Index Trends & Stocks In Action for 1st March 2013

Indian markets on Wednesday dropped sharply to end at three-month lows after the Union Budget failed to cheer investor sentiments. The Nifty at the end of the day closed down by 1.79% at 5693. Markets saw a fall with highest-ever turnover at Rs 4.2 lakh crore. The previous record was Rs 4.16 lakh crore. The Nifty formed a Bearish engulfing Candlestick pattern which indicates, sellers taking control over the market.  From an intraday point of view the Nifty has a strong support at 5670 and 5630. On the higher side immediate hurdles come in at 5730 and trading above that can result in a pullback rally which could see the Index go to levels of 5760.

According to the media reports, Dr Reddy Laboratories (DRL) is in the process of acquiring Netherlands-based OctoPlus NV at an estimated amount of USD 27.4 million. DRL has made an open offer to purchase all outstanding shares of OctoPlus at an offer price of 0.52 euro in cash for each share. We expect to see some volatility in the scrip of DRL in today's trading session.

Promoters of Suzlon Energy are reported to have sold 6.2% of the paid up capital held by them to raise an amount of Rs 240 crore. After this sale the promoter-group holding stands reduced to 44.46% of the paid up capital. The Company reported that this cash infusion will gradually support the operations of the company in the current liquidity situation. The stock has been hit in the aftermath of this news and is expected to slide further today.

One stock to watch out for after every budget is ITC. No matter how much the company projects itself to be a diversified conglomerate, the fact still remains that it is still a tobacco products company, primarily cigarettes. Keeping in line with the tradition, the FM has raised excise duty on cigarettes and this though will impact smokers, bodes well for the company. The stock closed flat yesterday but is likely to remain in focus through today.

Another stock to watch out closely following yesterday’s budget is Mahindra & Mahindra. The hike in excise on SUVs does not go in favour of the company, which has been riding high on this segment. The stock will react for another couple of days on this development before the markets take it in their stride and life moves on. For today, watch it closely if you are looking at some trading exposure to it.

Strides Arcolabs sale of its speciality arm Mylan for USD 1.6 billion saw the stock tumble in yesterday’s trading. The impact of the news is likely to remain and play heavy on the stock even for today.