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Daily Market Strategy - Truncated week; flat start

Anil Mascarenhas/ Mumbai 08:15 , Jul 28, 2014

Indian indices ended their eight-day winning streak on profit taking after they hit fresh all-time highs. For the day, the outlook is a flat start.

Do what you feel in your heart to be right, for you’ll be criticized anyway.–Eleanor Roosevelt

The Narendra Modi government may have missed a big bang budget but all attempts are being made to ensure that the PM’s speech on Independence Day will have some proud announcements of the proposals implemented in record time.

It’s an action-packed truncated week with the stock market closed on Tuesday, 29 July 2014, on account of Ramzan Id.  The F&O expiry will ensure wild swings in the coming days. Thursday will also have the announcement of Consumer Price Index (CPI) data for Industrial Workers.

Besides quarterly numbers, investors will pay attention to June fiscal deficit. Developments on the political front will also be closely watched. In terms of corporate earnings, we expect healthy performance from ICICI Bank.

Indian indices ended their eight-day winning streak on profit taking after they hit fresh all-time highs. For the day, the outlook is a flat start. L&T, Dabur India, Hindustan Unilever results will be in focus. The Rupee which closed at 60.1 against US dollar will also be eyed.

Reliance Power will be in action after it announced plans to acquire the entire hydroelectricity portfolio of the Jaiprakash Group. JP Associates Ltd too will join the action. Meanwhile, Gautam Adani is making big plans to mop up a total of Rs 100bn through a qualified institutional placement (QIP) of shares of Adani Enterprises, Adani Power and Adani Ports & Special Economic Zone to fuel the group's growth, says a report. The Australian government on Monday approved Indian firm Adani Mining Pty Ltd's A$16.5 billion ($15.5 billion) Carmichael coal and rail project in Queensland, subject to strict conditions to protect groundwater, a report stated.

On Wednesday, attention will be on FOMC meeting and first estimates for Q2 US GDP. US indices ended week on Friday. Sentiment was hurt after Amazon and Visa disappointed on the earnings front. The Dow fell 0.72% while S&P 500 shed half a percent. Nasdaq too lost half a percent. On the bright side, Asian markets are mostly higher with Nikkei 225 index and Hong Kong's Hang Seng index up around 0.6%. While South Korea's Kospi index is marginally higher, China's Shanghai is up almost 2%.

Net profit growth of 249 companies, excluding those engaged in banking and finance and oil & gas, rose a creditable 21.1% year-on-year, says a report adding that the main reason was a spurt in other income and a drop in interest costs.

Gold imports declined 25% to 638 tonnes in 2013-14 from 845 tonnes in the previous fiscal, Minister of State for Finance, Nirmala Sitharaman said in a written reply in the Lok Sabha.Gold imports stood at 919 tonnes in 2011-12. The quantum of gold import stood at 221 tonnes in the April-June period of current fiscal, while in value terms it was Rs 54,792 crore, she said. 

Nirmala Sitharaman said that the new government has not decided its stance on a policy in place to allow foreign direct investment (FDI) in supermarkets. The new government is opposing the “foreign investment policy” put in place by its previous government to allow foreign supermarkets to operate in India. 

Strides Arcolab Ltd has posted a net profit of Rs. 267.957 mn for the quarter ended June 30, 2014 as compared to Rs. 21.574 million for the quarter ended June 30, 2013.Total Income has increased from Rs. 1840.422 mn for the quarter ended June 30, 2013 to Rs. 2262.785 mn for the quarter ended June 30, 2014.The stock was flat at Rs669..

Shares of Wipro Ltd slipped 5% to Rs 548 after Company has posted a net profit of Rs. 20672 mn for the quarter ended June 30, 2014 as compared to Rs. 13380 mn for the quarter ended June 30, 2013.

Colgate Palmolive (India) Ltd has posted a net profit of Rs. 1349.10 mn for the quarter ended June 30, 2014 as compared to Rs. 1852.20 mn for the quarter ended June 30, 2013.The stock was down 2% at Rs1631.

Jet Airways announced the appointment of Mr. Raj Sivakumar, as Chief Commercial Officer of the Company with immediate effect. Similarly, Rajeev Nambiar has joined the airline’s management team as Vice President – Sales (India).The airline also approved the appointment of Martin Drew as Vice President – Cargo (Designate).

GAIL (India) Limited announced the signing of a Memorandum of Understanding (MOU) with Sumitomo Corporation, Japan (Sumitomo). Under the MOU, GAIL and Sumitomo will pursue business opportunities in natural gas and LNG value chain business globally, specifically covering cooperation in petrochemicals, natural gas procurement, pipelines and LNG. GAIL and Sumitomo hold half of the capacity in the Cove Point LNG Liquefaction Terminal in the US respectively, and have also agreed to coordinate for ensuring smooth operation of the terminal. Both parties view US market as a growth area for their line of businesses and would cooperate on businesses ranging from upstream to downstream.

Results watch: L&T, Bank of Baroda, Dabur India, Godrej Cons, Hindustan Unilever, Havells India, Vijaya Bank, Aditya Birla Money, Alembic Pharma, Balaji Amin, Ador Welding, Agri-Tech India Ltd, Mah Holiday, Inox Leisure, Maruti Sec, Nath Seeds, Noida Toll, Praj Inds, Shriram City Uni, SJVN, State Bank Mysre, Torrent Power, Blue Star, Vinayak Polycon, Vinyl Chemicals, Delta Corp and Welcast Steel.

Trends in FII flows: The domestic institutional investors (DIIs) were net sellers of Rs2.10bn on Friday, as per the provisional figures released by the NSE.

The foreign funds were net sellers of Rs2.10bn in the cash segment on Friday, according to SEBI data.

Global data: Business Confidence (Jul) Eur, Markit PMI Composite (Jul)Preliminar USD, Markit Services PMI (Jul)Preliminar USD, Pending Home Sales (MoM) (Jun) USD, Pending Home Sales (YoY) (Jun) USD, Dallas Fed Manufacturing Business Index (Jul) USD, 3-Month Bill Auction USD, 6-Month Bill Auction USD, 2-Year Note Auction USD, Jobs/applicants ratio (Jun) JPY, Overall Household Spending (YoY) (Jun) JPY, Unemployment Rate (Jun) JPY, Large Retailer's Sales (Jun) JPY, Retail Trade (YoY) (Jun) JPY and Retail Trade s.a (MoM) (Jun) JPY.  

In other news in the media

Reliance Power said it has signed an initial agreement to acquire all the three hydroelectric power plants of Jaiprakash Associates Ltd. (BS)

Cairn India has sought partner Oil and Natural Gas Corp's nod for extension of the licence of their prolific Rajasthan oil block beyond the contractual deadline of 2020. (BS)

Shree Renuka Sugars said it will soon approach market regulator SEBI with a proposal to raise about Rs7.25bn through rights issue. (BS)

Coal India is yet to enter into fuel supply pacts with 12 power units as issues like change in ownership and extension of coal supplies are still being examined by the government. (BS)

Maruti Suzuki India is looking to increase the supply of auto gear shift version of its latest compact hatchback Celerio to reduce the waiting period that currently stands at about four months. (BS)

Tata Chemicals has sought shareholders nod to raise up to Rs.10bn from private placement of non-convertible debentures for general corporate purposes. (BL)

Wipro will hire 7,000 people over the next five years for its SEZ facility at Visakhapatnam, besides expanding its operations to Vijayawada, Kakinada and Tirupati. The company will develop the plot it got from the Government in the next five years. (BL)

State discoms of Gujarat, Haryana, Maharashtra, Punjab and Rajasthan are like to move the Supreme Court in next few days against the APTEL's interim order of July 21, government and industry sources said. Prior to APTEL, the CERC had allowed Tata Power and Adani Power to charge compensatory tariff from procurers with whom they have signed PPAs. (ET)

Ashok Leyland has lined up a number of new launches this fiscal which include the formal launch of 'Jan Bus' in Kolkata on July 30. (ET)

The Rs8.7bn merger deal of travel firm Thomas Cook (India) with resort owner Sterling Holiday Resorts India has got clearance from BSE and NSE. The 'no-objection' from two stock exchanges would allow the two companies to file their scheme of amalgamation with the High Court for further clearance of the deal. (ET)

With new procedures in place and skilled manpower recruited to carry out aviation safety surveillance, DGCA is ready to seek a fresh audit of India's safety oversight mechanism which was downgraded in January by its US counterpart FAA. (BS)

Citing the urgent need for turning the country into an export powerhouse and the prevalent practices in competing nations, the Exim Bank has requested the Reserve Bank to increase its leverage ratio so that it can lend more to the exporters. (BS)

Armed with budget proposals to bring down the fiscal deficit, the Finance Ministry will pitch for a ratings upgrade at a series of meetings with the global agencies in the next 2-3 months. (BL)

India's steel production grew at nearly half the world's average in the first six months of this year, but the country still maintains the fourth position among top steel producers. From January-June, India produced 41.28MT steel, up 1.4% over 40.72MT in the year-ago period, as per the World Steel Association data. (ET)


TEN MOST ACTIVE FUTURES

Symbol

No.of Cont Traded

Last price

Open Interest

% chg in Op.Int

DLF

16,794

204.75

26632000

-9.90

AXISBANK

16,572

1,988.10

5309250

-14.69

ALBK

15,562

118.95

10496000

-43.72

BHEL

14,466

226.30

24584000

-24.96

CENTURYTEX

13,626

601.75

4604000

-20.81

CAIRN

12,971

309.65

13009000

1.94

AUROPHARMA

11,722

692.60

7639500

-15.11

BANKINDIA

11,427

285.40

9764000

-23.34

BIOCON

11,071

480.75

4327000

-9.86

CANBK

9,200

394.65

5933000

-32.35

TEN MOST ACTIVE OPTIONS


Option Type

Strike price

No.of Cont Traded

Open Interest

% Chg in Op.In

SBIN

CE

2,600

7,644

605750

21.06

RELIANCE

CE

1,040

6,528

1191750

12.94

SBIN

PE

2,500

6,195

261250

-15.86

RELIANCE

CE

1,020

5,672

701000

23.14

INFY

CE

3,400

4,601

375625

-6.36

TCS

CE

2,600

4,240

297375

30.79

RELIANCE

PE

1,000

3,852

565000

-3.13

SBIN

CE

2,550

3,620

125000

90.48

ICICIBANK

CE

1,500

3,494

589250

22.06

PNB

CE

940

3,461

226000

143.01

SUPPORT & RESISTANCE LEVEL

Company Name

S3

S2

S1

Close

R1

R2

R3

ACC

1,406

1,412

1,419

1,432

1,444

1,451

1,457

AMBUJACEM

204

206

208

211

215

217

219

ASIANPAINT

623

627

631

638

645

649

653

AXISBANK

S3

1,968

1,974

1,987

1,999

2,006

2,012

BAJAJ-AUTO

2,081

2,086

2,091

2,100

2,109

2,114

2,119

BANKBARODA

844

849

854

864

873

878

883

BHARTIARTL

351

352

353

355

358

359

360

BHEL

217

220

222

227

232

234

237

BPCL

572

576

580

588

597

601

605

CAIRN

296

299

302

308

314

318

321

CIPLA

440

442

443

445

448

449

450

COALINDIA

368

370

372

377

381

383

385

DLF

195

197

200

204

209

211

214

DRREDDY

2,685

2,698

2,712

2,738

2,764

2,778

2,791

GAIL

421

423

425

429

433

435

437

GRASIM

3,238

3,250

3,263

3,288

3,313

3,326

3,338

HCLTECH

1,562

1,566

1,571

1,580

1,589

1,594

1,598

HDFC

1,036

1,042

1,049

1,062

1,075

1,082

1,088

HDFCBANK

825

827

830

835

840

843

845

HEROMOTOCO

2,535

2,544

2,554

2,574

2,594

2,604

2,613

HINDALCO

186

187

188

191

194

195

197

HINDUNILVR

644

649

653

662

671

676

680

ICICIBANK

1,455

1,461

1,467

1,479

1,491

1,497

1,503

IDFC

150

151

152

155

157

158

159

INDUSINDBK

541

544

546

551

556

559

561

INFY

3,302

3,317

3,333

3,364

3,395

3,411

3,426

ITC

353

355

356

358

360

361

362

JINDALSTEL

270

273

276

282

288

291

294

JPASSOCIAT

56

56

57

59

61

62

63

KOTAKBANK

930

933

937

943

950

953

957

LT

1,634

1,639

1,645

1,655

1,665

1,671

1,676

LUPIN

1,102

1,109

1,115

1,128

1,141

1,147

1,154

M&M

1,192

1,195

1,198

1,205

1,212

1,215

1,218

MARUTI

2,480

2,486

2,493

2,506

2,519

2,526

2,533

NMDC

173

174

175

176

178

178

179

NTPC

146

147

147

149

150

150

151

ONGC

395

396

397

400

403

404

405

PNB

906

911

915

925

934

939

943

POWERGRID

133

133

134

135

136

137

137

RANBAXY

570

574

578

585

592

596

600

RELIANCE

996

1,002

1,008

1,020

1,032

1,038

1,044

SBIN

2,442

2,455

2,469

2,497

2,525

2,539

2,552

SSLT

285

286

288

292

295

297

298

SUNPHARMA

760

765

771

783

794

800

806

TATAMOTORS

438

442

447

457

467

472

477

TATAPOWER

98

98

99

100

102

102

103

TATASTEEL

542

546

550

557

564

568

572

TCS

2,579

2,586

2,594

2,610

2,626

2,634

2,641

ULTRACEMCO

2,437

2,444

2,452

2,467

2,482

2,490

2,497

WIPRO

535

539

543

551

560

564

568



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