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3. stocks

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Friday, 6th February 2015
Index Levels :
INDEX
NIFTY#
(8661.05)
SENSEX#
(28717)
#as
Market Trend (Nifty):
SUPPORTS
RESISTANCES
8640 / 8570 /
8750 / 8850 /
8530 / 8450
9000
28640 / 28300 /
28960 / 29400 /
28000
29850
Period
Current Trend
Short Term Trend*
on 6th February 2015
DOWN
Trend Reversal Point
(TRP)Nifty close basis
UP ABOVE
8860
Medium Term*
UP
DOWN BELOW
8450
Long Term Trend*
UP
DOWN BELOW
7100
*Trend is based on close prices.
Imtiaz Merchant’s Best Picks:
Indices:
COMPANY NAME
SIZE
SECTOR
INFOSYS
LARGE
CAP
INFO. TECH
UPL
MID CAP
INDUSTRIALS
LUPIN
LARGE
CAP
HEALTHCARE
CURRENT
PRICE
2229
428
1567
Domestic
Indices
Close
Points
% Chg
BSE Sensex
28717
-133.06
-0.46
Nifty
8661.05
-50.65
-0.58
Dollar/Rupee
61.69
-0.04
-0.06
Note: (Buying should be done from a medium to long term perspective)
Market Brief
Amid growth concerns, global cues and lower than expected corporate earnings, triggered a
correction in the market last week, and it closed lower by almost 2 percent. The underperforming
sectors were Auto, Capital Goods, and Power. Information Technology and Consumer Goods sector
held on with gains. This is a crucial month for the market with Delhi election results, concerns over
Crude oil prices and forthcoming Budget, all this will determine the trend going forward.
Technically, the short term trend for the market has turned down. However, the intermediate
(medium) trend is still up and it may remain so as long as Nifty is above 8450. Bulls will still control the
market and it is still a buying time for investors so long as 8450 is held. On the higher side, the
resistance to watch out is 8850. A close above this level, Nifty will start a renewed upwards journey.
And this may only happen only on positive news flows. In the near term, we expect market to be in a
broader range between 8450 and 8850.
The extreme short term range for the market is 8530 and 8850. The markets going forward will be
extremely volatile and range bound. Investors should use declines in the market to buy selected
stocks from sectors like Healthcare, Consumer Goods, Information Technology and Infrastructure.
Investors are suggested to exit the under-performing and weak stocks in rally. This is a good portfolio
re-structuring time.
`
Advance/
Decline
BSE
NSE
Advance
Decline
AD
Ratio
UnChanged
809
2078
0.39:1
100
300
1127
0.27:1
42
Global Indices
Close
Points
% Chg
Dow Jones*
17884.88
211.86
1.20
NASDAQ*
4765.10
48.40
1.03
FTSE*
6865.93
5.91
0.09
Nikkei
17648.50
143.88
0.82
Hang Sang
24679.39
-86.10
-0.35
Straits Times
3431.36
24.78
0.73
#as
on 6th February 2015
Institutional
Activity
FII*
Buy
Sell
4126.53
4222.98
Net
(Cr)
-96.45
DII**
1339.04
1223.55
115.49
FII* Foreign institutional investor DII** Domestic institutional invest
Not going to judge Modi's 1st full-year Budget: Rajan
While Reserve Bank of India Governor Raghuram Rajan has
linked further rate cut rates to Prime Minister Narendra Modi's
first full-year Budget, he's quick to emphasize he's not
conducting a trial. "I'm not sitting in judgment over the
government," Rajan, 52, said in an interview with Bloomberg TV
India's Harsha Subramaniam at the central bank's headquarters
in Mumbai on Wednesday. "My role is to keep inflation under
control, and historically the problem has been that fiscal,
expansionary fiscal policies have an effect on inflation in India."
Along with inflation data, Rajan flagged Modi's Budget on
February 28 as one of the key determinants of future policy
moves when he held the benchmark rate at 7.75 per cent on
Tuesday. Interest rate swaps show that investors are betting on
another 75 basis points of cuts in the calendar year. In the policy
statement, Rajan says he wanted to see "high-quality fiscal
consolidation". He added that "the unlikely possibility of
significant fiscal slippage" is an upside risk to hitting his inflation
target of six per cent for January 2016. "It has to be that the
package that is put together, and let me emphasize the
package, has to be such that it gives us comfort that inflation
will not be enhanced," Rajan said, adding that he won't be
looking at a specific deficit number. Rechanneling spending that
is "mistargeted" toward capital expenditure that creates supply
would help contain inflation, Rajan said, adding that such a
move would be positive. "Things like that will be what we would
look for," Rajan said.
NEWS PERSPECTIVE
Jubilant FoodWorks: No real uptick in
consumer demand yet
Jubilant FoodWorks (Jubilant), the operator of
Domino’s Pizza and Dunkin Donuts outlets in India,
reported a weak set of numbers for the December
2014 quarter. Notably, the 1.9 per cent same-store
sales (SSS) growth number, which comes after five
quarters of negative SSS growth, can be misleading,
even as it was higher than Street expectations of a
flattish number. The reason: the latest number is
largely a function of low base effect in the
corresponding quarter of last fiscal and does not
indicate any sign of improvement in consumer
demand. Jubilant’s SSS growth had fallen 2.6 per
cent in the December 2013 quarter. "The SSS
growth number looks better cosmetically primarily
due to a low base. There is no conclusive evidence
of a dramatic change in consumer sentiment,"
Jubilant’s management said in a post-results call
with investors. The management is cautiously
optimistic about future demand trends and growth
prospects.
In the December quarter, weak Ebitda margins ate
away a large part of the top-line gains. A 479-basis
point year-on-year fall in the tax rate provided some
support to the net profit, which grew at a far slower
pace than sales. Jubilant's net sales grew 21.4 per
cent year-on-year to Rs 554 crore while net profit
grew by a subdued 4.2 per cent to Rs 35 crore. Both
these numbers, though, were largely in line
with Bloomberg consensus estimates of Rs 551
crore and Rs 36 crore, respectively. Price hikes of 3
per cent implemented in November 2014 partly
aided top-line growth, and so did new store
openings. Benign input costs (down 101 basis points
to 21.9 per cent of sales) were more than offset by
higher employee costs (up 229 basis points to 20.8
per cent) and rental costs (up 76 basis points to 9.7
per cent). Thus, Ebitda margins contracted by 170
basis points to 13.1 per cent compared to the yearago period. While strong addition of new stores (41
Domino's, 12 Dunkin Donuts) pushed up rental
costs in the quarter, employee costs were fuelled by
a hike in salaries and a higher employee base.
`
ITE – 35* Top Gainers & Losers
Gainers
Losers
Stocks
%
Stocks
%
CIPLA
42.85
L&T
-16.22
LUPIN
31.97
CAIRN INDIA
-16.19
SUN PHARMA
26.65
RELIANCE INDS.
-8.06
DR.REDDY’S
22.64
# % = 3 months Return
ITE – 211** Top Gainers & Losers
Gainers
Losers
%
Stocks
Stocks
%
Vaibhav Global
Cairn India
Finolex Inds.
Mcleod Russell
27
23
20
19
Ratnamani Metals
Gati
Guj Gas Co.
Page Industries
61
59
53
48
Whirlpool India
48 Just Dial
17
Techno Elec.
46 ONGC
17
CCL Products
45 Escorts
16
Symphony
42 Biocon
15
Amara Raja Batt.
38 Firstsource Soln.
14
Gateway Distriparks
37 CMC
13
# % = 3 months Return
BSE Top Gainers & Losers
Gainers
Losers
Stocks
%
Stocks
%
BHUSANSTL
11.96
CEATLTD
6.27
HDIL
8.68
APOLLOTYRE
5.93
SADBHAV
6.63
J&KBANK
5.49
INDIACEM
5.46
SUNTV
5.41
#as
on 6th February 2015
`
Nifty ends below 8,700; Tata Motors slumps 5%
Benchmark indices ended lower for the sixth straight session on heavy selling in shares of auto companies
with Tata Motorsleading the decline on weak third quarter earnings. Further, investors remained cautious
ahead of the US jobs and wages data due to be released later in the day for further clues as to when the
Federal Reserve might raise interest rates.
The Delhi assembly polls on 7 February are likely to dictate the trend on the bourses on Monday as market
participants remain wary of the outcome. The 30-share Sensex lost 133 points to end at 28,718 marks and
the Nifty slipped 51 points to close at 8,661.
Among broader markets, BSE Midcap and Smallcap indices underperformed the benchmark indices- BSE
Midcap and Smallcap indices plunged between 1-2%. Meanwhile, foreign portfolio investors sold shares
worth a net Rs 27.43 crore yesterday, 5 February 2015, as per provisional data.
Surprise rate cut by RBI coupled with additional liquidity announcement from ECB have led to excellent
gains in the market. With reduction in policy rates, focus is now on government action on reforms and
fiscal consolidation. Expected announcements in the Union Budget as well as action on recently passed
ordinances would be closely watched out for in the near term, Dipen Shah, head- private client group
research, Kotak Securities added.
Global Markets:
Japanese shares rose on Friday after oil prices rebounded, but investors remained cautious ahead of a U.S.
jobs report later in the day that could give clues on the timing of the U.S. Federal Reserve's plan to raise
rates. The Nikkei share average ended 0.8% higher at 17,648. For the week, the Nikkei fell 0.1 %.
Meanwhile, the Hang Seng index fell 0.4%, to 24,679.39, while the Shanghai Composite Index lost 1.9%, to
3,076 points.
Further, european stocks fall ahead of the U.S. non-farm payrolls report for January due later in the day
with Germany dropping the most. The DAX is down 0.66% while France's CAC 40 has lost 0.27% and
London's FTSE 100 is lower by 0.06%.
Rupee: In line with equity markets, the rupee fell by three paise to 61.76 against the American currency on
fresh dollar demand from banks and importers.
`
Key Stocks: On the sectoral front, BSE Auto index was the top loser down nearly 3% followed by
Healthcare, Bankex, Oil & Gas and Power indices down over 1%. However, BSE IT, Teck and FMCG emerged
as the gainers and were up nearly 1% each.
From the Auto space, Tata Motors, M&M, Hero Moto, Bajaj Auto and Maruti Suzuki slipped between 0.55%.
Shares of Tata Motors ended lower by 5% after India’s biggest automobile manufacturer missed estimates
by a huge margin. Net profit fell 25.5 per cent to Rs 3,581 crore from Rs 4,804 crore in the year-ago period.
Unfavourable revaluations of foreign currency debt, unrealised hedges, higher depreciation and
amortisation and a provision for capital cost of buildings at Singur, amounting to Rs 310 crore, also
impacted margins and profits.
Among banks, Axis Bank, HDFC Bank, SBI and ICICI Bank dipped between 0.5-2.5percent. HDFC Bank
dropped over 2%. It has risen around Rs 10,500 crore through simultaneous share sales to institutional
investors on Indian and US exchanges.
Banking stocks gained focus in focus after the Reserve Bank of India said in its guidelines for
implementation of Countercyclical Capital Buffer (CCCB) that the CCCB may be maintained in the form of
Common Equity Tier 1 (CET 1) capital or other fully loss absorbing capital only, and that the amount of the
CCCB may vary from 0 to 2.5% of total risk weighted assets (RWA) of the banks.
GAIL and Tata Steel slipped between 1-3% on caution ahead of the announcement of its Q3 results later
during the day. Shares of Cipla lost over 1%.The pharmaceutical major, Cipla and Pune-based unlisted
Serum Institute will plan a marketing tie up under which Cipla will sell Serum's products in selected
markets abroad. Among its peers, Sun Pharma and Dr Reddy’s Lab lost between 1-2.5%. BHEL, Tata Power,
Coal India, ONGC and RIL were some of the notables losers and lost between 1-5%. On the flip side, HDFC,
Sesa Sterlite and ITC gained between 1-2.5%.
Shares of Infosys ended higher by 1.6% on the BSE after Infosys BPO secured an IT services deal with Dutch
insurance services firm a.S.R. for supporting back-office operations. Among its peers, Wipro and TCS gained
0.75 each. Orange SA has explored various acquisitions in Africa, including assets owned by Bharti Airtel
Ltd, as the French company seeks to bolster its business in the region, according to people. The stock
climbed 1%.
Markets breadth on the BSE ended weak with 2,010 shares declining and 863 shares advancing.
`
‘Markets are directionally efficient, meaning that today’s price
reflects what is currently known about the future direction of
the markets.’
*ITE-35 index is a well diversified Index with 35 stocks large size companies developed by Pragmatic Wealth Management research group. The
ITE-35 Index commensurate with the Sensex & Nifty.
** ITE -211 is a broad based index constitutes 211 companies from large, mid and small size companies spread over 9 ethically permissible
sectors. This is parent (macro Index) and it commensurate with BSE- 500 and S&P CNX 500
Caution: We do not encourage intraday trading and Derivative trading. Stocks should only be sold upon procuring the delivery.
Disclaimer: The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can
be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are
solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness. The
above recommendations are based on the theory of Technical & Fundamental Analysis Combined. © Pragmatic Wealth Management Pvt. Ltd.