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!!

Dow Jones 30 and NASDAQ 100 Price Forecast December 5, 2017, Technical Analysis

The US stock markets gapped higher at the open on Monday, suggesting that we are ready to continue the rally after the U.S. Senate passed a form of tax reform. This of course is a very bullish sign for tax reform, and should continue to elevate markets.

Dow Jones 30

The Dow Jones 30 gapped higher at the open on Monday, as the CFD markets reacted to tax reform coming out of the U.S. Senate. We are currently hovering just below the 24,500 level, which is an area that of course has a certain amount of psychological resistance, and therefore I think we could get a short-term pullback, but I believe there’s plenty of buying pressure underneath, as the gap should be supportive. As soon as the vote comes Monday night to perhaps send reconciliation into order, the markets will probably be bullish after that as well. I believe the 24,000-level underneath is massively supportive, and essentially a “floor.”

NASDAQ 100

Unlike the S&P 500 and the Dow Jones 30, the NASDAQ 100 fell during the day, as we continue to see a lot of volatility in the sector. We are starting to cross over in the oversold part of the Stochastic Oscillator, which of course is a sign that we could start buying again. I think the 6400 level above is massively resistive, just as the 6250-level underneath is going to be massive support. The choppy action in this market should continue, and with the sudden selloff that we have seen in the NASDAQ 100, I much prefer having a long position in either the Dow Jones 30 or the S&P 500 currently, as the NASDAQ 100 tends to be a bit of an outlier when it comes to the US indices.

MORE WILL UPDATE SOON!!

S&P 500 Price Forecast December 5, 2017, Technical Analysis

  

The S&P 500 gaped higher at the open on Monday, it now seems to be trying to settle at the 2650 handle. This of course is an area that has been resistance, so it’s likely that we will continue to find interest in this area.

The S&P 500 gaped higher at the open on Monday, clearing the 2650 handle. The market rallying to the 2660 level did find a bit of resistance, but eventually we pulled back to test the 2650 level for support. Ultimately, the market should continue to go higher, and then reaching towards the 2700 level. However, if we break down below the bottom of the gap for the day, that would be a very negative sign, perhaps sending this market back down to the 2625 handle. The 2600 level underneath is massive support as well, and essentially where I think that the uptrend ends, least in the short term.

We should see the “Santa Claus rally” soon, which is when fund managers on Wall Street start buying stocks to make it look like they have been doing something all year. It’s called padding the portfolio, and it makes investors happier at the end of the year. This is something that happens quite often, and it looks as if the S&P 500 is ready to continue that tradition. I don’t think we are going to see a massive selloff unless of course we get a failure of tax reform, which right now looks very likely to pass in one form or the other, as the US Senate passed a form of tax reform over the weekend. Late Monday night we will get a resolution vote in the US House of Representatives, and if it moves forward it’s likely that we will have a bill for President Trump to sign in the next week or so.

MORE WILL UPDATE SOON!!

Is there a case for RBI to cut policy rate on Wednesday?

The fifth monetary policy for the financial year 2017-18 is likely to be a non-event as most experts predict a status quo.

  

Risks to inflation, stable growth, and uncertainty ahead are likely to keep the Reserve Bank of India from changing the key policy repo rate from the current 6 percent in its monetary policy review on Wednesday.

The direction and language of the policy statement will be crucial, but the policy itself, which is the fifth for the current financial year, is likely to be a non-event as most experts predict a status quo.

The six-member MPC, chaired by the Reserve Bank of India Governor Urjit Patel, will meet on two days – December 5 and 6 – to decide on the movement of key interest rate going forward.

The resolution of the MPC will be placed on the website at 2.30 pm on December 6.

Rating agency ICRA, also anticipates the MPC to leave the repo rate unchanged at 6.0 percent in a non-unanimous decision in the December 2017 policy review, given the expectation of a further rise in the CPI inflation in the coming months.

Retail inflation or CPI (consumer price index) inflation inched up to a 7-month high of 3.58 percent in October from 3.28 percent in September.

Based on the staggered impact of the revision in HRA, housing inflation is expected to continue to harden over the rest of this fiscal. Moreover, the announcements of pay revision by various state governments, which would continue into FY2019, would add to inflationary pressures, ICRA said.

After a dip of 5 quarters, GDP growth in the second quarter of 2017-18 was 6.3 percent. The growth was at 5.7 percent in the April-June period, lowest growth rate since the NDA Government took office.

Despite the uptick, Fitch Ratings cut its growth forecast for the full year FY18 to 6.7 percent from 6.9 percent and forecast for FY19 was revised to 7.3 percent from 7.4 percent.

Going by this, Bhattacharya forecasts a marginal likelihood of a rate reduction in the year ahead.

There is very slim probability of one more rate cut. There are risks to inflation, global commodity prices will need to stabilise, fiscal situation needs to be under control, tax collections need to improve and Federal Reserve’s signals on interest rates, etc…all of this together will be watched.

In its previous policy review, the MPC highlighted upside risks to inflation with Governor Patel calling for a “cautious approach” maintaining the neutral policy stance.

While the MPC voted in favour of a status quo in October, the only member in favour of a rate cut was Ravindra Dholakia, who pushed for a steep 50 basis point cut.

However, another member - Michael Patra - had advocated a rate hike saying “it is time to be in readiness to raise the policy rate to quell the underlying drivers of inflation if they strengthen further”.

The RBI had also raised its inflation forecast while cutting growth projection for fiscal 2018 due the lingering effects of demonetisation, the rollout of GST and the spurt in crude oil prices around the globe.

Patel also suggested the recent structural reforms may have had some impact on growth in the short run. However, they will boost medium-to long-term growth prospects.

To improve immediate growth prospects, teething troubles relating to GST need to be addressed expeditiously. Concerted efforts also need to be made to encourage investment activity by removing various constraints. Resolution of stressed balance sheets of banks remains important for supporting a revival in the investment cycle. Finally, government should adjust administered interest rates on savings instruments every quarter as per the formula to help with monetary transmission.

MORE WILL UPDATE SOON!!

Top 15 unloved stocks on D-Street rose up to 38%;I've got that winning feeling!

Morgan Stanley, which gives 50 percent probability to its base case target scenario for Sensex at 35,700 in the next one year or by December 2018, sees growth moving higher in 2018.

Finding value in the Indian market is hard especially at a time when benchmark indices have already rallied nearly 24 percent so far in the year 2017. But, there are plenty of stocks which brokerage firms are overweight on but are still under-owned.

Some of the stocks are going through the impact of GST and slowdown in the demand environment but are still very good bets in the long term, suggest experts.

A combination of supportive global growth, improving capex, fiscal spending, and a buoyant consumer augur well for growth in 2018, Morgan Stanley said in a note released last month.

The global investment bank highlighted 15 stocks which are unloved or under-owned despite strong rally seen in the market. Most of the stocks mentioned in the Morgan Stanley’s unloved list are low-beta stocks (with a beta less than 1).

Out of 15 stocks mentioned, Morgan Stanley remains overweight on 7 stocks which include names like Coffee Day Enterprises which rose up to 38 percent in the calendar year 2017, followed by Asian Paints which gained 26 percent, and Shree Cements rallied 15 percent in the same period.

Morgan Stanley maintains an underweight rating on as many as 7 out of 15 stocks mentioned in the unloved list which include names like Nestle India, Wipro, Marico, Colgate Palmolive, Mindtree Glaxo Pharma, and IDFC Bank. Most of the names in the underweight category have given a negative return.

Some of the stocks mentioned in the list might fall in the category of unloved or under-owned, but has huge potential left. Colgate being the leader in toothpaste has faced a very tough competition from its rival Patanjali (Dantkanti) & for some products from Dabur.

Overall Nestle & Colgate is considered as underweight with the sales and profits declining. Dabur can be considered as Buy opportunity in the FMCG space with its great outlook," he said. In the overweight category, Singhvi is positive on Coffee Day which has huge potential left in this space with the vision of increasing the number of outlets.

Overall Consumption sector has seen the boom, so we would certainly suggest adding Asian paints, Coffee Day, Hathway Cable & Shree Cements at these levels for further up move," he said. Cummins India is also a very good dividend yield stock and with great fundamentals & for the growth story unlocking can be bought in the range of Rs 700-750.

Morgan Stanley, which gives 50 percent probability to its base case target scenario for Sensex at 35,700 in the next one year or by December 2018, sees growth moving higher in 2018. The global investment bank expects earnings growth to hit 16 percent and 24 percent for FY18, and FY19, respectively.

In the bull case scenario, where the global investment bank has put a probability of just 30 percent could see Sensex rallying towards 41,500. In the bull case scenario, earnings growth is likely to hit 19 percent in FY18, and 27 percent in FY19.

In terms of Nifty, analysts expect strong earnings revival from the second half of FY18 after September quarter earnings which were surprisingly better than consensus estimates.

The Nifty50 rallied nearly 24 percent year-to-date, driven majorly by liquidity on hopes of earnings growth and Modi government reforms.

Research house IDFC Securities expects Nifty earnings to register 15.1 percent CAGR over FY16-19 and set FY19 Nifty EPS target at Rs 579, implying 20.9 percent YoY growth.

Recent quarterly earnings (July-September) were stable to better-than-expected, which supported the market and gave investors a confidence to stay positive on India growth.

The research house is overweight on engineering and capital goods, construction, metals & mining, oil & gas, consumer goods, automobiles, media and pharmaceuticals sectors.

Largecap top picks are SBI, ONGC, Motherson Sumi, HPCL, Hindalco, Bharat Electronics, Aurobindo Pharma and Ashok Leyland while mid-small cap top picks are Kajaria Ceramics, SpiceJet, Ashoka Buildcon and Greenply Industries.

Asian Paints

Asian Paints is the leader in the paint segment with more than 50 percent market share. Further, the company also has a strong dealer network of over 40,000 across India and is expected to be the key beneficiary of the government’s reforms like the Seventh Pay Commission which would increase the disposable income and the implementation of the GST which would reduce the tax arbitrage for the unorganized segment.

Coffee Day Enterprises

The company reported a healthy Q2FY18 numbers driven by good same-store-growth (SSG). On a consolidated level, topline grew 21 percent on a YoY basis to Rs 8.8 bn.

A key business that drove growth were CDGL (gross sales up 24 percent yoy), logistics (Sical; +20 percent), and financial services (Way2Wealth; +15 percent). The company added six stores during the quarter and the store count (ex-Kiosk) stood at 1,700.

GlaxoSmithkline Pharma

GSK is among the top ten players in the Indian pharmaceutical market, having a market share of 3.7 percent. Unlike other MNCs, the company has been amongst the few which have taken initiatives to grow their businesses in the Indian market with the consistent launch of new products.

Glaxo announced Rs 864cr investment in India to set up a medicine manufacturing unit. The new facility will substantially increase the company’s manufacturing base.

The drug maker is proactively building capacity in the country as it delivers its portfolio of products in areas such as gastroenterology and anti-inflammatory medicines.

Nestle

Nestle has been consistently posting sustained volume-led growth across all product categories fuelled by rising volumes in Maggi Noodles. However, ash and lead content found above the permissible limit remains a key concern for Maggi in the near-term.

It will also benefit from a reduction in GST rate on chocolates (from 28 percent to 18 percent) and on condensed milk (from 18 percent to 12 percent). A strong product portfolio, 45 launches over past 18 months and healthy track record of product innovation & renovation render Nestle key beneficiary of urban demand recovery.

Marico

With the strong brand equity in its two flagship brands, Parachute and Saffola, Marico has successfully extended its brands into higher growth and underpenetrated categories, like, value-added hair oil (VAHO) (Parachute Advanced), body lotions (Parachute body lotion) and breakfast cereals (Saffola Oats and muesli).

Further, the acquisition of brands like Set Wet and Zatak and Livon provide it a platform to grow in the segments of future through already established brand equity. However, the price of copra has been up by 17 percent sequentially and by 84 percent Y-o-Y in Q2FY18.

The annual crop in FY18 is expected to be lower by around 20 percent due to the deficient monsoons thus causing the price to remain high which will be a key concern for the company as Copra is one of the key raw material.

Hathway Cable

Hathway Cable has a strong market share in regional cable markets in India. GPON Technology is implemented to provide seamless connectivity. It provides broadband speed as high as 200 MBPS.

FY17 standalone PAT for the company was at Rs 40 crore which is already at Rs 26.7 crore by H1FY18. The Company is constantly providing new value-added services to customers to acquire additional and retain existing market share.

Shree Cements

Shree Cement has always been one of the low-cost manufacturers of cement. Further, considering growing emphasis of government on infrastructure couple with schemes such as Bharatmala, Housing for ALL we believe cement companies are up for a boom.

Shree Cement being one of the market leaders and most cost-efficient producer is sure to benefit from this up cycle. Further due to significant growth coming into industry any significant re-rating for the industry shall be commended by market leaders.

Shriram City Union Finance

Shriram City Union Finance is a niche play in the retail NBFC space with a focus on MSME lending. Factors like moderate loan growth, higher growth in gold loan segment which has comparatively higher spreads, engagement with Mckinsey for MSME lending for non-south market penetration makes it a good long-term bet.

Colgate Palmolive India

Colgate’s strengths are its wholesale channel recovery post demonetization, strong distribution channel, category development efforts, brand strength, R&D and its concentrated focus on oral care.

New campaigns focusing on the twice-a-day brushing habit and the likely enhanced herbal focus are expected to boost prospects. Colgate will also be a significant beneficiary of a rural market recovery, as its rural market share is disproportionately higher than its urban market share.

LIC Housing Finance

High competition in the mortgage business has played out, leading to the margin pressure. LIC faced pressure owing to high-salaried (83 percent) borrowers and a higher yield book. However, with a majority of assets being re-priced, we expect NIM to stabilize and improve hereon.

With LIC’s incremental borrowing at 7.23 percent, re-pricing of liabilities would support NIMs. In Q2FY18, overall growth was 20 percent YoY, driven by individual loans which grew by 18.4 percent and developer’s loan book which increased 65.8 percent.

Headline gross NPAs deteriorated to 0.8 percent QoQ from 0.72 percent, driven by developers’ loan growth. It has PCR of 60 percent in the developers' book. LIC Housing benefits from strong distribution reach of its parent and the highest credit rating.

IDFC Bank

As the retail franchise continues to improve but they are still on slow pace. The margins remain under pressure on corporate book lending yields and will continue to do so going ahead.

The bank expects to improve presence and improve granularity in its retail franchise with a multi-fold increase in branch presence from 85 branches to 150 by Mar’18 and target to grow retail loans by Rs50bn/year mainly on the higher-yielding assets.

Mindtree

Mind Tree has seen a revenue growth of 14 percent CAGR over the last five years. Even though industry’s growth rate has softened, largely led by account-specific concerns across vendors, the deal sizes in Digital have seen significant improvement, and are up as much as 3x.

The proportion of Digital to overall revenue has increased to 42.6 percent in Q2FY18 from 39 percent in FY17 and 37 percent in FY16. Mind Tree has been investing in Digital through four acquisitions over FY15-16 around P&C Insurance, SAP HANA, CPG analytics, and Salesforce.

Persistent Systems

The management expects over 40 percent growth in digital (20.9 percent of business); Growth (4-5 percent) returning to its legacy business; Significant cost savings led by the restructuring of deliveries in alliance business.

High growth digital business is now contributing over 20 percent of overall revenues, while zero growth services is now showing a moderate 4-5 percent growth, in turn enabling overall revenue growth of over 12-13 percent.

Wipro

Led by the continued strong banking sector, Wipro’s revenue growth is bound to recover. Wipro has outperformed peers within the BFSI vertical with double-digit revenue growth (14 percent YoY in Q2FY18) and strong deal wins.

Wipro has gained market share with banking clients, particularly in Europe, and won large deals in recent quarters. Wipro has spent $1bn in M&A in recent years on companies such as Appirio and DesignIt to build its upstream consulting and digital capabilities.

Revenue growth headwinds in the healthcare and telecom verticals should bottom out in Q3FY18 and that consequently, its Q4FY18 growth should be in line with the industry growth.

MORE WILL UPDATE SOON!!

Buy, Sell, Hold: 7 stocks and 1 sector are being tracked by investors

SIS, HPCL and Heritage Foods, among others, being tracked by analysts on Tuesday.

SIS

Brokerage: IIFL | Rating: Initiate Coverage with Buy | Target: Rs 1,300

The brokerage house expects 44 percent EPS CAGR over FY17-20. Further, it sees revenue CAGR of 21% & margin expansion of 160 bps over FY17-20.

HPCL

Brokerage: Citi | Rating: Buy | Target: Rs 564

Citi said that short-term sentiment for the firm could turn bullish. Further, it remains upbeat on Q3 with Singapore GRMs holding well. The company could get a boost from Bhatinda refinery expansion completion.

Bharti Airtel

Brokerage: CLSA | Rating: Buy | Target: Rs 640

CLSA said that strategy change was driving Africa improvements & profits. Further, the company has started registering profits in Africa since Q4, which marks a turnaround. It sees growth In India & Africa driving a 9x jump in consolidated PAT by FY21.

Greenply

Brokerage: IDFC | Rating: Outperform | Target: Rs 390

The brokerage house said that any revival in real estate would aid growth for the company. Further, it expects the company’s earnings to double over FY17-20.

Parag Milk

Brokerage: Edelweiss | Rating: Initiate with buy call | Target: Rs 340

The brokerage house expects EBITDA to jump 2.3x & RoCE to 19% over FY17-20. Further, it sees revenue and profit CAGR of 14 and 49 percent, respectively, over FY17-20. An improving mix will spur earnings and return ratio.

Heritage Foods

Brokerage: Edelweiss | Rating: Initiate Coverage with Buy | Target: Rs 976

Edelweiss said that the stock entails immense potential in the sector. Additionally, it sees sales and EBIT CAGR of 23% & 21% respectively Over FY17-20.

Prabhat Dairy

Brokerage: Edelweiss | Rating: Buy | Target: Rs 211

Edelweiss estimates sales, EBITDA & profit CAGR of 15%, 19% & 39%, respectively over FY17-20. B2C and value-added products will drive growth. The company is also seeing a rapid expansion of distribution network.

Sector:Tyres

Brokerage: Deutsche Bank

The global investment bank said that industry profitability should remain healthy over the next few quarters. Further, truck tyre demand trends continue to improve in Q3 and that should aid OEM sales.

MORE WILL UPDATE SOON!!

Which Stocks To Buy In Correction??

Buy Minda Corporation around 185--175 Target 225--250+ Stop Loss 165

Buy Pricol around 115--105 Target 125--140+ Stop Loss 90

Buy Yes Bank around 300--285 Target 345--375+ Stop Loss 264

Buy Shalimar Wires around 16--13 Target 21--25+ Stop Loss 10

Buy Skipper around 250  Target  295+ Stop Loss 235

Buy Bodal Chemicals around 160--156 Target 200+ Stop Loss 144

Buy Goa Carbon around 750 Target 900--1050 Stop Loss 650

Buy HFCL 27--25  Target 35--40+ Stop Loss 23

Buy RPP Infra around 276--260 Target 320--350+ Stop Loss 250

MORE WILL UPDATE SOON!!

Top 11 largecap stocks which are likely to remain in action in December series; do you own any?

At the current juncture, 10,000 put and 10,500 call options are attracting trader’s attention and will remain in a range for the index for the few sessions.

The November series started on a positive note as a lot of long positions rolled from the October expiry. The bullish momentum of the penultimate month continued in starting sessions of the November expiry and as a result, the index made a new ‘all-time high’ of 10,490.45.But, foreign institutional investors (FIIs) didn’t participate in that up move as they started taking short positions in the index futures right from the start of the series.They continued their selling momentum in the index futures throughout the first fortnight of the November series and as a result, their ‘Long Short Ratio’ (LSR) in index futures too came down from 70.40 percent (October 26) to 48.90 percent (November 16).

The Nifty50 failed to abide their selling pressure and corrected by around 400 points from its peak. Average of FIIs’ short positions in Nifty was around 10,370–10,420 and they defended that territory in the latter half of the November expiry when Nifty bounced back.

To get an exit with the profits, they didn’t give any chance to the Bulls on the expiry session and dragged the index lower below 10,250 level. At the current juncture, they exited 53 percent of their total positions in index futures on the expiry day ahead of events like RBI policy, US Federal Reserve meeting and Gujarat election; wherein shorts were more than the longs and as a result, the ‘LSR’ stood at 68.30 percent.

The November series F&O expiry ended with the loss of 1.13 percent over its previous expiry close. Rollovers in Nifty (63.28 percent) were below its quarterly average of 66.84 percent.

Also, rollovers were low in terms of open interest, indicating that the most of the positions formed in the last couple of months didn’t get carried forward to the next series.

At the current juncture, 10,000 put and 10,500 call options are attracting trader’s attention and will remain in a range for the index for the few sessions.

Rollover in BANKNIFTY (55.62 percent) was much below its quarterly average of 67.18 percent. In November series, we witnessed a good amount of open interest reduction in the banking index and as a result, open positions (Open Interest) in BankNifty are at the lowest level of the three years.

It indicates that most of the long positions, formed in the recent up move, are now out of the system. Since BankNifty is light on positions; formation of new positions will dictate the further movement of the index.

At the current juncture, strong support for the banking index is placed in the zone of 24,800-25,000 and a sustainable move below the same may not bode well for the Bulls as it will open a door for 24,000-mark.

On the flipside, 25,800-26,000 will remain a strong hurdle for the Bulls.

Stocks like Indian Bank, Biocon, Hexaware, Voltas, PC Jeweller, Jain Irrigation, Tata Power, Tata Elxsi, SRF and Dalmia Bharat added huge longs in the November series and the same got rolled to the coming month.

While in terms of stocks there were a good amount of short positions got rolled to the next series include names like Lupin, PFC, HPCL, Muthoot Finance, Vedanta, REC, Coal India, PNB, L&T Finance Holdings and Canara Bank.

Observations on Some Large-cap Counters:

Reliance Industries (RIL)

RIL started correcting right from the start of the November expiry along with a decent amount of short build-up. However, the stock rebounded in the latter half of the month; but we didn’t witness fresh buying in that.

High rollovers (88.42 percent) indicates that the shorts got rolled to the December series. Thus, the stock may remain under pressure and may even correct towards Rs860 – 850 levels. On the flipside, resistance for the stock is placed in the zone of 960 - 965.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

L&T

L&T traded in a narrow range of Rs1210 – 1270 throughout the November series; wherein, we witnessed the formation of mixed positions.

Rollovers were also in line with its averages. Thus, a sustainable move beyond mentioned range will result in a directional move in coming days.

ITC

ITC continued its bearish momentum for yet another month. In last month, the stock formed a good amount of short positions and the same got rolled to the December series.

At the current juncture, the stock has a support around Rs250 mark and a sustainable move below that may drag the stock towards Rs233 – 230 levels.

Bharti Airtel

By looking at the month-on-month (MoM) data, it seems that Bharti Airtel added a good amount of short positions in the last month. But, a daily derivative activity clearly shows that the stock has formed mixed positions which are still intact in the system.

We would be vigilant on further development on derivative data front before initiating any direction trade in the counter.

Aurobindo Pharma

November series, was not good for Aurobindo Pharma as it started correcting after the first week of the November expiry. The stock added a decent amount of shorts and the same got rolled to the December series.

Currently, the stock has a support around Rs670 – 675 and a breach of the same may lead to a correction towards Rs640 levels.

Coal India

After a strong rally in the October series, Coal India started correcting from the first day of November expiry. The stock continued to add short positions along with the fall. Since rollovers (80.71%) are above its quarterly average, we may see a continuation of the bearish momentum in the counter.

HDFC

HDFC corrected from its strong resistance zone of Rs1790 – 1800 and formed fresh short positions. High rollover clearly indicates that the shorts are still intact in the system. Thus, this stock will remain a sell on rise counter for us.

HPCL

HPCL corrected sharply in the last month with huge short build-up. Rollovers (87.43%) are high than its averages and indicates that the shorts are still intact in the system. Currently, the counter has a support around 410 levels and a move below that may accelerate the correction towards 385 – 380 levels.

Maruti Suzuki India

Maruti Suzuki witnessed a rally of more than 6 percent in the last series. But, we didn’t witness any meaningful open interest build-up in the expiry gone by. Rollovers (80.84%) are low in both percentage and open interest terms. Currently, the stock is light in positions and fresh build-up will decide the further move in the counter.

Tata Steel

Tata Steel corrected by around 5 percent in the last (November) series with the rise in open interest on a month-on-month basis. If we look at the daily activities, the stock has mixed positions; wherein shorts are more than the longs. Rollovers (90.32 percent) are also on the higher side.

Yes Bank

After the sharp correction in October series, Yes Bank corrected in November series too. Short formed in last month got rolled to December series too.

At the current juncture, the stock has a strong support in the zone of 285 – 290 and any positive development around that zone may result in a decent short covering move in the counter.

MORE WILL UPDATE SOON!!