Street Signs: Oil boost for paint and tyre stocks, NMDC gains 4%, and more

Shares of paint and tyre companies could extend rally, thanks to a sharp plunge in global oil prices. Last week, the Brent crude posted its worst weekly drop of the year at 14 per cent to close at $94.7 per barrel - the lowest levels since February. For paint and tyre companies, oil is a major input. Analysts say investors should keep paint stocks, such as Indigo Paints, Berger Paints, Asian Paints, AkzoNobel India, and Kansai Nerolac Paints, on their radar. Meanwhile, tyre companies, such as Apollo Tyres, MRF, CEAT Tyres, and Balkrishna Industries, could also gain, if oil prices continue to remain benign.

Sell HDFC, buy HDFC Bank: Analysts

With the merger of two financial sector behemoths - Housing Development Finance Corporation (HDFC) and HDFC Bank - nearing its close, analysts are suggesting investors sell the former and buy the latter. At current prices and merger ratio, HDFC is about 2 per cent cheaper than HDFC Bank. However, this discount is expected to widen further. “We anticipate the discount (between the two) to start expanding. We have been recommending flipping from HDFC to HDFC Bank,” said a note by IIFL Research. Last week, HDFC and HDFC Bank filed a joint company scheme application with the National Company Law Tribunal, Mumbai. Their merger has already received approvals from the Pension Fund Regulatory and Development Authority, the Reserve Bank of India, the Securities and Exchange Board of India, and stock exchanges.

NMDC shrugs aside Nifty CPSE, gains 4%

Shares of NMDC (formerly National Mineral Development Corporation) rallied over 4 per cent on Friday, even as the stock got removed from the Nifty CPSE index. The effective date for the rebalancing of Nifty indices was August 5. NMDC’s removal from the index led to a selling of close to $100 million by passive funds. Yet, the stock managed to soar on the back of strong performance during the April-June quarter (first quarter, or Q1) of 2022-23 (FY23). The miner reported iron-ore realisations at Rs 6,050 per tonne - higher than Street expectations of Rs 5,350 per tonne – lifting top line, margins, and profits. “The Nifty CPSE Index exclusion overhang is over and the stock has delivered good performance in Q1FY23. As a result, NMDC might continue to outperform,” said an analyst.