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Daily Market Strategy - Weak start; kind comments from RBI awaited

Anil Mascarenhas,  India Infoline News Service | Mumbai | September 30, 2014 08:30 IST

The outlook is a weak start. Rate sensitives will remain in focus as the RBI unveils its policy later in the day. Inflation remains a cause of worry for the RBI.

Be kind - Remember every one you meet is fighting a battle - everybody's lonesome. - Marion Parker
 
US President Barack Obama hosted a private dinner for Prime Minister Narendra Modi at the White House greeting him in Gujarati, asking "Kem Chho?" (how are you?). While a lot of attention is in the US where Prime Minister Narendra Modi met CEOs of large American companies and impressed upon them to invest in India, for the day the action shifts towards RBI governor Raghuram Rajan.  Modi said he wants to convert the Supreme Court judgment on coal allocation into an opportunity to move forward and clean up the past.
 
The outlook is a weak start. Rate sensitives will remain in focus as the RBI unveils its policy later in the day. Inflation remains a cause of worry for the RBI. Though some downward movement has been seen in consumer price inflation recently, it may not impress the RBI to cut rates immediately. Expectations are that Statutory Liquidity Ratio (SLR) may be reduced.
 
Strides Arcolab could remain in action after it said it would merged with itself Chennai-based Shasun Pharmaceuticals in an all-stock deal. Expectations of a special dividend of about Rs100 a share boosted the stock, a report stated.
 
Global cues are weak. The Dow and S&P were down 0.25% while Nasdaq fell 0.14%. Asian indices remain in the red with Nikkei down almost a percent. Hong Kong's Hang Seng index has lost over a percent while South Korea's Kospi index is marginally lower. China's Shanghai index has also lost marginally.
 
Union minister for Defence and Finance, Arun Jaitley, who is under treatment at AIIMS, will not attend a World Bank meeting slated for October in the US and his illhealth could also lead to the postponement of a crucial joint military meeting with Russia, says a report.
 
Shiv Senas Anant Geete will resign from the Union cabinet, party chief Uddhav Thackeray said.
 
The Government has cancelled approvals of nine special economic zones (SEZ) including that of Adani, Essar and Hindalco. This decision was taken by the Board of Approvals (BoA) for SEZ, at its meeting on September 18, a report stated.
 
Tata Motors announced the appointment of Mayank Pareek as President, Passenger Vehicle Business Unit (PVBU).
 
Shares of Valecha Engineering hit 10% upper circuit at Rs 67 after the Board of Directors of the Company on September 27, 2014 approved the sale of three Build, Operate and Transfer basis road assets located in Madhya Pradesh and Gujarat to New Generation Infrastructure, Inc., a subsidiary of New Generation Holdings, Inc (Purchaser) for an aggregate consideration for approximately Rs. 309 Crore.
 
Shares of Srei Infrastructure Finance Limited ended 6% higher at Rs48 after the company stated that it is proposing a public issue of secured, redeemable non-convertible debentures (NCDs) of face value of Rs 1,000 each amounting up to Rs 2,500 million(Base Issue Size), with an option to retain over-subscription aggregating up to the Shelf Limit i.e. Rs 15,000 million (Tranche 1 Issue)*.
 
Shares of Patel Integrated Logistics ended 20%  higher at Rs54 and hit upper circuit on reports that the Amazon has entered into an air cargo alliance with the company for domestic deliveries.
 
Shares of Suprajit Engineering Ltd ended lower by 1% at Rs125 after the Company has executed a Business Transfer Agreement with Pricol Limited, Coimbatore for acquisition of their Speedo Cable Business on a Slump Sale Basis.
 
The Promoters of Housing Development and Infrastructure Limited (HDIL) have revoked all shares earlier pledged with IL&FS Trust Company Ltd and now the entire 100 per cent shares in the promoters category is non-pledged.
 
Finance Secretary Arvind Mayaram said the India's growth rate will be in range of 5.5%-5-9% this fiscal. There is a case for upwards revision of the credit rating.The government is planning to borrow Rs 2.4 trillion through bonds in the second half of the financial year, taking the total borrowing to Rs 5.92 trillion, Mayaram said in New Delhi.
 
ZyFin Researchs Consumer Outlook Index continues its uptrend in September 2014, showing significant improvement in consumer confidence over the previous month. This increase removes any concerns of waning positive sentiment, prompted by the sudden dip in the August score. The COI, while maintaining its uptrend since April, has recovered to 45.2, a 1.6-point increase over the previous month. Since April 2014, the average index level has been at 43.9, as compared to 40.9 for the same time last year.
 
Salaries across Asia Pacific are set to rise by an average 7% in 2015 as per the Towers Watson 2014-15 Asia-Pacific Salary Budget Planning Report which included 2,900 sets of responses received from over 300 different companies across a range of industry sectors and job grades from 20 countries. Pakistan, Bangladesh and Vietnam are set to lead the way with over 11% overall salary increases while India is placed at #4 with an increase of 10.8%. 
 
Trends in FII flows: The FIIs were net buyers of Rs1.5bn in the cash segment on Monday, while the domestic institutional investors (DIIs) were also the net buyers of Rs2.35bn, as per the provisional figures released by the NSE.
 
Global data: ANZ Activity Outlook (Sep) NZD , ANZ Business Confidence (Sep) NZD, Private Sector Credit (YoY) (Aug) AUD, Private Sector Credit (MoM) (Aug) AUD, Labor Cash Earnings (YoY) (Aug) JPY, HSBC Manufacturing PMI (Sep) CNY, M3 Money Supply (YoY) (Aug) NZD, Vehicle Production (YoY) (Aug) JPY, Housing Starts (YoY) (Aug) JPY, Annualized Housing Starts (Aug) JPY, Construction Orders (YoY) (Aug) JPY, Cash Reserve Ratio INR, RBI Interest Rate Decision (Repo Rate) INR, Retail Sales (YoY) (Aug) EUR, Retail Sales (MoM) (Aug) EUR, Nationwide Housing Prices n.s.a (YoY) (Sep) GBP, Nationwide Housing Prices s.a (MoM) (Sep) GBP, Infrastructure Output (YoY) (Aug) INR, Consumer Spending (MoM) (Jul) EUR, Producer Prices (MoM) (Aug) EUR, KOF Leading Indicator (Sep) CHF, Unemployment Change (Sep) EUR, Unemployment Rate s.a. (Sep) EUR, Unemployment (Aug) EUR, Current Account (Q2) GBP, Gross Domestic Product (YoY) (Q2) GBP, Gross Domestic Product (QoQ) (Q2) GBP, Index of Services (3M/3M) (Jul) GBP, Total Business Investment (YoY) (Q2) GBP, Total Business Investment (QoQ) (Q2) GBP, Consumer Price Index - Core (YoY) (Sep)Preliminar EUR, Consumer Price Index (YoY) (Sep)Preliminar EUR, Unemployment Rate (Aug) EUR, Producer Price Index (YoY) (Aug) EUR, Retail Sales (YoY) (Jul) EUR, Consumer Price Index (YoY) (Sep)Preliminar EUR, Consumer Price Index (EU Norm) (MoM) (Sep)Preliminar EUR, Consumer Price Index (EU Norm) (YoY) (Sep)Preliminar EUR, Consumer Price Index (MoM) (Sep)Preliminar EUR, 10-y Bond Auction GBP, Producer Price Index (YoY) (Aug) EUR, Federal Fiscal Deficit, INR (Aug) INR, Gross Domestic Product (MoM) (Jul) CAD, Redbook index (MoM) (Sep 26) USD, AiG Performance of Mfg Index (Sep) AUD, Tankan Large All Industry Capex (Q3) JPY.
 
In other news in the media:
 
Strides Arcolab has said that it has entered into an agreement with GMS Holdings. Jordan-based GMS will invest US$21.9mn for a 25.1% stake in Stelis Biopharma, the biotech arm of Strides, to fund its greenfield project. (BS)
 
United Spirits has decided to repay its fixed deposit holders to the tune of Rs4.5bn before the end of this financial year. (BS)
 
Strides Arcolab is acquiring similar sized Chennai-based pharma company Shasun Phamaceutical in an all stock transaction, post which the combined entity will have revenues of Rs25bn. As part of this acquisition, each equity shareholder of Shasun will be entitled to receive 5 equity shares of Strides in lieu of 16 equity shares held in Shasun. (ET)
 
The state government has urged NTPC Ltd and Power Grid Corporation of India Ltd to go ahead with the task of floating tenders for implementation of projects under the Rajeev Gandhi Grameen Vidyutikaran Yojana in the 12th Plan period. (BS)
 
In the run up to the festive season, Hero Motocorp and Honda Motorcycle and Scooter India, have raised product prices almost simultaneously. (BS)
 
Srei Infrastructure Finance is set to raise up to Rs15bn through secured, redeemable, non-convertible debentures. The base issue size is of Rs2.5bn with an option to retain over-subscription up to the shelf limit of Rs15bn. (BS)
 
NTPC has tied up loans to the tune of US$250mn with Mizuho Bank Limited for funding its expansion plans. (ET)
 
Mahindra & Mahindra, which is yet to make a mark in the two-wheeler space, launched a new 110-cc scooter 'Gusto' as the homegrown auto major seeks to challenge the supremacy of Japan's Honda in the domestic market. (BL)
 
The government has cancelled approvals of nine special economic zones, including that of Hindalco Industries, Essar and Adani as no "satisfactory" progress was made to execute the projects. (BS)
 
ABB has bagged an order worth around Rs1.72bn from Power Grid Company of Bangladesh. The order is to provide four new turnkey sub-stations and help expand six others, to enhance transmission capacity and boost power supply to meet growing demand for electricity. (ET)
 
In one of the first Make in India, manufacturing initiatives, Tata Power will produce Honeywell Aerospaces Talin navigator system in India. (BL)
 
PVR Ltd said that the board has approved plans to raise Rs5bn through qualified institutional placement. (BL)
 
Man Industries (India) has got orders worth about Rs5.5bn from domestic and international customers for supply of pipes for oil and gas projects. (ET)
 
The Indian data center infrastructure market, comprising of server, storage and networking equipment, will total US$2.03bn in 2015, a 5.4% increase from 2014 revenue of US$1.92bn, according to Gartner. (BS)
 
Banks have opened as many as 50mn accounts under the Jan Dhan scheme till September 25 and collected over Rs35bn in deposits, a top Finance Ministry official said. (ET)
 
Union secretary in the department of Economic Affairs Arvind Mayaram reiterated the country can achieve 7% growth in the next three years, and for this, he urged the state governments to change its laws to attract more investments. (BS)
 
Solar energy could be the top source of electricity by 2050, aided by plummeting costs of the equipment to generate it, a report from the International Energy Agency, the West's energy watchdog, said. (ET) 
 
TEN MOST ACTIVE FUTURES
Symbol

No.of Cont Traded

Last price

Open Interest

% chg in Op.Int

SBIN

26,549

2,459.90

4643750

-3.63

RELIANCE

23,268

943.25

33850500

2.18

AUROPHARMA

18,441

955.30

9098500

7.15

ICICIBANK

12,641

1,465.70

8777500

-0.61

SUNPHARMA

11,734

839.70

9805000

-5.96

TCS

11,595

2,776.85

3567375

-0.88

HDFCBANK

11,008

872.05

36697000

-1.59

LT

10,781

1,475.90

7854250

-0.33

INFY

9,737

3,727.45

3470500

-0.06

TATASTEEL

8,742

470.50

16842000

4.09

TEN MOST ACTIVE OPTIONS

Option Type

Strike price

No.of Cont Traded

Open Interest

% Chg in Op.In

SBIN

CE

2,500

5,028

218375

14.03

RELIANCE

CE

960

4,825

926000

48.34

SBIN

CE

2,600

3,779

272500

21.92

SBIN

PE

2,400

3,251

120000

5.49

RELIANCE

CE

940

2,709

465500

24.47

SBIN

PE

2,300

2,676

122625

22.78

INFY

CE

3,900

2,589

131000

112.15

INFY

CE

3,800

2,406

286750

280.43

RELIANCE

CE

1,000

2,317

1348500

4.53

INFY

CE

4,000

2,115

221375

180.67

SUPPORT & RESISTANCE LEVEL

Company Name

S3

S2

S1

Close

R1

R2

R3

ACC

1,416

1,421

1,427

1,437

1,447

1,453

1,458

AMBUJACEM

212

212

213

215

217

218

218

ASIANPAINT

619

621

622

626

630

631

633

AXISBANK

S3

382

383

385

388

389

390

BAJAJ-AUTO

2,266

2,276

2,286

2,306

2,326

2,336

2,346

BANKBARODA

886

889

893

900

907

911

914

BHARTIARTL

399

400

401

404

406

407

408

BHEL

203

204

205

207

209

210

211

BPCL

621

625

629

637

645

649

653

CAIRN

303

304

305

307

309

310

311

CIPLA

609

611

614

618

622

625

627

COALINDIA

339

340

341

343

345

346

347

DLF

154

155

156

158

160

162

163

DRREDDY

3,173

3,186

3,199

3,225

3,251

3,264

3,277

GAIL

442

445

448

454

460

464

467

GRASIM

3,529

3,539

3,550

3,570

3,590

3,601

3,611

HCLTECH

1,690

1,695

1,699

1,708

1,717

1,722

1,726

HDFC

1,021

1,024

1,028

1,035

1,042

1,046

1,049

HDFCBANK

856

858

861

866

872

874

877

HEROMOTOCO

2,817

2,827

2,839

2,861

2,883

2,895

2,906

HINDALCO

155

156

158

161

163

165

166

HINDUNILVR

735

738

741

747

753

756

759

ICICIBANK

1,441

1,445

1,450

1,459

1,467

1,472

1,476

IDFC

139

139

140

141

142

143

143

INDUSINDBK

616

619

621

627

632

634

637

INFY

3,697

3,710

3,724

3,750

3,776

3,790

3,803

ITC

361

362

364

367

369

371

372

JINDALSTEL

170

172

173

177

180

182

184

JPASSOCIAT

25

25

26

26

27

27

27

KOTAKBANK

983

988

993

1,002

1,011

1,016

1,021

LT

1,441

1,448

1,454

1,467

1,480

1,486

1,493

LUPIN

1,374

1,378

1,383

1,392

1,401

1,406

1,410

M&M

1,372

1,375

1,379

1,386

1,394

1,398

1,401

MARUTI

2,991

2,997

3,003

3,015

3,026

3,032

3,038

NMDC

162

163

164

166

167

168

169

NTPC

137

138

138

139

140

140

141

ONGC

401

403

404

408

411

412

414

PNB

873

877

881

890

899

903

907

POWERGRID

138

138

139

140

141

142

142

RANBAXY

612

616

620

628

637

641

645

RELIANCE

925

927

929

933

938

940

942

SBIN

2,421

2,429

2,438

2,455

2,472

2,481

2,490

SSLT

268

269

270

272

273

274

275

SUNPHARMA

815

820

826

836

846

852

857

TATAMOTORS

505

506

508

510

513

514

515

TATAPOWER

83

83

84

84

85

85

85

TATASTEEL

456

458

461

466

471

474

476

TCS

2,708

2,724

2,741

2,774

2,807

2,824

2,840

ULTRACEMCO

2,610

2,617

2,625

2,640

2,655

2,663

2,670

WIPRO

588

590

593

598

602

605

607

 

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