Mid-market commentary July 13

The stock markets seem to have taken a breather after two consecutive upbeats. The benchmark indices opened on a positive note hitting above the 11 month highs. However, markets witnessed an intraday retreat where both Nifty and Sensex traded on a flat to negative note.

Broader markets underperformed amid profit booking where Smallcap and Midcap indices fell 0.6 and 0.4 per cent respectively. Thereby the market bias remained negative with 894 advances and 1610 declines.

India’s June CPI (Consumer Price Index) has hit 22 months high at 5.77 per cent while May IIP (Index of Industrial Production) has increased inadequately at 1.2 per cent as against expectations of a fall of 0.3 per cent. Out of the total CPI, Food inflation stands at 7.79 per cent as against 7.47 per cent in May. The said condition may refrain RBI from announcing any interest rate cut in near future.

On the sectoral front, leaving apart Metal that surged against the markets with 1.9 per cent gains and Energy and IT that remained marginally up with 0.5 and 0.35 per cent respectively, all other sectors traded in red. PSU Banks led the downfall with 0.8 per cent losses with Allahabad Bank and Syndicate Bank falling 2.5 per cent each.

Top Nifty gainers: ONGC remained the top gainer by 3.5 per cent upside after kerosene price hike of 0.25 paise by the government. BHEL too grabbed the top position with 3.1 per cent gains. Metal major Tata Steel and GAIL followed with more than 2 per cent gains. Kotak Bank was the only frontline bank trading in green with 1.1 per cent gains.

Top Nifty losers: BPCL was held the top loser with 2.5 per cent losses. Auto stocks viz TATAMTRDVR and Maruti Suzuki tumbled 1.5 per cent and more. IndusInd Bank and Axis Bank followed with 1.3 per cent downside.

Nifty hovers around 8500 mark. Nifty witnessed profit booking in Wednesday’s trade. Now in case of any further correction we hold 8475 followed by 8400 as the next supports for the Nifty. If markets rebound, we hold 8530-8550 as immediate resistances for the Nifty. 8600-8620 is our next upside target.

Asian markets closed higher on Wednesday with hopes that Bank of Japan would adopt monetary easing in its policy for revival of the economy. Markets retreated from highs after government of Japan refused the use of ‘Helicopter money’ which means central bank directly financing government spending or tax cuts. European markets opened on a flat to positive note.

Stocks to watch:

BHEL: The Bharat Heavy Electricals Limited received a contract out of the six bidders for the project floated by BIFPCL in international tender. The stock of BHEL was one of the top gainers with 3 per cent plus upside.

Cairn India: Shares of Cairn India rallied on Wednesday on media reports that its Energy Plc sought a compensation of 5.6 billion USD from Government of India for raising retrospective tax demand of Rs 29047 crores. Moreover, Cairn and Vedanta merger has got LIC nod.

Kwality: US private equity firm assured to invest Rs 520 crore in Kwality Limited, a dairy firm through structured debt investment. The stock surged more than 4 per cent in intraday trade.

IDFC Bank: The bank announced acquisition of Grama Vidiyal Microfinance at an undisclosed value. The stock of IDFC Bank tumbled more than 2 per cent after the announcement.

TV18 Broadcast/Network18: The companies TV18 Broadcast and Network18 Media & Investment will announce their Q1FY17 results on Wednesday. The stocks are likely to remain volatile during the session.