the newsletter Market Remain choppy led by the global sell-off MARCH 2016 From the desk of Business Head

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1 the newsletter MARCH 2016 From the desk of Business Head Market Remain choppy led by the global selloff Indian market continues to face challenges in February from both global as well as domestic front as NIFTY decline 7.6% month on month (mom). On global front, the selloff in the Chinese market and continued weakness in commodity prices has severely dented the sentiment in our market. US Federal Reserve hinted at further rate hikes this year, which also disheartened the market player. Strengthening of US currency against Indian Currency has also negatively impacted as currency adjusted return of FII investors is debt and equity segments dipped further. On domestic front, slow progress in implementing reforms, rising NPA in banking sector and slowdown in rural India is negatively impacting the market sentiment. Midcaps and small cap segments also witnessed higher selling during the month. Real estate (15.1% mom decline in NIFTY Realty Index) and public sector banks (11.1% mon declined in NIFTY PSU Bank Index) remained worst performing sector. On the other hand FMCG (4.2% mom decline in NIFTY FMCG Index) and Pharma (5% mom decline in NIFTY Pharma Index) sector continue to outperform the benchmark index. With FIIs continuing with their negative stance towards the emerging markets pack in February and consequently India too witnessed FIIs selling equity worth Rs242 bn in current year, which was reflected in the behavior of the Nifty. Higher riskoff in global market and weakening INR has resulted into continued selling from FII. On the other hand DII remain buyer in the equity market to the tune of Rs211 bn in current year, led by the healthy retail inflow. Continuous decline in market average daily turnover clearly indicates that overall churning has come down in last few months. The big event in February was The Union Budget Budget has rightly focused on key areas of 1) meeting the fiscal consolidation path as envisaged under FRBM Act (FY17E fiscal deficit at 3.5%); 2) supporting infrastructure growth through higher public capex and, 3) buoyant net tax revenue, despite the impact of the Seventh Pay Commission and OROP scheme. We believe Union budget is a balancingact between managing the fiscal discipline and stimulating economy by adequately providing for social infrastructure programmes, agri & rural infra push and increased public spending in core sectors. Budget has enhanced expenditures in priority areas of farm and rural sector, social and infrastructure sector, while continuing with the ongoing reform initiatives such as Goods and Service Tax bill and Bankruptcy code. Post this budget, hope of rate cut by RBI has increased as Government has delivered on fiscal consolidation roadmap and surprised markets with a lower than expected net borrowing target of Rs 4.2Tn. We expect, FY17E GDP to grow at more than 7% led by the expected pickup in agriculture, service and industrial sector. Various government initiatives to stimulate consumption and investment will help the economy to grow at relatively better pace compared to other emerging market peers. Based on the likely trajectory of earnings growth over the next 3 years, we see market is trading at attractive valuations. We believe that market will revive along with upgrades in earnings and will easily surpass 2014 highs over next 2 to 3 years. We believe fiscal rectitude has provided sufficient space for monetary policy easing by RBI as Govt has reinstated to fiscal prudence. Hence, sharp correction in market offers good opportunities for long term investors. Valuation of several bluechip stocks is at attractive level. While it is impossible to catch the bottom, we believe current slide in market provide a good opportunity to add quality stocks from large cap universe that are available at lower levels based on historical valuations. We see good opportunities in IT, Infrastructure and Private Banks. RSL/149/

2 Research Desk Market Technical View: NIFTY50 (7,532) The month of February 2016, remained extremely painful for the domestic bourses, as NIFTY50 lost close to 7.6%, its highest monthly loss registered since November The selling was observed across the board with majority of sectoral indices ending the session deep in red. The top loser being the Realty index that ended with heavy loss of about 15% closely followed by PSE and Media each losing more than 12% each respectively. The sectoral index which withstood the selling pressure was the Metal Index that lost just 1.5%. Selling in broader market indices too outpaced that in the benchmarks, with Midcap losing 12% while the Smallcap lost 13.3%. Just to look back, NIFTY50 has lost close to 26% from the peak of 9191 to recent low of 6,834. This, correction has also helped most of the technical oscillators to move out of the overbought zone post giving negative crossover in the overbought area. Also, NIFTY50 during the month has moved below its 50 month exponential moving average placed around level of 7,010 mark before reversing sharply. At the same time, index continues to face strong resistance around its 20 month exponential moving average that is placed around level of 7,740 mark. As for the month of March 2016, NIFTY50 has already witnessed sharp recovery however we believe the index will continue to strong resistance in 7,600 to 7,700 mark. On the downside, two crucial supports level to watch out for will be 7,240 and 7,000 mark.

3 Research Desk Technical picks for the month Technical Picks for the month BUY Godrej Industries Ltd. (CMP: Rs326) Godrej Industries once again reversed after visiting its longterm moving average (200weeks SMA) and lower band of the rising channel and later it rose to almost onemonth closing high. We believe, history will be repeated in the stock and gradually it will climb higher, as key technical indicators, Stochastic (5,3) and RSI (14,9) are heading northward after giving positive crossover around their oversold zone. In case of any adverse action, the stock will find support around its March month s low. However, on the higher side, Godrej Industries will first face resistance around the intermediate falling trend line and later at the upper band of the rising channel. Thus, fresh long position can be initiated at the present level and on dips for probable up move towards Rs with a closing based stop loss of Rs290. BUY Pidilite Ind (Rs600) Stock after correcting from high of Rs648 has recently took support around its 50 day exponential moving average of Rs575 before bouncing back. Stock continues to have very strong support in the range of Rs that continues to coincide with its short term averages as depicted in the chart. RSI above 50 mark is also indicative of strength in the stock. Given the above setup, we believe, stock has potential to once again move back to level of Rs640/650 provided it continues to hold level of Rs575 on downside. Thus, we recommend BUY on the stock at current level and on dips with closing based stop loss of Rs578 and target of Rs640. Note: Strict stop loss is strongly advised.

4 Research Desk Reliance Securities Model Portfolio Performance Sector Automobiles Company 3.0 HDFC , HDFC Bank Yes Bank 688 LIC Housing SBI IndusInd Bank Sanitaryware/Packaging RSec Weightage (%) Tata Motors Capital Goods Reliance Securities Model Portfolio Performance Sensex Weightage (%)* 2,500 2,200 Swaraj Engines Banking & Finance CMP* Hero MotoCorp Bajaj Auto Larsen & Toubro HSIL , FMCG ITC Bajaj Corp 381 Colgate 822 Plastics Sintex 65 Oil & Gas Reliance Inds. ONGC Pharmaceuticals IPCA Dr. Reddy Glenmark Pharma IT Services , Infosys Tech. 1, TCS 2, Accelya Kale How to Invest online Step 1: Step 2: Select Rofferings > Model Portfolio To know more visit: Since inception in October 2011, the Reliance Securities Model Portfolio has outperformed its benchmark (Sensex) by ~36%! While the Sensex has declined by 13.7%, in Oct 15Feb 16 v/s 11.7% decline in RModel Portfolio during the same period, thus outperforming benchmark index by 2%.

5 Research Desk Fundamental / Technical Calls Performance

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7 Currency Research Desk Indian rupee esteemed peak of elevated Indian rupee strengthens sharply to headed positive note on first week of the march and edged up around further 1.91% in the month against the month of February While on yearly bases Rupee depreciated by 4.41% as its set closed at as compared to previous year close of per Dollar. However, the unit appreciated sharply during the first week of the March month Global economic cues and Wholesale price Index, Indian Interest rate decision & budgetary announcement. During the month of February 2016 major economical decision of Indian interest rate decision has been taken starting from the first week. While India's annual consumer price inflation edged up to a 17month high of 5.69 percent in January, driven up by higher food costs. Meanwhile, separate data showed India's industrial output contracted an annual 1.3 percent in December. The elevated inflation in key food items despite the decline in global food prices over the last two years suggests structural mismatches and poor policy choices in India. All leading indicators had suggested that IIP will remain in contracting zone, because it had witnessed sluggish growth in core industrial output, the impact of Chennai flood on manufacturing output, weak global demand impacting our exports and fall in vehicle sales across categories. Federal Reserve officials held off of a rate hike may thought downside risks had increased, according to minutes of the meeting released during the second week of the month. Officials decided it would be "prudent" to wait, even though many thought that the weaker growth outlook for China that emerged in August and the subsequent drop in stock prices around the world would "likely" have a small effect on the economy. Some voting members of the Fed policy committee said that these global developments did not increase their confidence that inflation would return to the central bank's 2% target. Fed officials were split, with some worried that hiking rates would push inflation lower and others saying that delaying a hike for much longer would risk an undesirable build up of inflation.

8 Currency Research Desk Technical Outlook The USDINR ended lower at during the first week of March month 2016 down by 1.90% as against closing of during the previous month. The pair may find major trend reversal support near to levels on closing bases, as indicated by the upward green arrow levels at supportive trend line. While from the current level of 67.59, support is seen at the levels of followed by which were arrived from simple moving average of 14 and 21 days in weekly chart which indicated subdued to upside in the above chart. INR is likely to remain range bound till the unit trades in between the levels of to These levels are edged upward trend lines channel. In the near term, resistance may be seen at INR 68.1 which is 50% of recent previous week of retracement levels. As per weekly chart, USDINR is slightly on downward direction as indicated by Moving average of conversion and divergence MACD and stochastic that indicates to move towards the level of to and per dollar with an expected trading range of and to 66.5 and per Dollar. While, any close above the level of 68.0 per Dollar may drag the unit to and further extending to levels. While according to technical indicators, moving average, USDINR is likely to witness sideways to up movement above the level of While on the higher side of 67.2 and 67.9 to levels on short term bases while would quite long term bases, the unit may bring in a selling opportunity in the momentum bases. Overall near term scenario looks subdued between to levels per dollar. It is therefore advisable to adopt sell in rise strategy around the level of to for the target of followed by 66.0 and bounce back may be witnessed from these levels to levels. For more information: , SMS <RSEC CD> to currency@rsec.co.in

9 RGURUKOOL Relative Strength Index (RSI) for Trading One of the most popular technical analysis indicators, the Relative Strength Index (RSI) is an oscillator that measures current price strength in relation to previous prices. The RSI is a versatile tool, it can be used to: An alternative way An alternative way that the Relative Strength Index (RSI) gives buy and sell signals is given below: Buy when price and the Relative Strength Index are both rising and the RSI crosses above the 50 Line. Generate buy and sell signals Show overbought and oversold conditions Sell when the price and the RSI are both falling and the RSI crosses below the 50 Line. Confirm price movement Warn of potential price reversals through divergences The chart below of ebay (EBAY) shows how the RSI can generate easy to follow buy and sell signals: RSI Buy Signal Buy when the RSI crosses above the oversold line (30). An example of this methodology for buying and selling based on 50 Line crosses is given below in the chart of WalMart (WMT): RSI is not used as a primary tool for making Buying and Selling, but ofcourse it is a very important tool used by the Technical Strategists. More tools will be covered in the upcoming months. Where do I get it: RSI Sell Signal Sell when the RSI crosses below the overbought line (70). Log in to RSEC > Marketwatch > Advance tools >Charts > Indicators > Relative Strength Index (RSI) Varying the time period of the Relative Strength Index can increase or decrease the number of buy and sell signals. In the chart below of Gold, two RSI time periods are shown, 14day (default) and 5day. Notice how decreasing the time period made the RSI more volatile, increasing the number of buy and sell signals substantially. Hope this article has been useful for further knowledge on the subject visit us at For more information: , Visit us at : SMS <RSEC RGURU> to Register for our trainings at:

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