News Views & Events 28th March 2013

News:

Ø  Homeland Mining and Energy SA Proprietary a wholly-owned subsidiary of Canada-listed Homeland Energy Group, in which GMR Energy has a majority stake has divested its stake in two coal assets for $50 million (about Rs.270 Crs) to multiple buyers.

Ø  Prime Focus has thrown its hat in the ring to buy a bankrupt Hollywood visual effects company best known for bringing to life Ang Lee's Oscar winner Life of Pi. Prime, which has emerged as one of the few key visual effects studios in Hollywood, will jostle with India's Prana Studios and Psyop to buy Rhythm, which filed for bankruptcy recently.

Ø  Clariant Chemicals (India) said its board has approved the proposal to divest the business of textile chemicals, paper specialities and the emulsion products, for a consideration of Rs. 209.15 Crs.

Ø  Promoters of Aditya Birla Nuvo have raised their stake in the diversified company to 53.76% from 51.04% at present after converting warrants into equity. Warrants were converted at a price of . 910.86 apiece valuing the transaction at Rs.608.45 Crs.

Ø  Bharat Oman Refineries, a joint venture between Bharat Petroleum Corporation and Oman Oil, is close to signing up with banks for a Rs2500 Crs loan as it aims to bring down the cost of funds.

Ø  HCL Technologies has bagged a multi-year infrastructure management services contract from US-based automaker Ford Motor Company. "The value of the five-year contract is estimated to be close to $100 million.

Ø  Matthew R Barney, vice-president and head of Infosys Leadership Institute (ILI), has quit, ending his four-year association with the Bangalore-based company.

Ø  Balmer Lawrie board approves bonus issue in the ratio of 3:4 shares.

Ø  Gitanjali Gems has decided to defer issue of FCCBs.

Ø  Nifty Changes: IndusInd Bank and NMDC to replace Wipro and Siemens in Nifty effective April 1 (i.e. Monday).

  Key events for the day:

Ø  Exclusion of GVKPIL & Bhushan Steel from F&O segment from today. (No further contracts available in next series.)

Ø  Release of Nationwide HPI in UK.

Ø  Release of Retail PMI in Euro Zone.

Ø  Release of Final GDP, Chicago PMI & Unemployment Claims in US.

 

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Derivatives Strategist 28th March 2013

Data Feeler: Nifty future after a consecutive seven days of fall witnessed some relief at lower levels and took support around 5600 psychological area. Being expiry day and last trading day of financial year volatility may remain intact in the markets and traders should keep strict stop levels for trading. Nifty future for the day, if sustains above 5650 levels then only bounce back may be seen towards 5700 levels. Whereas sustaining below 5620 levels may put further selling pressure towards 5580-5550 levels. Looking at the option concentration data for March series, maximum put OI is still intact at 5600 strike price suggesting immediate support area for the markets. Whereas for April series maximum put OI is concentrated at 5600 strike price and maximum call OI is at 6000 strike price. Bank Nifty for the day has immediate support around 11000 levels and breaching these levels may put further pressure to it whereas strong hurdle around 11350-11500 levels.

 

Put Call Ratio based on Open Interest of Nifty moved up from 0.78 to 0.81 levels. Historical Volatility of Nifty moved down from 16.67 to 16.17 levels but Implied Volatility moved up from 15.31 to 15.48 levels.

 

Nifty future saw increase in OI by 6.54% with a marginal fall in price. Market witnessed buying interest in CD FMCG, Tech, IT, Auto and Banking space whereas selling pressure was seen especially in Oil & Gas, Reality, CG, Power, Metal and PSU sector stocks. Nifty future closed at discount of one point as compared to premium of 11 points in previous trading session.

 

The market turnover increased by 6.98% in terms of number of contracts traded vis-à-vis previous trading day whereas in terms of rupees increased by 6.12%.

 

Derivative Calls: Buy on TITAN & Sell on TATA MOTOR DVR

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First Morning Technical Call 28th March 2013

MARKET OUTLOOK

Nifty (5642): CNX Nifty closed positive after 7 trading days and in last 12 days only 2 days we have seen positive close with Nifty breaching 200DMA 5624 by making a low of 5612 before closing positive. Today is Derivative settlement, Last day of the Month, Quarterly close and last day of financial year which can keep market most volatile, So Nifty holding 5600 is important crossing 5680 is crucial for a rally till 5720 & 5775 while below 5600 correction may continue till 5548 & 5480. Nifty has made low of 85 trading days, Nifty YTD date is down 4.4% while in Nifty stocks HCLTECH+25%, TCS+23%, INFY+23 %, ONGC+13, SUNPHARMA +11% are Top 5 gainers while Top 5 Losers are RELINFRA-37%, JPASSOCIATE-33%, HINDALCO-32%, TATASTEEL-28%, BANKBARODA-23%. Buying YTD is seen in IT, Pharma, FMCG and Oil Companies Surprise was Oil Companies post Decontrol of Diesel and Partial decontrol in LPG prices while selling in Realty, Infra, Metal, Auto, PSUBANK, PSU Stocks. Quality Mid-Cap stocks are showing signs of recovery BAYERCORP, PFIZER, CUMMINS, GSPL, KARURVYSYABANK, M&MFIN, MINDTREE, NATCOPHARMA and SPECIALITY can be accumulated for long term.  

SENSEX (18705) : Sensex has corrected for straight 8 days and now Gap-up(18590-18612) are broken on a closing basis only then some selling pressure could intensify towards,18300-18190 levels. Sensex is still above its 200 DMA 18546. Any rally above 18850 in the index can trigger a fresh round of short covering as the index seems to have taken a temporary support near 200 DMA levels and is showing first signs of a pullback after a steep correction. Therefore for the day the levels for the Sensex, moving above 18790 could target 18880-18940 on the upside while on the downside, the index could continue its downtrend if the 200 DMa 18546 is broken o n a closing basis. 

 TECHNICAL CALLS 

BUY RANBAXY Rs.444: The stock has rallied 17% in this month so far,  a stunning recovery from lower levels and has now made an unconventional inverted head and shoulder bullish pattern. Ranbaxy has seen a huge built up of long positions as per the derivatives data which indicates that a short covering move of at least 4-5% can be witnessed in the stock. The stock is trading above its 20 DMA Rs.415 & 50DMA Rs.431 levels which forms good support for the stock. The stock looks good for an upside target of 480 in the days to come.

SELL RELIANCE CAPITAL Rs.301 :   The stock is down by a staggering 16.52 %  during the month of March,2013 and Year till date 37%  which suggests huge short built up of positions in the stock according to the derivatives data.. The stock has had huge volumes during the entire sell off from 380 odd levels, which is a big negative for the stock. The stock could see more selling pressure during expiry as traders trapped on the long side would eventually have to cut their positions. The stock looks weak enough to target at least 270 -275 on the downside as it is trading below all major moving averages.

 

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