Mid-market commentary Aug 03

Country’s most awaited reform of GST bill is to be tabled today in Rajya Sabha. Investors remained vary of the authenticity of it getting passed and also the implications post the bill if it is successfully announced. The said concern offset recovery in Nikkei/Markit service sector PMI to a 3 month high of 51.9 in July as against 50.3 in the previous month driven by growth in the new businesses.

Benchmarks witnessed a consolidation breakdown and are 0.9 per cent down where Nifty hit below 8550 mark. Broader markets too remain 1 per cent down. Market bias remains highly negative with just 690 advances and 1679 declines.

Barring IT sector which remained flat to positive supported by HCLTECH, all other sectors witnessed a free fall where FMCG led with 2 per cent losses. Media and Auto followed the move with more than 1 per cent losses.

Apart from HCLTECH that rose 3.5 per cent with positive quarterly results, Infratel, Cipla, Coal India, Idea Cellular and Asian Paints remained up by more than 1 per cent gains. On the downside, Power Grid, ITC, Tata Motors and BHEL have fallen more than 2 per cent.

Nifty has breached our prior supports. In case Nifty sustains below 8570 on a closing basis we hold 8490-8475 as the immediate supports. On the contrary if the market recovers from here we hold 8620-8635 as the resistances provided Nifty breaks 8590 on the upside.

Stocks to watch:

Adani Ports: ICRA has recently revised the long term outlook of Adani Ports to Stable from Negative. It has assigned Provisional IND AA+ rating for proposed Non-Convertible Debentures of Rs 1000 crores.

M&M: The company has entered into a multiyear agreement with WABCO Holdings to purchase vacuum pumps across its engine platforms. The pumps will enable better fuel economy and reduced emissions.

Bharti Airtel: Verizon Digital Media Services has tied up with Bharti Airtel to launch new points of presence in four metro cities.

Berger Paints: Berger Paints has recently announced its Q1 results where its revenues and net profits have increased on QoQ and YoY basis to Rs 1242 crores and Rs 120 crores. The stock has seen gradual rise in prices and is trading 0.8 per cent up.