Index Trends & Stocks In Action For 3rd June 2013

On Friday the Indian markets crashed piercingly, tracking weak global markets and worried about the Rupee’s decline against the dollar. Concerns that the US Federal reserve might trim its monetary stimulus soon too added to the pressure. The RBI Governor’s statement that retail inflation was still high also added pressure in the market as investors and traders dumped rate-sensitive stocks. The Nifty ended at 5986 down by 2.26%. In our last write we had mentioned 6050 to be a crucial support for the bulls and that a break below this level will level could take us down to 5970. Something very similar to our view unfolded on Friday. Going ahead, the market may consolidate in a range of 5910-5970 as the Nifty has multiple supports around levels around 5920-5940 on the daily charts. 5940 is also the 38.2% retracement level; which indicates that the market might take support around these levels.  However, in case the index breaks below 5910 it could trigger a fall to 5860-5820 levels. On the higher side the market will face resistance around levels of 6010 and 6050.

NR Narayana Murthy is back at Infosys as the Executive Chairman of the company with effect from 1st June 2013. IT experts have applauded his second innings. Kiran Mazumdar Shaw, Chairman of Biocon welcomed this decision saying that this will help the IT giant. Murthy has been appointed for a term of five years. According to industry experts Murthy’s appointment would also help the overall Indian IT industry. This development will have a positive impact on the shares of Infosys. By the way the stock was already up 3 per cent on Friday.

Leading auto manufacturers on 1st June released the monthly auto sales data. The country's largest car-maker Maruti Suzuki reported a 14.4% decline in sales for the month of May. Its domestic sales declined by 13% while that in the exports category were down 27%. Ashok Leyland also reported a 16% drop in sales for the month of May. Sales of Commercial vehicles were down 22%. Mahindra and Mahindra reported a 1.2% drop in its May sales but sales in the domestic markets were up by over 5%. The company however reported a massive 67% drop in the exports category. TVS Motors also reported a 6% decline in the May sales with an 8% drop in its two wheelers sales in the month. Now what this means for all these auto stock’s is certainly not required to be spelt out in clear words.

According to media reports, GSK Plc, the promoters of GSK Pharma India are in talks for increasing their stake in the company. The English company is likely to hike its stake upto 75 percent via a voluntary open offer that will take place in the next two-three months. Currently, the promoters hold around a 50.67 percent stake in GSK Pharma while foreign institutional investors (FIIs) and domestic institutional investors (DIIs) put together hold more than a 33 percent stake in GSK Pharma.

According to reports, the government is mulling over the idea of splitting Coal India into smaller units that will compete with each other. The move comes in to usher in a better performance on the coal front which bodes well for the whole economy. Watch out for the Coal India stock as it could react to this piece of news.