Index Trends & Stocks In Action for 20th May 2013

The Indian markets bounced back in last hour of trading after a range-bound day of trade on Friday. The recovery was led by the Capital goods and the IT Sector. The Nifty ended up 17 points at 6187. The short-term trend for the Nifty remains fairly positive. The Index has been making a higher top and a higher bottom. On the daily charts there is no sign of a reversal candlestick yet. But if we look at key momentum oscillators such as the RSI and the Stochastic, they are in an overbought territory, which suggests profit booking. However we feel as long as the Nifty continues to trade above 6120, it is in an uptrend. Going ahead, on an intraday basis the Nifty will face stiff resistance around 6220-6248. On other hand support comes in at 6160-6125.

Shares of Infosys may show some negative trades over the news that the Income Tax department has slapped a USD 106 million or about Rs 582 crore tax notice on it pertaining to the fiscal year 2009. According to reports, the company is already contesting the additional income tax demand of Rs 1175 crore for the four years, starting from 2005 with the I-T Authorities. The company has said that it will seek a legal opinion against this latest demand but the stock is likely to show some negativity.

Despite gold price having turned volatile, credit rating agency Brickwork Ratings India has revised the credit rating  for the NCDs of Manappuram Finance from BWR AA- (Outlook: Stable) to BWR A+ (Outlook: Negative). The revised rating indicates an adequate safety of the capital which may result in the stock facing a good air today.

Tata Motors subsidiary TML Holdings Pte Ltd has issued and allotted S$350 million of senior notes due in 2018. The notes carry an interest rate of 4.25 percent. The stock will see some movement based on the news item, but nothing substantial out there.

Meanwhile Tata Teleservices seems to be in trouble with other GSM operators set to disconnect it on grounds that its licenses ought to be considered as cancelled. Subscribers of the GSM service of Tata Tele will not be able to make calls to subscribers of Airtel, Vodafone and Idea if this proposal goes through. Looks like a bad day ahead for the Tata Tele stock.

LIC Housing Finance is looking at floating a separate company to facilitate the home finance business in the North East. Looks like a good move for the company which is already the second largest standalone company in the housing finance space. The stock will react well to this development as it spells a good and better business opportunity.