Index Trends And Stocks In Action For 16th July 2013

The Indian equity markets ended on a positive on Monday on the back of buying witnessed in rate-sensitive stocks such as banks and real estate. In our last write up we mentioned that we expect the markets to continue building on its gains.

One important thing to note for today is that technically we have had a minor breakout on Bank Nifty. Bank Nifty has crossed its 200-day EMA, which is a positive sign for the bulls. Bank Nifty stocks, especially PSU banks, were pulling the bulls back. However, now they seem to have started participating in the rally. Going ahead, the Nifty will face resistance at levels of around 6055-6060. On the downside, the Nifty has support at levels of around 6010 and 5970.

Hindustan Petroleum has said that it will partner with Shapoorji Pallonji to set up a liquefied natural gas (LNG) import terminal at Chhara near Junagadh in Gujarat through a 50:50 joint venture. Shapoorji Pallonji is already setting up a new direct berthing port in Junagadh district. Both the companies are currently carrying a technical and commercial feasibility study for setting up a re-gasification terminal with annual capacity of 5 million tonnes. The shares of HPCL may show some gains today. However, gains may be pared on account of the rising rupee, as stated below.

With the rupee continuing to remain weak against the US dollar, losses on diesel have climbed to Rs 9.45 per litre, upsetting the government's subsidy maths. The government in January decided to raise diesel prices in small doses of 40-50 paise a litre every month till such time that losses on the fuel are wiped out. Regular hikes in fact brought down the losses on diesel to just Rs 2.62 in March from Rs 8.64 per litre. But with the rupee dropping below 60 to a US dollar, losses on diesel have now climbed back to Rs 9.45. This may not bode well for OMCs like IOC, HPCL and BPCL as the hike in petrol prices may get overshadowed. Hence these OMCs may trade with a negative bias in today’s trade.

Tunisian Indian Fertilisers (TIFERT), a joint venture of Coromandel International and Gujarat State Fertilisers and Chemicals Ltd (GSFC) with two state-owned units in Tunisia, has started production at its plant at Skhira. The Plant will consume around 1.4 million tonnes of Tunisian phosphate rock per year, producing 3.6 lakh tonnes of phosphoric acid annually. Stocks prices of Coromandel International and GSFC are likely to see some upward movement today.

Exide Industries has posted a net profit after tax of Rs. 158.80 crore for the quarter ended June 30, 2013 as compared to Rs. 152.04 crore for the quarter ended June 30, 2012. Total Income has increased from Rs. 1569.37 crore for the quarter ended June 30, 2012 to Rs. 1633.68 crore for the quarter ended June 30, 2013. The results has come out post market hours yesterday, hence the stock may trade on a positive note in today’s trade.

Metal stocks such as Tata Steel, JSW Steel, SAIL, etc may show some volatility on the back of the news that India's iron ore imports have declined by 78% in the first quarter of the current fiscal. This coupled with 9.1% decline in China's iron ore imports will put pressure on the growth plans of steel companies. Yesterday's China GDP data also came in softer which means that the world's second largest economy may not show any immediate growth. The stocks that we have mentioned may show volatility on the back of these developments.