Sensex tops 19,000; Ambani bros' deal lifts ADAG stocks
The biggest news of the day was an inter-city fiber sharing agreement between the Ambani brothers.
Mumbai: Shares rallied on Tuesday after a sedate start, with investors appearing to have regained their appetite for midcap stocks. The BSE Sensex finished above the psychological 19,000-mark, up 176 points over its previous close. The Nifty rose 43 points to close at 5748.
The biggest news of the day was an inter-city fiber sharing agreement between the Ambani brothers. The deal had a positive effect on Anil Ambani's group stocks. Reliance Power, Reliance Capital and Reliance Broadcast ended with hefty gains.
Reliance Jio Infocomm and Reliance Communications (RCom) sign Rs 1,200 crore agreement for sharing of RCom's nationwide optic fiber network. Reliance Communication stands to be the biggest beneficiary from the deal. The stock was up 11 per cent.
Reliance Jio Infocomm to utilise multiple fiber pairs across RCom's 1,20,000 kms nationwide inter-city optic fiber network. RCom to have reciprocal access to fiber infrastructure built by Reliance Jio Infocomm in future.
Metal, capital goods, oil & gas and pharma were among the best performers, while investors cold shouldered shares from the auto, FMCG and realty sectors.
Midcap shares outperformed their large cap counters, but market experts said it was too early to say if the trend will sustain. While the rally took most players by surprise, near term outlook on the market remains cautious in the absence of any positive triggers.
Auto sales in March declined, reflecting the slowdown in the economy, and the widely held view is that March quarter corporate earnings will most likely disappoint.
"I do not think we will have much cheer for the next six months in terms of earnings," Sandeep Bhatia of Kotak said in an interview to CNBC-TV18 earlier on Tuesday.
"The focus is on incremental announcements by the government to see if the diesel price increase is on track or if the government is not falling apart, because some ally has decided to move out," he said.
Brokerage house Bank of America Merrill Lynch expects more earnings downgrades this financial year, because of the slowing economy and weak demand.
"We expect FY14 Sensex EPS to be downgraded below Rs 1300, for growth of under 10 per cent," said the Merrill Lynch note to clients.