Index Trends And Stocks In Action For 19th November 2013

Indian equity market continued its rally for second straight day led by banking and capital goods stocks. Nifty closed up by 132 at 6189. In our last update we had mentioned that Nifty is showing signs of ending downtrend and we expect smart recovery, this was in line with our expectation. On daily charts nifty has followed by a bullish candlestick post forming inverted hammer, which hints buying momentum is likely to continue. Going ahead nifty has strong resistance around 6228 and if nifty sustain above this level next resistance around 6245. On downside nifty has strong support around 6158 and next support around 6120.

JK Tyre & Industries has informed that the company will invest Rs 1430 crore to ramp up capacity at its Chennai manufacturing facility which makes radial tyres for trucks, buses and cars. Also, the company is spending Rs 140 crore at its Mexican subsidiary Tornel to increase capacity by 18% from its present capacity of 3.2 million tyres. This news is likely to keep the stock in limelight in today’s session with a positive bias.

Dena Bank has lowered its loan growth target to 15-16% from the earlier estimate of 18% due to slow economic growth.  In 2012-13, it had witnessed 16.27% growth in credit on a YoY basis. The bank is also planning to raise Rs 600 crore through qualified institutional placement (QIP) after it receives capital infusion from the government. The revision of the credit growth target is likely to play a dampener for the stock prices in today’s session.

IPCA Laboratories has entered into an agreement with Avik Pharmaceutical Ltd to acquire 50 per cent stake in the firm. The company has entered into an agreement with Avik Pharmaceutical Ltd to acquire 50 per cent of its paid-up equity share capital, partly through purchase of equity shares from its existing shareholders and partly through subscription to its fresh equity share capital on a preferential allotment basis, both aggregating to approx Rs 6.51 crore. We expect a positive impact on the counter of IPCA Laboratories.

Tail Winds, a promoter entity of Jet Airways, today offloaded 7.89 per cent stake for over Rs 211 crore in the open market, as Naresh Goyal-led Indian carrier gears up to complete the 24 per cent stake sale to Etihad.  According to information available with the bourses, Tail Winds sold a total of 68,15,843 shares -- amounting to 7.89 per cent stake at an average price of Rs 310.15 apiece, pegging the transaction value at Rs 211.41 crore. Tail Winds used to hold majority of promoter shares till some months ago. Under the proposed deal with Etihad, Goyal would eventually have a 51 per cent stake in the company, while 24 per cent stake would be held by Etihad and the remaining 25 per cent will be with public. The counter of Jet Airways is likely to witness some pressure in near term.