Index Trends & Stocks In Action For 6th March 2013

On Tuesday the markets recorded their biggest percentage gains with the Sensex closing above the important mark of 19000 while the Nifty closed at 5784 with gains of 1.50%. Yesterday we had mentioned that we have established a short term bottom around levels of 5660-5670 on the Nifty. We had also said that above 5730, we expect the Nifty to flare up. In today’s session we saw the Nifty flare above 5730 and registered a high of 5790. The Index has formed a bullish marubozu candlestick pattern, which means, the opening price is equal to the low price of the day and the closing price is equal to the high of the day. This shows that buyers controlled the price action from the first trade to the last trade. Going ahead, a stiff resistance for the Nifty will come in at 5830-5840 levels. Above these levels the Nifty may touch around 5880-5900. On lower side it has a strong support at around 5730-5740.

Telecom is probably among the most troubled sectors of recent times. But Bharti Airtel seems to be pretty sure about its future. The company has raised USD 1 billion through sale of bonds in the overseas market. The issue was over-subscribed by more than nine times. This makes it the largest ever bond issue by an Indian telecom player. Well, we surely feel that markets aren’t going to loose out on this news item and will follow the confidence that overseas players seem to have in this company. Expect the stock to remain in action for a better part of today.

Demand is what drives expansion. Expectation of a higher demand and getting prepared for it with confidence is a sign of leaders. FMCG major CavinKare is doing exactly the same. The company is reported to be in the process of raising funds. It is diluting around 10 per cent of its stake, in a bid to garner Rs 350 crore. The money is supposed to be supporting it in additional capacity expansion plans. The news will surely see the stock remain in focus for today.

Companies expand, modernize and grow. Here is one company which has plans to relocate its present operations in order to facilitate all of the above. The foreign promoters of Kennametal India are reportedly seeking land from the Karnataka government to expand, modernize and relocated its operations. The company is in the process of filling an application with the State Government Agency, the Karnataka Udyog Mitra to seek help in the identification and allocation of a suitable land for its expansion. The stock is likely to see some upside following this development as the market takes note of its ambitions.

Here is one stock from the Pharma sector which is likely to remain in focus today. Dr Reddy’s Laboratories has reportedly launched Zoledronic Acid Injection (4 mg/5 mL), a bioequivalent generic version of Zometa (zoledronic acid) 4 mg/5 ml injection in the US. The company received an approval from the USFDA for its version of the injection. The stock is likely remain in focus following this development.

Among PSU stocks, keep an eye on Rashtriya Chemicals and Fertilisers (RCF).  According to reports, the Empowered Group of Ministers (EGoM), headed by Finance Minister P Chidambaram, is likely to meet today to decide on selling a 12.5 per cent stake in it. The stake sale is likely to fetch around Rs 300 crore to the exchequer. The base price for selling the stake is likely to come out of the meeting. Another reason why this stock will remain in action is, the company management has said that it has embarked on a major expansion at its Thal unit at a cost of Rs 4,112.5 crore. According to the management, the company has been planning to set up additional streams of ammonia and urea which will add 12.7 lakh MT per annum of urea capacity at a cost of Rs 4112.5 crore.