Index Trends and Stocks In Action for 27th December 2012

Market after two days of consolidation managed to close above 5900 on Wednesday. In the second half, it saw a good up move but volumes were below average. Going ahead the Nifty has a strong support around levels of 5871-5820 and on the other side it may face resistance around levels of 5945 and 5960. If the Nifty manages to close above levels of 5960 It may touch levels of 6020. On the down side if it breaches its strong support of 5820, it may touch levels of 5775.

Binani Industries, which has a 98.4% stake in Binani Cement said that it will divest up to 40% of its stake to fund expansion and improve its liquidity position. It would offload the stake in phases and has received a nod from the Board for this. Binani Cement was delisted from the bourses in May 2011 and is eyeing expansion in emerging markets like Africa. All this will lend a good amount volatility to the stock of Binani Industries today.

Jindal Stainless said that it will issue shares worth Rs 200.54 crore to its promoters on a preferential basis. This move has come in as a requisite to meet the conditions of its reworked corporate debt restructuring (CDR) scheme. In accordance to this scheme, the shares would be issued in two equal tranches before June 30, 2013. It has a debt of over Rs 9000 crore and is under the CDR programme since a few months. This will result in an upward movement in the stock price of Jindal Stainless today.

Higher import and e-auction coal prices have led to an unsustainable power production situation for Nalco. The company is looking at shutting down 3-4% of its aluminium capacity over the next fortnight due to higher production costs. Although 90% of its coal requirements are met through Coal India, Nalco depends on imports and e-auctions for a little over 10% of its requirements. Since this move is aimed towards improving margins, which have been taking a hit due to higher power costs, the stock price is likely to react in a positive manner today.

In a move to partner more closely with farmers, sugar producer EID Parry launched a call centre solution for the farming community at 5 locations in Tamil Nadu and Puducherry. This move is in line with its earlier initiatives like farm mechanisation and drip irrigation which were attempts to improve the relationship with sugarcane producers. This is likely to result in improved performance in the long-term and thus lend a positive bias to the stock price of EID Parry today.

Credit Analysis and Research rallied 23% yesterday over its issue price of Rs 750 per share. It closed at a price of Rs 922.55 per share. The stock got listed yesterday and is likely to remain volatile on account of the high subscription and extreme volumes on day one of listing. The stock may also show some strong directional movement today albeit in a high volatility trading session.