September 06, 2019

WEEKLY

EQUITY ALERT

PICK OF THE WEEK

MARKET WATCH

WHO DID WHAT

 WEEK THAT WENT BY
The Indian equity markets failed to carry Mahindra witnessed their sales going down
forward previous week’s momentum as on a during the month. The total domestic
weekly basis, indices once again ended with passenger vehicle sales of Maruti fell 36%,
losses. Sharp fall in August auto sales domestic passenger vehicle sales of Tata
numbers, dismal GDP data, dipping PMI Motors declined a massive 58%, while
manufacturing data and wild currency swing Mahindra & Mahindra's total passenger
dragged the indices lower. Apart from that, vehicle sales touched a total of 13,507 units
weak global sentiment and sustained capital in August, which was 32% lower compared to
outflow of foreign funds continued weighing August 2018 figures.
on market sentiment.
Nifty Gainers (%) Nifty Losers (%)
TVSMOTOR 8.1 CANBK (13.1)
Indian Market
COALINDIA 7.5 MCX (9.4)
Weekly Close Points (%)
DRREDDY 7.1 DLF (8.3)
Sensex 36,982 (351) (0.94)
BPCL 6.7 PEL (7.3)
Nifty 10,946 (77) (0.70)
Nifty Bank 27,248 (180) (0.66) For the week, Metals index shot up by 3%,
Sentiment was hit after the GDP expanded at Energy index was up by 1.5%, Nifty Auto index
its slowest in over six years. GDP was lower- gained by 1.3% and Infra index rose by 0.8%.
than-expected at 5% yoy in the April-June Date FII (`Cr) DII (`Cr)
quarter and it was driven by weak demand. 5-Sep-19 (561) 699
Meanwhile, the government's fiscal deficit 4-Sep-19 (1738) 1305
3-Sep-19 (2016) 1251
touched `5.47 lakh crore in the June quarter,
30-Aug-19 1163 1502
which is 77.8% of the budget estimate for
On the other hand, Realty index slipped by 5%,
2019-20.
PSU Bank index was down by 4% and FMCG
Developed Markets (Weekly)
index slipped by 2.1%. The Nifty Metals index
Close Points (%)
Dow Jones 26,728 366 1.39 showed signs of recovery during the week.
Nasdaq 8,117 143 1.80 The index has broken out from a two-week
S&P 500 2,976 51 1.76
Nikkei 21,200 495 2.39
consolidation base indicating the recovery is
likely to get extended in the coming week.
August turned out to be another depressed
Sector Gainers (%) Sector Losers (%)
month for major car manufacturers in the
Metal 2.7 Realty (4.8)
country as there seems to be no respite in Power 1.9 Con Durables (2.1)
terms of demand pick up. Auto heavyweights Utilities 1.9 FMCG (1.7)

like Maruti, Tata Motors and Mahindra & Oil & Gas 1.6 Finance (1.7)

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 PICK OF THE WEEK

Buy Relaxo Footwears between `480-485, Target `507, Stop Loss `471

The stock has been trading in rising channel The price outburst has been accompanied
pattern since October 2018 and has finally with sharp uptick in traded volumes. In
broken out from the channel on the weekly addition, positive crossovers on the moving
chart. This move indicates an extension of averages indicates fresh upmove is on the
the higher top higher bottom structure which cards. Hold long positions with mentioned
is a positive development. stop loss on weekly closing basis.

Relaxo Footwears Chart

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 MARKET WATCH
Technical View… Derivative Indicators...
Markets saw decent momentum in the last Markets ended the week on a negative note
three sessions of the week, however, failed to with Nifty Bank & Nifty index closing ~0.7%
carry forward previous week’s gains as indices lower. A sharp recovery was witnessed in
closed in the red. Nifty formed a Dragonfly Doji both Nifty and Bank Nifty futures in the
candle on the weekly chart after forming a Doji closing part of the week led by the build-up
candle in the preceding week once again of long positions as the open interest soared
indicating uncertainty, which means a dead higher. Both the indices have formed a
cat bounce is on the cards. Going forward, the bullish hammer candlestick pattern on the
long term 200-DMA levels of 11200 will act as weekly chart, making a case for a positive
a stiff resistance while on the downside, momentum during the next week.
10750 mark is going to act as a strong
India VIX index closed flat at 16.2. On the
support area for the Nifty.
options front (September 12, 2019 expiry), in
Bank Nifty on the other hand too formed a Friday’s trade, across the board short selling
Dragonfly Doji candle on the weekly chart was seen in Nifty out of the put options
indicating short term reversal is likely. The strikes with Nifty 10900PE adding ~15 lakh
index has also found support around the shares in open interest, consisting mainly of
falling trendline of the previous breakout zone writing positions, indicating a formation of
on the weekly basis. Going forward, 26600 floor level for the index around the
zone is the crucial support area while on the mentioned strikes in the current weekly
upside, 27650 is the important resistance series.
levels.
Nifty Daily Chart

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 COMMODITY WATCH
MCX Gold MCX Crude Oil
Comex Gold, during the week made a new 6- MCX Crude oil continued to recover during the
years high and retreated back to lower levels week and price has moved above previous
by the end of the week. On the higher end, the week’s high. On the daily chart, price remained
price found resistance at the previous swing sideward. On the weekly chart, price remained
high which prompted long unwinding in the ranged. The NYMEX WTI Crude Oil has moved
last two days of the week. On the daily chart, above the 13EMA on the daily chart. Also,
price has given rising wedge pattern price has been hovering around 50EMA on the
breakdown at $1546 levels which is an daily timeframe. Momentum oscillator RSI
indication of bearish reversal of the price (14), is seen to be flat and into a bullish
trend. The daily RSI (14) is seen to be in sync crossover. The bias is expected to remain
with the price as it is in bearish crossover and sideward as long as price fails to move above
falling. `4,150 decisively. On the lower end, decisive
MCX Gold, has given trendline breakdown fall below `3,970, (200EMA on daily
after registering new record high during the timeframe) may trigger correction towards the
week. In addition, price fell below previous recent low of `3,827. On the higher end,
swing low of `38,611. The daily RSI (14) is in resistance is visible at `4,150 for the next
bearish crossover and approaching oversold week; decisive move above Rs4,150 may
zone. On the lower end, price may drift down initiate a strong rally in Crude Oil towards
towards `37,500 and lower. On the higher end, `4,400.
crucial resistance is visible at `39,000.

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 GLOBAL MOVES
 Gold prices made new 6-years high on also supporting Asian currencies as
Wednesday, however, remained under investors toned down their recent gloom
pressure, losing more than 2% in the last over the global economy. Separate surveys
two sessions of the week, as robust US suggested the world’s largest economy is
data encouraged a return to riskier assets in better shape than investors had feared.
and hit demand for safe-haven bullion. Risk US service sector activity accelerated in
appetite was also whetted by news that the August and private employers boosted
US-China had agreed to hold high-level hiring beyond expectations.
talks early in October that fuelled optimism  Growth in the US services sectors
for substantial progress in the long trade accelerated in August, rebounding from its
conflict between the two. weakest level in nearly three years as new
 Oil prices edged higher on Friday, with orders rose to their highest level since
crude benchmarks poised for multi-week February amid trade worries, according to
gains amid a sharp drawdown in US crude a private survey released on Thursday. The
inventories. Brent is set to mark its fourth Institute for Supply Management (ISM)
weekly gain, while US crude is headed for a said its non-manufacturing activity index
second weekly rise. Beijing and rose to 56.4 from 53.7 in July which was
Washington on Thursday agreed to hold the weakest level since August 2016. The
high-level talks in early October in number of Americans filing applications for
Washington, cheering investors hoping for unemployment benefits rose modestly last
an end to the trade war between the week, suggesting little impact on the labor
world’s two biggest economies that has market from trade tensions, which have
brought tit-for-tat tariff hikes, chipping eroded business confidence and undercut
away at economic growth. The prolonged manufacturing.
dispute had a dampening effect on oil
prices, although they have risen over the
year, helped by production cuts led by the
OPEC and its allies, including Russia, to
drain inventories.
 Upbeat US economic data gave the dollar
an edge over its peers on Friday, arresting
a recent flight from the greenback while

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 MEDIA NEWS
 Bajaj Finance to consider raising funds via Noida, Authority to Unitech'. The response
QIP issue on Sept. 17. from the Company is awaited.
 Tech Mahindra announced the expansion  Hexaware Technologies, in a regulatory
of its strategic collaboration with AT&T to filing said it has been listed as a 'strong
accelerate AT&T’s IT network application, performer' in API strategy and delivery by
shared systems modernization and Forrester Research, an American market
movement to the cloud. research company.
 Sun Pharma clarified that SEBI had  Havells, on September 5, launched India’s
ordered forensic audit with respect to first complete square‐shaped pedestal fan‐
financial statements for financial years ‘Aindrila’.
2016, 2017 and 2018, which are presently  Reliance Jio has announced the
underway. commencement of JioFiber with effect
 National Company Law Tribunal (NCLT) from Sept. 5.
approved JSW Steel's `19,700cr bid for  NDTV says the Bombay High Court has set
Bhushan Power & Steel. aside SEBI’s orders which were passed in
 Sundaram Group decreased stake from August 2017.
5.16% to 2.77% in NCC.  Videocon Industries said that the National
 European Commission cleared the Company Law Tribunal has directed State
acquisition of joint control over a newly Bank of India to maintain status quo on its
created plant, by Toyota Tsusho India Pvt. plan to sell upstream oil and gas assets of
Ltd., its parent Toyota Tsusho Corporation, the Group located in Brazil and Indonesia.
and Maruti Suzuki India Ltd., according to  L&T Finance Holdings' Board to consider
European Commission’s statement. raising up to Rs100cr via non-convertible
 Prabhat Dairy's Board of directors to preference shares on Sept. 11.
consider delisting of shares from the  Bank of Baroda reduced MCLR across
bourses on Sept. 10. various tenors by five basis points with
 Hinduja Global Solutions announced it has effect from Sept. 7. One Month MCLR at
recovered $1bn in denied insurance 8.1% and One Year MCLR at 8.4%.
payments on behalf of healthcare systems.  Karur Vysya Bank revised its MCLR across
 NSE has sought clarification from Unitech various tenors with effect from Sept. 7.
with respect to recent news item captioned Base Rate at 9.7%, one-month MCLR at
'pay `2,734cr in 15 days or else lose land in 8.35% and one-year MCLR at 9.45%.
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 MEDIA NEWS
 DHFL defaulted in payment of non-  Rating agency CRISIL has assigned
convertible debentures interest worth "CRISIL AA+" rating with "stable" outlook on
`1.4cr which were due between Sept. 3-4. Avenue Supermarts' NCDs of `200cr.
 Rating agency CRISIL has assigned  Coffee Day Enterprises appointed retired
"CRISIL AA+" rating with "stable" outlook on CBI deputy inspector general Ashok
Avenue Supermarts' NCDs of `200cr. Malhotra to probe the company's
 Power Grid Corporation of India said in a financials.
regulatory filing that it has been declared  Neuland Labs received establishment
as the successful bidder for Madhya inspection report from the USFDA for its
Pradesh Transmission System. Hyderabad unit.
 Lupin has agreed to develop and  DHFL's board approved the conversion of
commercialise a drug to treat whole or part of debt into equity
gastrointestinal and lung cancers with the shares/other securities. The debt
German pharmaceutical firm Boehringer conversion may result in a change in the
lngelheim GmbH for which it would be paid company's ownership.
$70 mn upfront.  Biocon said USFDA issued Complete
 Wipro received 7-yr contract worth Response Letter for the New Drug
$300mn from ICICI Bank for digital Application for Insulin Glargine filed by
services. partner Mylan.
 Ultratech Cement appointed Kailash  Oriental Bank of Commerce and United
Chandra Jhanwar appointed as MD w.e.f. Bank of India will be merged with Punjab
Jan 1, 2020. National Bank (PNB) to become the
 Moody's has changed the outlook on PNB second-largest public sector lender of the
to positive' from 'stable'. country with a business of `17.95 lakh cr.
 IndiGo has got a letter from Sebi seeking  Syndicate Bank to be merged with Canara
reply with respect to the letter by Rakesh Bank, which will be the fourth-largest public
Gangwal's counsel. sector bank (PSB) with a business of
 India Ratings has downgraded Shankara `15.20 lakh cr.
Building Products to IND A-. The rating  Corporation Bank and Andhra Bank will be
agency has a 'stable' outlook on the firm. merged with Union Bank to be the fifth
largest PSB with `14.59 lakh cr business.

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 MEDIA NEWS
 Indian Bank and Allahabad Bank will be LongJin Investment Company (China) and
merged to form a `8.08-lakh cr entity. Sveva Capitals (Hong Kong) to establish a
 Aurobindo Pharma’s Netherlands joint venture in China for development,
subsidiary formed JV with two companies manufacturing, marketing and sale of
in China. The Dutch arm will hold 57% pharmaceutical products for China
stake in China Joint Venture. excluding Taiwan, Hong Kong and Macau.
 Divi's Ireland and Slovenia drug bodies  Alkem Laboratories received two Form
clear Visakhapatnam unit, which was 483 observations by USFDA for its
inspected from August 26 to August 30. manufacturing facility in Daman.
 JK Tyre Promoters have released pledge  Power Grid Corporation declared
on 5.1 cr shares (20.7% equity) on August successful bidder for two Transmission
30. Projects.
 IndiGo CFO Rohit Philip has resigned,  HDFC sold 6.74cr shares of Gruh Finance
effective September 15. The board has at `247.15 each aggregating to `1,665.8cr.
approved Aditya Pande as the new CFO,  State Bank of India said it has raised up to
who takes charge on September 16. `3,105cr by issuing bonds under the Basel-
 Yes Bank's board of directors has III regulations.
approved an increase in authorised share  Neuland Laboratories received
capital to `1,100cr from `800cr. India Establishment Inspection Report for its
Ratings has downgraded the private lender Hyderabad manufacturing facility by
with a negative outlook. USFDA.
 L&T has been awarded the contract to  L&T Infotech has completed the 100%
build Navi Mumbai international airport. acquisition of Lymbyc Solutions.
 CG Power has sacked CFO VR Venkatesh  JSW Steel said that ICRA revises outlook
and posted `507cr loss in FY19. on long term debt of the company to
 GSK Pharma sold its Thane land parcel of ‘Negative’ from ‘Stable’.
60 acres to Oberoi Realty for `889.5cr. The  BHEL approved proposal of strategic
company said that it paid a sum of disinvestment in Neelanchal Ispat Nigam
`337.46cr towards obtaining all required Ltd.
statutory and regulatory approvals.
 Aurobindo Pharma’s Netherlands arm has
entered into an agreement with Shanghai
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 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%

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