Update on Nifty levels, Derivative Outlook and Equity Pick of the day 4th Jan 2018
Nifty 10443 /Sensex 33793/ Bank Nifty 25318
28 Advances / 22 Declines/ 0 Unchanged
Benchmarks pare gains to end flat
Paring all of their early gains, Indian equity benchmarks once again ended flat on Wednesday, as traders remained on sidelines ahead of ahead of corporate results for the third quarter FY18 to be released later this month and service PMI data to be released tomorrow. However, markets made optimistic start with key gauges hitting their crucial 10,500 (Nifty) and 34,000 (Sensex) levels in morning deals with traders reacting positively to the last day’s report of manufacturing PMI rising to 54.7 in December 2017 from 52.6 in November on the back of robust improvement in the health of the sector since December 2012. Some support also came with the Rajya Sabha unanimously passing the Insolvency and Bankruptcy Code (Amendment) Bill that replaces an Ordinance that prevents unscrupulous persons from misusing or vitiating the provisions of the Insolvency and Bankruptcy Code.
Traders also took some encouragement with foreign brokerage report stating that India’s growth rate is expected to accelerate over the coming year and is likely to improve further to 7.6% by 2019-20 as key sectors would revive from disruptions related to the implementation of GST and demonetization. The report further said the recovery in India’s GDP growth will likely be relatively gradual, preventing price pressures from rebounding and allowing the Reserve Bank of India to keep rates on hold for the time being. However, really got fizzled out and markets ended lower with traders booking all of their early gains ahead of key corporate results starting next week. Investors are awaiting corporate results, including from Tata Consultancy Services and Infosys that are scheduled next week, amid signs the economy is recovering after the withdrawal of high-denomination currency bills in late 2016 and the introduction of a national goods and services tax last year. Meanwhile, the government has notified lower 1% GST rates for manufacturers who have opted for composition scheme as well as easier norms for traders opting for it. The finance ministry has notified the changes decided by the GST Council, chaired by Union Finance Minister Arun Jaitley and comprising state counterparts, in November 2017.
On the global front, European markets were trading mostly in green in early deals. UK construction sector activity eased slightly in December, missing forecasts and dampening optimism over the British economy. Asian markets ended mostly in green, as optimism about global growth buoying investors’ sentiments.
Back home, telecom sector remained in focus, as the Telecom Regulatory Authority of India (Trai) released a detailed set of regulations for interconnection pacts between operators and mandated a daily penalty of Rs 1 lakh per circle for non-compliance of these norms. However, auto stocks edged lower despite rating agency ICRA forecasting domestic tractor industry to touch an all time high sales in FY-18 led by improved farm sentiments and two consecutive normal monsoon. The agency expects domestic tractor industry to record a volume growth of 12-13% during FY-18 with positive growth momentum also likely to spill over in next fiscal.
FII’s Activity 3rd-Jan-18
The FIIs as per Wednesday’s data were net buyers in equity segment, while they were net sellers in debt segment, according to data released by the NSDL.
In equity segment, the gross buying was of Rs 3166.29 crore against gross selling of Rs 2546.92 crore. Thus, FIIs stood as net buyers of Rs 619.37 crore in equities.
In the debt segment, the gross purchase was of Rs 863.27 crore with gross sales of Rs 1175.42 crore. Thus, FIIs stood as net sellers of Rs 312.15 crore in debt.
In the hybrid segment, there was no buying against gross selling of Rs 2.16 crore. Thus, FIIs stood as net sellers of Rs 2.16 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 4th 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 10500 strike and maximum put buying was seen at Nifty 10100 strikes.
• Maximum positions are at 11000 CE and 10300 PE.
• JETAIRWAYS (19.70%), ADANIENT (14.10%), FORTIS (11.30%), HCC(9%) and RNAVAL (8.7%) were the top gainers in terms of open interest.
• IFCI (-3.8%), PIDILITE (-3.2), SUZLON (-2.5%), DIVISLAB(-2.3%) and GLENMARK (-1.3%) were the top losers in terms of open interest.
• The Nifty Put Call Ratio (PCR) finally stood at 1.07 for January month contract.
Derivative Idea (04-01-2018)
Ujjivan gain around 11.20% of open interest as long build up on Wednesday’s trade. Ujjivan trading above its resistance level of 398.00 level while RSI and MACD showing upside momentum in it.
Now what to expect???
Ujjivan has minor hurdle at 405. Above 405 it can touch 418—424 and then to 435+++ mark in days to come else could touch its support level of 390 again.
Fresh selling can be initiated below 390
Current chart pattern and derivatives data suggest that we expect further panic in coming sessions.
Trading Recommendation (4th Jan 2018)
Buy Ujjivan above 405 with stop loss of 390 for the initial target 420—425 and then to 430++ mark.
S Chand and Company Ltd - Top Pick
Going ahead, since S Chand, has strong brand value, and is widely present in the growing segment of the education industry, we expect S Chand will grow by around 14–15% YoY in FY18E & FY19E organically, with constant
increase in the product portfolio and increase in the reach by adding new institutions.
Now what to expect???
On Daily chart, S Chand and Company looks positive above 524 and we will see rally till 540----550 in days to come.
Support intact at 510.
Trading Recommendation (4th Jan 2018)
Buy S Chand and Company above 524 with stop loss below 510 (on a closing basis) for the upside target of 540---550.
More Will Update Soon!!
