Mid market commentary June 20

Indian markets saw a gap down opening with the news of RBI governor Raghuram Rajan not extending  his tenure after September, which was flashed during the weekend itself. However, the gap was immediately filled where both Nifty and Sensex saw a recovery to trade in green.

FIIs have been positive of Rajan’s tenure with him striving hard for targeting inflation and fiscal forethought. Hence, going forward, after Brexit the three main issues to be closely watched would be the monsoon; FIIs participation post tenure expiry of Rajan; and the clearance of GST.

Nifty is hovering around 8210 with 40 points upside while SENSEX has gained nearly 150 points at 26780 mark. This time the broader markets have underperformed the benchmarks where Midcap and Smallcap indices remain marginally up with 0.1 and 0.26 per cent gains, respectively. Market breadth is positive with 1253 advances and 1043 declines.

Asian markets, mostly the Japanese indices saw short covering with some relaxation in the Brexit worries, as the latest poll suggested a majority in favour of UK remaining in the EU. Nikkei 225 was up 2.1 per cent; while Hang Seng has surged 0.7 per cent. Yen depreciated and Bonds yields have risen.

All the sectors have turned green, wherein IT and Metal remain in the limelight with 1.8 per cent gains. IT has surged amid nearly 2.5 per cent rise in its frontliners HCL Technologies, Tech Mahindra and TCS. HCL Technologies is continuing with its buoyant move on Friday after company announced a strategic partnership contract with LeasePlan. Realty surged with a spurt in Unitech with 8.8 per cent gains. Metal sector followed with 1 per cent gains with Tata Steel and Vedanta surging 2 per cent.

Nifty top gainers: Apart from Tata Steel that is the top gainer other leaders are all IT stocks viz; HCL Tech, TECH M, TCS and Infy. IT stocks surged on Rupee depreciation by 60 paise. Infy is 1.9 per cent up.

Nifty top losers: None of the Nifty 50 stocks are down more than 1 per cent. Axis Bank and Asian Paints remain down with 0.9 per cent losses each. Auro Pharma, Lupin and Eicher Motors remain marginally down.

Nifty is all set to rise again. We can see a new rally if Nifty crosses 8290-8300 on the upside. Any downturn, ahead of Brexit, if any, can drag Nifty to 8075-8065, provided Nifty hits below 8130-8100.
Pharma and Aviation sectors are set for a new boost for increasing percentage of FDI inclusion in the sectors.

Stocks to watch:

Unitech: Earlier court had ordered case against Unitech bosses for cheating. However, on Monday, the company provided that it is professionally managed and its topline employees are not involved in the day-to-day affairs. Moreover, the realty sector remains up after SEBI relaxed few norms for the sector.

Cadila Healthcare: Shares of Cadila surged after its subsidiary Zydus Worldwide DMCC acquired two ANDAs (abbreviated new drug application) from Teva. Moreover, the increase of FDI in Pharma may also boost the stock.

HDFC Bank: The stock of HDFC Bank will remain in the limelight as the bank has declared that it would seek shareholders’ nod to raise Rs 50000 crore for affordable housing.

Himachal Futuristic Communications: BSNL has placed an advance purchase order of 1245 crore to the company for building DWDM (dense wavelength division multiplexing), an optical transmission backbone network for the armed forces.

IOC: The Indian Oil Corporation together with Oil India Limited and Bharat Petro Resources has signed an agreement to acquire 23.9 per cent stake in Rosneft Oil Company, NOC of Russia in JSC Vankorneft.