Nifty 9837 /Sensex 31524/ Bank Nifty 24074
25 Advances / 26 Declines/ 0 Unchanged
Weak global cues, Sikka’s resignation drag benchmarks lower
Friday turned out to be a disappointing day of trade for Indian equity benchmarks, as key indices traded sluggish through the session and settled below their crucial 31,600 (Sensex) and 9,850 (nifty) levels. Traders opted to book profits in risky assets after three days of continuous rally amid weak global cues. Heavy selling in IT pack mainly dampened sentiments with Infosys leading the fall on the back of developments in the top management exit. IT major announced that its board of directors has accepted the resignation of Vishal Sikka as the Managing Director and CEO with immediate effect. Some pessimism also crept in with Chief Economic Adviser Arvind Subramanian’s statement that overemphasis on renewable energy would create a 'double whammy' for the government by reducing the viability of thermal power plants and raising bad loans of state-owned banks.
Traders shrugged off report by real estate consulting firm CBRE South Asia that India has surpassed China in the global Retail Development Index in 2017, indicating growing prominence of the country as a preferred retail destination for global brands. Traders failed to get any sense of relief with report that the government gave some relief to taxpayers availing of transitional input tax credit under the Goods and Services Tax (GST) regime by giving them an extra week till 28 August 28 to file tax returns.
Weak opening in European counters too dampened sentiments with CAD, DAX and FTSE all were trading in red in early deals, as market sentiments weakened following news of a terrorist attack in Barcelona, Spain. Asian markets ended mostly in red, taking a cue from nervous Wall Street as political woes for President Donald Trump imperil his tax cut and infrastructure spending plans.
Back home, investors took note of foreign brokerage report that economic growth and inflation are expected to trend higher in the next 6-12 months and the Reserve Bank is likely to stay on a prolonged pause. The brokerage report highlighted that the MPC minutes suggest low inflation and growth concerns led to policy easing earlier this month, and going ahead the RBI is expected to stay on hold.
FII’s Activity 18-Aug-17
The FIIs as per Friday’s data were net sellers in equity and debt segments both, according to data released by the NSDL.
In equity segment, the gross buying was of Rs 8959.08 crore against gross selling of Rs 10886.50 crore. Thus, FIIs stood as net sellers of Rs 1927.42 crore in equities.
In the debt segment, the gross purchase was of Rs 363.69 crore with gross sales of Rs 533.13 crore. Thus, FIIs stood as net sellers of Rs 169.44 crore in debt.
Now what to expect next??
Nifty Levels
Close above 9920 will see upside rally till 9960---9990 and then to 10050 marks else it could test it's support level of 9790 again.
Below 9790 will see more downside panic till 9730---9690 mark.
Trade with levels only.
Daily Derivative Outlook 21th August
• Nifty August 2017 futures closed at 9854.40 on Friday at a premium of 17 points over spot closing of 9837.40.
• Maximum Call writing was seen at 9800 and maximum option buying (unwinding by option writers) was seen at 9900 PE and 10100 CE strike.
• Maximum positions are at 10000 CE and 9800 PE.
• INFY (45%), ZEEL (13%), MRPL (9%), PCJEWELLER (9%) and APOLLOHOSP (8%) were the top open interest gainers in the market.
• INDIGO (-11%), ITC (-8%), CHENNPETRO (-8%), VOLTAS (-7%) and BATAINDIA (-7%) were the top open interest losers in the market.
• The Nifty Put Call Ratio (PCR) finally stood at 0.94 for August month contract.
• Advance Decline ratio in F&O segment was at 0.43, Advance (70) + Decline (147) + Unchanged (2) = 219
Derivative Idea (21-08-2017)
Bharat Finance gain 4.7% of open interest as long build up on Friday’s trade. It is trading near its immediate resistance level which is stood at 885.00. On Weekly chart Bharat Finance forming symmetrical triangle having breakout point at 885.00
Now what to expect??
Break and sustain above 885.00 will take it to 950—980 and then to 1050+++ mark in days to come.
Support and stop loss below 815.
Current chart pattern and derivatives data suggest that we expect further rally in coming sessions.
Trading Recommendation(21-Aug-17)
Buy Bharat Finance (AUG) future above 885.00 Stop loss 815(on closing basis) Target 950--980 and then to 1050+++
Top pick (21-Aug-17)
Deepak Fertiliser Top
Chemical revenue saw muted growth along with 36% YoY slide in EBIT to INR862mn as sharp volatility in ammonia prices led to inventory-led loss.
However, with stabilisation in ammonia prices and pick up in chemical demand, company expect chemical margins to improve in subsequent quarters.
DFPCL is the leader in the Indian Technical Ammonium Nitrate (TAN) market, with 30% share. The company is set to benefit from the increasing TAN demand on account of the growing demand for coal and limestone production.
Expect earnings visibility to enhance, balance sheet and return ratios to improve (RoCE of ~17% by FY19 from ~10% in FY17) following improvement in fertiliser business.
Trading Recommendation (21st August 2017)
Deepak Fertiliser above 390 will see upside rally till 425---440+++ mark in days to come. Looks bearish only if close below 360 marks. Any sharp downside panic will be buying opportunity in it.
Corporate Action
Sun Tv Network Limited -Interim Dividend-Rs 2.50 Per Share
Steel Authority of India Limited- Annual General Meeting
More Will Update Soon!!
