Weekly view:
Some pullback may be seen if Nifty recovers above 8720…
Research analysts
Amit Gupta
Azeem Ahmad
Raj Deepak Singh
[email protected]
[email protected]
[email protected]
February 6, 2015
Weekly
Recommendations…
Deal Team
– At Your
•
Service
Infosys Ltd (INFTEC)
Buy INFTEC February Future in the range of | 2200-2220. Target | 2450 Stop loss | 2092
Rationale:
In the recent declines, technology stocks have shown significant resilience and outperformed the
Nifty. Despite broader market weakness, Infosys gave its all-time high closing in the last session. This
move has triggered closure of positions at its highest Call base of 2200 strike. Since December, near
30% open interest has been closed in Infosys futures. Looking at the short covering trend in both
futures & options segment, we believe Infosys is likely to move towards | 2450 in the days to come.
Last week recommendations follow up
Date
Underlying
30-Jan-15
WIPRO
View
Strategy
Reco
Target
Bullish
Buy Future
613
665
2
SL Profit/Loss
574
19500
Comment
Profits booked
The Week Gone By…
Bank
drags
belowService
8700…
DealNifty
Team
– Nifty
At Your
•
The Nifty traded on a weak note for the entire week and witnessed continuous selling pressure. Apart from
technology and FMCG space, all other sectors came under pressure while banking stocks took the most plunge
•
During the week, the banking index lost almost 5% against 1.7% drop in the Nifty. The Bank Nifty also breached its
January 15 lows making it a more than 10% decline from the top of 20900 levels
•
The market breadth also remained under severe pressure throughout the week due to broader market weakness. The
market breadth has turned positive only once since January 20, 2015
•
India volatility index remained above 20 throughout the week and is unlikely to come down in the near term due to
upcoming Budget and result announcements
•
In the week, major Nifty gainers were Cairn India (9.13%), HCL Tech (9.1%), Wipro Ltd (6.1%), Hindalco (5.4%) and
Sesa Sterlite (4.3%)
•
On the other hand, Nifty losers of the week were Jindal Steel & Power (-10.5%), Punjab National Bank (-10%), Bhel (9.5%), M&M (-9.1%) and Bank of Baroda (-8.9%)
Nifty highlights
Week on week
Spot
Fut
COC(%)
Tot Fut OI
PCR OI
PCR Vol
ATM IV (%)
Current
8661
8712
10.7
52681600
0.89
0.97
18.7
Previous
8809
8872
6.2
52865050
0.96
1
19.8
Change (%)
(1.7)
(1.8)
-
(0.3)
-
-
-
4
Outlook for coming week…
Highest Put base of 8500 major support…however, on higher side, some pullback may
be seen if Nifty recovers above 8720…
•
The Nifty was dragged by almost 150 points during the week and due to lack of buying support continued to slide. It
ended the week near the lows
•
Lower-than-expected results from banking stocks was the primary reason behind the recent sell-off. Stable global
cues were also unable to help the index and it was unable to sustain any intermediate recovery
•
OTM Call strikes witnessed continuous writing during the week and Call 8800 and 8900 strikes added more than 15
lakh shares each during the week. The decline in PCR-OI from 0.96 to 0.89 also indicates the same. However, the
major Put base was formed at the 8500 strike with more than 30 lakh shares, which is likely to act as major support
for the Nifty on declines
•
On the higher side, sustainability above 8720 may induce some recovery towards 8900. We continue to believe that
upward bias should be maintained in the technology space, which is likely to outperform the Nifty in the current
consolidation
Nifty Options build-up for February Series…
14
Call OI
12
Put OI
10
6
4
2
6
9200
9100
9000
8900
8800
8700
8600
8500
0
8400
OI in Millions
8
Bank
recovery
only
if it takes out 19200…
DealNifty
Team
– Atlikely
Your
Service
•
The Bank Nifty witnessed a fall of over 1000 points for a second consecutive week. Both PSU and private banking
stocks remained under pressure during the week
•
The RBI move on keeping key rates unchanged added more pressure to the index
•
The index added over 22% in open interest since last Friday with the 9% fall, which clearly indicates formation of
short positions
•
The current price ratio of the Bank Nifty/Nifty has breached the important level of 2.20. Below this it is likely to retest
the levels of 2.14-2.12 indicating that the banking stocks are likely to underperform
•
The Bank Nifty has closed below the highest Put base of 19000. It means the Bank Nifty may witness some more
selling pressure towards previous consolidation price of 18400 if it does not recover above 19200 soon
Bank Nifty options build up for February Series
Call OI
350000
Put OI
300000
250000
200000
150000
100000
50000
7
19500
19400
19300
19200
19100
19000
18900
18800
18700
18600
18500
0
FIIs flows remain muted in cash and index futures but stock futures segment witnesses fresh
Deal Team – At Your Service
shorting…
•
Post the sharp rally, FIIs have taken out over US$130 million from the equity segment during the week. Even
though banking stocks corrected significantly and the Nifty also declined nearly 4% from its recent peak,
figure of outflows remained low compared to the amount they poured in the second half of January. On the
other hand, they continued to favour India’s debt segment as they parked in over $760 million. Despite profit
taking in the equity segment, inflows in the debt segment kept the INR resilient against the US dollar
•
In the index futures segment, FIIs created fresh short positions by keeping maximum exposure in banking
pack. They created fresh shorts of well over US$135 million during the week. In stock futures, their stance
remained more bearish as they built short positions of over US$650 million in the last five trading sessions.
This led to a sharp decline in many index stocks with a major fall observed in PSU banks. In Index options
segment, FIIs remained buyers, which suggests creation of some hedging positions against long portfolios
•
Among EM equities, FII activity remained mixed in nature, where they remained sellers in countries like India
and Turkey, while on the other hand Philippines, Thailand and Taiwan witnessed inflows from FIIs
FII & DII flows
FII
Date
DII
Index Fut
Stock Fut
Index Opt
Cash
30-Jan
11.67
-260.53
213.47
28.82
-5.99
2-Feb
-0.55
-305.57
124.63
-94.99
-36.28
3-Feb
-76.81
-251.02
110.00
-7.00
-22.19
4-Feb
35.72
-142.04
46.22
-3.44
-11.66
5-Feb
-93.2
44.5
118.4
NA
52.74
* FII and DII’s net figure is in million USD as per provisional data
8
Cash
Dax
likely
to move
of 11500…
Deal
Team
– Attowards
Your target
Service
S&P 500: S&P to trade with positive bias with support at
2000
S&P Index
In the first five sessions of February, the S&P has bounced sharply
and covered January’s decline completely. Despite below
expected trade deficit numbers, S&P remained strong above 2050.
The highest Put base at 2000 strike has expectedly given support
to the index and is likely to remain an important support in the
coming days. Also, sustaining above 2050 could allow the index
to extend its rally towards its highest Call base of 2100. On the
lower side, the 10-month moving average, which had supported
the entire rally of S&P since it moved up from 1370 levels, is
currently placed at 2000 levels
Call OI
Put OI
7
6
5
OI Millions
4
3
2
1
Dax: Dax likely to move towards 11500: After breaching the
9
Dax Index
120
100
80
60
40
20
Call OI
Put OI
11000
10900
10800
10700
10600
10500
10400
10300
10200
0
10100
key hurdle of 10100, the Dax added over 9% gains making an up
move of nearly 17% from the bottom of 9380. Sustaining above
10000 led to a short covering rally, which ultimately took the
index to all-time highs of 10980. During the month, the euro
stabilised near 1.12 levels post reactive decline on ECB’s stimulus
announcement. As the ECB is likely to carry on with its stimulus
plan, the euro may continue to remain subdued in the coming
days. The options structure displays highest Call and Put
concentration at 10700 strike. The current move of the Index looks
to be taking a breather near its recently formed highs. We may
see a test of a key support of 10700-10550 in the coming days,
which could be utilised for entering longs for target of 11500
2100
2090
2080
2070
2060
2050
2040
2030
2020
2010
2000
0
OI in Thousands
•
8
10000
•
US$INR:
US$INR–toAt
trade
in theService
range of 61.3-62.7
Deal Team
Your
•
In the February series, the open interest concentration continued between 62 and 62.5 Call strikes with both having build-up of
over 1.60 lakh contracts. Last week writers managed to maintain their upper hand and kept the currency pair below 62 levels. On
the other hand, 62 Put strike has witnessed noticeable increase in OI with premium of 70 paisa and the same now carries highest
OI of over 1.2 lakh contracts. This set up suggests range bound biased in US$INR for near future.
•
The currency pair traded in a narrow range throughout the week witnessing some short additions towards the end of week. Also,
in the last few sessions, we observed a shift of short positions from near month to March series, which we believe is a cautious
stance taken by participants prior to major forthcoming event of Union Budget.
•
The dollar index seemed to have met resilience near recent highs of 95. Also below expected trade deficit data from US forced the
index to cool off towards 93.5 in later part of the week. This too has allowed INR to stabilize near 62.
•
Following weak sentiments among global equities, FIIs have pulled out some funds from equities in last week. Though inflows in
India’s debt segment were continued as they pour in over | 2300 crore during the week. This has offset outflows from equities and
restricted INR from depreciating against US$.
•
The overall scenario illustrates that US$INR is likely to trade in the range of 61.3-62.7 in coming days with FIIs flows remains key
factor in both equity and debt segments
US$INR February series options build-up
US$INR future price and OI Chart
63
62
61
60
59
58
Open Interest
US$INR
4-Feb
30-Jan
27-Jan
21-Jan
16-Jan
13-Jan
5-Jan
8-Jan
31-Dec
26-Dec
22-Dec
17-Dec
9-Dec
12-Dec
4-Dec
1-Dec
21-Nov
26-Nov
18-Nov
57
13-Nov
65.50
65.00
64.50
64.00
63.50
63.00
Put OI
64
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
10-Nov
Call OI
62.50
62.00
61.50
61.00
60.50
60.00
59.50
59.00
OI in Thousands
180000
160000
140000
120000
100000
80000
60000
40000
20000
0
Stock
…. Service
Deal Futures
Team Scanner
– At Your
Long build-up
Short build-up
Current OI
CMP
Canara Bank
7947
417.7
40.73%
-6.40%
5.53%
Crompton Greav
19124
160.15
40.56%
-16.02%
9.50%
5.27%
Yes Bank
17392
814.25
38.01%
-6.05%
115.15
7.12%
4.30%
M&M
20268
1157.4
35.70%
-9.16%
721.85
5.64%
1.88%
Havells
6871
245.95
26.40%
-5.46%
Stock
Current OI
CMP
Dabur
2296
274.3
21.87%
6.24%
Wipro
17110
644.9
12.09%
Jubilant Foods
9357
1472.35
HDIL
6286
Ranbaxy
26645
Stock
% Chg in OI % Chg in price
Long closure
Stock
% Chg in OI % Chg in price
Short covering
Current OI
CMP
UPL Ltd
4528
430.95
-24.52%
16.52%
-6.18%
Cairn
11946
254.75
-19.54%
8.70%
-10.62%
-12.34%
Bharat Forge
14030
1059
-19.35%
1.80%
185.8
-10.34%
-0.43%
HCL Tech
24049
1965.6
-14.79%
9.27%
113.35
-10.15%
-3.94%
Sesa Sterlite
23327
211.25
-7.99%
3.94%
Current OI
CMP
JSW Energy
5784
102.75
-17.41%
-15.85%
India Cem
10478
101.75
-15.42%
Apollo tyres
5573
214.25
Exide Ind
3531
Syndicate Bank
6632
Stock
% Chg in OI % Chg in price
11
% Chg in OI % Chg in price
Stock
Deal options
TeamOI– activity….
At Your Service
Top liquid stock options
High Call Base
Calls
Calls
Stock
Expiry
Strike
OI in Contract
% Chg in OI Stock
Expiry
Strike
OI in Contract
% Chg in OI
IOB
26-Feb
52.5
192
2300
INFY
26-Feb
2160
50
-76
JUBLFOOD
26-Feb
1450
220
1733
WOCKPHARMA
26-Feb
1100
33
-48
TATAGLOBAL
26-Feb
157.5
240
1400
WIPRO
26-Feb
630
118
-42
UCOBANK
26-Feb
70
608
1167
ONGC
26-Feb
390
612
-34
RCOM
26-Feb
75
384
473
ITC
26-Feb
365
80
-30
High Put Base
Puts
Puts
Stock
Expiry
Strike
OI in Contract
% Chg in OI Stock
Expiry
Strike
OI in Contract
% Chg in OI
HCLTECH
26-Feb
1950
113
5550
HDFCBANK
26-Feb
990
7
-73
WIPRO
26-Feb
640
48
4700
SSLT
26-Feb
215
11
-58
IOB
26-Feb
50
1060
464
HDIL
26-Feb
115
12
-57
BPCL
26-Feb
760
90
329
TECHM
26-Feb
2750
6566.666667
616
IDFC
26-Feb
180
137
-48
IOB
26-Feb
55
104
-36
12
Forthcoming
during
the week …
Deal Team –Events
At Your
Service
•
•
•
•
•
India:
09 Feb : GDP and Quarterly Result of DLF, L&T and Bank of India
10 Feb : Import-Export Numbers and Quarterly Result of Motherson Sumi and Aditya Birla Nuvo
11 Feb : Quarterly Result of PFC, BPCL and Power Grid
12 Feb : Industrial Production, CPI and Quarterly Result of Coal India, Reliance Capital, BHEL, Cipla, ONGC, Hindalco and Glenmark Pharma
13 Feb : Quarterly Result of United Breweries, SAIL, OFSS, SBI, M&M, Bosch, REC, HPCL, Reliance Communications and Eicher Motors
•
•
•
•
US:
11 Feb : MBA Mortgage Applications
12 Feb : Monthly Budget Statement and Initial Jobless Claims
13 Feb : University of Michigan Expectations
•
•
Euro zone:
12 Feb : Industrial Production
13 Feb : Trade Balance & GDP
•
•
•
Japan:
09 Feb : BoP Current Account Balance and Trade Balance
10 Feb : Tertiary Industry Index MoM
12 Feb : PPI and Machine Orders
•
•
•
China:
08 Feb : Trade Balance
10 Feb : CPI, PPI
•
•
•
UK:
10 Feb : Industrial & Manufacturing Production
10 Feb : NIESR GDP Estimate
12 Feb : RICS House Price Index & BoE Inflation Report
•
•
•
•
Germany:
09 Feb : Trade Balance & Current Account Balance
12 Feb : CPI
13 Feb : GDP and WPI
Portfolio allocation in Derivatives Products…
•
•
•
•
•
It is recommended to spread out the trading corpus in a proportionate manner between the various derivatives
research products
Please avoid allocating the entire trading corpus to a single stock or a single product segment
Within each product segment, it is advisable to allocate equal amount to each recommendation.
For example: The ‘Daily Derivatives’ product carries two intraday recommendations. It is advisable to allocate equal
amount to each recommendation
Stock Trader & Quant Picks recommendations should be considered in cash segment and stoploss on closing basis.
Time frame for these recommendations is 3 month.
Allocation
Products
Return Objective
Product wise Max allocation
allocation
per stock
Frontline Mid-cap
Number of Calls Stocks
stocks
Duration
Daily Derivatives
5%
2-3%
2 Stocks
1%
2-3%
Intraday
Weekly Derivatives
10%
3-5%
2 Stocks
3-5%
5-7%
1 Week
High OI stock
5%
2-3%
2-3 Stocks
5-7%
7-10%
1-2 Weeks
Monthly Derivatives
15%
3-5%
4-7 Stocks
7-10%
10-15%
1 Month
Global Derivatives
5%
2-3%
1-2 index strategy
-
-
1 Month
Stock Trader/ Stock in Focus
15%
2-3%
5-6 Stocks
7-10%
10-15%
3 Months
Quant Picks
10%
2-3%
2-3 Stocks
7-10%
10-15%
3 Months
Alpha Trader
5%
2-3%
2-3 Alpha strategy
5%
-
3 Months
Volatility Insights
5%
2-3%
1-2 Strategy
8-10%
10-15%
1-2 Month
Arbitrage Opportunity
5%
2-3%
2-3 Stocks
> 2.5%
>2.5%
Event Based
Positional / Daily Futures
5%
2-3%
8-12 Stocks
1-3%
2-5%
1-14 days
Index option & Strategy
5%
3-4%
2-5 Nifty
2-3%
-
1-14 days
Stock option & Strategy
5%
3-4%
2-8 Stocks
-
3-5%
1-14 days
Currency Futures
5%
3-4%
3-5 Calls
-
-
Intraday
14
Pankaj Pandey
Head – Research
[email protected]
ICICIdirect.com Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road no.7, MIDC
Andheri (East)
Mumbai – 400 093
[email protected]
15
Disclaimer
ANALYST CERTIFICATION
We /I, Amit Gupta B.E, MBA (Finance), Raj Deepak Singh BE, MBA (Finance), Azeem Ahmad MBA (Fin) Research Analysts, authors and the
names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the
subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific
recommendation(s) or view(s) in this report.
Terms & conditions and other disclosures:
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brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India’s largest private
sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance,
venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com.
ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in
India. We and our associates might have investment banking and other business relationship with a significant percentage of companies
covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their
relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report
and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way,
transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior
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under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent
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acting in an advisory capacity to this company, or in certain other circumstances.
This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has
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ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have
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ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period
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16
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banking or brokerage services from the companies mentioned in the report in the past twelve months.
ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report.
ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party
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of interest at the time of publication of this report.
It is confirmed that Amit Gupta B.E, MBA(Finance), Raj Deepak Singh BE, MBA(Finance), Azeem Ahmad MBA (Fin), Research Analysts of
this report have not received any compensation from the companies mentioned in the report in the preceding twelve months.
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service
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ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company
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Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial
ownership in various companies including the subject company/companies mentioned in this report.
It is confirmed that Amit Gupta B.E, MBA(Finance), Raj Deepak Singh BE, MBA(Finance), Azeem Ahmad MBA (Fin), Research Analysts do
not serve as an officer, director or employee of the companies mentioned in the report.
ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the inf,ormation presented in
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17