Trade setup for Thursday: Top 10 things you should know before Opening Bell

Both MACD as well as Supertrend indicators are in ‘sell’ mode and if Nifty breaks below 10,030 then decline towards 9,850 is possible, suggest experts.

 

The Nifty, which was reeling under pressure, extended the decline soon after the Reserve Bank of India (RBI) kept its key lending rate — the repo rate— unchanged at 6 percent on Wednesday, but warned about lurking inflation worries in the New Year.

The index formed a bearish candle on Wednesday and breached its 100-day simple moving average placed at 10,071. The index took support at its 100-days exponential moving average placed around 10,038 which also forms a crucial support in days to come.

Formation of a bearish candle after a Doji pattern clearly gives an advantage to the bears but a small technical bounce back could be on the cards as Indian markets are trading near key support levels after seven straight sessions of bearish candles.

Both MACD as well as Supertrend indicators are in ‘sell’ mode and if Nifty breaks below 10,030 then decline towards 9,850 is possible.

The Nifty opened at 10,088 and rose to an intraday high of 10,104 but then bears took control of the index and pushed the index below 1oo-SMA to touch its intraday low of 10,033. Nifty finally closed 74 points lower at 10,044.

“The Nifty continued its slide before registering a bearish candle as selling got accelerated especially after RBI policy meets.

The Nifty breached its crucial 100-days moving average after two months as selling pressure weighed on investor sentiments after RBI maintained the status quo.

The Nifty continued the selling spree for the seventh consecutive session in a row. The index also closed below 10,100 which was being sustained in last three days.

“Initial supports which were last hope for bulls placed at 10,100-10,090 levels has also been breached coupled with 10,071 which was 100 Days SMA. In a continuous downward trend, we are seeing selling pressure on any marginal bounce and is being aggressively utilized by bulls.

“In the short-term, a bounce towards 10,200 - 10,180 is being observed as resistance while support may be seen at 9,980 - 9,950. Technically price structure also suggests a bearish sentiment is prevailing with a recent low around 10030 being a lower bottom.

Mustafa further added that a breach of previous swing low which was formed in November around 10,100 may also act as a resistance.

We have collated the top ten data points to help you spot profitable trade:

Key Support & Resistance Level for Nifty

The Nifty closed at 10,044.1 on Wednesday. According to Pivot charts, the key support level is placed at 10,016.87, followed by 9,989.63. If the index starts to move higher, key resistance levels to watch out are 10,087.77 and 10,131.43.

Nifty Bank

The Nifty Bank closed at 24,851.8. Important Pivot level, which will act as crucial support for the index, is placed at 24,751.13, followed by 24,650.46. On the upside, key resistance levels are 25,014.93, followed by 25,178.07.

Call Options Data

Maximum Call open interest (OI) of 67.36 lakh contracts stands at strike price 10,500, which will act as a crucial resistance level for the index in the December series, followed by 10,400, which now holds 53.23 lakh contracts in open interest, and 10,300, which has accumulated 50.44 lakh contracts in OI.

Call writing was seen at strike prices of 10,100 (8.55 lakh contracts were added), followed by 10,200 (7.93 lakh contracts added), and 10,400 which added 7.13 lakh contracts.

Call unwinding was seen at strike price 10,000, which shed 0.81 lakh contracts.

Put Options Data

Maximum Put OI of 83.49 lakh contracts was seen at strike price 10,000, which will act as a crucial base for the index in December series, followed by 9,800, which now holds 50.35 lakh contracts and 10,100 which has now accumulated 37.87 lakh contracts in open interest.

Put writing was seen at strike prices 9,800 (5.30 lakh contracts added) and 10,000, which saw the addition of 3.06 lakh contracts and 10,100, which saw the addition of 2. 74 lakh contracts.

Meanwhile, Put Unwinding seen at the strike price of 10,200, which saw shedding of 2.05 lakh contracts, followed by 10,400, which saw 1.24 lakh contracts.

FII & DII Data

Foreign institutional investors (FIIs) sold shares worth Rs 1,217.92 crore, while domestic institutional investors bought shares worth Rs 995.11 crore in the Indian equity market.

Stocks with high delivery percentage

High delivery percentage suggests that investors are accepting the delivery of the stock, which means that investors are bullish on the stock.

MORE WILL UPDATE SOON!!

Dow Jones 30 and NASDAQ 100 Price Forecast December 6, 2017, Technical Analysis

With the volatility comes pullbacks, and these pullbacks look as if they are offering value for the astute trader, and of course algorithmic black box systems.

Dow Jones 30

The Dow Jones 30 has fallen a bit during the trading session on Tuesday, reaching towards the 24,200 level. I believe that the market should continue to go much higher. Ultimately, I think that the 25,000 level will be targeted, but in the meantime the initial target will be the 24,500 level after that. Currently, I look at the 24,000 level below as the “floor” in the market, and therefore I like buying these dips as it appears Wall Street is ready to do the same. The so-called “Santa Claus rally” is likely to happen, so therefore as money managers try to pad their funds with stocks, to show signs of progress for the year. That provides a little bit of a bullish attitude in the month of December.

NASDAQ 100

The NASDAQ 100 has been out of control lately, as we continue to see so much in the way of negativity, and then bounced rather radically from the 6225 level. It looks as if we are going to try to fill the gap from a couple of days ago again, meaning that the markets going to find support near the 6370 level. The stochastic oscillator is looking very likely to cross over in the overbought range, so therefore I think that it’s a matter of time before you pull back. The volatility the NASDAQ 100 has been very difficult to deal with, and I think that it is easier to play the Dow Jones 30 to the upside, or perhaps even the S&P 500. Tech stocks continue to look very volatile around the world, and the NASDAQ 100 isn’t any different.

MORE WILL UPDATE SOON!!

S&P 500 Price Forecast December 6, 2017, Technical Analysis

The S&P 500 had a slightly positive session on Tuesday, as we continue to dance around the 2650 level. The uptrend seems to be very much intact.

The S&P 500 rallied during the trading session on Tuesday, reaching towards the 2650 level again. We had fallen on Monday to fill the gap, and now it appears that the gap is going to hold as support for the longer-term move. Because of this, a break above the 2650 level should send fresh money into the marketplace, looking for a breakout to the upside yet again. At this time of year, you quite often get the “Santa Claus rally”, which is simply larger money managers trying to buy stocks to show clients that they are in fact invested in something. Managers that have not done well this year will be chasing returns frantically, to get the right amount of return for their clients to keep the business going.

We have algorithmic trading that is also keeping the market afloat as well, and I think that the machine trading will continue. That being the case, I like buying pullbacks in the S&P 500 but I also recognize that there is a lot of noise in the marketplace, with a lot of focus being on the US Congress passing some type of tax bill. Ultimately, the market should continue to go higher if we get signs of progress. Alternately, if we fail to get that passage, that should be very negative for stock markets. Currently, it looks as if the corporate rate is going to be 20% in the United States, which makes it very competitive with the rest of the world, thereby having the S&P 500 looking cheaper than it did just a few weeks ago. Ultimately, the 2600 level is the “floor” in the uptrend.

MORE WILL UPDATE SOON!!

Index trend and stocks in action December 06, 2017:"STOCKS TO BUY"

During the previous trading session, after opening gap and testing its 100-SMA, Nifty rebounded to close flat with negative bias. The price action has resulted in the formation of doji candle which indicates indecision. Going forward, a follow through correction below the 100-SMA, which is placed around 10,070, may see the Nifty extending its correction towards levels of 10,000, while on the upside the level of 10,180 followed by 10,210 is a stiff barrier for the index. Today being a crucial event, i.e. RBI bimonthly policy release, the outcome of policy could the dictate the near term trend for the Nifty. 

Essel Propack: The Company is issuing Commercial Papers (CP) for Rs. 30 crore on private placement basis.  

Reliance Communication: Fitch Ratings (Fitch) has withdrawn “C” rating of Company’s Long-Term Foreign and Local Currency Issuer Default Ratings and Bonds listed in Singapore Stock Exchange due to commercial reasons.    

Byke Hospitality: Company announced acquisition of the 3 hotels, The Byke Nature Villas in Shimla, The Byke Puja Samudra in Kovalam and The Byke Brightlands Resorts in Matheran.  

Infosys: Inspired by the success of past funding initiatives to train thousands of public school teachers, Infosys Foundation USA will host the Pathfinders Summer Institute 2018, a national convening for K-12 teacher education in Computer Science and Making.  

Hatsun Agro Product: Paid Rs 2.07 crore to the income tax authorities as per the settlement commission order.  

Shilpa Medicare: Company has received Form 483 observations from the USFDA for it Telangana facility, a total of 10 observations was cited during the close up meeting.  

Punjab Chemicals: The board meeting is to be held on December 8, 2017 to consider fund raising.  

MORE WILL UPDATE SOON!!

Buy, Sell, Hold: Here are 6 stocks that are in focus today:Intraday

Bharat Forge, Dish TV and Axis Bank, among others, are being tracked by investors on Wednesday.

Bharat Forge

Brokerage: CLSA | Rating: Buy | Target: Rs 905

The global research firm said that outlook for exports has improved significantly. It sees demand picking up in key industrial export segments and a strong 34 percent EPS CAGR over FY17-20. The brokerage said that the firm had valuations at 30x one-year forward PE are not cheap but should sustain.

Dish TV

Brokerage: CLSA | Rating: Buy | Target: Raised to Rs 108

CLSA said that Q2 earnings were underlined by slow recovery in ARPU & subscriber additions. It lowered EBITDA estimates by 5-8 percent, but remains positive. It sees significant synergy benefits for the firm from Videocon D2H merger.

Brokerage: IDFC | Rating: Outperform | Target: Rs 92

The brokerage said that the second half of FY18 ARPU is expected to be higher than the first half. Further, the D2H merger may yield revenue and cost synergies. It cut FY18/19 earnings by 51%/35% as we increase D&A expenses.

Brokerage: Morgan Stanley

Morgan Stanley said that the company’s Q2 revenue was in-line with estimates; EBITDA Beat Of 3% was seen. Further, average revenue per user improved marginally in Q2 but net subscriber additions remain soft. The research firm believes that GST will aid margin expansion, benefits to mainly accrue over H2FY18.

Axis Bank

Brokerage: Nomura | Rating: Buy | Target: Cut to Rs 620

Nomura said that core PPOP/asset is readjusting downwards to a new normal. It expects a normalised RoEs of 15-15.5 percent for the bank.

Arvind

Brokerage: Edelweiss | Rating: Buy | Target: Rs 493

Edelweiss said that garments, advanced materials are the ‘wheels for future’, says management. Given the growth plans for brand and retail, future cash flow requirement will be the key. It believes that carved-out textile unit may figure among fastest growing textile firms.

M&M

Brokerage: Citi | Rating: Buy | Target: Raised to Rs 1,700

Citi said that farm equipment remains on a solid footing and it forecasts 15%/10% tractor volume growth in FY19/20. Further, weak UV performance has led to the stock treading water for over three years.

Voltas

Brokerage: Motilal Oswal | Rating: Neutral | Target: Rs 580

The brokerage house said that AC portfolio overhaul is likely post energy rating norm changes. One could watch out for the company’s pricing on inverters. Meanwhile, projects business has also stabilised with margin recovering to 5-6%.

MORE WILL UPDATE SOON!!

Stay with winners! Nifty falls 372 points from record highs; 20 stocks which rose 20-40%

Even if BJP does win Gujarat election we could see a sigh of relief but if the results disappoint then chances of a big cut could be on cards, suggest experts.

The bull’s part fizzled out soon after the benchmark indices hit record highs back in the month of November. The S&P BSE Sensex slipped over 1,000 points from its record high of 33,865 while the Nifty50 dropped 372 points from its record high of 10,490 recorded on November 6.

The index did make a recovery but the trend started drifting lower post November 20. The Nifty50 now trades below key short-term moving averages but there was plenty of stock specific action which kept traders busy throughout the period.

The Nifty50 hit a record high of 10,490 on November 6 but as many as 20 stocks gave returns in the range of 20-40 percent in the same period, according to data collated from Capitaline.

Stocks which outperformed Nifty50 in the last one month includes many small and midcap names such as Jai Corp, Praj Industries, Minda Industries, Vakrangee, McLeod Russel, Sonata Software, Religare Enterprises, L&T Technology, VIP Industries, La Opala, Coffee Day Enterprises etc. among others.

After a sharp rally seen in the first 10 months of the calendar year 2017, most analyst were expecting the rally to take a halt in the month of November and December.

There are many events lined up for the month of December which could halt rally on D-Street at least in the short term. Nervousness on D-Street is clearly visible ahead of key events such as RBI policy outcome, US Fed Monetary policy review, as well as the outcome of state elections, suggest experts.

The market is likely to stay rangebound until the time state election results especially Gujarat election results are out; hence, a big rally or a Santa Claus rally might have to wait for another year.

Even if BJP does win Gujarat election we could see a sigh of relief but if the results disappoint then chances of a big cut could be on cards, suggest experts.

 Do not expect a win by Modi to move the markets up or have too much of an upside based on this news alone but a loss and upset from BJP could take the markets lower.

Looking at the market, we believe this inherent weakness in the market will continue and we expect the market to move lower into the 10,000 to 10,100 region in the coming expiry, i.e. the December expiry.

In the short term, it is essential for investors to opt for bottom-up ideas which can offer superior value in terms of their valuation. Many stocks did correct up to 20 percent in the last one month, but investors must do their research before putting their money.

Many stocks fell up to 20 percent in the Nifty500 index which includes names like Marksans Pharma, Reliance Communications, Lupin, MTNL, Welspun Corp, GSFC, Aurobindo Pharma, Vedanta, Cadila Healthcare, Punjab National Bank, Suzlon, Tata Motors, MMTC, Hindalco Industries, Power Finance Corporation etc. among others.

  Despite the sharp correction, analysts feel that the Bull Run remains intact and investors should be focused on building their portfolio with quality stocks. Investors should use these dips to accumulate quality stocks.

“We continue to believe that Indian markets are in a phase of a secular bull run. Hence, even if there are event-based intermittent corrections in the Indian markets, the long-term trend remains bullish

These events in the immediate future could be the outcome of the state elections or the US Fed policy review but we firmly believe that it will not reverse the overlying trend of upward asset values.

MORE WILL UPDATE SOON!!

Top 10 stocks which are likely to benefit the most if RBI cut rates

State Bank of India, Punjab National Bank, HDFC Bank, HDFC, Maruti Suzuki, Ashok Leyland, DHFL, TVS Motor, L&T and IndusInd Bank are stocks, which could benefit the most from a rate cut by the RBI.

The Reserve Bank of India (RBI) which will announce the policy review on 6th December after two days of Monetary Policy Committee (MPC) meeting beginning 5th December, is likely to keep repo rates unchanged at 6 percent with a hawkish stance on inflation concerns.

The retail inflation or consumer price index-based- inflation inched up to a seven-month high of 3.58 percent in October from 3.28 percent in the month of September. The crude oil prices which contribute to rise in inflation is in an upward trajectory for the past few months.

As the inflation rate is expected to remain high for a longer duration due to factors such as firming international crude oil prices, fiscal issues etc. and RBI is expected to avoid tinkering with rates and await for more clarity. It might adopt a more hawkish tone, suggest experts.

Expect RBI to sit tight on the monetary policy, with no rate move expected for at least the next two quarters. In fact, there's a possibility of the central bank adopting a relatively hawkish tone given the sharp liquidity dip in banking, growing inflation and concerns of fiscal slippage.

Apart from the outcome of the monetary policy, the future policy statement will be of utmost importance. Most analysts expect a cut probably in the first half of next year to fuel growth momentum.

The status quo of the industry will help us decipher the further steps that the RBI might take in the future, giving us a glimpse of the upcoming activities. We can expect a rate cut next year and a lot depends on how inflation plays the role.

Here is a list of top ten stocks from across analysts at brokerage firm which could benefit the most from a rate cut by the RBI:

State Bank of India (SBI):

SBI is the sector leader with healthy loan book. Despite the challenging environment, the bank has reported a stable set of numbers over the last several quarters.

Recently, SBI has raised interest rates on bulk deposits of above Rs.1 crore to 10 crore by 100 bps. Therefore, any cut in the key rates will reduce its cost of fund, which may improve its margin as well as advance growth.

We believe the Bank will perform well with the improvement in the economy going forward.

Punjab National Bank (PNB):

In Q2FY18, the bank reported an improvement in its asset quality. Its Gross NPA and Net NPA improved by 35bps and 23bps QoQ.

Fresh slippages for the quarter stood at Rs.3500 crore against Rs.6649 crore on a QoQ basis. Domestic Net Interest Margin (NIM) improved by 6bps QoQ to 2.62 percent.

We believe, over the last several quarters much of the stress is being recognized and now the government focus is on sectors like infrastructure, iron & steel and rural economy etc., will positively impacting PNB going forward.

Maruti Suzuki India Ltd:

Maruti Suzuki has reported a healthy November sales growth. It sold 1.54 lakh units during the month, an increase of 14.1 percent on a YoY basis.

The growth was driven largely by domestic sales that grew by 15 percent on a YoY basis to 1.45 lakh units. We believe, reducing interest rate cycle coupled with, rising income base and improving rural demand, positively impacting automobiles industry wherein, Maruti is the front-runner to take the standing opportunity.

Analyst: Mustafa Nadeem, CEO, Epic Research

TVS Motor:

A cut in rates would directly have an impact which could result in improved spending that may further boost the momentum of this stock. The stock has been in an overall uptrend positing good moves while a rate cut would further improve volume action and undertone for it to push towards Rs780 - 770 zones with a stop loss below Rs720

IndusInd Bank:

IndusInd Bank is amongst the top performing bank from the private sector space and is riding the liquidity wave. The stock has been an outperformer in the overall banking sector private players.

The stock is in a higher top and higher bottom trajectory and any rate cut would further boost this stock to rally and add more gains. Any rate cut would further boost the stock to test the higher top of around Rs1850 - 1900 zones in coming few weeks.

Larsen and Toubro (L&T):

The stock may end its short-term correction cycle in case a surprise cut is made. Given its dominating position in EPC and infra space, it will have the direct benefit of improved spending. This stock can test higher levels of Rs1330 – 1340 going forward.

HDFC Bank:

HDFC Bank is the leader in the private banking space and has been leading the price momentum despite correction among its peers.

The dominating presence and stronghold among the space and better net interest margin (NIM) as compared to other players make it a favored stock in case a rate cut is seen. The stock may rise towards Rs1950 - 2000 zone in case a change in status quo is made by RBI.

Analyst: Pushkaraj Sham Kanitkar, AVP - Technical Research at GEPL Capital

HDFC:

HDFC is one of the big private sector lenders will benefit from the cost of funds and also advances will likely to increase. In terms of business, the company will have strong growth rate and ROA will likely to increase.

DHFL:

The Company is well capitalized to grow loan book in the housing finance space. The housing finance space in itself is expected to grow owing to the focus on affordable housing.

The company has maintained stable net interest margins (NIMs) and asset quality which is commendable, given the aggressive growth in the loan book.

Ashok Leyland:

The Company has already posted robust results in the previous quarters. Rate cuts will make loans cheaper and encourages the sales growth of the products. We believe that Ashok Leyland will be benefit from the rate cut.

MORE WILL UPDATE SOON!!