MOSt Market Outlook

23rd May 2017

Nifty Chart

Nifty Outlook

Nifty Cash R1

R2

S1

S2

9438

9480

9550

9420

9380

'Nifty index opened positive but failed to surpass 9500

zone and lost most its gains then finally closed the session

on a flat to positive note. It formed an “Inside candle” as

traded inside the trading range of last session. Now if it

sustains below 9420 zones then only weakness could drag

the index towards 9380 and 9350 zone while on the upside

a hold above 9480-9500 would nullify the immediate

weakness to start the next leg of rally.

Currency (USDINR) Outlook

USDINR

64.59

S1

64.45

S2

64.25

R1

64.70

R2

65.00

Market Drivers

Indices ended marginally higher thanks to ITC

which saw strong gains but the overall market

depicted signs of sluggishness. Select sectors

saw sharp correction. Psu Banks, airline stocks

were among the losers. SBI corrected post num-

bers. Bank of India reported weak set of num-

bers and saw sharp declines. Overall market as

well as industries are trying to understand the

implications and implementation of GST. Do-

mestic institutions were strong net buyers. Glo-

bal cues are stable to positive. Overall results

season has been generally better than expec-

tation on the profitability front and that should

be supportive. Market will remain focussed on

results and to some extent on global cues as

well.

Consolidation within 64.25 - 65.00 is likely with bullish

bias.

Trading Idea - Cash & Future

Scrip

LT

Sectoral Outlook

SL

Target

1725 1810

Highest Call OI

Outlook

Positive

Negative

Instrument

Nifty 25 - May

Bank Nifty 25 - May

Strike

9500

23000

OI

6552675

1443080

Chg in OI

412200

183000

Reco

BUY

CMP

1752

Sector

Capital Goods

Banks

Corporate Action:

NA

Security in Ban period:

BANKINDIA; BHARATFIN; CAPF; CEATLTD;CESC;HDIL;IBREALEST

IDBI;INFIBEAM;JINDALSTEL;JISLJALEQS;JPASSOCIAT;JSWENERGY

ORIENTBANK;TV18BRDCST;UJJIVAN

Today Event

NA

Trading Idea - Derivatives

STRATEGY UPDATE : NIFTY- Bear Put Spread

Instrument

B/S

Lot

Reco

NIFTY 9500 PE

NIFTY 9400 PE

Buy

Sell

1

1

51.00

21.00

Highest Put OI

Instrument

Strike

9300

22000

OI

6457425

1086080

Chg in OI

-104400

200

CMP

72.50

26.50

Nifty 25 - May

Bank Nifty 25 - May

Target: INR 5250, SL: INR 2250,

MOSt Market Outlook

23rd May 2017

Trading Calls

L&T

Buy

CMP :

Target :

INR 1752

INR 1810

Derivatives Idea

Nifty

Bear Put Spread

Buy 1 Lot NIFTY 9500 PE 25 May 2017

Sell 1 Lot NIFTY 9400 PE 25 May 2017

'Price moves in a trading range for last couple of weeks and

then we see a hammer at the support, which is followed by a

long green candle. Thus the hammer is confirmed giving us a

buy signal in the stock.

3

Expect the prices to trade towards 1810 over next couple of

days. Consider buying this stock at current levels with a stop

below 1725 for a possible rally to 1810.

3

Nifty index failed to hold 9500 zone and started to witness sell-

ing pressure at higher level

3

Highest Call congestion at 9500, fresh writing at 9500 CE could

act as an immediate hurdle

3

Indicating negative to range bound move with a Hedging view

this Bear Put Spread is recommended

3

FII & DII Activity (INR in Cr)

Cat.

FII

DII

Amt

-321

1263

MTD

-206

3837

YTD

15592

45571

FII F&O

Institution

INDEX FUTURES

INDEX OPTIONS

STOCK FUTURES

Net B/S

-78.80

-191.82

151.67

OI

Short Built Up

Option Writing

Long Built Up

MOSt Market Outlook

23rd May 2017

Long Built-up

Short Built-up

Long Unwinding

Short Covering

Nifty Option OI

1- Day change in Nifty OI

MOSt Market Outlook

23rd May 2017

Morning Meet Notes

Research Notes

Company

Sales % Y/Y EBITDA % Y/Y

4.9

2.6

8.3

PAT % Y/Y

1.5

-7.5

Pidilite Industries 13.0

Bank of India

34.7

8.8

31.3

113.6 -10.5 -70.9

Gail India

134.2

15.4

15.3

36.3

10.5

36.1

Comments

1. Consumer Bazaar revenue rose 7.6% YoY & Industrial revenues grew 1.2% YoY

2. Consumer Bazaar EBIT margin shrunk 50bp YoY to 22.9% and Industrial margin contracted 260bp to 16.1%

Neutral/762/I

3. Higher tax rates (38.5% in 4QFY17) meant that adj. PAT declined by 7.5% YoY

4. Reduction in GST rates will be passed on to customers. Fair valuations at 35x FY19E EPS

1. Continued elevated net stress addition has kept asset quality under pressure

2. OSRL book declined 40bp QoQ, largely led by relapse to NPA

Neutral/147/B

3. Expect high credit cost on account of ageing of NPL portfolio

4. CET1 of 7.2% is also at the lower end of the peer range

5. Reduce earnings by 5-7% for FY18E/19E due to low operating profits & growth. RoA & RoE of 0.2-0.3% & 6-9% over FY18-19E

1. 4Q EBITDA declined 10% QoQ due to lower petrochemical earnings & higher employee cost (7th Pay Commission)

2. Reported PAT was impacted by provision for impairment loss out of carrying investment of INR9.7b in JV entity

Neutral/358/B

3. Benefit of petchem ramp-up will be boosted by a decline in spot LNG prices, increase in oil price would benefit LPG & liq. HC

4. Stock trades at 12x FY19E EPS and adj. for investments of INR64/sh at 10x. Our SOTP-based target price is INR358

Rationale

MOSt Market Outlook

23rd May 2017

MOSt Market Outlook

23rd May 2017

Currency Ideas

USDINR

EURINR

3

3

USDINR is likely to continue consolidation within 64.25 - 65.00 zone.

Strong short-term supports are now at 64.45 - 64.25 whereas 64.70 - 65.00 may

act as strong resistances.

Dip buying is advised.

3

3

EURINR continues to rise sharply and there is no reversal sign yet.

It has strong supports at 72.20 / 71.95 / 71.60 whereas strong resistances are

placed at 72.75 / 73.10.

Buying on dips is advised for the session.

3

3

MOSt Market Outlook

23rd May 2017

Dharmesh Kant (Head - Retail Research)

Dharmesh.Kant@motilaloswal.com

Chandan Taparia (Derivatives & Technical Analyst)

Chandan.Taparia@motilaloswal.com

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