Update on Nifty levels, Derivative Outlook and Equity Pick of the day 3rd Jan 2018
Nifty 10442 /Sensex 33812/ Bank Nifty 25338
20 Advances / 30 Declines/ 0 Unchanged
Markets end choppy session on quiet note
Indian equity benchmarks ended the choppy day of trade on quiet note on Tuesday, as traders remained on sidelines ahead of corporate results for the third quarter FY18 to be released later this month. After a positive start, markets turned choppy and altered between green and red throughout the session to end flat. Though, traders took some support with report that the eight core industries growing by 6.8% in November 2017, compared to the production during November 2016. The growth in November was driven by a 16.6% increase in steel production over November 2016. Traders also got some solace with government’s decision to ease norms for rectification of GST returns. The Finance Ministry has permitted businesses to rectify mistakes in their monthly returns - GSTR-3B - and adjust tax liability, a move that will help them file correct returns without fear of penalty. Better than expected Nikkei India Manufacturing Purchasing Managers’ Index (PMI) too provided some comfort to the market participants. The seasonally adjusted Manufacturing PMI rose to 54.7 in December from 52.6 in November, indicating a healthy growth in manufacturing sector since December 2012.
However, traders remained concerned with report that retail inflation for industrial workers rose to 3.97% in November 2017 as compared to 3.24% for the previous month, mainly due to surge in prices of food items, kerosene and cooking gas. The year-on-year inflation measured by monthly CPI-IW (Consumer Price Index-Industrial Workers) stood at 3.97% for November, 2017 as compared to 3.24% for the previous month (October, 2017) and 2.59% during the corresponding month (November 2016) of the previous year. The traders took note of report which has pointed oil, inflation as risk factors, stating that India's economic growth is likely to pick up in the New Year but rising oil prices and a firming inflation may spoil the party.
Weak opening in European counters too dampened sentiments. Activity in the UK manufacturing sector slowed slightly in the last month of the year, but continued to expand at a solid pace. Asian markets ended mostly in green terrain, after a survey of Chinese manufacturing proved surprisingly upbeat, while the euro lurked within striking distance of its 2017 top against an ailing US dollar.
Back home, oil marketing companies i.e. Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) edged lower following further increase in Brent crude oil prices on ongoing supply cuts. Banking shares remained under pressure, as the country’s largest PSU bank SBI has lowered the base rate by 30 basis points to 8.65 per cent, setting trend for other banks to follow. It is also set to initiate insolvency proceedings against at least a dozen defaulting companies. However, select auto stocks remained in top gear as car sales picked up in December. The improved consumer sentiment on the back of a broader economic revival, a surging stock market and year-end stock clearance offers pushed up sales of passenger vehicles in December. Select cement stocks edged higher despite cement production increasing by 17.3% in November 2017 over same month in 2016.
FII’s Activity 2nd-Jan-2018
The FIIs as per Tuesday’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 832.38 crore against gross selling of Rs 843.68 crore. Thus, FIIs stood as net sellers of Rs 11.30 crore in equities.
In the debt segment, the gross purchase was of Rs 125.22 crore with gross sales of Rs 7.28 crore. Thus, FIIs stood as net buyers of Rs 117.94 crore in debt.
In the hybrid segment, the gross buying was of Rs 0.53 crore, while there was no selling. Thus, FIIs stood as net buyers of Rs 0.53 crore in hybrid segment.
Now what to expect ??
Nifty Levels
Support at 10350---10280 and Resistance at 10570
Trade within a range only. Either side break and close will decide further.
Daily Derivative Outlook 3rd January 2018
• Nifty (January) futures closed at a discount of 33.20 points versus a premium of 63.15 points.
• Maximum call writing was seen at Nifty 10600 strike and maximum put writing was seen at Nifty 10400 strikes.
• Maximum positions are at 11000 CE and 10300 PE.
• EICHERMOT (22%), TVSMOTOR (13%), TATAELXSI (8%), BPCL (7%) and DISHTV (7%) were the top gainers in terms of open interest.
• RCOM (-16%), HDIL (-11), ICIL (-6%), INFRATEL (-6%) and MCDOWELL-N (-5%) were the top losers in terms of open interest.
• Advance Decline ratio in F&O segment was at 0.32, Advance (53) + Decline (143) + Unchanged (0) = 217
Derivative Idea (03-01-2018)
Tata Power gain around 2.20% of open interest as long build up on Tuesday’s trade. Tata Power trading around its resistance level of 101.00 level while RSI and MACD showing upside momentum in it.
Now what to expect???
Tata Power has Resistance at 101.... above 101 it can touch 105—108 mark in days to come else could touch its support level of 96.50 again.
Fresh selling can be initiated below 96.50
Trading Recommendation (3rd Jan 2018)
Buy Tata Power above 101 with stop loss of 96.50 for the initial upside target 105---108
MRPL - Top Pick
On Daily chart, MRPL looks weak below 125 and will see panic till 120----118 in days to come.
Resistance intact at 130.
Any sharp rise will be a selling opportunity in it.
Trading Recommendation (3rd Jan 2018)
Sell MRPL below 125 with stop loss above 130 (on a closing basis) Target 120—118.
More Will Update Soon!!
