*Morning Action @ 7am – Monday, July 26th 2021*
In Friday’s trade, robust corporate profits cheer Wall Street as Dow Jones closes above the symbolic 35,000 milestone. Dow is up 14%+ for 2021.
*SGX Nifty is however not seen joining the conga-line of optimism.*
*“So for today’s trade, ‘what do you think of the market?’ is less interesting of a question than, ‘what stocks to buy?’”*
*7 AM GLOBAL UPDATE:*
# Dow (+238, 35062)
# Nasdaq (+152, 14837)
# SGX Nifty (-81, 15773)
# Brazil Bovespa (-1094, 125053)
# Nikkei (+401, 27950)
# Hang Seng (-496, 26826)
*MARKET TRENDS:*
# Global: Positive.
# FII: Negative (-163.31 Cr)
# DII: Positive (+2187.80 Cr)
# F&O: Nifty 15500-16200 zone
# Market Breadth: Uninspiring
# Sentiment: Precarious
# Technicals: Bullish
# Outlook: Nifty 16000+
*All ABOUT NIFTY & BANK NIFTY:*
*NIFTY (CMP 15856):*
#SUPPORT: 15707/15577
# RESISTANCE: 15963/16057
# RANGE: 15777-15977
# BIAS: Positive.
*BANK NIFTY (CMP 35034):*
# SUPPORT: 34357/33849
# RESISTANCE: 35407/36101
# RANGE: 34407-35407
# BIAS: Positive.
*THEME OF THE DAY:*
Technically speaking, the bulls are seen fighting back control, looking to recapture Nifty’s all-time-high at 15963 mark. If Nifty’s 15963 barrier is taken out convincingly then simply expect Nifty to rip to its psychological 16,000 mark and then aggressive targets at 16201 mark. Downside likely to be limited to 15700-15725 zone.
The price action for Nifty in near term is suggesting that we are likely to see a 15,500- 16200 range in near term.
The options data for July series suggests Nifty is likely to be in a trading range of 15500-16000 as maximum Call OI is at 16000 followed by 15800 strike price. Maximum Put open interest stands at 15000 levels followed by 15500 levels. Call writing was seen at 15700 and then at 15600 strike price, while there was meaningful Put writing at 15600 and then at 15200 strike prices.
*Q1 earnings to trickle in today:* AXIS BANK, KOTAK BANK, SBI LIFE, DLF, SPARC, NAVIN FLUORO, L&T, KPIT TECH, APLL, VEDL, M&M FIN.
*Disclaimer:* Our subscribers/clients may have positions in the stocks recommended in this note. Please note that the actual subscribers may receive additional information in real time not available to the viewers of this note.
This does not construe to be an investment advice. Stock market investments are subject to market risks. All information is a point of view, and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments.
In Friday’s trade, robust corporate profits cheer Wall Street as Dow Jones closes above the symbolic 35,000 milestone. Dow is up 14%+ for 2021.
*SGX Nifty is however not seen joining the conga-line of optimism.*
*“So for today’s trade, ‘what do you think of the market?’ is less interesting of a question than, ‘what stocks to buy?’”*
*7 AM GLOBAL UPDATE:*
# Dow (+238, 35062)
# Nasdaq (+152, 14837)
# SGX Nifty (-81, 15773)
# Brazil Bovespa (-1094, 125053)
# Nikkei (+401, 27950)
# Hang Seng (-496, 26826)
*MARKET TRENDS:*
# Global: Positive.
# FII: Negative (-163.31 Cr)
# DII: Positive (+2187.80 Cr)
# F&O: Nifty 15500-16200 zone
# Market Breadth: Uninspiring
# Sentiment: Precarious
# Technicals: Bullish
# Outlook: Nifty 16000+
*All ABOUT NIFTY & BANK NIFTY:*
*NIFTY (CMP 15856):*
#SUPPORT: 15707/15577
# RESISTANCE: 15963/16057
# RANGE: 15777-15977
# BIAS: Positive.
*BANK NIFTY (CMP 35034):*
# SUPPORT: 34357/33849
# RESISTANCE: 35407/36101
# RANGE: 34407-35407
# BIAS: Positive.
*THEME OF THE DAY:*
Technically speaking, the bulls are seen fighting back control, looking to recapture Nifty’s all-time-high at 15963 mark. If Nifty’s 15963 barrier is taken out convincingly then simply expect Nifty to rip to its psychological 16,000 mark and then aggressive targets at 16201 mark. Downside likely to be limited to 15700-15725 zone.
The price action for Nifty in near term is suggesting that we are likely to see a 15,500- 16200 range in near term.
The options data for July series suggests Nifty is likely to be in a trading range of 15500-16000 as maximum Call OI is at 16000 followed by 15800 strike price. Maximum Put open interest stands at 15000 levels followed by 15500 levels. Call writing was seen at 15700 and then at 15600 strike price, while there was meaningful Put writing at 15600 and then at 15200 strike prices.
*Q1 earnings to trickle in today:* AXIS BANK, KOTAK BANK, SBI LIFE, DLF, SPARC, NAVIN FLUORO, L&T, KPIT TECH, APLL, VEDL, M&M FIN.
*Disclaimer:* Our subscribers/clients may have positions in the stocks recommended in this note. Please note that the actual subscribers may receive additional information in real time not available to the viewers of this note.
This does not construe to be an investment advice. Stock market investments are subject to market risks. All information is a point of view, and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments.
*Derivative Calculus @ 8am - Monday, July 26th 2021*
#Nifty July Futures ended Friday’s session at a discount of -11 vs discount of -01.
#The 29th July expiry Put-Call Open Interest Ratio was at 1.00 for Nifty whereas it was 0.93 for Bank Nifty.
#The 29th July expiry Put-Call Volume Ratio was at 0.87 for the Nifty and 0.91 for Bank Nifty.
#For Nifty, Maximum Call Open Interest (OI) stands at 16000 Strike Price, followed by 15900 Strike Price for 29th July Series. Short covering was seen at strike prices 15500-15700.
#Maximum Put Open Interest (OI) was seen at strike price 15000 followed by 15800 strike prices for 29th July series. Short buildup was seen at strike prices 15000-15300.
#For Bank Nifty, Maximum Call Open Interest (OI) stands at 35000 Strike Price and Maximum Put Open Interest stands at 35000 Strike Price.
#As per Friday’s provisional data available on the NSE, FIIs sold shares worth Rs. 163.31 crores in the Indian Equity Market. DIIs on the other hand bought shares worth Rs. 2187.80 crores in the Indian Equity market.
#Long Buildup: ITC, FEDERALBANK, ICICIBANK, HCLTECH.
#Short Buildup: TATAMOTORS, HDFCBANK, M&MFIN, TATACHEM.
#Short Covering: SUNPHARMA, HDFCLIFE, JINDALSTEL.
#Long Unwinding: NMDC, GRASIM, BEL, AUROPHARMA.
#Stocks banned in F&O segment: CADILA, CANBK, IDEA, NATIONALUM, SUNTV.
#New in Ban: IDEA.
#Out of Ban: IBULSHSGFIN, NMDC.
#Nifty July Futures ended Friday’s session at a discount of -11 vs discount of -01.
#The 29th July expiry Put-Call Open Interest Ratio was at 1.00 for Nifty whereas it was 0.93 for Bank Nifty.
#The 29th July expiry Put-Call Volume Ratio was at 0.87 for the Nifty and 0.91 for Bank Nifty.
#For Nifty, Maximum Call Open Interest (OI) stands at 16000 Strike Price, followed by 15900 Strike Price for 29th July Series. Short covering was seen at strike prices 15500-15700.
#Maximum Put Open Interest (OI) was seen at strike price 15000 followed by 15800 strike prices for 29th July series. Short buildup was seen at strike prices 15000-15300.
#For Bank Nifty, Maximum Call Open Interest (OI) stands at 35000 Strike Price and Maximum Put Open Interest stands at 35000 Strike Price.
#As per Friday’s provisional data available on the NSE, FIIs sold shares worth Rs. 163.31 crores in the Indian Equity Market. DIIs on the other hand bought shares worth Rs. 2187.80 crores in the Indian Equity market.
#Long Buildup: ITC, FEDERALBANK, ICICIBANK, HCLTECH.
#Short Buildup: TATAMOTORS, HDFCBANK, M&MFIN, TATACHEM.
#Short Covering: SUNPHARMA, HDFCLIFE, JINDALSTEL.
#Long Unwinding: NMDC, GRASIM, BEL, AUROPHARMA.
#Stocks banned in F&O segment: CADILA, CANBK, IDEA, NATIONALUM, SUNTV.
#New in Ban: IDEA.
#Out of Ban: IBULSHSGFIN, NMDC.
*Economic Calendar, Monday, July 26th 2021*
Japan: Manufacturing PMI (Jul), Services PMI, BoJ Core CPI (YoY)
Singapore: Industrial Production (YoY) (Jun), Industrial Production (MoM) (Jun)
Euro: German Business Expectations (Jul), German Ifo Business Climate Index (Jul), German Current Assessment (Jul), German 12-Month Bubill Auction
USA: New Home Sales (Jun), New Home Sales (MoM) (Jun), Dallas Fed Mfg Business Index (Jul), 3-Month Bill Auction, 6-Month Bill Auction, 2-Year Note Auction
Hong Kong: Imports (MoM) (Jun), Exports (MoM) (Jun), Trade Balance
Japan: Manufacturing PMI (Jul), Services PMI, BoJ Core CPI (YoY)
Singapore: Industrial Production (YoY) (Jun), Industrial Production (MoM) (Jun)
Euro: German Business Expectations (Jul), German Ifo Business Climate Index (Jul), German Current Assessment (Jul), German 12-Month Bubill Auction
USA: New Home Sales (Jun), New Home Sales (MoM) (Jun), Dallas Fed Mfg Business Index (Jul), 3-Month Bill Auction, 6-Month Bill Auction, 2-Year Note Auction
Hong Kong: Imports (MoM) (Jun), Exports (MoM) (Jun), Trade Balance
Brokrage Reports
ITC
MS: OW, TP Rs 251
CLSA: Buy, TP Rs 265
CITI: Neutral, TP Rs 210
ICICI BK
MS: OW, TP Raised to Rs 900
CLSA: Buy , TP Raised to Rs 940
USL
JPM: Neutral, TP Rs 640
GS: Buy, TP Rs 675
Macquarie: U-P, TP Rs 480
RIL
MS: OW, TP Rs 2262
Nomura: BUY, TP Rs 2400
Nomura on Ambuja Cements
Downgrade to Reduce after recent outperformance, TP Rs 360
SBI Cards
Bernstein: O-P, TP Rs 1330
JP Morgan: OW, TP Rs 1200
JSW Steel
Investec: Buy, TP Rs 860
Nomura: Neutral, TP Rs 747
ITC
MS: OW, TP Rs 251
CLSA: Buy, TP Rs 265
CITI: Neutral, TP Rs 210
ICICI BK
MS: OW, TP Raised to Rs 900
CLSA: Buy , TP Raised to Rs 940
USL
JPM: Neutral, TP Rs 640
GS: Buy, TP Rs 675
Macquarie: U-P, TP Rs 480
RIL
MS: OW, TP Rs 2262
Nomura: BUY, TP Rs 2400
Nomura on Ambuja Cements
Downgrade to Reduce after recent outperformance, TP Rs 360
SBI Cards
Bernstein: O-P, TP Rs 1330
JP Morgan: OW, TP Rs 1200
JSW Steel
Investec: Buy, TP Rs 860
Nomura: Neutral, TP Rs 747
*SERNET Midnight News Update – Jul 26th 2021*
For Jun-21 quarter, ICICI Bank reported 78% higher net profit on Saturday at Rs.4,616 crore, largely on the back of a 62% fall in provisioning for loan losses. However, the bank witnessed higher slippages in the retail loan book. Net interest income or NII was up 18% at Rs.10,936 crore while NIM was 20 bps higher at 3.89%. Provisions for Jun-21 quarter were lower at Rs.2,852 crore against Rs.7,594 crore in the Jun-20 quarter. The bank added Rs.3,604 to its Gross NPAs with fresh slippages of Rs.6,700 crore in retail loans.
Foreign portfolio investors of FPIs sold Rs.5,689 crore of equities in July as they continued to remain tad cautious on emerging markets due to the strong dollar. However, during the first 3 weeks of July, FPIs infused Rs.3,191 crore in the debt segment. Thus, net withdrawal stood at Rs 2,499 crore. FPIs have been worried about a mix of higher crude oil prices and a strong US dollar. However, FPIs have continued to be persistent sellers in equities, although they have been heavy investors in the Zomato IPO last week.
ITC reported 30.2% growth in net profits at Rs.3,344 for the Jun-21 quarter. Revenues were up 35.9% at Rs.14,241 crore in the quarter, led by a boost to cigarette sales. The company witnessed a turnaround in the non-cigarette FMCG business with hygiene products triggering the growth in the EBITDA of ITC. While the agriculture products vertical also grew sales by 50%, the surprising performer was the paperboards segment which saw good traction. The hotels segment, finally saw a turnaround to positive EBITDA zone.
A total of 6 out of 10 most valuable companies by market cap on the Nifty saw combined erosion of Rs.76,641 crore during the week. After the spike in asset quality stress, HDFC Bank was the big loser during the week. For example, HDFC Bank lost Rs.43,578 crore in market value while HUL lost Rs.13,001 crore. HDFC lost Rs.9,543 crore, Kotak Bank Rs.5,393 crore and Reliance Rs.4,184 crore. Among gainers, Infosys gained Rs.15,056 crore, ICICI Bank Rs.11,371 crore TCS Rs.6,436 crore and Bajaj Finance Rs.3,190 crore
More than 8 months after the listing of Gland Pharma, Mumbai based Macleod Pharma is looking at a domestic listing via the second biggest pharma IPO. Macleod Pharma has initiated discussions with BRLMs to evaluate an IPO in FY22. It is expected that Macleod Pharma may raise Rs.3,000 crore via this route. Macleod is cash rich and is among the largest unlisted pharma plays in India. Some of the recently listed IPOs like Laurus Labs, Gland Pharma and Eris Lifesciences have performed extremely well post listing.
With the successful listing of Zomato, investors are getting a little more positive about the valuations of Info Edge, currently having a market cap of Rs.67,000 crore. It will generate a good deal of cash from the small stake sale and its holdings in Zomato also becomes currency for Info Edge. It is well known that Info Edge owns nearly 18% in Zomato, which listed at a market cap of close to Rs.100,000 crore. So just the investment in Zomato is worth 30% of Info Edge market capitalization. It also has a stake in Policybazaar.
India’s most valuable education portal, BYJU’s, acquired after-school learning app, Toppr and upskilling platform, Great Learning, in a cash-cum-stock stock deal. This is the sixth start-up that Byju’s has acquired in 2021. Byju’s had recently raised $1.5 billion from UBS and ADQ, valuing the company at $16.5 billion. Byju’s will pay $600 million for Great Learning and $150 million for Toppr, although these figures are to be confirmed. Till date in 2021, Byju’s has already shelled out $2.2 billion towards a slew of acquisitions.
Reliance Industries will start natural gas production from the MJ field in its eastern offshore KG-D6 block. The production is expected to commence in the last quarter of 2022. RIL and BP PLC will use the floating production system at high-seas in the Bay of Bengal to extract the deepest gas in the KG-D6 block.
For Jun-21 quarter, ICICI Bank reported 78% higher net profit on Saturday at Rs.4,616 crore, largely on the back of a 62% fall in provisioning for loan losses. However, the bank witnessed higher slippages in the retail loan book. Net interest income or NII was up 18% at Rs.10,936 crore while NIM was 20 bps higher at 3.89%. Provisions for Jun-21 quarter were lower at Rs.2,852 crore against Rs.7,594 crore in the Jun-20 quarter. The bank added Rs.3,604 to its Gross NPAs with fresh slippages of Rs.6,700 crore in retail loans.
Foreign portfolio investors of FPIs sold Rs.5,689 crore of equities in July as they continued to remain tad cautious on emerging markets due to the strong dollar. However, during the first 3 weeks of July, FPIs infused Rs.3,191 crore in the debt segment. Thus, net withdrawal stood at Rs 2,499 crore. FPIs have been worried about a mix of higher crude oil prices and a strong US dollar. However, FPIs have continued to be persistent sellers in equities, although they have been heavy investors in the Zomato IPO last week.
ITC reported 30.2% growth in net profits at Rs.3,344 for the Jun-21 quarter. Revenues were up 35.9% at Rs.14,241 crore in the quarter, led by a boost to cigarette sales. The company witnessed a turnaround in the non-cigarette FMCG business with hygiene products triggering the growth in the EBITDA of ITC. While the agriculture products vertical also grew sales by 50%, the surprising performer was the paperboards segment which saw good traction. The hotels segment, finally saw a turnaround to positive EBITDA zone.
A total of 6 out of 10 most valuable companies by market cap on the Nifty saw combined erosion of Rs.76,641 crore during the week. After the spike in asset quality stress, HDFC Bank was the big loser during the week. For example, HDFC Bank lost Rs.43,578 crore in market value while HUL lost Rs.13,001 crore. HDFC lost Rs.9,543 crore, Kotak Bank Rs.5,393 crore and Reliance Rs.4,184 crore. Among gainers, Infosys gained Rs.15,056 crore, ICICI Bank Rs.11,371 crore TCS Rs.6,436 crore and Bajaj Finance Rs.3,190 crore
More than 8 months after the listing of Gland Pharma, Mumbai based Macleod Pharma is looking at a domestic listing via the second biggest pharma IPO. Macleod Pharma has initiated discussions with BRLMs to evaluate an IPO in FY22. It is expected that Macleod Pharma may raise Rs.3,000 crore via this route. Macleod is cash rich and is among the largest unlisted pharma plays in India. Some of the recently listed IPOs like Laurus Labs, Gland Pharma and Eris Lifesciences have performed extremely well post listing.
With the successful listing of Zomato, investors are getting a little more positive about the valuations of Info Edge, currently having a market cap of Rs.67,000 crore. It will generate a good deal of cash from the small stake sale and its holdings in Zomato also becomes currency for Info Edge. It is well known that Info Edge owns nearly 18% in Zomato, which listed at a market cap of close to Rs.100,000 crore. So just the investment in Zomato is worth 30% of Info Edge market capitalization. It also has a stake in Policybazaar.
India’s most valuable education portal, BYJU’s, acquired after-school learning app, Toppr and upskilling platform, Great Learning, in a cash-cum-stock stock deal. This is the sixth start-up that Byju’s has acquired in 2021. Byju’s had recently raised $1.5 billion from UBS and ADQ, valuing the company at $16.5 billion. Byju’s will pay $600 million for Great Learning and $150 million for Toppr, although these figures are to be confirmed. Till date in 2021, Byju’s has already shelled out $2.2 billion towards a slew of acquisitions.
Reliance Industries will start natural gas production from the MJ field in its eastern offshore KG-D6 block. The production is expected to commence in the last quarter of 2022. RIL and BP PLC will use the floating production system at high-seas in the Bay of Bengal to extract the deepest gas in the KG-D6 block.
MJ-1 is estimated to hold a minimum of 0.988 Trillion cubic feet or TCF of contingent resources. RIL has so far made 19 gas discoveries in the KG-D6 block. RIL holds 66.67% in the block and while BP holds 33.33%.