Mid-market commentary: August 12, 2016

Markets witnessed a short covering post consecutive downbeats ahead of increased CPI and IIP numbers for July. Moreover, positive results from heavy weights have offset the negative worse than expected results from the other frontliners.

Benchmark indices gained where Nifty hit above 8650; while Sensex surged above 28100 mark. Midcap index is trading in line while Smallcap index, which has underperformed, but maintains marginal gains of 0.45 per cent. Market breadth remains positive with 1288 advances and 1092 declines.

Barring IT that is flat to negative, all other sectors are trading in green, where PSU Banking is leading with 3 per cent plus gains. Amongst the frontliners, SBIN has surged 5 per cent with the results; while Hindalco has surged 3 per cent ahead of positive results. On the contrary, Bosch has tumbled 2.3 per cent post worse than expected results, and Cipla, BPCL and Idea Cellular followed with 1 per cent plus losses.

Taking support at 20 days EMA, Nifty has bounced back. Hence in case of further optimism we hold 8710-8730 as our next resistance levels provided Nifty closes above 8680 levels. In case of a retreat, if any we hold 8580-8540 as supports.

Stocks to watch:

Alkem Laboratories: The company has announced successful US drug regulator's inspection at its bioequivalence facility at Taloja, Maharashtra. The shares had surged with the news but have now retreated.

Hindalco: The shares of the company have surged, and it was the top gainer in Nifty50 after the announcement of their quarterly results. Hindalco has posted net profit of Rs 294 crores as against Rs 61.1 crores YoY.

Aditya Birla Nuvo: Company's shareholders have reacted negatively to the merger of Aditya Birla Nuvo into Grasim and then separately carving out the financial services into a new entity. The company has dropped 18 per cent.

Bharti Airtel Ltd: The company has completed acquisition of the right to use 20Mhz spectrum in 2300Mhz band in the Odisha circle resulting from a deal with Aircel Ltd.

Dena Bank: Dena Bank is likely to consider raising up to Rs 446 crores through preference share sale to the government.