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Daily Market Strategy - F&O expiry and a new high in store

Anil Mascarenhas,  India Infoline News Service | Mumbai | August 28, 2014 08:15 IST

A truncated week and an F&O expiry seems to be the perfect recipe for a choppy session especially the last hour.

A successful individual typically sets his next goal somewhat but not too much above his last achievement. In this way he steadily raises his level of aspiration. Kurt Lewin
 
After years of uncertainty and inaction, India Inc is now preparing to re-ignite its growth engines, says a poll conducted by ET. Aspirations of individuals and companies seem to be on the climb after the new government took charge. While investors analyse the first 100 days, some may find that their expectations have not been met. But everyone understands that it takes time and no one is really complaining. Finance Minister Arun Jaitley was in Mumbai at an event organized by the Indian Express group in association with IIFL Wealth. He said, "Food inflation will be a challenge and a top priority for the government."
 
A truncated week and an F&O expiry seems to be the perfect recipe for a choppy session especially the last hour. Indices may look at scaling to new highs before volatility sets in. US indices eked out gains. The Dow Jones rose 0.1% while S&P 500 was flat. The Nasdaq Composite was marginally lower. Asian indices are mixed with Japan's Nikkei 225 lower while Hong Kong's Hang Seng index is higher. South Korea's Kospi index was up over half a percent while China's Shanghai is trading in the green.
 
DLF could be under pressure after the Supreme Court rejected DLF's appeal against Rs 630-crore penalty imposed by the Competition Commission of India. Earlier in July, DLF had moved the apex court against the Competition Appellate Tribunal.

The Govt has deferred its decision on ONGC, CIL, NHPC stake sale for now.
 
RBI has eased norms to refinance ECBs.

A Rajya Sabha panel will meet on Insurance Bill on September 4.

Moodys says India (Baa3 stable) is poised for an acceleration in GDP growth, based on expected policy reforms and robust investor sentiment. However, inflation remains high from a global standpoint (see Exhibit 1), weighing down an otherwise promising economic recovery. Recurrent inflationary pressures have also constrained Indias sovereign rating as they keep domestic capital costs high, erode domestic purchasing power as well as savings and lower international competitiveness Companies raised over Rs 20,000 crore through qualified institutional placement (QIP) since June, says a report.
 
The Prime Minister, Narendra Modi will launch Pradhan Mantri Jan Dhan Yojana (PMJDY) today. About 76 mega functions will also be organized at prominent places throughout the country to mark the launch of Yojana which will be attended by the Union Ministers and the State Chief Ministers along with other dignitaries.  
 
The Initial Public Offering of Snowman Logistics Limited closes today and is seeing good interest from retail investors. The Company has already finalized the allocation of 9,450,000 Equity Shares (15% of the total Issue size of 42,000,000 Equity Shares) to 3 Anchor investors at Rs. 47 per Equity Share (upper end of the Price Band) aggregating to Rs. 444.15 million (Rs. 44.42 crore). The Anchor Investors are Faering Capital India Evolving Fund, ICICI Prudential Growth Fund - Series 2, ICICI Prudential Value Fund Series - 4, IDFC Sterling Equity Fund and IDFC Infrastructure Fund.
 
 
Prime Minister has approved the constitution of a Committee to carry out a review to identify obsolete laws. The newly-constituted Committee will examine all Acts recommended to be repealed by the Committee on Review of Administrative Laws, which had been appointed by the Union Government of Shri Atal Bihari Vajpayee, in 1998. 
 
The Prime Minister has expressed concern that out of the 1382 Acts recommended for repeal by that Committee, only 415 have been repealed so far. He has called for a focused and result-oriented exercise to systematically weed out archaic laws and rules. The Committee will also examine Acts and Rules which may have become obsolete within the last ten to fifteen years.
 
Sustainability in construction and how India can become a world centre for construction equipment and manufacturing are two of the central pillars of this years The Big 5 Construct India. With the new governments promise to aggressively promote affordable housing the economy is set to be back on track and raise the plummeting GDP to 8-9%. 
 
The new government is expected to infuse life into the existing policies and remove major bottlenecks that are deterring growth. Foreign direct investment (FDI) in the Indian real estate sector is expected to get a lift, resulting in amplification of fund flows.
 
Flipkart announced the launch of five new tablets under its in house brand Digiflip Pro. In a special collaboration with Intel, this range of next generation tablets will be powered by Intel Atom Processors.
 
Mumbai International Airport Pvt. Ltd announced kick starting of monetisation of commercial real estate by finalising lease of one of the parcel, to Oasis Realty Pvt. Ltd. This parcel will have a potential for commercial development of 1.166 million square feet. This is part of the process of overall commercial development of 22 million square feet in phases over a period of 10 years.
 
This transaction has been finalised at the rate of approx. Rs. 106 Crore per acre which translates to total of Rs. 580 Crore for this parcel at the rate of approx. Rs. 5000 per square foot of build-up area.
 
ASSOCHAM and Small & Medium Enterprises (SMEs) of China have inked five MoUs in different sectors to promote and help the SMEs to exchange technologies and enter joint ventures (JVs).The areas identified were processed food, cosmetics, rubber, plastics, textiles, machines for garment industry, and small scale plants for a range of consumer durables among others. Toolings and Process machinery for painting, plating and coating also have enormous opportunities.
 
Results watch: PRIME FOCUS, USHERAGRO, UTTAMSUGAR, LYKALABS, PFOCUS, ROLLATAINERS LTD, NEWINFRA, 
 
Trends in FII flows: The FIIs were net buyers of Rs2.9bn in the cash segment on Wednesday. The domestic institutional investors (DIIs) were also the net buyers of Rs2.36bn in the cash segment, as per the provisional figures released by the NSE.
 
Global data: HIA New Home Sales (MoM) (Jul) AUD, Private Capital Expenditure (Q2) AUD, Gross Domestic Product (YoY) (Q2) EUR, Gross Domestic Product (QoQ) (Q2) EUR, HICP (YoY) (Aug)Preliminar EUR, Employment Level (QoQ) (Q2) CHF, Unemployment Rate s.a. (Aug) EUR, Unemployment Change (Aug) EUR, M3 Money Supply (YoY) (Jul) EUR, M3 Money Supply (3m) (Jul) EUR, Private loans (YoY) (Jul) EUR, Retail Sales n.s.a (YoY) (Jun) EUR, Retail Sales s.a. (MoM) (Jun) EUR, Business Climate (Aug) EUR, Consumer Confidence (Aug) EUR, Economic Sentiment Indicator (Aug) EUR, Industrial Confidence (Aug) EUR, Services Sentiment (Aug) EUR, Business Confidence EUR, 10-y Bond Auction EUR, Wage Inflation (YoY) EUR, Wage Inflation (MoM) EUR, CBI Distributive Trades Survey - Realized (MoM) (Aug) GBP, Business Confidence (Aug) EUR, Consumer Confidence (Aug) EUR, Consumer Price Index (YoY) (Aug)Preliminar EUR, Consumer Price Index (MoM) (Aug)Preliminar EUR, Harmonised Index of Consumer Prices (MoM) (Aug)Preliminar EUR, Harmonised Index of Consumer Prices (YoY) (Aug)Preliminar EUR, Current Account (Q2) CAD, Core Personal Consumption Expenditures (QoQ) (Q2)Preliminar USD, Gross Domestic Product Annualized (Q2)Preliminar USD, Gross Domestic Product Price Index (Q2)Preliminar USD, Initial Jobless Claims (Aug 22) USD, Continuing Jobless Claims (Aug 16) USD, Personal Consumption Expenditures Prices (QoQ) (Q2)Preliminar USD, Pending Home Sales (MoM) (Jul) USD, Pending Home Sales (YoY) (Jul) USD, EIA Natural Gas Storage change (Aug 22) USD, Kansas Fed manufacturing activity (Aug) USD, 7-Year Note Auction USD, Building Permits s.a. (MoM) (Jul) NZD, Hometrack Housing Prices s.a (MoM) GBP, Gfk Consumer Confidence (Aug) GBP, Overall Household Spending (YoY) (Jul) JPY, Tokyo Consumer Price Index (YoY) (Jul) JPY, Jobs/applicants ratio (Jul) JPY, National Consumer Price Index (YoY) (Jul) JPY, National CPI Ex Food, Energy (YoY) (Jul) JPY, National CPI Ex-Fresh Food (YoY) (Jul) JPY, Tokyo CPI ex Food, Energy (YoY) (Jul) JPY, Tokyo CPI ex Fresh Food (YoY) (Jul) JPY, Unemployment Rate (Jul) JPY, Industrial Production (MoM) (Jul)Preliminar JPY, Industrial Production (YoY) (Jul)Preliminar JPY, Retail Trade (YoY) (Jul) JPY, Large Retailer's Sales (Jul) JPY, Retail Trade s.a (MoM) (Jul) JPY.
 
In other news in the media:
 
Gas Authority of India Limited will establish a City Gas Distribution network in Patna and Gaya during the first phase of its Rs100bn Haldia - Jagdishpur 'energy highway' gas pipeline project. (ET)
 
Reliance Communications said that it is ready with its mobile banking service which will enable banking transactions for its customers, irrespective of the handset, make or region. (ET)
 
Videocon launched 4K ultra high definition smart television and plans to reach it to 100 cities across the country by Diwali. (BS)
 
Philips India said it would manufacture around 80% of its domestic appliance range in India by 2015. (ET)
 
NTPC has signed fuel supply agreements for 14,010 MW capacity to be commissioned by March 2015. (et)
 
Indian Hotels Co has set aside of Rs4.4bn for capital expenditure over the next three years for 33 new hotels which would be a combination of greenfield projects and management contracts. (BL)
 
RIL and GSPL may have to wait till September-end to learn if they can charge more than $4.20 per unit of gas, but in a little-noticed development, Cairn India has been allowed to sell gas from its Rajasthan block at about $8.40 per unit to Gujarat based firms. (ET)
 
Mangalore Refinery and Petrochemicals Ltd has commissioned a Petrochemical Fluidized Catalytic Cracking (PFCC) unit at its plant in Mangalore. (BL)
 
Ramco Cement has indicated its interest in setting up of a cement factory in Kurnool district of Andhra Pradesh. The total investment in the cement plant and related infrastructure could go up to Rs30bn, as it requires a rail line of about 20 km to facilitate transport. (BL)
 
The Supreme Court upheld the Competition Appellate Tribunal's order and instructed DLF to pay a penalty of Rs6.3bn in three months for unfair trade practices. (BL)
 
The Competition Commission has cleared pharmaceutical firm Sanofi-Synthelabo's proposed stake buy in an arm of Apollo group, saying the deal does not raise any concerns related to unfair business practices. (BS)
 
Dish TV, has revamped its consumer facing packaging on the platform in order to expand its subscriber base. The new packaging leverages the packed sports calendar around the year with the emergence of new leagues (domestic and international) and the acceptance of non-cricket sports like football, hockey and most recently, kabaddi. (BS)
 
Tech Mahindra announced the national launch of Saral Rozgar Cards with seeking to create a common pool of jobs and job providers. Saral Rozgar is a mobile job marketplace that helps blue collared and entry level job seekers to connect to mainstream employers anywhere in India via mobile in their own language. (BS)
 
The Government of India has decided to provide alternative means of coal supply to power producers if captive coal blocks are de-allocated. (BL)
 
The Reserve Bank eased norms to refinance external commercial borrowings and allowed banks to approve even those cases where the average maturity period of fresh borrowings exceeds residual maturity of existing loan. (BL)
 
Sugar prices in India are firming on fears of short-term supply constraints and seasonal demand even as global prices are sliding, posing a threat to a recent recovery in exports in the country. (BS)
 
TEN MOST ACTIVE FUTURES
Symbol

No.of Cont Traded

Last price

Open Interest

% chg in Op.Int

SBIN

32,109

2,498.90

3300625

-13.71

JINDALSTEL

28,032

237.55

10627000

-20.95

HDFCBANK

27,820

843.80

16649500

-35.60

RELIANCE

26,969

994.20

10856750

-21.52

TATASTEEL

20,611

526.15

9494000

-24.40

HINDALCO

20,551

170.75

17618000

-14.72

ICICIBANK

19,356

1,508.95

6960250

-10.32

INFY

17,286

3,616.85

1545500

-23.11

LT

16,513

1,506.80

4693750

-20.65

AXISBANK

15,030

398.15

14638750

-28.83

TEN MOST ACTIVE OPTIONS

Option Type

Strike price

No.of Cont Traded

Open Interest

% Chg in Op.In

SBIN

CE

2,500

11,814

421125

3.47

SBIN

PE

2,450

5,630

185750

50.40

RELIANCE

CE

1,000

4,613

1099250

7.59

HINDALCO

CE

170

4,466

898000

-2.39

TATASTEEL

CE

530

3,806

864000

-7.79

TCS

CE

2,550

3,738

129000

-28.38

ICICIBANK

CE

1,520

3,712

234250

56.43

TECHM

CE

2,350

3,461

242375

64.46

SBIN

CE

2,550

3,357

266500

33.25

SBIN

PE

2,500

3,297

189125

-20.95

SUPPORT & RESISTANCE LEVEL

Company Name

S3

S2

S1

Close

R1

R2

R3

ACC

1,452

1,461

1,471

1,490

1,509

1,519

1,528

AMBUJACEM

206

206

207

209

210

211

212

ASIANPAINT

601

603

604

607

610

611

613

AXISBANK

S3

393

395

398

402

403

405

BAJAJ-AUTO

2,220

2,230

2,240

2,260

2,280

2,290

2,300

BANKBARODA

880

883

886

892

897

900

903

BHARTIARTL

362

364

366

369

372

374

376

BHEL

228

230

232

236

240

242

244

BPCL

652

656

660

669

677

681

685

CAIRN

319

320

321

323

324

325

326

CIPLA

504

506

508

512

516

518

520

COALINDIA

349

351

353

358

363

365

367

DLF

189

189

190

192

194

195

196

DRREDDY

2,843

2,853

2,864

2,885

2,907

2,918

2,928

GAIL

426

428

430

434

438

440

442

GRASIM

3,295

3,316

3,338

3,381

3,424

3,446

3,467

HCLTECH

1,568

1,576

1,584

1,600

1,617

1,625

1,633

HDFC

1,049

1,052

1,054

1,059

1,065

1,067

1,070

HDFCBANK

835

837

838

842

845

847

849

HEROMOTOCO

2,525

2,535

2,545

2,566

2,587

2,597

2,607

HINDALCO

162

164

167

171

176

178

180

HINDUNILVR

715

717

720

724

728

731

733

ICICIBANK

1,488

1,494

1,500

1,512

1,523

1,529

1,535

IDFC

140

140

141

143

145

145

146

INDUSINDBK

554

556

558

563

567

570

572

INFY

3,584

3,590

3,597

3,610

3,624

3,630

3,637

ITC

350

350

351

353

354

355

355

JINDALSTEL

230

232

234

238

242

244

246

JPASSOCIAT

46

47

48

49

50

51

52

KOTAKBANK

1,044

1,047

1,051

1,057

1,063

1,067

1,070

LT

1,486

1,491

1,497

1,508

1,519

1,524

1,529

LUPIN

1,265

1,270

1,276

1,287

1,298

1,304

1,309

M&M

1,383

1,386

1,390

1,396

1,402

1,405

1,408

MARUTI

2,751

2,759

2,766

2,781

2,796

2,803

2,811

NMDC

168

169

170

171

172

173

174

NTPC

139

140

140

141

142

142

143

ONGC

407

410

414

420

427

430

433

PNB

945

949

953

962

970

975

979

POWERGRID

129

130

130

131

132

132

133

RANBAXY

639

643

647

654

661

665

669

RELIANCE

983

985

988

992

997

999

1,002

SBIN

2,480

2,487

2,495

2,509

2,523

2,531

2,538

SSLT

275

276

278

282

285

287

288

SUNPHARMA

848

852

856

865

874

878

882

TATAMOTORS

502

505

508

514

520

524

527

TATAPOWER

87

87

87

88

89

89

89

TATASTEEL

514

517

520

525

530

533

536

TCS

2,495

2,503

2,512

2,528

2,545

2,553

2,561

ULTRACEMCO

2,563

2,575

2,587

2,610

2,633

2,646

2,657

WIPRO

541

543

546

551

555

558

560



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