Stocks In Action For 3rd July 2012

Business Standard has reported that Reliance Power has lost a case against distribution companies over the Krishnapatnam UMPP (penalty notice of Rs 400 crore). According to the news report, the court has dismissed the petition in favour of the discoms, maintaining that there are no grounds to grant interim injunction. The discoms would now encash the available amount of Rs 320 crore by invoking a bank guarantee, besides initiating action to collect the balance amount demanded from the company.

According news sources, ITC shares today would continue feeling the heat after the Uttar Pradesh government raised the value-added tax (VAT) on cigarettes to 50 per cent, stoking fears yet again that this move, which comes on the back of similar moves in some other states, could hurt volumes at India’s largest cigarette maker. The stock yesterday closed lower by 3.4 per cent.

Jindal Steel is set to buy European steel maker, SMS Meer, for Rs 1,500-2,000 crore. SMS Meer is part of the European SMS Group which largely produces copper, aluminum and steel. Jindal Steel is actively looking to expand in the European region. This is an important acquisition for the company. Apart from this, they are also in talks with a couple of players in Australia and Mangolia. This looks as positive news and one may see gain in the share price of Jindal Steel in today’s trading session.

According to media reports, Grasim Industries yesterday post-market informed the BSE that due to water shortage at Nagda (Madhya Pradesh), the company will have to curtail production at its staple fibre plant, closed from June 3. On the back of this news one may see volatility with a negative bias in the share price of Grasim in today’s trading session.

Ambuja Cements has reported 7.2 per cent rise in its dispatches to 1.79 million tonnes in June 2012. Cement production also grew by 7.9 per cent. The rise, surprisingly, is in the traditionally sluggish season of monsoon. ACC has also reported growth in dispatches from 1.91 million tonnes to 1.96 million. Its production grew to 1.97 million tonnes from 1.89 million tonnes. This is positive news for the industry and we may see some gains in the shares of these companies as well as other related stocks.

Two-wheeler maker, Hero MotoCorp, has reported 4.3 per cent rise in its two-wheeler sales to 5,34,091 units. On a sequential basis, however, sales were down by 4 per cent. Bajaj Auto has also reported a 6 per cent year-on-year drop in its June total sales at 3,45,162 units due to lower demand. The four-wheeler sales also indicate towards a not-so-robust demand and therefore the industry may take some time to come back on the growth path. We expect volatility in the above stated companies’ scrips as well as the auto stocks.

According to a media report, the promoter holding in Kingfisher Airlines has dipped to a low of 35.86 per cent. After excluding the pledged shares, the promoters hold a merely 3.55 per cent in this debt-ridden airline company. On this news the shares may be under selling pressure today.