Monday, 17 July 2017

Money Market Manthan :Market Update

Global rally consolidates with US bank earnings key in deciding way forward for equities. US Dollar rallies from 10 month low as bond yields stabilise while oil prices remain weak.
Asian indices opened in the red as US Dollar rally saw profit booking in the Japanese markets which resumed trading after a holiday on Monday. All eyes will be on Central bankers this week as expectations of earlier than expected rate hikes could hurt sentiment going forward. Rise in German 'bunds' is the main cause of alarm as the markets price in change in stance from the ECB on Thursday.
Nifty closed over 9900 as Reliance, Hind Unilever, Wipro, ICICI Bank and Metal stocks charged the Nifty forward with foreign flows mitigating the local selling. With PCR (put call ratio) at 1.5 plus levels the markets continue to be overbought but nearness to 10000 is seeing no let up in sentiment which drives the indices higher. For today expect consolidation as mid-caps join the rally with earnings form key heavyweights dominating the proceedings. 
Technical view: Nifty finds strong support around 9850 while 10000 will be the key resistance on the upside. Bank Nifty also finds strong support around 23750 while 24100 will act as initial resistance on the upside.
Trading Ideas  (Time period: 1-3 days)
Hindalco (Buy Above 210 with Stop Loss at 205 for Target of 220): After consolidating for over few weeks the stock has finally broken out from an inverse Head and Shoulder pattern on the daily chart. Our weekly chart analysis also suggests that Hindalco is on the verge of breaking out from a rising channel pattern . We expect the current momentum will extend towards its potential target of Rs 220 in short term.
Derivative strategies  (Time period: Till expiry)
Buy Ambuja July Future @265-267, Stop Loss 259.5 and Target 270.5-271.5.
Derivative Snippets
In the last trading session, Nifty and Bank Nifty index closed above 9900/24000 level for the first time ever. Nifty ATM/ITM call option strikers continued to see unwinding of open interest as the short gamma traders ran for cover. Nifty 9900PE added fresh short positions to the tune of ~10 lakh shares as the index marched towards the record 10000 mark. Bank Nifty 24000CE continued to add fresh long position as the underlying moved higher.
FIIs were net buyers in cash market segment to the tune of Rs 329 Cr.
Call Success and Update
Reliance Industries Limited - Call Success & Update
Reco Price: Rs 1420, Target: Rs 1540, Revised Target: Rs 1720
We had recommended a buy on  Reliance Industries Limited   in an Idea 2 Act note released on September 20, 2016 for a target price of Rs 1280 and extended our target price to Rs 1540 in a call update released on April 07, 2017. The stock has touched a high of Rs 1559.6 in yesterday’s trading session yielding returns of 8.4% from previous update and 40.4% from our original recommendation. We continue to remain bullish and advise investors to hold for an extended price target of Rs 1720 in the coming 3-6 months translating into 11.6% upside.
Corporate Snippets:
Gujarat High Court dismissed a plea by Essar Steel against the Reserve Bank of India. (ET)
ONGC need not pay a premium for government stake in Hindustan Petroleum (HPCL) since the latter is widely traded and fairy valued by the market and the transaction would involve no change in state control over the two companies, a senior executive at ONGC said. (TOI)
Jubilant FoodWorks said its President and CFO Sachin Sharma has resigned. (ET)
Cipla sees sales growth picking up in Oct-Mar on post-GST recovery.
Automobile major Mahindra and Mahindra is readying two new models by the next fiscal-end as it looks to consolidate its position in the Indian passenger vehicle segment. (ET)
TVS Motors will pump in Rs 500 crore into operations this year, launch a high-powered motorcycle and a scooter as well as develop a new generation engine.
JSW Energy has said the deal with regard to buying JSPL's 1,000 MW power plant in Chhattisgarh is on track and is likely to close by June next year. 
Bharat Petroleum Corp has made its first purchase of US oil, buying high sulphur crudes Mars and Poseidon in a tender, its head of refineries R. Ramachandran has said. (HBL)
Siemens to install state-of-the-art IGBT technology for Indian Railways.
Economy Front Page:
The world's biggest oil refinery -cum-petrochemical complex planned in Ratnagiri district of Maharashtra will cost Rs 2.7 lakh crore and take 60 months to build, Oil Minister Dharmendra Pradhan said. (ET)
The Delhi state consumer commission has directed a real estate firm to pay Rs3 lakh as compensation to a homebuyer for delay in handing over the possession of a flat.

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