Embed Size (px)
Citation preview
Khandwala Securities Limited 1 | P a g e
Monthly Review – July 2014
INDEX witness profit booking after its five months winning streak!!!
With the past five months gains of 1611 points , in the fifth month index has formed the “ spinning top”
at the all-time high levels, suggesting some profit booking and sell off to be witnessed. As stated in our
earlier monthly report, rallies do come in 3-5-8 legs.
Nifty posted a green candle with a gain of 1.45% making a high of 7840.95, during the month we saw
much appreciation with the Auto, IT and FMCG gaining from 2-7% respectively, whereas the Energy and
Infra stocks were deeply in red around 4-6%.
The HSBC manufacturing purchasing managers' index (PMI) — which gauges factory activity based on
data from 500 large companies — inched up to 51.5 in June from 51.4 in May on the back of improved
export orders and higher output. Industrial growth quickened to a 19-month high in May, (IIP), rose 4.7%
in May from 3.4% in the previous month, the sharpest increase since October 2012 The year-on-year
inflation measured by monthly CPI stood at 7.02 per cent for May as compared to 7.08 per cent for the
previous month and 10.68 per cent during the corresponding month of the previous year.
Along with the corporate earnings, investors are now eyeing RBI's monetary policy due on 5th August
2014, the first since the 2014-15 Budget was announced. "The undertone in the market continues to be
bullish in the medium term, though the short run might be dictated by foreign flows.
In the coming month, we are much likely to see the range bound moment within 7800 -7500, traders are
advised to be on the short side during the month with upside cap around 7711 -7750 levels and down
side we can see the lower levels at 7480 -7420.
Khandwala Securities Limited 2 | P a g e
Indices Performance
Index July 31, 2014 June 30, 2014 % Change
BSE SENSEX 25894.97 25413.78 1.89
NIFTY 7721.3 7611.35 1.44
BSE-MIDCAP 9188.19 9378.95 -2.03
CNX500 6194.45 6174.2 0.33
BSE-SMALLCAP 9989.42 10203.19 -2.1
Comparison with Global Indices
Index July 31, 2014 June 30, 2014 % Change
CNX Nifty 7721.3 7611.35 1.44
Dow Jones 16563.3 16826.6 -1.56
Nasdaq 4369.77 4408.18 -0.87
FTSE 6730.11 6743.94 -0.21
CAC 4246.14 4422.84 -4
DAX 9407.48 9833.07 -4.33
Hang Seng 24756.85 23190.72 6.75
Nikkei 15620.77 15162.1 3.03
Sectoral Performance
Sectors July 31, 2014 June 30, 2014 % Change
BankNifty 15267.6 15241.9 0.17
CNXAUTO 6907.15 6775.15 1.95
CNXENERGY 9510.5 9968.45 -4.59
CNXFMCG 18778.75 17434 7.71
CNXINFRA 3163.5 3372.75 -6.2
CNXIT 10304.7 9912.3 3.96
CNXMETAL 3295.8 3308.75 -0.39
CNXPHARMA 9342.9 8535.7 9.46
Monthly Advances & Declines (NSE)
Month Advances Declines A/D Ratio
June-2014 876 685 1.28
May-2014 851 681 1.25
Apr-2014 783 712 1.10
Mar-2014 772 689 1.12
Feb-2014 680 735 0.93
Economic Updates – July 2014
• Industrial growth quickened to a 19-month high in
May, providing cheer to the new government that on
Thursday unveiled its first budget with a heavy
emphasis on reviving the country's manufacturing
sector and economy. Industrial output, as measured
by the Index of Industrial Production (IIP), rose 4.7% in
May from 3.4% in the previous month, the sharpest
increase since October 2012. (ET)
• Retail inflation fell to 30-month low of 7.31 per cent in
June, mainly on account of lower prices of food items,
including vegetables, cereals and meat. The retail
inflation, measured on consumer price index (CPI), was
8.28 per cent in May. Its lowest was 7.65 per cent in
January, 2012, the month the government started
releasing the data in percentage terms. (ET)
• Exports grew in double digits for the second month in
a row in June at 10.22 per cent, but a rise in gold
imports pushed the trade deficit to 11-month high of
USD 11.76 billion. Imports increased by 8.33 per cent
year-on-year to USD 38.24 billion in June. (ET)
• India is the only big emerging economy to escape a cut
in the International Monetary Fund's update of its
World Economic Outlook that says the global economy
seems to have tripped on an unexpected contraction
in the US economy in the first quarter. IMF has
retained its forecast of 5.4% growth in Indian economy
in 2015 and a stronger 6.4% growth next year. (ET)
• Borrowings by Indian firms declined by over 3 per cent
from a year ago to $ 1.89 billion in June 2014,
according to Reserve Bank data released. During June
2013, India Inc had raised $ 1.95 billion from overseas
markets by way of external commercial borrowings
(ECBs). (ET)
• Engineering exports grew at an impressive rate of
24.15 per cent to $ 16.94 billion during the April-June
quarter this fiscal helped by robust expansion in
shipments of aircraft and spacecraft parts and
automobiles. Exports of aircraft and spacecraft parts
rose to $ 1.5 billion in the first quarter of 2014-15 from
$ 574 million in the year-ago period, engineering
export body EEPC India said. (ET)
Economic Updates – July 2014
• Industrial growth quickened to a 19-month high in
May, providing cheer to the new government that on
Thursday unveiled its first budget with a heavy
emphasis on reviving the country's manufacturing
sector and economy. Industrial output, as measured
by the Index of Industrial Production (IIP), rose 4.7% in
May from 3.4% in the previous month, the sharpest
increase since October 2012. (ET)
• Retail inflation fell to 30-month low of 7.31 per cent in
June, mainly on account of lower prices of food items,
including vegetables, cereals and meat. The retail
inflation, measured on consumer price index (CPI), was
8.28 per cent in May. Its lowest was 7.65 per cent in
January, 2012, the month the government started
releasing the data in percentage terms. (ET)
• Exports grew in double digits for the second month in
a row in June at 10.22 per cent, but a rise in gold
imports pushed the trade deficit to 11-month high of
USD 11.76 billion. Imports increased by 8.33 per cent
year-on-year to USD 38.24 billion in June. (ET)
• India is the only big emerging economy to escape a cut
in the International Monetary Fund's update of its
World Economic Outlook that says the global economy
seems to have tripped on an unexpected contraction
in the US economy in the first quarter. IMF has
retained its forecast of 5.4% growth in Indian economy
in 2015 and a stronger 6.4% growth next year. (ET)
• Borrowings by Indian firms declined by over 3 per cent
from a year ago to $ 1.89 billion in June 2014,
according to Reserve Bank data released. During June
2013, India Inc had raised $ 1.95 billion from overseas
markets by way of external commercial borrowings
(ECBs). (ET)
• Engineering exports grew at an impressive rate of
24.15 per cent to $ 16.94 billion during the April-June
quarter this fiscal helped by robust expansion in
shipments of aircraft and spacecraft parts and
automobiles. Exports of aircraft and spacecraft parts
rose to $ 1.5 billion in the first quarter of 2014-15 from
$ 574 million in the year-ago period, engineering
export body EEPC India said. (ET)
Khandwala Securities Limited 3 | P a g e
Nifty Monthly Gainers
Scrip July 31, 2014 June 30, 2014 % Change
HINDALCO 191.7 164.2 16.75
SUNPHARMA 790.95 687.95 14.97
LUPIN 1181.75 1048.05 12.76
IDFC 152.25 135.1 12.69
RANBAXY 578.85 516.6 12.05
BHARTIARTL 372.9 336.9 10.69
Nifty Monthly Losers
Scrip July 31, 2014 June 30, 2014 % Change
JPASSOCIAT 58.45 77.2 -24.29
JINDALSTEL 274.8 322.55 -14.8
CAIRN 315.25 365.05 -13.64
LT 1502.9 1701.7 -11.68
BAJAJ-AUTO 2075.9 2316.2 -10.37
TATAPOWER 97.75 107.8 -9.32
CNX 500 Monthly Gainers
Scrip July 31, 2014 June 30, 2014 % Change
SINTEX 92.35 45.65 102.3
ORISSAMINE 4508.8 2337 92.93
IBPOW 14.4 7.95 81.13
BBTC 215 146.75 46.51
WELSPUNIND 238.55 175.1 36.24
TATASPONGE 887.85 654.4 35.67
CNX 500 Monthly Losers
Scrip July 31, 2014 June 30, 2014 % Change
SHRENUJ 60.85 125 -51.32
REIAGROLTD 3.5 5.75 -39.13
PSL 19.85 28.25 -29.73
GTLINFRA_T 2.65 3.75 -29.33
DRDATSONS 11 15.5 -29.03
ORBITCORP 18.2 25.5 -28.63
Corporate News
• Hindustan Unilever Ltd reported a 3.68% increase in
net profit at Rs 1,057 crore for the quarter ended June
30, 2014. The total income rose 10.4% to Rs 7,716
crore as against Rs 6,986 crore in June 2013. Overall
expenses in Q1 stood at Rs 6,466.52 crore, as against
Rs 5,789.88 crore in the year-ago period. (BS)
• Larsen and Toubro reported an over two-fold rise in
consolidated net profit at Rs 967 crore for the April-
June quarter, buoyed by a Rs 1,382-crore gain on
disinvestments. Net sales rose to 18,974.75 crore
compared to 17,241.14 crore. (BS)
• Wipro reported a 29.5% growth in its consolidated net
profit at Rs 2,103.2 crore for April-June period, helped
by large deals in the application and infrastructure
space. Consolidated net sales rose by 15.5% to Rs
11,245.5 crore in April-June quarter of the current
fiscal from Rs 9,733.2 crore in the same quarter of
2013-14. (BS)
• Reliance Industries (RIL) reported a 13.7% rise in first
quarter consolidated net profit on the back of higher
refining margin. Consolidated net profit in April-June
quarter at Rs 5,957 crore was 13.7% higher than Rs
5,237 crore in the same period a year ago. The total
income increased from Rs 99,895 crore for the quarter
ended June 30, 2013 to Rs 106,614 crore in April-June
this year. (BS)
• Crompton Greaves has decided to demerge its
consumer products business, the company announced.
The consumer products division, which manufactures
lights and fans, contributes about 20% to group's
turnover and 50% to its earnings before interest and
tax. (BS)
• Infosys reported 21.57% growth in consolidated net
profit to Rs 28.86 billion for the quarter ended Jun. 30,
2014 as compared to Rs 23.74 billion in the same
period last year Revenues has increased to Rs 127.7
billion for the quarter ended Jun. 30, 2014 from Rs
112.67 billion for the quarter ended Jun. 30, 2013,
representing an increase of 13.3%. (Myiris)
Corporate News
• Hindustan Unilever Ltd reported a 3.68% increase in
net profit at Rs 1,057 crore for the quarter ended June
30, 2014. The total income rose 10.4% to Rs 7,716
crore as against Rs 6,986 crore in June 2013. Overall
expenses in Q1 stood at Rs 6,466.52 crore, as against
Rs 5,789.88 crore in the year-ago period. (BS)
• Larsen and Toubro reported an over two-fold rise in
consolidated net profit at Rs 967 crore for the April-
June quarter, buoyed by a Rs 1,382-crore gain on
disinvestments. Net sales rose to 18,974.75 crore
compared to 17,241.14 crore. (BS)
• Wipro reported a 29.5% growth in its consolidated net
profit at Rs 2,103.2 crore for April-June period, helped
by large deals in the application and infrastructure
space. Consolidated net sales rose by 15.5% to Rs
11,245.5 crore in April-June quarter of the current
fiscal from Rs 9,733.2 crore in the same quarter of
2013-14. (BS)
• Reliance Industries (RIL) reported a 13.7% rise in first
quarter consolidated net profit on the back of higher
refining margin. Consolidated net profit in April-June
quarter at Rs 5,957 crore was 13.7% higher than Rs
5,237 crore in the same period a year ago. The total
income increased from Rs 99,895 crore for the quarter
ended June 30, 2013 to Rs 106,614 crore in April-June
this year. (BS)
• Crompton Greaves has decided to demerge its
consumer products business, the company announced.
The consumer products division, which manufactures
lights and fans, contributes about 20% to group's
turnover and 50% to its earnings before interest and
tax. (BS)
• Infosys reported 21.57% growth in consolidated net
profit to Rs 28.86 billion for the quarter ended Jun. 30,
2014 as compared to Rs 23.74 billion in the same
period last year Revenues has increased to Rs 127.7
billion for the quarter ended Jun. 30, 2014 from Rs
112.67 billion for the quarter ended Jun. 30, 2013,
representing an increase of 13.3%. (Myiris)
Khandwala Securities Limited 4 | P a g e
Outlook for the Month
SIDEWAYS
Market Indices
Sensex: 25895
Nifty: 7721
Trend
CORRECTIVE
Trend Reversal
ONLY BELOW 7400
Strategy
SELL ON RISE
Level to watch
Support: 7400 / 7230
Resistance: 7850 / 7900
Technical Picks
GMR INFRA - BUY
HEXAWARE - SELL
Outlook for the Month
SIDEWAYS
Market Indices
Sensex: 25895
Nifty: 7721
Trend
CORRECTIVE
Trend Reversal
ONLY BELOW 7400
Strategy
SELL ON RISE
Level to watch
Support: 7400 / 7230
Resistance: 7850 / 7900
Technical Picks
GMR INFRA - BUY
HEXAWARE - SELL
NIFTY Spot – Monthly Chart
NIFTY Spot – Monthly Chart
The index since last two months is seen trading in the broad range of
7420-7800 after the strong up move in May’14 and can be seen as a
base formation for the next couples of months.
Prices on the monthly chart have clearly enter in some correction
zone, as we see the “ spinning top” candles stick formation at the
top, this simply suggest that we are lined up with breather or for
some halt before the fresh move begins or declines. Going ahead if
the previous month low is breached on closing basis then we may
see some more months of correction toward 7200 -7000 mark.
Only a decisive breach of 7400 will derail the current uptrend in the
market. On the higher side the recent highs of July 2014 placed at
7840 levels is likely to act as major resistance in the short term
Roller over in nifty are comparatively less than the previous months
but better than the three months average, whereas the strong
hands in the market has already shifted there longs in patches. We
expect implied volatile to rise from the current levels which may
pressurize nifty for time being. Traders are advised to wait for
meaningful declines for fresh longs.
The index since last two months is seen trading in the broad range of
7420-7800 after the strong up move in May’14 and can be seen as a
base formation for the next couples of months.
Prices on the monthly chart have clearly enter in some correction
zone, as we see the “ spinning top” candles stick formation at the
top, this simply suggest that we are lined up with breather or for
some halt before the fresh move begins or declines. Going ahead if
the previous month low is breached on closing basis then we may
see some more months of correction toward 7200 -7000 mark.
Only a decisive breach of 7400 will derail the current uptrend in the
market. On the higher side the recent highs of July 2014 placed at
7840 levels is likely to act as major resistance in the short term
Roller over in nifty are comparatively less than the previous months
but better than the three months average, whereas the strong
hands in the market has already shifted there longs in patches. We
expect implied volatile to rise from the current levels which may
pressurize nifty for time being. Traders are advised to wait for
meaningful declines for fresh longs.
Future Outlook – August 2014
Khandwala Securities Limited 5 | P a g e
What Charts Speak?
Made ‘Doji’ candles at
top in daily chart.
Head & Shoulder pattern
breakdown in daily
chart.
Fall is more wild then
rise from June onwards.
Oscillator RSI has taken
the resistance of
trendline breakdown
and is moving well below
the same in daily chart.
What Charts Speak?
Made ‘Doji’ candles at
top in daily chart.
Head & Shoulder pattern
breakdown in daily
chart.
Fall is more wild then
rise from June onwards.
Oscillator RSI has taken
the resistance of
trendline breakdown
and is moving well below
the same in daily chart.
BSE CONSUMER DURABLES – Daily Chart
BSE CONSUMER DURABLES – Daily Chart
Nifty OI – Call Put Analysis
Sector For The Month
• After a sharp rally from 5263.48 to 9227.04 in five months ended June 2014, BSE CONSUMER DURABLES has made
three ‘Doji’ candles in daily chart, where the rally has halted.
• From last one month index is moving in sideways direction. The ongoing consolidation has resulted into formation of
‘Head and Shoulder’ pattern in daily chart.
• Recently index has given neckline breakdown from the mentioned pattern (as seen in chart).
• Additionally the momentum oscillator RSI has taken the resistance of trendline breakdown and is moving well below
the same in daily chart, suggesting weakness in Consumer Durable counters in upcoming weeks.
• Some of the CONSUMER DURABLES counters like Titan, Bajaj Electricals and Videocon Industries can be traded with
negative bias for the month.
Khandwala Securities Limited 6 | P a g e
Technical Picks
GMR INFRA CASH- BUY CMP: 28.70
HEXAWARE FUTURE – SELL CMP: 138.95
The stock prices of GMRINFRA had given a bullish reversal pattern breakout at around 25 - 26 levels on April 14 known as 'INVERSE HEAD AND SHOULDER’. After breakout the prices went up to reach the levels of 38 and have now corrected back to the breakout levels which is a strong confluence zone of support formed by 50% retracement level of medium term rally (10 - 38) and 200DMA. The prices on weekly charts have formed a strong bullish candle stick pattern known as 'BULLISH ENGULFING and have registered 'HIGHER TOP HIGHER BOTTOM' price cycle which indicates strength in the bulls. Technically it can be presumed that as long the prices sustains the 'HIGHER TOP HIGHER BOTTOM' price cycle a strong pull back from the current levels cannot be ruled out. Recommendation: Looking on the entire above
scenario we give a positional buy on GMRINFRA
at/above 28 with SL of 26 for targets of 33/38.
The stock prices of GMRINFRA had given a bullish reversal pattern breakout at around 25 - 26 levels on April 14 known as 'INVERSE HEAD AND SHOULDER’. After breakout the prices went up to reach the levels of 38 and have now corrected back to the breakout levels which is a strong confluence zone of support formed by 50% retracement level of medium term rally (10 - 38) and 200DMA. The prices on weekly charts have formed a strong bullish candle stick pattern known as 'BULLISH ENGULFING and have registered 'HIGHER TOP HIGHER BOTTOM' price cycle which indicates strength in the bulls. Technically it can be presumed that as long the prices sustains the 'HIGHER TOP HIGHER BOTTOM' price cycle a strong pull back from the current levels cannot be ruled out. Recommendation: Looking on the entire above
scenario we give a positional buy on GMRINFRA
at/above 28 with SL of 26 for targets of 33/38.
As seen in the chart, stock prices of HEXAWARE have given a bearish trend line breakdown which resembles a 'HEAD AND SHOULDER' bearish reversal pattern. The prices for last two months were trading in a narrow range of 140 - 160 levels and last week the prices by giving a close below 140 levels have completed a bearish 'RECTANGULAR CHANNEL' breakdown. The impact of the above patterns can lead prices to the downside of 125/115 in near term. In daily chart, prices are well below the short term and medium term moving averages i.e. 20SMA, 50SMA and 200SMA which indicates overall bearishness in the counter. Momentum oscillators like RSI and MACD are in negative zone supporting the sell call. Recommendation: We recommend traders to go short in HEXAWARE FUT at/below 141 with SL of 147 for targets of 125/115.
As seen in the chart, stock prices of HEXAWARE have given a bearish trend line breakdown which resembles a 'HEAD AND SHOULDER' bearish reversal pattern. The prices for last two months were trading in a narrow range of 140 - 160 levels and last week the prices by giving a close below 140 levels have completed a bearish 'RECTANGULAR CHANNEL' breakdown. The impact of the above patterns can lead prices to the downside of 125/115 in near term. In daily chart, prices are well below the short term and medium term moving averages i.e. 20SMA, 50SMA and 200SMA which indicates overall bearishness in the counter. Momentum oscillators like RSI and MACD are in negative zone supporting the sell call. Recommendation: We recommend traders to go short in HEXAWARE FUT at/below 141 with SL of 147 for targets of 125/115.
Khandwala Securities Limited 7 | P a g e
Global Economic Calendar – August 2014
Source : mcxindia.com
Performance Overview – July 2014
Booked in Profit 55
Exited at Cost 19
Exited in Loss 32
Total Calls Given in the Month 106
Assumptions in Calculation: The invested capital per trade is 50000. One lot traded for each future call. The number of lots in options will vary depending on the price per lot since a fixed capital base of 50000 has been assumed. Calls which were exited with ROI of more than 0.80% are treated as ‘Exited in Profit’. Calls exited in between + 0.80% to -0.80% has been treated as ‘Exited at Cost’. Calls exited with loss of more than -0.80% ‘Exited in Loss’.
Khandwala Securities Limited 8 | P a g e
IMPORTANT DISCLOSURE
Khandwala Securities Limited and its affiliates are a full-service, integrated investment banking, investment management and brokerage group. We along with our affiliates are leading underwriter of securities and participants in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationships with a significant percentage of the companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. Investors should assume that Khandwala Securities Limited and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may participate in the solicitation of such business. Our research professionals are paid in part based on the profitability of Khandwala Securities Limited, which include earnings from investment banking and other business. Khandwala Securities Limited generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, Khandwala Securities Limited generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein.
This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. It is for the general information of clients of Khandwala Securities Limited. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Khandwala Securities Limited does not provide tax advise to its clients, and all investors are strongly advised to consult with their tax advisers regarding any potential investment.
Certain transactions -including those involving futures, options, and other derivatives as well as non-investment-grade securities - give rise to substantial risk and are not suitable for all investors. The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only. We endeavour to update on a reasonable basis the information discussed in this material, but regulatory, compliance, or other reasons may prevent us from doing so. We and our affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material, may from time to time have “long” or “short” positions in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. For the purpose of calculating whether Khandwala Securities Limited and its affiliates holds beneficially owns or controls, including the right to vote for directors, 1% of more of the equity shares of the subject issuer of a research report. Khandwala Securities Limited and its affiliates may, to the extent permissible under applicable laws, have acted on or used this research to the extent that it relates to issuers, prior to or immediately following its publication. Foreign currency denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or income derived from the investment. In addition, investors in securities such as ADRs, the value of which are influenced by foreign currencies affectively assume currency risk. In addition options involve risks and are not suitable for all investors. Please ensure that you have read and understood the current derivatives risk disclosure document before entering into any derivative transactions.
This report has been prepared by Khandwala Securities Limited (KSL). KSL has reviewed the report and, in so far as it includes
current or historical information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed.
