Update on Nifty levels, Bank Nifty levels, Derivative Outlook and Equity Pick of the day 6th Oct 2017
Nifty 9888/Sensex 31592/ Bank Nifty 24058
21 Advances / 29 Declines/ 0 Unchanged
Benchmarks snap four days gaining streak; Nifty slips below 9,900 mark
Snapping four days winning streak, Indian equity benchmarks ended the Thursday’s trade in red with marginal losses, after the Reserve Bank of India (RBI) cut its growth estimate for the current fiscal on Wednesday and warned that any economic stimulus and farm debt waivers could push up fiscal deficit by 1 percentage point, potentially stoking inflation. Markets started off on optimistic note, but soon gave up all of their gains to turn red and traded flat-to-negative. Fresh selling in the last leg of trade mainly dragged the frontline indices below their crucial 9,900 (Nifty) and 31,600 (Sensex). Investors remained cautious on foreign brokerage report that the sentiment of foreign portfolio investors towards India is likely to remain weak until corporate earnings recovery sets in. This, coupled with high equity supply, would mean that the market performance will remain subdued until the end of the year. FPIs have pulled out over Rs 24,000 crore from Indian equities since August due to disappointment over economic growth, delay in earnings recovery, expensive valuation and geopolitical tensions.
However, losses remained capped on report that Nikkei India Services Purchasing Managers’ Index rose to 50.7 in September from 47.5 in August. India’s service sector PMI marked below the 50.0 neutral level in the previous two months due to the goods and services tax (GST) introduced in July. According to the PMI survey, greater workloads supported job creation in September, with the rate of employment growth the strongest since June 2011. Traders also took some solace with NITI Aayog CEO Amitabh Kant’s statement that while there has been a ‘little bit of dip’ in the Indian economy, it is now bouncing back. Prime Minister Narendra Modi too has asserted that the economy is much better than critics make it out to be and that his government is ‘totally committed’ to reverse the slowdown in GDP growth in recent quarters.
On the global front, European markets were trading mostly in red as investors monitored political events and took a cautious approach ahead of key data releases. Spanish equities investors cautioned that political uncertainty could hurt the economy after Catalonia’s separatist leader said the region would move on Monday to declare independence after a referendum that authorities in Madrid declared illegal. Asian markets ended mixed, as market participants awaited the US government's non-farm payrolls report due out Friday for further clues as to the timing of the next rate rise.
Back home, select IT stocks remained under pressure as Indian IT companies are likely to report another quarter of muted results as clients in retail and banking and financial services continue to curtail their IT spends. However, IT margins will be helped by favorable currency movements. Banking stocks edged lower despite RBI cutting 50 basis points in SLR, which will further ease liquidity in the banking system. Prataap Snacks made a stellar listing on the bourses today and went home with a gain of over 25%. The Rs 482 crore IPO was oversubscribed 47.39 times.
FII’s Activity 5th-Oct-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 5959.89 crore against gross selling of Rs 6397.40 crore. Thus, FIIs stood as net sellers of Rs 437.51 crore in equities.
In the debt segment, the gross purchase was of Rs 3490.64 crore with gross sales of Rs 771.85 crore. Thus, FIIs stood as net buyers of Rs 2718.79 crore in debt.
Now what to expect ??
Nifty Levels
Close above 9960 will see more upside rally till 10065 and then to 10120---10170 mark again else it could test its support again
Break and sustain below 9850 will see more downside panic till 9800 and then to 9765---9720
Trade within a range
Bank Nifty
Close above 24250 will see more upside rally till 24470 and then to 24580---24720 mark else it could test its support again.
Break and sustain below 24000 will see more downside panic till 23860---23750 and then to 23580
Trade within a range
Daily Derivative Outlook 6th Oct 2017
• Nifty (Oct) futures closed at a Premium of 20.00 points versus a premium of 15.55 points.
• Maximum call writing seen at 10100, Maximum put writing seen at 9800.
• Maximum positions are at 10000 CE and 9800 PE.
• JUBLFOOD (26%), POWERGRID (15%), NIITTECH (12%), ENGINERSIN (10%) and ICIL (9%) were the top gainers in open interest in the market
• BERGEPAINT (-10%), APOLLOHOSP (-9%), BATAINDIA (-7%), PVR (-6%) and JPASSOCIAT (-4%) were the top losers in open interest losers in the market
• The Nifty Put Call Ratio (PCR) finally stood at 1.26 for October month contract.
Derivative Idea (06-10-2017)
ICIL gain around 9.00% of open interest as long build up on Thursday’s trade. It is trading near its resistance level of 109, while ICIL forming double bottom patter on daily chart.
Now what to expect??
Hurdle at 109, above 109 rally remain continue till 120—122 and then to 130+++ mark in days to come.
Support and stop loss below 100.00
Current chart pattern and derivatives data suggest that we expect further rally in coming sessions.
Trading Recommendation (6th Oct 2017)
Buy ICIL Future/ Cash above 109 Stop loss 100 (on closing basis) Target 120--122 and then to 130+++.
Petronet LNG - Top Pick
Rebound in LNG imports and shutdown of Dabhol LNG terminal during the monsoon to improve PLNG’s Dahej terminal utilization in Q2FY18. Expects PLNG to be a key beneficiary of the rising share of LNG imports in India’s overall gas consumption due to the following reason:
1) Flat to a marginal increase in the domestic gas production outlook over FY18E-FY20E and, 2) Low competition in LNG market as only two new LNG terminals - 5mmt Mundra terminal and 5mmt Ennore terminal is expected to come on-stream over FY18E-FY20E.
The stock is trading at an attractive valuation of 14.9x FY19E EPS given the strong earnings growth outlook (15 percent CAGR over FY17-2019E) and resilient RoE of 22-23 percent.
Now what to expect???
On Daily chart, Petronet LNG is showing breakout point above 242 level. Break and sustain above 242 will see nonstop rally till 250---255++ in weeks to come.
Looks bearish only if close below 234 marks.
Any sharp downside panic will be buying opportunity in it.
Trading Recommendation (6th Oct 2017)
Buy Petronet LNG above 242 with stop loss below 234 (on a closing basis) Target 250--255.
More Will Update Soon!!
