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Nifty Outlook

Markets traded volatile for yet another session and ended marginally lower. After the flat start, the benchmark plunged lower due to a sharp fall in index heavyweights, Reliance however resilience in banking and FMCG majors gradually pared the losses as the day progressed. Finally, the Nifty settled at 15,752 levels; down by 0.18%. Meanwhile, the broader indices outperformed the benchmark and gained in the range of 0.3-0.5%.

The recent consolidation phase indicates caution citing the recent fall in the global indices. We reiterate our view to focus on sectors/themes which are showing resilience and attracting buying interest on dips. We like auto and FMCG among the sectoral pack while a rebound in energy and metal may continue to underperform. Participants should align the positions accordingly.

News

* Maruti Suzuki announced its June sales numbers wherein total sales grew by 5.8% YoY to 1,55,857. Exports volumes grew by 40% YoY.

* M&M Auto division reported volume growth of 64% YoY to 54,096. The tractor segment volumes de-grew by 13% YoY mainly due to decline in domestic volumes.

* Tata Motors announced auto sales numbers wherein CV volumes were up 69% YoY and PVs volume was up 88% taking overall volume growth to 79% YoY.

Derivative Ideas

NIFTY shed 0.18% and closed at 15752.05 on 1st July. The index after opening flat witnessed pressure in the first half, however it managed to close flat giving a rebound after taking support at 15500 levels. The data suggests base formation around 15500-15600 levels at least for the short term. We expect NIFTY to test its hurdle at 15950 in coming sessions and thus suggest selling PE as per the given levels.

Strategy:- SELL NIFTY 7 JUL 15200 PE@ 40-45, STOP LOSS 60, TARGET 10

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