 percent ahead of the company providing a revival plan to government today. Reports suggest that JPM Chase and Ajay Singh could invest USD 200 million and the deal is likely to be finalised in next 6 weeks. Kalanithi Maran is keen to exit the airline completely.