CONTENT. November Fundamentals I Technical I Derivatives

Transcription

1 Fundamentals I Technical I Derivatives vember 2017 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 Ajay Pasari, CFA Ajit Mishra Archana Gude Manoj M Vayalar Mehernosh Panthaki Suhanee Shome hitesh.agrawal@religare.com ajay.pasari@religare.com ajit.mishra@religare.com archana.gude@religare.com manoj.vayalar@religare.com mehernosh.panthaki@religare.com suhanee.shome@religare.com Dear Investor, After two months of consolidation, which also invited some profit-booking at the then life-time highs, the Indian stockmarket registered robust gains in October 2017 aided by domestic news flow and positive global markets, which too hit lifetime highs. The bold step by the Indian government to recapitalize public sectors banks and announcement of major infrastructure projects helped the Indian stockmarket come out of a slumber and convincingly break into new highs. Also, sustained hopes of recovery in corporate earnings, inflation cool-off, and reducing lingering effects of demonetisation along with stability in global geo-political issues helped fuel market rally. Nifty ended October month at a record high of 10,335, up 5.6% on month-on-month (m-o-m) basis. All the major sectoral indices ended in the green with PSU Banks, Oil& Gas, Realty, Metal, Capital goods and Power being the top gainers, up 6-13%. The BSE Mid-cap and BSE Small-cap indices outperformed with 7.5% and 9.2% gains respectively. On the institutional action front, after selling to the tune of Rs 25,000cr in the previous two months, FIIs turned net buyers of ~Rs 1,900cr encouraged by the government s efforts at reviving the economic vigour, while domestic Mutual Funds continued their flow into Indian equities by pumping in an additional ~Rs 9,000cr. On the economy front, the retail inflation for September 2017 came in flat m-o-m at 3.3% but lower than the 4.3% recorded in September The mild easing in food prices was offset by rise in housing and fuel inflation. Industrial output strengthened in August 2017 to record a robust 4.3% growth as re-stocking of manufactured items gained momentum shrugging of the teething troubles posed by the GST implementation from July 1. A higher-than-expected demand on account of the festive season also bolstered factory output for the month. On an encouraging note, the sequential improvement in industrial growth in August 2017 was broad-based, led by mining, manufacturing and electricity. On global macro front, no further escalation of tensions between rth Korea and United Stated went down well with market participants globally. Most of the markets made new highs on increasing optimism towards global recovery. However, an important event to watch out for is the fact that few major central banks are expected to taper their bond buying program and increase interest rates in the coming months, which could reduce liquidity in the global economy to a certain extent. Going forward, in the near term, Indian stockmarket focus on the on-going quarterly result season would continue with high stock-specific action. As far as the medium-to-long-term is concerned, after seeing some slowdown post demonetization and the country s transition to the new tax system (GST), the domestic economy is expected to gather some steam, also aided by the concentrated efforts of the government. The only challenge from the near-term perspective is the fact that valuations seem to have run a bit ahead of their true worth and thus we do not rule out heightened volatility in the months ahead for the market. However, at the same time, every dip should be taken as an opportunity to enter the market with an investment horizon. Hitesh Agrawal EVP & Head Retail Research Religare Securities Limited 2

3 FUNDAMENTAL MONTHLY WRAP-UP Indian Indices BSE Sectoral Indices % Change Close 1 Month 1 Year BSE Metal 14, BSE Cons Durable 18, BSE Cap Goods 18, BSE FMCG Sector 10, BSE Healthcare 14, BSE IT Sector 10, BSE PSU 9, BSE Teck 5, BSE Auto 25, BANKEX 28, BSE Oil&Gas 16, BSE Power 2, BSE Realty Index 2, Close price as on October 31, 2017 FIIs Investments In Indian Equities Net Investment (` Crore) % Change Close 1 Month 1 Year SENSEX 33, CNX NIFTY 10, BSE MIDCAP 16, BSE SMLCAP 17, NIFTY BANK 25, Month Jan ,919 (11,129) (1,000) Feb 1,404 11,476 (7,988) 10,485 Mar 20,077 12,078 23,621 33,780 Apr 9,602 11,721 3,655 (2,200) May 14,006 (1,895) 2,579 10,850 Jun 13,991 (5,480) 5,175 4,000 Nifty PE Movement Market Overview After two months of consolidation, which also invited some profit-booking at the then life-time highs, the Indian stockmarket registered robust gains in October 2017 aided by domestic news flow and positive global markets, which too hit lifetime highs. The bold step by the Indian government to recapitalize public sectors banks and announcement of major infrastructure projects helped the Indian stockmarket come out of a slumber and convincingly break into new highs. Also, sustained hopes of recovery in corporate earnings, inflation cool-off, and reducing lingering effects of demonetisation along with stability in global geo-political issues helped fuel market rally. Nifty ended October month at a record high of 10,335, up 5.6% on month-on-month (m-o-m) basis. All the major sectoral indices ended in the green with PSU Banks, Oil& Gas, Realty, Metal, Capital goods and Power being the top gainers, up 6-13%. Market Outlook Going forward, in the near term, Indian stockmarket focus on the on-going quarterly result season would continue with high stock-specific action. As far as the medium-tolong-term is concerned, after seeing some slowdown post demonetization and the country s transition to the new tax system (GST), the domestic economy is expected to gather some steam, also aided by the concentrated efforts of the government. The only challenge from the near-term perspective is the fact that valuations seem to have run a bit ahead of their true worth and thus we do not rule out heightened volatility in the months ahead for the market. However, at the same time, every dip should be taken as an opportunity to enter the market with an investment horizon. Net Investment (` Crore) Month July 13,124 2,593 11,130 1,882 Aug 5,430 (17,249) 9,800 (13,613) Sept 5,103 (5,696) 9,330 (10800) Oct (1,172) 4,204 (3,500) 1920 v 13,753 (7,629) (17,400) Dec (11,325) 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 13 stocks based on their financial performance. Investors interested in dividend income may consider the stocks in this list. Company Name Industry Financial Year End Mcap (Rs cr.) Equity (Rs cr.) Price October 31, 2017 Face Value Book Value EPS P/E (x) Div. / Share [FY17] Div. / Share [FY16] Div. / Share [FY15] Div. Yield (%) Hind.Zinc Mineral , NHPC Ltd Power ,290 10, Rural Elec.Corp. Power ,206 1, Coal India Mineral ,811 6, Oil India Oil&Gas , Power Fin.Corpn. Power ,763 2, Greaves Cotton Capital , Natl. Aluminium Mineral , Akzo bel Paint , , NMDC Mineral , MphasiS IT , Indiabulls Hous. NBFC , , Sonata Software IT , Source - Capitaline 4

5 TECHNICAL MONTHLY OUTLOOK The Month That Was:- Nifty gained points in the month of October, Outlook for Nifty 50 ( ) Support 10400/10260/10100 Resistance /10850/ Below is a summary of Top Nifty Gainers & Losers: Top Nifty Gainers October 2017 Scrip Name Close Price* (`) % Change BHARTIARTL BANKBARODA RELIANCE SBIN BPCL Top Nifty Losers for October 2017 Scrip Name Close Price* (`) % Change YESBANK INDUSINDBK HCLTECH HDFC HDFCBANK *Closing of last trading day of the month Breadth of Nifty stocks was positive 47 stocks closed in green while 4 stocks closed in red in the month of October, Relative comparison shows PSU, Oil and Gas and Reality index were the outperformers whereas IT, Bankex and FMCG Index were the underperformers in October, Sector Relative Performance Nifty, after consolidating for two months, witnessed strong surge in the passing month and made a new record high. The bias was positive from the beginning which maintained till the end. It recovered swiftly from the support zone around 9700 and ended around the month s high at ; up by 5.58%. Almost all the sectoral indices participated in the move; even laggards like PSU banks and select counters from pharma and IT pack witnessed significant recovery. Nifty has been maintaining this uptrend for last ten months and still there s no sign of slowing down. The recent breakout in the banking pack has further strengthened our belief and we expect this up trend to continue with intermediate corrective phase. Traders should focus on stock selection and use any pause or correction to accumulate them on dips. * 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 vember 3,

6 TECHNICAL Outlook for Bank Nifty ( ) Support 25400/25100/24800 Resistance 26000/26500/27100 BankNifty too witnessed noticeable buying interest in the passing month but failed to make a new record high, indicating slight underperformance. Profit taking in the select private banking majors post result capped the upside. After prolong underperformance, PSU banks counters witnessed exceptional single day surge, in reaction to the recapitalization plan. However, follow-up buying was limited only to the handful stocks from that pack. Despite noticeable surge in the PSU banks, we suggest participants to prefer private banks for trading and investment as they re competitively less volatile and have been holding uptrend since long. Any dip or consolidation in HDFC bank, Indusind bank, Kotak bank and Yes bank should be considered as buying opportunity for medium to long term investment. Stock Recommendations For vember APOLLOTYRE CMP ` * Stop Loss ` 228 Target ` 260 Buy Range ` COLPAL CMP ` 1, * Stop Loss ` 1,000 Target ` 1,120 Buy Range ` 1,030-1,040 After a strong up move from , APOLLOTYRE has witnessed a decent correction in last three months or so and retraced closer to the major support zone. In FMCG space, COLPAL is one of the consistent performer as it has been maintaining uptrend since Currently, it s consolidating around that support area of long term moving averages on daily chart and forming a fresh buying pivot. After hitting record high in Sep 2017, it has witnessed a marginal correction and retraced to the support area of long- term moving average (200 EMA) on daily chart. Considering its chart pattern, we expect a strong rebound in near term. Thus, traders can utilize this corrective phase to accumulate fresh in the given range of with the closing stop loss of 230 for the target of 250. Technically, its chart structure combined with the positioning of the confirmation indicators are all indicating towards a strong surge ahead. We advise traders to use this phase to accumulate fresh longs in the given range. *Close price as on vember 3,

7 DERIVATIVES DERIVATIVES MONTHLY ROLLOVER REPORT October Expiry Derivatives Summary Nifty Index closed at around after Volume weighted average price (VWAP) based buying activity was witnessed in the last hour of trade. The Nifty futures long roll cost (difference between current and next month futures) was at around 34bps vs 38 bps. Nifty futures vember contract started with around 2.23 Cr vs 1.96 Cr open interest. BankNifty futures have seen an open interest at around 16.9 lkh vs 11.3 lkh last series. At expiry, VIX was at around 11% levels implying a 330 odd points swing in the Nifty in next 30 days. The highest Nifty options open interest is at 1000 PE and CE. Nifty put open interest stands at around 44 lkh and call open interest at around 29 lkh. Sector Rollover (%) Rollover % vember Series Outlook Rollover Synopsis In October series, Realty@90%, Fertilizers@89% and are the sectors where highest rollover was witnessed, whereas Oil&Gas@78%, Banking@82% and are the sectors where lower rollovers were witnessed. Indiabull Real Estate and JSW Energy are the leaders in rollover where as Powergrid and BataIndia futures witnessed the lowest rollovers in October series. Nifty futures has rolled around 73% vs 70% with respect to last month, and the open interest for the new vember contract is higher by around 27 lkh implying fresh long build up at around levels. BankNifty futures rolled at around 69% vs 65% compared to last month. Even the open interest of BankNifty in this series is more by around 5.5 lkh, due to the fresh long buildup seen in the last two days of October expiry. The range for Nifty might be and FIIs have sold around Rs 6300 Cr in the cash market (expiry to expiry) in October. With Nifty futures starting vember series with higher open interest as of expiry due to fresh long positions and VIX being in 10.5%-14% levels we expect Nifty stocks to witness some accumulation taking the index towards the levels till the first fortnight of vember. The vember weighted average price for Nifty and BankNifty futures are at and respectively. These might act as the pivot for indices for the month of vember. Vix is currently at 11.5% and is likely to be in 10.5% to 14% for the major part of vember. We advocate doing Nifty Bull Call spread through options. Buy Nifty 30 v and sell Nifty 30 v , stop loss at 30, target 140. Sector-wise FMCG, Power and Media stocks might outperform, however Banking and Finance as a sector might be stable in vember series. Since we expect the vember series to be in a range of , buying Nifty put option towards the upper side of this range to hedge all stock futures positions is recommended. 7

8 Open Interest (in lakhs.) DERIVATIVES NIFTY vember Series Option Data Nifty Open Interest Call Put TOP 5 PRICE GAINERS Expiry-to-Expiry TOP 5 PRICE LOSERS Expiry-to-Expiry STOCK NAME % Change PNB UNIONBANK SAIL BANKINDIA CANBK STOCK NAME % Change RCOM IBREALEST STAR YESBANK BAJFINANCE TOP 5 STRONG ROLLOVERS STOCK NAME % Rollover IBREALEST 96 JSWENERGY 96 CASTROLIND 95 FORTIS 95 ADANIPOWER 94 TOP 5 WEAK ROLLOVERS STOCK NAME % Rollover POWERGRID 61 BATAINDIA 65 BPCL 65 COALINDIA 67 GAIL 67 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

10 10