Stocks In Action: 8th August 2012

India’s foremost oil & gas company, Reliance Industries Limited (RIL) has got conditional approval for investment of over USD 1 billion with its British partner BP Plc. This investment will be made in its gas reserves in the KG-D6 basin. Minister of Petroleum, S Jaipal Reddy, has also said that the ministry will do whatever necessary in terms of approvals in order to raise the production level. RIL has already shared its accounts with CAG and has also reported a rise in its GRMs. We expect the stock to show some positive trades on the back of this news.

State-owned PSU Coal India has agreed to a penalty of between 1.5-40 per cent in case it fails to meet the contracted fuel supply quantity. The quantum of the penalty will depend on the level of default. It has also agreed to pool the prices of imported coal with domestic supplies but the final decision on the same would be taken by the CEA. At the moment this looks somewhat shaky as the power generators are facing several problems, one of which is the decline in profits and sensitive position of the SEBs. We expect some negative bias for the stock tomorrow.

The country’s largest telecom company, Bharti Airtel is set to publish its June quarter numbers tomorrow. On the whole, the market expecting an increase of 6.8 per cent in its net profit with a 4.3 per cent rise in its EBITDA margins. Bharti’s stock was down by 0.79 per cent in Tuesday’s trading sessions and we expect volatility in the shares today as well.

A leading research house has upgraded Jet Airways’ level to ‘buy’ on account of its recent June quarter results. There is an expectation of a further turnaround in its business. Some other research houses have also upgraded the stock from that of an underperformer to ‘buy’. We expect a rise in the share price in Wednesday’s trades.

Dr Reddy’s Labs has launched Montelukast Sodium tablets in the U.S. market. This drug is a bioequivalent generic version of the brand ‘Singulair’. The brand has American sales of about USD 4.7 billion, as per the record of 12 months ended March 31, 2012 revealed by IMS Health. We expect a jump in the shares of the company.

Tata Power will announce its earnings results today and this may lead to some volatility in the share price. While the prices of coal were quite volatile, the exchange rate had been high during the June quarter and hence there could be some disappointment in store.