Index Trends And Stocks In Action for 8th October 2013

Indian equity markets showed resilience in trade today and bounced back in the last hour of trade even as the global markets witnessed sell-0ff on US debt ceiling concerns. The strength back home was largely on account of dollar inflows after the US Federal Reserve announced its plan to continue with its quantitative easing program.  Nifty bounced sharply from important support levels of 5820. Going ahead nifty will face resistance around levels of 5940-5990. On downside support is likely to come in around 5870-5810.

Apollo Tyres' $2.5 billion deal to acquire Cooper Tire has run into rough weather as its demand for price reduction because of problems related to the US firm's operations in China and concessions to workers' union has been rejected by the latter. According to a complaint filed by Cooper in a US court, Apollo wanted a price renegotiation "far greater than the USD 2.50 reduction it had earlier proposed, and at one point referencing 'USD 8 or USD 9' per share". As per the original deal announced in June this year, Apollo had agreed to buy Cooper at USD 35 per share in an all cash transaction. We expect a positive impact on the counter.

The third round of spectrum auction may start from January 7th 2014 as per the tentative timeline worked out by an inter-ministerial committee (IMC), which was set up by the Department of Telecom. IMC had decided to complete the considerations over telecom regulator TRAI's recommendations by October 7th 2013 and make submissions to the Empowered Group of Ministers on spectrum, headed by Finance Minister P Chidambaram, by November 7th. We expect a positive impact on the counters like Bharti Airtel and Idea cellular.

Reports suggested that retiring a staggering debt of Rs 60,000 crore is the first thing on the mind of the Tata Steel management. Tata Steel may sell stake in Tata Group holding companies to Tata Sons, helping the company raise over Rs 5000 Crore. According to reports Tata Steel has identified four group companies to bring down that debt. These include Tata Motors, Tata Sponge Iron, Tayo Rolls and TRF. Expect a positive move in the counter in near term.

Commercial vehicle maker Force Motors reported a 40.70 per cent rise in net profit at Rs 26.93 crore for the quarter ended September 30, 2013 on the account of tax gains. The company had reported net profit of Rs 19.14 crore in the same period a year ago. Force Motors' reported deferred tax gain of Rs 23.41 crore during the quarter. Its current tax outgo also declined sharply by 85.71 per cent to Rs 71 lakh in the September 2013 quarter compared with Rs 4.97 crore in the corresponding quarter a year ago. We expect the counter to witness positive movement on the bourses.