Profit booking sets in; Re near 60/$

iifl2nd July, 2013 : Comments by Amar Ambani, Head of Research, India Infoline 

Profit booking gripped the benchmark indices today after three days of consecutive gains. Every time the bulls tried to bounce back, a deluge of selling pressure stemmed their tide. Negative vibes from the European equity market also proved to be a dampener.

The Sensex closed down 113 points at 19,463 while the Nifty closed at 5,857, down 41 points over Monday’s close.

Realty, auto, oil and gas, capital goods and banking stocks were under pressure in trade today. Even mid and small-cap stocks were not spared. However, defensives like pharmaceutical and the consumer durable stocks were in the green.

After appreciating on Reserve Bank intervention and government reforms, the Indian rupee once again weakened in trade today. It hovered tantalizingly close to the 60 per dollar mark.

Jindal Steel, DLF, Axis Bank, Reliance Infrastructure, Tata Power, Punjab National Bank, NMDC, NTPC, Maruti and ONGC lost out while Ranbaxy, Lupin, GAIL India, Bharti Airtel, BHEL, ACC, IDFC, Sesa Goa, HCL Technologies, ICICI Bank and JP Associates were gainers.

The advance-decline ratio marginally favoured the bears. On the Bombay Stock Exchange, 1,217 stocks declined against 1,130 advances, while 145 stocks remained unchanged.

Mahindra Satyam and Tech Mahindra fell 2.5% in trade today. But Amar Ambani, Head of Research at IIFL, feels investors should continue to hold on to the stock. “With the consummation of the long standing merger between Mahindra Satyam and Tech Mahindra, the combined entity now will be the fifth largest in India. Complementary strengths in services and verticals, non-overlapping client base, reduced concentration risks and operational synergies are the key benefits from the merger. We remain positive on the combine considering the improving prospects and attractive valuation.”

Stocks in News:

Elder Pharmaceuticals closed up 2.7% at Rs. 344 per share after the company acquired UK-based Max Healthcare for an undisclosed amount. Via this buyout, the company looks to re-enter the over-the-counter pharmaceutical business.

Zensar Technologies closed at Rs. 261, up 2.5%, on reports that it is in talks to acquire two US-based companies.

Unitech ended at Rs. 22.75, down 2.15%, after it approached Morgan Stanley, Singapore government-owned GIC, and Blackstone to sell its Infotech Special Economic Zone in Gurgaon.

Madras Cements fell 3% despite reports that the company plans to invest Rs. 360 crore to set up a new grinding unit in Andhra Pradesh and another Rs. 55 crore to boost its power generation capacity.