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Quantum Global Wealth Weekly 03-04

Top Sectors for the Week 05-12

Disclaimer 13

CONTENTS

Top Sectors for the Week

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STOCKS CMP BIAS TRADING/ INVESTMENT STRATEGY

Tuesday13th August, 2019

Analyst’s Pick: CIPLA(CMP 484.50). Target: Rs.451.

BHEL is clearly in a down-wave pattern and now seen breaking down below a descending triangle pattern on the monthly charts. A break below 55 could lead to a fall below the psychological 50 mark. Establishing short positions at CMP, and on strength between 60-62.50zone should be the preferred trading strategy, targeting 50 and then aggressive targets at 40-42.50 zone. Stop above 72.81. Holding Period: 1 Month.

Overbought technical conditions still prevail on monthly charts. CIPLA is also signaling a breakdown below a higher consolidation zone on daily charts with a probable double top resistance. Hence, major weakness likely for the stock. Establishing short positions at CMP, and on any strength between 515-521 zone should be the preferred trading strategy, targeting457 and then at 427-431 zone. Aggressive targets seen at 401zone. Stop above 551. Holding Period: 2 Months.

MGL deserves attention as the stock is signaling a breakdown from a probable lower consolidation zone on the daily charts. The stock is likely to be a big underperformer in medium term. Establishing short positions between 801-811zone should be the preferred trading strategy, targeting psychological 750 mark and then aggressive targets at 691-701 zone. Stop above 877. Holding Period: 2 Months.

PAGE INDUSTRIES is moving down with its sequence of lower highs/lows intact on daily, weekly and monthly charts. The stock is just signaling a break down below a 17675-18885 lower consolidation zone. Establishing short positions at CMP and on any early strength between 17901-18001 zone should be the preferred trading strategy, targeting 16500and then aggressive targets at15101-15251 zone. Stop above 19751. Holding Period: 2 Months.

PNB was seen consolidating in last 12- months after falling one way down since October 2017. The daily charts for the stock is again looking ugly as the stock is on verge of breaking down below a lower consolidation zone. A break below Sept 2018 low at 58.45 will confirm further weakness. Establishing short positions at CMP should be the preferred trading strategy, targeting 58.50 and then aggressive targets at psychological 50 mark. Stop above 77.45. Holding Period: 2 Months.

BHEL 56.95 Negative

CIPLA 484.50 Negative

MAHANAGAR GAS (MGL) 785 Negative

PAGE INDUSTRIES 17682 Negative

PUNJAB NATIONAL 66.55 NegativeBANK (PNB)

Cipla is a leading global pharmaceutical company, dedicated to high-quality, branded and

generic medicines. The firm is trusted by healthcare professionals and patients across

geographies. Over the last 8 decades, CIPLA has strengthened its leadership in India’s

pharmaceutical industry and fortified its promise of ‘Caring for Life’.

CIPLA is strengthening its global focus by consolidating and deepening its presence in the key

markets of India, South Africa, the US, and other economies of the emerging world

Having said that, Cipla reported weak 1QFY20 results. Revenue came in at INR39.9bn, up 1%

y-y but below 11% street’s expectation. The negative catalyst was revenue miss was that was

primarily on backdrop in distribution in India trade generics, slower growth in branded

generics and deferment/channel destocking in Emerging markets. Please note there remain

uncertainties around the trade generics ramp-up in India and the slowdown in the South Africa

tender business.

The stock faces multiple growthchallenges; hence, we maintain ’SELL’.

Technically, CIPLA’s stock price pattern appears ugly at current levels.

The momentum oscillators are in sell mode signaling further sharp down move. The stock price is signaling a break down from a "Reverse Flag

Pattern" on the monthly charts with the sequence of lower highs / lows is intact in daily chart, indicating further weakness. Major weakness on cards

below its intermediate May 2016 low at 457. The stock is moving below this level after consolidating between 457-687zone for past 37-months.

Immediate downside risk below 457 is at psychological 401mark.

Also, a probable reverse Head & Shoulder pattern can be seen on weekly charts. The stock is likely to be a big underperformer going forward.

Establishing short positions at CMP, and on any strength between 515-521 zone should be the preferred trading strategy, targeting 457 and then at

427-431 zone. Aggressive targets seen at 401 zone. Stop above 551.Holding Period: 2 Months.



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Sectors Relative to Sensex... Outperforming stocks Underperforming stocks


Sector Analysis: Relative Strength Performance

Tuesday13th August, 2019

BSE Auto Index Underperformer BAJAJ AUTO, ASHOK LEYLAND, HERO MOTO CORP TATA MOTORS.

BSE Banks Index Underperformer KOTAK BANK SBI, INDUSIND BANK, YES BANK

BSE Capital Goods Index Neutral AIA ENGINEERING SUZLON, BHEL, CG POWER

BSE Healthcare Index Underperformer METROPOLIS, CIPLA, WOCKHARDT, DR LAL PATH LABS

BSE Metals Index Underperformer COAL INDIA NALCO, HINDALCO, SAIL


From Quantum Global Invest Research Desk…


The Week That Was: Sensex snaps 4-week losing streak.

Sensex: 37,582.

In last week’s trade, the benchmark Sensex recovered by 1.23% and most importantly, snapped 4-week consecutive fall. The key catalysts were:

• Union Home Minister Amit Shah, read out a presidential notification that stated the decision to scrap the contentious Article 370 and to bifurcate the state into two Union territories – Jammu and Kashmir, which will have a legislature, and Ladakh, which will be without a legislature. As a result, Pakistan downgraded diplomatic ties with India, explled envoy as well.

• RBI cut the repo rate by 35 basis points to 5.40% and kept the door open for lowering rates further by retaining an “accommodative” policy stance, but flagged worries over weakening growth prospects. This was the fourth repo rate cut in as many policies since February 2019.

• US jobless claims dipped to 209,000, a decrease of 8,000 from the previous week's revised level of 217,000. Economists had expected jobless claims to come in unchanged compared to the 215,000 originally reported for the previous week.

• US trade deficit narrowed slightly to $55.2 billion in June from a revised $55.3 billion in May. Economists had expected the deficit to narrow to $54.6 billion from the $55.5 billion originally reported for the previous month.

• US 10 year Treasury yield rates staged a minor recovery after falling below 1.65% last week.

• China's consumer price inflation rose to 2.8 percent in July from 2.7 percent in June, the National Bureau of Statistics reported. The rate was forecast to remain unchanged at 2.7 percent.

• The Chinese Yuan ended at 7.06 per US Dollar after breaching the key 7-per-dollar level for the first time in more than a decade.

• Japan's gross domestic product gained a seasonally adjusted 0.4 percent on quarter in the second quarter of 2019. That beat expectations for an increase of 0.1 percent following the upwardly revised 0.7 percent gain in the previous three months (originally 0.6 percent).

The Sensex ended in green in 3 out 5 trading sessions. The BSE MidCap and the BSE SmallCap index ended higher on weekly basis, up 1.06% and 1.63% respectively. The BSE Small Cap Index outperformed the benchmark Sensex.

Amongst Sectoral indices in last week’s trade BSE Auto Index, BSE Teck Index & BSE IT Index were up 2.7%, 2.4% & 2.4% respectively whereas BSE Metal Index, BSE PSU Index & BSE Oil & Gas Index were down 3.00%, 2.2% & 1.4% respectively.

Amongst the BSE-30 stocks like HEROMOTO, BHARTI AIRTEL & HCLTECH were up 9.1%, 8.1% & 7.5% respectively. The top three losers of the week were TATA STEEL, YESBANK and TATAMOTORS DVR, down 11.4%, 7.0% and 6.7% respectively.

The recent stock market rally attempt stumbled early Friday, with the Dow Jones industrials falling more than 100 points following a report that the United States is holding off on allowing chipmakers and other U.S. companies to resume business with China's Huawei.

The tech-heavy Nasdaq composite moved down 0.9%. The S&P 500 lost 0.6%, while the Dow Jones Industrial Average dropped 0.5%. Year to date, the Nasdaq has advanced about 20%. The S&P 500 has gained about 17%, while the Dow Jones has moved up about 13%.

The Week Ahead: US-China trade war concerns need a fullproof solution to bolster bullish sentiments.

US-China trade war issues still remain the centre theme for world wide stock markets and any positive or negative development on the same will be closely monitored from hereon.

Finance Minister Nirmala Sitharaman on Friday assured industry of cutting the corporation tax rate to 25% across the board once it gets comfort on revenues, and that direct tax laws would be simplified after the task force submits its report later this month.

Addressing members of the Confederation of Indian Industry (CII), the finance minister said she would be travelling to tier 2 cities to understand the issues of harassment faced by corporates from tax officials.

The positive news for investors this Tuesday morning is that FIIs bought shares worth Rs. 203.73 crores after a stint of horrible selling over past few months. FIIs had siphoned out Rs. 16,870 crore worth of shares in July alone.

The street will spy with one big eye on CPI (YoY) numbers for July month, due to release on Tuesday, 13th August. Alongwith India even USA will release its CPI numbers on the same date. India's WPI (YoY) numbers for July will be out on Wednesday 14th August.

The USD /INR movement will also be closed monitored especially after last week when the Indian Rupee dropped the most in six years as Kashmir added to yuan woes. The Indian Rupee crashed to ̀ 1.13 to 70.73 versus US dollar on Monday 5th August.

FY19-20 Q1 earnings season is on, the big names and the numbers to trickle-in this week are:

• Monday: BHARTI INFRATEL, MUTHOOTFIN, HINDUSTAN MOTORS, MOTHERSON, RPOWER.

• Tuesday: RITES, IPCALABS, RELINFRA, APOLLOHOSP, BOSCH, NALCO, KSCL, ONGC.

• Wednesday: MTNL, GMRINFRA, JAIN IRRIGATION, SML ISUZU, IDBI BANK, JINDAL STEEL & POWER, HDIL, IBREALEST, GRASIM, RELCAP, IGL.

Meanwhile, the technical landscape continues to be bearish as the indices are seen correcting from overbought technical conditions. The immediate downside risk continues to be at 35751 mark.

Please note, confirmation of major weakness only below 35751 mark, targeting October 2019 low at 33291 mark.

The key interweek hurdles to watch on Sensex are at 38001 mark. Buying advised only if Sensex is able to move above 39005 mark.

The corresponding levels for Nifty are: Supports at 10751 zone and after that downside risk is at 10001 mark. Hurdles for Nifty now seen at 11307 and then at 11707 mark.

Preferred trade for the week:

Sensex (37582): Sell between 37901-38101 zone, targeting 36601 and then at 35751 and final logical targets at 33291. Stop at 39101.

Amongst momentum stocks looking bright on any corrective declines are: ULTRATECH, AIA ENGINEERING, NESTLE, ICICI BANK, METROPOLIS, AMRUTANJAN, RITES and GRSE.

Meanwhile, we are negative on stocks like: CIPLA, HINDALCO, BHEL, INDUSIND BANK, VEDANTA, ASHOK LEYLAND, MARUTI, YES BANK, MARUTI, LUPIN, JINDAL STEEL & POWER, TATA MOTORS, RELIANCE INFRA, RELIANCE CAPITAL, SAIL, UNION BANK OF INDIA and RELIANCE INDUSTRIES.

Amongst sectoral indices, we have a negative rating in BSE Auto index amidst deteriorating technical conditions. BSE Auto index is likely to continue its underperformance. BSE Metals could witness sharp rebound only in case of U.S-CHINA trade truce — until then its sell on every strength. BSE Bank index could correct amidst overbought technical conditions. Meanwhile, for this week, our most preferred pair strategies are:

• Pair Strategy: Long METROPOLIS and Short CIPLA.

• Pair Strategy: Long KOTAK BANK and Short PNB.

• Pair Strategy: Long AIA ENGINEERING and Short BHEL.



BSE Auto Index vs Sensex

• BSE AUTO:16,062:UNDERPERFOMER.

• In last week's trade, BSE Auto indexwas seen rebounding and most importantly was seen snapping 5 week losing streak. On a weekly basis, BSE Auto index was up2.73%.Technically, momentum oscillators continue to be negative but that said oversold conditions prevail. Amidst this backdrop, selling only on any excessive strength should be the preferred strategy. Major hurdles now at 20411mark.Interweek resistance at 17181. From here on, downside risk seen at 14589 zone.

• Support:15001/14589/11651.

• Resistance:17201/18501/20411.

• Preferred Strategy on Auto Index: For this week, aggressive traders can look to sell between 16500-16751 zone, targeting 15001and then14501. Final aggressive targets located at 11651-12001 zonewith strict stop above 18501.

• Preferred Trade:

• Sell MOTHERSON SUMI(CMP 107) between 111-115zone, targeting 100 zone and then at 92.50-95 zone with stop at 119. Holding Period: 1 Month.

• Sell AMAR RAJA BATTERY (CMP 627.50) between635-645 zone, targeting 572 zone and then at 551-553zone with stop at 689. Holding Period: 2 Months.

• Outperforming Stocks: BAJAJ AUTO, HERO MOTO CORP.

• Underperforming Stocks: ASHOK LEYLAND, APOLLO TYRES, TATA MOTORS, MOTHERSON SUMI.

PAIR Strategy: Long BAJAJ AUTO and Short TATA MOTORS.



BSE Banks Index vs Sensex

PAIR Strategy: Long KOTAK BANK and Short PNB

• BSE BANKS:32,115:UNDERPERFORMER.

• The interweek outlook continues to be negative as the index is seen trading at overbought conditions on daily charts. In last week's trade, Bank Nifty was seen consolidating, up 0.66%. Bank Nifty is clearly seen struggling and unable to move past its all-time-high at 35717 mark. Immediate downside risk seen at its make-or-break interweek support at 30251zone.Lightening leveraged long positions should continue to be the preferred strategy.

This week, we expect Bank index to trade volatile with negative bias.

• Support: 31854/30251/27751.

• Resistance: 32951/33301/34575.

• Preferred Strategy on Bank Index: For this week, aggressive traders can look to sell between 32751-33001 zone, targeting 31854 and then aggressive targets seen at 30251-30551zone with strict stop above 34575.


• Sell INDUSIND BANK(CMP 1413)between 1439-1451zone, targeting 1333-1347 zone and then at 1269-1275zone with stop above1551. Holding Period: 1 Month.

• Sell UNION BANK OF INDIA (CMP 64.75) between 68-70 zone, targeting 61zone and then at 57.50-59 zone with stop above 73. Holding Period: 1 Month.

• Outperforming Stocks: KOTAK BANK, ICICI BANK.

• Underperforming Stocks: UNION BANK OF INDIA,STATE BANK OF INDIA, SOUTH INDIAN BANK, PNB, BANK OF INDIA, YES BANK.



BSE Capital Goods Index vs Sensex

PAIR Strategy: Long AIA ENGINEERING Short BHEL

• BSE CAPITAL GOODS:17,301: NEUTRAL.

• The interweek outlook continues to be negative after the index witnessed sharp correction recently. In last week’s trade, the index was seen consolidating, up 0.16%. We suspect, some more corrective declines quite likely. Key interweek support seen at 16971.Key intermonth support at 16113.Expect range bound trading this week with negative bias.

• Support: 16971/16113/15001.

• Resistance: 18201/19251/20501.

• Preferred Strategy on Capital Goods Index: For this week, sell between 17701-18001 zone, should be the preferred trading strategy, targeting 16971zoneand then at 16113-16251 zone with strict stop at18551.


• Buy THERMAX (CMP 1095) between 1071-1075 zone, targeting 1151 and then at 1221zone. Stop below 961. Holding period: 2 months

• Buy AIA ENGINEERING (CMP 1680) between 1625-1651 zone, targeting 2001 and then at 2150zone. Stop below 1601. Holding period: 2 months.

• Outperforming Stocks: AIA ENGINEERING, THERMAX.

• Underperforming Stocks: C G POWER, BHEL, HAL.



BSE Healthcare Index vs Sensex

PAIR Strategy: Long METROPOLIS and Short CIPLA

• BSE HEALTHCARE: 12,694:UNDERPERFOMER.

• The interweek outlook continues to be negative amidst reverse flag being witnessed on daily charts. In last week's trade, the index was seen consolidating, up 1.10%.Major downside risk on cards if the index slip below its key support at 12,477 mark. Please note, below 12,477 mark major weakness on cards for BSE Healthcare index with aggressive intermonth targets at 11000 mark. Immediate hurdles at 13455. Confirmation of strength above 15185.

• Support: 12477/11951/11001.

• Resistance:13455/14501/15185.

• Preferred Strategy on Healthcare Index: For this week, aggressive traders should look to sell at CMP, targeting 12477 and then at 11001-11251zonewith strict stop below 13501.


• Sell CIPLA (CMP 485) between 495-501zone, targeting 457 zone and then at 421-427 zone with stop above557. Holding Period: 1 month.

• Buy BIOCON (CMP 229) between 217-219 zone, targeting 257.50 and then at 271-275zone. Stop below 211. Holding period: 2 months.

• Outperforming Stocks: METROPOLIS, APOLLO HOSPITAL, LALPATH LABS, IPCA LAB, MERCK, PFIZER.

• Underperforming Stocks: FORTIS, CIPLA, WOCKHARDT, CADILA HEALTHCARE, LUPIN.



BSE Metals Index vs Sensex

PAIR Strategy: Long JSW STEEL and Short SAIL

• BSE METALS: 8,899:UNDERPERFOMER.

• In last week's trade, BSE Metal index witnessed volatile movements and most importantly, severely underperformed the benchmark indices, down 3.03%. The negative takeaway was that the sell-off was amidst deteriorating conditions at U.S-China trade war. The major technical landscape will now improve only if BSE Metal index moves above 11001mark. Technically, oversold conditions still prevail on long term charts. Major interweek support now seen at 8750-8801zone. Selling on strength should be the preferred strategy.

• Support: 8750/8501/6169.

• Resistance: 9501/10201/11901.

• Preferred Strategy on Metals Index: For this week, aggressive traders can look to sell between9251-9501 zone, targeting8750 and then at 8501zone with strict stop above 10271.


• Sell HINDALCO (CMP176)between 181-185 zone, targeting161and then at 145-151zone. Stop above 195. Holding period: 1 month.

• Sell NATIONAL ALUMINUM(CMP 41.75) between 45-46 zone, targeting 40and then at 37.50-38 zone. Stop above 49. Holding period: 1 month.

• Outperforming Stocks: COAL INDIA.

• Underperforming Stocks: NATIONAL ALUMINUM, TATA STEEL, JSW STEEL, JINDAL STEEL & POWER, SAIL, VEDANTA.

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Tel: +91 (22) 4543 1600

Email: [email protected]

DISCLAIMER: This is solely for information of clients of Quantum Global Securities Ltd. and does not construe to be an investment advice. It is also not intended as an offer or solicitation for the purchase and sale of any financial instruments. Any action taken by you on the basis of the information contained herein is your responsibility alone and Quantum Global Securities Ltd., its subsidiaries or its employees or associates will not be liable in any manner for the consequences of such action taken by you. We have exercised due diligence in checking the correctness and authenticity of the information contained in this recommendation, but Quantum Global Securities Ltd. or any of its subsidiaries or associates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this recommendation or any action taken on basis of this information.

Technical analysis studies market psychology, price patterns and volume levels. It is used to forecast future price and market movements. Technical analysis is complementary to fundamental analysis and news sources. The recommendations issued herewith might be contrary to recommendations issued by Quantum Global Securities Ltd. Ltd. in the company research undertaken as the recommendations stated in this report is derived purely from technical analysis. Quantum Global Securities Ltd. has based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Quantum Global Securities Ltd. makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. The opinions contained within the report are based upon publicly available information at the time of publication and are subject to change without notice. The information and any disclosures provided herein are in summary form and have been prepared for informational purposes. The recommendations and suggested price levels are intended purely for trading purposes. The recommendations are valid for the day of the report however trading trends and volumes might vary substantially on an intraday basis and the recommendations may be subject to change. The information and any disclosures provided herein may be considered confidential. Any use, distribution, modification, copying, forwarding or disclosure by any person is strictly prohibited. The information and any disclosures provided herein do not constitute a solicitation or offer to purchase or sell any security or other financial product or instrument. The current performance may be unaudited. Past performance does not guarantee future returns. There can be no assurance that investments will achieve any targeted rates of return, and there is no guarantee against the loss of your entire investment.

POTENTIAL CONFLICT OF INTEREST DISCLOSURE (as on date of report)Disclosure of interest statement – • Analyst interest of the stock /Instrument(s): - No. • Firm interest of the stock / Instrument (s): - No.


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