Stocks In Action For September 24, 2012

Shares of Oil marketing companies (OMCs) may remain under pressure over the news that Competition commission of India (CCI) may investigate them for cartelization of the prices. According to the news article, OMCs increased or decreased the oil price despite oil prices being artificially decontrolled. The decision on this is expected in first fortnight of October. We expect volatility in the shares of Hindustan Oil, Indian oil and Bharat Petroleum. One should remember the CCI probe on Cement companies.

Indian arm of credit rating agency Fitch has downgraded the credit rating of Jain Irrigation from BBB to BB+. The reasons cited by the rating agency are the stretched liquidity position and greater than expected delay in fund infusion of USD 200 million. We expect negative price movement of the Jain irrigation on the bourses.

Pharma Company Wockhardt has reiterated that it will continue generating higher revenues from USA. The new product approvals and launches in US will drive its US revenues which have recently emerged as the top business segment. On the back of this news, we expect positive movement in the Wockhardt’s share price.

We also expect some negative action in the share price of RIL as it will surrender two more exploration blocks on bad outlook. In one of the drilled block there was no hydrocarbon recorded as per the news article. RIL’s exploration & production portfolio has shrunk to half in last two years.

Shares of the companies in the Power sector such as NTPC, Tata Power, Power Grid etc may show  rise on the news that government is considering some big ticket reforms in the power sector that includes the debt recast of the SEBs. One may see short rally in the sector.