Tuesday 2 nd, May, 2017

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1 Tuesday 2 nd, May, 2017 Index Levels : Market Trend (Nifty): INDEX SUPPORTS RESISTANCES Period Current Trend NIFTY ( ) SENSEX ( ) ITE-35* ( ) *as on 2 nd May / / / / / / Trend Reversal Point (TRP) 27Nifty on close basis Short Term Trend* UP DOWN BELOW 9200 Medium Term* UP DOWN BELOW Long Term Trend* UP DOWN BELOW 7900 (*Trend Reversal Point (TRP) is based on close prices.) Imtiaz Merchant s Best Picks Indices COMPANY NAME SIZE SECTOR CURRENT PRICE Equity Indices Close As on 21 st April Close As on 28 th April Points % Chg MARUTI LARGE CAP AUTO 6525 BSE Sensex % MOTHERSON SUMI LARGE CAP AUTO 401 Nifty % UPL LARGE CAP INDUSTRIES 805 Note: (Buying should be done from a medium to long term perspective) ITE Shariah 35* S&P CNX 500 Shariah % % Dollar/Rupee % (*Weekly Returns) Market Brief Markets ended the week and the month on positive note. Though for the day on Friday in the midst of profit taking the market gives a negative close, Some of the companies have reported better earnings, Hence it lifted the market up to a historic new high, As anticipated by us in our newsletter few months ago. Markets are likely to do well in times to come with a caveate that there should not be deterioration of Geo Political. The sectors likely to do well are Consumer Goods, Auto and selected stocks from Construction, Oil & Gas and Industrials. Economic policy reforms as led down by the government, will be soon implemented and its likely to increase the GDP growth rate and higher employment. Technical Technically markets from Medium to Long Term looks strong and soon likely to test new high, however small corrective action is not ruled out, market in the short term can perhaps test the levels of 9200 and in the worse case it may test 9050, On the higher side if market breaks out above the recent high of 9370 with higher volumes would see a substantial upside in the market, and is quite possible, So in extreme Short Term it can remain in a range between Since the undertone is bullish higher side breakout is likely to happened. We reiterate what we said earlier through our Newsletters that this is a stock specific market and Good stock peaking is going to yield good results. One should Buy stocks those are leaders, Even if it comes with some premium and One should certainly avoids the leggards. Stocks with high Debt and Poor Management should be avoided.

2 Advance/ Decline Advance Decline AD Ratio Un- Changed BSE :1 132 NSE :1 67 Shariah Universe*** :1 35 Global Indices Close Points % Chg Dow Jones* % NASDAQ* % FTSE* % Nikkei % Hang Sang % Straits Times % Institutional Buy Sell Net Activity (Cr) FII* DII** FII* Foreign institutional investor DII** Domestic institutional invest News: Maruti Suzuki hits new high; m-cap inches closer to Rs 2 lakh crore mark Maruti Suzuki India (MSIL) has moved higher by 3.3% to Rs 6,580, also its record high on the BSE, on expectation of strong volume growth in April-June (Q1FY18) quarter, owing to marriage season demand and uptick in rural growth. With the market capitalization (mcap) of Rs 198,765 crore, MSIL is Rs 1,234 crore away to join Rs 2 lakh crore m-cap club. MSIL had reported a 15.7% year on year jump in net profit for the fourth quarter (Q4FY17), to Rs 1,709 crore. Sales revenue for the fourth quarter rose 20% to Rs 18,005 crore. The company sold 414,439 vehicles in the quarter, growing 15% over the same period a year before. Growth in volumes, increase in share of the company s higher segment models, benefits due to full capacity utilization and cost reduction efforts contributed to increase in profits. This was partially offset increase in commodity prices and adverse forex movement, MSIL said in a release. Analysts at HDFC securities Institutional Research is positive on the MSIL and maintains buy rating on the stock with target price of Rs 7,070. We remain positive on the MSIL growth story on the back of strong volume growth, led by consistent volume uptick of Ciaz, Brezza and Baleno, and success of Ignis; increasing ASP, led by an expanding portfolio in the premium segment; fresh capacity addition from the Gujarat facility; uptick in rural demand and supporting macro tailwinds like 7th Pay Commission payout, falling interest rates, urbanisation and growing middle class, the brokerage firm said in results preview. Over the medium term, analyst at IIFL Wealth Management expects passenger car demand to remain strong driven by under penetration in rural areas. Maruti, with new launches and deep penetration will continue to outperform the industry. Maruti continues to churn out volumes showcasing massive resistance in an otherwise turbulence caused in the auto space owing to government led regulatory changes. We continue to hold out assumption of MSIL being one of the steady performer and truly marching towards 2 million units sales mark by FY19, according to India Nivesh Securities, which maintain buy rating on the stock with a revised target price of Rs 7,375. *source: Business Standard News: Sensex at 30,000: No PSU in top 5 cos, RIL leads rally with 40% gain As the S&P BSE Sensex breezed past the 30,000 mark on Wednesday to settle at all-time high levels, the rally from the recent December 2016 lows has been mostly led by Reliance Industries (RIL) that has gained nearly 40% during this period. Surprisingly, none of the public sector undertakings (PSUs) have made it to the top five companies by market-capitalisation (marketcap) as the benchmark index achieved this feat. ITC, HDFC, HDFC Bank and Larsen & Toubro are the other index heavyweights that pushed the benchmark in unchartered waters and form the remaining four in the most valuable by market-cap club. However, ONGC, State Bank of India (SBI) and Indian Oil Corporation (IOC) do form a part of the top 10 by market-cap, data show. BSE PSU index has outperformed with a gain of 20% from market s December low, compared to 16% rally in the benchmark index during this period. The rally in the index has largely been on account of an up move in RCF (up 90%), Rural Electrification Corporation, or REC, (up 74), followed by Bank of India, Vijaya Bank, Oriental Bank of Commerce (OBC) and Indian Bank that gained 54 71% during this period. Though analysts expect the markets to do well going ahead, excessive government control and asset quality concerns in some are some of the factors that deter investor from investing in these companies, they say. Earlier, ONGC used to be a part of this club, but has lost out given how the crude oil prices are behaving. The other companies have overtaken given the businesses they are in. The rally in PSU banks has been good, but they are saddled with their own problems of non-performing assets. Having said that, I expect the PSU banks to outperform but it will take time as they need to address their asset quality concerns, says A K Prabhakar, head of research at IDBI Capital. As regards ONGC, I have doubts as they have invested heavily at a very high price in many assets. As a result, a spectacular growth in the near term is ruled out. Liquidity is another issue. Given that they are government-controlled enterprises, a major chunk of holding is with the State. That apart, there is excessive government control over the functioning in some, which is a deterrent for a number of investors, he adds. Traditionally, most of the PSUs have been cashrich, which has added to their value. Off late, the government has been tapping into their cash resources to boost revenue for the exchequer. Experts believe the high amount of cash PSUs gave investors through dividends and buybacks could hold back capex growth of these companies going ahead. The need to cut deficits and a lack of revenue buoyancy have pushed the government to rely more on disinvestments of / dividends from PSUs, which have increased from 4.3% of the government's net revenues in FY13 to 8.3% in FY17, reports suggest. Nearly 30% of non-bank listed PSUs have meaningfully increased pay-outs in FY17; several have already paid out large portions of their cash balances. Yet, the government hopes to make 8.8% of FY18 net revenue from its PSU holdings (up 14% y- o-y)," says Sanjay Mookim, India equity strategist at Bank of America Merrill Lynch in a recent co-authored report with Anand Kumar. This is a tough bill to fill, but it may become ever more critical if the GST (goods and services tax) impacts core tax collections near term. The govt. may be forced to consider more radical means of extracting cash from its companies. Government creativity might produce some short-term beneficiaries (if any) but in general it would be bad for PSU balance sheet and P&L (profit & loss account). Top down, this would be a basket best avoided over the next 12 months, they add. *surce: Business Standard

3 ITE 35* Shariah Top & Titan Company 40% Divis Lab Ltd -20% Grasim Industries 24% Dr. Reddy Lab -14% Ultratech Cement 23% Tech Mahindra -6% Asian Paint Ltd 20% ONGC Ltd -4% #% = 3 months Return ITE 211** Shariah Top & Future Retail Ltd 99% Kusha Tradelink Ltd -35% Future Lifestyle Ltd 90% Divis Lab Ltd -20% Escort Ltd 81% Dr. Reddy Lab Ltd -14% Spicejet Ltd 77% Crisil Ltd -14% Delta Corp Ltd 64% Mindtree Ltd -13% Gujarat Flucoche 61% Dr. Lalpathlab Ltd -12% Just Dial Ltd 60% Shilpa Medicare Ltd -12% Century Plywood Ltd 53% Bayer Cropscience -10% Gujarat Gas Ltd 53% Healthcare Global -8% Aegis Logistic Ltd 52% Narayana Hrud Ltd -8% # % = 3 months Return Sectors Indices BSE Top & AMTEKAUTO 18.37% ADANIENT -4.59% FEDERALBNK 13.58% IBREALEST -4.31% DENABANK 9.68% PRESTIGE -4.30% IFCI 8.90% DELTACORP -4.09%

4 Markets settle lower on profit-booking, but gains most in six weeks The benchmark indices on Friday settled lower as investors booked profits in index heavyweights such as ITC and HDFC ahead of a long weekend, but posted their biggest weekly gain in six weeks. The S&P BSE Sensex ended at 29,918 down 111 points, while the broader Nifty50 closed at 9,304, down 38 points. In the broder market, the S&P BSE Midcap and S&P BSE Smallcap indices outperformed to gain 0.2% and 0.6%, respectively. The market breadth, indicating the overall health of the market, turned negative from positive. On BSE, 1,479 shares fell and 1,386 shares rose. A total of 136 shares were unchanged. "With Trump optimism waning, domestic markets took little inspiration from global equities whose gains were limited ahead of FOMC rate decision next week. While earnings shocks kept Pharma and Realty under check, FMCG stocks were seen struggling probably after FM s announcement on GST stoked concerns over higher commodity tariffs, said Anand James, Chief Market Strategist, Geojit Financial Services. Nifty Realty index (down 1.7%) was the leading sectoral loser, led by losses in Prestige (down 4%) and Delta Corp (down 4%) and Indiabulls Real Estate (down 3%). The Nifty Bank pared entire intraday losses to settle 0.1% higher. Public sector banks (PSBs), Andhra Bank, Canara Bank, Indian Bank, Oriental Bank of Commerce and Vijaya Bank hit their respective 52-week highs on the NSE with Nifty PSU Bank index gaining 3%. Syndicate Bank, Canara Bank, Union Bank, Allahabad Bank and Andhra Bank gained anywhere between 5% to 9%. Consumer goods and cigarettes maker ITC (down 2%) declined for a second day and was the biggest loser on the Nifty. Shares of Tata Teleservices (Maharashtra) hit the upper circuit limit of 20% after the Delhi High Court approved a $1.2 billion settlement between promoter Tata Sons and NTT DoCoMo. Among the losers, biopharmaceutical company Biocon fell over 3% in intraday trade after the company on Thursday reported a 62% plunge in March-quarter consolidated profit. The stock settled at Rs 1,113, down 0.5%. European markets were trading mixed. The European Stoxx 50 was 0.16% higher, France's CAC 40 was up 0.2%, while Britain's FTSE 100 shed 0.3%. Asian stocks slipped as investors booked profits after a strong week. South Korea's KOSPI index, which opened higher, reversed its gains and fell 0.2%. MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.15%. Hong Kong's Hang Seng index slipped 0.3%, while China's Shanghai Composite ended little changed. *source: Business Standard

5 Stock Universe for April to June 2017 Compliant Status No. of Companies Percentage of Total companies Total Market Capitalization Percentage of Total Market Capitalization Shariah Compliant Stocks ,038, Ratio Based Shariah Non Compliant ,196, Industry Based Non- Compliant ,265, Total Traded Stocks ,500, Markets are directionally efficient, meaning that today s price reflects what is currently known about the future direction of the markets. *ITE-35 Shariah index is a well diversified Index with 35 stocks large size companies developed by Pragmatic Wealth Management research group. The ITE-35 Index commensurate with the Sensex & Nifty. ** ITE -211 Shariah is a broad based index constitutes 211 companies from large, mid and small size companies spread over 9 Shariah permissible sectors. This is parent (macro Index) and it commensurate with BSE- 500 and S&P CNX 500 *** Shariah universe comprises of companies derived (Filtered) from total traded stocks on Bombay Stock Exchange (BSE) as per Shariah norms Caution: Islamic Investments strictly prohibits intraday trading and Derivative trading. Stocks should only be sold upon procuring the delivery. Disclaimer: The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness. The above recommendations and Newsletters are based on the theory of Technical & Fundamental Analysis Combined. Pragmatic Wealth Management Pvt. Ltd.