Index Trends & Stocks In Action for 5th February 2013

Indian equity markets hit a two-week low yesterday.  After a gap up opening the Nifty slipped below its psychological mark of 6000 on weak cues from European markets and uninspiring result from Bank of Baroda and Jubilant Foodworks. The market fell for the third straight day and formed a Three Black Crows candlestick pattern, which is bearish in nature. From the past two trading sessions it has been observed that the bulls are bouncing back from levels of 5980. So, going ahead, one can consider 5980 as a crucial support level while the second support level stands at 5945. Resistance will kick in at 6020-6060 levels.

Supreme Infrastructure has bagged contracts worth Rs 505 crore in five states. This includes a contract worth Rs 267 crore for building an additional office complex for the Supreme Court of India. The company has also received another order from the Delhi Metro Rail Corporation for the construction of a Metro rail depot. Besides all these contracts, it has also received four other contracts in Punjab, Rajasthan, West Bengal and Chandigarh. Based on these developments we expect the stock of Supreme Infrastructure to remain in a bullish grip for today.

Asian Granito has launched its new porcelain product brand for the floor segment, named Tufflong. The company reported that its new products have a longer and stain free life and start from Rs 250 going to as far as Rs 1900 per sq meter. In the next four years the company plans to increase its exports from Rs 20 crore to Rs 1000 crore. On the back of these announcements, we expect the stock of Asian Granito to remain volatile for the day today with a positive bias.

According to media reports, Crompton Greaves has signed a long term supply relationship agreement with Transpower of New Zealand. This makes the company the first of the three preferred vendors to supply transformers to Transpower with a potential to scale orders up to worth USD 15 million annually. The agreement will be in force for five years with an extension of two years each. We expect the stock of Crompton Greaves to remain in focus for the day today.

Hero Motocorp has reported that it will start selling its products in 8-10 new markets in Latin America and Africa by the end of March this year as the company looks to increase its exports. At present the company exports its products only to Colombia in Latin America. The Latin American market currently is ruled by Japanese companies such as Honda, Yamaha, Suzuki and Kawasaki. This would be a big challenge for Hero. We expect the stock of Hero to remain volatile for the day,

Rural Electrification Corporation (REC) announced its Q3FY13 result yesterday. The company reported a 33% increase in net profit for the December quarter of 2012. Its total income has climbed to Rs 3552.23 crore from Rs 2699.12 in the corresponding quarter. The company also declared an interim dividend of Rs 6.75 per share for the financial year 2012-2013. The REC stock yesterday closed at Rs 247.95 gaining 4.69% for the day. We expect it to remain bullish for the day.

Among the major companies to announce their results today are Cosmo Films, D S Kulkarni Developers, GTL, Jindal Stainless steel, MCDowell, NHPC, Phillip Carbon, UCO Bank, United Bank and Wheels India. These stocks are expected to remain volatile for the day with their directional trend dependent on the results they announce.