the big picture€¦ · sks micro 531.00 571.00 7.53% booked profit reliance industries 1,027.00...

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From the Editor’s Desk

The Union Budget to be announced on

Feb 29 is likely to be significant for 3 key themes. Firstly, the government will have

to stick its neck out on fiscal prudence. Most likely the government may relax on

this front. Secondly, the government will make a serious effort in this Budget to

spur infrastructure spending and rural incomes with positive implications.

But at a broader level, one can look

forward to a lot of serious tweaking on the tax front. One can anticipate greater

clarity on the GAAR and retrospective taxation to soothe the frayed nerves of

the FPIs. A roadmap to GST looks likely, which also means that service tax may be

raised from 14% to 16% to put it at par

with the GST rates. There is also an outside chance that the government may

choose to distribute goodies among the middle class with an eye on greater

purchasing power and on the coming state elections. At the economic half-way

mark for the current NDA government, this could be a crucial Budget document.

1. Banking surely needs a prop…

The big story in the Union Budget will be

what it does for the PSU Banks. With an NPA pile of $60 billion and low capital

adequacy ratios, they need urgent repair. The stressed asset coverage chart clearly

indicates why the PSU banks need government support. A comprehensive

NPA policy that empowers banks to write-off, get tax credits and also pursue legal

options against borrowers needs to be cleared in this Budget. Hiking FDI limits

in PSU banks from 20% to 49% could be

another step in the right direction. Finally, banks need capital urgently.

2. Helping FMCG via rural push…

The chart above clearly indicates what is wrong with rural India. The highest level

of rural income is marginally above the urban average. Point to point, rural

incomes lag behind urban incomes and they have seriously eroded demand as

they account for a larger percentage of

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94,972

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37,763 31,083

49,896 54,283

27,372 19,770 17,633

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The Big Picture

A fortnightly newsletter on financial market insights

Issue Date – Feb 21st , 2016 Editor – T S Harihar

Topic – 6 Sectors with Budget Focus...

Page | 2

population. Implementation of the OROP

and the 7th CPC will put a lot more money into the hands of people. We also expect

steps to boost rural incomes and demand through rural-focused schemes. This is

likely to be positive for discretionary demand products. Could be interesting!

It is very likely that there will be higher

excise on cigarettes and clarity on the Sin Tax in GST. Either ways, one needs to

look at FMCG beyond cigarettes. This budget will underscore exactly that.

3. Automobiles may be in limelight…

As stated in the previous point, the rural demand creation and higher payouts to

government employees will add value to

two wheelers and economy cars. The roadmap for GST will be closely watched

as most auto companies will benefit from GST as the tax impost will go down. Rural

demand creation will also benefit companies like M&M which have a very

strong retail franchise.

The above chart shows how India has

already emerged as the 6th largest auto market in the world. Hence sops to the

auto sector from the Union Budget may

be called for. This budget is also likely to introduce a clear-cut scrappage policy for

commercial vehicles and passenger

vehicles. This is likely to benefit the CV

and the passenger segment as demand will be more frequent. This is likely to be

more pronounced in the commercial vehicles space as these CVs tend to have

their life stretched to the hilt. Additionally, we also expect some specific

tax breaks for companies that are currently investing or propose to invest

into alternate cars, fuel-efficient cars to wean cars away from diesel usage.

4. Metals need a helping hand…

One just needs to look at the distribution of steel production in the world to

understand the crux of the problem. China alone accounts for 50% of global

steel output and even at about 70%

capacity utilization China is able to dump cheap steel across the world. The

demand slowdown due to a weak Chinese economy has also contributed to the

overall glut and low commodity prices across the world. What could the current

budget address?

A significant hike in the customs duty on steel imports is a strong possibility.

Already the Indian steel industry is up in arms and the budget may accede to their

request. This will be positive for the big guns like Tata Steel and JSW Steel. Steel

industry may also benefit from a

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Size of Auto Market (in million units)

803.8

310.0

303.9

110.7

43.9

5.7 29.8

15.0Steel Production (million tonnes)

China Rest of Asia Europe North America

Latin America Oceania Middle East Africa

Page | 3

reduction in customs duty on imported

coke to reduce input costs. This argument may also be extended to

aluminum, which will surely benefit Hindalco and Vedanta.

Currently, iron ore producers are

struggling as their export prices have become uncompetitive due to high export

duties and a relatively strong rupee. The budget may take a step to cut the duty

on iron ore exports benefiting stocks like NMDC and Vedanta in the process.

5. REIT booster for Realty…

The real estate sector has failed to live

up to its promise. Partly, it is blamed on bad corporate decision and partly on an

unfriendly regulatory regime. This budget

may address the long-standing demand for giving dividend tax exemption to

REITS so that the pass-through benefit will make them attractive. The housing

limit has been stagnant at an unrealistic level. That may be hiked giving rise to

greater housing demand.

The big story, however, could arise in the area of affordable housing. This

government has made affordable housing its priority and it needs to walk the talk

with tax incentives. This budget may give special incentives for companies engaged

in the business of providing affordable

housing like HDIL, Sobha etc.

6. Infrastructure needs action…

Figure 1 - Investment Outlay Comparison

While the withdrawal of exemptions may

get compensated by reduction in tax

rates, the infrastructure sector will look forward to winding down of the MAT. This

budget is also expected to give a major push to infrastructure with major

investment in roads and highways. The infrastructure sector is starved for funds

and it would be looking to the budget to introduce some innovative products for

raising funds in the market that are also tax efficient. Logistics will look forward to

GST and an independent rail regulator.

Calibrating your TBP portfolio…..

TBP Equity Portfolio

We are not making any changes to our

TBP equity portfolio and will take a view

after the Union Budget announcement.

TBP F&O portfolio

With F&O expiry coming up and volatility

already high, we will wait till the March series to initiate fresh positions in F&O. ©

Data Source (SIAM, Planning Commission, NSS, Macquarie and World Bank)

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11th Plan (trillion INR) 12th Plan - E (trillion INR)

Disclaimer: This report is brought to you by Tradeplus in association with HRBV Client Solutions. The Information contained in this report is solely for information purpose and may not be used as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. The investment as mentioned and opinions expressed in this report may not be suitable for all investors. In rendering this information, we assumed and relied upon, without independent verification, the accuracy and completeness of all information that was publicly available to us. The information has been obtained from the sources that we believe to be reliable as to the accuracy or completeness. While every effort is made to ensure the accuracy and completeness of information contained, we take no guarantee and assume no liability for any errors or omissions of the information. This information is given in good faith and we make no representations or warranties, express or implied as to the accuracy or completeness of the information. No one can use the information as the basis for any claim, demand or cause of action.

Stock Recommend Price

Current Market

Price

Notional ROI on

Holding

Actual ROI

Booked Call to Action

Reliance Industries 858.00 939.00 9.44% Booked Profit

TCS Ltd 2,570.71 2,603.00 1.26% Booked Profit

Lupin Ltd. 1,871.11 1,973.00 5.45% Booked Profit

ICICI Bank 320.00 295.55 -7.64% Booked Loss

Larsen & Toubro 1,670.00 1,758.00 5.27% Booked Profit

MCX Ltd. 1,127.00 1,068.05 -5.23% Booked Loss

Coal India Ltd. 368.00 397.00 7.88% Booked Profit

DLF Ltd. 124.00 128.20 3.39% Booked Profit

Shriram Transport 1,195.00 831.80 -30.39% 0 Hold

Tata Motors Ltd. 486.00 318.05 -34.56% 0 Added Lower

Asian Paints 761.00 853.00 12.09% Booked Profit

Tech Mahindra 471.00 502.00 6.58% Booked Profit

Titan 333.00 342.80 2.94% Booked Profit

Sun TV 282.00 333.00 18.09% Booked Profit

Bank of Baroda 156.00 209.55 34.33% Booked Profit

Motherson Sumi 345.00 251.00 -27.25% Booked Loss

State Bank of India 265.00 255.00 -3.77% Booked Loss

Dish TV 101.00 72.55 -28.17% 0 **Averaged**

Britannia Industries 3,340.00 2,728.00 -18.32% 0 Hold

IndusInd Ltd. 948.00 967.00 2.00% Booked Profit

UPL Ltd. 552.00 398.00 -27.90% 0 Hold

OIL India 451.20 443.85 -1.63% Booked Loss

Cipla 668.00 639.00 -4.34% Booked Loss

Infosys 1,117.00 1,064.65 -4.69% Booked Loss

Sun Pharma 902.00 865.45 -4.05% 0 Hold

SPARC 386.00 374.85 -2.89% Booked Loss

Glenmark 959.00 748.00 -22.00% 0 **Averaged**

Sobha Ltd. 312.00 310.65 -0.43% Booked Loss

Reliance Industries 941.00 983.00 4.46% Booked Profit

Idea Cellular 125.00 108.20 -13.44% **Averaged**

IDFC 60.10 41.00 -31.78% Hold

Just Dial 1,042.00 835.45 -19.82% Booked Loss

Havells Ltd. 288.00 299.85 4.11% Booked Profit

Ashok Leyland 96.00 91.25 -4.95% Hold

Mahindra & Mahindra 1,260.00 1,202.00 -4.60% Booked Loss

Lupin Ltd. 1,735.00 1,819.00 4.84% Booked Profit

SKS Micro 531.00 571.00 7.53% Booked Profit

Reliance Industries 1,027.00 943.50 -8.13% Hold

Tech Mahindra 500.00 439.70 -12.06% **Averaged**

Reliance Power 58.00 44.90 -22.59% Hold

Current Market Price is LTP as on 19 February 2016

Comment: The portfolio has been fine tuned with 4 stock additions.

Of the 40 stocks, 15 are open and 25 have been closed

Focus is more on high growth sectors for 2016

EVALUATION OF PORTFOLIOS RECOMMENDED IN THE BIG PICTURE (MAR / JUN / AUG / SEP / OCT - 2015)

Stock Notional Buy Qty Buy Value of Portfolio

Market Value of

Portfolio

MTM profit/loss on

Portfolio Booked Profit

Percent

Holding

Reliance Industries 0 0 0 81,000 0.00%

TCS Ltd 0 0 0 45,206 0.00%

PORTFOLIOS RECOMMENDED IN THE BIG PICTURE (MAR / JUN / AUG / SEP / OCT - 2015)

March

Ad

ditio

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Au

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Se

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Oct A

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Lupin Ltd. 0 0 0 1,83,402 0.00%

ICICI Bank 0 0 0 -24,450 0.00%

Larsen & Toubro 0 0 0 88,000 0.00%

MCX Ltd. 0 0 0 -58,950 0.00%

Coal India Ltd. 0 0 0 29,000 0.00%

DLF Ltd. 0 0 0 16,800 0.00%

Shriram Transport 1000 11,95,000 8,31,800 -3,63,200 0 11.69%

Tata Motors Ltd. 2000 9,72,000 6,36,100 -3,35,900 0 8.94%

Asian Paints 0 0 0 92,000 0.00%

Tech Mahindra 0 0 0 31,000 0.00%

Titan 0 0 0 19,600 0.00%

Sun TV 0 0 0 51,000 0.00%

Bank of Baroda 0 0 0 1,07,100 0.00%

Motherson Sumi 0 - - -1,31,600 0.00%

State Bank of India 0 - - 3,690 0.00%

Dish TV 8000 8,08,000 5,80,400 -2,27,600 0 8.15%

Britannia Industries 200 6,68,000 5,45,600 -1,22,400 0 7.66%

IndusInd Ltd. 0 - - 9,870 0.00%

UPL Ltd. 900 4,96,800 3,58,200 -1,38,600 0 5.03%

OIL India 0 - - -8,085 0.00%

Cipla 0 - - -29,000 0.00%

Infosys 0 - - -41880 0.00%

Sun Pharma 600 5,41,200 5,19,270 -21,930 0 7.30%

SPARC 0 - - -11,150 0.00%

Glenmark 1000 9,59,000 7,48,000 -2,11,000 0 10.51%

Sobha Ltd. 0 - - -2,700 0.00%

Reliance Industries 0 - - 42,000 0.00%

Idea Cellular 4000 5,00,000 4,32,800 -67,200 0 6.08%

IDFC 5000 3,00,500 2,05,000 -95,500 0 2.88%

Just Dial 0 - - -103275 0.00%

Havells 0 - - 11,850 0.00%

Ashok Leyland 5000 4,80,000 4,56,250 -23,750 0 6.41%

Mahindra & Mahindra 0 - - -29000 0.00%

Lupin Ltd. 0 - - 42,000 0.00%

SKS Micro 0 - - 40,000 0.00%

Reliance Industries 600 6,16,200 5,66,100 -50,100 7.95%

Tech Mahindra 2000 10,00,000 8,79,400 -1,20,600 12.35%

Reliance Power 8000 4,64,000 3,59,200 -1,04,800 5.05%

MTM Profit Booked Profit

Portfolio Value on 19 February 2016 85,36,700 71,18,120 -16,07,080 4,13,428 100%

Portfolio Cost at INR 100 million (+ / - 10%) Portfolio ROI -13.98%

* Percent Holding refers to the share of the market value of a stock in overall portfolio

Comment: Our reallocation has become more balanced now

Our ROI for the portfolio in total is at a negative level of -13.98%

During the same period the Nifty is down around -21%.

We will look to add quality stocks at appropriate levels

March Portfolio was closer to the peak of the market

The various portfolio additions have been coloured in different shades

F&O Strategy / Position

Notional

Buy 1 lot

Price of

Purchase

Cost of

Position

Market

Price *

Market

Value

MTM

profit/loss Booked Profit Call to Action

SBI Strangle

Buy SBI Apr 260PA 1250 3 3,750 0.30 375 -3,375

Buy SBI Apr 280CA 1250 7 8,750 0.30 375 -8,375

Strategy Status -11,750 Loss Booked

ICICI Bank Protective Put

Buy ICICI May Fut 1250 326 4,07,500 316.00 3,95,000 -12,500

Buy May 310PA 1250 8 10,000 2.00 2,500 -7,500


Sun Pharma Protective Call

Sell Sun Apr Fut 250 1045 2,61,250 1,085 2,71,250 10,000

Buy Apr 1120 CA 250 23 5,750 7 1,750 -4,000

Strategy Status 6,000 Profit Booked

Infosys Long Strangle

Buy Apr 2100 PA 250 42 10,500 126 31,500 21,000

Buy Apr 2300 CA 250 36 9,000 1 250 -8,750


Idea Cellular Protective Call

Sell Idea Apr Fut 2000 177.3 3,54,600 190 3,80,000 25,400

Buy Apr 200 CA 2000 3 6,000 0.20 400 -5,600


HCL Technology Vertical Bull

Buy Apr 950 CA 250 30 7,500 1 250 -7,250 Loss booked

Sell Apr 1000 CA 250 4 1,000 22 5,500 4,500 Profit Booked

Strategy Status -2,750 Call Closed

Infosys Vertical Call Spread

Buy Infy 2000 CA 125 41 5,125 0.00 0 -5,125

Sell Infy 2200 CA 125 0 0 7.50 938 938


HCL Tech Protective Put

Buy HCLT May Fut 250 919 2,29,750 955.00 2,38,750 9,000

Buy HCLT 920 PA 250 19.2 4,800 5.90 1,475 -3,325


Tata Motors July Strangle

Buy TTMT 460 CA 500 9 4,500 1.25 625 -3,875

Buy TTMT 400 PA 500 5 2,500 16.00 8,000 5,500 Profit Booked

Strategy Status 1,625

Infosys July Put Spread

Buy INFY 980 PA 250 26.00 6,500 56.00 14,000 7,500

Sell INFY 940 PA 250 33.00 8,250 15.00 3,750 -4,500 Profit Booked


NMDC Aug Protective Put

Buy NMDC Future 4000 107.00 4,28,000 106.00 4,24,000 -4,000

Buy NMDC 115 PA 2000 3.00 6,000 6.10 12,200 6,200 Profit booked


Lupin August long strangle

Buy Aug 1700 CA 125 35.00 4,375 155.00 19,375 15,000

Buy Aug 1650 PA 125 65.00 8,125 0.00 0 -8,125 Profit Booked


PSU spread - Long BOB Short

PNB

EVALUATION OF FUTURES, OPTIONS AND STRATEGIES RECOMMENDED IN |The Big Picture|

Buy BOB Aug Fut 2000 152.15 3,04,300 187.30 3,74,600 70,300

Sell PNB Aug Fut 2000 157.20 3,14,400 135.50 2,71,000 -43,400 Profit Booked


Telco spread - Long Idea Short

Bharti

Buy Aug Bharti 420 PA 1000 14.00 14,000 26.00 26,000 12,000

Buy Aug Idea 180 CA 2000 4.00 8,000 0.70 1,400 -6,600 Profit Booked


Long Yes Bank Nov Fut / Short

ICICI Fut

Buy Nov Yesbank Fut 700 760.00 5,32,000 740.00 5,18,000 -14,000

Sell Nov ICICIBK Fut 1700 264.00 4,48,800 278.00 4,72,600 23,800 Profit Booked


Long Bajaj Auto Nov Fut / Short

Tata Mot

Buy Nov Bajaj Auto Fut 400 2463.00 9,85,200 2533.00 10,13,200 28,000

Sell Nov Tata Motors Fut 3000 398.50 11,95,500 396.00 11,88,000 -7,500 Profit Booked


Long RIL Nov Fut / Short ONGC

Fut

Buy Nov RIL Fut 500 950.00 4,75,000 960.00 4,80,000 5,000

Sell Nov ONGC Fut 2000 231.50 4,63,000 243.00 4,86,000 23,000 Profit Booked


Protective Put on Infosys

Buy Dec Infy Futures 500 1055.00 5,27,500 1094.00 5,47,000 19,500

Buy Dec Infy 1040 Put 500 12.00 6,000 6.00 3,000 -3,000 Profit Booked


Tata Motors / DVR Spread

Strategy

Buy TAMO DVR Futures 2100 278.00 5,83,800 291.60 6,12,360 28,560

Sell TAMO Futures 1500 391.80 5,87,700 380.00 5,70,000 -17,700 Profit Booked


Banking Long / Short Strategy

Buy Yes Bank Dec Fut 700 687.00 4,80,900 729.55 5,10,685 29,785

Sell ICICI Bank Dec Fut 1700 261.50 4,44,550 251.00 4,26,700 -17,850 Profit Booked


Auto Sector Long/Short Strategy

Buy Maruti Feb Futures 125 4187.00 5,23,375 3560.00 4,45,000 -78,375 Rolled to Feb

Sell M&M Feb Futures 400 1226.60 4,90,640 1184.00 4,73,600 -17,040 Call Open

Strategy Status -95,415

Financial Sector Long/Short

Strategy

Buy LICHFL Feb Futures 2200 460.00 10,12,000 418.95 9,21,690 -90,310 Rolled & Avg

Sell HDFC Feb Futures 400 1074.00 4,29,600 1173.00 4,69,200 39,600 Partly Closed

Strategy Status -90,310 39,600

Notional Profit /

loss

Booked Profit /

Loss Overall Position

-1,85,725 1,88,233 2,508

Comments

* We are adding 2 fresh positions in this fortnight

* Yellow shade denotes closed positions

* In open positions, the non-editable prices are shaded in blue

* Market price normally refers to the last trading day of the week

* Actual execution price is considered as on Monday morning

* Call to Action explains whether a positions is booked, closed, rolled or averaged

* All strategies are monitored on a real time basis and communicated for action

the big picture€¦ · sks micro 531.00 571.00 7.53% booked profit reliance industries 1,027.00...

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