Tuesday's Indian Markets Defy Global Cues

Includes: IFN, IIF
by: Wisdomsmith

Indian markets showed some signs of bullish frenzy, when local indices gained despite a negative day for Asian markets and London. Of particular note was the divergence from LSE, which was trading as much as 0.8% down. Ignoring global cues today, Sensex gained 0.46% to close at 18645.06, while the Nifty gained 0.49% to close above 5.6K mark at 5604.

There was some circumspection within smaller indices. Junior Nifty ended down marginally, while BSE Midcap and Smallcap gained lower than the Sensex. FIIs were marginal net sellers according to data on the BSE. Domestic institutions were net buyers to the extent of Rs 440 crore.

Cement stocks were the stars of the day, even in the leading indices like the Nifty. Ambuja Cement (+7.5%) and ACC (+6.5%) were the top two gainers in the Nifty. The next best, by a distance was Idea (+3.2%). While Junior Nifty itself was flat, cement stock Ultratech Cement (+8.3%) stood out. In the BSE A group, Madra Cement (+14.1%), India Cement (IAMUF.PK) (+9.7%) were two other cement gainers.

The rise in cement stocks was apparently on the rumour of a price hike in South India, which is the market worst affected by cement overcapacity. This is perhaps what explains the strong jump in Southern stocks like Andhra Cement, India Cement and Madras Cement.

Wisdomsmith’s top cement pick Prism Cement was among the best cement performer of the day, gaining 16.4%, alongside Andhra Cement (+16.5%).

Several sugar stocks were up as well. Balrampur Chini was up 4.6%, while Shree Renuka was up 4.3% in the BSE A group.

It appears that the stage is being set for the several large PSU IPOs and FPOs which are lined up now. We advise investors to refrain from fresh buying at this stage.

Disclosure: No positions