Research Desk Stock Broking

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1 MARKET ROUNDUP NIFTY ( ): In the week passed by moreover markets remained positive; after slew of volatility markets managed to snap away three week s consecutive downfall, Nifty ended at with gains of 1.21% on weekly closing basis. Broad based buying witnessed in the market, as barring one exception of NIFTYREALTY all the major indices closed in green. The trend in the domestic markets during the week was dictated by policy reforms announced by Government- The CCEA approved a 1% stake sale in Coal India, an IPO at Cochin Shipyard and a five-year interest subsidy scheme to boost sagging exports. And a positive sentiment was aided by the US Federal Reserve s confidence in the American economy. Going ahead, all eyes will now be on the proceedings of the winter parliamentary session slated to begin on 26 November, as government is keen to push GST. Also F&O expiry for the month will remain in focus in the truncated week as markets will remain close on 25 November on account of Guru Nanak Jayanti. Technically Nifty closed marginally above its 9-pd EMA and momentum oscillator 14-period RSI is poised with bullish bias, indicating Nifty on sustaining above 785 levels likely to surge higher over coming sessions. On the upside resistance is pegged near levels, while on the downside supports are placed near 777 levels followed by 77 mark, failing to hold above which selling pressure may aggravate towards levels. Hence in this week we expect Nifty to consolidate in a range of 77 to 8 with mixed to positive bias. REPORT HIGHLIGHTS Street Buzz,Corporate Actions Pg. 2 PICK OF THE WEEK: DABUR Pg. 6 HYBRID STRATEGIES Pg. 7 DID YOU KNOW?? - MASALA BONDS Pg. 8 INDEX STRATEGY SHORT STRANGLE IN NIFTY Sell one lot of Nifty Nov and Sell one lot of Nifty Nov LBEP: 7685 UBEP: 815 Max Profit: Rs. 1,125 Max Loss: Unlimited Beyond BEP s KARVY STOCK BROKING~KEEP GROWING 1

2 STREET BUZZ... Anil Ambani-led Reliance Group has bagged 12 of the 32 Defence manufacturing licences cleared by the Department of Industrial Policy and Promotion (DIPP). Kotak Mahindra General Insurance Company (Kotak General Insurance) on Friday received approval from the Insurance Regulatory and Development Authority of India (Irdai) to commence business as an insurance company. With this, the company has completed all registration formalities required by the regulator. Glenmark Pharmaceuticals Ltd, Sun Pharmaceutical Industries Ltd and Cipla Ltd are among drugmakers exploring bids for a portfolio of US generic products Teva Phamaceutical Industries Ltd is selling CORPORATE ACTIONS DURING THE WEEK Company Code Ex Date Record Date Purpose TAKE Interim Dividend - Re.3/- Per Share MANAPPURAM Interim Dividend-Re.45/- Per Share NATCOPHARM Face Value Split (Sub-Division) - From Rs 1/- Per Share To Rs 2/- Per Share AVANTIFEED Face Value Split (Sub-Division) - From Rs 1/- Per Share To Rs 2/- Per Share INDIACEM Annual General Meeting ECONOMIC EVENTS DURING THE WEEK Event Date Prior Survey Eight Infrastructure Industries % - Bloomberg Nov. India Economic Survey KARVY STOCK BROKING~KEEP GROWING 2

3 NIFTYFMCG NIFTYCONSUM NIFTYENERGY NIFTYAUTO NIFTYMETAL NIFTY NIFTYFINANCE NIFTYBANK NIFTYPHARMA NIFTYIT Research Desk Stock Broking NIFTY V/S GLOBAL INDICES SECTOR SNAPSHOT 3.% 2.% 1.% 4.5% 4.% 3.5% 3.% 2.5% 2.% 1.5% 1.%.5%.%.% NIFTYFMCG (2449.8) outperformed Nifty in the concluding week gaining 2.78%. Among the top performers in the sector were TATAGLOBAL, JUBLFOOD, BRITANNIA, UBL and COLPAL whereas losers were MCOWELL-N, MARICO and ITC. On the technical front the index is trading above 21 DEMA, 5 DEMA and 1 DEMA respectively indicating an uptrenfd in the stock. 14 day RSI for the index is trading above 9 day signal line. Going forward the index would find immediate support around the levels of and resistance around the levels of NIFTYPHARMA ( ) gained.38% in the concluding week but underperformed Nifty continuing to look weak. DRREDDY, CIPLA, AUROPHARMA, GLAXO, LUPIN and GLAXO were among the top performers. Among the top losers were DIVISLAB, PEL GLENMARK and SUNPHARMA. On the technical front the index is trading below 21 DEMA, 5 DEMA and 1 DEMA. Also 14 days RSI for the stock is trading below its 9 day signal line suggesting continued weakness in the stock. going forward the index could find support around and resistance could be pegged at SECTORAL SNIPPETS NIFTYMEDIA (2355.2) gained.71% in the just ended week and outperfored Nifty. Stocks such as EROSMEDIA, INOXLEISUR PVR, NETWORK18 AND ZEEL led the gains while SUNTV,TVTODAY and TV18BRDCST. On the technical front, there is mixed view with 14-day RSI line is trading below its 9 day signal line. On the Bollonger band the index is trading below the mean level. CNX MEDIA is trading above its 1 DEMA and 5 DEMA but below 21 DEMA.Immediate support for the index could be seen around 2259 and resistance could be pegged around the levels of BANKNIFTY(1755.6) has closed higher than previous week close, gaining.72%. Public sector banks such BANKBARODA, BANKINDIA, INDUSIND, PNB were among the top performers. Private sector banks such as ICICIBANK, HDFCBANK AND AXISBANK dragged the index. The index is below its 21 DEMA and 5 DEMA but taking support at its 1 DEMA. Going forward the index is expected to find its immediate support and on the higher side resistance could be pegged at KARVY STOCK BROKING~KEEP GROWING 3

4 FII ACTIVITY IN DERIVATIVES In the month of Nov FII/FPIs remained on the selling mode. On the Index futures front they have an open position of 3.1 lakh shares, while they sold Index future worth Rs Cr during the week. On the other hand, at the fag end of the week witnessed heavy long accumulation with OI surpassing 1 lakh mark. We expect the positive momentum is likely to continue in the near term Index Fut. OI INDEX FUTURES Index Fut. Net Buy Stock Fut. OI STOCK FUTURES Stock Fut. Net Buy INSTITUTIONAL ACTIVITY IN CASH FII/FPI DII Time Frame FII/FPI DII Month Till Date (Nov) Last Month (Oct) 3, , Year Till Date (1/1/15-2/11/15) For the CY ended , ,32.69 Note: Values in Rs Cr. Source: SEBI/NSE The FII/FPI s continued their selling spree throughout the week and remained net sellers to the tone Rs. 2, Cr. On the flip side, the DII s continued to remain bullish on Indian Equities and bought securities worth Rs. 3,48 Cr during the concluded week. During the month of November the FII s have sold securities worth Rs Cr where as the DII s have bought securities worth Rs Cr. KARVY STOCK BROKING~KEEP GROWING 4

5 x 1 Research Desk Stock Broking OI CHANGES DURING THE WEEK - STOCKS NIFTY OPTIONS OI Stock Top OI Gainers with increase in Price Long Accumulation OI (in lakhs) OI Chg (%) PRICE Chg(%) IBULHSGFIN PETRONET HAVELLS ENGINERSIN ARVIND Stock Top OI Closures with increase in Price Short Closure OI (in lakhs) OI Chg (%) PRICE Chg (%) JINDALSTEL CADILAHC CEATLTD CIPLA HDFC Call Put On the options data front, Nifty is expected to trade in the broad range of 77-8 levels for this expiry as 77 PE is having writing of more than 51 lakh shares while on the higher side 8 CE is highest call writing of 59 lakh shares. The bias of the market is on the bullish side for short term period. Stock Top OI Gainers with decrease in Price Short Accumulation OI (in lakhs) OI Chg (%) PRICE Chg (%) OIL ALBK AJANTPHARM MINDTREE CANBK Stock Top OI Closures with decrease in Price Long Closure OI (in lakhs) OI Chg (%) PRICE Chg (%) DRREDDY PCR OI V/S NIFTY PCR Nifty During the current month, the PCR ratio is continuously trading below the psychological levels of 1 indicating the bias on the negative side. While on the other hand, PCR is trading in the oversold zone around range suggesting some kind of pullback in the Index in the near term. KARVY STOCK BROKING~KEEP GROWING 5

6 PICK OF THE WEEK BUY DABUR CMP: RS ACT ENTRY SL* TGT TIME FRAME BUY months DABUR is leading FMCG company in India and world s largest Ayurvedic and Natural Health Care Company. The company deals in key consumer products categories like Health Care, Home Care, Food etc with huge presence in the overseas markets currently available in over 6 countries. The stock is in uptrend and making higher highs and higher lows on daily charts. The stock has seen profit taking from the life time high of 312 levels which dragged the stock to the low of around 253 levels. Currently the stock has consolidated in the range of levels for around four weeks. The recent price action in the stock has given the consolidation range breakout on weekly charts on last week with supportive volume. The stock has also given the downward sloping trend line breakout around 265 levels drawn from the high of 312 levels on weekly charts. Among the indicators, 14 days RSI has given the positive cross over on weekly charts. The parabolic SAR is still maintaining buy signal on daily charts suggest bullishness in the stock will remain intact in near term. The recent development in the stock suggest bullishness in the counter and the stock is well placed to take it up move for the target of levels keeping stop loss of 245 levels in near term. KARVY STOCK BROKING~KEEP GROWING 6

7 Research Desk Stock Broking HYBRID STRATEGIES COLLAR IN AMBUJACEM AMBUJACEM moved up 1.64% in futures with regards to its previous day s ( ) closing price and the open interest was down by 8.73% i.e 7, 56, shares on Friday indicating short covering has taken place. Technically, the stock has taken support around its long term trend-line on the daily charts and is consolidating, indicating the stock can move northward in coming trading sessions. STRATEGY: Buy one lot AMBUJACEM Nov 2; Buy one lot Nov 2 PE around 2.5 and Sell one lot Nov 25 CE around 1 Max Gain: Rs 735 Max Loss: Rs. 315 BEP: PROTECTIVE PUT IN BANKBARODA BANKBARODA moved up 1.78% in futures with regards to its previous day s ( ) closing price and the open interest was down by 3.62% i.e 15, 59,3 shares on Friday indicating short covering has taken place. Technically, the stock has taken support around its previous breakout levels on the daily charts and has shown smart recovery of around 4% from the lows of the day on Friday from its support levels. STRATEGY: Buy one lot of BANKBARODA Nov 171 and buy one lot of 17 strikes Nov 2 Max Gain unlimited above BEP Max loss Rs 93 BEP: STRATEGY PAYOFF STRATEGY PAYOFF KARVY STOCK BROKING~KEEP GROWING 7

8 Did You Know?? MASALA BONDS MASALA BONDS are Indian rupee denominated bonds issued in offshore capital markets. These will be offered and settled in US dollars to raise Indian rupees from international investors for infrastructure development in India. IFC will convert bond proceeds from dollars into rupees and use the rupees to finance private sector investment in India. While it may seem odd to name a staid debt instrument after food, it has been done in the past. Chinese bonds, named Dim-sum bonds after a popular dish in Hong Kong, have been around for while. So have Japanese bonds named Samurai after the country s warrior class. IFC then named them Masala Bonds to give a local flavor by calling to mind Indian culture and cuisine. This is a 1-year bond with a yield of 6.3% and an AAA benchmark rating. This is not the first rupee denominated offshore issuance to be settled in dollars. IFC had earlier issued offshore rupee bonds with maturities up to 7 years. Though there are other offshore rupee bonds, this issuance will be the first to be listed on a stock exchange. IFC, the private investment arm of the World Bank Group, has announced a new issuance of its Rs 1.7 billion Masala Bonds. SIGNIFICANCE Masala Bonds, if they take off, can be quite a significant plus for the Indian economy. They are issued to foreign investors and settled in US dollars. Hence the currency risk lies with the investor and not the issuer, unlike external commercial borrowings (ECBs), where Indian companies raise money in foreign currency loans. While ECBs help companies take advantage of the lower interest rates in international markets, the cost of hedging the currency risk can be significant. If unhedged, adverse exchange rate movements can come back and bite the borrower. But in the case of Masala Bonds, the cost of borrowing can work out much lower. LSE will provide visibility, and set a benchmark for yields in future issuances. It could also increase demand for similar products later as liquidity of these bonds goes up. This also shows the confidence of international investors in the Indian economy and its currency. CONCLUSION Masala Bonds are a good idea to shield corporate balance sheets from exchange rate risks. But they are best used in moderation. The after-effects of too much masala are not pleasant. Housing Development Finance Corporation (HDFC) might be the first Indian company to issue offshore rupee-denominated bonds or Masala Bonds. Barclays, HSBC, JP Morgan, Citi and Credit Suisse are the bankers to the HDFC deal. Indian Railway Finance Corporation (IRFC) has already floated an RFP for appointing bankers for its Masala Bonds, while India Infrastructure Finance Company is looking for lead managers for its rupee-denominated bond issuance, according to a statement on the company s website. International Finance Corporation, a member of the World Bank Group, recently issued R17 crore worth of rupee-denominated bonds at a yield of 6.5% as part of its strategic support to Indian companies which are preparing to issue rupee-denominated bonds in offshore markets. KARVY STOCK BROKING~KEEP GROWING 8

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