Index Trends & Stocks in Action For 24th May 2013

The Indian markets slipped below the crucial psychological mark of 20,000 on Thursday following a sell-off in global markets on fears that the US Federal Reserve may discontinue with quantitative easing. Moreover, the Q4FY13 result of SBI disappointed the markets and the stock plunged almost 9%. The 50-share Nifty ended at 5967, down by 127 points.

In our last write up, we mentioned that the Nifty has a crucial support level at 6070. Once this support is broken, the markets can slide down to lower levels. Yesterday, as soon as 6070 was breached on the Nifty, there was a free fall.

Going forward, 5920-5930 would be key levels for the Nifty. If these levels are sustained, we may see a pullback rally. On the higher side, resistance would come in at levels of around 6000-6040.

Tata Steel, part of the Tata group has reported consolidated loss of Rs 6528 crore for the March quarter in comparison to profit of Rs 433.40 crore which it posted in the year-ago period. However, if we remove Rs 8355 crore provision for impairment of non-core business, the firm would have been profitable. Total sales of the company have increased by a mere 2% on a yearly basis to Rs 34650 crore.  However, EBIDTA has increased by 27.7% and consequently the EBITDA margin has increased by 250 basis points. Share prices of Tata Steel are expected to remain volatile through the day.

Glenmark Generics, a subsidiary of Glenmark Pharmaceuticals, is recalling multiple lots of three of its drugs from the US market due to "odd smell", according to US Food and Drug Administration. A notification issued by the US Food and Drug Administration said that the drug major has initiated voluntary recall of its Gabapentin tablets 600mg, 500-count bottle and 800 mg, 500-count bottle, Pravastatin Sodium tablets 40 mg, 90-count bottle and Topiramate tablets 200 mg, 60-count bottles from the US market following the identification of the problem. Stock prices of Glenmark are likely to see downward pressure today.

Zuari Agro Chemicals has said that it would not be able to start its Ammonia/Urea Plant due to unavailability of water from the Government of Goa. The company had shut this plant for annual maintenance and the necessary work has been completed. The company reported poor sales and a loss of Rs 6.6 crore in the March quarter. With this latest development no reversal in the bearish trend is expected.

Shares of Wockhardt yesterday tanked 20% on the back of the news that the company has received a US FDA alert on its Aurangabad manufacturing facility. The market has turned bearish on the stock as there is no buyer in the counter. Its Aurangabad unit does not add significant revenues in US Generics business and hence there would not be significant decline in the top line. The market is however worried if the alert is extended to all of its units. On the back of this, Wockhardt is expected to see an extension of negative trades today.

Among the major companies to announce their Q4FY13 results today are Britannia Industries, Crompton Greaves, Gammon Infra, Gujarat Carbon, HSIL, ICRA, Jet Air India, JMT Auto, Karur Vysya Bank, Pratibha Industries, Spicejet and Sri Adhikari Brothers. These stocks are expected to remain volatile through the day with the directional trend depending on the results they announce.