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US indices hit fresh new all time highs as better results, stronger $ & rise in commodities fuelled stocks higher.

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Indian Indices: Asian markets opened in the green as overnight US cues prompted buying in equities with Dow Jones scaling another fresh high. The return of risk on trade is seeing stocks & indices touch fresh highs with the Brazilian 'Bovespa' leading from the front. The Index has given returns of over 15% YTD (year to date) & over 66% on a yearly basis.


Nifty scales 8900 for the 1st time in 5 months with Bank Nifty closing @ 20860 which is the highest all time closing high recorded. The left out feeling is seeing huge pent up buying which is keeping indices overbought with any fall being brought into. Oil &gas, banks, auto's& financials are contributing to the gains while IT stocks saw profit booking after a heady rally in the last week.


The BSE Sensex is currently trading at 28611.63, down by 49.95 points or 0.17% after trading in a range of 28603.41 and 28726.10. There were 14 stocks advancing against 16 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.22%, while Small cap index was up by 0.24%.The CNX Nifty is currently trading at 8868.75, down by 10.45 points or 0.12% after trading in a range of 8865.25 and 8897.15. There were 26 stocks advancing against 25 stocks declining on the index.

MARKET INDICATORS

·           

 

Group ATopGainers

 

 

Company

Price (Rs)

% chg

Reliance

1168.60

7.38

Goderejpor

373.80

5.10

Rajeshexpo

522.15

4.37

KTKbank

126.25

3.15

Group ATopLosers

 

 

Marksans

48.90

-3.65

Titan

443.00

-3.12

BEL

1521.00

-2.44

GPPL

159.30

-2.18

Market Statistics

 

 

 

BSE

NSE

Advances

1357

771

Declines

1054

717

 

Technical view: Nifty will now attempt the previous high of 8968 hit in September 2016 which will act as resistance while support now emerges closer to 8840 which was the earlier resistance. Bank Nifty is in blue sky territory with new highs being seen & will attempt 21200 while support now comes around 20576.


INDEX PERFORMANCE

 

 

Indices

Support

Resistanes

Sensex

28638

28925

Nifty

8872

8955

 

Trading ideas :INDIACEM (Buy above Rs 173, for target of Rs 182, SL at Rs 168): Stock has broken out from a cup and handle pattern, which has aided India Cement resume its prior uptrend. The breakout has been accompanied with impressive volumes. Other oscillators also indicate that the current momentum would extend. We advise to Buy INDIACEM above Rs 173, Stop Loss at Rs 168 and Target of Rs 182.


Derivative Snippets: Markets traded with a positive bias, as the index call option writers continue to cover their short positions for the third straight day. Nifty 8800 CE to 9000 CE strikes witnessed massive short covering.

FIIs were net sellers in cash market segment to the tune of Rs. 1435 crores.

FII’s index future long/short ratio at 2.2x vs 2.5x with an addition of ~22K short contracts.

The Fiscal Responsibility and Budget Management (FRBM) committee has suggested setting up of a fiscal council to oversee and verify the credibility of the government’s Budget numbers and fiscal targets for any given year.


Nifty Movers: The top gainers on Nifty were Reliance Industries up by 7.22%, Axis Bank up by 2.31%, Coal India up by 2.14%, BhartiInfratel up by 2.10% and Bosch up by 1.99%.

On the flip side, Infosys down by 1.78%, NTPC down by 1.25%, TCS down by 1.05%, Tata Steel down by 0.91% and Eicher Motors down by 0.82% were the top losers.

Top Sectoral& Stock Screening:  The top gainers on the Sensex were Reliance Industries up by 7.28%, Axis Bank up by 2.19%, Coal India up by 2.05%, BhartiAirtel up by 1.91% and Asian Paints up by 1.81%. On the flip side, Infosys down by 1.59%, NTPC down by 1.16%, TCS down by 0.96%, Tata Steel down by 0.76% and GAIL India down by 0.73% were the top losers.

 

 

 

On the global front: On the global front, Asian shares were trading mostly in green, joining a record-setting night for world markets as investors cheered upbeat factory activity in Europe and solid earnings on Wall Street. China’s home price growth slowed for the fourth straight month as demand cooled further in the biggest cities, signaling government curbs to defuse a bubble in the sector were starting to pay dividends.

 

Global Signals: The Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.76 points or 0.04% to 1,707.31, KOSPI Index increased 3.01 points or 0.14% to 2,105.94, Taiwan Weighted increased 18.19 points or 0.19% to 9,782.12 and Hang Seng increased 207.54 points or 0.87% to 24,171.17.On the other hand, Nikkei 225 decreased 11.38 points or 0.06% to 19,370.06, Jakarta Composite decreased 6.5 points or 0.12% to 5,334.49 and Shanghai Composite decreased 4.4 points or 0.14% to 3,248.93.

 

Oil Marketing Companies Decent show-Report-Sharetipsinfo

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OMCs reported decent results in Q3 driven by strong volume growth and inventory gains. Core earnings of OMCs adjusted for inventory gains/losses came in at Rs12.7/12.1/7.6/share for BPCL/HPCL/IOCL versus reported EPS of Rs15.7/15.7/8.4.

Marketing margin of BPCL/IOCL improved by 2.3%/2% qoq to Rs4,143/3,860/mt. However, HPCL’s margin contracted qoq by 13.1% to Rs4,058/mt. Total debt declined by 8.3% qoq but interest cost increased by 42% qoq to Rs11.8bn due to capitalization of IOCL’s Paradip refinery which led to increase in interest cost.

Adjusting for refining inventory gain, GRM for Q3FY17 for BPCL/HPCL/IOCL came in at $3.9/4.08/5.1/bbl. Gross UR on kerosene came in at Rs16bn which was entirely compensated by the government and thus there was no burden on OMCs.

After adjusting for one-offs, core earnings of IOCL & BPCL came in-line with our estimates but HPCL missed the mark on this metric as marketing margins disappointed. However, broadly reported earnings of all three OMCs were in-line.

Hence, we expect upgrades to FY17E EPS by 20-25% with FY18 EPS following suit. Also, the OMCs look attractive on a dividend yield basis (c5% on CMP). So, we maintain our buy BUY recommendation on all the three OMCs with IOCL being our most preferred pick.

IOCL outperformed on GRM

GRM for Q3FY17 for BPCL/HPCL/IOCL came in at $5.9/6.4/7.7/bbl which implies an increase of 90% qoq on an average. Increase in GRM was mainly driven by widening of product crack spreads due to tighter demand/supply dynamics in the market and inventory gains across the OMC pack with IOCL achieving the highest GRM.

 Blended marketing margin declined

The OMC pack witnessed a decline in marketing margins on a qoq/yoy by 3.5%/9.2% yoy to Rs4,020/mt (avg. of OMCs) as HPCL’s marketing margin fell by 13.1%. Petrol’s marketing margin during YTDFY17 averaged Rs1.54/ltr while diesel’s averaged Rs1.42/ltr.

Interest cost increased qoq

Overall borrowings of all the three OMCs on a qoq basis declined by 8.3% to Rs695bn. However, interest cost increased by 42% qoq to Rs11.8bn mainly due to capitalization of IOCL’s Paradip refinery which led to increase in interest cost

 

Overall market share increased

For Q3FY17, IOCL lost market share by 44bps to 42.92% and HPCL/BPCL gained market share by 66/6bps to 18.67%/19.65%. Combined market share of the OMC increased by 28bps qoq to 81.2%.

Key takeawaysfrom BPCL’sconcall

Reason for lower GRM in Q3 due to commissioning of Kochi refinery’s new units, the impact (around $1/bbl) of which will be there in Q4FY17 as well. Management has indicated 80% utilisation in FY18 of the incremental 6MT capacity in Kochi refinery. Incremental benefit in terms of GRM on entire 15Mt volume is expected to be around $2/bbl while opex will increase by $0.5/bbl. The FCCU will get commissioned in Q1FY18. Kochi Tax deferral on a sustainable basis is Rs2.5bn. p.a. for 15 years.

 

Kochi refinery’s GRM stood at $6.1/bbl while the GRM of Mumbai refinery was at $5.75/bbl

during the quarter.

 

PSU market share in petrol & diesel was c95% & slightly less than 95% respectively.

 

Loss due to discount of 0.75%on digital payments was about Rs.180-190mn. till Dec.

2016.

 

Increase in other operating expenditurewas largely on account of higher transportation

expense and no one-off items.

 

There was a 2% increase in diesel volume growthin 9MFY17 for the oil PSUs. However, due to competition private players have grown at a faster rate versus oil PSUs.

 

Digital paymentsaccount for around 28% of total marketing sales currently a bulk of which comes from the loyalty program.

 

9MFY17 capex was Rs120bn.out which Rs60bn. was spent on the Russian acquisition. Capex for FY17 is guided at Rs125bn. excluding the Russian acquisition. FY18 capex is guided at Rs80bn. and for FY19 it is Rs105bn.

 

FY18 regular maintenance capexshould be Rs30bn., refining capex should be Rs.25bn., marketing capex is Rs7.5bn. & E&P capex is guided at Rs15bn.

 

Consolidated debt stood at Rs300-320bn. Standalone debt is Rs160bn, BPRL is

Rs140bn. and Bina debt is at Rs40bn. $ denominated debt is 90%+ of the total d

ebt balance. Debt repayment in FY17 is around $300mn. which is due in March 2017 and another $250mn. in Nov.-Dec. FY18.

 

Scheduled maintenanceof Kochi refinery is scheduled for Oct.-Nov. 2017.

 

Petchem plant-It is expected to be commissioned by the end of

2018. Out of the total capex budget of Rs46bn., Rs.4.15bn. has already been spent.

Key takeaways from Indian Oil concall

Paradip refinery-It has fully stabilised as of now with all units including secondary units

currently operating. Utilisation was 80% in the last couple of months while the full year

averageutilisation stood at 63%. Product evacuation and pipeline dispatches have also

started. VAT deferment for Paradip would be cRs18bn. on an annual basis. Interest cost

expensed would be around Rs9.5bn. p.a. going forward while depreciation should be

Rs.12bn. p.a. Opex for Paradip refinery is $2/bbl which is in-line with the opex of IOCL’s

other refineries at $1.92/bbl. Going forward, GRM will improve significantly as the Paradip refinery processes 100% high sulphur crude from FY18.

 

GRM-Core GRM (ex. Paradip& inventory gains) was $5.47/bbl for Q3 ($4.79/bbl in

Q2FY17) while including inventory gains, GRM (ex. Paradip) stood at $7.67/bbl. Core GRM excluding inventory gain was $4.92/bbl in 9MFY17 ($7.95 including inventory gains).

 

Entry tax-IOCL has been affected in the states of Bihar, UP and Haryana. Most of the

entry tax related cases might go against IOCL. Rs.1,923crores of provision has been

created for entry tax related charges and the management doesn’t expect any such

provisions going forward.

 

Capex guidance-FY18 capex has been guided at Rs196bn. while FY19 capex has been

guided atRs250bn.

 

Debt-Total DebtofRs370bn., 70% is in foreign currency and 30% is in INR terms.

 

Other pointers-1)Market share in MS increased in Q3. 2) Fuel & loss stood at 8.5% in

9MFY17 which is slightly lower compared to the same period last year.

Outlook and Valuation

After adjusting for one-offs, core earnings of IOCL & BPCL came in-line with our estimates but HPCL missed the mark on this metric as marketing margins disappointed. However, broadly reported earnings of all three OMCs were in-line. Hence, we expect upgrades to FY17E EPS by 20-25% with FY18 EPS following suit. Also, the OMCs look attractive on a dividend yield basis (c5% on CMP). So, we maintain our BUY recommendation on all the the OMCs with IOCL being our most preferred pick.

 

Have a Nice Day  !!

Sensex up 193 pts, Nifty ends above 8850; Buy back lifts lifts TCS 4%

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Indian Indices: Indian equity benchmarks continued their momentum to trade near highest point of the day in late afternoon session as broadly positive global indices and a strong rupee buoyed investors' sentiments. Sentiments also remained optimistic with the report that GST Council on Saturday approved a law to compensate states for any loss of revenue from the implementation of the new national sales tax but deferred approval for enabling laws to the next meeting. The council will meet again on March 4 and 5 to approve the legally vetted draft of the supporting legislations for Central GST (C-GST) and Integrated GST (I- GST), days before the start of the second leg of the Budget Session. Besides, investors opted for bargain-hunting as well as short-covering ahead of derivatives expiry this week. On sectoral front, buying was witnessed in most of the steel sector stocks with Care Ratings report that the country's steel production and consumption is likely to remain higher in 2017-18 from 89.79 MT of crude steel during 2015-16 backed by an increase in infrastructure allocation in the Budget.

The BSE Sensex is currently closed at 28661.58, up by 192.83 points or 0.68% after trading in a range of 28419.27 and 28652.91. There were 23 stocks advancing against 7 stocks declining on the index.The broader indices were trading in green; the BSE Mid cap index was up by 0.67%, while Small cap index was up by 0.78%.

The CNX Nifty is currently shut up at 8879.20, up by 57.50 points or 0.65% after trading in a range of 8809.80 and 8863.95. There were 37 stocks advancing against 14 stocks declining on the index.

MARKET INDICATORS

·           

 

Top Movers (Group A)

 

 

Company

Cmp

% chg

Gainers

 

 

Marksans

48.70

19.95

DCB Bank

152.65

10.58

Punjlloyd

22.15

10.20

Jindalsteel

100.20

7.80

Losers

 

 

Aiaeng

1462.00

-2.86

Havells

414.55

-2.66

Coromande

333.15

-2.43

Gruh

369.95

-1.78

Market Statistics

 

 

 

BSE

NSE

Advances

1450

843

Declines

647

251

 

Crporate Front:

Shares of DilipBuildcon rallied over 5 per cent on the Bombay Stock Exchange after the realty major said it has received a letter of award issued by National Highways Authority of India for the Project of four laning of Tuljapur-Ausa Section of NH-361 from Km 0.000 to km 55.835 under NHDP Phase IV on Hybrid Annuity Mode in the State of Maharashtra.

 

Macroeconomic front:

In a bid to bring awareness among the youth regarding the growing cyber attacks and cyberbullying, Delhi-based IT risk assessment and digital security services provider Lucideus on Monday launched a first-of-its-kind cyber security course.

 

On the global front:

On global front, European markets were trading in green as investors eyed earnings and fresh economic data, as well as monitoring for any more details from President Donald Trump on his economic policies. Asian markets were trading mostly in green. Back home, in scrip specific development, Tata Steel traded higher on exploring possibility of entering overseas markets like Bangladesh and Myanmar with retail branded steel solution products. The company is taking this step boosted with success of its solution business in the retail segment in the domestic market.

Commodity Updates:

Commodity Prices (MCX):

Commodity

Rs

% Chang

Gold

29260.00

-0.34

Silver

42789.00

-0.34

Crude oil

3639.00

0.97

Natural Gas

185.60

-2.93

Alluminium

125.90

0.2

Copper

402.40

0.55

 

Top Sectoral& Stock Screening:The top gaining sectoral indices on the BSE were Metal up by 2.24%, Basic Materials up by 1.40%, Telecom up by 1.40%, Realty up by 1.36% and Utilities up by 1.24%, while there were no losing indices on BSE.

Top Nifty Movers:The top gainers on Nifty were Tata Steel up by 4.12%, Idea Cellular up by 3.35%, GAIL India up by 2.45%, BPCL up by 2.36% and Asian Paints up by 1.87%. On the flip side, Axis Bank down by 0.84%, ITC down by 0.80%, Tech Mahindra down by 0.76%, HDFC down by 0.75% and Yes Bank down by 0.61% were the top losers.

 

Global Signals:

Asian markets were trading mostly in green; KOSPI Index increased 3.81 points or 0.18% to 2,084.39, FTSE Bursa Malaysia KLCI increased 5.13 points or 0.3% to 1,712.81, Jakarta Composite increased 6.34 points or 0.12% to 5,357.27, Nikkei 225 increased 16.46 points or 0.09% to 19,251.08, Shanghai Composite increased 37.89 points or 1.18% to 3,239.96 and Hang Seng increased 112.34 points or 0.47% to 24,146.08. On the flip side, Taiwan Weighted decreased 26.72 points or 0.27% to 9,753.20.

All European markets were trading in green, UK’s FTSE 100 increased 12.45 points or 0.17% to 7,312.41, France’s CAC increased 28.94 points or 0.59% to 4,896.52 and Germany’s DAX increased 78.54 points or 0.67% to 11,835.56.

 

 

Markets start week on quiet note after huge February rally as Japanese data disappoints even as M&A activity picks up

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Indian Indices: Asian markets opened mixed with the Japanese 'Nikkei' seeing marginal losses as export data released today disappointed coming below most estimates. However the huge Kraft Heinz bid for Unilever globally would be the talking point this week as M&A activity picks up. This also should see higher valuations for most FMCG stocks as value buying props up stock prices. 


Nifty saw a huge move till almost 8900 led by banks with Bank nifty scaling new all time highs in morning trade on Friday. However domestic profit booking trimmed the gains with Nifty closing @ 8821.The left out feeling seems evident for most foreign investors & any fall is being used as an opportunity to buy with huge scramble to buy HDFC bank shares on Friday seeing the stock hit fresh all time highs. For this holiday shortened week expect volatility to rise as we head for derivative contracts expirythis Thursday.


The BSE Sensex is currently trading at 28499.07, up by 30.32 points or 0.11% after trading in a range of 28419.27 and 28521.16. There were 18 stocks advancing against 12 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.57%, while Small cap index was up by 0.71%.

 

MARKET INDICATORS

·           

 

Group ATopGainers

 

 

Company

Price (Rs)

% chg

Marksans

47.60

17.24

Jindalstel

100.65

8.28

Adanient

99.10

5.76

HCC

41.05

5.66

Group ATopLosers

 

 

AIAENG

1471.50

-2.23

GVKPIL

6.58

-1.94

Suntv

690.60

-1.81

Havells

420.40

-1.29

Market Statistics

 

 

 

BSE

NSE

Advances

1675

1064

Declines

505

420

 

Technical view: Nifty finds strong support around 8770 which was an earlier resistance while 8900 acts as strong resistance. Bank Nifty now finds support around 20500 while 20900 will act as resistance.


INDEX PERFORMANCE

 

 

Indices

Support

Resistanes

Sensex

8785

8933

Nifty

28345

28850

 

Trading ideas :PETRONET (Buy above Rs 401, for target of Rs 418, SL at Rs 390): Stock has broken out from a short term consolidation pattern which took 12 weeks to complete. The immediate resistance of Rs 396.5 was breached convincingly accompanied with impressive volumes. Momentum oscillators have also witnessed positive crossover which further adds confirmation to our positive stance.


Derivative Snippets: Markets surge higher as the index call option writers run for a cover, massive short covering was witnessed in Nifty 8800 to 9000 call options and Banknifty 20200 to 20700 call options.

 FIIs were net buyers in cash market segment to the tune of Rs. 8043 crores.


FII’s index future long/short ratio at 2.9x vs 3.1x. Heavy call option buying (short covering) to the tune of 15k contracts was observed.


Nifty Movers: The top gainers on Nifty were Idea Cellular up by 2.97%, BhartiAirtel up by 2.27%, GAIL India up by 1.81%, Tata Power up by 1.66% and TCS up by 1.51%.

On the flip side, Hindalco down by 1.50%, Tech Mahindra down by 1.06%, HDFC down by 0.99%, Bosch down by 0.99% and Yes Bank down by 0.87% were the top losers.

Top Sectoral& Stock Screening:  The top gaining sectoral indices on the BSE were Telecom up by 1.91%, Consumer Durables up by 1.13%, Basic Materials up by 0.88%, Realty up by 0.78% and Utilities up by 0.72%, while FMCG down by 0.04% was the sole loser on BSE.

The top gainers on the Sensex were BhartiAirtel up by 2.30%, GAIL India up by 1.80%, Tata Steel up by 1.42%, TCS up by 1.41% and Bajaj Auto up by 1.14%.

 

 

 

On the global front: On the global front, Asian shares were trading mostly in green, with Tokyo shares erasing morning losses and Hong Kong equities resuming a rally. Japan’s exports rose in January at a slower pace than the previous month due to a decline in shipments to the US and the Lunar New Year holidays and as concerns about growing trade protectionism cast doubts over the outlook.

 

Global Signals:The Asian markets were trading mostly in green; KOSPI Index increased 0.53 points or 0.03% to 2,081.11, FTSE Bursa Malaysia KLCI increased 4.09 points or 0.24% to 1,711.77, Jakarta Composite increased 15.89 points or 0.3% to 5,366.82, Nikkei 225 increased 16.76 points or 0.09% to 19,251.38, Shanghai Composite increased 27.08 points or 0.85% to 3,229.15 and Hang Seng increased 81.32 points or 0.34% to 24,115.06.On the other hand, Taiwan Weighted decreased 25.33 points or 0.26% to 9,754.59.

 

WEEKLY NIFTY TRADING VIEW FOR THE WEEK FEB 20, 2016–FEB 26, 2016

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Events to watch this week

  • Upbeat US data fuel growth, inflation hopes
  • Yellen: Risky to wait too long to raise rates
  • Mnuchin confirmed as US Treasury Secretary
  • Greek bailout deadline in doubt

The Week ahead:

  • US markets are closed for President's Day on Monday, 20 February
  • China reports trade data on Tuesday, 21 February
  • Flash purchasing managers’ indices are released globally on Tuesday, 21 February
  • Eurozone consumer price data is reported on Wednesday, 22 February
  • UK Q4 gross domestic product are reported on Wednesday, 22 February
  • US existing home sales data are released on Wednesday, 22 February

For the week,Global equities continued their advance on increasing evidence of improved US economic growth and rebounding inflation. Major US indices again notched record highs during the week, though bond yields held steady. Despite the strong data, the yield on the 10-year US Treasury note fell to 2.415% from 2.43% a week ago. Oil prices dipped, with West Texas Intermediate crude at $53.50 a barrel versus $54.10 last week and global Brent falling to $55.60 from $57.10. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), edged up to 12 from 10.9.

NIFTY- 8,821.70
CRUDE OIL-Rs 3,607barrel
GOLD-Rs 29,355 gram
Rs/$-Rs 67.02

MARKET ROUND UP

Indian equity benchmark indices viz. the S&P BSE Sensex and the Nifty 50 index registered small gains in the week ended Friday, 17 February 2017 amid mixed global cues. However, the overall sentiment in the broader market was subdued during the week.

The Sensex rose 134.50 points or 0.47% to settle at 28,468.75. The Nifty advanced 28.15 points or 0.32% to settle at 8,821.70. The BSE Mid-Cap index fell 0.33% and the BSE Small-Cap index declined 0.98%. Both these indices underperformed the Sensex.

Key benchmark indices eked out small gains in what was a volatile first trading day of the week on Monday, 13 February 2017. The Sensex had risen 17.37 points or 0.06% to settle at 28,351.62, its highest closing level since 6 February 2017.

Key benchmark indices settled with small declines in what was a lacklustre session of trade on Tuesday, 14 February 2017. The Sensex fell 12.31 points or 0.04% to settle at 28,339.31, its lowest closing level since 10 February 2017.

Macro Economic Front:

On the Economic Front,India's industrial production declined 0.4% in December 2016 over December 2015, snapping strong 5.7% growth recorded in November 2016. The manufacturing sector's production declined 2% in December 2016, contributing to the overall decline in industrial production.

The all-India general consumer price index (CPI) inflation dipped to 3.17% in January 2017 compared with 3.41% in December 2016. The data was announced after market hours on Monday, 13 February 2017.

The monthly inflation data based on wholesale price index (WPI) rose 5.25% (provisional) for the month of January 2017 as compared to 3.39% (provisional) for December 2016 and minus 1.07% during January 2016. The data was announced during market hours on Tuesday, 14 February 2017.

India's exports rose 4.32% to $22.11 billion in January 2017 and imports rose 10.7% to $31.95 billion. The data was announced after market hours on Wednesday, 15 February 2017. The monthly trade deficit narrowed slightly to $9.8 billion.

Major Action &Announcement:

Tata Motors tumbled 11.13%. The company's consolidated net profit fell 96.22% to Rs 111.57 crore on 4.31% decline in total income to Rs 68708.48 crore in Q3 December 2016 over Q3 December 2015. The result was announced during market hours on Tuesday, 14 February 2017.

Sun Pharmaceutical Industries (Sun Pharma) rose 3.11%. The company's consolidated net profit fell 4.72% to Rs 1471.82 crore on 10.13% rise in total income to Rs 8034.81 crore in Q3 December 2016 over Q3 December 2015. The result was announced during market hours on Tuesday, 14 February 2017.

Dr Reddy's Laboratories (DRL) declined 2.01%. The company said it received an unfavorable ruling in a US court regarding a patent infringement case. The announcement was made during market hours on Thursday, 16 February 2017.

DRL announced that the United States District Court for the District of New Jersey issued its opinion regarding Helsinn Healthcare's patent infringement claims against the company's proposed palonosetron product, pursuant to a paper NDA under section 505(b)(2) of the Food, Drug and Cosmetic Act.

Cipla advanced 2.29%. The company announced that it has launched adult Hepatitis B vaccine in India. Under a co-exclusive agreement with Serum Institute of India (SII), Cipla will market the vaccine for adults while SII will market it for adults and children. The announcement was made during trading hours on Friday, 17 February 2017.

Adani Ports and Special Economic Zone (APSEZ) fell 4.37%. The company's consolidated net profit rose 25.82% to Rs 849.75 crore on 29.48% rise in total income to Rs 2429.56 crore in Q3 December 2016 over Q3 December 2015. The result was announced during market hours on Tuesday, 14 February 2017.

TCS wasup 0.48%. The company said that its board will meet on 20 February 2017 to consider buyback of equity shares. The announcement was made after trading hours on Wednesday, 15 February 2017.

Tata Steel was up 0.04%. The company said that the National Trade Union Steel Coordinating Committee (Steel Committee) in the UK announced that its members have voted to support the company's proposals, including the proposal to close the pension scheme in the UK to future accrual. The announcement was made after trading hours on Wednesday, 15 February 2017.

Global Front:

In Overseas Markets,Japan's economy slowed again in the final quarter of 2016, as feeble spending by consumers took the shine off a pickup in exports and business investment. Japan's real gross domestic product grew 1% on an annualized basis in the three months through December for the fourth consecutive quarter of expansion, the longest stretch of gains since 2013, according to Cabinet Office data released on Monday, 13 February 2017.

China's producer price inflation picked up more than expected in January to near six-year highs. China consumer inflation also rose more than expected, nearing a three-year high as fuel and food prices jumped, data showed on Tuesday, 14 February 2017.

In US, retail sales rose 0.4% in January, a faster pace than had been expected, while the consumer price index rose 0.6% in the month, the largest amount in four years, though this was largely due to a rebound in the price of gasoline.

Global Economic News:

US economy shows signs of strength
After a run of strong economic data from the United States, hopes intensified this week that the reflationary period underway since late 2016 would prove more durable than the four prior upturns during the current business cycle, which began in early 2009. January retail sales were a major bright spot, rising a better-than-expected 0.4%, while December sales were revised up 1% versus a previously reported 0.6% advance. Firmer consumer prices at both the headline and core level, buoyant manufacturing output and upbeat regional Fed manufacturing surveys—particularly the Philadelphia Fed's manufacturing index — which soared to a 33-year high — added to investor optimism. 

Fed’s Yellen reiterates case for rate hikes
After a string of strong economic reports, markets expect the US Federal Reserve to hike rates in the first half of 2017, perhaps as soon as next month’s meeting of the Fed’s rate-setting committee. In congressional testimony this week, Chair Janet Yellen said that it would be risky to wait too long to raise interest rates and that the committee would consider hiking rates in coming meetings. Yellen holds press conferences once per quarter, and the two rate hikes this cycle have both come at meetings that were followed by press briefings. Her next press conference is scheduled for 15 March, with another on 14 June.

Mnuchin confirmed as Treasury pick
US president Donald Trump’s pick for treasury secretary, Steven Mnuchin, was confirmed by the US Senate this week and sworn into office shortly thereafter. Tax reform is expected to be Mnuchin's early focus with Trump unveiling his tax reform package in the next few weeks.

Greek bailout lenders at loggerheads
The International Monetary Fund and eurozone finance ministers remain at odds over the direction of the Greek bailout process. The two sides hope to iron out a deal early next week to allow the IMF to release €7 billion in aid to Greece ahead of European elections, which kick off next month. The creditors hope to keep Greece from becoming a campaign issue in elections in the Netherlands in March and in France in April and May for fear that the matter could further fuel an anti-European Union populist backlash. IMF and Eurogroup finance ministers have been unable to reach agreement on the IMF’s proposal to grant Greece some level of debt relief. Without that relief, the fund says, Greece’s debt is unsustainable.

GLOBAL CORPORATE NEWS

Comings and goings in Washington
It was an eventful week for appointees of President Trump. In addition to Mnuchin taking the helm at Treasury, the president accepted the resignation of his national security advisor, General Michael Flynn. Trump scrambled to nominate R. Alexander Acosta as labor secretary after fast food executive Andrew F. Puzder withdrew his nomination.

S&P 500 earnings on pace for back-to-back gains
With 75% of S&P 500 companies having reported (as of 15 February), aggregate earnings are up 5.2% year over year while revenues have grown 4.3%. According to Hedgeye Risk Management, if these trends hold up, the fourth quarter of 2016 will be the first time in two years that companies will have generated positive earnings for two straight quarters.

NEW 52-WEEK HIGH BSE (A):

 

GAIL

513.00

HDFC BANK

1450.00

INDUSINDBK

1364.30

NEW 52-WEEK LOWS BSE (A):

NOT YET

----

 

MAJOR WEEKLY GAINERS IN BSE A CATEGORY:

CADILA HEALTHCAR

23.06

IIFL HOLDINGS

13.52

AIA ENGINEERING

10.22

MAJOR WEEKLY LOSERS IN BSE A CATEGORY:

SOUTH INDIAN BAN

-13.04

INTELLECT DESIGN

-12.19

BANK OF BARODA

-11.73


Eyes will be set on the certain US economic data releases are:

Monday (20 Feb)
US Holiday Market Closed

Tuesday (21 Feb)
PMI Manufacturing Index

Wednesday (22 Feb)
Existing Home Sales

Thursday (23 Feb)
Jobless Claims

Friday (24 Feb)
Consumer Sentiment

Fundamental Pick of the week:

Derivative Ideas Glenmark Pharmaceuticals Ltd For Target Rs. 980.00

 

After trading with bearish bias for over a week, GLENMARK posted decent recovery from day’s low on 16th February and settled near day’s high, indicating buyer’s interest at current levels. Early signs of recovery are also visible on the daily chart. Considering all, we recommend buying this stock.

Recommendation

Buy  Glenmark Pharmaceuticals Limited   @ 926-930 Stoploss 905 Target  980

Indian Market Outlook:

Markets rebounded swiftly today and gained over half a percent. The upbeat trade deficit figure aided a firm start which was supported by select index majors. Mostly sectoral indices traded in line with the benchmark and ended higher. Besides, recovery in the midcap and smallcap space added to the positivity. We feel the consolidation is not over yet and its range has slightly broadened now. A decisive move above 8850 in Nifty will trigger further up move else range bound bias will continue. Amidst all, stocks are witnessing moves on both sides so traders should focus more on trade management and maintain a balanced portfolio. .

*The Union Cabinet approved the merger of State Bank of India and its 5 associate banks - State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT). The listed associate banks closed up 3-4.5%.

*Bharat Forge announced signing an agreement for a Joint Venture with Israel Aerospace Industries (IAI). Kalyani Strategic Systems (KSSL) and IAI signed the MoU during the Aero-India exhibition at Bangalore. Shares of Bharat Forge closed up 6%.

*Cadila Healthcare announced that the USFDA has inspected the company's Moraiya plant and did not issue observation (483) which meant that the plant met the manufacturing norms successfully. Shares closed up by 19.8%.

TECHNICAL VIEW:

S3

S2

S1

NIFTY

R1

R2

R3

8,690

8,745

8,775

8,821.70

8,877

8,933

8,969


Conclusion:


The NIFTY seems to be locked in a tussle spacing 8827-8715, that’s around a 115 points. Index may now look for an immediate technical trigger to break this deadlock. Some correction towards 8640-8580 levels may set in, if prices break the low @ 8715 mark. In the medium term, the SUPPORT zone now shifts upwards to 8537, the 3 week LOW; followed by 8330, that corresponds to 5 week’s LOW. On the other hand, If 8850 gets breached convincingly, upside to the July 2016 HIGH @ 8935 would be in contention.  

Emerging markets join the rally with strong flows now chasing 'alpha' as developed markets look expensive

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Indian Indices: Asian markets saw routine profit booking in early trade as the Dow Jones index managed to close flat after seeing huge gains in the past few days. The flow of money is now seeing buying emerging markets indices & stocks more aggressively as the developed markets get more expensive. With the MSCI world index hitting all time highs equity flows may continue to chase stocks in the near term.


Nifty rebounded in style & closed within reach of 8800 as IT, energy & gas stocks led the way forward. With expiry due next Wednesday expect another attempt @ 8840 with possibility of hitting 8900 by next week on the cards. For today expect pullback in Auto's, Banks &Mid caps as the broader market may outperform. Shares of HDFC Bank would be in action after the Reserve Bank of India (RBI) removed the heavyweight from ban list for FII Share Purchase. The aggregate foreign shareholding in HDFC Bank has slipped below 72%. The limit specified under the existing FDI Policy is of 74%. Thus, the restriction on purchase of shares of HDFC Bank is withdrawn with immediate effect.


The CNX Nifty is currently trading at 8821.15, up by 43.15 points or 0.49% after trading in a range of 8804.25 and 8896.45. There were 26 stocks advancing against 25 stocks declining on the index.

MARKET INDICATORS

·           

 

Group ATopGainers

 

 

Company

Price (Rs)

% chg

HDFCBank

1413.00

6.45

Wabag

519.50

5.03

Cadilahc

450.50

4.90

Dishman

217.50

4.39

Group ATopLosers

 

 

Godrejind

484.50

-4.27

Aiaeng

1493.00

-3.47

NHPC

30.10

-2.75

Idea

104.85

-2.74

Market Statistics

 

 

 

BSE

NSE

Advances

503

280

Declines

1673

1227

 


Technical view: Nifty now finds strong support around 8720 with 8820 being the resistance on the upside. Bank Nifty also finds strong support around 20000 while 20350 will act as initial resistance.


INDEX PERFORMANCE

 

 

Indices

Support

Resistanes

Sensex

8769

8845

Nifty

28261

28460

 

Trading ideas :TATAMOTORS (Buy above Rs 447 for target of Rs 465, SL at Rs 438):Stock has formed a bullish hammer pattern on the daily charts after hitting a low of Rs 435 in yesterday's trade. Tata Motors bounced from the multiple support line from where it has reversed twice earlier. The stock also after retracing 50% of its previous up move is showing signs of a reversal. We advise to Buy Tatamotors above Rs 447, stop loss at Rs 438 and Target of Rs 465.


Corporate Snippets:

Cadila Healthcarehas said the US health regulator has inspected the company’s Moraiya plant and found it meeting the manufacturing norms.

IL&FS Engineering and Construction Companyhas bagged two pipeline laying contracts worth Rs1.23bn from Gas Authority of India Ltd (GAIL).

Tata Consultancy Services’s (TCS),board of directors would consider a proposal for buyback of equity shares of the company at its meeting to be held on Feb 20, 2017.

NTPC is planning to expand into cement manufacturing with the twin objectives of utilising fly ash from its power stations and create captive demand for electricity. 

Nifty Movers: The top gainers on Nifty were HDFC Bank up by 6.24%,Indusind Bank up by 1.66%, Bosch up by 1.61%, BPCL up by 1.50% and HDFC was up by 1.39%. On the flip side, Idea Cellular down by 3.25%, BhartiInfratel down by 1.82%, Infosys down by 1.79%, TCS down by 1.52% and HCL Tech was down by 1.43% were the top losers.

Top Sectoral& Stock Screening:  The top gaining sectoral indices on the BSE were Bankex up by 1.80%, Oil & Gas up by 0.58%, Consumer Durables up by 0.36%, PSU up by 0.21% and Capital Goods was up by 0.20%, while IT down by 1.21%, TECK down by 1.06%, Metal down by 0.31%, FMCG down by 0.03% and Auto was down by 0.01% were the top losing indices on BSE.

 

 

On the global front:On the global front, Asian stock markets took a breather on Friday from their recent surge as investors took profits, while the dollar inched up after Thursday’s slide and optimism over possible renewed supply cuts by OPEC lifted oil prices. The US markets ended almost flat after a lackluster performance in the last session, as traders expressed some uncertainty about the near-term outlook for the markets following the recent run to record highs.

Global Signals:Asian markets were trading mostly in red; Nikkei 225 declined 132.06 points or 0.68% to 19,215.47, Hang Seng decreased 96.44 points or 0.4% to 24,011.26, Jakarta Composite fell 27.64 points or 0.51% to 5,350.36, Shanghai Composite shed 15 points or 0.46% to 3,214.62, Taiwan Weighted slipped 7.88 points or 0.08% to 9,763.37 and KOSPI Index was down by 3 points or 0.14% to 2,078.84.  On the flip side, FTSE Bursa Malaysia KLCI was up by 2.36 points or 0.14% to 1,709.95.

 

Dow Jones in new orbit as new highs coming on a daily basis with chase for equities seeing huge global liquidity rally

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Indian Indices: Asian markets opened flat with profit booking seen on opening bell even as the US indices chase new highs daily. Globally the equity rally gathers steam with the developed markets seeing new all time highs, led by the US & German indices. The Brazilian 'Bovespa' also seems to be seeing huge interest with new 52 week highs being seen on a regular basis in tandem with the US indices.


Nifty succumbed to profit booking in mid session& broke most near term supports to hit 8715 as the carnage in Tata Motors spoilt sentiment. With expiry for derivative contracts next Wednesday expect higher than normal volatility as foreign flows continue to buy the falls & protect the downsides. For today expect IT & energy to see buying while auto, metals & banks could see further selling on the downside.


The BSE Sensex is currently trading at 28185.31, up by 29.75 points or 0.11% after trading in a range of 28146.19 and 28264.67. There were 18 stocks advancing against 12 stocks declining on the index.The broader indices were trading in green; the BSE Mid cap index was up by 0.53%, while Small cap index was up by 0.57%.The CNX Nifty is currently trading at 8737.80, up by 13.10 points or 0.15% after trading in a range of 8719.60 and 8751.45. There were 31 stocks advancing against 20 stocks declining on the index.

MARKET INDICATORS

·           

 

Group ATopGainers

 

 

Company

Price (Rs)

% chg

JPAssociat

13.25

9.69

IIFL

355.80

4.68

Edelweiss

116.30

3.98

Jindalstel

92.90

3.51

Group ATopLosers

 

 

Godrejind

502.00

-3.43

Southbank

19.90

-2.69

DEN

81.65

-1.63

ITC

269.10

-1.57

Market Statistics

 

 

 

BSE

NSE

Advances

503

280

Declines

1673

1227

 

Technical view: Nifty could find support close to 8675 while 8775 will act as resistance. Bank Nifty finds strong support @ 20000 while 20350 will act as resistance & the weekly expiry today could see volatility spurt intraday.


INDEX PERFORMANCE

 

 

Indices

Support

Resistanes

Sensex

8769

8845

Nifty

28261

28460

 

Trading ideas :HDFC BANK (Buy above Rs 1324 for target of Rs 1354, SL at Rs 1310): HDFC Bank has broken out from a trading range and also closed above the immediate crucial resistance of Rs 1320. The breakout in yesterday's session comes with impressive volumes, and confirm the continuation of the primary uptrend. We advise to Buy HDFC BANK above Rs 1324, stop loss at Rs 1310 and Target of Rs 1354.


Corporate SnippetsReliance Infrastructure has decided to reboot its engineering, procurement and construction (EPC) business after scaling it down in the past 3-4 years due to slowdown in orders and shrinking margins. 

DLF has decided to extend the deadline for sale of 40% stake owned by its promoters in its rental arm DLF Cyber City Developers (DCCDL) to March 2018.

Piramal Fund Management (PFM), arm of Piramal Enterprises, has sanctioned investments worth about Rs20bn within three months of launching lease rental discounting (LRD) for completed commercial assets that include office and retail space.

Nifty Movers: The top gainers on Nifty were Sun Pharma up by 2.30%, Tata Motors - DVR up by 1.71%, Infosys up by 1.68%, Eicher Motors up by 1.65% and Tata Motors up by 1.62%.  On the flip side, ICICI Bank down by 1.99%, Dr. Reddy’s Lab down by 1.54%, BPCL down by 1.53%, ITC down by 1.41% and Adani Ports & Special Economic Zone down by 1.23% were the top losers.

Top Sectoral& Stock Screening:  The top gaining sectoral indices on the BSE were Realty up by 2.30%, IT up by 1.23%, Consumer Durables up by 1.06%, TECK up by 0.96% and Auto up by 0.68%, while FMCG down by 0.65% and Bankex down by 0.03% were the only losers on BSE.

 

 

On the global front: On the global front, Asian shares were trading mostly in red, as markets tread cautiously on growing prospects for a Fed rate hike in March. Japan’s stock exchange fell with Toshiba shares down amid mounting troubles over efforts to restructure operations after a massive write-down related to its US nuclear unit.

Global Signals: The Asian markets were trading mostly in red; Nikkei 225 decreased 96.96 points or 0.5% to 19,341.02, Taiwan Weighted decreased 40.64 points or 0.41% to 9,759.12, Jakarta Composite decreased 4.28 points or 0.08% to 5,376.39, FTSE Bursa Malaysia KLCI decreased 3.06 points or 0.18% to 1,706.73 and KOSPI Index decreased 2.85 points or 0.14% to 2,081.01. On the other hand, Shanghai Composite increased 8.11 points or 0.25% to 3,221.10 and Hang Seng increased 74.91 points or 0.31% to 24,069.78.

 

Sensex.Nifty end flat with positive bias ahead of Jan CPI data

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Indian Indices:  Indian equity benchmarks trimmed losses but continued to trade in red amid consolidation in late afternoon trade as investors awaited retail inflation data for the month of January due later today. The markets trimmed its losses led by IT, TECK, Metal and Power stocks. While, the sell-off continued in Consumer Durables, PSU, FMCG and Realty stocks. Investor sentiments remained positive on the back of gains by European and Asian markets. However, upside remained capped with the report indicating that Industrial production contracted in December 2016, due to a sharp decline in production of consumer goods, confirming a demonetisation led contraction in demand. Index of Industrial Production (IIP) was 0.4% lower in December 2016 from the same period a year ago. The number was well below the 5.7% growth in November.

The BSE Sensex is currently trading at 28303.17, down by 31.08 points or 0.11% after trading in a range of 28197.38 and 28458.80. There were 14 stocks advancing against 16 stocks declining on the index. The broader indices were trading in red; the BSE Mid cap index was down by 0.61%, while Small cap index was down by 0.62%.

The CNX Nifty is currently trading at 8784.85, down by 8.70 points or 0.10% after trading in a range of 8754.20 and 8826.90. There were 23 stocks advancing against 28 stocks declining on the index.

 

MARKET INDICATORS

·           

 

Top Movers (Group A)

 

 

Company

Cmp

% chg

Gainers

 

 

Suzlon

18.05

4.95

Exidind

215.50

3.68

IIFL

341.15

3.57

PEL

1832.00

3.37

Losers

 

 

Bankbarod

168.75

-10.26

SRF

1594.00

-9.02

IFCI

28.90

-6.47

Unitech

6.17

-5.95

Market Statistics

 

 

 

BSE

NSE

Advances

1397

648

Declines

1190

811

Crporate Front: Driven by strong participation from retail investors, mutual fund (MF) houses have registered an addition of around 62 lakh investor accounts in the first 10 months of the current fiscal, taking the total tally to 5.4 crore, reported PTI. This follows addition of 59 lakh folios in 2015-16 and 22 lakh in 2014-15.


 

Market Sentiment:

The market breadth on BSE was positive in the ratio of 1397: 1190, while 159 scrips remained unchanged.

Macroeconomic front: The Reserve Bank central board took stock of the current economic situation, global and domestic challenges and other specific areas of its operations, reported PTI. "The 563rd meeting of the central board meeting was chaired by RBI Governor Urjit R Patel... The board reviewed the current economic situation, global and domestic challenges and other specific areas of operations of the Reserve Bank of India," the central bank said in a statement.

 

On the global front: On the global front, European markets were trading in green with positive U.S. and Asian cues, reflecting optimism with U.S. President Donald Trump's tax reform plans, and generally upbeat global economic data. Asian markets were trading in green as investor sentiments improved after a meeting between Trump and Japanese Prime Minister Shinzo Abe ended without trouble, avoiding tough talk on currency and trade issues. Back home, in scrip specific development, Trent traded higher after the company received an approval for raising of funds through issue of Commercial Paper up to an amount not exceeding Rs 100 crore.


Commodity Updates:

Commodity Prices (MCX):

Commodity

Rs

% Chang

Gold

29145.00

-0.1

Silver

42641.00

0.1

Crude oil

3588.00

-0.58

Natural Gas

199.60

-2.2

Alluminium

125.25

0.32

Copper

410.20

0.5

Top Sectoral& Stock Screening:The top gaining sectoral indices on the BSE were IT up by 0.72%, TECK up by 0.55%, Metal up by 0.15% and Power up by 0.14%, while Consumer Durables down by 1.18%, PSU down by 1.04%, Realty down by 0.95%, Capital Goods down by 0.60% and FMCG down by 0.53% were the top losing indices on BSE.

Top Nifty Movers:The top gainers on Nifty were Eicher Motors up by 2.51%, Hindalco up by 2.00%, Yes Bank up by 1.73%, Tata Power up by 1.53% and Infosys up by 1.49%. On the flip side, Bank of Baroda down by 9.04%, Idea Cellular down by 3.12%, AurobindoPharma down by 2.57%, BHEL down by 1.99% and SBI down by 1.77% were the top losers.

 

Global Signals:

All Asian markets were trading in green; KOSPI Index increased 3.57 points or 0.17% to 2,078.65, FTSE Bursa Malaysia KLCI increased 9.32 points or 0.55% to 1,708.26, Shanghai Composite increased 20.14 points or 0.63% to 3,216.84, Jakarta Composite increased 26.46 points or 0.49% to 5,398.13, Taiwan Weighted increased 44.73 points or 0.46% to 9,710.32, Nikkei 225 increased 80.22 points or 0.41% to 19,459.15 and Hang Seng increased 136 points or 0.58% to 23,710.98.

All European markets were trading in green; UK’s FTSE 100 increased 7.45 points or 0.1% to 7,266.20, France’s CAC increased 20.4 points or 0.42% to 4,848.72 and Germany’s DAX increased 34.09 points or 0.29% to 11,701.06.

 

Dow Jones scales new highs as equity outperformance continues with rise in stocks & bond yields.

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Indian Indices: Asian markets saw profit booking in early trade even as US indices continued to hit new highs with Dow Jones scaling 20400.Equity allocations continue to see increase with US assets being most sought after, even as bond yields hit near term highs.US$ retreated from fresh near term highs as markets await Federal Reserve Chairman Janet Yellen's testimony on rate outlook this week.


Nifty saw weakness creep in above 8800 with PSU banks & metals leading the market lower. However late session buying by foreign investors pushed up the index to close above 8800 as rupee strength & better then expected corporate results buoyed sentiment. For today expect positive opening & consolidation with any fall being bought by foreign institutional investors which could see Nifty attempt 8840 on the upside.


The BSE Sensex is currently trading at 28329.16, down by 22.46 points or 0.08% after trading in a range of 28263.45 and 28386.68. There were 11 stocks advancing against 19 stocks declining on the index.The broader indices were trading in red; the BSE Mid cap index shed 0.33%, while Small cap index was down by 0.18%.The CNX Nifty is currently trading at 8792.10, down by 12.95 points or 0.15% after trading in a range of 8772.50 and 8820.45. There were 20 stocks advancing against 31 stocks declining on the index.

MARKET INDICATORS

·           

 

Group ATopGainers

 

 

Company

Price (Rs)

% chg

GVK PIL

7.31

10.76

MMTC

66.20

5.08

SJVN

34.10

3.33

Sun tv

728.00

2.03

Group ATopLosers

 

 

Repcohome

674.00

-7.40

Shreecem

15170.00

-4.63

Unitech

5.89

-4.54

Concor

1252.00

-4.06

Market Statistics

 

 

 

BSE

NSE

Advances

1703

626

Declines

673

872

 

Technical view: Nifty  finds strong support around 8750 which was yesterday's low & faces resistance around 8840, break either side will see Nifty direction in the near  term. Bank Nifty also finds support @ 20116 which was yesterday's low while 20576 continues to act as hurdle on the upside. 


INDEX PERFORMANCE

 

 

Indices

Support

Resistanes

Sensex

8769

8845

Nifty

28261

28528

 

Trading ideas: Wipro (Buy above Rs 475 for target of Rs 490, SL at Rs 468): The stock was stuck in narrow trading range for the past two weeks and has been creating a base between 450-470 levels. Wipro has finally broken from the consolidation phase. The stock has also closed above all its crucial moving averages. Other momentum oscillators are also indicating that current momentum is here to stay.


Corporate Snippets:

Reliance Defence and Engineeringsigned an agreement with the American Navy for repair and alteration services for warships of the largest forward-deployed Seventh Fleet operating in the region.

Suzlon Energyhas divested 49% stake in solar power projects totalling 210mw and is in advanced talks to sell stake in another 130mw projects in a deal that the company aims to close before March.

L&T entered into a joint venture with European defence major MBDA MissileSystems for development of missiles in India.

Nifty Movers: The top gainers on Nifty were Adani Ports up by 1.55%, Reliance Industries up by 1.11%, Grasim Industries up by 0.99%, Tech Mahindra up by 0.99% and ONGC was up by 0.91%. On the flip side, BPCL down by 2.21%, Hero MotoCorp down by 1.90%, Ambuja Cement down by 1.69%, Zee Entertainment down by 1.41% and Coal India was down by 1.34% were the top losers.

Top Sectoral& Stock Screening: The only gaining sectoral indices on the BSE were Realty up by 0.28% and Bankex was up by 0.08%, while Consumer Durables down by 0.85%, Auto down by 0.66%, Metal down by 0.57%, Capital Goods down by 0.48%, Power was down by 0.42% were the top losing indices on BSE.

 

 

 

On the global front: On the global front, Asian counters were trading mostly in red at this point of time with the rally fizzling out, traders are pricing in a 30 percent chance the US Fed will lift rates at its March 15 meeting. Japanese market too was in red ahead of Bank of Japan Governor Haruhiko Kuroda’s speech later in the day. The US markets extended their upmoves in last session to reach fresh record highs, on optimism about reduced corporate taxes under President Donald Trump.

 

Global Signals:Asian markets were trading mostly in red; Nikkei 225 declined 151.14 points or 0.78% to 19,308.01, Jakarta Composite decreased 10.7 points or 0.2% to 5,398.85, KOSPI Index shed 7.04 points or 0.34% to 2,071.61, Shanghai Composite slipped 4.41 points or 0.14% to 3,212.43, FTSE Bursa Malaysia KLCI dipped 2.47 points or 0.14% to 1,707.77 and Taiwan Weighted was down by 0.99 points or 0.01% to 9,709.33. On the flip side, Hang Seng was up by 1.19 points or 0.01% to 23,712.17.

 

Arvind Stock Research Report

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Text Box: Company Overview:Arvind has a strong focus on Research and Development for process improvement, cost reduction and new product development. This is evident in the fact that Arvind continuously modifies its production process to enhance flexibility on the use of various types and quality of cotton. To further meet customer needs, Arvind has also introduced a new dyeing and processing method for denims.

State-of-the-art technology and equipment have made Arvind one of the leading producers of denim in the world, paving the way for the Company to emerge as a global textile conglomerate. This cutting edge position comes to Arvind courtesy technologies such as Open-end Spinning, Foam Finishing, Mercerizing, Slasher-dyeing, Rope-dyeing, Air-Jet, Projectile and Wet Finishing. It’s only natural that Arvind quality fabrics are in high demand in the markets of Europe, US, West Asia, the Far East and Asia Pacific.

Continued traction in the brand portfolio

* Consolidated revenues rose by 15% yoy to Rs23bn. EBITDA margin was down 250bps yoy at 10.1%. APAT down 16% yoy at Rs756mn

* “Unlimited” and growth brands drove overall Brand and Retail (B&R) growth by 24% yoy to Rs7.6bn. Textile revenues grew 8% yoy to Rs14bn on the back of a robust volume growth in garmenting division. We expect revenue CAGR of 14.6% over FY16-19E

* EBITDA margins were impacted by weaker mix in favour of garmenting (in textiles) and EBO/LFS (in brands), investment in the internet business and advancement of end of season sale (EOSS). We expect EBITDA margin of 11.9/12.3/12.5% in FY17/18/19E.

 

Performance highlights:.

Branded apparel sustains growth trajectory; Margins impacted by one-offs

Arvind’s Q3FY17 revenue growth was in-line with our estimates, while EBITDA margins were impacted due to one-offs. Key highlights: 1) Consolidated revenues at Rs23.3bn were up 15% yoy, with textile revenues increasing 8% yoy and B&R revenues increasing 24% yoy. EBITDA at Rs2.4bn down 8% yoy. EBITDA margins corrected down by 250bps yoy to 10.1%, impacted by higher employee costs, weaker mix, and investment in the internet business. Lower interest burden was offset by lower other income resulting in APAT of Rs756mn, down 16% yoy.

Demonetisation impact wears off; Maintains guidance of 15% growth

Company has maintained its revenue growth guidance of 15% going forward, driven by 25% growth in the B&R division. Growth in textiles is expected to be subdued at c.8%. Operating leverage, localised sourcing and improved performance from “Unlimited”, growth brands and specialty retail are expected to partially offset weaker mix (which will weigh down EBITDA margins). We have built in a 14.6% revenue CAGR over FY16-19E. We expect consolidated EBITDA margins to decline by 70bps in FY17E and to improve by 40/20bps in FY18E/19E.

Financials :

 

Particulars

Dec-16

Sep-16

June-16

Revenue

1463.91

1484.16

1465.85

Other Income

16.75

31.47

23.62

Total Income

1480.66

1515.63

1489.47

Expenditure

-1280.43

-1310.29

-1247.96

Interest

-54.80

-57.40

-70.50

PBDT

145.43

147.94

171.01

Depreciation

-46.46

-45.59

-43.53

PBT

98.97

102.35

127.48

Tax

-27.32

-35.08

-40.03

Net Profit

71.65

67.27

87.45

Equity

258.36

258.36

258.24

EPS

2.78

2.60

3.39

 

Highlights the fact:

1)Company has maintained its revenue growth guidance of 15% going forward, driven by 25% growth in the B&R division.

2)Lower interest burden was offset by lower other income resulting in APAT of Rs756mn, down 16% yoy.

3)The B&R business is well placed with a strong portfolio of brands, and is expected to drive growth.

4)EBITDA margins were impacted by weaker mix in favour of garmenting (in textiles) and EBO/LFS (in brands), investment in the internet business and advancement of end of season sale (EOSS).

5)Consolidated revenues rose by 15% yoy to Rs23bn. EBITDA margin was down 250bps yoy at 10.1%. APAT down 16% yoy at Rs756mn.

6)We expect consolidated EBITDA margins to decline by 70bps in FY17E and to improve by 40/20bps in FY18E/19E.

 

Technically View:

 

The stock is currently trading around 50 days and 100 days, moving average that is all about good positive moov& uptrend signal on daily base. RSI &MFI is present at 48 and 68respectivally, which is uptrend& showing the sideways formation for the short term period. The stock is currently in the upward formation and when it hold above 400 then somemore upside is expecting with major support is found 330 level. MACD line is greaterthen signal line 10 day Avg Volume is very high.

 

 

VALUATION & OUTLOOK:

 

While the revenue growth was in-line with our expectation, the impact of demonetisation on the trade channels, advancement of EOSS and investment in the internet business impacted profitability. The B&R business is well placed with a strong portfolio of brands, and is expected to drive growth. Owing to the weak profitability in the quarter and EBITDA mix moving in favour of low margin B&R and Garmenting segments, we have cut our EBITDA by 6%/4%/2% for FY17E/18E/19E respectively and consequently cut our EPS by 12%/8%/4% for FY17E/18E/19E. We maintain ACCUMULATE rating with revised price target of Rs450/share.

 

We retain our Buy recommend in this script with a price target of Rs 450 in the very short term outlook. So Entry would be around 380-370as recomanded in this counter.

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