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Pre-market: Steel, power stocks will be in focus

Markets are likely to open flat as selling pressure in steel and power stocks would cap upside gains in the first half of the trading session on Tuesday. Further, with expiry of August derivative contracts on Thursday a bit of volatility is not ruled out.

At 8:35AM, the SGX Nifty, early indicator of the market trend, was lower by 11 points at 7,906.

The Supreme Court on Monday held as illegal all coal blocks allocated by the Union government between 1993 and 2010. It said a final decision on the fate of the blocks would be taken on September 1.

US stocks ended higher as investors bought shares after recent data showed that the economy is on an uptick while better-than-expected earnings also boosted sentiment. Meanwhile, the broader S&P 500 touched a fresh all-time high led by biotechnology and financials surpassing the 2,000 mark for the first time ever but closed shy of that level at 1,997.92. The global benchmark Dow Jones ended up 0.4% at 17,076.87 while the tech-laden Nasdaq ended up 0.4% at 4,557.35.

European shares also ended mixed on Monday after tracking gains on Wall Street on hopes that the European Central Bank would soon start quantitative easing. The CAC-40 ended up 2.1%, DAX gained 1.8% and FTSE-100 ended flat with negative bias.

Asian shares except for Straits Times were trading in negative terrain shrugging off firm overnight cues on wall Street. Nikkei which had rebounded to a three-and-half week high on Monday retreated today and was down 0.4%. China’s Shanghai Composite was down 0.1% while Hang Seng was also down 0.1%.

STOCKS TO WATCH

Tata Steel may rebound on short covering at lower levels as the company is not impacted much from the SC order on coal block allocation as most of the operational blocks were alloted before 1993.

Nalco may be under pressure as the Utkal-E coal block was allotted in 2004.

Jindal Steel & Power is the most impacted by the SC order with Gare-Palma coal blocks and Utkal-B1 blocks allocated after 1993.

Hindalco could be under pressure as the coal blocks Talabira-1 and Talabira-II were allocated in 1994 and 2005, respectively.

In the power space, JP Power, KSK Energy, Adani Power and Reliance Power may also see some pressure today.

Banks both private and state-owned who have exposure to some of the above power and metal stocks could see some profit taking.

Shree Cement will be in focus after the company’s board approved acquisition of 1.50 MTPA cement grinding unit of Jaiprakash Associates Ltd. situated at Panipat in the State of Haryana on going concern basis for consideration of approx Rs. 360 crore.

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