Daily Market Strategy - Blame it on China! Weak Wednesday for Sensex, Nifty

Anil Mascarenhas, IIFL | Mumbai | August 12, 2015 08:25 IST

The outlook is a weak start. Macro data including IIP and CPI will be in focus besides results like Coal India, Reliance Infrastructure, JSPL, Ashok Leyland and Aurobindo Pharma. Global markets are in turmoil.

Bull and Bear
Life takes its path and sometimes there are people to blame. - Andrea Corr
 
Stock markets across the globe are treading on a slippery path and for the time being you can blame it on China. To push market reforms, China's central bank on Tuesday devalued its yuan by nearly 2% against the US dollar. This move hit companies globally which have exposure to China. The proceedings at Parliament will take centre-stage as despite being in minority, in the Rajya Sabha, the Narendra Modi government on Tuesday mustered enough courage to table the Goods & Services Tax (GST) bill in the upper house. Continued protests from the Opposition will make it tough to pass the bill with barely any days left for the monsoon session of parliament to end. The bill is listed for consideration and passage today. Finance Minister Arun Jaitley lashed out at the Congress for stalling the country’s economic progress by not allowing the passage of the bill under the pretext of the Lalit Modi-Sushma Swaraj issue.

The outlook is a weak start. Macro data including IIP and CPI will be in focus besides results like Coal India, Reliance Infrastructure, JSPL, Ashok Leyland and Aurobindo Pharma. Global markets are in turmoil. US indices came tumbling with stocks like Apple, General Motors and others shedding weight due to China factor. The Dow fell 1.21%, S&P 500 dropped 0.96% and Nasdaq crashed by 1.27%. Asian markets are also in the red.  With the Nifty  below 8500, investors will remain cautious till a firm uptrend is established. In recent days, the mid-cap and small cap indices are also tumbling adding to the pressure.
 
Indirect Tax Revenue (Provisional) collections have increased from Rs 40,802 crore in July, 2014 to Rs. 56,739 crore during July, 2015. Thus an increase of 39.1% has been registered during July-2015 over the corresponding period in the previous year. This is an achievement of 32.6 % of the target fixed for BE 2015-16 i.e. Rs. 646267 crore.
 
Shares of Sun Pharma will be in focus after the company has posted a net profit after taxes & minority interest of Rs. 4789.60 million for the quarter ended June 30, 2015 as compared to Rs. 12045.90 million for the quarter ended June 30, 2014. Total Income has increased from Rs. 65231.30 million for the quarter ended June 30, 2014 to Rs. 68629.60 million for the quarter ended June 30, 2015.
 
Tata Motors slipped over 4.5% to Rs. 368 amid reports that the company plans to invest up to 1 billion euros for the new JLR plant outside the United Kingdom. According to media reports, the company has signed a letter of intent with the Slovakian government to build the factory in the western city of Nitra, its first European production plant outside of the United Kingdom. The new plant is likely to have a capacity of 300,000 cars per year.
 
Bosch was the other major gainer in the Nifty-50. The stock jumped 2 percent to Rs. 26,555 after the company reported 12 percent growth in Q1FY16 net profit at Rs. 343.74 crore when compared with Rs. 306.68 crore in Q1FY15. Total income was up 8.3 percent at Rs. 2,665 crore from Rs. 2,460 crore.
 
Syngene International made a sparkling debut in an otherwise slippery market. The stock was listed at an 18 percent premium at Rs. 295, and touched a high of Rs. 318. The company had successfully raised Rs. 550 crore from its recent IPO (Initial Public Offer) which was subscribed by nearly 24 times. The stock finally ended with a premium of 24.4 percent at Rs. 311 as against the issue price of Rs. 250. Meanwhile, Biocon was down 0.5 percent at Rs. 463.
 
eClerx Services zoomed to a fresh all-time high at Rs. 1,777, and finally ended with a solid gain of 5.7 percent at Rs. 1,681 on the back of steady Q1 earnings. The company's Q1 standalone net profit jumped by 28.8 percent to Rs. 65.70 crore as compared with Rs. 51.01 crore in the corresponding quarter a year ago. 
 
Polaris Consulting & Services soared to a high of Rs. 224 before ending flat at Rs. 207 amid buzz of likely stake sale. According to media reports, Indian and foreign companies are said to be in race to buy a majority stake in Polaris after founder chairman and mentor Arun Jain and key investors re-initiated talks to sell the company. 
 
Engineers India tumbled 6.5% to Rs. 220 on the back of weak financial earnings for the first quarter ended June, 2015. The company's net profit declined by 29.4 percent to Rs. 56.80 crore in Q1FY16 from Rs. 80.40 crore in Q1FY15. 
 
IL&FS Transportation Networks cracked 7% to Rs. 132 on the back of dismal Q1 performance. The group's consolidated Q1 net plunged by almost 98 percent to Rs. 2.90 crore when compared with Rs. 137.75 crore in the corresponding quarter a year ago. 
 
Gujarat Mineral Development Corporation (GMDC) slipped 2.5 percent to Rs. 87.35 after the company reported 43.4 percent fall in Q1 net profit on year-on-year basis at Rs. 73.54 crore as against Rs. 130 crore in a year ago period. 
 
Alphageo (India) plunged 7.5% to Rs. 354 on the back of reverse turnaround. The company reported consolidated net loss of Rs. 3.05 crore in Q1FY16 as against net profit of Rs. 10.85 crore in Q1FY15.
 
Wockhardt rallied to a high of Rs. 1,683 on the back of near six-fold jump in Q1 consolidated net. The pharma major's Q1FY16 consolidated net soared to Rs. 114.20 crore when compared with Rs. 19.95 crore in Q1FY15. The stock, however, ended wee bit in red at Rs. 1,646.
 
Titan jumped to a high of Rs. 336 after the BSE counter witnessed a huge block deal of around 1.94 crore shares around Rs. 335. The stock ended unchanged at Rs. 329.
 
Sun TV Network slumped to a low of Rs. 319 following news report that the Madras High Court cancelled former Union telecom minister Dayanidhi Maran's interim anticipatory bail in the controversial telephone exchange case and directed him to surrender before the Central Bureau of Investigation (CBI) within three days. The stock, however, recouped losses and ended a percent higher at Rs. 345.
 
Power Grid Corporation soared to a high of Rs. 141 after the company's Q1FY16 net profit surged by over 20 percent to Rs. 1,367 crore when compared with Rs. 1,137 crore in Q1FY15. The stock eventually ended flat at Rs. 138.
 
Finolex Cables gained 1.2 percent at Rs. 266 on the back of 38.3 percent growth in standalone net at Rs. 48 crore for the quarter ended June 2015, as against net profit of Rs. 34.7 crore in the corresponding quarter ended June 2014.
 
Housing Development & Infrastructure (HDIL) declined 1.5% to Rs. 87.10 after the company reported consolidated net profit of Rs. 59.24 crore in Q1FY16, as against Rs. 57.58 crore in a year ago period.
 
India Glycols soared over 10% to Rs. 109 on the back of strong financial earnings. The company booked a net profit of Rs. 7.73 crore in Q1FY16, as against Rs. 1.31 crore in a year ago period.
 
Subex touched a high of Rs. 18.35 and ended 0.7 percent higher at Rs. 17.45 after the company announced the launch of a new version of the industry leading revenue assurance solution, ROC Revenue Assurance 5.3 yesterday.
 
Redington India zoomed to a high of Rs. 130 after the company informed the BSE that Xiaomi has appointed the company for distribution of their smartphones in a number of cities across India. The stock, however, pared gains and ended with a loss of 2 percent at Rs. 119.

Shree Uttam Steel & Power and South Korea’s Posco have signed an agreement to set up a 3 million tonne per annum integrated steel manufacturing plant in Maharashtra at an investment of US$3bn (INR 19,200 crore). The new steel plant is to be set up in two phases in the Sindhudurg district of Maharashtra.
 
Come 2017, the country’s largest carmaker Maruti Suzuki India could run out of production capacity at its existing plants at Manesar and Gurgaon, Chairman RC Bhargava has been quoted as saying. So, naturally the Maruti management is worried that any delays in starting the proposed plant in Gujarat will jeopardize their production strategy, Bhargava told a financial daily.
 
Bharat Sanchar Nigam Ltd. (BSNL) will soon float a tender for outsourcing operations and management of 65,000 towers across India, according to a business daily. The contract is expected to be valued at Rs.1,500-2,000 crore and an expression of interest (EoI) will be out within the next few weeks, Chairman & MD Anupam Shrivastava has been quoted as saying by the paper.
 
The Competition Commission of India (CCI) is investigating whether airlines are indulging in cartelisation of air fares, Corporate Affairs Minister Arun Jaitley said in the parliament on Tuesday. In a suo motu case regarding cartelisation in passenger fares by airlines, CCI has directed an investigation by its Director General, he told the Rajya Sabha, adding that the case does not pertain to festive season hike.
 
Jaguar Land Rover (JLR) has selected Slovakia as the location for its first manufacturing plant in mainland Europe, with a capacity to produce 300,000 cars over the next decade. The premium car maker owned by India's Tata Motors has signed a letter of intent (LoI) with the Slovak government and is conducting a feasibility study for the development of a plant near the city of Nitra, in the west of the country, CEO Ralf Speth has been quoted as saying.
 
Gujarat’s discoms (power distribution companies) have yet again received top rating (A+), along with the discoms of Punjab for the year 2013-14.  Minister of State (Independent Charge) for Power, Coal and New & Renewable Energy, Piyush Goyal announced the ratings accorded to discoms across the country on Tuesday. The four Gujarat discoms that received the A+ rating include Uttar Gujarat Vij Company Ltd, Madhya Gujarat Vij Company Ltd, Dakshin Gujarat Vij Company Ltd and Paschim Gujarat Vij Company Ltd.
 
The initial public offer (IPO) of Power Mech Projects Ltd. closed on Tuesday with strong subscription, led by QIBs and HNIs, according to data on the NSE web site.  The issue was finally subscribed by 38.10 times, as on 21.00 (IST) on Tuesday. The IPO received bids for 11.39 crore shares as against 29.88 lakh shares on offer, as per the NSE data. It had opened for subscription on Friday.
 
The Government will reportedly consider a proposal tomorrow to provide 50% diesel subsidy to farmers in places where rainfall has been very scanty during this monsoon season.  "The Cabinet Committee on Economic Affairs (CCEA) meeting is scheduled for tomorrow and the Agriculture Ministry's proposal on diesel subsidy is on the agenda," according to reports.
 
Results: Coal India, Reliance Infrastructure, JSPL, Ashok Leyland, Abbott India, Aditya Birla Nuvo, Alembic, Aurobindo Pharma, Axiscades Engineering Technologies, Essar (India), IDBI Bank, Bank of Maharashtra, Bafna Pharmaceuticals, City Union Bank, NALCO, Ballarpur Industries, Balmer Lawrie, Balrampur Chini, Cadila Healthcare, Dhanlaxmi Bank, Career Point,Cigniti Technologies, CMS Infotech, Dhanuka Agritech, Eureka India, Garden Silk Mills, Great Eastern Shipping, Hinduja Global Solution, Hotel Leela Venture, India Cement, Indaian Hotels, India Cement, Integra Engineering India, JBM Auto, Jubilant Inds, Lambodhara Textile, Manaksia, Man Infraconstruction, Max India, Merck, MOIL, Mukand Engineers, Nahar Induatrial Ent, Natco Pharma, Nahar Industrial Ent, National Fertilizers, Oil India, Pennar Industries.
 
Global data: Westpac Consumer Confidence Index (Aug) AUD Westpac Consumer Confidence (Aug) AUD Wage Price Index (QoQ) (Q2) AUD Wage Price Index (YoY) (Q2) AUD Capacity Utilization (Jun) JPY Industrial Production (YoY) (Jul) JPY Tertiary Industry Index (MoM) (Jun) JPY Industrial Production (MoM) (Jul) JPY Retail Sales (YoY) (Jul) CNY Industrial Production (YoY) (Jul) CNY, Urban investment (YTD) (YoY) (Jul) CNY, Current Account (Jun) EUR, Global Trade Balance (Jun) EUR, Trade Balance EU (Jun) EUR, Claimant Count Rate (Jul) GBP, Claimant Count Change (Jul) GBP, ILO Unemployment Rate (3M) (Jun) GBP, Average Earnings including Bonus (3Mo/Yr) (Jun) GBP, Average Earnings excluding Bonus (3Mo/Yr) (Jun) GBP, 10-y Bond Auction EUR, Industrial Production w.d.a. (YoY) (Jun) EUR, Industrial Production s.a. (MoM) (Jun) EUR, ZEW Survey - Expectations (Aug) CHF, Consumer Price Index (MoM) (Jul) EUR, Consumer Price Index (YoY) (Jul) EUR, RBA Deputy Governor Lowe Speech  AUD, MBA Mortgage Applications (Aug 7) USD, Industrial Output (Jun) INR, Cumulative Industrial Output (Jun) INR, JOLTS Job Openings (Jun) USD, EIA Crude Oil Stocks change (Aug 7) USD, 10-Year Note Auction USD, Monthly Budget Statement (Jul) USD, Business NZ PMI (Jul) NZD, Food Price Index (MoM) (Jul) NZD, RICS Housing Price Balance (Jul) GBP, Machinery Orders (MoM) (Jun) JPY, Foreign investment in Japan stocks (Aug 7) JPY, Foreign bond investment (Aug 7) JPY, Machinery Orders (YoY) (Jun) JPY
 
Trends in FII flows: The FIIs were net sellers of Rs. 7.36 bn in the cash segment on Tuesday. The domestic institutional investors (DIIs) were net buyers of Rs. 1.30 bn as per the provisional figures released by the NSE.
 
In other news in the media:
 
Tata Motors-owned Jaguar Land Rover has signed a letter of intent with the government of the Slovak Republic for setting up a manufacturing plant in the city of Nitra in western Slovakia. (ET)
 
Indian Oil Corporation, is on the government agenda for disinvestment. With petrol and diesel prices now market linked and crude oil prices at historic lows, not only the company’s borrowings have come down by 35%, it is looking up to exceeding its capital expenditure. (ET)
 
The Great Eastern Shipping Company (G.E. Shipping) said it has signed a contract to sell a new Kamsarmax Dry Bulk Carrier "Jag Aakash" (81,600 dwt). (BS)
 
Delays in getting necessary approvals for a new green field manufacturing plant in Gujarat will likely cost car market leader Maruti Suzuki the next year. Manufacturing capacity in Gurgaon and Manesar will be fully utilised next year, and the company needs new capacity. (BL)
 
Allied Blenders & Distillers (ABD) is said to have cancelled its plan to acquire stake in Tilaknagar Industries. (BS)
 
Apollo Tyres plans to spend Rs12bn to increase the truck and bus radial tyre capacity at the Chennai plant from 8,900 tyres a day to 12,000 tyres a day. The company informed the stock exchanges that its board of directors, at a meeting, approved raising Rs20bn in debt to meet the capital expenditure requirements and proposed expansions at Chennai and Kalamassery (Kerala) plants. (ET)
 
IL&FS Transportation Networks said that its subsidiary has signed a concession agreement with the Jharkhand Government for the development of six-laning of Ranchi Ring Road at an estimated cost of Rs5.87bn. (BL)
 
Shree Uttam Steel and Power and South Korean steel giant Posco have signed an agreement to set up a three million tonne per annum integrated steel manufacturing company in Maharashtra, with an investment of USD3bn. (BL)
 
House of Spices, importer of Nestle products from India, said that the US Food and Drug Administration has given a clean chit to Maggi Noodles. (BL)
 
Lanco Infratech Ltd has declared the first unit of 371 MW of third phase of Lanco Kondapalli Power Ltd near Vijayawada as commercially ready for operation. (BL)
 
Power Grid Corporation (PGCIL) is likely to soon raise another Rs30bn under its second round of fund raising plan through domestic bonds to meet working capital expenditure. (BL)
 
Operationalising of Codli mine in Goa may add Rs6.16bn to Vedanta’s topline in the current financial year. The Codli mine has an annual production cap of 3.1 MTPA, which is over 60% of the stipulated cap for Vedanta (5.5 million tonnes). Iron ore mining was re-started on this mine, which marked resumption of mineral excavation in Goa after three years. The mine has total estimated reserves of 70 million tonnes. (BS)
 
Milk cooperatives, represented by the National Dairy Development Board (NDDB), have agreed to meet the quality standards set by the Food Safety and Standards Authority of India (FSSAI). The two bodies have reached an agreement about the quality checks, infrastructure, and government testing facilities needed to conduct accurate product tests by the regulator, it is learnt. (BS)
 
Narendra Modi Government finally managed to table the Constitution Amendment Bill for the Goods & Services Tax in the Rajya Sabha. But, pandemonium in the House prevented it from being taken up. (BL)
 
The government has decided to boost ethanol production by making 10% blending with petrol mandatory from the next year starting October 2015 in its efforts to resolve the sugar imbroglio. (ET)
 
The government is working on a proposal to raise minimum wages of workers, a top Labour Ministry official said. (BL)

TEN MOST ACTIVE FUTURES

Symbol

No.of Cont Traded

Last price

Open Interest

% chg in Op.Int
SBIN

109,155

270.20

60,999,000

9.69

TATAMOTORS

32,578

369.15

42,474,000

0.91

APOLLOTYRE

25,407

183.05

16,228,000

9.65

ADANIENT

21,468

92.90

11,757,000

-0.71

YESBANK

21,014

802.40

12,428,500

3.73

ICICIBANK

19,261

303.60

49,609,000

2.65

LT

17,613

1,803.05

5,076,625

-2.99

AXISBANK

17,594

571.95

20,576,000

1.03

TATASTEEL

17,343

248.15

32,634,000

8.26

JINDALSTEL

16,898

81.60

40,282,000

-3.48

TEN MOST ACTIVE OPTIONS

Option Type

Strike price

No.of Cont Traded

Open Interest

% Chg in Op.In

SBIN

CE

300

27,709

8,473,000

73.63

SBIN

CE

290

23,952

7,819,000

79.25

SBIN

PE

270

17,622

2,337,000

7.70

SBIN

PE

280

12,795

2,820,000

-7.30

SBIN

CE

280

12,413

3,771,000

105.62

SBIN

PE

260

10,953

2,223,000

-9.71

SBIN

CE

310

10,251

3,750,000

34.94

SBIN

CE

295

8,402

2,066,000

183.01

RELIANCE

CE

1,000

7,993

1,539,500

8.42

SBIN

CE

285

7,184

1,903,000

68.86

SUPPORT & RESISTANCE LEVEL

Company Name

S3

S2

S1

Close

R1

R2

R3

Sensex Index

27,616

27,676

27,741

27,866

27,991

28,056

28,116

Nifty Index

8,386

8,405

8,424

8,462

8,500

8,520

8,538

ABB Ltd

1,334

1,339

1,345

1,355

1,366

1,372

1,377

ACC

1,360

1,363

1,366

1,373

1,379

1,382

1,385

Ambuja Cements

220

221

221

223

225

225

226

Bajaj Holdings

1,541

1,549

1,558

1,574

1,590

1,599

1,606

BHEL

262

263

264

267

269

271

272

Bharti Airte

399

400

402

405

408

410

411

Cipla

710

712

715

720

725

727

729

Dabur India

293

295

297

300

303

305

307

GAIL India

342

342

343

344

346

346

347

Grasim Ind.

3,684

3,692

3,700

3,717

3,734

3,743

3,751

HCL Tech

935

936

937

940

943

944

945

HDFC Bank

1,084

1,087

1,089

1,094

1,099

1,102

1,105

Hero Honda

2,645

2,653

2,662

2,679

2,696

2,704

2,712

Hindalco

100

101

102

103

105

106

107

Hindustan Unilever

875

878

882

889

896

900

903

ICICI Bank

296

297

299

302

305

307

308

Infosys Tech

1,077

1,084

1,091

1,104

1,118

1,125

1,132

ITC Ltd

317

318

318

320

322

323

324

L&T

1,770

1,777

1,784

1,797

1,811

1,818

1,824

MTNL

19

19

19

19

20

20

20

M&M

1,318

1,323

1,329

1,339

1,350

1,355

1,360

Maruti Suzuki

4,463

4,473

4,484

4,505

4,526

4,536

4,546

Mahindra Satyam

531

534

536

541

545

548

550

National Alumin

37

37

38

38

39

39

39

ONGC

265

266

268

270

273

274

276

Oriental Bank

165

166

168

171

174

176

177

PNB

152

153

154

156

159

160

161

Ranbaxy Labs

830

833

836

842

848

851

854

Reliance Capital

361

363

365

369

373

376

378

Reliance Comm

68

69

69

70

71

72

72

Reliance Energy

394

396

398

402

406

408

410

Reliance Inds

955

958

961

966

972

975

978

R Power

43

43

44

45

45

46

46

Siemens India

1,441

1,447

1,454

1,467

1,481

1,487

1,494

SBI

255

259

262

269

276

280

283

TCS

2,560

2,570

2,581

2,603

2,625

2,636

2,647

Tata Motors

356

360

363

370

376

380

383

Tata Power

67

67

68

68

69

69

69

Tata Steel

238

240

242

247

252

254

256

Tata comm

431

433

436

441

445

448

450

Wipro

557

559

562

566

571

573

576

Wire And Wireless

35

35

35

36

36

36

36

Zee Entertainment

409

410

412

415

418

420

422


 
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