Index Trends And Stocks In Action For 31st July 2013

The Indian equity market fell 1.3% on Tuesday as the rupee dropped below the 60-mark post RBI’s credit policy review, continuing weakness for the fifth consecutive session. Selling was witnessed among all the sectors with Oil & Gas being the biggest loser on fears that the rupee depreciation may raise import cost for Oil Marketing companies. BPCL, IOC and HPCL were trading lower in the range of 8-11%. Buying was witnessed in IT counters like HCL Tech and Infosys. In our last write up we mentioned that the Nifty has a big hurdle at around 5870, on the upside. What we saw on Tuesday was that the Nifty, after touching a high of 5861, corrected by almost 100 points.

Now we had five days of back-to-back decline; a decline supported by strong volumes and no relief rally. So this gives a warning that traders and investors are liquidating their long positions. Going ahead, we feel the markets may touch levels of 5650 in the short-term. For intraday trades, 5740 is a strong support on the downside and next support is at levels of around 5700. On the upside, 5810-5830 will act as stiff resistance.

Gati has announced that GE Energy Financial Services has invested Rs 257 crore in Gati Infrastructure, an infrastructure arm of Gati. The infrastructure subsidiary of the company is setting up a 110 MW hydro power plant in Sikkim. It is said that the turbines and generators are being supplied by Alstom India. Following this, we expect shares of Gati to show some positive response on the stock exchange. 

After the RBI policy yesterday, the forex markets did not show any excitement. The rupee also breached the 60/dollar level showing continued outflow of capital from the country. Under such circumstances, HPCL, BPCL and IOC have shown high volatility and the same is likely to continue going ahead. We expect HPCL, BPCL and IOC to remain under pressure today as well.

Dr Reddy’s Laboratories said that it plans to move away from the traditional generic drugs business to value-added drug making, in a move to strategically shift its business focus. It expects 70% of its revenues to come from partnerships and non-oral solid medicines by FY17. The company said the above post its result announcement wherein it reported a 12% increase in net sales and 7% in net profit, on a yearly basis. The company may see some upward movement today.

The Pune Labour Commissioner Office witnessed strong protest from the labour union of Bajaj Auto and discussions between them failed once again on account of strong agitation, said media reports. The consistent failure in discussions, with no clear resolution being reached at, is likely to negatively impact stock prices of Bajaj Auto.