religare morning digest - morning digest november 7, 2016 ... the next major support is at 8300 in...
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Religare Morning Digest
November 7, 2016
Nifty Outlook
VWAP (Expiry till date) Max OI (Call) Max OI (Put)
NIFTY 8605 9000 8200
Markets remained under pressure on Friday as well, tracking feeble global cues and lost over half a percent. In today's trade, anxiety ahead of the US Presidential election overshadowed the positivity of recent breakthrough on GST front. Also, slide in pharma majors further dented the sentiments. Above all, sharp decline in Midcap and Smallcap pack completely unsettled the participants and pushed them on the back foot.
Our markets are mirroring the global sentiments and it'll only subside post the US Presidential Election outcome. Till then, traders are advised to restrict their positions and sit on cash. At the same time, investors should use this fall to gradually accumulate quality counters, which are available at good bargain.
On index front, the next major support is at 8300 in Nifty while in case of rebound 8500 would now act as hurdle.
Sectors to watch
Sector Name Outlook
FINANCIAL STABLE
INFRA STABLE
PHARMA STABLE
News Religare Super Ideas**
FII & DII Cash Segment (Rs. in Cr.) Trade Stats
Category Amt. MTD YTD
FII -707 -1498 39738
DII 535 1134 3219
NO OF CON-
TRACTS
TURNOVER IN CR
IDXFUTS 251470 16992
IDXOPT 2959366 202061
STKFUTS 645310 42487
Derivative Ideas **
Shares of NMDC ended lower by nearly 5% after the company announced that it has kept prices of iron ores unchanged with effect from 3 Nov 2016 compared with prices in October.
Shares of Magma Fincorp fell 12.4% on subdued Q2FY17 numbers. Its consolidated PAT rose 3.7% to Rs 50.4cr, while its total income declined by 1.7% YoY to Rs 600.2cr.
Titan missed analysts' expectations on topline (down 0.2% YoY Rs 2,676cr in Q2FY17) and bottomline front (up 23.5% YoY to Rs 181cr) but operating profit was ahead of estimates, up 36.8% to Rs 276cr and margin expanded by 280 bps to 10.3% YoY.
*FII & DII data as on 3rd November 2016
Scrip Buy/Sell CMP Initiation
Range SL* Target
BEL BUY 1299.85 1270-
1280 1240 1380
ALBK SELL NOV
FUT 71.20 72-73 77 65
**Please note that the given technical and derivative recommendations are
"valid for taking position" only on recommended date and in the given range.
*Please note - Stoploss is on closing basis for delivery recommendation and intraday basis for futures recommendation.
Instrument B/S Lot INITIATION
RANGE SL
TAR-GET
NIFTY
BUY
8500 CE 75
100-105
190 350 BUY
8500 PE 140-145
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Religare Morning Digest
November 7, 2016
Religare Super Ideas
Investment Pick - Arman Financial Services Ltd.
Incorporated in 1992, Ahmedabad based Arman Financial Services (ARFL) lends primarily in the micro-finance and two wheeler space. ARFL operates in
micro-finance through its subsidiary Namra Finance (Rs 117cr, 68% of AUM) while Vehicle financing amounts to Rs 55cr (32% of AUM).
Key rationales: i) Multi-year growth in micro-finance business ii) Value creating opportunities in newer geographies in micro-finance and foray into SME lending iii)
Steady AUM growth of 35% CAGR over FY12-FY16 iv) Stable asset quality, High NIMs and Strong ROAAs. We feel the gradual and focused growth in micro-finance, conservative lending and focus on newer geographies will drive ARFL’s AUMs while sustained NIMs and controlled costs will improve profitability.
Scrip CMP Target Duration Recommendation Price
ARMANFIN 256 338 9-12 Months 260
Index options buying by FIIs indicating rise in
volatility ahead of US presidential election which is
scheduled next week. Keeping in mind the
increased volatility and major event, we recommend
doing long straddle in Nifty.
Strategy: BUY NIFTY 8500 CE @ 100-105 & BUY
8500 PE @ 140-145, NET PREMIUM PAID @ 240-
250, SL 190, TARGET 350.
Derivative Ideas
Bharat Electronics Limited (BEL) Allahabad Bank (ALBK)
BEL is comfortably sustaining at higher levels
despite weak markets post breakout where it
surpassed five month trading range. Volume is also
supporting price movement, all this indicates
bullish bias to continue ahead as well.
Post recent rise where ALBK rallied from 50 till 88
levels, distribution is witnessed on daily chart and
on Friday, i.e. 04th November, it closed below its
200 EMA support as well, indicating weak trend.
Therefore, we believe, it will head south wards in
coming sessions.
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Religare Morning Digest
November 7, 2016
Religare Investment Calls
Name of the Company Reco Date Reco Price Target Price Upside % Previous day Closing Price
Tech Mahindra 7-Aug-15 534 600 12.4% 430.05
Kotak Mahindra Bank 19-Aug-15 688 900 30.8% 799.65
Glenmark Pharma 10-Sep-15 1,017 1,370 34.7% 869.15
Dabur India 10-Sep-15 275 325 18.1% 298.50
HUL 10-Sep-15 803 1,050 30.8% 848.00
Bajaj Corp 3-Nov-15 416 500 20.3% 396.40
Britannia Inds 23-Dec-15 2,896 3,600 24.3% 3,302.00
Nandan Denim 5-Jan-16 150 183 22.0% 133.25
Atul Auto 22-Mar-16 506 580 14.6% 478.65
Century Plyboards 5-Jul-16 207 271 30.9% 229.70
Greenply Industries 5-Jul-16 248 322 29.8% 289.75
Talwalkars Better Valkue Fitness 22-Aug-16 252 328 30.2% 253.40
Tv Today Network 29-Aug-16 300 388 29.3% 340.10
Jamna Auto 2-Sep-16 217 272 25.3% 210.55
SML Isuzu 26-Sep-16 1,300 1,560 20.0% 1,266.20
Swaraj Engines Ltd. 3-Oct-16 1,184 1,535 29.6% 1,336.00
Cigniti Technologies Ltd. 5-Oct-16 419 538 28.3% 407.45
Arman Financial Services 14-Oct-16 260 338 30.0% 256.00
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Religare Morning Digest
November 7, 2016
Corporate Action Calendar — November 2016 (Cash Dividend)
Sun Mon Tue Wed Thu Fri Sat
06 07
Supreme Industries Ltd
Vedanta Ltd
08
Colgate-Palmolive India Ltd
PI Industries Ltd
09
Astral Polytechnik Ltd
Sonata Software Ltd
10
Sundaram-Clayton Ltd
Transport Corp of India Ltd
11
12
Corporate Action Calendar — November 2016 (Stock Buyback)
Sun Mon Tue Wed Thu Fri Sat
06 07
R Systems International Ltd
08 09 10 11 12
Corporate Action Calendar — November 2016 (Stock Split)
Sun Mon Tue Wed Thu Fri Sat
06 07
08 09 10 11
Indo Count Industries Ltd
12
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Religare Morning Digest
November 7, 2016
Economic Calendar — November 2016
Sun Mon Tue Wed Thu Fri Sat
06 07 08 09
Local Car Sales
10
Trade Balance
Imports YoY
Exports YoY
11
Industrial Production YoY
12
Corporate Action Calendar — November 2016 (Acquisition)
Date Target Company Acquirer Company
10/30/2016 Yatra Online Inc Terrapin 3 Acquisition Corp
10/31/2016 One97 Communications Ltd Multiple acquirers
10/31/2016 Spirotech Heat Exchangers Pvt Ltd LU-VE SpA
10/31/2016 IIInspection & Export Pvt Ltd Iii Co Ltd
10/31/2016 Discountseniorsupply.com domain Health Advance Inc
11/2/2016 Anka India Ltd Private Investor
11/10/2016 BCC Fuba India Ltd Private Investor
11/10/2016 Kwality Credit & Leasing Ltd Private Investor
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Religare Morning Digest
November 7, 2016
Current Portfolio and Performance Summary as on 4th November’16
Stock Sector Entry Date Weight Reco price (`) CMP (`)
Bajaj Corp Consumer Goods May 13, 2016 9.2% 393 396
Magma Fincorp Financial Services June 30, 2016 8.7% 109 101
Apollo Hospitals
Enterprises Healthcare Services July 29, 2016 9.5% 1,362 1,286
Emami Consumer Goods August 3, 2016 10.4% 1,151 1,200
Castrol India Energy August 5, 2016 10.1% 425 430
Indiabulls Housing
Finance Financial Services August 8, 2016 9.8% 808 788
Punjab National Bank Financial Services October 3, 2016 9.4% 143 132
Minda Corporation Auto Ancillaries October 10, 2016 10.4% 109 107
Cash 22.5%
Total Total 100%
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Religare Morning Digest
November 7, 2016
Historical Performance as on 4th November’16
Performance Matrix 1-Month 3-Month 6-Month 1-Year Since Inception
Religare Alpha -4.8% 0.3% 13.0% 10.3% 27.6%
Nifty -3.8% -1.4% 9.1% 6.0% 7.0%
Outperformance -1.0% 1.6% 4.0% 4.3% 20.7%
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Religare Morning Digest
November 7, 2016
Research Product Basket
For cash market trading
Call / Product Call Frequency No. of calls Avg open call duration % funds allocated
Intraday Calls Intraday 2 - 3 < 1 day 25%
Live / RMD Calls Daily 3 - 4 3 - 4 days 30%
Master Pick Weekly 1 1 month 15%
Religare Alpha Opportunity NA 2 - 3 months 20%
Cash NA 10%
For 1L margin*
Total Per Call
25,000 8,000
30,000 4,000
15,000 5,000
20,000 As per weightage
10,000
Intraday Calls These calls are flashed live on Ms Lync and ODIN with the purpose of squaring off positions on the same day. As a policy, we restrict our
intraday cash market calls to less than 4 calls a day. Hence, funds should be allocated accordingly to have provision to trade in all calls.
Live / RMD Calls 2 super ideas are flashed in RMD daily with a view of 3-4 days. Additionally as per market opportunity, we flash live calls during the day
(including BTST calls). 3-4 such calls are made on a daily basis which might be open for 3-4 days. Funds should be allocated keeping in mind that
there will be 7-8 such open calls daily.
Master Pick This is our weekly recommendation shortlisted on the basis of techno-funda analysis. 15% of funds is recommended to be allocated for Master
Pick considering that there will be 3 open calls. The average open duration for this call will be 1 month.
Religare Alpha This is a portfolio of 8-10 stocks which are held with a view of 2-3 months. It is recommended to allocate 20% of funds for building this portfolio
which will provide stability to the overall trading portfolio.
Cash 10% surplus cash in the portfolio should be kept for the purposes of allocating it to opportunities as and when they arrive.
For derivative market trading
Call / Product Call Frequency No. of calls Avg open call duration % funds allocated
Derivative Ideas Daily 1 - 2 1 - 3 days 40%
Live calls Intraday / Daily 1 - 2 3 - 4 days 50%
Cash NA 10%
For 1L margin*
Total Per Call
40,000 40,000
50,000 50,000
10,000
Derivative Ideas 1 derivative idea is shared in RMD daily. It can be a plain vanilla F&O buy/sell call or an option strategy. Funds should be allocated assuming 2
such calls will be open at any time. These calls are open for 3-4 days on an average.
Live Calls These calls are flashed on MS Lync and ODIN during live market hours. These calls can be intraday or with a view of 2-3 days. Funds should be
allocated considering 2 such calls will be open at any time. 3/4 times, these calls will be on Nifty / Bank Nifty only.
Cash It is recommended to hold 10% cash to capitalize on any opportunity that may arise in markets.
For every client, the advisor must allocate a specific proportion of funds for trading and investing depending on the risk taking ability and willingness of the client
and their investment goals.
The below mentioned product basket tries to address the way to deal with the trading portfolio (cash/derivative) for optimum effectiveness of research calls.
It is recommended to divide your trading funds for various types of calls and not invest the entire amount for 1 or 2 calls only.
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Religare Morning Digest
November 7, 2016
Hitesh Agrawal [email protected]
Ajay Pasari, CFA [email protected]
Ajit Mishra [email protected]
Archana Gude [email protected]
Gaurav Sharma [email protected]
Swati Saxena [email protected]
Manoj M Vayalar [email protected]
Mehernosh Khurshed Panthaki [email protected]
Vipin Kumar [email protected]
Team Members
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Religare Morning Digest
November 7, 2016
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