Nifty ends August series above 5300

The Indian market ended on an optimist note in an otherwise dull day of trade. The Nifty shot up to close above 5300 mark in last one hour of trade recovering nearly 60 points from day's low. The recovery was led by realty and banking stocks.

The focus will now shift to West for cues from Jackson Hole meeting tomorrow. Back home, the GDP numbers for the first quarter of the financial year 2013 will be announced as well.

The Sensex closed at 17541.64 up 50.83 points or 0.29% and the Nifty shuts shop at 5315.05 up 27.25 points or 0.52%. About 1368 shares advanced, 1326 shares declined, and 752 shares remain unchanged.

DLF, IDFC, Jaiprakash Associates, Power Grid and Hindalco were top gainers in the Nifty. GAIL, Tata Steel, Maruti Suzuki, Jindal Steel and Sterlite Industries were top losers. 

Nifty in August series

The Nifty surged close to 5% in the August series. The broader markets underperformed largecaps. Prominent names like Alok Textiles, S Kumars, IFCI, Opto Circuit, JP Power and Patel Engg were down in the range of 18-30% in this series.

Top news of the day

CRISIL believes that loans restructured by Indian banks may increase sharply to Rs.3.25 trillion in FY13 against the earlier estimate of Rs 2 trillion.

Shares in Hero MotoCorp fell after Credit Suisse downgrades the stock to "neutral" from "overweight" and cut its target price to Rs 2,056 from Rs 2,401.

JPMorgan initiates coverage of Sesa Goa with an "overweight" rating and a September 2013 target price of Rs 240.

Indian telecom major, Reliance Communication bagged multiple government orders worth Rs 150 crore.

Global player British Telecom today began sale of a part of its over 23% stake in IT major Tech Mahindra  in the open market. The stock recovered post a block deal in Tech Mahindra.

In another block deal, over 4% equity of MTNL changed hands at Rs 37.40-45.10 per share.

Orchid chemicals will sell its Penicillin and Penem API business, including its plant in Aurangabad to Hospira for USD 200 million.

Mphasis was up 2% post earnings. Revenue was up 2% at Rs 1355 crore while PAT was up 10% at Rs 208.7 crore.

Jaypee infra fell after the UP government shelved the over 1000 crore Agra inner ring road project which was awarded to the company three years ago.

Gold fades

Indian gold extended losses on Thursday to trade close to its lowest level in a week, with local importers eyeing Federal Reserve chairman Ben Bernanke's speech that could stoke expectations of a third round of easing.

The market has cut some of its early trade losses as the Nifty is inching towards 5300. Broader markets have also flattened out, but midcap technology and financials continue to drag. Some buying was seen in realty and pharma stocks.

Manish Kumar of ICICI Prudential feels that the market has practically moved sideways over the last two years and primarily on the macro front.

Kumar believes, in market conditions like this, investors should focus more on balance sheet than P&L. According to him, companies with better balance sheets have done much better.

The Sensex was down 27.13 points or 0.16% at 17463.68, and the Nifty was down 2.95 points or 0.06% at 5284.85.

About 1244 shares have advanced, 1338 shares declined, and 864 shares are unchanged.

Top losers on the Sensex were GAIL at Rs 356.15 down 2.37%, Maruti Suzuki at Rs 1,145.85 down 1.94%, Tata Steel at Rs 368 down 1.71%, Hero Motocorp at Rs 1,820 down 1.6% and Jindal Steel at Rs 354.35 down 1.53%.

Most active shares on BSE were Tech Mahindra, HDFC, SBI, United Spirits and AP Paper Mills.

Tech Mahindra and Mahindra Satyam trade under pressure. in a move to pare down its shareholding in Tech Mahindra, BT sold 8.4% of its stake with a large chunk sold at the lower end of the price band at Rs 775 a share.

Jaypee Infra was down nearly 2% after the UP government shelved the over 1000 crore Agra inner ring road project, which had been awarded to the company 3 years ago. the government will now float a fresh tender for the project

Lanco Infra gains as news reports indicate that the company could be in talks with private equity firms Bain Capital and Kohlberg Kravis Roberts to sell stake in its power business.

Refinery major HPCL was trading at Rs 297.15 down 4.35% from its previous close of Rs 310.65.

It was a dull session for the market so far but traders expect a bout of volatility in the last one hour of the expiry day. The Nifty was hovering around 5270 mark in a narrow band of 20 points. European markets open flat today.

The Sensex was down 45.65 points or 0.26% at 17445.16, and the Nifty was down 11.55 points or 0.22% at 5276.25. About 1117 shares advanced, 1341 shares declined, and 988 shares remain unchanged.

Top gainers on the Nifty were DLF, Hindalco, Tata Motors, Wipro and Bajaj Auto. GAIL, Jindal Steel, Maruti Suzuki, Tata Steel and Hero Motocorp were top losers.

In the smallcap space, Ind-Swift Labs, TV18 Broadcast, Munjal Auto Industries, Hindustan Media and India Glycols were bzzing in trade. Net 4 India, Hind Dorr-Oliver, Prakash Ind, SPML Infra and Surana Ind were bleeding

Japan's Nikkei average fell below 9,000 to a two-week closing low on Thursday as hopes that US Federal Reserve Chairman Ben Bernanke will signal more stimulus in his speech on Friday faded, while resources-related shares slid on a weaker outlook.

Crude oil futures prices declined by 0.24% to Rs 5,301 per barrel today as speculators reduced positions amid a weak trend in Asian trade. 

Amid profit-booking by speculators after recent gains and a weak trend overseas, gold futures today fell by 0.15% to Rs 30,802 per 10 grams.

The benchmark index Nifty was trading flat ahead of the expiry today. Market seems to be awaiting cues from the Jackson Holes meet and Q1 GDP numbers (India) scheduled to announce tomorrow.

The Sensex was down 69.13 points or 0.40% at 17421.68, and the Nifty was down 17.00 points or 0.32% at 5270.80. About 1061 shares advanced, 1252 shares declined, and 1133 shares remain unchanged.

Selling pressure was seen in metals, autos and capital goods. Cues from the Asian markets were also not so encourgaing. Japanese retail sales fell 0.8%, much higher than expectations of a 0.2% decline.

DLF, Hindalco, Wipro, Cipla and Cairn India were top gainers in the Nifty. GAIL, Maruti Suzuki, Jindal Steel, HDFC and Hero Motocorp were top losers.

UBS advises investors to stay defensive in Indian stocks, arguing valuations for the Nifty at 12.9 times 1-year forward P/E "are not cheap."

Looking at its model portfolio, the investment bank remains "overweight" on consumers, pharmas and defensive power stocks; "neutral" on IT; and "underweight" on autos, banks, cements, materials, and oil & gas.

Tech Mahindra recouped losses after BT sold 8.4% of its stake with a large chunk sold at the lower end of the price band at 775 rupees a share.

Orchid Chemicals was up 2% after the company divested its Penicillin and Penem API business along with an associated process R&D infrastructure in Chennai for around 200 million dollars.

Mphasis reacted positive to its earnings. Revenues and margins came in slightly below estimates as HP continues to drag but the bottomline was in line above 200 crore, led by higher other income.

The Sensex sheds another 100 points in trade today. Sentiment is weak ahead of the expiry of August derivative contracts later in the day.

Hero Honda lost 2.5% on expectations of a slowdown in demand and a pileup of inventory. Other blue chips like Reliance Industries, ICICI Bank fall on worries April-June GDP data on Friday will disappoint, dealers say.

The Sensex was down 94.03 points or 0.54% at 17396.78, and the Nifty was down 23.60 points or 0.45% at 5264.20. The breadth of the market was negative. About 753 shares advanced, 1130 shares declined, and 1563 shares remain unchanged.

Top gainers on the Nifty were DLF, Hindalco, Cairn India, Power Grid Corp and Wipro.

In a block deal, BT sold stake in IT major Tech Mahindra at Rs 775 per share. The stock recovered after inital sell off.

DLF was up 2% after company reported that promoters sold stake in the open market worth Rs 70 crore.

Wockhardt, Glenmark, Manappuram Finance, MTNL and FAG Bearings were top gainers in the midcap space. On the losing side, Glodyne Techno, Jaypee Infra, Religare Enterprises, Bombay Dyeing and Cox & Kings tops the list.

Brent crude fell towards $112 a barrel on Thursday after oil facilities in the Gulf of Mexico were largely spared storm damage, but maintenance at North Sea fields and a possible strike in Norway's oil sector curbed losses.

The rupee is lower at 55.72-55.73. Pair likely to remain in range-bound trading ahead of GDP data on Friday. Month-end oil-related dollar demand and corporate inflows will also be watched, traders say.

The Nifty opens lower for fifth consecutive session on the final day of the expiry.  The focus will now shift to West awaiting decisive move from central bankers' meet at Jackson Hole.

The August series will go down as a big disappointment especially for the broader markets. Midcap stocks like IFCI, GMR Infra, Opto Circuits, Indiabulls group stocks were singled out for the punishment.

The Sensex was down 60.09 points or 0.34% at 17430.72, and the Nifty was down 18.15 points or 0.34% at 5269.65. About 303 shares advanced, 389 shares declined, and 2754 shares remain unchanged.

Metal, realty and auto stocks were on sellers radar today. Top losers on the Nifty were Jaiprakash Associates, Sesa Goa, Sterlite Industries, Jindal Steel and SAIL.

Asian markets were trading lower. Hang Seng slipped 1.20%, Nikkei shed 0.74%,  Straits Times was down 0.88% and Seoul Composite fell 1.37%.

Buzzing Stocks

BT will sell its 5.6-8.4% stake worth USD 100 million in Tech Mahindra via block deal today. The stake sale may happen between Rs 775-790 per share.

Alembic Pharmaceuticals' reports that major part of its manufacturing operations at Halol, Vadodara has been restored.

Chart Check

"The action formed the biggest Bear Candle of the current Settlement ending today. The candle's high-low levels exactly touch both sides of the channel we showed. The low is now testing the previous support of August 10 at 17471. After heavy losses, watch if the nearby levels provide some support again. The bias would remain negative otherwise." reports ICICIdirect.

Rollover Analysis

Nifty rolls were at 50.06% vs. the 3M average of 51.67%. Market wide rollover was at 63.57% vs. the 3M average 64.58%.
 
Sectorally, the cement, capital goods and FMCG space is witnessing high rollover of positions while technology, pharma and oil & gas stocks are observing relatively low rolls into the September series. High rollover was observed in Tata Communication (89%), CESC (87%), McLeod Russel (84%), Videocon Industries (82%) and Sintex (80%).
 
With just one day to settlement, TVS Motors, Hexaware, Fortis, Petronet and Exide. Volatile movement in these stocks can be expected due to closure of positions. Among index stocks, HDFC (32%), ACC (43%) and Dr Reddy's (45%) are witnessing low rolls while Bhel (80%), Maruti (73%) and Power Grid (70%) are observing better rollover into the September series.

Currency Strategy

ICICIdirect expects the US dollar to attract some buying on declines against the Indian Rupee. Buy USDINR September future above 55.88 with a stop loss of 55.79 and target of 56.05

Market cues:

• FIIs net buy USD 30 million in cash market on August 28
  
• MFs net sell Rs 224 cr in cash market on August 28

The US markets eke out marginal gains following the Fed's beige book report, but trading was thin and muted throughout most of the session as investors remained cautious ahead of Chairman Bernanke's speech tomorrow. The CBOE volatility index rose more than 3% to above 17.

Dow Jones Industrial Average was up 0.03% or 4.49 points at 13107.48. Nasdaq Composite was up 0.13% or 4.05 points at 3081.19. Standard & Poor's 500 was up 0.08% or 1.19 points at 1410.49.