Daily Market Strategy - Trust in future! Sensex, Nifty search for options to rise

Anil Mascarenhas, IIFL | Mumbai | July 29, 2015 08:28 IST

After ending lower again on Tuesday, the outlook is a flat start. The Nifty will look at remaining above 8300 levels on the eve of F&O expiry. Investors will keep an eye on the US Federal Reserve policy meeting and strong indications are that Janet Yellen will reiterate her view of an interest rate hike this year. Market consensus calls for a hike of 25 basis points in September.

Daily Market Strategy
When you really trust someone, you have to be okay with not understanding some things. - Gordon Atkinson,
 
The temporary weak trend notwithstanding, investors are searching for options to take a long call. The Indian rupee pared losses against the greenback. The market remains disappointed by the deadlock in both houses of parliament as the opposition continues to thwart any meaningful discussion on important reforms like land acquisition bill and Goods and Services Tax Bill.
 
After ending lower again on Tuesday, the outlook is a flat start. The Nifty will look at remaining above 8300 levels on the eve of F&O expiry. Investors will keep an eye on the US Federal Reserve policy meeting and strong indications are that Janet Yellen will reiterate her view of an interest rate hike this year. Market consensus calls for a hike of 25 basis points in September. Effectively, US dollar can move higher during this week, influenced by optimistic Fed policy statement. Results of companies like Godrej Consumer Products, Yes Bank and JSW Steel results will be in focus.
 
The Dow closed up 1.09% while S&P 500 rose 1.24% and Nasdaq added 0.98%. Asian shares are looking at recouping today on hopes that China will take steps to minimize the damage to the stock market without any measures which could hurt the economy.


Public sector banks could be in action after Jayant Sinha has said the govt is working on PSU banks' recapitalisation plan.
 
Biocon's research arm Syngene International's initial public offering was over-subscribed on the second day of the offer. The IPO received bids for 1,60,79,700 shares as against 1,60,00,000 shares on offer, resulting in a subscription of 1.01 (rpt) 1.01 times, according to NSE data. The qualified institutional buyers category was over-subscribed 1.22 times, while non-institutional investors portion saw 16% subscription.
 
Speaking at the company's annual general meeting (AGM), JSW Steel Chairman Sajjan Jindal reportedly said that the  Indian steel industry faces constraints such as ease of doing business, land acquisition, environmental clearance and availability of finance at competitive prices.Jindal added that the unprecedented growth in steel imports in hurting the domestic industry. 
 
Indian Economist Arvind Subramanian, incumbent Chief Economic Adviser (CEA) to the Government of India, has said that healthy exports will play a very important role in the growth of India. For that, India needs to have a competitive exchange rate, as well as upgradation in infrastructure sector.
 
CRISIL said 46,000 mw of power projects are facing viability issues due to lack of long-term buyers for electricity, inadequate fuel supply, and aggressive bidding to win projects and coal blocks.Of this, 36,000 mw are coal-based projects within which tariff under-recovery has impacted 20,000 mw of capacities, while the rest are reeling because of inadequate feedstock and poor electricity offtake by discoms. And 10,000 mw of gas-based projects have become unviable because of dwindling fuel supplies from the Krishna-Godavari basin.
 
Axis Bank has announced a rate cut of up to 0.25 percent on bulk deposit in three different maturities.The rate cut in deposits is applicable only on the bulk deposit of over Rs. 5 crore.
 
Adani Enterprises is planning to raise up to Rs. 6,000 crore through issuance of securities, says report.
 
Punjab National Bank zoomed 5.5% to Rs. 143 on the back of strong earnings growth on a sequential basis. The bank's Q1FY16 net profit soared by 135 percent to Rs. 720.71 crore when compared with Rs. 306.56 crore in Q4FY15. Total income was up 15.3 percent at Rs. 13,432 crore from Rs. 11,650 crore on quarter-on-quarter basis.
 
Power Finance Corporation (PFC) tumbled 3.5% to Rs. 245 a day after its OFS (Offer For Sale) received a strong response and was over-subscribed by 1.8-times.
 
Glenmark Pharmaceuticals slumped over 4% to Rs. 993 following media reports that a US Court has ruled against Glenmark's proposed generic version of Bayer AG's Finacea, a gel for treating the common skin condition rosacea, stating that it infringes the latter's patent.
 
Ceat rallied 3.7% to Rs. 819 after around 1.42 million equity shares changed hands in a huge block deal on the BSE around Rs. 804 per share.
 
Just Dial jumped to a high of Rs. 1,107 after the company's net profit surged by 18 percent to Rs. 33.17 crore in Q1FY16 from Rs. 28.11 crore in Q1FY15. Total income also jumped by 21.4 percent to Rs. 176 crore from Rs. 145 crore. The stock, however, shed 2.5 percent at Rs. 1,057.
 
Union Bank of India recovered from a low of Rs. 151, to end 2 percent higher at Rs. 157, after the bank posted a net profit of Rs. 518.78 crore for the quarter ended June 2015 when compared with Rs. 443.77 crore at the end of March 2015 quarter.
 
Torrent Pharmaceuticals surged to a high of Rs. 1,520 after reporting strong set of earnings for the quarter ended June, 2015. According to a release issued to the BSE, the pharma company's consolidated net profit jumped by 75.4 percent to Rs. 449 crore in Q1FY16 from Rs. 256 crore in a year ago period. The stock, however, ended flat at Rs. 1,400.
 
Jagaran Prakashan soared to a high of Rs. 147 on reporting over three-fold jump in Q1 net profit on year-on-year basis. The company booked consolidated net profit of Rs. 180 crore for the quarter ended June, 2015, as against Rs. 55.13 crore in corresponding quarter a year ago. The stock eventually ended unchanged at Rs. 134.
 
KEC International jumped 1.5 percent to Rs. 152 on reporting 2.7-times jump in Q1 net profit on year-on-year basis. The company posted consolidated net profit of Rs. 30.39 crore in Q1FY16, when compared with Rs. 11.37 crore in Q1FY15.
 
Shares of Spicejet Ltd ended 6% higher to Rs. 26.60 after the company posted Q1 results.The airline reported a net profit of Rs 71.8 cr for Q1FY16, an improvement of Rs 195.9 cr relative to the net loss of Rs 124.1 cr for the same quarter last year.  On a revenue base of Rs 1,106.3 cr for the quarter, this translates to a net margin of 6.5%. On an EBITDA basis, SpiceJet reported positive Rs 126.7cr at 11.5% EBIDTA margin, against negative Rs 43.1 cr the previous year.  
 
Results:  Yes Bank, Essar Oil, Vedanta, Advanta, Allahabad Bank, Dabur India, Blue Dart Express, Castrol India, Nestle IndiaAvantel, JSW Steel, Godrej Consumer Products, Coral Laboratories,Excel Corp Care, HEG Ltd, Hikal, IIFL Holdings, Lakshmi Mills Company, Mphasis, Navin Fluorine International, NHPC, Nirlon, UPL, VHCL Industries, Wabco India, Zydus Wellness 
 
Global Data: Consumer Confidence (Jul) EUR, Business Confidence (Jul) EUR, Gross Domestic Product (QoQ) (Q2)Preliminar GBP, Gross Domestic Product (YoY) (Q2)Preliminar GBP, Index of Services (3M/3M) (May) GBP, Raw Material Price Index (Jun) CAD, Industrial Product Price (MoM) (Jun) CAD, Redbook index (MoM) (Jul 24) USD, Redbook index (YoY) (Jul 24) USD, S&P/Case-Shiller Home Price Indices (YoY) (May) USD, Markit Services PMI (Jul)Preliminar USD, Markit PMI Composite (Jul) USD, Richmond Fed Manufacturing Index (Jul) USD, Consumer Confidence (Jul) USD, 4-Week Bill Auction USD, 2-Year Note Auction USD, Retail Trade s.a (MoM) (Jun) JPY, Retail Trade (YoY) (Jun) JPY, Large Retailer's Sales (Jun) JPY
 
Trends in FII flows: The FIIs were net sellers of Rs. 13.75 bn in the cash segment on Tuesday. The domestic institutional investors (DIIs) were net buyers of Rs. 6.65 bn as per the provisional figures released by the NSE. 

In other news in the media:
 
Qatar Airways said it is in talks with IndiGo to buy stakes in the airlines. It denied news reports that it is holding discussions for a "commercial stake" or engage in a "partnership" with SpiceJet. (BS)
 
An unprecedented surge in imports is hurting and causing harm to the domestic steel industry, said Sajjan Jindal, chairman and managing director, JSW Steel. (BS)
 
Coming down hard on carmakers found to be restricting sale of spare parts in open market, CCI imposed a penalty of Rs4.20bn on Hyundai Motor India and asked two others, Reva and Premier to 'cease and desist' from anti-competitive practices. (BS)
 
The Intellectual Property Appellate Board has allowed a petition of Hindustan Unilever Ltd for early hearing and asked the registry to number a counter appeal filed by Kerala-based Thahir Group, in a dispute related to the latter's trade mark 'Sun Plus'. (BL)
 
PVR Ltd will be installing Dolby Atmos in 50 of its cinema screens across the country over the next two years. When completed, this will be one of the largest rollouts of Dolby Atmos screens by any multiplex chain in India. (BS)
 
Mahindra Holidays & Resorts India Ltd will add 700 units in the next 2-3 years. It would cost around Rs5.25bn for the proposed expansion. (BL)
 
An overseas wholly-owned subsidiary of Hero Motocorp will acquire ownership of certain tangible and intangible assets of Erik Buell Racing for a consideration of US$2.8m. (BL)
 
Adani Enterprises said it plans to raise up to Rs60bn through issuance of securities to sustain rapid business growth. (ET)
 
R P P Infra Projects Ltd has bagged two orders worth Rs728m from Chennai Corporation. The project is funded by World Bank for Construction of Integrated Storm Water Drain in Coovum watershed. (ET)
 
The Maharashtra government is working on a proposal to offer equity to NTPC in its power generation company MahaGenco. (BS)
 
Glenmark Pharmaceuticals' proposed generic version of Bayer AG's Finacea, a gel for treating the common skin condition rosacea, infringes Bayer's patent, a US court ruled. (ET)
 
Saddled with bad loans, PNB said it has reported to RBI 400 'wilful defaulters', and plans to sell Non Performing Assets worth up to Rs30bn to ARCs in the current fiscal. (ET)
 
Power projects with a collective capacity of 46,000 MW are facing viability issues due to lack of long term energy buyers, inadequate fuel supply, and aggressive bidding to win projects and coal blocks, Crisil ratings said. (BS)
 
Indian banks will continue to reel under the impact of bad loans in the current financial year, although new NPAs may decline, says a Moody's report. (BL)
 
In its third bi-monthly monetary policy review to be announced next month, RBI is likely to announce liquidity tightening steps like longer tenure term reverse repos, which are used to suck out liquidity from the system. (BS)
 
Manila-headquartered Asian Development Bank inked US$300m loan pact with the government to support the National Urban Health Mission. (ET)

TEN MOST ACTIVE FUTURES

Symbol

No.of Cont Traded

Last price

Open Interest

% chg in Op.Int

HDFCBANK

49,430

1,108.95

11,445,250

-37.94

RELIANCE

44,005

1,011.15

13,062,750

-32.45

SBIN

39,417

259.80

32,241,000

-31.07

MARUTI

34,600

4,203.15

1,491,875

-25.55

ICICIBANK

32,859

285.85

28,106,000

-16.19

TATAMOTORS

32,150

371.15

20,874,500

-15.17

AXISBANK

29,699

562.45

14,181,000

-25.81

YESBANK

29,687

796.95

7,311,000

-24.65

INFY

28,479

1,065.00

8,690,250

-30.65

BANKINDIA

28,251

153.45

9,180,000

-11.68

TEN MOST ACTIVE OPTIONS

Option Type

Strike price

No.of Cont Traded

Open Interest

% Chg in Op.In

MARUTI

CE

4,300

9,301

183,875

5.52

RELIANCE

CE

1,020

8,150

984,250

-1.60

MARUTI

PE

4,100

7,995

150,375

34.87

RELIANCE

CE

1,040

7,202

1,536,250

-17.94

RELIANCE

PE

1,000

6,212

797,250

-1.30

DISHTV

CE

120

6,202

4,092,000

11.68

MARUTI

CE

4,200

5,825

131,375

17.56

MARUTI

CE

4,250

5,382

111,625

22.66

MARUTI

PE

4,200

5,353

129,000

7.72

PNB

CE

140

5,035

1,526,000

51.39

SUPPORT & RESISTANCE LEVEL

Company Name

S3

S2

S1

Close

R1

R2

R3

Sensex Index

27,287

27,329

27,373

27,459

27,545

27,589

27,631

Nifty Index

8,287

8,299

8,312

8,337

8,362

8,375

8,387

ABB Ltd

1,275

1,286

1,298

1,320

1,343

1,355

1,366

ACC

1,341

1,345

1,350

1,359

1,369

1,374

1,378

Ambuja Cements

224

226

227

231

234

235

237

Bajaj Holdings

1,385

1,392

1,399

1,413

1,427

1,434

1,441

BHEL

274

275

276

278

280

282

283

Bharti Airte

399

402

405

410

415

418

420

Cipla

662

664

667

671

675

677

679

Dabur India

288

290

291

294

297

298

300

GAIL India

348

349

350

352

354

355

356

Grasim Ind.

3,616

3,630

3,645

3,675

3,704

3,719

3,733

HCL Tech

904

908

913

923

932

937

942

HDFC Bank

1,094

1,097

1,101

1,107

1,114

1,118

1,121

Hero Honda

2,459

2,477

2,495

2,532

2,568

2,587

2,604

Hindalco

103

103

104

105

107

107

108

Hindustan Unilever

890

893

897

905

912

916

920

ICICI Bank

277

279

281

285

289

291

293

Infosys Tech

1,049

1,053

1,056

1,064

1,071

1,074

1,078

ITC Ltd

308

309

310

311

313

313

314

L&T

1,740

1,745

1,750

1,759

1,768

1,773

1,777

MTNL

18

19

19

19

20

20

20

M&M

1,295

1,300

1,305

1,315

1,326

1,331

1,336

Maruti Suzuki

4,135

4,150

4,165

4,196

4,226

4,241

4,256

Mahindra Satyam

516

518

519

522

525

527

529

National Alumin

35

35

35

36

36

36

36

ONGC

264

265

267

270

273

275

276

Oriental Bank

158

159

160

162

163

164

165

PNB

134

136

138

142

146

148

150

Ranbaxy Labs

806

809

813

821

829

833

837

Reliance Capital

367

368

370

373

376

378

379

Reliance Comm

64

64

65

66

67

67

68

Reliance Energy

383

385

387

390

394

396

398

Reliance Inds

999

1,002

1,005

1,010

1,015

1,018

1,021

R Power

41

42

42

42

43

43

43

Siemens India

1,368

1,372

1,376

1,383

1,391

1,394

1,398

SBI

256

257

258

259

261

262

263

TCS

2,484

2,488

2,493

2,502

2,510

2,515

2,519

Tata Motors

365

366

368

370

373

375

376

Tata Power

70

70

70

71

71

72

72

Tata Steel

246

246

247

249

251

252

253

Tata comm

467

468

470

473

476

478

479

Wipro

551

552

554

557

560

561

562

Wire And Wireless

35

35

35

36

36

36

36

Zee Entertainment

385

386

388

392

396

397

399


 
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