Nifty breaks 8700; TCS falls 1% ahead of Q4 earnings

10:45am HCC in Focus: HCC Concessions, the infrastructure development arm of the HCC Group, today announced the sale of its stake in Dhule Palesner Tollway to the Sadbhav Group, HCC’s JV partner in the project, for Rs 204 crore. HCC Concessions is also expected to realise an estimated amount of Rs 24 crore from additional claims to be made to the NHAI, towards this project. The deal is subject to receipt of necessary clearances and is expected to close shortly.

10:30am Market Update; The Sensex fell 131.97 points to 28667.72 and the Nifty dropped below 8700, down 51.40 points to 8698.80.

The broader markets also declined. The BSE Midcap and Smallcap indices fell over half a percent. About 802 shares have advanced, 1302 shares declined, and 127 shares are unchanged on the BSE.

10:20am Goldman on OMCs:  With clarity emerging on FY16 subsidy sharing, Goldman Sachs is upbeat on oil marketing companies (OMCs). The finance ministry on Wednesday communicated to the oil ministry that it will fully compensate oil marketing companies for Q4 under-recoveries of FY15.

The finance ministry has agreed to pay Rs 5300 crore for under-recoveries of OMCs, exempting upstream oil companies from sharing the burden.

Goldman Sachs expects another Rs 2,700 crore to come from the government towards direct transfer of LPG subsidy, taking the OMCs' total receipts to Rs 8,000 crore.

According to a report on Wednesday, the government will be paying the entire FY16 LPG subsidy through direct transfer, and upstream oil companies will be exempt from the same. But upstream PSU oil companies will have to share the entire under-recovery associated with kerosene.

This scenario is in line with Goldman Sach's estimates for upstream companies, improving the cashflow visibility for OMCs as it forecasts no subsidy payment in Q4 for OIL/ONGC and the FY16 realization is further based in line with its estimate of USD 50/bbl. "We believe the above scenario would be modestly positive for OMCs as direct transfer of cash by the government would further reduce working capital requirements for OMCs, thus improving earnings and cashflow visibility. Currently OMCs are transferring cash to customer accounts, for which they are reimbursed by the government," the report adds.

10:00am Market Check:

The market looks sluggish just as March quarter corporate earnings kick start in full steam from today. The Sensex is down 18.47 points at 28781.22 and the Nifty is down 16.70 points at 8733.50. About 913 shares have advanced, 910 shares declined, and 114 shares are unchanged.

ONGC, Bharti Airtel, Tata Motors, Hindalco and Tata Steel are top gainers in the Sensex. Among the losers are Sesa Sterlite, Cipla, Dr Reddy's Labs, L&T and HUL.

TCS is down over 1 percent ahead of its Q4FY15 results expected to be announced in the evening. For TCS, analysts will be keenly eyeing whether the company will be able to even meet the now-muted expectations on revenue growth and how much of a hit margins take due to forex movements and seasonality impact.

A poll of analysts has forecast the firm’s dollar revenue to grow 0.2 percent to USD 3940 million versus USD 3931 million in the previous quarter, while rupee revenue is seen declining 0.1 percent, from Rs 24,501 crore to Rs 24,456 crore.

US crude futures dropped below USD 56 on disappointing US economic data and renewed concerns about global oversupply. Oil prices jumped steeply on Wednesday after US inventories built up more slowly than expected and talks between major oil producers this week triggered speculation of production cuts, although most analysts said these were currently unlikely.

Despite the dip, crude prices have risen around 15 percent since the beginning of April and are back to levels reached in February, which marked the 2015 highs. For more information please visit this site www.appsmine.org