Monday, February 5, 2018

Update on Nifty levels, Bank Nifty levels, Derivative Outlook and Equity Pick of the day 5th Feb 2018

 Update on Nifty levels, Bank Nifty levels, Derivative Outlook and Equity Pick of the day 5th Feb 2018

Nifty 10760 /Sensex 35906/ Bank Nifty 27220

5 Advances /45 Declines/ 0 Unchanged

Markets witness complete bloodbath on Budget woes

Friday turned out to be an awful day of trade for Indian equity benchmarks, with frontline gauges tumbling below their crucial 10,800 (Nifty) and 35,100 (Sensex) levels, as traders took beating on the back of several announcements made yesterday in his speech by Finance Minister Arun Jaitley during Union Budget 2018. After making a gap-down opening, markets never looked confidant and extended their southward journey to end at day’s lows. The Finance Minister’s proposal to levy long-term capital gains tax (LTCG) on equities investments mainly dampened sentiment. This move may reduce incentive for investors to hold equities for longer term as the difference between tax on short and long term capital gains is only 5%. Besides, the imposition of a fresh tax on income from Mutual Funds could also have spooked investors. Sentiments also remained dampened on report that India’s fiscal deficit, for nine months of Financial Year 2018, stands at Rs 6,20,949 crore, overshooting the budgeted estimate (BE) target by 113.6%.The government has estimated Rs 5,46,532 crore of fiscal deficit for FY18 which during the same period of the last year stood negative at 93.9%.

Markets extended southward journey after Fitch Ratings said that high debt burden of the government constrains India’s rating upgrade, a day after Finance Minister Arun Jaitley projecting a fiscal deficit of 3.5% of GDP against the earlier target of 3.2%. The report enlightened that weak public finances constrain India’s sovereign ratings, given a high general government debt burden of around 68% of GDP and a wide fiscal balance of 6.5% of GDP if states are included. Traders failed to draw any solace with Finance Minister Arun Jaitley’s statement that India’s $2.5 trillion economy is now firmly on course to register a strong growth rate of over 8% and indicated that the country has grown on an average of 7.5% in the first three years of the Modi government.

Weak opening in European markets too dampened sentiments as a slump in Deutsche Bank after a bigger-than-expected loss hit the heavyweight banking sector. Some investors also see signs of a potential market correction as yields continue to go up. Asian markets exhibited mixed trend on Friday, as rising bond yields and mixed earnings from top US companies.

Back home, this year's budget focused more on rural and agri economy and the government is committed to the welfare of the fares. Mid-and small-cap indices lost ground on Friday, as investors booked profit in stocks of these two segments. In scrip specific development, Bajaj Auto declined on reporting lower than expected net profit for the December quarter at Rs 9.52 billion against Rs 9.24 billion Year-on-Year (Y-o-Y). The company’s revenue rose 26% at Rs 63.69 billion against Rs 50.67 billion (Y-o-Y).

FII’s Activity 2nd-Feb-18

The FIIs as per Friday’s data were net buyers in equity and debt segments both, according to data released by the NSDL.

In equity segment, the gross buying was of Rs 7721.20 crore against gross selling of Rs 6555.36 crore. Thus, FIIs stood as net buyers of Rs 1165.84 crore in equities.

In the debt segment, the gross purchase was of Rs 2586.62 crore with gross sales of Rs 1288.44 crore. Thus, FIIs stood as net buyers of Rs 1298.18 crore in debt.

In the hybrid segment, there was no buying against gross selling of Rs 0.38 crore. Thus, FIIs stood as net sellers of Rs 0.38 crore in hybrid segment.

Now what to expect ??

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Nifty Levels 

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Nifty formed a bearish engulfing pattern on daily chart and having support at 10700. 

Any sharp rise will be selling opportunity in it.

 Break and sustain below 10700 will take it to 10580—10530 and then to 10300 mark.

Hurdle intact 10900

Trade with levels only 

Bank Nifty 

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We have seen heavy sell off in bank nifty down by almost 2.5%.

Now what to expect???

Support at 26400 breaks and sustain below 26400 will take it 26000---25800.

Hurdle intact at 26800

Daily Derivative Outlook 5th February 2018

Nifty (February) futures closed at a Discount of 4.75 points versus a Premium of 14.40.

ESCORTD (23%), CEATLTD (18%), BEL (13%), IDBI (13%) and APOLLOTYRE (11%) were the top gainers in terms of open interest.

JISLJALEQS (-19%), TORNTPHARM (-10%), MANAPPURAM (-9%), FORTIS (-9%) and MINDTREE (-8%) were the top losers in terms of open interest.

Maximum call writing was seen at Nifty 10900 strike and maximum put buying was seen at Nifty 11000 strikes.

Maximum positions are at 11500 CE and 10500 PE.

The Nifty Put Call Ratio (PCR) finally stood at 0.82 for February month contract.

Advance Decline ratio in F&O segment was at 0.04, Advance (8) + Decline (207) + Unchanged (2) = 217

Derivative Idea (05-02-2018)

GAIL lossess around 4.00% of open interest as long unwinding on Friday’s trade. 

Support at 460, Below 460 panic remain continue till 430—420 and then to 410 mark else could touch its resistance level of 490

Fresh buying can be initiated above 490

Current chart pattern and derivatives data suggest that we expect further panic in coming sessions.

Trading Recommendation (5th Feb 2018)

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Sell GAIL future below 460 with stop loss of 490 for the initial target 430—420 and then to 410 mark.

Yes Bank- Top Pick 

According to MACD analysis, a bearish crossover just happend and it's a negative signal.

Now what to expect?? 

On Daily chart, break and sustain below 342 will see panic till 324-—320 in weeks to come.

Resistance intact at 360.

Any sharp upside rally will be selling opportunity in it. 

Trading Recommendation (5th Feb 2018)

Sell Yes Bank below 342 with stop loss above 360 target 324---320.

Results Today

Colgate Palmolive (India) Limited

Ujjivan Financial Services Limited

Tata Motors Limited (DVR)

Tata Motors Limited

IFCI Limited

Bosch Limited

More Will Update Soon!!