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1 August 2016 CONTENT 03 Monthly Wrap-up 04 Dividend Yield Stocks 05 Technical Monthly Outlook 06 Technical - Stock Recommendation 07 Derivatives Monthly Report

2 Team Members Hitesh Agrawal Ajit Mishra Ajay Pasari, CFA Gaurav Sharma Manoj M Vayalar Swati Saxena Vipin Kumar hitesh.agrawal@religare.com ajit.mishra@religare.com ajay.pasari@religare.com gaurav.sh@religare.com manoj.vayalar@religare.com swati.saxena@religare.com vipin.k@religare.com Dear Investor, Globally, markets continued their upward journey last month with major central bank policies coming in-line with expectations, except by the BoJ, wherein market participants had great expectations. The optimism spilled over onto Indian shores as well with the Nifty scaling fresh 52-week highs by moving past the 8,600 mark supported by strong foreign inflows. Hopes of passage of GST bill in the ongoing monsoon session of Parliament and the overall good monsoon have been aiding sentiments. Global markets have strengthened on the back of increasing risk appetite, as investors move a small part of their exposure into relatively riskier assets like equity, as bonds yield hit all-time lows. Nifty rallied 4.2% in July, whereas the BSE Small-cap and BSE Mid-cap indices surged 4.3% and 8% respectively. Bank Nifty outperformed the Nifty with a gain of over 7%. Strong buying was witnessed across sectors except IT, which was impacted by weak Q1 results. FIIs and Domestic MFs invested Rs 11,130 cr and Rs 249 cr respectively in July. Our domestic macro situation showed some improvement with IIP growth at 1.2% in May compared to a decline of 0.8% in April Inflation continued to rise with both CPI and WPI inflation inching higher due to rising food prices. CPI Inflation stood at 5.8% whereas WPI data came in at 1.6% for June The increase in inflation has diminished hopes of a rate cut in the upcoming August Monetary Policy. The US Fed kept status quo in its monetary policy and guided for gradual hike in interest rates going ahead. It didn t give any timeline for rate hike, but stated that the US economy continues to show signs of recovery with strong jobs data and diminishing risks from global economy. July witnessed a mixed set of Q1FY17 earnings led by disappointing numbers by many IT companies and Banks. Auto companies reported a decent set of results on stronger demand in the quarter gone by. Also, selectively, many companies reported good numbers in the Mid-cap and Small-cap space. In the near term, strong hopes have emerged w.r.t. the passage of the GST bill in the ongoing Parliament session, which will be a notable trigger for the Indian economy, Indian companies and the stockmarket. Apart from this, we have the RBI policy which is scheduled on August 9th and the ongoing results season, all of which will guide the market. Globally, with economic scenario continuing to remain challenging and fragile, market participants are expecting continued support from central banks like the ECB, BoE and BoJ in terms of some form of enhanced stimulus measure to support the economies. We have been positive on Auto, Private Banks, NBFC, IT and FMCG sectors and recommend clients to remain invested in these sectors. Hitesh Agrawal EVP & Head Retail Research Religare Securities Limited 2

3 FUNDAMENTAL MONTHLY WRAP-UP Indian Indices BSE Sectoral Indices Close 1 Month 1 Year BSE Metal 9, BSE Cons Durable 12, BSE Cap Goods 15, BSE FMCG Sector 8, BSE Healthcare 16, BSE IT Sector 10, BSE PSU 7, BSE Teck 5, BSE Auto 21, BANKEX 21, BSE Oil&Gas 10, BSE Power 2, BSE Realty Index 1, Close price as on July 29, 2016 FIIs Investments In Indian Equities Net Investment (` Crore) Close 1 Month 1 Year SENSEX 28, CNX NIFTY 8, BSE MIDCAP 12, BSE SMLCAP 12, BANK NIFTY 18, Month Jan 22, Feb 24, , Mar 10, , Apr 5, , , May 22, , Jun -11, , Nifty PE Movement Market Overview Nifty continued to rally last month led by strong buying in all major sectors except IT. IT index saw a correction on the back of weak results by many companies in the sector. Investor sentiments sustained on hopes of GST Bill passage and steady progress of monsoon. Both FIIs and Domestic MFs were net buyers and helped the Nifty to scale past the 8,650 mark in July. On earnings front, HDFC, HDFC Bank, Asian Paints, Reliance Industries, etc. reported strong set of numbers. ICICI Bank, L&T, Axis Bank, etc. disappointed. Market Outlook Investors are expecting the GST Bill to get cleared in the monsoon session of Parliament. A positive outcome on this front has the potential to lift investor sentiments in the short-term. Moreover, the RBI is scheduled to meet on August 9th, but we do not expect it to reduce rates in this policy due to higher inflation prints for June. The monsoon progress has been good so far and IMD expects it to progress well. We will see many more companies reporting their Q1 numbers in August and investors need to be ready for stock-specific reactions. Net Investment (` Crore) Month July -6, , , ,130 Aug -5, , , Sept 13, , Oct 15, , v 8, , Dec 16, Nifty Dividend Yield Chart 3

4 Dividend Yield Stocks Dividend yield is one of the main factors to consider when investing in dividend-paying stocks. It is an indicator of the return that the investors are earning on their shares. In this list we have selected 16 stocks based on their financial performance. Investors interested in dividend income may consider the stocks in this list. Company Name Source - Capitaline Industry Financial Year End Mcap (Rs cr.) Equity (Rs cr.) Price July 29, 2016 Face Value Book Value Coal India Mining , Rural Elec.Corp. Finance , Oil India Oil Drilling , SJVN Power , Neyveli Lignite Power , O N G C Oil Drilling , Sun TV Network Entertainment , Balmer Lawrie Diversified , Chambal Fert. Fertilizers , Infosys IT , R C F Fertilizers , Manappuram Finance Finance , Nava Bharat Vent Diversified , Tata Chemicals Fertilizers , J B Chem & Pharm Pharmaceuticals , Cadila Health. Pharmaceuticals , EPS P/E (x) Div. / Shar e [FY1 6] Div. / Shar e [FY1 5] Div. / Shar e [FY1 4] Div. Yield (%) 4

5 TECHNICAL MONTHLY OUTLOOK The Month That Was:- Nifty gained points in the month of July, Outlook for Nifty 50 ( ) Support 8500/8410/8280 Resistance 8650/8730/8820 Below is a summary of Top Nifty Gainers & Losers: Top Nifty Gainers July 2016 Scrip Name Close Price* (`) EICHERMOT INFRATEL BHEL MARUTI LUPIN Top Nifty Losers for July 2016 Scrip Name Close Price* (`) DRREDDY INFY WIPRO TATAPOWER IDEA *Closing of last trading day of the month Breadth of Nifty stocks was positive 42 stocks closed in green while 9 stocks closed in red in the month of July, Relative comparison shows Metal, Oil & Gas and Midcap Index were the outperformers whereas IT and TECk Index were the underperformers in July, Sector Relative Performance Nifty extended its positive bias for fifth successive month and gained over four percent. The move was gradual as it spent nearly two weeks in consolidation in between and finally settled above 8600 hurdle. Fate of the GST bill, prevailing earning season and cues from the global front will guide the market this month. Technically, we expect Nifty to consolidate in a broader range this month; however the bias would remain on the positive side. We reiterate our view to concentrate on Midcap and Smallcap pack as outperformance is expected in days to come but traders should now be selective and accumulate them gradually. Among sectors, we maintain our positive bias on auto, private banks and NBFCs along with selective counters from FMCG and pharma space. * All the sectors have been compared with Nifty & the zero line represent Nifty. The movement of the sector vis-a-vis Nifty whether they outperform or underperform is shown in the above chart. It shows which sectors have attracted inflows and also the sectors from where money has exited. *Close price as on August 3,

6 TECHNICAL Outlook for Bank Nifty ( ) Support 18400/18150/17950 Resistance 18850/19000/19250 Bank Nifty also played its part in the passing month s rally and gained over five and half percent; thanks to upbeat performance from select private banking counters and continuous of rebound in the PSU pack. After the recent rally, consolidation is likely in the Banknifty too and that should be utilized to accumulate quality private banking counters. On the other hand, upside seems capped in the PSU pack so traders should maintain extra caution while taking fresh long trades. Stock Recommendations For August Britannia Industries Limited (BRITANNIA) LIC Housing Finance Limited (LICHSGFIN) CMP ` * Stop Loss ` 2700 Target ` 3400 Buy Range ` CMP ` * Stop Loss ` 490 Target ` 580 Buy Range ` BRITANNIA is probably the most popular name in Indian bread & biscuit market. Having large market share and pan-indian presence, this company has earned its reputation after decades of experience. It has multiplied investors wealth in past couple of years, it was trading around 900 in June, 14 and went up to 3400 plus levels by Aug, 15. These figures clearly indicate it s strong up move. Post which, it went into consolidation phase. Going ahead, in the near-term, we expect fresh breakout from ongoing consolidation which has lasted for almost a year now. Hence, one can accumulate in range keeping 2700 as closing stop loss for 3400 target. LICHSGFIN is a leading housing finance company in India which was promoted by state-owned Life Insurance Corporation of India in Technically, it is in uptrend, trading at 52-week high. Earlier last month, breakout from declining channel formation was witnessed. This is a bullish continuation formation generally formed in uptrend. Considering all, we recommend buying this stock in range keeping 490 stop loss for 580 target. *Close price as on August 3,

7 DERIVATIVES DERIVATIVES MONTHLY ROLLOVER REPORT July Expiry Derivatives Summary Sector Rollover (%) Nifty Index closed up at 8667, after some volume weighted average price (VWAP) buying of 8-20 points on Nifty futures led to the closing of trade in Nifty index above 8650 in the last 30 min of the trade. The Nifty futures long roll cost (difference between current and next month futures) was at around 54 bps vs. 38 bps, indicating fresh long rollovers. Nifty futures Aug contract started with around 2.18 Cr vs Cr open interest. Bank Nifty futures have also seen an open interest at lkh vs 18.3 lkh, last series. At expiry, VIX was at 15.4% levels implying a 340 odd points swing in the Nifty in next 30 days. The highest open Interest is at Nifty 8500 PE and 9000 CE. 8500put Open interest stands at 45lk and 9000 call Open interest at 67lk. August Series Outlook Rollover Synopsis Rollover % Nifty futures has rolled around 63% vs. 78% with respect to last month, and the open interest for the new August contract is higher by around 30lkh due to addition of fresh long positions. Bank Nifty futures rolled at around 70% vs 77% compared to last month. Short covering in bank nifty futures has led to lower open interest of Aug contract just at lkh,down by around 1lkh with respect to last month. Bank nifty August futures has a resistance near 19600, banknifty might outperform the nifty only after this level is breached on upside. Banks have been outperforming till the month of June, later in July some short positions were witnessed. Short covering seen in July contract and lesser Open interest in Aug contract implies that bank nifty might not outperform the nifty in this August series till level is not breached. A closing below on Banknifty futures all long positions in banknifty should be hedged or squared off. Sector-wise Realty, Metals, Finance, Banking and Fertilisers gained the most in the July series. 87%, 84%, Finance and 83% each, are the sectors where highest rollover was witnessed, whereas 69%, 71%, Metals and 75% each are the sectors where lower rollovers were witnessed. Sector-wise we expect FMCG, PHARMA and IT to lead in this series at least for first half of the Aug contract. CNX Pharma index might rally till and CNX IT might rally till from current levels The range that we advocate for Aug first fortnight is for Nifty and for Bank nifty it is at The August weighted average price for Nifty and Bank Nifty futures are at 8645 and respectively. These might act as the pivot for indices for the month of August. Vix is currently at 16.14% and is likely to be in 13.5% to 19% for the major part of Aug. Bank Nifty falling below other sectors like IT, FMCG might start outperforming the Nifty in Aug series. We advocate doing a strangle in index. BUY NIFTY AND BUY , TOTAL PREMIUM AT 171, STOPLOSS AT 138, TARGET

8 Open Interest (in lakhs.) DERIVATIVES NIFTY August Series Option Data Nifty Open Interest Call Put TOP 5 PRICE GAINERS Expiry-to-Expiry TOP 5 PRICE LOSERS Expiry-to-Expiry STOCK NAME JPASSOCIAT CAIRN BAJFINANCE VEDL PFC STOCK NAME DRREDDY MINDTREE TV18BRDCST KSCL JUSTDIAL TOP 5 STRONG ROLLOVERS STOCK NAME DIVISLAB 93 TATAGLOBAL 93 COLPAL 92 MRF 92 GLENMARK 91 TOP 5 WEAK ROLLOVERS STOCK NAME PCJEWELLER 41 ADANIENT 46 NIITTECH 51 NMDC 54 POWERGRID 55 8

9 Before you use this research report, please ensure to go through the disclosure inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 and Research Disclaimer at the following link: Specific analyst(s) specific disclosure(s) inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 is/are as under: Statements on ownership and material conflicts of interest, compensation Research Analyst (RA) [Please note that only in case of multiple RAs, if in the event answers differ inter-se between the RAs, then RA specific answer with respect to questions under F (a) to F(j) below, are given separately] S.. Statement Answer Tick appropriate I/we or any of my/our relative has any financial interest in the subject company? [If answer is yes, nature of Interest is given below this table] I/we or any of my/our relatives, have actual/beneficial ownership of one per cent. or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance? I / we or any of my/our relative, has any other material conflict of interest at the time of publication of the research report or at the time of public appearance? I/we have received any compensation from the subject company in the past twelve months? I/we have managed or co-managed public offering of securities for the subject company in the past twelve months? I/we have received any compensation for brokerage services from the subject company in the past twelve months? I/we have received any compensation for products or services other than brokerage services from the subject company in the past twelve months? I/we have received any compensation or other benefits from the subject company or third party in connection with the research report? I/we have served as an officer, director or employee of the subject company? I/we have been engaged in market making activity for the subject company? Nature of Interest ( if answer to F (a) above is Yes :... Name(s) with Signature(s) of RA(s). Yes [Please note that only in case of multiple RAs and if the answers differ inter-se between the RAs, then RA specific answer with respect to questions under F (a) to F(j) above, are given below] SS... Name (s) of RA. Signtures of RA Serial Question of question which the signing RA needs to make a separate declaration / answer Yes. Copyright in this document vests exclusively with RSL. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose, without prior written permission from RSL. We do not guarantee the integrity of any s or attached files and are not responsible for any changes made to them by any other person. 9

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