News Views & Events 1st April 2013

News:

Ø  Hero Moto Corp Sets up Base in Netherlands Ahead of Overseas Drive. Hero MotoCorp has incorporated an off-shore investmen t subsidiary in the Netherlands - the first in a slew of overseas arms it plans to set up. 

 

Ø  Spice Jet overtook Air India as the third-largest domestic carrier in February, flying a fifth of the total passengers on the back of its 'Big Sale' that offered a million air tickets at Rs 2,013 apiece..

Ø  Polaris Financial Technology has approached engineering and construction group L&T and India's thirdlargest technology services exporter Wipro to gauge their interest in acquiring its services business,

Ø  Jindal Steel and Power's (JSPL's) bid to acquire a majority stake in Gujarat NRE Coke's Australian subsidiary has not been successful, with the company managing to acquire only 31.49% stake at the end of its open offer.

Ø  The finance ministry has asked PSU banks to limit the amount of loan write-offs and sought details of recoveries made by them in the six years ending 2011-12 with an aim to improve the finances of PSU lenders.

Ø  The department of telecom has asked Tech Mahindra to set up a $100-million (Rs 550 crs) lab to ensure that network gear used by telecom companies in India are free from bugs and malicious software, which may be used for spying. 

Ø  Private sector Dhanlaxmi Bank will issue 85 lakh equity shares to five individuals, including a non-resident Indian BK Raveendran Pillai, to mobilize 51 crs.

Ø  Sterlite Industries, is raising Rs 2,500 crs through sale of 10-year bonds to refinance its current obligations.

Ø  Verdict on Novartis plea for Glivec patent today

Ø  HDFC Bank  cuts lending rate by 10 bps to 9.6% effective March 30

Ø  Godrej Properties  announces a new redevelopment project in Malad, Mumbai

Ø  Pollution Control board orders shut down of Sterlite copper plant in Tuticorin, TN

Ø  Coal India, which had so far acquired only two unexplored blocks in Mozambique, has lined up Rs 30,000 Crs for foreign acquisitions and hopes to wrap up at least one deal by March 2014

Ø  Morgan Stanley Asia (Singapore) Pte on Thursday offloaded 28.55 lakh shares of YES Bank.

Key events for the day:

Ø  Listing of Equity Shares of Repco Home Finance Limited.  NSE Symbol: REPCOHOME BSE Code: 535322.

Ø  Release of Manufacturing PMI in India.

Ø  Release of ISM Manufacturing in US.

 

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Weekly Derivatives Strategist 1st April 2013

Weekly Data Feeler

 

Ø  Open Interest of Nifty future decreased by 33.44% with a marginal rise in price by 0.25% from the previous week, indicating short covering of their positions as Put writing at 5600 and 5700 strike was holding the market.

Ø  Bank Nifty future has seen also seen short covering as OI decreased by 30.92% with the rise in price by 1.11% from the previous week.

Ø  Put Call Ratio based on Open Interest of Nifty moved up from 0.82 to 0.98 levels. If this ratio sustains above psychological 1 level then a bounce back move continue in the market in next coming sessions.

Ø  HV (Historical Volatility) of Nifty moved down from 17.08 to 16.06 levels.

Ø  Implied Volatility of Nifty also declined from 15.65 to 15.44 levels.

 

On the Option front, maximum Put OI is at 5600 and 5700 strike, whereas maximum Call OI is at 5700 followed 6000 strike. Even after the market fall maximum Put OI is intact at 5600 and 5700 strike which indicates that this zone is likely to act as a medium term support for the market.

 

Nifty future has fallen down sharply from 5967 to 5604 levels in last nine trading sessions by making lower lows levels. After such fall a bounce back move may be seen but overall sentiment would remain negative till Nifty future sustains below 5850 levels. If it sustains above 5650 levels then a bounce back move may be seen towards 5770-5850 levels. If it fails to hold 5600 levels then further selling pressure may get intensified towards 5500 levels.

 

Bank Nifty future also fallen down sharply from higher levels but has taken strong support around psychological 11000 levels and bounced back towards 11375 levels in last two trading sessions.  If it sustains above 11200 levels then up move may be seen towards 11500-11700 levels. If it sustains below 11000 levels then it may correct till 10800-10700 levels.

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Derivatives Strategist 1st April 2013

Data Feeler: Nifty future on the last day of March Expiry closed on a positive note with some relief rally seen from lower levels. Nifty future witnessed lackluster move for the first half of trading session but in the later half a strong short covering rally was seen with fresh buying seen in almost across the board. Nifty future for the day, if sustains above 5680 levels then bounce back may be continued towards 5720-5750 levels. Whereas sustaining below 5650 levels may put further selling pressure towards 5600 levels. Looking at the option concentration data for April series, maximum put OI is concentrated at 5600 followed by 5700 strike price and maximum call OI is at 5700 followed by 6000 strike price. Bank Nifty for the day has immediate support around 11200 levels whereas strong hurdle around 11500 levels.

 

Put Call Ratio based on Open Interest of Nifty moved up from 0.81 to 0.98 levels. Historical Volatility of Nifty moved down from 16.17 to 16.06 levels and Implied Volatility also moved down from 15.48 to 15.44 levels.

 

Market witnessed buying interest almost across the board especially in Metal, CG, CD, PSU, Banking, IT, Reality, Power, Tech and HC space whereas selling pressure was seen only in Auto sector stocks. Nifty future closed at premium of 32 points in previous trading session.

 

The market turnover increased by 35.9% in terms of number of contracts traded vis-à-vis previous trading day whereas in terms of rupees increased by 35.65%.

 

Derivative Calls: Buy on TECHM & KOTAKBANK.

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First Morning Technical Call 1st April 2013

MARKET OUTLOOK

Nifty (5683): S&P CNX Nifty closed at its highest level in 5 trading days after making a panic low of 5604 , its lowest in 86 trading sessions and now 200DMA 5627 is acting as strong support on closing basis. Financial year end closing gave NAV prop-up in many stocks and if the positive sentiments  are carried on into the new financial year ,then a rally till 5788 & 5831 could be possible. Today Monthly Auto sales number would drive the sentiment 5660 is the mid-point till this level is held on lower side then rally till 5744 & 5788 becomes possible while below 5660 then correction till 5620 & 5575 is on cards as fluid poli tical condition, Euro zone problem and North Korea declaring war could be drag. CNX500 gainers above 20% YTD (Year Till date) FINPIPE+56%, GUJALKALI+47%, MINDTREE+33%, TCS+24%, HCLTECH+28%, INFY+24%, BERGERPAINT+21% and PIDILITEIND+20%. Today SIEMENS & WIPRO will move out of Nifty with NMDC & INDUSINDBANK replacing them. Current account deficit widens to $32.6 bn, 6.7% of gross domestic product (GDP) in the third quarter of the current fiscal. Novartis to expect Supreme Court verdict on cancer drug on Monday.

SENSEX (18836) : Sensex has closed Gap created on 27^th November 2012 by making panic low of 18568 and recovered to close positive high in 5trading days. Any rally would resist around 19k & 20DMA 19132, while 100DMA 19336 & 50DMA 19464 are levels to watch. Today Sensex has to hold 18725 which would be important Mid-point holding which 18920 & 19035 are possible levels on higher side, while below 18725 then selling pressure would start where 18630 & 18485 are possible levels on lower side.

 TECHNICAL CALLS 

BUY GODREJ INDUSTRIES Rs.296: GODREJ INDS has made an unconventional inverted head and shoulder pattern on daily charts which could breakout above 300 levels. The stock is showing good signs of a possible up move which is doe in the stock for a few days now. The stock is trading above its 20 DMA at 290 and the 200 DMA at 283 which are good support levels for the stock. The stock looks good for an up move of at least 8-10 % in the days to come.

SELL STERLITE INDUSTRIES Rs.94:   The stock is down 19.7% YTD and trades near 4years low of Rs.86 and looks very weak to move below Rs.86. Stock on daily & weekly chart has made inverted Cup & Handle which indicates any rise should be sold into. Stock trades below all major averages with Dead Cross also forming 200DMA Rs.104, 100DMA Rs.106 and 50DMA Rs,101 and 200 Week .M.A Rs.148.

 

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