Religare Weekly : Equity

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1 (30th June 2017) INDEX RESISTANCE 2 RESISTANCE 1 CMP SUPPORT 1 SUPPORT 2 NIFTY NIFTYBANK NIFTYIT NIFTY OUTLOOK In continuation to its sideways trend, the domestic benchmark index, Nifty slipped nearly half percent amid volatility. Participants are focusing on GST roll out and will react to the cues next week. Besides, indications from the global front, movement on currency front and further monsoon update will dictate the market trend. Technically, Nifty has crucial support at 9400 and any breakdown will trigger further selling pressure ahead. Having said that, the overall trend is still positive and we advise investors to utilise this corrective phase to accumulate quality index majors. Broadly, we expect Nifty to trade in a range of in the up coming week. SECTORS TO WATCH SECTOR FMCG METAL IT PHARMA OUTLOOK BULLISH BULLISH SIDEWAYS TO BEARISH SIDEWAYS TO BEARISH

2 NIFTY FMCG OUTLOOK Nifty FMCG index gained nearly two percent and out performed the benchmark in the passing week. The FMCG index has made a new record high after consolidating for a month and looks upbeat maintaining the prevailing momentum ahead as well. Traders can utilise this opportunity and accumulate sound stocks like BRITANNIA, COLPAL, DABUR, and GODREJIND. NIFTY METAL OUTLOOK Nifty Metal index performed exceptionally well in the passing week and gained nearly three and half percent. Technically, it s holding strong and reached to its upper band of the congestion zone, while making a strong base around 2800 levels. Considering its current chart pattern, we expect strong surge in near future. Traders can consider stocks like JSWSTEEL, VEDL and HINDZINC.

3 NIFTY IT OUTLOOK thing much have changed for the IT index in the passing week as well and it concluded on a feeble note. It has again failed to surpass the resistance zone of its moving averages around mark and trading under pressure. Keeping in mind its overall trend, we advise traders to avoid any long trade in IT space. NIFTY PHARMA OUTLOOK Though Nifty Pharma index has rebounded in passing week due to some technical bounce in selective counters but overall trend is still sideways to bearish. The current chart structure indicates multiple hurdles of its moving averages and the upside movement seems capped. Trades should remain selective in this space.

4 DERIVATIVES OUTLOOK Nifty futures volume weighted average price (VWAP) is at 9550 and Banknifty futures is at Call writing was seen at 9500 & 9700 strikes, put writing was seen at 9400 strike. Maximum positions are at 9700 CE and 9400 PE. Nifty is expected to be in the range of Metals, Realty and Telecom stocks gained the most whereas Infrastructure, Banking and Automobile stocks lost the most during the week. FIIs were net seller of around 1318 Cr whereas DIIs were net buyers of around 620 Cr in cash segment during the week. VIX is still in same range and likely to hover around % range for the next week. Strategy:- BANKNIFTY has been in a range of around for last 4-5 sessions. The 6th July expiry too has highest maximum positions at CE and PE. Banknifty July futures has opened with lower open interest with respect to June series, implying lesser participation. Considering all above mentioned factors, we recommend doing a short strangle in Banknifty as per levels mentioned below. Strategy: SELL BANKNIFTY 6th JULY CE AT & SELL BANKNIFTY 6th JULY PE AT 25-26, NET PREMIUM RECEIVED 65-67, SL 87, TARGET 25. LONG BUILDUP (Weekly change) SYMBOL PRICE % CHANGE IN PRICE OPEN INTEREST % CHANGE IN OI JPASSOCIAT DISHTV ADANIPOWER SHORT BUILDUP (Weekly change) SYMBOL PRICE % CHANGE IN PRICE OPEN INTEREST % CHANGE IN OI GMRINFRA PVR OIL

5 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 v-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Wholesale Price Inflation (%) BSE Sectoral Indices This Week Pre. Week % Change METAL 11, , HC 14, , FMCG 10, , CD 16, , TECK 5, , AUTO 23, , OIL&GAS 13, , PSU 8, , BANKEX 26, , CG 17, , IT 9, , POWER 2, , REALTY 2, , Weekly News Share price of CARE Ratings ended sharply higher after its rival CRISIL picked up 8.9% stake in the company held by Canara Bank. As per Canara Bank, the entire stake sale in CARE was a part of monetisation of non-core assets. CRISIL stated that it continuously evaluates investment options as a part of its corporate strategy and this stake purchase is an investment in the good long term prospects of the India s credit rating sector. Crisil & Canara Bank also closed higher by 1.5% & 2% respectively. Axis Bank rose after the bank said that about 80% of its bad loans in 12 companies identified for Insolvency and Bankruptcy Code (IBC) were secured. The bank stated that it has exposure to 8 out of the 12 accounts under IBC and its fund-based outstanding on the 8 accounts stood at Rs 5,071cr. Mold-Tek Packaging announced its plans to invest Rs 25cr to triple its capacity of producing the Food & FMCG IML thin wall containers at its Hyderabad plants. First phase of Project will go into production in v 2017 and will be completed by June This investment will be over and above the investment of two dedicated plants being setup for Asian Paints. Raymond announced its plans to invest a total of Rs 1400cr in a phased manner in its new plant at Amravati, which will go on stream by this year-end. The company has made an initial investment of Rs 200cr for the first phase of the new unit that will produce cotton shirts, linen, and denim, among others. The banking stocks fell sharply after news that Reserve Bank of India (RBI) has directed banks to keep higher provisions (at least 50% of the loan amount) for accounts referred to bankruptcy courts. This move could hurt banks earnings substantially with government-owned banks likely to be worst affected as they hold the chunk of defaulted loans in India. Stocks like PNB, BOB, Corporation Bank, Canara Bank, Andhra Bank and SBI fell by 3-5%. Nesher Pharmaceuticals, a subsidiary of Zydus Pharmaceuticals USA has received final approval from the USFDA to market Dextroamphetamine Sulfate extended-release capsules, 5 mg. Zydus Pharmaceuticals is US division of Cadila Healthcare.

6 Team Members Hitesh Agrawal Ajay Pasari, CFA Ajit Mishra Archana Gude Manoj M Vayalar Mehernosh Khurshed Panthaki Siji A Philip Suhanee Shome Vipin Kumar hitesh.agrawal@religare.com ajay.pasari@religare.com ajit.mishra@religare.com archana.gude@religare.com manoj.vayalar@religare.com mehernosh.panthaki@religare.com siji.philip@religare.com suhanee.shome@religare.com vipin.k@religare.com

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