Nifty 10,081 /Sensex 32,476/ Bank Nifty 25022
13 Advances / 38 Declines/ 0 Unchanged
RBI’s rate cut decision fails to cheer Dalal Street
Indian equity benchmarks retreated from record highs and ended the session with a cut of around one third of a percent on Wednesday, as Reserve Bank of India’s (RBI’s) decision to lower the policy rate by 25 bps to 6% failed to boost sentiment. This was the first rate cut since October 2016 and the interest rate is now at a 6-year low. No change in cash reserve ratio (CRR) too dampened sentiments. Though, markets started the session on positive note, as traders took some encouragement with Minister of State for Finance Santosh Kumar Gangwar’s statement that the government has collected over Rs 1.80 lakh crore in direct tax till July 15 in the current fiscal, an increase of 21.4% year-on-year, and ‘belying’ fears of slowdown in economic activities. The current growth rate is higher than the target rate of 15.32% required to achieve the Budget Estimate. Meanwhile, Finance Minister Arun Jaitley has said that the GST Council, at its next meeting later this week, will finalize a mechanism to operationalize anti-profiteering clause which seeks to protect consumers’ interest. GST Council comprising state finance minister will meet on August 5 to take stock of implementation of GST which was rolled from July 1.
However, markets turned red and extended fall despite the announcement of a 25 basis points cut in the repo rate by RBI, as the markets appear to have already factored in a quarter percentage point rate cut. Traders also remained concerned after finance minister Arun Jaitley cautioned that the fiscal deficit of states may rise this year, with states likely to tap the markets to raise funds to finance farm debt waivers. Some cautiousness also came with the Central Electricity Authority’s (CEA) statement that about 7% of India's coal-fired power plants may never be able to comply with new environmental norms because they lack the space to install emission-cutting equipment, potentially leading to their shutdown.
Weak opening in European counters too dampened sentiments, as investors focused on a fresh batch of corporate earnings and began to prepare for the Bank of England’s policy statement on Thursday. UK construction sector activity dropped more than expected in July, hitting an 11-month low. However, Asian markets ended mostly in green led by half a percent gain in Japanese Nikkei.
Back home, Indian rupee that has been seen among the top performing world currencies surged to 63.73, a two-year high, against the US dollar at the time of equity markets closing. Meanwhile, RBI in its third bi-monthly policy review for FY18 enlightened that external demand conditions are gradually improving and should support the domestic economy, although global political risks remain significant. Keeping in view these factors, the projection of real GVA growth for 2017-18 has been retained at the June 2017 projection of 7.3%.
FII’s Activity 2-Aug-17
The FIIs as per Wednesday’s data were net sellers in equity segment, while they were net buyers in debt segment, according to data released by the NSDL.
In equity segment, the gross buying was of Rs 4579.68 crore against gross selling of Rs 5499.50 crore. Thus, FIIs stood as net sellers of Rs 919.82 crore in equities.
In the debt segment, the gross purchase was of Rs 3249.80 crore with gross sales of Rs 2005.58 crore. Thus, FIIs stood as net buyers of Rs 1244.22 crore in debt.
Now what to expect next??
Nifty Levels
Support at 10030---9950 and resistance at 10200
Above 10120 will see rally till 10145---10200 mark else it could test its support level of 10030---9950 again.
Trade with levels only
Bank Nifty Levels
Support at 25000 and resistance at 25300
Close above 25145 will take to 25240---25300 mark.
Support and stop loss below 25000 on closing basis
Trade with levels only
Daily Derivative Outlook 3rd August
• Nifty (Aug) futures closed at a Premium of 19.60 points versus a premium of 23.80 points.
• Maximum call writing was seen at 10350 strike, and maximum put buying was seen at 9900 strike.
• Maximum positions are at 10500 CE and 10000 PE. Nifty expected trading range spread to 10500—10000.
• CUMMINSIND (47%), CEATLTD (40%), INFIBEAM (40%), GODREJCP (37%) and TITAN (17%) were the top open interest gainers in the market.
• TECHM (-9%), CHOLAFIN (-8%), ESCORTS (-8%), JPASSOCIAT (-7%) and HEROMOTOCO (-6%) were the top open interest losers in the market.
• The Nifty Put Call Ratio (PCR) finally stood at 1.12.
• Advance Decline ratio in f&O segment was at 0.77, Advance (71) + Decline (145)+ Unchanged (3) = 219
Derivative Idea (03-08-2017)
INFIBEAM gain around 40% of open interest as short build up on Wednesday’s trade.
On Daily charts, INFIBEAM has formed bearish engulfing candlestick pattern and stock trading in oversold zone while RSI too showing negative divergence in it which indicates weakness in stock.
Below 1380 panic remain continue till 1340—1310 mark in day to come.
Resistance and stop loss above 1425
Current chart pattern and derivatives data suggest that we expect further panic in coming sessions.
Trading Recommendation
Sell INFIBEAM (AUG) Future Below 1380 Stop loss 1425 Target 1340--1310
Corporate Action
Kajaria Ceramics Limited- Annual General Meeting/Dividend - Rs 3 Per Share
HCL Technologies Limited-Interim Dividend - Rs 2/- Per Share
Results Today
Colgate Palmolive (India) Limited
Ujjivan Financial Services Limited
Titan Company Limited
The Ramco Cements Limited
Hindustan Construction Company Limited
Indian Oil Corporation Limited
CEAT Limited
Cummins India Limited
More Will Update Soon!!
