Update on Nifty levels, Derivative Outlook and Equity Pick of the day 19th Dec 2017
Nifty 10388 /Sensex 33601/ Bank Nifty 25594
35 Advances / 14 Declines/ 1 Unchanged
Bulls take control on Dalal Street as BJP leads in Gujarat, Himachal
Extending gaining streak for third straight day, Indian equity benchmarks ended the Monday’s trade with a gain of around half a percent, as Prime Minister Narendra Modi-led BJP looked set to win key polls in Himachal Pradesh and Gujarat. Markets made dismal start with Sensex and Nifty tumbling below their crucial 32,600 and 10,100 levels in early deals, as early trends had suggested that the BJP and the Congress are locked in a tight race to win Gujarat. However, domestic markets staged splendid recovery and entered into green terrain after the ruling party -- BJP -- made a comeback against Congress in Himachal Pradesh and Gujarat election results. Sentiments also remained up-beat with data from the commerce department, which showed that India’s exports rose at a faster clip in November, reversing the contraction in the previous month. Exports grew 30.6% in November from a year ago, while imports rose 19.6%. Traders also took some encouragement with statement of an UN expert that India can achieve an 8% growth rate for the next two decades by promoting investment and improving the living conditions of its people.
Sentiments also remained optimistic with Reserve Bank of India (RBI) Governor Urjit Patel’s statement that with growth picking up in the second quarter of the current financial year, the economic slowdown may have bottomed out. He said “our recent growth numbers may have disappointed some in the first quarter of this fiscal year, but the second quarter has recorded an uptick and the slowdown may well be bottoming out”. Traders also took some support with report that foreign investors are flocking to the Indian capital markets in a big way with a net inflow of over $30 billion (more than Rs 2 lakh crore) of so-called hot money in 2017, with equities alone getting over $8 billion -- an amount bigger than the cumulative investment of the previous two years.
Positive opening in European counters too aided sentiments on hopes a major US tax reform bill will be passed before the end of the year. Asian markets ended mostly in green led by over one and a half a percent jump in Japanese markets, as the country’s exports accelerated sharply in November, yet again pointing to growing momentum in the world’s third-biggest economy.
Back home, stocks of public sector banks (PSBs) remained in focus on report that the first round of capital infusion for state-run banks that was announced recently is likely to take place soon. The government is likely to raise around Rs 70,000 crore by February 2018 as part of the total Rs 1.35 lakh crore to be met through recapitalization bonds. Finance Minister Arun Jaitley said the government has decided to recapitalize PSBs to enhance credit growth and job creation. Select stocks from fertiliser space remained n buyers’ radar after the Finance Ministry sought Parliament’s approval for the net additional spending of Rs 33,380 crore ($5.21 billion) for 2017-18. This includes Rs 20,532 crore for the fertiliser sector. Stocks from footwear industry exhibited mixed trend after the Union Cabinet chaired by Prime Minister Narendra Modi on Friday approved special package for employment generation in leather and footwear sector. The package involves implementation of central scheme ‘Indian Footwear, Leather & Accessories Development Programme’ with an approved expenditure of Rs 2,600 crore over the three financial years from 2017-18 to 2019-20.
FII’s Activity 18th-Dec-17
The FIIs as per Monday’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 9274.29 crore against gross selling of Rs 10144.34 crore. Thus, FIIs stood as net sellers of Rs 870.05 crore in equities.
In the debt segment, the gross purchase was of Rs 1334.50 crore with gross sales of Rs 930.38 crore. Thus, FIIs stood as net buyers of Rs 404.12 crore in debt.
What Gujarat election results mean for business, economy, reforms and markets
Analysts see the party’s victory as a sign of continued political stability and hopes the government will continue its reform agenda. However, a closer-than-expected race in Gujarat, Prime Minister Narendra Modi’s home state, has also prompted concerns that the government might abandon the path of fiscal prudence and be tempted to pursue populist policies in a bid to retain power in the 2019 elections.
For business: While the central government might be tempted to go populist over the rest of its term, it will also continue to pursue its anti-corruption and ease of doing business agenda, said analysts.
For the markets: The markets have priced in a BJP victory. When early trends showed the party neck-and-neck with the opposition, the markets tanked as much as 2.6% (about 867 points for the Sensex). However, as the ruling party recovered as counting progressed, the markets recovered and the benchmark indices closed about half a percent higher.
(http://www.livemint.com/Opinion/LMtPDjgFBiryhJfQUnOXAI/What-Gujarat-election-results-mean-for-business-economy-re.html)
Domestic pharma gets extended release from low growth
Domestic pharmaceutical companies are in better health. In November 2017, India’s medicine sales rose by 8.1% over a year ago, despite a high base effect caused due to demonetisation, according to market research firm AIOCD Awacs.
In November 2016, medicine sales jumped by 14.5%, partly because people were allowed to use old notes to buy medicines at pharmacies.
(http://www.livemint.com/Money/KpwxuyQPAt5RhxIrRJJQRL/Domestic-pharma-gets-extended-release-from-low-growth.html)
Now what to expect ??
Nifty Levels
Close above 10460 will see rally till 10530---10600. More and more upside rally will see only close above 10600 else it could test 10200---10050 again.
Trade within a range
Daily Derivative Outlook 19th December 2017
• Nifty (Dec) futures closed at a premium of 15.60 points versus a premium of 26.25 points.
• Maximum call buying was seen at Nifty 10500 strike and Maximum put writing was seen at Nifty 10300 strikes.
• Maximum positions are at 10500 CE and 10000 PE.
• DCBBANK (46%), PAGEIND (31%), UPL (15%), CHOLAFIN (9%) and M&M (9%) were the top gainers in terms of open interest.
• MUTHOOTFIN (-13%), IGL (-10%), PIDILITIND (-9%), SIEMENS (-8%) and BATAINDIA (-8%) were the top losers in terms of open interest.
• Advance Decline ratio in F&O segment was at 1.95, Advance (142) + Decline (73) + Unchanged (2) = 217
Derivative Idea (19-12-2017)
REC gain around 2.20% of open interest as Long Build-up on Mondy’s trade. REC trading near its resistance level of 154.50
Now what to expect??
Above 154.50, rally remain continue till 165—170 and then to 185+++ mark in days to come.
Support at 145.00
Current chart pattern and derivatives data suggest that we expect further panic in coming sessions.
Trading Recommendation (19th Dec 2017)
Buy REC above 154.50 with stop loss of 145 for the initial target 165—170 and then to 185+++ .
TD Power Systems Ltd. - Top Pick
According to exponential moving average analysis, tdpowersys is in a strong downtrend and also showing breakout on chart.
Now what to expect???
Above 188 will see rally till 203—205 in days to come. Further upside will see if closes above 205.
Support intact at 176
Any sharp upside rally will be selling opportunity in it.
Trading Recommendation (19th Dec 2017)
Buy TD Power Systems above 188 with stop loss below 176 (on a closing basis) Target 203—205.
More Will Update Soon!!
