WEEKLY VIEW OVER ALL

Dear Friends,

Following is the Analysis on Several Indices including Nifty, Bank Nifty, All F&O Stocks, Small Cap & Mid Cap along with VIX & USDINR and Derivatives Outlook in addition to Global Markets outlook including Crude. 

 Weakening Rupee, Expectations of a Below Normal Monsoon, Lack of clarity over MAT applicability to FIIs, sustenance of Crude at higher levels (50% rise from its near term bottom), Weak corporate earnings along with pending impasse of Greece has led to further profit booking & Selling Pressure at higher levels leading the Index to end the week with a cut to the tune of 3.5%.

What has happened till now post this fall from 8850 to 8280 is that trader confidence is shaken, now if fall extends below 8240, could lead to panic & confidence shaking within investor community.

251 out of CNX 500 index including many large-caps are trading below their 200 DMA & could lead to selling pressure intensifying on rises.

 Sectorially,

Almost all Sectors witnessed cuts with IT & Realty Sector stocks witnessing highest cuts to the tune of 6-8% followed by Pharma, Auto, Oil & Gas, Capital Goods & Power registering losses by 4-5% each. Even FMCG lost grounds by 3% followed by Metals & Banks closing the week negative by 1-2%.

Breadth of the markets remained negative on Higher Volumes. 

On the Global Front,

Almost all Global Markets i.e Hang Sang, Nikkei, FTSE, CAC & DAX ended the week with a 1-2% gain. Only the Indian Markets have underperformed losing grounds by 3.5%.

Fear of applicability of MAT on Investors has also spooked the Investor Sentiment.

Tax Claim on FIIs pertaining to prior years is hurting investor sentiment despite FIIs seeking a retrospective exemption from the Government. The Government on its part has made it clear that retrospective exemptions cannot be provided. A report by CLSA points out that if the High Court upholds the claims of the Income Tax Authority, it will create operational chaos for FIIs as they will need to determine who will foot the Tax Bill.

However a subsequent clarification by the Government sources state that FII can claim treaty benefits if they are covered under a treaty & also that the total Tax claim may not increase to more than Rs 6000-7000 Crores as against widely speculated amount of Rs 40,000 Crores.

International Crude prices has rebounded 50% upto 64-65$ from the lows of 43-44$ that it witnessed in Jan-Feb 2015.

Crude till now has been a saving grace for India from the point of view of containing the twin deficits (Current & Fiscal). However any further rise from the current levels would create a fiscal discomfort from the economy point of view.

Global Market Sentiment has turned shaky over the Greece Debt Issue cropping yet again. Concerns are mounting that Greece may default on its debt repayment & rumors are picking pace of the country’s exit from the Euro Zone which can have a severe impact on the financial markets.

Also Concerns of a slowdown in China is becoming a cause of concern for major economies.

Last week The People’s Bank of China had lowered the Reserve Ratio Requirement for all banks by 100 basis points. This cut has been the deepest since the global crisis in 2008 & much more than what was expected to counter the sharp slowdown in the Chinese Economy. China is a major trade partner for India & our Exports to China declined by over 22% in March leading to India’s Trade Deficit widening.

In its first official monsoon outlook for the year, the India Meteorological Department (IMD) on Wednesday said Southwest monsoon received by the country this year could be below normal, at 93 per cent of the long-period average (LPA).

IMD also said the probability of rainfall being bad this year was almost 68 per cent and it being good was only 28 per cent (with a model error of plus or minus five per cent). The El Niño weather condition, the met department said, was likely to persist.

This forecast is not in line with private agencies which had earlier predicted a normal monsoon.

 

The next forecast will be updated in the month of June when it will also estimate the rainfall for July & August during which period most of the country receives maximum rainfall. Also it will also focus on how monsoon distribution will be advancing over broad geographical divisions such as northwest, northeast, south & central India.

Poor Monsoon Expectation, Rising Crude Prices in addition to depreciation in INR could lead to Inflation spiraling & spell worries from the Deficit point of view & could lead to RBI delaying a further Interest Rate Cuts.

Also Parliament Session has started on a shaky note & nervousness regarding the passage of the Land Acquisition Bill & progress on GST are further adding to the weaker sentiments.

Important Q4FY15 results announcements would continue during the course of this week & street would continue to watch out for the management commentary to gauge the future earnings outlook for the next few quarters.

Also, Results season has also started on a weaker note & earnings announced by major companies like TCS, Mindtree, HCL Tech, Wipro & Infosys were dismal; Reliance, HDFC Bank, IndusInd Bank, Yes Bank were in-line with the estimates while M&M Finance, India Bulls Hsg Fin & L&T Finance were above estimates. 

Major Results to be announced in the coming week:

27^th April: ICICI Bank, Maruti, UPL, Andhra bank, Godrej Industries, JSW Energy, Granules;

28^th April: Bharti Airtel, Idea, Godrej Consumer, Tata Elaxi, Amaraja Battery;

29^th April: HDFC, M&M, Hexaware, SSLT, Ambuja Cement, TVS Motors, Federal Bank, Biocon, DHFL, Info-Edge, Shree Cement;

30^th April: Axis Bank, IDFC, Sriram Transport, Marico;

Going forward,

Movement of the Markets would be dictated by Crude Oil Prices, USDINR trend, Clarity on MAT Applicability to FIIs, outcome on Greece deal, India Inc. Quarterly Corporate Results, F&O Expiry, FII Fund Flows, Global Market Trends, Dollar Index.

CNX Nifty (CMP 8306):

Going Forward,

Index in the past week has faced resistance & selling pressure from higher levels around 8620 zone & thus slipped to 8280 zone. 

Going Forward, Index is likely to find support around 200 DMA zone of 8225-8240 which is also the 61.8% retracement of the upmove from 7422 (July 2014) & 9119 (4^th March 2015) & till 8225 holds, a pullback upto 8450-8470 is likely. However at higher levels, selling pressure would be witnessed.

Breach below 8225 would lead the Index to head upto lower levels of 8130-8060.

Only incase 8470 is crossed & sustained on the upside, relief rally would be witnessed & further short-covering would lead to higher levels of 8560-8630 zone.

Technical Indicators – RSI, MACD & Stochastic are placed below its averages on daily as well as on weekly charts indicating selling pressure on all rises.

On the Options Front,

Highest OI built up is witnessed in 8500 Calls (51.50 Lakhs) along with 8300-8200 Puts (50 Lakhs & 48 Lakhs respectively).

Additions to the tune of 8.4 & 7 lakhs each were witnessed in 8400 Calls (OI 34 Lakhs) & 8300 Calls (OI 20 Lakhs) along with unwinding to the tune of 6 lakhs & 9 lakhs in 8500 Puts (28 Lakhs) & 8400 Puts (30 Lakhs)

Looking at the derivatives data, Resistance at higher levels would be witnessed around 8450-8470, while supports are pegged at 8200-8250.

Trading range for the week:  8200 – 8470.

BANKNIFTY (CMP 18001):

Index in the past week has faced resistance & selling pressure from higher levels around 18300 zone & thus slipped to 17800 zone. 

Going Forward, Index will initially dip upto 17650-17700 zone & is likely to find support on dips around 17650 which is 50% retracement of the upmove from 14338 (July 2014) & 20900 (Jan 2015) & till 17600 holds, from lower levels a pullback upto 18400-18550 is likely. However at higher levels, selling pressure would be witnessed.

Breach below 17600 would lead the Index to head upto lower levels of 17100-16900.

Only incase if 18550 is crossed & sustained on the upside, relief rally would be witnessed & further short-covering would lead to higher levels of 19000-19100 zone.

On the Options Front, Aggressive addition seen 18500 CE total OI 5.70 Lakh Shares (on Friday 0.58 Lakh Shares add) implying 18400-18500 emerge as stiff resistance & in 17500 Puts total OI 4.65 Lakhs Shares implying support 17600-17650.

Trading Range: 17600 – 18450.

USDINR (CMP 63.67):

USDINR after trading in a tight range for last 2 months have weakened & has given a break out from a 2 year old weekly triangle on account of FII outflows & weak macro-economic factors.

Now Going Forward, till USD INR holds 62.25, it can move upto 65.50-66.

However, if it breaks & sustains below 62.25, it will fall upto 59 zone. 

 

BRENT CRUDE ($ 65.28):

Crude Oil prices has sustained at higher levels on account of ongoing tensions escalating in Yemen. Crude Prices have risen almost 50% from its lows of 44$ which was witnessed in the previous quarter.

Now Going Forward, till Crude Oil holds 62, it can move upto 68-69 where the current rally would halt.

However, if it breaks & sustains below 62, it will fall upto 58-56 zone. 

DOW JONES (CMP 18080):

Dow Jones has closed 1.5% positive for the week & Going Forward, 17800-17850 zone is an important support zone & till 17850 holds, further rebound upto 18400-18500 would be on the cards.

Break of 17800, would lead to Index retesting support zone of 17500-17400. 

CBOE VIX (CMP 12.29) has fallen 12% for the week post some buying support emerging at lower levels n US equity markets, indicating a range bound movement for Vix between 10-14.

NSE Midcap: (CMP 12656)

NSE Mid-Cap CMP 13260 closed 4.5% negative for the week underperforming the broader indices.

Going forward, 12450 would act as a support with the Index approaching oversold zone on daily charts.

Till 12450 holds, Index can rebound upto 13000 zone. However all rises will be met with selling pressure at higher levels.

Below 12450, fall can intensify upto 12000-11800 zone.

BSE Small Cap (CMP 11,008):

BSE Small-Cap CMP 11,622 has closed 6% negative for the week underperforming the broader indices..

Going forward, 10850 would act as a support & Till 10850 holds, Index can rebound upto 11400 zone. However all rises will be met with selling pressure at higher levels.

Below 10850, fall can intensify upto 10400-10200 zone.

VIX (19.10):

India VIX after forming a strong bottom around 12.50-13 zone has spiked up 45% in the past week following the weakness in the equity markets.

Going forward, till VIX holds above 16.50, it can move upto 22-23 zone again & stabilize here.

Below 16.50, VIX could witness a crack upto 11-12 zone.  

FII’s for the past week have turned net sellers in Cash segment along with sellers in Index as well as Stock Futures, while turning buyers in Index Options while DII’s have also turned Net Buyers for the 5^th consecutive week. 

Nifty Futures have closed at a 10 points premium compared to 30 points.

Cumulative FII Derivatives Stats from 20/04/2015 to 24/04/2015:

Index Futures: -2100 Cr;

Index Options: +1271 Cr;

Stock Futures: -51 Cr;

Stock Options: -463 Cr

 Cash Market:

FII: -4468 Cr;

DII: +4001 Cr.

Cumulative FII Derivatives Stats from 26/03/2015 to 24/04/2015:

 

Index Futures: -952 Cr;

Index Options: +14711 Cr;

Stock Futures: +355 Cr;

Stock Options: -329 Cr

Cash Market:

FII: -3668 Cr;

DII: +6812 Cr.

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