India Stocks Outlook for the week (21-24.08.2012)

[rupeedesk]

India Stocks Outlook for the week (21-24.08.2012)

Stock indices may continue to move in a tight range next week, with overseas markets lending cues on Tuesday after a long weekend back home. Indian financial markets will be closed on Monday for Id-ul-Fitr. Yesterday, indices ended off highs as the Comptroller and Auditor General of India, in a report tabled in parliament, pegged the financial gain that private companies made due to the government's flawed coal allocation policy at a staggering 1.86 trln rupees.

The CAG also blamed the government for vitiating the tender process in the award of Madhya Pradesh-based 4,000 MW Sasan ultra mega power project to Reliance Power and helping the private sector generation company derive undue benefits to the tune of 290.33 bln rupees in the process. The CAG also alleged that the civil aviation ministry and the Airports Authority of India connived against the government's interests to blatantly favour the Delhi International Airport Ltd.

National Stock Exchange's 50-scrip Nifty ended at 5366.30, up 3.35 points or 0.1% from Thursday, and BSE's 30-stock Sensex closed at 17691.08, up 33.87 points or 0.2%. Traders see the Nifty in the band of 5300-5450 next week. Traded volume is expected to remain low due to subdued foreign investor participation. Yesterday, the combined turnover in the cash segments of the BSE and NSE was around 124 bln rupees, largely unchanged from Thursday.

Stocks of power companies are likely to remain weak. Reliance Power and Tata Power Co may see another 3-4% fall in coming days as both the companies have been named by CAG as having been favoured in coal mine allocation. On yesterday, Reliance Power shares ended down 5.9% at 87.65 rupees, and those of Tata Power closed down 4% at 97.25 rupees.

GMR Infrastructure is also expected to remain subdued. The stock ended down 3.1% at 20.55 rupees yesterday after the CAG said the GMR Group was given 196-acre for its Delhi International Airport for 60 mln rupees, while current value of the land is 240 bln rupees.

Stocks of consumer goods companies are likely to trade with a positive bias as investors would prefer to stick to defensive bets. Rich valuations, however, will limit the upside. Hindustan Unilever, which touched a lifetime high of 505.45 rupees yesterday, could see some profit booking on Tuesday. We expect the stock to consolidate in the range of 485-505 rupees next week. The scrip ended 1.8% higher at 503.40 rupees.

By RUPEE DESK

rupe...@googlegroups.com