Nifty 10,031 /Sensex 32,237/ Bank Nifty 24675
20 Advances / 31 Declines/ 0 Unchanged
Benchmarks extend pessimism a day after RBI cut key rates
Extending southward journey for second straight session, Indian equity benchmarks ended the session with a cut of around three fourth of a percent, breaching their crucial 32,300 (Sensex) and 10,050 (Nifty) levels. Markets showed solemnity since beginning and never looked confident of recovering till end to close near intraday lows, as investors opted to remain on sidelines pondering rate outlook, a day after the RBI maintained its neutral stance, citing record low inflation. Most of the market participants are not expecting any further rate cut this year, saying the present low inflation print is not sustainable. Sentiments also remained dampened with report showing that the services sector contracted in July and fell to its lowest level in nearly four years following implementation of the Goods and Services Tax (GST). Nikkei India Services Purchasing Managers’ Index fell to 45.9 in July. Some concern also came with the Reserve Bank’s third bi-monthly monetary policy statement that farm loan waivers by state governments could result in possible fiscal slippages and undermine the quality of public spending.
Some concerns also came with the private report stating that more than 31 percent of the chief financial officers (CFOs) from various companies feel implementation of GST is challenging and manufacturing is the most affected sector. Market participants shrugged off Finance Minister Arun Jaitley’s indications that there could be scope for rationalization of rates under the GST as its implementation progresses. Jaitley also said that he was under pressure to change the GST Network which people said was faulty but felt the structure was correct. Traders also failed to get any solace with John Chambers’, Chairman of the newly-formed US-India Strategic Partnership Forum, prediction that India would turn out to be a role model for the world economies. He said India will figure among the top three economic powers in the world over the next 10-15 years.
Weak trend in Asian counters too dampened sentiments with most of the regional peers ended in red on Thursday on weak regional data. China’s services sector expanded at a slightly slower pace in July as new business growth eased, pointing to potential softening in a key part of the world’s second-largest economy. However, European markets were trading mostly in green as a fresh round of corporate earnings is set to be released and as investors eyed the Bank of England’s monetary policy decision due later in the day.
Back home, sharp appreciation in Indian rupee too failed to revive sentiments. The rupee strengthened against the US dollar at the time of equity markets closing, buoyed by hopes of more capital inflows, coupled with more selling of the American currency by banks and exporters. On the sectorial front, stocks related to telecom sector rang louder on report that the government may soon consider the telecom industry’s demand of doing away with telecom circles and will work towards the concept of one nation, one network and one license. However, stocks from auto sector edged lower despite healthy sales in July, allaying concerns over a likely fall in demand due to transition to the GST regime.
FII’s Activity 3-Aug-17
The FIIs as per Thursday’s data were net buyers in equity and debt segments both, according to data released by the NSDL.
In equity segment, the gross buying was of Rs 4106.42 crore against gross selling of Rs 3538.51 crore. Thus, FIIs stood as net buyers of Rs 567.91 crore in equities.
In the debt segment, the gross purchase was of Rs 1532.36 crore with gross sales of Rs 494.34 crore. Thus, FIIs stood as net buyers of Rs 1038.02 crore in debt.
Now what to expect next??
Nifty Levels
Our sell call in Nifty proven great. We recommended selling below 10100 mark.
Now what to expect???
Still looks weak and could test 10020---9950 mark. More and more downside panic will see only close below 9950 mark else it could test it's resistance level of 10080---10120 and then to 10200 again.
Trade with levels only
Daily Derivative Outlook 4th August
• Nifty (Aug) futures closed at a Premium of 29.35 points versus a premium of 19.60 points.
• Maximum call writing was seen at 10350 strike, and maximum put buying was seen at 9900 strike.
• Maximum positions are at 10500 CE and 10000 PE. Nifty expected trading range spread to 10500—10000.
• INFIBEAM (32%), INFRATEL (23%), FORTIS (21%), ACC (15%) and CUMMINSIND (13%) were the top gainers in open interest in the market.
• JUBLFOOD (-10%), CADILHC (-9%), PVR (-8%), AUROPHARMA (-8%) and WOCKPHARMA (-8%) were the top losers of open interest in the market.
• The Nifty Put Call Ratio (PCR) finally stood at 0.97.
• Advance Decline ratio in F&O segment was at 0.77, Advance (67) + Decline (152)+ Unchanged (0) = 219
Derivative Idea (04-08-2017)
PFC losses around 2.8% of open interest as short unwinding on Thursday’s trade.
PFC forming Symmetrical Triangle pattern on daily chart which has a breakout point at 128.50. Break and sustain above 128.50 will take it to 133—135++ mark in days to come.
Support and stop loss below 122
Current chart pattern and derivatives data suggest that we expect further rally in coming sessions.
Trading Recommendation
Buy PFC (AUG) Future above 128.50 Stop loss 122 Target 133—135+
Corporate Action
Balkrishna Industries Limited - Interim Dividend - Rs 2.50 per Share
Voltas Limited-Annual General Meeting/Dividend - Rs 3.50 per Share
Tata Global Beverages Limited-Annual General Meeting/Dividend- Rs 2.35 per Share
Results Today
Andhra Bank
MRF Limited
Repco Home Finance Limited
Mahindra & Mahindra Limited
Hindustan Petroleum Corporation Limited
Gujarat State Fertilizers & Chemicals Limited
Fortis Healthcare Limited
Dabur India Limited
Berger Paints (I) Limited
Chennai Petroleum Corporation Limited
Arvind Limited
Apollo Tyres Limited
More Will Update Soon!!
