Index Trends & Stocks In Action For 6th May 2013

The Indian markets ended the week after a volatile trading session. It ended on a lower note on Friday after the Reserve Bank of India announced lower-than-expected rate cuts and the central bank’s comments on the limited room for monetary easing hit the sentiments of investors and traders. The Nifty declined by 55 points closing at 5955. Banking stocks were the worst performers with the index declining by about 2.5%. On other hand, some buying was seen in Metals, which provided some respite to the markets.

The area of concern is that in the last two trading sessions, the markets touched the mark of 6000, but did not sustain or close above it. So going ahead bulls will keep an eye on the level of 6000 on a closing basis. If we close above this level, we anticipate that the markets will gain momentum and a new long position may build in.

A few points which reveal the strength of the Nifty are that the Nifty continues to trade firmly above its key moving averages and the MACD 14-day RSI and the ADX are in favor of the bulls on daily charts. Technically the Nifty needs to move past 5980-6020 levels to gain further strength. In case the index fails to cross 6020 in the next couple of sessions, one can assume that the Nifty may have hit a temporary high. Support for the Nifty is at levels of around 5920-5880.

UltraTech Cement said it plans to increase capacity at Aditya Cement Works in Rajasthan by 2.90 million tonnes per annum (MTPA). It also plans to set up two grinding units there. This additional capacity is expected to be commissioned by 2015 and would require an investment of Rs 2000 crore. Apart from the above, the company has been commissioning projects at several locations including Rawan (Chattisgarh), Cochin (Kerala) and Katni (Madhya Pradesh). Some upward movement is expected in the stock prices of UltraTech Cement as a result of this announcement.

According to reports, ace investor Rakesh Jhunjhunwala picked up 25 lakh shares of budget carrier SpiceJet for an estimated nearly Rs 10 crore. According to report, Jhunjhunwala together bought 25 lakh shares of SpiceJet through open market transactions. Even the promoters have increased stake in the counter. The overall holding of promoters in the airline also climbed to 52.14 percent from 48.59 per cent at the end of the March quarter. We expect a positive move in the counter.

In a move to retire debt, Suzlon Energy is planning to divest its stake from 15 non-core assets. In this move, it would raise up to USD 400 million, which would help ease its debt-pile of approximately Rs 14600 crore. This sell-off would take place over the next 12-18 months and would concentrate on geographies like China, US, etc. This move is in line with the company’s debt restructuring programme and would result in some upward movement in the stock prices today.

News reports have been indicating that Reliance Industries may win approval of USD 1.452 billion worth investment for the development of a natural gas find it has made in a Cauvery basin block off the Tamil Nadu coast several years back. RIL proposes to produce 150 million standard cubic feet per day of gas for 10 years from five development wells on the find and has proposed a capex of $1.452 billion in development of the find and another $267 million of exploration expenditure. Stock prices of RIL can see a slight upward bias in today’s trading session.

NMDC announced prices of iron ore for the month of May 2013. The company retained prices at the same level as in April 2013, wherein prices of iron ore lumps and fines stood at Rs 4600 and Rs 2610 per tonne respectively. From October 2012, on account of subdued demand, the company has either reduced prices or cut them down, on a monthly basis. This is likely to cause volatility in the stock prices of NMDC today.