Fram a stable prognostication all of last month , the Rupee suddenly nose dived on a pathetic July IIP performance which saw utilities coming up back to double digit growth as expected but apart from Electricity other sub indices were pretty badly scorched by a mostly inexplicable July patch of non performance. Fresh longs in Cipla and Ranbaxy apart from signalling a robustness of the sector also show a preponderence of defensive investors in this area despite the push for the sector to be counted with the cyclicals in the up move. Ranbaxy may have a lot of up move in this segment as markets consolidate below 8100 but nthe reorganization plan by Sun merely heightens the speculative nature of the stock in the Indian stock markets and one should be careful of sharp cuts in the proposition on the bourses leading the rediscovery of chinks in our ‘national’ big pharma strategy
Markets see opportunistic corrections in many cyclicals joining in the mainstream stocks in which cuts have been evinced to match the indices, and the dull nature of F&O markets after FIIs moved out of futures to index options, mostly 8100 and higher floors are likely to be fortified byt he correction and volatility spark up from 12% lows last week
Among the weaker stocks BHEL and some other unwilling Capex stocks must be jettisoned altogether. At this time one does not see a rosier prediction for even L&T in the capex stocks. Cuts in GAIL probably offer a buying opportunity. IDFC, ICICI Bank and HDFC Bank remain mainstream buys esp as HDFC Bank gets to get ahead of ICICI Bank and both lead banking sector performance by leaps and bounds ahead of the recovery data stabilising for India Inc.
Lack of volumes because of low floating stock show up on “opportunities” like info edge ( naukri, 99acres). IT sector would probably make a comeback into the good books ahead of results season sometime this month but this week’s move would necessarily not last on the sector. Lupin responds to news of another foreign pharma signing a marketing deal with Lupin