Daily Market Strategy - Odds are against a bright start! Indices to open lower

The outlook is a weak start. Global cues are weak for now. Focus will be on how corporate earnings pan out in the coming weeks. Investors may do well to remain cautious at these levels after a strong recovery in last three weeks and adopt a stock-specific approach.

Jan 04, 2016 03:01 IST IIFL Anil Mascarenhas |

Daily Market Strategy
One needs to be slow to form convictions, but once formed they must be defended against the heaviest odds. - Mahatma Gandhi
 
The main indices may have gained around 4% in the last couple of weeks even as it closed lower for the year but the start to this week appears to be lackluster. China Caixin Manufacturing PMI for Dec was lower than expectations at 48.2 as operating conditions faced by Chinese goods producers continued to deteriorate in December. Production declined for the seventh time in the past eight months and data suggested that client demand was weak both at home and abroad, with new export business falling for the first time in three months in December. 
 
The outlook is a weak start. Global cues are weak for now. Focus will be on how corporate earnings pan out in the coming weeks. Investors may do well to remain cautious at these levels after a strong recovery in last three weeks and adopt a stock-specific approach.  The combined market valuation of eight of the top-10 most valued Indian companies surged up by Rs. 38,355.66 crore with Coal India and ONGC emerging as the biggest gainers.
 
Chief Economic Advisor Arvind Subramanian reportedly said that  India has emerged as the world's fastest growing economy notwithstanding global demand slowdown and four droughts. Arvind Subramanian said that there has been improvement in quality of spending toward capital, fiscal consolidation at central and state levels.
 
The Bombay Stock Exchange (BSE) will today auction investment limits for foreign investors to buy government debt securities worth Rs.7,396 crore.
 
Cement stocks will be in focus.  Average cement prices declined by 7.3% in December 2015 compared to the same month in the previous year mainly due to weak demand, says a research report by a leading Mumbai-based broking firm. Cement prices in the northern and western regions have witnessed maximum correction of 10-12 per cent on a year-on-year (YoY) basis. 
 
Iran’s proposed increase in oil production after sanctions are removed will enter the market “gradually” and won’t pressure international crude oil prices, Iranian oil ministry said on Saturday. Iran has the potential to boost its oil production by 500,000 barrels a day within a week of sanctions being lifted, and by 1 million barrels shortly after, according to Shana news agency.
 
Orbit Corporation's dues worth INR 528 crore are in the process of being restructured, including Rs. 87 crore due to LIC Housing Finance since 2013, reports a financial newspaper. Orbit Corp’s overdue interest bill at the end of March 2015 was Rs. 262 crore. Its total debt at the end of March 2015 was Rs.950 crore. 
 
The recent increase in excise duty on petrol and diesel - three in a row - will help the Government mop up an additional INR 10,000 crore in FY16.  The Government has raised excise duty on petrol and diesel three times in last two months and by seven times since November 2014.
 
A study by international real estate consultant JLL has named Delhi and Mumbai in the list of world's top-30 most powerful, productive and connected cities. Mumbai has been ranked 22nd while Delhi is placed at No. 24.
 
India's foreign exchange reserves rose by $ 943.4 mn to $ 352.050 bn during the week ended December 25, according to RBI data.
 
Capital markets regulator Sebi directed Astha Green Energy Ventures India and its directors to refund Rs. 43.77 crore to investors along with an interest of 15%, says report.
 
Among stocks to watch:
 
IDBI Bank: The Government is unlikely to go for a strategic stake sale of IDBI Bank during the current fiscal year due to some procedural issues, as per media reports.
 
Tata Motors: Tata Motors continued to witness year-on-year growth in the M&HCV segment in December 2015, with a growth of 2%. Total sale of Tata Motors passenger and commercial vehicles (including exports) were at 39,973 vehicles, lower by 4%, over 41,734 vehicles, sold in December 2014. 
 
Hero MotoCorp Ltd: Hero MotoCorp the world’s largest two-wheeler manufacturer, clocked 499,665 units of two-wheeler despatches in December 2015. The company had sold 526,097 units in December 2014.
 
TVS Motor Company: TVS Motor Company has recorded 4% growth in sales during the month of December 2015, with total sales increasing from 194,481 units recorded in the month of December 2014 to 202,086 units in the month of December 2015.
 
Ashok Leyland: Hinduja group's flagship, Ashok Leyland saw December total sales rise 31% yoy to 12,209 units while M&HCV sales were up 35% yoy at 9,758 units. 
 
SML Isuzu: The company has reported 18.27% fall in December sales. The company has sold 877 vehicles during December, 2015 against 1073 vehicles sold in December, 2014, as per media reports.
 
Eicher Motors: Eicher Motors has reported 50% growth in its total sales at 4.5 lakh units for the calendar year 2015. 
 
SpiceJet Ltd: SpiceJet has announced that it is considering Embraer jets to expand its fleet, according to reports.
 
Sterlite Grid: Sterlite Grid has set a new benchmark by commissioning the Transmission Project to Rajasthan Atomic Power Project (RAPP) ahead of schedule. 
 
Coal India: Coal India reported said its production in December stood at 52.07 million tonnes (MT) as against the target of 51.08 MT for the month.
 
Somany Ceramics Ltd: Somany Ceramics Ltd has approved Issuance of Commercial Paper by the Company up to Rs. 25 Crores.
 
Canara Bank: Canara Bank has announced that as per the powers delegated by the Board of the Bank, the Bond Committee has decided to raise Basel III Compliant Tier-II Bonds amounting to Rs. 1500 Crore by way of Private Placement.
 
Kotak Mahindra Bank: Kotak Mahindra Bank Ltd has informed BSE that the Bank on January 01, 2016 has acquired 10,00,000 equity shares at Rs. 10/- each aggregating to Rs. 1 crore being 9.99% of the paid-up capital of Institutional investor Advisory Services India Limited.
 
Power Grid: The company has announced that Power Grid Vizag Transmission Limited, a wholly owned subsidiary of Power Grid Corporation of India Limited, secured though Tariff Based Competitive Bidding (TBCB) process has successfully charged the 1st element of the Project: Khammam - Nagarjunasagar 400kV D/C Transmission line on December 31, 2015, within the completion schedule specified.
 
State Bank of Mysore: The Bank has raised Rs. 300 crore of non-convertible, redeemable, unsecured, Basel III Compliant Tier 2 Bonds, for inclusion in tier 2 capital of the Bank, in the nature of debentures of face value of Rs. 10 lakhs each (“bonds”) at par aggregating Rs. 300 crore.
 
Thomas Cook: Thomas Cook Ltd has announced that its Arm Quess Corp has completed acquisition of remaining 51% stake In MFXchange Holdings.
 
Delhi, which has a reputation of being one among the world's most polluted city in a study of 1,600 cities, will see the odd-even scheme in full force on Monday as Delhiites get back to the roads after their New Year holiday. The new rule was rolled out in Delhi NCR from Jan 1 2016. During the 15-day trial basis, on even dates, vehicles with license plates ending with an even number are permitted on roads and on odd dates, you need to have your license plates ending with an odd number to hit the road.
 
Global Data: Day after New Year's Day NZD, Nikkei Manufacturing PMI (Dec) JPY, Caixin Manufacturing PMI (Dec) CNY, RBA Commodity Index SDR (YoY) (Dec) AUD, Markit Manufacturing PMI (Dec)EUR, SVME - Purchasing Managers' Index (Dec) CHF, Markit Manufacturing PMI (Dec) EUR, Markit Manufacturing PMI (Dec) EUR, Markit Manufacturing PMI (Dec) EUR, Markit Manufacturing PMI (Dec) EUR, Markit Manufacturing PMI (Dec) EUR, Net Lending to Individuals (MoM) (Nov) GBP, Markit Manufacturing PMI (Dec) GBP, Consumer Credit (Nov) GBP, Mortgage Approvals (Nov) GBP, M4 Money Supply (YoY) (Nov) GBP, M4 Money Supply (MoM) (Nov) GBP, 10-y Bond Auction EUR, 5-y Bond Auction EUR, Harmonised Index of Consumer Prices (MoM) (Dec)Preliminar EUR, Consumer Price Index (YoY) (Dec)Preliminar EUR, Harmonised Index of Consumer Prices (YoY) (Dec)Preliminar EUR, Consumer Price Index (MoM) (Dec)Preliminar EUR, RBC Manufacturing PMI (Dec) CAD, Markit Manufacturing PMI (Dec) USD, ISM Prices Paid (Dec) USD, ISM Manufacturing PMI (Dec) USD, Construction Spending (MoM) (Nov) USD, 3-Month Bill Auction USD, 6-Month Bill Auction USD
 
Trends in FII flows: The FIIs were net buyers of Rs. 2.28 bn in the cash segment on Friday. The domestic institutional investors (DIIs) were net sellers of Rs.812.4 mn as per the provisional figures released by the NSE.
 
Other news in the media:
 
Corporate Front Page:
 
SpiceJet, which has activated plans to place orders for new planes to expand its fleet strength, is considering Embraer jets for its fleet among others. (ET)
 
State Bank of India is all set to buy four flats in the Mumbai's Peddar Road area in an all-cash deal from the loss-making Air India for Rs 900 mn. (ET)
 
IndusInd Bank is planning to enter the low-cost housing loans segment and is in the final stages of stitching up a partnership with a payments bank (PB) licencee shortly. (BS)
 
The Government of India is unlikely to go for a strategic stake sale of state-owned IDBI Bank during the current fiscal due to some procedural issues. (BL)
 
Punjab National Bank has launched a host of digital banking solutions including green PIN and enhancement of its mobile app. (ET)
 
Swiss pharma major F Hoffmann-La Roche has entered into an out-of-court settlement with Glenmark Pharmaceuticals to resolve a patent dispute of its cancer drug Tarceva in India. (BS)
 
A number of key employees at Tata Steel’s two Scottish plants on the verge of closure will be retained on a 60 per cent salary as part of a new £195,000 government support package. (BL)
 
Coal India Ltd has produced 52.07 million tonnes (mt) of coal in December last year, surpassing its target of 51.08 mt. (BL)
 
Mahindra & Mahindra inaugurated a bio-CNG facility here to create carbon neutral ecosystem at Mahindra World City (MWC). (BL)
 
TVS Motor reported a 4 per cent increase in total sales at 2,02,086 units in December. (ET)
 
Maruti Suzuki and rival Hyundai Motor posted robust growth in December on the back of good sales of models like Baleno, Creta and Grand i10. (ET)
 
India's passenger vehicle industry ended on a high in 2015, with a double digit rise in December sales helping the sector with deep economic linkages post its best annual showing in four years and strapping it with confidence to face the year ahead. (ET)
 
The National Highway Authority of India (NHAI) is likely to use Gujarat State Fertiliser and Chemicals (GSFC) ‘Nylon 6 fibre products’ for its infrastructure projects including construction of roads across the country. (BL)
 
More than two billion people globally will use mobile devices to connect to the Internet in 2016, with countries like India, China and Indonesia leading the way, research firm IDC said. (ET)

TEN MOST ACTIVE FUTURES

Symbol

No.of Cont Traded

Last price

Open Interest

% chg in Op.Int

RELINFRA

29,333

593.30

9,257,300

9.86

JETAIRWAYS

19,630

765.15

2,374,200

#DIV/0!

RELCAPITAL

16,604

465.45

13,791,000

5.39

TATAMOTORS

8,945

403.95

28,338,000

2.66

LT

8,755

1,294.20

12,423,300

0.72

DLF

8,048

122.25

43,075,000

11.49

AXISBANK

8,026

452.65

37,571,000

1.75

ICICIBANK

7,977

263.60

49,094,300

0.06

RCOM

7,908

91.05

75,928,000

3.58

RELIANCE

6,921

1,021.10

27,000,500

0.67

TEN MOST ACTIVE OPTIONS

Option Type

Strike price

No.of Cont Traded

Open Interest

% Chg in Op.In

RELINFRA

CE

600

3,289

787,800

431.58

RELINFRA

CE

560

2,418

520,000

42.35

SBIN

CE

230

2,392

3,406,000

45.80

RELINFRA

CE

580

2,094

269,100

132.58

JETAIRWAYS

CE

800

1,978

302,400

#DIV/0!

TATAMOTORS

CE

400

1,539

1,023,000

6.07

RELCAPITAL

CE

460

1,515

436,500

56.45

RELINFRA

CE

620

1,464

319,800

564.86

RELINFRA

PE

560

1,433

718,900

4,927.27

SBIN

CE

240

1,372

2,674,000

7.39

SUPPORT & RESISTANCE LEVEL

Company Name

S3

S2

S1

Close

R1

R2

R3

Sensex Index

26,036

26,066

26,099

26,161

26,223

26,255

26,286

Nifty Index

7,922

7,932

7,942

7,963

7,984

7,995

8,005

ABB Ltd

1,111

1,113

1,114

1,118

1,121

1,122

1,124

ACC

1,355

1,360

1,364

1,373

1,382

1,387

1,391

Ambuja Cements

203

204

204

205

206

207

208

Bajaj Holdings

1,647

1,653

1,660

1,672

1,684

1,690

1,696

BHEL

168

169

170

171

172

173

174

Bharti Airte

336

337

339

341

343

344

345

Cipla

649

650

652

655

658

659

661

Dabur India

274

274

275

276

278

278

279

GAIL India

364

365

367

370

373

375

376

Grasim Ind.

3,732

3,740

3,748

3,764

3,781

3,789

3,797

HCL Tech

839

841

842

846

849

850

852

HDFC Bank

1,079

1,082

1,084

1,089

1,093

1,096

1,098

Hero Honda

2,673

2,677

2,681

2,688

2,695

2,699

2,702

Hindalco

84

84

85

85

85

85

86

Hindustan Unilever

852

853

854

857

859

860

861

ICICI Bank

259

260

261

263

265

266

267

Infosys Tech

1,094

1,096

1,098

1,103

1,108

1,110

1,113

ITC Ltd

326

326

326

327

328

329

329

L&T

1,277

1,279

1,283

1,289

1,295

1,298

1,301

MTNL

22

22

22

22

23

23

23

M&M

1,249

1,253

1,256

1,263

1,271

1,274

1,278

Maruti Suzuki

4,596

4,606

4,616

4,635

4,654

4,664

4,674

Mahindra Satyam

516

517

518

520

522

523

524

National Alumin

40

40

40

40

41

41

41

ONGC

239

240

241

242

244

245

246

Oriental Bank

141

142

143

144

146

147

148

PNB

116

116

117

118

118

119

119

Ranbaxy Labs

808

810

812

816

819

821

823

Reliance Capital

442

447

452

463

473

479

484

Reliance Comm

88

89

89

91

92

92

93

Reliance Energy

556

565

574

591

609

618

627

Reliance Inds

1,008

1,010

1,012

1,015

1,019

1,021

1,023

R Power

57

58

58

59

60

60

60

Siemens India

1,190

1,193

1,196

1,203

1,209

1,213

1,216

SBI

225

225

226

228

229

230

231

TCS

2,400

2,404

2,408

2,416

2,424

2,428

2,432

Tata Motors

394

396

398

402

405

407

409

Tata Power

68

68

68

69

69

70

70

Tata Steel

253

254

255

257

260

261

262

Tata comm

432

432

433

435

437

438

439

Wipro

554

554

555

556

558

559

559

Wire And Wireless

36

36

36

37

37

37

38

Zee Entertainment

428

429

431

433

435

436

437


 
Click below for the India Infoline Daily Market Strategy:
https://content.indiainfoline.com/Newsletter/040116.html
 
Read Leader Speak:
https://www.indiainfoline.com/Research/LeaderSpeak/

All the news on India Infoline:
https://www.indiainfoline.com/Markets/News/

To subscribe please send a mail to editor@indiainfoline.com

Related Story