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cues bring Domestic Rally
A joyful life is
an individual creation that cannot be copied from a recipe.
The market has seen a joyful run in recent series. A
healthy correction is long awaited. Global cues today are subdued and that need
not bring in any meaningful fall. So far, sector rotation and follow-on buying
have kept the market in good cheer. This week will see the market react to Q4
GDP numbers and infrastructure output for January. The outlook is a weak start.
RIL could help reduce the losses on the main indices. The F&O rollover was
encouraging as market wide rollover of Nifty contracts to March series stood at
73 pc as against an average of less than 70 pc in the last three series. HPCL
could see action on reports that ONGC could take control of it as part of the
governments plan to create an integrated public
sector oil entity. FPI activity has resumed as overseas investors put in over
Rs. 14,600 crore into the Indian market in Feb investing Rs 9,359 crore in
equities and another Rs 5,279 crore in the debt segment.
Rollovers Analysis - February 2017
Back to back strong series, as Nifty shutting shop at
8940 levels for February expiry, Nifty/Banknifty up 3.9/7.2% on (eoe) basis.
Participation increased as open interest swelled towards life high levels on
market wide positions and Bank nifty OI at highest since 2010.
Strong domestic flows, global equity rally, positive news
momentum on index heavy weights (HDFCBank/Reliance/TCS) pushed Nifty higher
towards physiological mark of 9,000. Rollovers of Nifty/Bank Nifty stood at
73/60% (2.25cr/27.5lacs shares) as against 3 months average of 69/68%,
rollovers in share terms were significantly higher for bank nifty to tune of
37% compared to previous month. Market-wide rolls stood at 82.8 as against 82%
in the previous expiry.
FIIs long/short index futures rolls stood at 77/32% as
against previous four month average of 66/46%. Total aggregate open interest
rolled to March series at 387cr increased by 21% when compared to previous
expiry. On options data, March series Nifty index starts at strike 9,000
calls/8500 puts holding the maximum OI to tune of 3.36mn/3.09mn shares. With
FED policy event and domestic election outcome due in March volatility likely
to inch higher from current levels.
- Nifty ending February expiry at 8940 levels, SGX
Nifty indicates gap down opening to tune of 30 points on back of weakness
in global markets.
- Rollovers for Nifty/Bank Nifty stood at 73/60%
(2.25cr/27.5lacs shares) as against 73/60% (1.9cr/20lacs shares) previous
- Bank nifty open interest surged significantly at
27.5 lacs shares lead by buoyancy in private banks.
- FIIs index futures long/short ratio at 4.83x
starting with net long futures positions at 1.8lacs contracts.
- Volatility likely to inch higher as markets awaits
FED policy and domestic election outcome during the month.
Fixed Income Synopsis
- The new 10Y benchmark 6.97% GS 2026, closed 2bps
lower at ~6.92% vs previous days close of 6.94% and the 7.59% GS 2026
ended at 7.07%.
- The demand at the fixed Repo window was Rs.15bn,
while the supply at the fixed Reverse Repo window was registered at
Rs.68.97bn. The Call WAR closed at 5.92% vs. previous close of 5.88%.
- The benchmark five-year OIS closed the
session at 6.72% vs. previous day's close of 6.73%, while the 1-Y OIS
closed at 6.42% vs. previous day's close of 6.43%.
- The Reserve Bank of Indias Reference Rate for the US Dollar was Rs.66.83 as
on February 23, 2017, while the corresponding rate for the previous day,
February 22 was Rs.66.96.
Nifty made new 52-week high on Friday but gave a close
below previous peak (8969) at 8940. Currently index is trading within the
three-digit gann channel i.e. 8860-8910 wherein, multiple gann pressure points
are observed. Failure to break above 9010 could see Nifty beginning a
corrective move in the form of rangebound consolidation. As per Gann analysis,
this week is an anniversary period where index formed a major bottom of 6826 on
29th Feb 2016. According to Gann, anniversary dates more often results in the
formation of tops and bottoms (either minor or significant). A year earlier
around the same time period (i.e. 4th March 2015), Nifty had made a top of
9119. So after a rally of ~14% from the midpoint i.e. 7894 of entire move of
6825 to 8969, Nifty is hovering close to its all-time high level, wherein
multiple supply points are found. So risk reward ratio for creating fresh longs
are not favorable.
& Currency Cues
Goldprices registered a 3 � month high,
helped by relatively soft US dollar and rising gold ETF inflows. Holdings in
worlds largest gold backed ETF (SPDR) have risen some 5% this month. Short
term outlook for the yellow metal hinges on Fed rate expectations. In this
context, markets do not expect a rate hike till June policy meeting, which is
deemed supportive for the precious pack. This week, markets will be interested
in the second estimate of US Q4 GDP growth numbers, expected at 2.1%, slightly
higher than the first reading.
In the non-ferrous pack, metal prices have
regained some lost ground after a liquidation on Thursday. On copper, there are
no signs of any end to the labour strike at Escondida mine in Chile.
Oilfutures are holding ground despite seventh consecutive
weekly rise in US oil inventories. Nevertheless, stockpiles at Cushing,
Oklahoma (storage hub) registered the biggest weekly drop since October.
Greenback slipped to a two-week low against Yen, with values
dipping to below 112 level at one point of time. Meanwhile, trading in Euro and
Sterling remains relatively range-bound. On speculative front, CFTC reported
that non-commercials/funds increased bullish bets on the dollar for the first
time in seven weeks.
Oil and Natural Gas Corp (ONGC)will invest Rs73.27bn in developing
four oil and gas projects, including the Ratna field which it had got back from
ZydusCadilareceived US drug regulator US Food and Drug
Administration (USFDA) approval for the groups plans to initiate a Phase-2
clinical trial of Saroglitazar Magnesium (Mg) in patients with Primary Biliary
Cholangitis of the liver.
Softbank has denied reports claiming that it was
interested in picking up a stake in the Vodafone- Idea Cellular merger.
Jet Airwaysannounced a reciprocal codeshare partnership with Hong
Kong Airlines, which will enable Indian fliers to travel seamlessly to New
Zealand, Japan, Indonesia, Vietnam and Thailand.
Piramal Enterprises (PEL)has entered into a partnership with Cambridge
to provide long term equity capital to residential projects across five metros
in the country.
ICICI Bankhas acquired its 814.4mn shares of Jaiprakash Power
Ventures Ltd under the strategic debt restructuring plan.
In a big jot to Indian Oil Corp (IOC), The Odisha
Government has withdrawn tax incentives given, to the Rs345.55bn Paradip
refinery, making the company reconsider its plans to invest another Rs520bn in
Larsen and Toubro Hydrocarbon Engineering, subsidiary of Larsen
& Toubro has bagged orders worth Rs11bn from IOC for its Bongaigaon
refinery in Assam.
Coal Indiasaid the board of its arm Northern Coalfield has approved
a share buyback plan worth Rs12.44bn.
Tata Steelhas received environment clearance (EC) for expansion of
its Haldia coke plant in West Bengal by ramping up unit capacity from existing
1.6MTPA to 2.2MTPA, making it the largest standalone coke plant in Asia.
Shoppers Stop has sold almost its entire 5% stake in airport retail
venture Nuance Group Fashion & Luxury Duty-Free Private for an undisclosed
Oil and Natural Gas Corporation's (ONGC) board has
approved the signing of definitive agreements for buying Gujarat State
Petroleum Corp's (GSPC) entire 80% stake in the KG-basin natural gas block for
BhartiAirtelwould buy Telenor (India) Communications, in a deal that
will bolster Airtel's footprint with additional spectrum in the 1800MHz band.
Overseas investors have pumped in over Rs146bn into the
Indian capital markets this month so far, enthused by clarity on FPItaxation.
India's foreign exchange reserves declined by USD56.8mn
to USD362.73bn in the week to February 17, on account of dip in foreign
currency assets (FCAs).
Independent Power Producers can now bid for coal
allocated to state government-run coal based power plants.
Indian firms raised over Rs46bn through issuance of
shares to institutional investors during 2016, a sharp fall of 76% from the
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