Sensex, Nifty open in red; ITC & SBI fall 2-3%, IT gains

Moneycontrol Bureau

9:50 am Buzzing: Shares of ITC slipped 3 percent intraday after its March quarter earnings were disappointing in all parameters. However, not all analysts are bearish on the stock.

Credit Suisse maintains underperform rating on the stock with a reduced target of Rs 310 per share. The brokerage expects ITC to underperform till the next Budget, only when the street will get a sense of government's taxation approach. It has also slashed earnings estimates by 2 percent stating that Q4 performance does not augur well for H1FY16 volumes, when additional 12-13 percent price hikes hit the market. The March quarter earnings were the weakest in many years as cigarette business suffered a volume shock for second consecutive quarter.

CLSA retains sell on the stock with a revised target price of Rs 310. It see no respite for ITC during H1FY16 as volumes are likely to remain under pressure and says that base will also be tough during this period. It expects a 15 percent annual volume drop in first half of FY16 and slahes FY16-17 earnings per share (EPS) estimates by 2-3 percent.

9:30 am Sensex rejig: Private sector electricity producer Tata Power will move out of the stock market benchmark index Sensex and will be replaced by drugmaker Lupin . Besides, Adani Power would be dropped from the S&P BSE 100 index, while various changes have been made to a host of other BSE indices as well. The S&P BSE-100, an index of the top 100 listed companies in the country, would see Aurobindo Pharma and Tata Motors (DVR) coming in, while the S&P BSE-200 would get five new entries -- Ajanta Pharma , Suzlon Energy , Dewan Housing , NCC India and Tata Motors (DVR).

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The market has opened in red as the Sensex is down 98.35 points at 27859.15. The Nifty is down 20.80 points at 8438.15. About 298 shares have advanced, 176 shares declined, and 80 shares are unchanged.

Wipro is up 3 percent while Sun Pharma, Infosys, Dr Reddy's Labs and Cipla are top gainers in the Sensex. ITC is down over 2 percent. SBI, Vedanta, Tata Power and Bajaj Auto are among the major laggards.

The Indian rupee has opened lower at 63.62 a dollar, down 10 paise compared to Friday's closing value of 63.52 per dollar.

Agam Gupta, Standard Chartered expects the rupee to see a range of 63.50-63.75/USD for the day as any downtick to 63.50/ USD will attract dollar demand from the local government banks.

He also expects to see some selling from FPIs on upticks to 63.75/USD. The US dollar was trading stronger against peers.

Asian shares got off to a lacklustre start, after rising inflation and a hawkish tone from the US Federal Reserve Chair rekindled expectations that the Fed is on track to hike interest rates.

Activity was likely to be thin this session, as UK and US markets are shut on Monday for the Spring Bank Holiday and Memorial Day respectively. European centres such as Germany will be observing the Whit Monday holiday.

US shares fell and Treasury yields and the dollar rose on Friday, after the US Labor Department's gauge on core consumer goods prices rose by 0.3 percent last month, bringing the year-on-year rise to 1.8 percent, the highest since October.