Mid-market commentary July 5

HSBC has recently upgraded its rating on India to ‘Overweight’ from ‘Neutral’ for Sensex and even raised its target. Markets witnessed a bit of correction after a long rally amid profit booking.

Nifty hit just below 8400 mark at 8398 and retreated to close lower in the previous session. Stock markets continued correction in Tuesday’s session where the benchmarks traded nearly 0.35 per cent down. Broader markets outperformed the benchmark indices where both Smallcap and Midcap traded with 0.2-0.3 per cent gains. Market bias remains positive with 1269 advances and 1115 declines.

It is yet again that India has posted a slow growth in its services in June 2016. It is the third straight slowdown where the Nikkei/Markit Services Purchasing Managers’ Index (PMI) fell to 50.3 as against 51 in May. However, above 50 indicates expansion. The slowdown in new businesses led to a softer expansion in activity.

PM Modi has carried out cabinet expansion and added 19 new ministers. Leaving apart Prakash Javadekar, who held independent charge of environment, all new inductees took oath as ministers. Mostly were the Dalits and OBCs.

PSU Banks and Media sectors were the top gainers and traded against the benchmarks with nearly 1 per cent gains. Auto on the other hand dragged the markets and fell 0.9 per cent, where Ashok Leyland tumbled 4.3 per cent. TVS Motors and Exide Industries fell more than 2 per cent.

Nifty top gainers: BHEL retains the top position for the second session in a row and gains 1.85 per cent. Reliance, Tata Steel, ZEEL and Yes Bank follow with 1 per cent plus gains.

Nifty top losers: NTPC falls the most with 1.8 per cent. Tata Motors, GAIL, Bajaj Auto and Bharti Airtel follow with more than 1.5 per cent losses.

Nifty formed a Doji on the daily charts as an indication of a reversal and accordingly Nifty corrected. Now if Nifty corrects further we hold 8300-8285 as our supports followed by 8248. Once Nifty hits 8400 on the upside on closing basis 8500 is the next upside target.

Stocks to watch: HCC: The orderbook of Hindustan Construction Company is likely to cross Rs 20000 crore after it gets order for Mumbai metro in a joint venture. The stock has hit 22.55 with 8 per cent gains.

Entertainment Network (India): Crisil has reaffirmed rating on the company’s debt instruments and bank facilities. Total Bank Loan Facilities have been reduced from Rs 5500 Million to Rs 500 million. The long term rating to Crisil AA+/ stable is reaffirmed.

Elantas Beck India: The stocks of Elantas surged after it received principle approval to sell its Pune property of nearly 6239 sq. mt.

Techno Electric & Engineering: The stock of Techno Electric surged 10 per cent after the company told media that it would consider issue of bonus shares.

JP Associates: Ultratech Cement announced purchase of Jaiprakash Associates’ 17.2 million tonnes per annum (mtpa) capacity cement plant worth an enterprise value of Rs 16,189 crore.