Index Trends & Stocks In Action For 18th April 2013

The Indian markets, after a volatile trading session, closed on a flat note. The markets saw a sell-off in Oil & Gas and IT counters.  The Nifty closed unchanged at 5689. In our last write-up, we mentioned that if the Nifty sustains above 5710, we may see levels of 5730. What we saw happening was in line with our expectation. The Nifty touched a high of 5732 and resisted from there to end flat. The Nifty has formed a black spinning top candlestick pattern. This candlestick reflects complete indecision between the bulls and bears. We have witnessed this candlestick pattern after a smart pull-back which implies weakness among the bulls and it is a warning about a potential change or interruption in trend. Going forward Nifty needs to sustain above levels of 5730-5735 for a fresh up-move. On the downside it will be important for the Nifty to sustain 5660.

Two-wheeler companies Honda Motorcycle & Scooter India, Bajaj Auto and TVS Motor have announced raising prices of their vehicles by up to Rs 800. Increasing diesel prices, costlier freight and other subsequent charges have led to pressures on manufacturers. The price raise is thus being enforced, even when market conditions have been curbing demand and affecting two-wheeler sales. Increased volatility can be expected in the stock prices of Bajaj Auto and TVS Motor.

Puravankara Projects yesterday announced its Q4FY13 numbers post market hours. The company reported an increase of 71% in net profit to Rs 79 crore, as compared to Q4FY12. For the same period, its consolidated revenues rose by 79% to Rs 416 crore. Expectations of robust results by Puravankara Projects led to a jump in stock prices by more than 7% yesterday. However, since the actual result has been robust, stock prices are expected to remain volatile today as well.

Drug major Cipla yesterday launched 'Etacept', a biosimilar of Etanercept which is used for treatment of rheumatic disorders. With launch of this drug, Cipla has now entered in the biologic segment. The drug is available at 30% discount to the branded drug. With this development the stock may show some gains today.

Shares of TCS may show some gains after the company has matched market expectations for its Q4FY13 results announcement. In the quarter, revenues of TCS grew by 2.2% to Rs 16430 crore on a sequential basis. Margins however were pressured, with the operating margin and net profit margin declining by 93 basis points and 8 basis points respectively. TCS witnessed a 4.4% growth in the volumes in the quarter on QoQ basis. The result of TCS looks good particularly when Infosys has failed to cheer investors.