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Daily Market Strategy - Indices could swing at new highs!

Anil Mascarenhas,  India Infoline News Service | Mumbai | September 02, 2014 08:23 IST

The indices are expect to open on a positive note. Some profit booking could always set in later in the day.

The strongest principle of growth lies in the human choice. - George Eliot
 
The indices seem to have no choice but to hit new highs. With the Nifty managing to end above the 8000 mark, the next number being eyed is a market cap of over Rs100 lakh crore for the BSE which is now close to Rs94 lakh crore.
 
Investors are trying to interpret the data emanating locally. Indias current account deficit (CAD) narrowed sharply to US$ 7.8 bn (1.7 per cent of GDP) in Q1 of 2014-15 from US$ 21.8 billion (4.8 per cent of GDP) in Q1 of 2013-14. However, it was higher than US$ 1.2 billion (0.2 per cent of GDP) in Q4 of 2013-14. The lower CAD was primarily on account of a contraction in the trade deficit contributed by both a rise in exports and a decline in imports. The countrys July infrastructure output growth slowed to a 3-month low of 2.7%. Its cumulative growth during April to July, 2014-15 was 4.1 %.

The indices are expect to open on a positive note. Some profit booking could always set in later in the day. With lack of cues from the US market as Wall Street was closed, investors are paying more attention to the other data like European Manufacturing which has weakened and Germanys GDP which has shrunk.
 
Asian indices are mixed. Japan's Nikkei 225 is up 1% while Hong Kong's Hang Seng index was down around half a percent. South Korea's Kospi index shed 0.6% while China's Shanghai is marginally higher.
 
With the PM in Japan, attention is also on what could come into the equity market here. Japanese investors may consider increasing investment in emerging market assets as India if inflation in Japan comes close to or crosses the Bank of Japan's target of 2%, a report stated. Japanese households own financial assets worth about $160 billion. However, a large 53% of this is invested in cash with only 5% invested in equities and 27% in insurance, the report added.
 
The Prime Minister, Narendra Modi, announced that a special management team would be set up directly under the Prime Ministers Office to facilitate investment proposals from Japan. 

Infosys' newly appointed boss Vishal Sikka said the company will unveil its strategy by mid-October, even as he stressed on the importance of automation and the need to embrace design-thinking to drive growth, says a report.
 
Highlighting the initiatives of the first 100 days of his Government, Modi said moves to ease FDI rules have been widely appreciated. He said the GDP growth of 5.7% in the first quarter of 2014-15 has generated a huge positive sentiment. He said the clear mandates received by the Governments of both India and Japan, and the political stability they had generated, would deliver a strong push to bilateral ties. 
 
Supreme Court will next hear coal block allocation case on Sept 9.
 
Russia's Energy Minister Alexander Novak reportedly said that Moscow and Kiev have agreed to hold a new round of talks to resolve a gas crisis on Sept. 6.
 
The Attorney General proposed to the Supreme Court that about 46 of the 216 coal mines it declared illegal should not be taken back from the companies that operate them, says a report.
 
In its earlier decision on August 25, the apex court ruled that all the coal blocks allocated by the Union Governments between the period 1993-2010 were illegal, and on many occasions the guidelines on coal allocation were breached and the approach of the companies was casual.
 
Auto stocks were in focus on Monday as the monthly sales figures were out. Maruti Suzuki India Limited sold a total of 110,776 units in August 2014. This includes 98,304 units in domestic market and 12472 units in exports.
 
M&M has sold 35,175 units during August 2014, as against 37,897 units during August 2013, While Honda Cars India Ltd registered monthly domestic sales of 16,758 units in August 2014 witnessing a growth of 88%. 
 
The United Bank of India declared the grounded Kingfisher Airlines and chairman Vijay Mallya a so-called 'willful defaulter', according to report.
 
"We have declared Kingfisher Airlines, Vijay Mallya and a few other directors of the airline company as wilful defaulters," Deepak Narang, executive director of UBI, reported.
 
Moody's Investors Service says the overall covenant quality (CQ) score of 1.83 for bonds issued by Moody's-rated high-yield Indonesian property developers between January 2011 and July 2014 is stronger than the average of 2.47 for Asian high-yield companies during the same period, based on Moody's five-point scale, in which 1.0 denotes the strongest level of investor protections and 5.0, the weakest. 
 
Crop protection chemical company Sharda Cropchem is planning to open initial public offer of 2.3 crore equity shares. Report stated that the company plans to raise around Rs 327-352 crore The price band may be fixed at Rs 145-156 a share through the issue, says report. The issue will open on 5th September and  will close for subscription on September 9. 
 
Shares of Brigade Enterprises surged over 8% to Rs 136 after company and GIC, Singapore's sovereign wealth fund, through its affiliate Company, have entered into a Memorandum of Understanding (MOU) to jointly invest up to Rs 1,500 crore in residential and mixed-use developments in select cities of South India.

Results watch: Shiv-Vani Oil & Gas Exploration Services, Silver Oak (India) Ltd, Vatsa Corporations and Visu International.
 
Trends in FII flows: The FIIs were net buyers of Rs5.54bn in the cash segment on Monday. The domestic institutional investors (DIIs) were the net sellers of Rs5.61bn in the cash segment, as per the provisional figures released by the NSE.
 
Global data: ANZ Commodity Price (Aug) NZD, Building Permits (YoY) (Jul) AUD, Building Permits (MoM) (Jul) AUD, Current Account Balance (Q2) AUD, Labor Cash Earnings (YoY) (Jul) JPY, RBA Interest Rate Decision AUD, RBA Rate Statement AUD, Gross Domestic Product (YoY) (Q2) CHF, Gross Domestic Product s.a. (QoQ) (Q2) CHF, Unemployment Change (Aug) EUR, PMI Construction (Aug) GBP, Producer Price Index (YoY) (Jul) EUR, Producer Price Index (MoM) (Jul) EUR, RBC Manufacturing PMI (Aug) CAD, Markit Manufacturing PMI (Aug) USD, ISM Manufacturing PMI (Aug) USD, ISM Prices Paid (Aug) USD, Construction Spending (MoM) (Jul) USD, IBD/TIPP Economic Optimism (MoM) (Sep) USD, 3-Month Bill Auction USD, 6-Month Bill Auction USD, BRC Shop Price Index (MoM) (Aug) GBP and AiG Performance of Services Index (Aug) AUD. 
 
In other news in the media:
 
Apollo Hospitals plans to add 3 more reach hospitals with a total bed capacity of 500 beds in the country at an investment of Rs.4bn in the current financial year. (BS)
 
Wipro plans to double its workforce at Muscat in Oman over the next 12-18 months, in view of a significant uptick in demand. (BS)
 
Neyveli Lignite Corporation has lined up renewable energy projects worth over Rs.5bn. The company plans to set up over 80 MW of wind and solar energy projects. (BS)
 
Cipla Ltd has launched an anti-asthma inhaler in Germany and Sweden that is a generic version of GlaxoSmithKline Plc's Advair. (BL)
 
ONGC is facing tough questions from the Petroleum and Natural Gas Ministry over the delay in developing its East Coast discoveries. (BL)
 
Jindal ITF, a wholly-owned subsidiary of Jindal SAW Ltd, and Sula Shipping & Logistics Pvt Ltd have set up a project-driven partnership. The partnership is expected to increase the efficiency of the NTPC-Farakka waterways project. (BL)
 
National Aluminium Company targets to procure goods and services worth Rs.3bn from the micro and small enterprises in 2014-15.(BS)
 
Sharda Cropchem plans IPO to raise around Rs.3.52bn. (BS)
 
SpiceJet launched another promotional scheme by offering discounted one-way fares for domestic destinations at Rs.499, including fuel surcharge but excluding applicable statutory taxes and fees. (ET)
 
Tata Steel-Sumitomo launches auto grade steel project in Jamshedpur. (BL)
 
NMDC has achieved a record growth in production and dispatches during August. (BL)
 
Loans given out by non-banking financial companies for housing purposes dipped by 25.8% between March 2012 and 2014, as per the latest RBI data. This was primarily on account of regulations aimed at containing the excessive flow of credit to the sector amid fears of asset bubbles. (BL)
 
The Reserve Bank issued revised and final guidelines for raising non-equity regulatory capital instruments by banks under the stringent Basel III framework under which lenders can issue tier 2 capital with a minimum original maturity of 5 years as against 10 years now. (ET)
 
Cracking the whip on banks for delay in disposal of loans to borrowers, RBI asked banks to set up timelines and review pending loan applications beyond specific period. (BL)
 
In order to give recommendations for spectrum auction, sectoral regulator Trai has sought more details from DoT regarding the quantum of spectrum which has been allotted to telcos in 900 MHz and 1800 Mhz bands and the amount which has been lying vacant in each service area. (ET)
 
Negative growth in crude oil, natural gas, refinery products, fertilisers and steel has pulled down the growth of the eight core industries to 2.7% in July. (BL)
 
TEN MOST ACTIVE FUTURES
Symbol

No.of Cont Traded

Last price

Open Interest

% chg in Op.Int

RELIANCE

34,629

1,022.25

28134750

3.11

JINDALSTEL

30,654

249.85

17315000

6.38

SBIN

26,889

2,523.05

4574000

9.51

ICICIBANK

19,715

1,603.55

6564500

8.79

MARUTI

17,408

2,932.50

2084000

18.38

TATASTEEL

15,920

528.10

17080000

4.24

LT

13,895

1,584.40

6471000

-1.79

HINDALCO

13,442

176.35

27820000

8.92

RELINFRA

12,433

734.85

6260000

0.81

DLF

12,035

181.05

36074000

4.55

TEN MOST ACTIVE OPTIONS

Option Type

Strike price

No.of Cont Traded

Open Interest

% Chg in Op.In

RELIANCE

CE

1,020

5,106

921750

45.90

SBIN

CE

2,600

4,713

271000

142.23

SBIN

CE

2,500

4,430

222250

14.12

RELIANCE

CE

1,000

4,385

1054500

3.74

RELIANCE

CE

1,040

4,308

659000

40.51

SBIN

CE

2,550

3,726

194250

132.63

RELIANCE

PE

1,000

2,926

527000

29.01

ICICIBANK

CE

1,600

2,920

202750

1.76

JINDALSTEL

CE

250

2,876

1073000

70.32

LT

CE

1,600

2,875

268500

52.99

SUPPORT & RESISTANCE LEVEL

Company Name

S3

S2

S1

Close

R1

R2

R3

ACC

1,482

1,486

1,490

1,498

1,506

1,510

1,514

AMBUJACEM

207

207

208

208

209

209

210

ASIANPAINT

624

625

627

629

632

633

634

AXISBANK

S3

401

403

406

409

411

412

BAJAJ-AUTO

2,227

2,235

2,243

2,260

2,277

2,285

2,293

BANKBARODA

878

881

884

890

896

899

902

BHARTIARTL

370

371

372

375

378

379

380

BHEL

234

235

236

239

241

242

243

BPCL

692

695

698

705

712

715

718

CAIRN

327

328

329

331

333

334

335

CIPLA

518

521

524

529

535

538

540

COALINDIA

359

361

362

366

369

370

372

DLF

176

177

178

180

181

182

183

DRREDDY

2,943

2,951

2,959

2,975

2,991

2,999

3,007

GAIL

450

453

456

461

467

470

472

GRASIM

3,416

3,429

3,443

3,469

3,496

3,510

3,523

HCLTECH

1,618

1,622

1,627

1,635

1,643

1,648

1,652

HDFC

1,041

1,046

1,050

1,059

1,068

1,073

1,077

HDFCBANK

837

839

841

844

847

849

851

HEROMOTOCO

2,648

2,678

2,711

2,773

2,835

2,868

2,898

HINDALCO

169

171

172

175

178

180

182

HINDUNILVR

734

735

737

741

745

747

749

ICICIBANK

1,573

1,580

1,588

1,603

1,617

1,625

1,632

IDFC

143

144

145

146

147

147

148

INDUSINDBK

595

600

605

614

623

628

633

INFY

3,578

3,583

3,589

3,600

3,611

3,617

3,622

ITC

345

346

347

350

353

354

356

JINDALSTEL

229

234

238

248

257

262

267

JPASSOCIAT

47

47

48

48

49

49

49

KOTAKBANK

1,040

1,042

1,044

1,049

1,053

1,055

1,057

LT

1,548

1,555

1,563

1,578

1,593

1,601

1,608

LUPIN

1,275

1,278

1,281

1,287

1,293

1,296

1,299

M&M

1,390

1,394

1,399

1,407

1,415

1,420

1,424

MARUTI

2,837

2,859

2,882

2,928

2,973

2,997

3,019

NMDC

168

169

169

171

173

174

174

NTPC

138

139

139

140

141

142

142

ONGC

435

436

437

439

441

442

443

PNB

957

962

967

977

987

992

997

POWERGRID

129

130

131

133

134

135

136

RANBAXY

627

630

632

637

642

645

647

RELIANCE

1,000

1,004

1,008

1,016

1,025

1,029

1,033

SBIN

2,486

2,493

2,500

2,515

2,530

2,537

2,544

SSLT

275

277

279

283

287

289

291

SUNPHARMA

827

831

835

842

849

853

857

TATAMOTORS

512

514

516

521

525

527

529

TATAPOWER

88

89

89

90

92

92

93

TATASTEEL

514

516

519

524

528

531

533

TCS

2,514

2,520

2,527

2,539

2,551

2,557

2,563

ULTRACEMCO

2,585

2,600

2,615

2,646

2,676

2,691

2,706

WIPRO

559

560

562

565

568

570

571



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