Index Trends and Stocks In Action for 24th December 2012

Market on Fridays witnessed intense selling pressure and closed one percent down at 5848. The Nifty has formed a three outside down candlestick pattern as on 21^st December, 2012, which is a negative signal. Going ahead the Nifty has a strong support around levels of 5815-5830. If it breaches this support level, then the bias would turn negative and it may touch levels of 5780 and 5750. On the other hand, the Nifty may face resistance around levels of 5875 and 5905.Now for the stocks to watch. 

We expect some positive movement in the shares of SBI today. The government has approved an equity infusion of Rs 3400 crore in this public sector bank. This infusion is expected the boost the capital base of the bank. In addition to this, the government also intends infusing another Rs 3000 crore in it over the near future. All this will keep the stock in a good stead today and probably over the next trading week.

Maruti Suzuki on Saturday said that it has begun work to set up a new facility in Gujarat. It has acquired another 600 acres of land for the purpose. The company will invest more than Rs 4000 crore to set up this plant. It also said that it will continue manufacturing small cars and will not foray in the passenger cars segment, as was reported earlier. Does this mean, it is moving out of Haryana, where it has faced many labour problems over the recent past? The management has said it has no intensions of doing so. Investors are expected to give this news of planned capacity addition a thumbs up.

Shares of Pharma companies are likely to show some gains today on the news that the Indian pharma market is expected to grow five-fold to Rs 5 lakh crore by 2020. Reported in the Economic Times, the view also says that the pharma market grew 3.5 fold to reach about Rs 1.2 lakh crore in 2011. This seems like a huge business opportunity for the Indian pharma companies and one may see some position trading in the counters in this sector. Investors should watch DRL, Sun Pharma, Glenmark, Lupin and Cadila among others for some positive action.

Software player Persistent Systems has said that it does not expect any impact of the slowing down of the economy on itself. The company has been reporting double digit growth rate when larger peers were seen cutting their guidance. It expects the economic environment to remain healthy for the company despite some companies facing the heat of the cut in client spending. We expect investors to continue trading positively in this scrip.

Shares of Edelweiss Financial Services (EFS) may also show some volatility on the news reported by DNA that it is about to rope in an investor to pick up a minority stake (26%) in its subsidiary, Edelweiss Housing Finance (EHF). The company expects this investor to help it launch more products in the Indian mortgage market which will give it a larger share of that market.