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LKP Securities

Published on 22/01/2020 5:17:45 PM

Bourses head for yet another sharp fall on wednesday

Indian equity bourses headed for yet another sharp fall on Wednesday, with Sensex & Nifty ending lower by around 0.50% each. The start of day was on firm note, aided with Union Minister Piyush Goyal’s statement that India is working on ways to have fairer and more equitable terms in its trade relationships with various countries. But soon, indices lost gaining momentum, amid report that direct tax collections till January 15 stood at Rs 7.3 lakh crore, down 5.2% from the year-ago period. Gross direct tax collections - after refunds but before devolution to states - for FY20 is budgeted to grow at 17.4% to Rs 13.35 lakh crore.

Losses got intensified during second half of the session, as a UN study report stated that economic inequality has risen to historic high levels across various countries with over 70 per cent of the world population living in countries where inequality has grown further and these include India and China. Domestic sentiments remained downbeat, after credit rating agency, Ind-Ra report stated that it expects GDP to grow at 5.5 percent year-on-year in FY21 but added that downside risks persist. This is only a marginal improvement over the GDP growth of 5 percent estimated by the National Statistical Office for the FY20.

On the global front, European markets were trading in green terrain, as German economic confidence strengthened significantly at the start of the year to the highest level since 2015, as the signing of the Phase 1 deal between the US and China eased trade tensions. Asian markets ended mostly higher, after Malaysia's central bank unexpectedly reduced its interest rate as policymakers said it as a pre-emptive measure to secure growth amid price stability. The Monetary Policy Committee of Bank Negara Malaysia decided to reduce the overnight policy rate by 25 basis points to 2.75 percent.

Back home, the realty sector stocks ended in red terrain, amid a private report stating that housing sales fell 9 per cent during October-December across nine cities to 60,453 units due to economic slowdown and liquidity crisis. Further, stocks related to the auto industry also settled on lower note, after automobile dealers' body Federation of Automobile Dealers Associations (FADA) said retail sales of passenger vehicles (PV) dropped around 9 percent to 2,15,716 units in December 2019, as compared to sales of 2,36,586 units in December 2018, as even the best offers failed to lift weak consumer sentiments.

Finally, the BSE Sensex lost 208.43 points or 0.50% to 41,115.38, while the CNX Nifty was down by 62.95 points or 0.52% to 12,106.90.

The BSE Sensex touched high and low of 41532.29 and 41059.04, respectively and there were 09 stocks advancing against 21 stocks declining.

The broader indices ended in red; the BSE Mid cap index fell 0.32%, while Small cap index was down by 0.13%.

The few gaining sectoral indices on the BSE were IT up by 1.09%, TECK up by 1.06% and Telecom up by 0.24%, while Metal down by 1.57%, Oil & Gas down by 1.49%, Power down by 1.45%, PSU down by 1.37%, Utilities down by 1.25% were the top losing indices on BSE.

The top gainers on the Sensex were Nestle up by 1.86%, TCS up by 1.61%, Infosys up by 1.06%, HCL Tech. up by 1.02% and SBI up by 0.78%. On the flip side, ONGC down by 5.13%, NTPC down by 4.27%, Kotak Mahindra Bank down by 2.46%, Maruti Suzuki down by 2.28% and HDFC down by 1.92% were the top losers.

Meanwhile, in order to advise the Centre on measures needed to build a strong ecosystem for nurturing innovation and start-ups in the country, the government has set up a National Startup Advisory Council, which will help to drive sustainable economic growth and generate large scale employment opportunities.

The Council will suggest measures to foster a culture of innovation amongst citizens and students in particular, promote innovation in all sectors of economy across the country, including semi-urban and rural areas, support creative and innovative ideas through incubation and research and development to transform them into valuable products, processes or solutions to improve productivity and efficiency and create an environment of absorption of innovation in industry.

Besides, it will also suggest measures to facilitate public organizations to assimilate innovation with a view to improving public service delivery, promote creation, protection and commercialization of intellectual property rights, make it easier to start, operate, grow and exit businesses by reducing regulatory compliances and costs, promote ease of access to capital for startups, incentivize domestic capital for investments into startups, mobilize global capital for investments in Indian startups, keep control of startups with original promoters and provide access to global markets for Indian startups.

The CNX Nifty traded in a range of 12,225.05 and 12,087.90. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 4.89%, Grasim Industries up by 2.64%, Nestle up by 1.84%, TCS up by 1.78% and Adani Ports up by 1.07%. On the flip side, ONGC down by 5.25%, Coal India down by 5.24%, NTPC down by 3.97%, Tata Motors down by 3.03% and UPL down by 2.99% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 13.99 points or 0.18% to 7,624.69, France’s CAC fell 1.10 points or 0.02% to 6,047.09 and Germany’s DAX was up by 29.49 points or 0.22% to 13,585.36.

Asian markets ended mostly higher on Wednesday as earlier concerns about the coronavirus outbreak in China abated. The World Health Organization (WHO) is expected to declare a Public Health Emergency of International Concern in response to the coronavirus outbreak which appears to have originated in eastern China, and spread to more Chinese cities including Beijing and Shanghai. Seoul shares ended higher after data showed South Korea's government spending surge helped the economy post its fastest quarterly growth in more than two years. Though, Malaysian shares ended lower after government report showed that the country's consumer price inflation rose 1% year-on-year in December, following a 0.9% increase in November.

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LKP Securities

Published on 22/01/2020 1:37:36 PM

Key indices continue to trade lower in afternoon deals

Indian equity benchmarks continued their weak trade in afternoon session, on the back of sustained selling activities by market-participants. Traders remained wary with Ratings and Research (Ind-Ra) report that it expects GDP to grow at 5.5 percent year-on-year in FY21 but added that downside risks persist. This is only a marginal improvement over the GDP growth of 5 percent estimated by the National Statistical Office for the FY20. Traders also took a note of private report that India needs a whopping $2.64 trillion investment to meet the UN's sustainable development goals (SDGs), offering the private sector an investment opportunity of over $1.12 trillion by 2030. Meanwhile, the government has set up a National Startup Advisory Council to advise the Centre on measures needed to build a strong ecosystem for nurturing innovation and start-ups in the country. On the sectoral front, stocks related to FMCG sector remained in focus with ratings agency Crisil in its latest report stating that the Rs 4-lakh crore FMCG sector is likely to register 9 percent growth in FY20, down 4 percentage points. However, it said an expected recovery in rural demand, coupled with steady urban demand, is set to lift revenue growth of the FMCG industry to 10-11 percent in FY21.

On the global front, Asian markets were trading mostly higher, as China's response to a virus outbreak tempered some fears of a global pandemic. Back home, the BSE Sensex is currently trading at 41178.79, down by 145.02 points or 0.35% after trading in a range of 41174.03 and 41532.29. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index fell 0.17%, while Small cap index was up by 0.18%.

The top gaining sectoral indices on the BSE were IT up by 1.21%, TECK up by 0.90%, Healthcare up by 0.51%, Basic Materials up by 0.38% and Realty was up by 0.10%, while Power down by 1.77%, PSU down by 1.48%, Utilities down by 1.40%, Metal down by 1.06% and Auto was down by 1.05% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.55%, HCL Technologies up by 1.31%, Nestle up by 1.27%, TCS up by 1.17% and Ultratech Cement was up by 0.65%. On the flip side, ONGC down by 4.11%, NTPC down by 3.46%, Power Grid down by 2.64%, Maruti Suzuki down by 2.22% and Kotak Mahindra Bank was down by 2.03% were the top losers.

Meanwhile, domestic ratings agency Crisil in its latest report has said that the Rs 4-lakh crore fast moving consumer goods (FMCG) industry is likely to register 9 percent growth in the current financial year (FY20), down 4 percentage points. However, it said an expected recovery in rural demand, coupled with steady urban demand, is set to lift revenue growth of the FMCG industry to 10-11 percent in FY21. It added that better storage levels in reservoirs, which are over 40 percent higher than the year-ago period due to better rains, an 8 percent increase in winter crop output and better visibility for the upcoming seasons will lift the rural consumption.

According to the report, higher spending by the government on rural infrastructure could benefit rural incomes and thereby demand for FMCG products. It said urban areas growth for the FMCG industry is unlikely to improve over the 8 percent level due to a growth in modern retail. However, the growth will not be uniform across companies. Besides, it noted that packaged food segment, which accounts for 50 percent of the industry's revenues will continue to grow at up to 10 percent in FY20 and inch up to 12 percent in next fiscal on a shift to branded products and deeper penetration of product segments.

The report further stated that the personal and home care segment, which accounts for a third of FMCG revenue, is also likely to see recovery in growth to 8-9 percent in FY21 from 6-7 percent in FY20, attributing the slower growth to a focus on discretionary spend-driven products in the segment. It expects the operating profits of companies to remain healthy at up to 20 percent level despite a hit of up to 1.5 percentage points on raw material costs and promotional expenses. It added that the credit profiles of FMCG companies are likely to remain stable, supported by well-capitalised balance sheets.

The CNX Nifty is currently trading at 12120.95, down by 48.90 points or 0.40% after trading in a range of 12119.15 and 12225.05. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Grasim Industries up by 1.88%, Infosys up by 1.45%, Zee Entertainment up by 1.41%, Nestle up by 1.28% and TCS was up by 1.22%. On the flip side, Coal India down by 4.70%, ONGC down by 4.20%, NTPC down by 3.93%, Tata Motors down by 3.13% and Power Grid was down by 2.84% were the top losers.

Asian markets were trading mostly higher; Hang Seng increased 295.19 points or 1.05% to 28,280.52, Nikkei 225 surged 166.79 points or 0.7% to 24,031.35, KOSPI rose 27.56 points or 1.23% to 2,267.25, Shanghai Composite gained 15.09 points or 0.49% to 3,067.23 and Straits Times was up by 6.86 points or 0.21% to 3,254.03.

On the flip side, Jakarta Composite was down by 4.35 points or 0.07% to 6,233.80.

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Swastika Investmart Ltd

Published on 22/01/2020 10:41:49 AM

Alert: 12125-12100 is important support zone for Spot Nifty for any recovery ahead of budget otherwise market texture will become weak.

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Angel Broking Pvt Ltd

Published on 22/01/2020 10:31:41 AM

Nifty Bank Outlook - (30947)

Bank Nifty as well started on a negative note and after trading in a range ended with a loss of 0.43% at 30947.

On the daily chart, Index has managed to hold the support levels of 30800 which previously twice acted as support and now coincides with 89EMA. Yesterday, the bank index formed a doji around this support zone and going ahead it will be crucial to see how the bank index reacts around this support zone. A sustain trade above 'Doji' pattern at 31170 can trigger a bounce back towards 31435-31600 levels. On the flip side, a break below 30800 may open doors for further weakness towards 30580 and 30340 levels . Traders are hence advised to keep a tab on the above levels and trade accordingly

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Angel Broking Pvt Ltd

Published on 22/01/2020 10:31:30 AM

Sensex (41324) / Nifty (12170)

Post the sell-off in Monday's session, the index opened yesterday's session marginally negative following the global cues. Nifty traded within a range of 70 points and ended the day with a loss of almost half a percent.

The index opened tad below the 12200 mark yesterday and traded within a range. However, there was some good stock specific momentum seen during the day wherein several midcap names were in momentum. Hence, the midcap index showed some outperformance compared to the large cap names. Overall, as highlighted yesterday, we interpret this down move as a correction within an uptrend which again is a good buying opportunity for positional traders to accumulate stocks for the next leg of the up move. As far as index levels are concerned, the support for Nifty for the day is placed in the range of 12150- 12130. Traders are advised to use dips in the support zone as a buying opportunity as the index could again show some pullback towards 12220-12250.

Inspite of some consolidation in the benchmark indices, stockspecific movements are providing better trading opportunities. Yesterday, the housing finance companies showed decent outperformance and traders are advised to focus on such pockets where there is price up move along with good volumes.

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Geojit Financial Services Ltd.

Published on 22/01/2020 10:06:49 AM

Nifty Outlook: FIIs add Index future shorts

On Tuesday, short positions in index futures saw the maximum built up by FIIs, with OI rising by 10249 contracts. However, positive bets were not far behind as index put shorts and index future longs were also boosted by 8655 and 5402 contracts respectively, suggesting that the directional bias is not as strong as yesterday, having entered the 12200- 12000 region. Meanwhile, Nifty option spectrum shows that OTM call shorts are being covered, and with weekly contract expiring tomorrow, this freed up position could sway the bias. For now, 12000 continues to be a critical support, while a push beyond 12300 could be required to shrug off the bearish belt hold.

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Geojit Financial Services Ltd.

Published on 22/01/2020 10:06:36 AM

F&O OUTLOOK

Review

Nifty futures closed at 12203.10 with a loss of 0.49% on Tuesday. Open interest of the current month expiry declined by 1.64 lakh shares indicating unwinding of long positions in the markets. Nifty premium fell to 33.25 points from previous day's 38.6 points. Put-Call ratio edged lower from Monday's 1.13 to 1.08 amid covering of Put options in the ATM and OTM strikes. India's Volatility index, VIX spiked by 2.94% to end the day at 15.8625 from last day's 15.41. Maximum Call OI was seen at 12,300 level while maximum OI in the Put options was at 12,200 strike.

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Geojit Financial Services Ltd.

Published on 22/01/2020 10:05:07 AM

Nifty Outlook:

Nifty to open close to 12220 and could again witness selling. Support is seen close to 12120-12100 (50DMA). A break below 12100, which is less expected, could accelerate the fall towards 11900 and 11730. 12230-12280 would resist Nifty in the near term.

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