Daily Market Strategy - Appearing better! Indices to open in green

Back to the market, the situation appears better this morning. Indices could start off on a cheerful note buoyed by global cues.

May 20, 2015 02:05 IST IIFL Anil Mascarenhas |

India Infoline Daily Market Strategy
The world is governed more by appearances than realities, so that it is fully as necessary to seem to know something as to know it. - Daniel Webster
 
The market saw all its gains vanishing on Tuesday as profit booking set in, especially in the banking counters. The government has proposed exempting interest earned on gold deposits from income tax, wealth tax or capital gains tax. It is also examining the option of allowing banks to use gold deposited under the monetisation scheme announced in the Budget as a part of their cash reserve and statutory liquidity. The draft gold monetisation scheme seeks to bring in small investors by lowering the minimum gold that can be deposited to 30g from 500g.
 
Back to the market, the situation appears better this morning. Indices could start off on a cheerful note buoyed by global cues. Reliance Communications could take over Sistema Shyam Teleservices (SSTL) in an all-stock deal. Expect action in these counters. Tata Steel has already addressed some concerns so disappointment may be less on the counter as it announces its numbers.  DLF, Aarti Drugs, Bajaj Finance, Archies, Bharat Forge and  Brigade are among the other counters which will see action based on their results.
 
The Dow was up 0.07% while S&P closed a tad lower. Nasdaq shed 0.17%. Japan's Nikkei 225 index was trading higher, Hong Kong's Hang Seng index was lower and China's Shanghai index is in the green.
 
The Cabinet Committee on Economic Affairs (CCEA), led by Prime Minister Narendra Modi, has already granted approval for stake sale worth about Rs 50,000 crore (at current prices) in about 20 companies, says a report.
 
The NSE had about 5.2 million active clients for all stock brokers of the exchange.

The valuation of holdings by domestic institutional investors (DIIs) in National Stock Exchange (NSE)-listed firms hit a six-year high of Rs 10.21 lakh crore at the end of March, on account of buoyant markets, says Prime Database. In percentage terms, DII holding in NSE-listed companies went up to 5.01 per cent at the end of March 31, compared with 4.58 per cent on an aggregate basis.
 
Reliance Industries Limited announced that it has priced its Regulation S offering of US$ 200 million 5% Senior Unsecured Callable Notes due 2035 (the “Notes”).These Notes, denominated in US dollars, have been issued primarily to Taiwanese life insurance companies and are proposed to be listed on Taipei Exchange (formerly known as GreTai Securities Market). Such notes are commonly known as Formosa Bonds. 
 
Deutsche Bank AG, Taipei Branch and HSBC Bank (Taiwan) Limited acted as Joint Bookrunners and Lead Managers on the transaction. Morgan Stanley & Co. International plc acted as the Structuring Agent on the transaction. 
 
GoAir Promoters are exploring options for IPO and looking at $150-200 mn size, according to reports.Report said that the airline appointed 2 bankers to explore IPO Options. The promoters are looking at total valuation of $650-700 mn, says report. The airline is likely to consider IPO by Q4 Of Current Calendar Year.
 
Indo Rama Synthetics India Ltd has hit 20% upper circuit at Rs. 21.50 after the company has posted Q4 results.
 
Mahindra Holidays & Resorts India tumbled 2% at Rs. 246.The company has reported 58% drop in standalone Q4 net profit to Rs. 10.42 crore as compared to Rs. 24.38 crore on year-on-year basis.
 
Bharti Airtel rallied to a high at Rs. 405 on media reports that the firm is in advanced talk to buy out Augere Wireless Broadband India for about Rs. 150 crore to consolidate its 4G high-speed broadband footprint ahead of Reliance Jio Infocomm's launch. The stock however, ended with a loss of 0.6 percent at Rs. 395.
 
Among other stocks - Bharti Infratel scaled to hit 52-week high at Rs. 440 after the company informed the BSE that it has been included in the list of stocks in MSCI Global Standard Index. The stock ended with a surge of 5.1 percent at Rs. 439.
 
NIIT Technologies added 1.6 percent at Rs. 387 after the company has signed a strategic agreement to acquire majority stake in Incessant Technologies.
 
Kellton Tech Solutions zoomed 15.4% at Rs. 76.50 after the company informed the BSE that it is in the final stage of acquiring a US-based IT Solutions Company with revenue of about $ 40 million. 
 
AXISCADES Engineering Technologies tumbled to hit 5% lower circuit on the BSE on reporting 27.3 percent decline in Q4 net profit on year-on-year basis. However, the stock recovered most of its losses and ended with a loss of 1.5 percent at Rs. 245. 
 
Suzlon Energy rallied to a high at Rs. 26.90 on receiving new order from Mytrah Energy to supply 98MW project in Telangana. The stock however ended unchanged at Rs. 26.15.
 
Just Dial soared 5.7% at Rs. 1,139 on reports that the company has expanded the scope of B2C transaction based services by adding product e-commerce marketplace. 
 
National Buildings Construction Corporation (NBCC) spurted almost 3% at Rs. 811 on entering into a Memorandum of Understanding (MoU) with NAWADCO for developing four Properties involving overall construction cost of Rs. 398 crore.
 
JBM Auto slumped 12.6 percent at Rs. 207 after the company reported 15.2 percent fall in Q4 net profit on year-on-year basis.
 
Results watch: Tata Steel, DLF, Aarti drugs, Bajaj Finance, Archies, Bharat Forge, Brigade, Era Infra, Globusspr, HGS, JB Chem Pharm, Shreyan Ind, TD Power Sys, TTIL, Sujanatwr, Voltamp, Wabco India. 
 
Global Data:  Westpac Consumer Confidence Index (May) AUD, Westpac Consumer Confidence (May) AUD, Coincident Index (Mar) JPY, Leading Economic Index (Mar) JPY, Producer Price Index (MoM) (Apr) EUR, Producer Price Index (YoY) (Apr) EUR, Fed's Evans Speech  USD, Non-monetary policy's ECB meeting EUR, Bank of England Minutes  GBP, BOE MPC Vote Hike GBP, BOE MPC Vote Unchanged GBP,BOE MPC Vote Cut GBP,Current Account (YoY) (Mar) EUR, Construction Output w.d.a (YoY) (Mar) EUR, Construction Output s.a (MoM) (Mar) EUR, ZEW Survey - Expectations (May) CHF, MBA Mortgage Applications (May 15) USD, Wholesale Sales (MoM) (Mar) CAD, EIA Crude Oil Stocks change (May 15) USD, FOMC Minutes  USD, Visitor Arrivals (YoY) (Apr) NZD, Foreign investment in Japan stocks (May 15) JPY, Foreign bond investment (May 15) JPY
 
Trends in FII flows: The FIIs were net buyers of Rs. 480.6mn in the cash segment on Tuesday. The domestic institutional investors (DIIs) were net buyers of Rs. 4.51bn, as per the provisional figures released by the NSE.
 
In other news in the media:
 
Lloyd Electric & Engineering is looking to scale up advertising and marketing spends in order to increase market share in the room AC segment. The company’s expenditure on brand building will go up by over 50% to Rs550m this fiscal. (BL)
 
NMDC Ltd has drawn up a growth plan to attain production of 100mn tonnes per annum by 2022 from the present production level of 30mn tonnes per annum, more than tripling its output. (BL)
 
Competition Commission of India has approved the acquisition of Alstom’s India assets by General Electric as part of global deal. (BL)
 
Reliance Industries has raised US$200mn through a fresh issuance in Taiwan. The company raised 20-year debt paper on May 18. (ET)
 
Puravankara Projects announced a major restructuring in the company to achieve higher growth in sales and delivery of projects over the next five years. (ET)
 
Tata Steel said it has no immediate plans to sell-off its Long Products Europe business to the Switzerland-based Klesch Group. (BS)
 
Glenmark Pharmaceuticals has raised Rs9.45bn by issuing over 10mn shares to Aranda Investments, an indirect subsidiary of Temasek Holdings. (BL)
 
Hyundai Motor Group expressed its desire to expand its business into sectors like construction and railways in India, where it is currently the largest exporter of cars. (ET)
 
Bharti Airtel is all set to buy out Augere Wireless, 4G spectrum holder company in Madhya Pradesh circle, for about Rs1.5bn. (ET)
 
Syndicate Bank said it will raise up to Rs55.5bn from a mix of equity and bond to meet its capital requirements. (BL)
 
Tata Steel is in talks to buy Visa Steel's ferro chrome unit for ~Rs10bn to safeguard its chrome mining reserves by buying value adding facility. (ET)
 
Seeking to mobilize gold held by households and institutions, the government released a draft scheme under which a person or entity can earn interest by depositing the metal with banks. (BS)
 
Raising concern over central banks globally being pushed into "competitive monetary easing", RBI Governor said lower interest rates and tax incentives can boost investments, but it is consumer demand that holds the key for pushing economic growth. (ET)
 
India's economic growth is projected to surpass that of China's, with the GDP expected to zoom by 7.7% in 2016, according to a UN report which said India will help accelerate economic growth in South Asia. (ET)
 
In a bid to attract more foreign investment, the government is looking at doing away with the mandatory approval of the Reserve Bank of India which currently is needed after an investment proposal has been approved by the FIPB. (BS)
 
Retail inflation based on consumer price index for rural labourers eased to 5.49% in March from 6.19% in previous month. (ET)

TEN MOST ACTIVE FUTURES

Symbol

No.of Cont Traded

Last price

Open Interest

% chg in Op.Int

YESBANK

27,857

857.65

10,723,750

-0.33

LT

27,670

1,621.65

6,984,875

-3.75

RELIANCE

26,738

895.85

28,391,750

-3.54

INFY

24,031

2,019.05

6,910,750

-1.51

HDFCBANK

23,552

1,008.30

34,266,250

-1.11

SBIN

23,080

286.15

44,752,500

-0.83

ASIANPAINT

22,383

775.45

4,481,250

-7.98

ICICIBANK

21,984

315.70

36,118,750

1.36

AUROPHARMA

19,230

1,391.60

9,916,000

0.19

WOCKPHARMA

17,635

1,377.90

2,654,125

1.46

TEN MOST ACTIVE OPTIONS

Option Type

Strike price

No.of Cont Traded

Open Interest

% Chg in Op.In

RELIANCE

CE

900

8,458

1,112,000

-11.24

RELIANCE

CE

920

5,572

617,750

-5.90

INFY

CE

2,000

5,321

300,375

-38.89

INFY

CE

2,050

4,995

222,500

-11.97

INFY

CE

2,100

4,409

424,625

-15.73

RELIANCE

PE

880

4,285

464,000

-8.12

YESBANK

CE

880

3,522

406,250

69.27

INFY

PE

2,000

3,376

228,500

17.03

LT

CE

1,700

3,234

645,250

17.80

RCOM

CE

70

3,095

3,958,000

-4.90

SUPPORT & RESISTANCE LEVEL

Company Name

S3

S2

S1

Close

R1

R2

R3

Sensex Index

27,449

27,496

27,547

27,646

27,744

27,795

27,842

Nifty Index

8,304

8,319

8,335

8,366

8,396

8,412

8,427

ABB Ltd

1,330

1,333

1,336

1,342

1,347

1,351

1,353

ACC

1,481

1,486

1,491

1,501

1,511

1,516

1,521

Ambuja Cements

236

237

237

239

240

241

242

Bajaj Holdings

1,250

1,258

1,266

1,283

1,299

1,308

1,316

BHEL

230

231

232

235

237

239

240

Bharti Airte

391

393

394

398

401

403

405

Cipla

673

676

678

683

687

690

692

Dabur India

263

263

264

265

266

266

267

GAIL India

385

386

387

390

393

395

396

Grasim Ind.

3,538

3,550

3,563

3,587

3,611

3,624

3,636

HCL Tech

923

926

928

934

939

942

945

HDFC Bank

994

997

1,000

1,007

1,013

1,016

1,019

Hero Honda

2,516

2,531

2,546

2,575

2,604

2,620

2,634

Hindalco

137

138

139

140

141

142

143

Hindustan Unilever

837

839

841

845

848

850

852

ICICI Bank

311

312

313

315

317

319

320

Infosys Tech

1,986

1,994

2,002

2,018

2,034

2,042

2,050

ITC Ltd

329

330

331

332

333

334

335

L&T

1,603

1,607

1,611

1,619

1,627

1,631

1,635

MTNL

18

18

18

18

18

18

18

M&M

1,228

1,234

1,240

1,251

1,263

1,269

1,275

Maruti Suzuki

3,673

3,681

3,691

3,708

3,726

3,735

3,744

Mahindra Satyam

610

612

615

619

624

626

628

National Alumin

49

49

49

49

50

50

50

ONGC

313

314

315

317

319

320

320

Oriental Bank

200

201

202

205

207

208

209

PNB

148

148

149

150

151

152

152

Ranbaxy Labs

945

948

950

956

962

965

968

Reliance Capital

402

404

406

410

414

416

418

Reliance Comm

67

67

68

69

70

70

70

Reliance Energy

441

444

448

456

463

467

470

Reliance Inds

884

887

890

896

901

904

907

R Power

54

54

54

55

55

55

55

Siemens India

1,337

1,343

1,349

1,362

1,374

1,381

1,387

SBI

285

286

287

288

290

291

292

TCS

2,491

2,496

2,502

2,512

2,522

2,528

2,533

Tata Motors

503

505

507

510

513

515

517

Tata Power

74

75

75

76

77

77

77

Tata Steel

363

364

366

368

371

372

373

Tata comm

434

435

436

439

441

442

443

Wipro

546

547

549

553

556

558

560

Wire And Wireless

34

34

35

35

35

36

36

Zee Entertainment

311

312

313

316

318

320

321


 
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