Research Desk Stock Broking December 31 st, 2016 MARKET ROUNDUP

Weekly Snippets December 31st, 2016 Research Desk – Stock Broking MARKET ROUNDUP NIFTY (8185.80) Markets signed off 2016 on a cheerful note, with ma...
Author: Kristin Lindsey
1 downloads 2 Views 1MB Size
Weekly Snippets December 31st, 2016

Research Desk – Stock Broking

MARKET ROUNDUP NIFTY (8185.80) Markets signed off 2016 on a cheerful note, with major indices making a turnaround and reclaiming their crucial psychological levels. Benchmark Index Nifty surging over 200 points closed at 8185.80 or 2.51% and SENSEX closed at 26626.40 with a gain of 585 points or 2.25%. On the sectoral front NIFTY FMCG gained the most by 5.93%, followed by NIFTY IT 3.26%,

whereas

NIFTY PSUBANK

and

NIFTY PHARMA

underperformed the broader market, among all Indices. In the week passed by, India signed a pact with Singapore to amend a decade old treaty to begin taxing capital gains on investments routed through the Southeast Asian nation from April next to check round-tripping of funds. The coming week will mark the beginning of the New Year as well as the start of the new month and lots of economic data will be announced, which will decide the course of action for the markets. Auto stocks will remain in focus next week on expectation of weak sales figures for the month of December. In economic releases, Nikkei India Manufacturing PMI data for the month of December to be released on Jan 2, and on Jan 4, Nikkei India Services PMI will be announced. Moreover market participants will be eyeing on Prime Ministers’ speech on 31

st

Dec’16,

and

Market’s

may

react

to

any

surprise

announcement made by him. After a muted opening of the week, Nifty picked up the momentum from Tuesday onwards, after forming double bottom near 7900 levels. On the weekly time frame Nifty chart formed Bullish Engulfing pattern which has engulfed prior week’s bearish candle, signalling that bulls are back in action. Technically, on Friday Nifty closed above its 21-DEMA, and holds below its 50 & 200-DEMA which is currently placed near 8227 & 8262 levels, which becomes immediate hurdle for Nifty. Considering technical setup, Nifty is likely to extend further gains towards 8250-8300 levels in the coming week, and any dip towards 8050-8100 levels can be utilized as a buying opportunity. Hence, markets are likely to trade with mixed to positive bias in the range of 8000 to 8300; any breakout from said range may trigger move of another 100-150 points in the same direction.

Report Highlights Street Buzz, Corporate Actions, Economic events

Index Strategy Pg. 1-2

COVERED CALL IN NIFTY TECHNICAL PICK : VOLTAS

Pg. 6

HYBRID & PAIR STRATEGY

Pg. 6

DID YOU KNOW??- BHARAT INTERFACE FOR MONEY (BHIM)

Pg. 7

Buy one lot of NIFTY JAN FUT @ 8150-8155 and Sell one lot of NIFTY JAN 8300 CE @ 58-60 | Max profit: 15225 | Max loss: Unlimited Below BEP | BEP:8097 | Positional SL: BLW 8000 |

December 31st, 2016

Weekly Snippets STREET BUZZ... 

India and Singapore signed a pact on Friday to amend the Double Taxation Avoidance Agreement (DTAA), in a bid to curb illegal hoarding of money. With the amendment, investments in India routed through Singapore will be liable for capital gains tax. According to Finance Minister Arun Jaitley, this amendment has been done to avoid round-tripping of funds, misused for tax evasion.



Drug firm Lupin has received a tentative approval from the United States Food and Drug Administration (USFDA) to market its cholesterol – lowering Pitavastatin tablets in the American market in the strength of 1 mg, 2 mg and 4 mg,



IDBI Bank cut the six month MCLR to 8.95% as compared with 9.25% earlier, while three year MCLR has been reduced to 9.3%, as against 9.7% previously



The National Stock Exchange of India (NSE), the country’s largest bourse in terms of market share, has filed a draft prospectus for its proposed initial public offer (IPO).



Maruti Suzuki and Hyundai Motor India plan to increase car prices by Rs 2,500 to Rs 1 lakh in January, as they seek to offset a dent on margin from higher raw material cost, steep discounts in the past few months and a weakened rupee that made imported parts more expensive. Several other automakers have already announced price increases and the rest are expected to do so soon, following suit the market’s top two.



Prime Minister Narendra Modi on Friday launched a new e-wallet app, BHIM, named after founding father Dr BR Ambedkar, to make it easier to transact online. The Aadhaar-based mobile payment application will allow people to make digital payments directly from their bank accounts. The PM also reiterated that digital transactions will be rewarded with raffle-like cash prizes from the government.



China unveiled plans on Friday to allow more foreign investment in banking, insurance, securities and credit-rating firms, as part of a wider opening up of the world’s second-largest economy. The moves could ease some frustration among foreign firms over their lack of access, though the guidelines issued by the National Development and Reform Commission (NDRC) were short on detail.

CORPORATE ACTIONS DURING THE WEEK Company Code

Ex Date

Record Date

Purpose

JHS

02-Jan-17

-

Extra Ordinary General Meeting

JSWSTEEL

04-Jan-17

05-Jan-17

Fv Splt Frm Rs 10 To Re 1

SASKEN

05-Jan-17

06-Jan-17

Buyback

HEXAWARE

05-Jan-17

06-Jan-17

Buyback

ECONOMIC EVENTS DURING THE WEEK Event

Date

Prior

Survey

IN NIKKEI Manufacturing PMI DEC

02-01-2017

52.30

50.80

US ISM Manufacturing PMI DEC

03-01-2017

53.20

53.40

DE Unemployment Rate DEC

03-01-2017

6%

6%

IN Nikkei Services PMI DEC

04-01-2017

46.70

48.20

December 31st, 2016

Weekly Snippets NIFTY 50 V/S GLOBAL INDICES 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% -1.00% -1.50% -2.00%

SECTOR SNAPSHOT 6.00% 4.00% 2.00% 0.00% -2.00%

SECTORAL SNIPPETS

NIFTYFMCG (20754.10) has outperformed NIFTY and generated 5.93% return, whereas NIFTY ended with a positive return of 2.51% during last week. The major gainers were the index heavy weights like ITC and HINDUNILVR along with DABUR, MARICO, GODREJCP and BRITANNIA. During this week the index has seen significant bounce from its recent low of 19457.25 levels, which placed the stock above its 21/50 DEMA on daily chart. On the technical indicator front 14-period RSI is trading above its 9-day signal line and poised with bullish bias, uptrend in the index in near term. The immediate support for the NIFTYFMCG is pegged at 20,000 followed by 19,500. On the higher side, the index may face resistance around 21,300 levels; breach above the said levels may take the index toward 21,500 levels. Going forward, we are expecting the index is likely to trade with positive bias in the coming week. Stock specific action is expected to be seen in the sector during the next week.

NIFTYIT (10399.25) ended with a weekly gain of 3.26 % and outperformed nifty during last week. The major gainers from the index were TECHM leading the pack along with HCLTECH, TCS WIPRO and INFY while on the flip side JUSTDIAL closed in red. The index has seen significant th bounce from its 52 week low of 9295.25 levels made on 15 November 2016, which placed the index above its short to medium term moving averages on daily chart, exhibiting an overall strength in the index in near term. On the technical indicator front, 14-period RSI is poised with positive bias, suggesting uptrend in the index in near term. Going ahead, the index is expected to trade with positive bias and outperform the NIFTY in the coming week also. The index may find resistance around 10,700 levels and above it 10,800 levels and on the lower side support is at 10,100 levels followed by 10,100 levels.

NIFTYBANK (18177.20) has closed the week on a positive note gaining 1.64%. On the daily chart the index has just shied from closing above the 21 DEMA. Among the top performers in the sector were the private banks like INDUSINDBANK, ICICIBANK, AXISBANK KOTAKBANK supported by the public sector banks like BANKINDIA and BANKBARODA which gained marginally. Index draggers for the week were PNB and CANBK. The index is forming a V shaped patter on the daily chart, breakout of which will happen above the level of 18270-18275. On the momentum oscillator front, 14 day RSI is comfortably placed above the 9 day EMA and heading upward. After giving lower closing for past four week, the index has finally taken support at its 100 DEMA and rebounded from that level. Going forward, support for the BANKNIFTY is seen at17800 followed by 17600. On the higher side resistance is seen at 18300 followed by 18600.

NIFTYAUTO (9141.75) has underperformed benchmark index NIFTY50, generating returning of 1.72% compared to the index which closed 2.51% in positive. Index pullers for the week were BOSCH, EICHERMOT, AHOKLEY, TATAMTRDVR, EXIDEIND, M&M. Index draggers for the week were BHARATFORG, APOLLOTYRE, MRF, AMARAJABAT and TVSMOTOR. On the daily chart the index has closed above the 21 DEMA but formed an indecisive candle on the last trading session. On the daily chart, 14 day RSI is placed above the 9 day EMA, indicating positive momentum could continue in the stock. Going forward, Auto sales numbers will be released next week which will largely decide the direction of the stock movement. Support for the index is placed around 8970 and resistance is seen around 9235-9240 followed by 9310.

December 31st, 2016

Weekly Snippets FII ACTIVITY IN DERIVATIVES

In the week passed by, FII’s started building long Index futures which stand at Rs. 2737.46 crore. Week on week basis they reduced 7270 long contracts from 120849 contracts earlier week to 113579 contracts last week, also they reduced short contracts by 44451, net stands at 50447 contracts. Since it is just one day passed to January expiry series, it is early to comment on it. During the week, FII’s turned net buyers in the Stock futures for Rs. 3000.89 crore. Week on week basis they reduced long position to the tune of 25711 contracts from earlier week of 382723 contracts to 357012 contracts last week, at the same time they also reduced short contracts by 72577, net stands at 482356 contracts. Generally, stock options are used to hedge the position, but since it is just fresh start of the expiry it is early to comment on it.

INDEX FUTURES 350

Index Fut. OI

STOCK FUTURES

Index Fut. Net Buy

300 250

2000

1000

1500

950

1000

200

Stock Fut. OI

Stock Fut. Net Buy

900

500

150

0

100

850

50

-500

800

0

-1000

750

900 800 700 600 500 400 300 200 100 0

INSTITUTIONAL ACTIVITY IN CASH The Foreign institutional players were sellers of worth Rs. 3,582.20 Crore in the cash segment, and also they were heavy sellers of Rs. 11,325.15 Crore in the month of Dec. For the year 2016 till date, the FII’s turned net sellers to the tune of Rs. 9,675.62 Crore. The Domestic Institutions were net buyers of securities worth Rs. 5,075.73 Crore for the concluded week, and in the month of Dec they were net buyers to the tune of Rs. 9,136.09 Crore. And year till date they are net buyers of Rs. 37,012.02 Crore. 2000 Time Frame

FII/FPI

DII

1500 Month Till Date (Dec)

-11,325.15

9,136.09

1000 500

Last Month (Nov)

-19,982.36

18,277.03

Year Till Date (01/01/1630/12/16)

-9,675.62

37,012.02

For the CY ended 2015

-17,512.09

0 -500 -1000

67,412.64

-1500

FII/FPI

DII

December 31st, 2016

Weekly Snippets OI CHANGES DURING THE WEEK - STOCKS

Top OI Gainers with increase in Price

Top OI Closures with increase in Price

Long Accumulation

Short Closure

OI (in lakhs)

OI Chg (%)

PRICE Chg (%)

CONCOR

7.75

10.94

0.71

PCJEWELLER

INDIACEM

283.85

7.93

3.97

M&MFIN

122.67

7.85

GRASIM

93.53

OIL

14.85

Stock

OI (in lakhs)

OI Chg (%)

PRICE Chg (%)

6.19

-44.16

1.25

NHPC

296.73

-41.75

0.95

5.55

BHARATFIN

93.62

-38.96

13.10

7.76

4.13

COALINDIA

96.08

-37.70

4.22

6.98

3.44

RECLTD

228.12

-32.98

1.71

Stock

Top OI Gainers with decrease in Price

Top OI Closures with decrease in Price

Short Accumulation

Long Closure

Stock

OI (in lakhs)

OI Chg (%)

PRICE Chg (%)

Stock

OI (in lakhs)

OI Chg (%)

PRICE Chg (%)

DIVISLAB

33.46

52.99

-9.03

MRF

0.27

-27.24

-0.19

GLENMARK

23.65

5.76

-4.02

UNIONBANK

188.28

-21.80

-2.73

-

-

-

-

-

-

-

--

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

NIFTY OPTIONS NIFTY OPTIONS OI x 100000

PCR OI V/S NIFTY 70 60 50 40 30 20 10 0

CALL PUT

OPEN INTEREST

1.5 1

7900

8000

8100

8200

8300

8400

PCR

NIFTY

8400.00 8200.00

0.5

8000.00

0

7800.00

8500

On the options front, 8000 PE is having the highest open interest of more than 57 lakh shares while 8200 CE is having highest call writing of over 42 lakh shares and 8300 CE is having outstanding open interest of more than 31 lakh shares. This indicates any dips towards lower levels of 8100 levels may be utilized as a best buying opportunity while on the flip side any breakout above 8200 levels may lead to short covering rally towards 8300 levels which is technically the next resistance level. On the other hand, 8000 mark may be acting as crucial support for the markets.

On the data front, PCR ratio is currently trading around 1 level which is a sign of consolidation in the market in the coming trading sessions. The ratio has been trading continuously around psychological level of 1 throughout the last trading week indicating sideways to bullish bias. Any dip in the PCR ratio towards 0.85-0.90 level may be best suitable levels to build long positions in the market.

December 31st, 2016

Weekly Snippets PICK OF THE WEEK – BUY VOLTAS | CMP: RS 328.25 ACT

BUY

ENTRY

324-325

SL

283

TGT

379-380

TIMEFRAME

4-6 months

 Voltas is India's largest air conditioning company, and one of the world's premier engineering solutions providers and project specialists. The company offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, mining and construction equipment, water management & treatment, cold chain solutions, building management systems, and indoor air quality.  VOLTAS has been making repeated cycles of higher highs and higher lows on the weekly & charts. The counter has zoomed over 90% in the small time frame of approximately eight trading months clocking an all time highs of 406.40 levels in the month of October 2016.  After clocking an all time high of 406.40 levels, the counter witnessed a round of profit booking which dragged the stock towards lower levels of 285-290 which is 61.80% retracement level drawn between swing low of 211 and all time high of 406.40 levels. This correction may be used as an best buying opportunity for the medium term investors  At current levels, the stock is expected to re-gain its bullish momentum and move towards the higher levels of 379-380 in medium term perspective where an unfilled gap is placed on the higher side. We recommend medium term investors to buy the stocks at current levels and accumulate more on any dips towards 298 levels with stop loss placed below 283 levels.

HYBRID STRATEGY

PAIR STRATEGY

CALL RATIO SPREAD IN BANK NIFTY

BUY HDFCBANK & SELL KOTAKBANK

BANKNIFTY JAN FUT has a total Open Interest of 20 35 880 shares with an addition of 20 35 880 shares an increase of 5.28 % shares over the last trading session whereas price has witnessed an increase of 0.59 % indicating positive bias on the index. BANKNIFTY 05JAN 18100 CE has a total OI of 82 400 shares with an increase of 21 760 shares and IV trading around 9.05 levels whereas BANKNIFTY 05 JAN 18400 CE has a total OI of 222 000 shares with an increase of 132 920 shares and IV trading around 13.28 levels. Going forward we believe the index will trade with positive bias with the index having key resistance around 18400 levels. Hence from the weekly expiry we recommend traders to build Call Ratio spread in the BANKNIFTY. Strategy: Buy one lot of BANKNIFTY 05JAN 18100 CE @ 140145 and Sell two lots of BANKNIFTY 05JAN 18400 CE @ 45-50 | MAX PROFIT: 10000 | MAX LOSS: unlimited above UBEP AND 1800 below LBEP | LBEP : 18155 | UBEP: 18655 |

HDFCBANK and KOTAKBANK have shown 76% co related price movement in the past 6 Month data set and the pair is trading near its mean with a 65 % Co-Integrated over the last 6 Month data set. The pair is currently trading with a price ratio of 1.67 and its mean is at 1.60 we believe pair will further divert from +1 SD towards +2 SD in the near future. We will initiate pair trade between HDFCBANK and KOTAKBANK. Strategy: Buy one lot of HDFCBANK JAN Fut @ 1207-1208 and Sell one lot of KOTAKBANK JAN Fut @ 719-720 | Current price ratio: 1.67 | Target: 1.62 of price ratio | Stop Loss: 1.78 of price ratio |

December 31st, 2016

Weekly Snippets

Did You Know?? BHARAT INTERFACE FOR MONEY (BHIM) APP The Bharat Interface for Money (BHIM) was rolled out by Prime Minister Narendra Modi on Friday, in an initiative to enable fast, secure and reliable cashless payments through mobile phones .BHIM is inter-operable with other Unified Payment Interface (UPI) applications and bank accounts, and has been developed by the National Payments Corporation of India (NPCI). This seals the government’s push towards digital payments after the November 8 demonetisation that resulted in the scrapping of high-value Rs 1,000 and Rs 500 currency notes. As it is Aadhaar-enabled, the app puts an end to the fuss around other e-wallets What is Unified Payments Interface (UPI)? Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience. How does BHIM work? Once the App is downloaded from Google play Store, one has to register their bank account with BHIM and set a UPI PIN for the bank account. Your mobile number is your payment address and you are ready for transacting through this app. The BHIM app currently supports Hindi and English languages but the government plans to launch it in other languages soon. Can money be sent to non-UPI supported banks? The user can send or receive money from customers, family or friends through the mobile number. Interestingly, money can also be sent to non-UPI supported banks using IFSC and MMID codes. The user will also be able to collect money by sending requests and can also reverse a payment if required. Benefits of BHIM (UPI based App) 

Round the clock availability



Single Application for accessing different bank accounts



Use of Virtual ID is more secure, no credential sharing



Single click authentication



Unlike mobile wallets, BHIM app users do not have to load money in it as the app is linked to their bank accounts. Therefore, all the money transacted through the app comes from and goes directly from the bank accounts, doing away with the need to transfer the money back to the bank account.

December 31st, 2016

Weekly Snippets KARVY RESEARCH DESK

QUERIES & FEEDBACK

JK Jain

Toll-Free: 1800 419 8283

Head Research

Email ID: [email protected]

KARVY STOCK BROKING LTD KARVY STOCK BROKING LTD| Karvy Millenium | Plot No : 31| Financial District |Gachibowli | Hyderabad - 500 032

Analyst Certification The following analyst(s), JK Jain, who is (are) primarily responsible for this report and whose name(s) is/ are mentioned therein, certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.

Disclaimer Karvy Stock Broking Limited [KSBL]is registered as a research analyst with SEBI (Registration No INH200003265 ).KSBL is also a SEBI registered Stock Broker, Depository Participant, Portfolio Manager and also distributes financial products. The subsidiaries and group companies including associates of KSBL provide services as Registrars and Share Transfer Agents, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, financial consultancy and advisory services, realty services, data management, data analytics, market research, solar power, film distribution and production, profiling and related services. Therefore associates of KSBL are likely to have business relations with most of the companies whose securities are traded on the exchange platform. The information and views presented in this report are prepared by Karvy Stock Broking Limited and are subject to change without any notice. This report is based on information obtained from public sources , the respective corporate under coverage and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of KSBL. While we would endeavor to update the information herein on a reasonable basis, KSBL is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent KSBL from doing so. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. KSBL will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither KSBL nor any associate companies of KSBL accepts any liability arising from the use of information and views mentioned in this report. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Past performance is not necessarily a guide to future performance. Forward-looking statements are not predictions and may be subject to change without notice. Actual results may differ materially from those set forth in projections.  Associates of KSBL might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.  Associates of KSBL might have received compensation from the subject company mentioned in the report during the period preceding twelve months from the date of this report for investment banking or merchant banking or brokerage services from the subject company in the past twelve months or for services rendered as Registrar and Share Transfer Agent, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, consultancy and advisory services, realty services, data processing, profiling and related services or in any other capacity.  KSBL encourages independence in research report preparation and strives to minimize conflict in preparation of research report.  Compensation of KSBL’s Research Analyst(s) is not based on any specific merchant banking, investment banking or brokerage service transactions.  KSBL generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.  KSBL or its associates collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report.  KSBL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report and have no financial interest in the subject company mentioned in this report.  Accordingly, neither KSBL nor Research Analysts have any material conflict of interest at the time of publication of this report.  It is confirmed that KSBL and Research Analysts, primarily responsible for this report and whose name(s) is/ are mentioned therein of this report have not received any compensation from the subject company mentioned in the report in the preceding twelve months.  It is confirmed that JK JAIN Research Analyst did not serve as an officer, director or employee of the companies mentioned in the report.  KSBL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.  Neither the Research Analysts nor KSBL have been engaged in market making activity for the companies mentioned in the report.



We submit that no material disciplinary action has been taken on KSBL by any Regulatory Authority impacting Equity Research Analyst activities