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Daily Market Strategy - Lower opening, yet on the road to new highs

Anil Mascarenhas,  India Infoline News Service | Mumbai | September 15, 2014 08:23 IST

The outlook is a lower opening given the subdued sentiment in global markets. The rupee movement and WPI Inflation numbers will be in focus today

No matter how far you have gone on the wrong road, you can still turn around. - Anonymous
 
Though the indices are back to hitting new highs, it remains in a range which could perhaps unnerve existing investors and prevent new ones from coming. Sectoral rotation is keeping the indices in good cheer and last week it was BankNifty which outperformed. The apprehension among investors now, especially the global investors, is whether or not the Fed will raise interest rates or hint at the same later this week. The ECB is on a different path of keeping interest rates low and looks like the divergence will continue for a while.
 
With the Mid-cap index crossing the 10,000 mark a lot of milestones are being re-captured. With the Sensex adding almost 6000 points this year, it is close to re-entering the trillion-dollar club, which it had moved out from in the aftermath of the September 2008 crisis. The total market capitalisation of BSE listed companies stands at Rs 96,25,517 crore at present.
 
The outlook is a lower opening given the subdued sentiment in global markets. The rupee movement and WPI Inflation numbers will be in focus today. FII flows have been encouraging with Rs 17,000 crore entering the Indian market in September alone. Of this ~6,600 crore came into equity while the rest was in debt.  The inflow into equity mutual funds continues with over 1 lakh investor accounts in August. The number of equity folios rose to 2,94,41,948 at the end of August from 2,93,13,290 in the preceding month, a gain of 1,28,658.
 
The market may react to IIP growth and lower retail inflation figures released late on Friday. The IIP for the month of July 2014 stands at 172.3, which is 0.5% higher as compared to the level in the month of July 2013. The cumulative growth for the period April-July 2014-15 over the corresponding period of the previous year stands at 3.3%.
 
The Consumer Price Index (CPI) inflation was down to 7.8% as compared to 7.96% in July. The food Price inflation rose to 9.42% as against 9.36% in July. The CPI urban inflation was at 7.04% as against 7.42% in July. 
 
Asian indices are lower with Hong Kong's Hang Seng index down 1%. South Korea's Kospi index has shed around 0.3% while China's Shanghai index was trading marginally lower.
 
On Friday, US indices also closed in the red. The Dow Jones industrial average fell 61.49 points, or 0.36 percent, to 16,987.51, the S&P 500 lost 11.91 points, or 0.6 percent, to 1,985.54 and the Nasdaq Composite dropped 24.21 points, or 0.53 percent, to 4,567.60.
 
Later the market focus will also be on the Federal Reserve meeting scheduled on September 17th.
 
The market cap of top five Sensex companies fell by Rs 36,971.61 crore last week.
ONGC, RIL, CIL and Sun Pharma saw a decline in market cap while the gainers were TCS, ITC, HDFC Bank, SBI and ICICI Bank. TCS retains its top slot in mcap ranking with ONGC, RIL, ITC, CIL, Infosys, HDFC Bank, SBI, ICICI Bank and Sun Pharma following it.
 
India's foreign exchange reserves fell by $1.327 billion to $317.313 billion in the week to September 5, as the country's central bank sold dollars to prevent currency volatility.
 
LIC has lined up over Rs. 55,000 crore for investment in the equity market in the current fiscal, a part of which will be used for picking up stakes in PSUs during the disinvestment process, says a report.
 
The Chief Election Commissioner, V S Sampath, has announced election schedule for the states of Maharashtra and Haryana. The states will go to polls on October 15 and counting of votes will be conducted on October 19, 2014, says report.
 
Gujarat has registered a 50.95 per cent voter turnout in by-elections held for nine Assembly and one Lok Sabha seats yesterday, as per the final data released by the Election Commission.
 
The Prime Minister, Narendra Modi reviewed the progress of eight major infrastructure sectors: Civil Aviation, Ports and Inland Waterways, Railways, Roads, Telecom, Power, Coal, and New and Renewable Energy. This was part of the regular series of reviews on infrastructure which the Prime Minister takes every month. He stated that accelerated infrastructure development was his top priority, and also stressed the need for creating world-class infrastructure in India. 
 
The three Oil Marketing Companies (OMCs), Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation, are implementing a contingency plan to restore normalcy in petroleum supplies in the flood-affected areas of Jammu & Kashmir at the earliest.  Senior OMC officials, camping at Jammu and Srinagar, are carefully monitoring the situation.
 
Snowman Logistics opened 59.6% higher on listing. The stock debuted at Rs.75, which was Rs.28 higher than its initial public offer (IPO) price of Rs.47 apiece. The shares closed up at Rs. 80, up 70% on NSE. 
 
The Rupee ended at 60.94, up 0.56% as against the US dollar. The Indian rupee opened flat at 60.97 per dollar against the previous day close of 60.92.
 
Indirect Tax Revenue (Provisional) collections have increased from Rs 1,85,881crore in April-August 2013 to Rs. 1,94,492crore during April-August 2014. Thus an increase of 4.6 % has been registered during April-August 2014 over the corresponding period in the previous year. Overall, it is an achievement of 31.2 % of the Budget Estimates for 2014-15. 
 
Ford Motor is planning to launch four new car models in India and is looking to increase the amount of locally-made parts to reduce the cost of its vehicles sold in the country, head of its local unit reportedly said on Friday. 
 
Trends in FII flows: The FIIs were net buyers of Rs1.82bn in the cash segment on Friday, while domestic institutional investors (DIIs) were the net sellers of Rs2.08bn in the cash segment, as per the provisional figures released by the NSE.
 
Global data: WPI Inflation (Aug) INR, Respect-for-the-Aged Day Bank Holiday JPY, New Motor Vehicle Sales (MoM) (Sep) AUD, New Motor Vehicle Sales (YoY) (Sep) AUD, Producer and Import Prices (MoM) (Aug) CHF, Producer and Import Prices (YoY) (Aug) CHF, Trade Balance n.s.a. (Jul) EUR, Trade Balance s.a. (Jul) EUR, NY Empire State Manufacturing Index (Sep) USD, Capacity Utilization (Aug) USD, Industrial Production (MoM) (Aug) USD.
 
In other news in the media:
 
Titan Company Limited commissioned its new stainless steel watch case plant on the outskirts of Coimbatore in Tamil Nadu. Set up at a cost of over Rs750mn, the new plant will manufacture around 1mn cases per annum and scale it up to 2mn cases annually. (BS)
 
The 15mn ton oil refinery of Indian Oil Corporation Ltd at Paradeep running behind schedule, is gearing up for commissioning by early 2015. (BS)
 
JSW Steel is poised to take over bankrupt Italian steelmaker Lucchinis three special steel re-rolling mills in Tuscany province. Together, the units have the capacity to re-roll 1mn tons of steel. (BL)
 
HCL Technologies is betting on engineering services outsourcing R&D to create new revenue streams and for a broad-based growth. (BL)
 
Fortis Healthcare has decided to sell its Singapore subsidiary RadLink-Asia Pte Ltd and its arm RadLink Singapore to Malaysian major IHH Healthcare Berhad for S$137mn. (BL)
 
ICICI Bank has raised US$500mn from overseas markets by selling its bonds to fund foreign expansion plans. (ET)
 
Tata Steel is setting up a 55,000 ton per annum ferro chrome plant at Gopalpur in Ganjam district of Odisha and its first unit is expected to start operations by March 2015. (ET)
 
Lupin Ltd has entered into an agreement with US-based Salix Pharmaceuticals to market gastrointestinal drugs in Canada. (BL)
 
Hero MotoCorp Ltd held parleys with Andhra Pradesh Chief Minister N Chandrababu Naidu on the companys proposed Greenfield plant in South India and a decision on finalising the location of the new plant is likely to be taken shortly. (BL)
 
GAIL India Ltd said it has made available natural gas from alternate sources to industries in Gujarat whose domestic fuel allocation was snapped to give fuel for CNG sector. (ET)
 
The first 1600 MW pithead thermal power project by Coal India Ltd subsidiary Mahanadi Coalfields Ltd is expected to be ratified at the next board meeting. (ET)
 
Zydus Cadila has set a target of clocking a consolidated turnover of over Rs100bn by FY'16. (ET)
 
With the ATM network virtually grounded and financial problems hitting the people, Jammu and Kashmir Bank has stepped up its operation and reopened 149 out of its 300 branches in Kashmir. (ET)
 
In July, India's industrial growth fell to 0.5%, the lowest this financial year, owing to contraction in manufacturing after three months, official data showed on Friday. While industrial growth in June stood at 3.9%, it was 2.6% in July 2013. (BS)
 
The government plans to repurchase government bonds (G-secs) through reverse auction for Rs200bn on Tuesday. (BS)
 
Communications minister Ravi Shankar Prasad said that the government will finalize spectrum trading and sharing guidelines by the year end and formalize procedures to conduct the next round of auctions within this fiscal. (ET)
 
TEN MOST ACTIVE FUTURES
Symbol

No.of Cont Traded

Last price

Open Interest

% chg in Op.Int

SBIN

30,632

2,634.80

4371000

0.76

SUNPHARMA

23,404

810.00

8838500

5.42

CIPLA

16,015

615.10

5389000

10.07

RELIANCE

15,954

1,019.35

28027750

0.10

ARVIND

13,692

337.55

11748000

1.66

AUROPHARMA

12,984

897.80

9626000

-0.17

MARUTI

12,655

2,981.55

2200750

4.57

EXIDEIND

12,491

175.70

13034000

18.92

IDFC

12,297

149.75

63628000

-0.52

TATASTEEL

11,882

518.60

19763000

2.57

TEN MOST ACTIVE OPTIONS

Option Type

Strike price

No.of Cont Traded

Open Interest

% Chg in Op.In

SBIN

CE

2,600

7,624

454625

-9.14

SBIN

CE

2,650

5,836

340500

-5.15

SBIN

CE

2,700

5,275

341750

3.72

SBIN

PE

2,600

4,667

183625

47.49

SBIN

PE

2,500

4,020

364750

5.99

RELIANCE

CE

1,040

3,711

1551750

0.96

SBIN

PE

2,550

3,604

189125

35.57

RELIANCE

CE

1,020

3,589

1005250

21.48

RELIANCE

CE

1,060

2,984

960250

-10.28

SBIN

CE

2,750

2,958

347375

3.66

SUPPORT & RESISTANCE LEVEL

Company Name

S3

S2

S1

Close

R1

R2

R3

ACC

1,521

1,525

1,529

1,537

1,545

1,549

1,553

AMBUJACEM

213

213

214

215

216

216

217

ASIANPAINT

656

659

663

670

676

680

683

AXISBANK

S3

414

415

416

418

419

420

BAJAJ-AUTO

2,311

2,318

2,326

2,340

2,355

2,362

2,369

BANKBARODA

925

930

936

948

960

966

971

BHARTIARTL

408

410

411

415

418

419

421

BHEL

216

217

218

220

222

223

224

BPCL

677

679

680

684

688

689

691

CAIRN

320

321

323

326

328

330

331

CIPLA

583

590

597

610

624

631

637

COALINDIA

351

352

354

356

359

360

362

DLF

173

174

174

176

177

177

178

DRREDDY

2,928

2,935

2,942

2,956

2,970

2,977

2,984

GAIL

454

455

457

460

464

465

467

GRASIM

3,618

3,628

3,639

3,660

3,681

3,691

3,702

HCLTECH

1,605

1,609

1,614

1,622

1,630

1,635

1,639

HDFC

1,042

1,045

1,048

1,053

1,058

1,061

1,064

HDFCBANK

851

852

854

857

860

861

863

HEROMOTOCO

2,714

2,725

2,736

2,758

2,780

2,792

2,802

HINDALCO

165

166

167

169

171

172

173

HINDUNILVR

750

752

754

757

760

762

764

ICICIBANK

1,556

1,559

1,561

1,567

1,573

1,576

1,578

IDFC

147

147

148

149

150

151

151

INDUSINDBK

625

627

628

631

634

636

637

INFY

3,636

3,645

3,655

3,674

3,693

3,703

3,712

ITC

351

352

353

355

357

358

359

JINDALSTEL

234

235

235

237

239

240

241

JPASSOCIAT

35

35

35

36

36

36

37

KOTAKBANK

1,056

1,059

1,061

1,066

1,071

1,074

1,076

LT

1,559

1,564

1,570

1,580

1,590

1,596

1,601

LUPIN

1,322

1,331

1,341

1,360

1,379

1,389

1,399

M&M

1,374

1,378

1,382

1,391

1,400

1,404

1,408

MARUTI

2,937

2,946

2,956

2,975

2,994

3,004

3,013

NMDC

175

175

176

177

178

178

179

NTPC

136

137

137

138

139

139

140

ONGC

422

423

425

428

431

433

435

PNB

964

969

973

983

992

997

1,002

POWERGRID

133

134

134

135

137

137

138

RANBAXY

591

596

601

611

620

625

630

RELIANCE

1,007

1,009

1,012

1,016

1,020

1,022

1,024

SBIN

2,602

2,610

2,619

2,637

2,655

2,664

2,672

SSLT

287

288

289

291

293

294

295

SUNPHARMA

785

790

795

806

816

822

827

TATAMOTORS

513

514

515

517

519

520

521

TATAPOWER

88

88

89

89

90

90

91

TATASTEEL

513

514

515

517

519

520

521

TCS

2,589

2,594

2,600

2,610

2,620

2,625

2,630

ULTRACEMCO

2,585

2,598

2,611

2,638

2,665

2,679

2,692

WIPRO

570

571

573

576

579

581

582



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