Mid market commentary July 27

Indian markets opened on a positive note, hit 15 months' high, but retreated to trade on a flat to negative note. The choppiness is driven by the July F&O expiry fever. Nifty hit 8665 and tumbled to trade below 8600 mark; while Sensex hit 28210 and turned back to trade below 28000 mark.

Midcap is trading in line with flattish movement while Smallcap index has slightly outperformed with 0.2 per cent upside. Market breadth is slightly negative with 1076 advances and 1298 declines.

On the Asian front, Shanghai Composite saw a sudden sharp crash of 2.9 per cent from lacklustre movement in the early session where investors believed no monetary easing in the current policy review was to happen. Japanese indices remained positive.

On the sectoral front Pharma dragged the markets down by falling 2 per cent where Dr.Reddy's fell nearly 10 per cent on posting Q1 results with decline in US volume, business loss in Venezuela, price erosion etc. FMCG, Realty and Metal have fallen more than 0.5 per cent each. On the contrary Media and Pvt. Bank sectors surged 0.5 per cent each.

Nifty top gainers: Infratel is the top gainer with 3.5 per cent gains post positive Q1 results. ICICI Bank and Maruti Suzuki surged 2 per cent each. ZEEL and Adani Ports followed with more than 1 per cent gains.

Nifty top losers: Apart from Dr. Reddy's, Tata Steel dropped 3 per cent after posting marginal growth in sales at 2.15 million tonnes for Q1. Idea Cellular, Axis Bank and Lupin fell more than a per cent.

Nifty hit above its double resistance at 8640-8645 levels but could not sustain. If Nifty falls and closes below the levels we may see some more downside, and we hold 8550-8490 as the supports. On the other hand 8640-8665 will be the immediate resistances if Nifty manages to close above 8620 levels.

Stocks to watch:

Tata Motors: Germany’s Volkswagen is said to partner with Tata Motors for production of small cars. Tata Motors already has a handhold in small car segment viz Nano. The move will be beneficial for the company.

Intellect Design Arena: The company has launched a comprehensive product named ONEMARKETS for securities trading and asset services.

Yes Bank: Yes Bank has posted in line YoY revenues while net profits surged 33 per cent. Moreover, the bank has received SEBI approval to set up AMC. The stock will boom in coming days.

UCO Bank/Allahabad Bank/Bank of India: RBI has imposed a penalty of Rs 2 crore on UCO Bank and Allahabad Bank and 1 crore on Bank of India for violation of anti-money laundering norms.

Lupin: According to media reports Lupin is in talks with Japan's Astellas and Shionogi to buy the off-patent medicine brands they have separately put on the block.