Weekly Recap June 30, 2017

Indian Market Week That Went By

Weekly Close Points %
The Indian equity market extended its losing streak to the third consecutive week as traders
Sensex 30,922 (217) (0.70)
and investors continued to trade cautiously ahead of the GST rollout. Outflows by foreign
Nifty 9,521 (54) (0.56)
funds and weak global cues further added to concerns. CDSL saw a bumper debut and closed
Nifty Bank 23,211 (332) (1.41)
near 75% higher on the street while AU Small Finance Bank IPO was oversubscribed by over
50x times. Eris Lifesciences got listed 2% over issue price on the bourses this week, however,
Developed Markets
it closed slightly lower. Tejas Networks witnessed a tepid listing; however, the stock picked
Weekly Close Points %
up momentum as the week progressed. Rashtriya Chemicals & Fertilizers (RCF) offer-for-
Dow Jones 21,287 (110) (0.52) sale was subscribed 791%. Monsoon has touched majority of Indian subcontinent and is just
Nasdaq 6,144 (92) (1.48) 1% below estimates. Government of India has in principle given an approval for sale of Air
S&P 500 2,420 (15) (0.61) India.
Nikkei 20,035 (93) (0.46)
Overall, volatility ruled the roost throughout the week on account of a historic F&O expiry
Nifty Gainers % Nifty Losers % which saw highest turnover ever. Banking stocks remained in focus following reports of an
JPASSOCIAT 16.3 GMRINFRA (8.0) RBI order seeking hefty provisions for accounts referred to bankruptcy courts.
ADANIPOWER 11.2 PVR (6.6)
DISHTV 8.5 FORTIS (6.1) US Fed Chief Janet Yellen made remarks where she gave no clear indication on the future
TATASTEEL 7.6 INDIGO (6.1) interest rate trajectory. However, she provided some jitters for the equity markets,
acknowledging that valuations (PE ratio) are rich. On macroeconomic cues, US Q1 GDP is
Sector Gainers % Sector Losers % upwardly revised to 1.4% from the prior estimate of 1.2%; however, the reading still remains
Metal 3.5 Energy (2.1) below the expectations. The International Monetary Fund has lowered its 2017 GDP growth
Telecom 2.8 Bankex (1.3) forecast for US downward from 2.3% to 2.1%.
FMCG 2.1 Finance (1.2)
US President Donald Trump told Prime Minister Narendra Modi who was in the US that he is
Basic Materials 1.6 Capital Goods (1.2)
looking forward to creating jobs in both countries, grow the two economies and create a
Date FII (Cr) DII (Cr) trading relationship that is fair and reciprocal. In other news, the Fed cleared a plan from
29-Jun-17 (1141) 600 allowed US banks to use extra capital for stock buybacks, dividends and other purposes. On
28-Jun-17 (469) 169
geopolitical front, President Donald Trump will officially meet Russian President Vladimir
Putin at a summit in Germany in July, an interesting event to say the least. While in India, the
23-Jun-17 270 (46)
government is reportedly planning to align its financial year with the calendar year from
22-Jun-17 193 455
2018; chances are the Union Budget could be presented in November this year.
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The next week will usher India into a new era with the rollout of GST commencing on July 1,
2017. A day that will be etched into history books.
 June Rollover Analysis

Nifty finally takes a breather posting a negative close for the first time since January 2017 on EoE basis ahead of GST rollout. The June F&O series
posted highest ever turnover of Rs 14 lakh crore on the expiry day. Barring Nifty Spot, other key indices closed in green. Noteworthy point is that
Nifty/ Bank NIfty gave away entire gains of ~2.5%/ 3% in the rollover week. Tracking the Options front for Nifty/Bank Nifty, short gamma
positions were the flavour of the June series as the indices closed between the maximum open interest call and put option strikes.
DIIs continued its buying spree posting a buying figure to the tune of ~Rs 4.8k Cr while FIIs pulled out ~Rs 2.7k Cr. FIIs long/short index futures
ratio stood above 2x throughout the series indicating of a positive bias. Rollovers of Nifty/Bank Nifty stood at 73% / 69% (2.03 Cr/23 Lakh shares)
as against 74% / 61% (2.04 Cr/32 Lakh shares) of previous month. Rollovers for Nifty and Bank Nifty in percentage terms were in line with its last
3-month average and were lower in terms of open interest. Based on analysis of the mentioned data, a lackluster start in Nifty can be expected.
Nifty IT index saw heavy rollovers of short positions with a negative cost of carry as the rollovers stood at 83%, up by 10% from its 3-month
average, indicating a continued selling pressure. Post breaching its multi-year lows India Vix index closed 9% higher indicating of rising fear. On
the options front, July series start with the highest open interest put strike at 9400 strike (4.2mn shares) and maximum call strike at 9700 strike
(2.7mn shares).

Stocks to watch out - July series

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 Media News

IndiGo, Indias biggest budget airline operated by InterGlobe Aviation HDFC Life, one of the countrys leading private sector life insurance
Ltd, has expressed unsolicited interest in Air India, minister of state companies, will decide on the initial public offering (IPO) in its Board
for civil aviation Jayant Sinha said on Thursday morning. meeting in July, confirmed a senior official of the company.
Rating agency CRISIL has purchased 26,22,430 equity shares of CARE Sunil Mittal-led Bharti Airtel is likely to acquire Tata Teleservices,
Ratings (representing 8.9 percent of its equity share capital). which is seen as an alternative to Tata Tele merging with state-owned
UltraTech Cement completes acquisition of cement plants of JP BSNL.
Associates.
The biggest rescue package being stitched together for distressed
Axis Bank had exposure in 8 accounts out of those identified by RBI.
power plants could see lenders take over three imported coal-fired
The bank said that total outstanding of the bank on these accounts
generation stations of the Tata, Adani and Essar groups, involving an
stood at Rs 5,071 crore. While non-fund based outstanding was at Rs
estimated investment of over Rs 40,000 crore, and transfer 100%
212 crore as on March 2017.
equity for Re 1 to consumers states, including Gujarat where these
Ultra Tech Cement will take over JP Cement plant tomorrow. The firm
plants are located.
has deposited all dues and upfront payment to the Mining
The US Food and Drug Administration (USFDA) has given final
Department to complete the process.
approval to drug firm Zydus Cadila to market oxybutynin chloride
The cumulative sales of ITC's non-cigarette FMCG brands has crossed
tablets used to treat symptoms of overactive bladder and urinary
the $2-billion mark in the fiscal ending March 2017, at Rs 14,000 crore
incontinence.
growing by 16 per cent over the previous year, the company disclosed
Private sector lender Federal Bank today raised Rs. 2,500 crore
in its annual report.
through qualified institutional placement (QIP) route to fund its
Industrialist Anil Ambani today termed the Goods and Services Tax
expansion plan.
(GST), being rolled out from July 1, as India's "economic freedom" and
Under pressure from lenders, the restructuring of billionaire Anil
said it would make the country the biggest free and democratic
Ambanis mobile-to-metro conglomerate is turning into a summer
market in the history of humankind.
sale.
Fortis Healthcare today said its shareholders have approved
SpiceJet announced its 'Mega Monsoon Sale' with under which all
increasing shareholding limit for foreign institutional investors to up
inclusive fares will start as low as Rs 699. The tickets will be available
to 74 per cent from 24 per cent at present.
on first come, first served basis.
Top lender State Bank of India (SBI) and other creditors have moved
Ashok Leyland expects short-term moderation in medium and heavy
insolvency proceedings against Kolkata-based Electrosteel Steels at
commercial vehicle (M&HCV) sales due to the effects of GST
the National Company Law Tribunal (NCLT).
transition.
NBCC set to win redevelopment order for 10 rail stations.
Chennai-based Apollo Hospitals has launched an air ambulance
United Bank to sell 40 NPAs worth Rs 4-5 billion next few quarters.
service to connect small cities in the South. The hospital chain has
Steel Strips Wheels has bagged an Exports order for supply of Steel
partnered with Bengaluru-based Air Aviators Rescue for helicopters
wheels for EU Caravan & Canadian Winter market.
and logistics support.

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LT Foods, a global Indian foods brand with presence in more than 65
countries commenced operations its first rice processing plant in
Europe at Rotterdam, Netherlands.
Lypsa Gems & Jewellery Ltds wholly-owned subsidiary, Lypsa Gems
& Jewellery DMCC will launch a diamond studded jewellery collection
comprising more than 100 designs targeting the Middle-East
business-to-business clientele.
OnMobile Global has secured a 3-year deal with Banglalink, one of
the leading digital communications services providers of Bangladesh
to provide Ringback Tones and Reverse Ringback Tones to its
customers.
TVS Motor Company, a leading two-wheeler and three-wheeler
manufacturer in India announced its partnership with Abans Auto a
leading distributor in Sri Lanka.
A subsidiary of engineering conglomerate Larsen and Toubro (L&T)
has secured orders worth Rs. 2,552 crore across business segments.
Glenmark Pharmaceuticals has received final approval from the US
health regulator for its generic version of anti-inflammatory drug
Indomethacin tablets.
The board of diversified group Piramal Enterprises has approved a
proposal to raise up to Rs 500 crore through issuance of non-
convertible debentures (NCDs) on a private placement basis.
State-owned Oil and Natural Gas Corporation has received
environmental clearance for drilling five wells to explore shale gas
and oil in the KG basin of Andhra Pradesh at an estimated cost of Rs
217 crore.
Domestic pharma major Sun Pharmaceutical Industries Ltd BSE -0.28
% and National Institute of Virology (NIV) signed a pact to test new
medicines developed by the company to combat zika, chikungunya
and dengue diseases.
With their Gujarat-based power plants incurring hefty losses, the
Adani, Tata and Essar groups are staring at write-downs in the tune of
thousands of crores of rupees.
Media News
Reliance Industries will seek shareholder approval to raise Rs. 25,000
crore ($3.88 billion) via sale of secured or unsecured redeemable
non-convertible debentures in a private placement.
Drug firm Cadila Healthcare on Monday said its board has approved
raising up to Rs. 18,500 crore through various financial tools,
including securities in domestic as well as international markets.
A forum of lenders, led by the State Bank of India (SBI), on
Thursday sent three large non-performing accounts Bhushan Steel,
Essar Steel and Electrosteel Steels to the National Company Law
Tribunal (NCLT) for further action under the Insolvency and
Bankruptcy Code (IBC).
Piramal Enterprises has said that the board has approved issuance of
privately placed non-convertible debentures to raise up to Rs 125
crore.
Fortis Health says company still mulling options to raise Rs 50 billion.
Britannia MD says rollout of GST to hit volumes over next 3 months.
Axis Bank FY16 gross NPA gap versus RBI assessment Rs 94.78 billion,
as per media reports.
The Essar group has crossed the last hurdle to complete the sale of its
Gujarat refinery to Russias Rosneft, with the lenders, including LIC,
giving the go-ahead for the deal, sources said.
Design services provider Tata Elxsi has been roped in by the Airports
Authority of India (AAI) to design information and technology
guidelines for all upcoming AAI airports.
Sun Pharma arm Taro says likely US drug price controls may hit sales.
Aban Offshore arm in pact with Brunei Shell to deploy jack-up rig.
Deep Industries gets Rs 37.2 million contract from ONGC.
Can Fin Homes Board approves raising up to Rs 1,000 Cr via rights
issue and 5-for-1 stock split.
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 Global Moves

Gold prices slipped despite a weaker US dollar, but relatively hawkish remarks from various central bankers and rising sovereign bond yields seem
to be a sore point for the gold bugs. After the series of Fed rate hikes, ECB President Mario Draghi has hinted towards a possibility of tapering the
bond buying programme, while BOE Governor conceded that a rate hike is needed somewhere down the line. Moreover, Bank of Canada is also
contemplating to embark on the path of monetary tightening. Meanwhile, US 10 year sovereign bond and German 10 year yields have hit 5 week
and 7 week highs respectively this week. In physical markets, spot premiums on gold in India have scaled higher, as investors and traders are
stockpiling ahead of the implementation of 3% GST on metal purchases.

During the week, gold prices hovered around US $ 1,250/oz mark, helped by weakness in US dollar against basket of currencies. Meanwhile,
markets failed to derive anything from the recent remarks made by US Fed Chief Janet Yellen, where she gave no clear indication on the future
interest rate trajectory. However, she provided some jitters for the equity markets, acknowledging that valuations (PE ratio) are rich.

Non-ferrous metals have been buoyant for the past few days, with gains seen across the board. Weaker US dollar and technical based buying has
triggered the spurt, however, in terms of fundamentals, there is nothing much that can substantiate the recent gains. In terms of Chinese news,
official manufacturing PMI revealed improvement in manufacturing activity, helped by export demand for Chinese goods.

On a whole, the week saw non-ferrous metals moved higher, with copper prices particularly on a tear. The red metal has advanced above US $
5,900/tonne, helped by persistent drawdown in LME warehouse stocks and series of supply side issues. However, global supply/demand balance
numbers yet not reflect severe tightness. In this regard, International Copper Study Group reported a global surplus of 165,000 tonnes during first
quarter of this year. This is mainly attributed to weak demand. On Lead markets, BMI Research projects a global deficit of 7,000 tonnes this year
and expects the gap to widen to 75,000 tonnes till 2021, rendered to be quite bullish for the long term price prospects.

The US Dollar is in doldrums, as legislative backdrop is getting more uncertain given the difficulty in passing new healthcare bills through US Senate.
Experts pointed out that the dollar has been influenced by murkier domestic legislative backdrop and early signals that central banks on the other
side of the Atlantic may gradually depart from their asset purchase programme. There is a perception that BOE and ECB slowly but surely will open
the door to hawks, in pursuit of how Fed tapered its quantitative easing and eventually embarked on a series of rate hikes.

The million dollar question remains that when will Donald Trump administration start working on other important legislative agenda (much
awaited by the markets) like tax reforms and infrastructure spending. On macroeconomic cues, US Q1 GDP is upwardly revised to 1.4% from the
prior estimate of 1.2%; however, the reading still remains below the expectations. On geopolitical front, President Donald Trump will officially meet
Russian President Vladimir Putin at a summit in Germany in July, an interesting event to say the least. Meanwhile, recent hawkish comments from
ECB President Mario Draghi continue to resonate, with Euro and German 10 year yields pushing higher.

5
 Market Watch

Market Forecast

Coming week would see markets reacting to the beginning of a new tax era as the GST will be rolled out from midnight of June 30, 2017. Apart
from that, monthly auto sales numbers will also be announced. Among the macro-economic data, June Nikkei Markit Manufacturing PMI and
Nikkei Service PMI are also scheduled to be released. Global cues, crude oil moves and currency activity will also act as key factors that will dictate
the direction in the coming week.

Formation of Inverted Hammer during the week on Nifty as well as Bank Nifty is a sign of uncertainty in the market. In addition, GST roll out and
weak global cues only adds to the concerns. Going forward, 9470 its recent swing low and 9460 its 50-Day EMA will continue to act as crucial
support zone for Nifty. If the index breaks below the mentioned supports, then fresh selling could drag the index towards 9,390 levels, which is the
projection of the Double Top pattern breakdown.

The current downtrend will reverse only if 9560 level, which is the neckline of Double Top breakdown is broken on upside.

Commodity Watch...

Gold prices fell against a falling US Dollar on Thursday, dropping below $ 1245 per ounce for the third time in 2 weeks even as the greenback hit
new 13-month lows versus the Euro on the currency market. Gold premiums in India jumped to the highest level in 7-1/2 months this week as
consumers advanced purchases to avoid paying higher tax when a new nationwide sales tax takes effect from July 1. MCX Gold is trading above its
support level of 28,330 which gives positive confirmation as long as mentioned support is intact.

On daily charts, Silver has formed double bottom pattern which indicates prices should rally as long as low of 37,800 is protected on downside.

Derivative Indicators

Markets ended the week on a negative note. Nifty and Bank Nifty Index posted negative weekly returns of ~(0.8%)/(1.4%). Nifty witnessed a
consecutive negative weekly close for the third week in a row on account of long unwindings. Nifty 9700CE and 9400PE strikes remain the highest
OI strikes. Both the strikes added fresh short positions, indicating a range bound activity in the coming week.

6
 Pick For The Week

Sell - Larsen & Toubro Ltd JUL Futs (CMP Rs 1688)

Larsen & Toubro Limited (LT) was stuck in a trading range for the past three months. Our daily chart analysis shows that the stock has formed a
broadening pattern, which is generally seen around the top of a trend. The index heavy-weight has also shown signs of entering into a Lower top
Lower bottom cycle, which further accentuates our bearish stance on the stock. We expect Larsen & Toubro Ltd to continue its downtrend in the
short term towards the level of Rs 1600. It is advisable to keep a strict Stop Loss of Rs 1701.

Larsen & Toubro Ltd Daily Chart:

LT [N11483] 1699.00, 1699.00, 1661.30, 1665.55, 799804 -2.24%
Price Log IRIS

1900

1850

1800

7
1750

1700

1 1650

1600

1550

1500

1450

1400

1350

Source : www.SpiderSoftwareIndia.Com
Vol Lk

40.00

30.00

20.00

10.00

16:D 17:J F M A M J Dly

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
7

Who Did What
Canara Bank sold 25.93 lakh shares or 8.8% stake at Rs 1,660 each
of CARE Ratings. CRISIL bought 26.22 lakh shares or 8.9% stake at
Rs 1,659.79 each.
Digital Satelite Holdings bought 3.26 Cr shares or 3.7% stake at Rs
28.05 each which was bought by Siti Networks.
JSW Cement bought 12.34 lakh shares or 0.6% stake at Rs 22.49
each of Shiva Cements.
Citigroup Global Markets Mauritius sold 37.79 lakh shares or 0.5%
stake at Rs 431.73 each of Petronet LNG.
Credit Suisse (Singapore) sold 4.57 crore shares or 0.9% stake at Rs
17.93 each of Suzlon.
Citigroup Global Markets Mauritius sold 37,79,753 shares of
Petronet LNG at Rs 431.73 on the NSE.
Reliance Mutual Fund Small Cap sold 8.56 lakh shares or 4% stake
at Rs 229.01 each of GNA Axles. Sundaram Alternative
Opportunities Fund bought 8.17 lakh shares or 3.8 percent stake at
Rs 229 each.
Porinju Veliyath bought 35,000 shares or 1% stake at Rs 143.26
each of Raunaq EPC. Rajiv Garg sold 29,000 shares or 0.9% stake at
Rs 148.45 each.
JSW Cement bought 25 lakh shares or 1.3 percent stake at Rs 21.25
each of Shiva Cements.
CX Securities sold 11.98 lakh shares or 0.7% stake at Rs 930.03
each of Natco Pharma.
Reliance Spot Exchange Infrastructure sold 1.63 lakh shares or
0.9% stake at Rs 282.87 each of Saregama India.
JPMSL A/C Copthall Mauritius Investment sold 4.65 lakh shares or
0.95% stake at Rs 113.75 each which were purchased by Gautam
Prakash in Ganesh Housing Corporation.
Natwest Bank bought 14 lakh shares or 0.55% stake at Rs 642.1
each of Reliance Capital.
Whats In Whats Out
IRB InvIT Fund says Trust Capital Service India sold 1.25 Cr
shares or 5% stake at an average price of Rs 98.96 each which
were bought by Reliance Mutual Fund.
Local Government Superannuation Scheme sold 5.63 lakh
shares or 0.5% stake at Rs 607.05 each which were bought by
Morgan Stanley in Laurus Labs.
Xenok Ltd. sold 1.3 Cr shares or 4.9% stake at Rs 155.03 which
were bought by HDFC Standard Life Insurance in Max India.
Himatsingka Seide promotor Ajoy Kumar Himatsingka sold 23.6
lakh shares or 2.4% stake at Rs 350.01 each.
DSP Blackrock Mutual Fund bought 4,71,698 shares of Arrow
Greentech at Rs 530 on the NSE.
Upcoming Events
July 3: Nikkei Markit Manufacturing PMI (Jun) INR, Markit
Manufacturing PMI (Jun) RUB, Retail Sales (YoY) (May) CHF, Spanish
Manufacturing PMI (Jun) EUR, Manufacturing PMI (Jun) USD, ISM
Manufacturing Prices (Jun) USD, Monetary Base (YoY) JYP.
July 4: BoJ Core CPI (YoY), Caixin Services PMI (Jun) CNY, RBA Interest
Rate Decision (Jul) AUD, Construction PMI (Jun) GBP, Industrial
Production (YoY) (May) BRL, BRC Shop Price Index (YoY) GBP.
July 5: FOMC Meeting Minutes USD, ikkei Services PMI (Jun) INR,
Markit Services PMI (Jun) RUB, French Markit Composite PMI (Jun)
EUR, Services PMI (Jun) EUR, Trade Balance (May) AUD.
July 6: FOMC Member Powell Speaks USD, German Factory Orders
(MoM) (May) EUR, ECB Publishes Account of Monetary Policy
Meeting, Trade Balance (May) USD, Crude Oil Inventories USD,
Heating Oil Stockpiles USD, Foreign Reserves (USD) (Jun) JYP.
July 7: Unemployment Rate n.s.a. (Jun) CHF, Net FX Reserves (USD)
(Jun) ZAR, French Government Budget Balance (May) EUR, Spanish
Industrial Production (YoY) (May) EUR, Italian Retail Sales (MoM)
(May) EUR, Construction Output (MoM) (May) GBP, Industrial
8
 Disclaimer

Recommendation Parameters for Fundamental/Technical Reports:

Buy Absolute return of over +10%

Accumulate Absolute return between 0% to +10%
Reduce Absolute return between 0% to -10%
Sell Absolute return below -10%

Please refer to http://www.indiainfoline.com/research/disclaimer for recommendation parameter, analyst disclaimer and other disclosures.

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