22^nd August, 2013 : Comments by Amar Ambani, Head of Research, India Infoline

Healthy recovery…Nifty reconquers 5,400 mark

The Indian equity market, for the first time in four days, showed some signs of a recovery with the Sensex shutting shop above the 18,000 mark while the Nifty reconquered the 5,400 mark once again.

This, despite the weakness in the Indian unit. The rupee on Thursday slipped below the psychological level of 65 against the dollar, hitting new lows for the fifth straight session. The weakness today was precipitated by the US Federal Reserve which once again hinted it would start scaling back stimulus as early as next month. The Indian unit slumped by 2.2% to hit a new record low of 65.56 against the dollar.

So, healthy was the recovery that only the BSE Realty index ended in the red. The metals index was the top gainer, up 8.2%, followed by oil and gas (up 3.5%), healthcare (up 2.6%) and IT (up 2.5%). Even the BSE Midcap and the Smallcap indices edged higher by 0.5% each.

The Sensex finally closed Thursday at 18,312, up 407 points, while the Nifty shut shop at 5,408, up 106 points over Wednesday’s close.

The advance-decline ratio favoured the bulls. On the Bombay Stock Exchange, 1,280 stocks advanced against 985 declines, while 139 remained unchanged.

Volatility, as measured by India VIX, was up 3.5% at 29.06. It hit a day’s high of 29.86 and low of 27.99.

Ranbaxy, Sesa Sterlite, Hindalco, Reliance Infrastructure, Tata Steel, JP Associates, ONGC, NMDC and Bharti Airtel led the gainers pack while DLF, HDFC, HDFC Bank, Axis Bank, ACC and Grasim lost out in trade.

Sesa Sterlite, a unit of Vedanta Resources, surged 13% to close at Rs.155.5 per share. This, after the company replaced Sterlite Industries on the Sensex.

Tata Steel, the country’s biggest producer of steel, surged 10.7% to close at Rs .273 per share after major brokerages including IIFL Institutional Equities upgraded the scrip citing a weak rupee.

However, Amar Ambani, Head of Research at IIFL, has chosen to stay neutral on the counter citing rich valuations. “Sesa Goa and Sterlite bounced back sharply in trade today after the government cleared the stake sale in Hindustan Zinc. Increase in stake would be a positive trigger for the stock due to the high cash balance with Hindustan Zinc.”

Adani Power close at Rs. 36.55, a 5.7% jump, after the Maharashtra Electricity Regulatory Commission allowed a 57 paise per unit hike for power supplied over and above 520 MW.

Hindalco surged 11% as Group Chairman Kumar Mangalam Birla looks set to invest Rs. 2.1bn by October raise his stake in the aluminium major to 37%.

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