Index Trends & Stocks In Action For 28th May 2013

The Indian markets ended with gains of about 1.66% yesterday led by index heavyweight Reliance Industries after the company and its partners announced a significant gas and condensate discovery in the KG D6 block. The Nifty ended at 6083 up by 100 points. In our last write up we had mentioned that index looks oversold on extreme short term charts and we expect a bounce back. We witnessed a sharp bounce and once 6040 was cleared the index rallied non-stop to levels of 6100. Going ahead, the market will face some resistance around levels of 6120-6150 on the Nifty. On other hand support will come in at around 6040-5970 levels for the index.

FMCG major Dabur India announced expansion of its packaged foods business with the launch of fruit juice-based drinking yoghurts under the Real Activ brand. The new Real Activ Drinking Yoghurt will be available in two delicious variants of Mango and Strawberry, said a company release. It will be available in two stock keeping units of 1 litre and 200 ml priced at Rs 105 and Rs 25, respectively. These new developments on the product launch front will keep the stock abuzz.

State-owned Coal India will raise coal prices by an average of 10 per cent on lower grades with effect from today, a move which may lead to higher input costs for some user industries. The world's largest coal producer also announced a price reduction for higher grades by an average of 12 per cent. This will keep the stock in action for today.

Mahindra Lifespace Developers informed the BSE in a letter that FII holdings in the company have reached 28.24% of the paid-up capital. This number is as per the latest download of beneficiary positions made available to the company by the depositories. A limit of 30% has been set up by the RBI for FIIs to invest in Mahindra Lifespace Developers under the Portfolio Investment Scheme. This is likely to result in increased volatility in the stock prices of Mahindra Lifespace Developers today.

JK Tyre announced its Q4FY13 numbers post market hours yesterday. On a standalone basis, the company reported a decline in revenues of 7.19% to Rs 1382.83 crore, on a yearly basis. Its EBIT increased by 12.64% to Rs 103.41 crore while its net profit declined by 49.17% to Rs 33.79 crore. It also announced that it would invest over Rs 800 crore to double the manufacturing capacity of its Chennai plant over the next two years. At the same time, it is also looking at an investment of USD 25 million at its Mexican subsidiary Tronel towards capacity expansion. Stock prices of JK Tyre are expected to remain volatile today.

Jet Airways will pare around Rs 2777.5 crore of debt in FY14 bringing it down to around Rs 8333 crore. The company announced this in its earnings call. The airline will also raise around Rs 1944 crore (USD 350 million) by leasing out its aircraft. One can expect a up-move in the counter today following these announcements.

Bajaj Finance is expecting its net interest income (NII) to grow by 20-25 percent in FY14. It also sees its net interest margins (NIM) improving and cost of funds going down. “We are looking at 20-25 percent asset growth and net income growth for the current year. We are just 50 days into the current fiscal. Overall the momentum at this point of time for the company is strong and we hope to deliver 20-25 percent asset and net income growth for the year” said a top level company executive in an interview. We expect the stock of Bajaj Finance to witness an up-move on the bourses today.

Bata India is diversifying its business in the accessories categories like sunglasses and scarves and is expecting to net 15-20 percent of revenues from this area in the next two-three years. We expect the diversification to help the company in terms of margin improvement also. Spells good for the counter in the long term.