19th August, 2013 : Comments by Amar Ambani, Head of Research, India Infoline
Manic Monday! Nifty just afloat 5400 levels
The bear onslaught continued on day two, with the Nifty losing another 93 points led by a weakening rupee. The Nifty barely managed to hold on to the 5,400 mark. The Indian currency weakened to a record low of 62.94 per dollar on concerns that the Federal Reserve may rollback its bond-buying programme earlier than schedule.
There was no respite for investors in bank stocks. The BSE Bankex was the top loser among sectoral indices, falling another 3.5% in trade today. Stocks like Axis Bank, ICICI Bank, IndusInd Bank, Punjab National Bank, State Bank of India and Kotak Mahindra Bank were among the top losers.
Among the other major laggards were auto, healthcare, consumer durables, FMCG and capital goods stocks. Even the BSE Midcap and Smallcap indices declined by 1.3% and 1%, respectively. Bucking the negative trend was BSE Metals and BSE IT indices, up 1.7% and 0.3% respectively.
The benchmark indices ended off the day’s low on account of short unwinding in metals and select power stocks. The Sensex closed at 18,307, down 291 points, while the Nifty shut shop at 5,414, down 93 points over Friday’s close.
So, how will the market trade going forward? Amar Ambani, Head of Research at IIFL, feels all is not lost for the market. “On the monthly charts, 5,380-5,400 is crucial support for the Nifty. A breach of this critical support will lead to a further sell-off. It would confirm a breach of the weekly head and shoulder neckline. A temporary pullback cannot be ruled out if the Nifty manages to hold above 5,380 on a closing basis.”
The advance-decline ratio favoured the bears. On the Bombay Stock Exchange, 1,396 stocks declined against 891 advances, while 142 stocks remained unchanged.
Volatility, as measured by India VIX, spiked another 8% to close at 25.59. It hit a day’s high of 26.99 and low of 23.64.
Tata Steel jumped 5% to close at Rs. 247.05, up Rs. 11.7 from Friday’s close, after many brokerages raised their target prices post better-than-expected June quarter results.
Adani Power surged 6.23% to close at Rs. 35.8 per share after a CERC panel headed by Deepak Parekh recommended a 25% tariff hike for Mundra-based power stations. Tata Power too inched up 1.29% and closed at Rs.74.4.
Siemens closed 1.06% higher after winning two contracts aggregating Rs. 1.44bn from the Rural Electrification Board, Bangladesh to construct 38 new 33/11kV sub-stations.
Simbhaoli Sugars surged 6.7% to close at Rs. 15, even as company’s net loss widened to Rs. 41.82cr for the first quarter ended March 31, due to higher expenses and finance cost.