Daily Market Strategy - Testing new opinions! Positive start to F&O week

India Infoline News Service | Mumbai | May 25, 2015 08:23 IST

The outlook is a positive start. Indices could get choppy later in the week on account of F&O expiry.

Daily Market Strategy
What we have to do is to be forever curiously testing new opinions and courting new impressions. - Walter Pater
 
The opinions regarding the performance of the government over the last one year may be mixed with industry and brokerages not really subscribing to the upbeat sentiment prevailing a year ago when the BJP-led government stormed into power. Nevertheless, there are many areas where a lot of improvement has set in and people are willing to give time. The MAT issue could continue to cause a dent in sentiment after reports stated that the Dispute Resolution Panel (DRP) of the income-tax department sent notices to foreign portfolio investors (FPIs) on Friday, telling them that the hearing of MAT disputes would start soon. Foreign funds have reportedly pulled out over Rs.14,600 crore (including debt funds) from the Indian market in May itself on account of continued taxation worries, says a report. The huge sell off comes amid worries over imposition of 20 per cent minimum alternate tax on capital gains by overseas investors till April 1, 2015, a report stated.

The outlook is a positive start. Indices could get choppy later in the week on account of F&O expiry. Asian markets are in the green with Japan's Nikkei up 0.6% and Hong Kong's Hang Seng index and China's Shanghai index gaining over 1.5% each.
 
US and European markets are mostly shut today. US stocks ended weaker on Friday after Federal Reserve Chair Janet Yellen indicated that the central bank was poised to raise interest rates this year, in line with Wall Street's expectations. 
 
Dow fell 0.29% while S&P 500 shed 0.22%. Nasdaq ended flat.
 
Shares of ITC Ltd will be in focus after company has posted a net Profit of Rs. 23611.80 mn for the quarter ended March 31, 2015 as compared to Rs. 22780.10 mn for the quarter ended March 31, 2014.  
 
Tata Power gets replaced by Lupin in the S&P BSE Sensex from June 22. Adani Power goes out of S&P BSE 100 while Tata Motors DVR (or Differential Voting Rights shares of Tata Motors) will enter the index.
 
Finance Minister Arun Jaitley said the last one year shows the direction in which this Government is working under the leadership of Prime Minister, Narendra Modi. “When the present NDA govt came to power a year ago, there was a general environment of gloom. That has been now replaced by hope and excitement. Though we are growing at the range of 7 to 8 %, yet there is a restlessness to grow even faster to achieve the real potential of India," he said.  
 
Foreign portfolio managers are pleading with the Indian capital market regulator Sebi to make the terms of the declaration that they sign to trade on local stock exchanges less pervasive, says  a report.
 
Reserve Bank of India Governor Raghuram Rajan reportedly said the country has layers of defence against volatility arising out of capital outflows, as the macroeconomic conditions have improved.
 
The Reserve Bank of India (RBI)’s foreign exchange reserves hit all-time high of $353.88 billion for the week ended May 15, according to RBI data.
 
Cipla Ltd has announced that Cipla (EU) Limited, U.K., the wholly owned subsidiary of the Company, has entered into a definitive agreement to acquire a 51% stake in Quality Chemicals Limited, Uganda (“QCL”) from the existing shareholders of QCL. As per the agreement, the cash consideration for 51% stake is payable in tranches with approx. USD 8 million payable upfront on completion and 5 equal installments of USD 4.41 million payable at annual intervals thereafter.
 
Amtek Auto has signed to acquire REGE Holding GmBH, a German auto component firm, for an undisclosed amount. The acquisition is expected to close by August 2015.Earlier Amtek signed a share Purchase Agreement with Japanbased Asahi Tec Corporation.
 
Ceat Ltd has announced that the Board of Directors of the Company at its meeting held on May 22, 2015, has approved issue of non-convertible debentures upto Rs. 500.00 crores in one or more tranches, subject to approval of members of the Company.
 
Steel Authority of India has formed a joint venture with ArcelorMittal. The proposed JV company will construct a cold rolling mill and other downstream finishing facilities in India that will offer technologically advanced steel products to India’s rapidly growing automotive sector, which is expected to grow from the current 3.5 million units to over 7 million units by 2020.
 
Results: Atlanta, Bharat Bhushan Share & Commodity Brokers, Bombay Dyeing & Manufacturing, Canara Bank, Dhanuka Commercial, Dishman Pharmaceuticals and Chemicals, Eclerx Services, Emami Infrastructure, Essar Oil, Future Retail, Fulford (India), Greenply Industries, Gujarat NRE Coke, Hathway, Heidelberg Cement India, Hindustan Motors, Igarashi Motors India, Inox Leisure, JIK Industries, Jyothy Laboratories, Lycos Internet, Nitin Fire, Pricol, Tara Jewels, Usha Martin, Vardhman Polytex and Va Tech Wabag.
 
Global data:  Memorial Day USD, Spring Bank Holiday GBP, Whit Monday CHF, Whit Monday EUR, BoJ Monthly Economic Survey  JPY, Trade Balance non-EU (Apr) EUR, Whit Monday EUR, FOMC Member Mester speech  USD, Fed's Stanley Fischer speech  USD, Trade Balance (YoY) (Apr) NZD, Exports (Apr) NZD, Imports (Apr) NZD, Trade Balance (MoM) (Apr) NZD, Corporate Service Price (YoY) (Apr) JPY

Trends in FII flows: The FIIs were net buyers of Rs. 2.11 bn in the cash segment on Friday. The domestic institutional investors (DIIs) were net buyers of Rs. 2.38 bn as per the provisional figures released by the NSE.
 
In other news in the media:
 
DLF has kept the new sales bookings target for this financial year at last year's level of about Rs.40bn as the company feels that it would take at least 12 months for housing sales to improve. (ET)
 
Ahead of the upcoming launch of the new version of premium hatchback Jazz in India, Honda has started shipping the vehicle to South Africa from its plant in Rajasthan. (ET)
 
Reliance Industries plans to fully resume its petrol pump network by March next year as government ending diesel subsidies have given it a level-playing field to compete with state-owned retailers. (ET)
 
Amtek Auto, one of India's largest integrated component manufacturers, is set to acquire REGE Holding GmBH, a German auto component firm, for an undisclosed amount. This is Amtek's second acquisition in less than a month. (ET)
 
Even as finer details of the gold monetisation scheme are awaited, Kerala-based Muthoot Pappachen Group, which is primarily into gold loans, has set up a separate arm to recycle the precious metal as it seeks to take early mover advantage. (BS)
 
Kalyan Jewellers is planning to invest up to Rs.18bn by FY2016-17 to expand its footprint across the country, while it targets 30% sales growth at Rs.130bn this year. (BS)
 
United Bank of India has become the first of the 17 lenders to publicly admit that it no longer expects to recover its dues from the beleaguered Kingfisher Airlines. (BS)
 
Cipla has inked a pact with Uganda's Quality Chemicals to acquire majority stake in the Africa-based firm for a total consideration of over $30mn. (ET)
 
ArcelorMittal and Steel Authority of India Ltd have signed a memorandum of understanding to set up an automotive steel manufacturing facility through a joint venture in India. (BL)
 
ONGC and Oil India have been exempted from paying fuel subsidy if global oil prices average up to $60 a barrel, but will have to share a part of the burden if rates go higher. (BL)
 
The Coal India Board has approved a Rs.5150mn plan to procure high-capacity box wagons of 80.5 tonnes each. (BL)
 
Titan Company is eyeing tier-II cities for opening its showrooms and expanding its market share in watches, jewellery and eyewear products. (BL)
 
Suven Life Sciences Ltd secured two product patents, one each from Mexico and Singapore, corresponding to the New Chemical Entities for the treatment of disorders associated with neurodegenerative diseases. (BL)
 
Bucking the overall trend of easing inflation, pulses got costlier by up to 64% in the first year of the Modi government across major metro cities, primarily due to fall in domestic production. (ET)
 
Mindful of the impact of frauds on banks' financials, the Reserve Bank of India will soon set up a Central Fraud Registry as part of an early warning system. (ET)

TEN MOST ACTIVE FUTURES

Symbol

No.of Cont Traded

Last price

Open Interest

% chg in Op.Int

SBIN

166,606

279.45

56,632,500

19.50

SUNPHARMA

34,832

1,001.35

13,614,500

-10.76

AXISBANK

31,950

568.10

20,364,000

-8.24

HDFCBANK

26,928

1,022.55

27,248,500

-8.98

VOLTAS

24,825

315.35

6,368,000

40.30

STAR

19,945

1,198.10

3,320,750

-0.78

YESBANK

19,586

866.40

9,460,250

-7.29

ITC

19,378

328.10

27,411,000

0.81

ICICIBANK

17,997

313.55

33,811,250

-5.25

RELIANCE

17,799

903.20

24,119,000

-4.51

TEN MOST ACTIVE OPTIONS

Option Type

Strike price

No.of Cont Traded

Open Interest

% Chg in Op.In

SBIN

CE

300

49,333

14,033,750

49.91

SBIN

CE

310

25,848

3,625,000

121.88

SBIN

PE

280

20,056

3,575,000

70.14

SBIN

CE

290

20,034

5,768,750

67.76

SBIN

PE

290

16,397

2,035,000

117.94

SBIN

CE

320

13,885

4,092,500

23.41

SBIN

CE

305

10,920

1,602,500

135.23

SBIN

PE

270

10,676

1,922,500

-12.76

SBIN

CE

295

10,142

1,875,000

61.81

SBIN

PE

285

6,141

960,000

34.74

SUPPORT & RESISTANCE LEVEL

Company Name

S3

S2

S1

Close

R1

R2

R3

Sensex Index

27,797

27,836

27,877

27,958

28,038

28,079

28,118

Nifty Index

8,413

8,424

8,436

8,459

8,482

8,493

8,504

ABB Ltd

1,348

1,360

1,371

1,394

1,417

1,429

1,441

ACC

1,498

1,502

1,507

1,517

1,526

1,531

1,536

Ambuja Cements

238

239

240

241

243

244

244

Bajaj Holdings

1,295

1,300

1,306

1,316

1,327

1,332

1,337

BHEL

231

232

232

234

236

236

237

Bharti Airte

391

392

393

395

397

398

399

Cipla

666

668

670

674

678

680

682

Dabur India

260

261

263

265

268

269

271

GAIL India

392

393

394

396

398

399

400

Grasim Ind.

3,597

3,608

3,619

3,642

3,665

3,676

3,687

HCL Tech

964

969

974

983

992

997

1,002

HDFC Bank

1,019

1,021

1,022

1,026

1,029

1,031

1,032

Hero Honda

2,580

2,585

2,591

2,601

2,611

2,616

2,621

Hindalco

136

136

136

137

138

138

138

Hindustan Unilever

855

857

859

863

867

869

871

ICICI Bank

309

310

311

313

316

317

318

Infosys Tech

2,029

2,032

2,035

2,042

2,048

2,051

2,055

ITC Ltd

324

325

326

328

331

332

333

L&T

1,636

1,639

1,643

1,651

1,659

1,663

1,666

MTNL

17

17

17

18

18

18

18

M&M

1,245

1,247

1,250

1,255

1,260

1,262

1,265

Maruti Suzuki

3,677

3,684

3,690

3,703

3,716

3,723

3,729

Mahindra Satyam

652

655

659

665

672

675

678

National Alumin

48

49

49

49

49

49

49

ONGC

319

320

321

322

324

325

326

Oriental Bank

196

198

199

202

205

207

209

PNB

147

147

148

150

152

152

153

Ranbaxy Labs

982

987

993

1,003

1,014

1,019

1,025

Reliance Capital

391

393

395

398

402

404

405

Reliance Comm

63

63

64

64

65

65

65

Reliance Energy

438

440

442

447

451

454

456

Reliance Inds

898

899

900

903

905

907

908

R Power

52

53

53

53

54

54

54

Siemens India

1,350

1,356

1,362

1,373

1,385

1,391

1,396

SBI

266

270

274

282

290

295

298

TCS

2,562

2,576

2,591

2,620

2,649

2,664

2,678

Tata Motors

510

511

512

515

517

518

519

Tata Power

75

75

75

76

76

76

77

Tata Steel

337

338

339

342

344

345

346

Tata comm

433

434

436

440

443

445

447

Wipro

555

556

558

561

563

565

566

Wire And Wireless

35

35

35

35

36

36

36

Zee Entertainment

315

316

317

319

321

322

323


 
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