Equity Report Outlook|24 carat financial services | 4 September 2017
NIFTY:-
NIFTY SPOT :-
- Nifty closed the week on positive note gaining around 0.20%.
- The Nifty is expected to trade with a positive bias above 9850. Despite the adverse news flows on global front, the Nifty has been able to find support near 9700. However, the Put option writers are also active at 9800 and 9900 strikes. This shows the Nifty could consolidate above 9850 in coming days.
- Nifty have started with almost same open interest as seen in the start of last series. However, Nifty Bank open interest has declined 35% in comparison to the start of August series. This shows some skepticism among the market participants after the Nifty reached 10000 levels.
- We believe certain index heavyweights could support the Nifty. In the last series, a major setback was seen primarily from PSU banking stocks and select private banking stocks along with Infosys. As Infosys is stabilizing and PSU banking is trading near support, we expect the index to find support on declines. The index heavyweights like L&T and ITC, which are also trading near supports can see some pullback.
- Volatility has subsided since the panic seen in last month. If India VIX remains below 14 levels, the equity index is also expected to remain resilient.
- Nifty Bank closed the week on positive note gaining around 0.90%.
- last week that support for the index lies in the zone of 23800 to 23900 from where the index broke out of June-2017 highs and short term moving averages are lying. If the index manages to close below these levels then the index can drift to the levels of 23300 to 23400 where break out levels for the index is lying. During the week th index manages to hit a low of 23882 and close the week around the levels of 24274.
- The Nifty Bank index remained under pressure for the last few weeks and witnessed a stiff hurdle in the range of 24400-24500. Despite sharp selling in a few banking stocks, the index remained firm above the highest Put base of the last series and ended well above 24000.
- The index have started the September series with eight month low open interest base along with lower rollover cost as most positions were left for expiry settlement. We feel stock specific buying can be seen in private sector banks, which is likely to provide cushion to the index.
- As the index ended above 24200, Call writers shifted their positions to 24500 strike. As the weekly close is very much near these levels, a move above 24500 is likely to attract short covering, which will take the index towards 24700. On the Put side, 24200 strike premium has fallen nearly 50% with a sharp rise in OI indicating major support for the week. We feel the writers of these Put options will have an upper hands for the current weeK.
- The price performance trend (Nifty Bank) has been hovering near 2.46 in the past two or three weeks. We feel this ratio is likely to move towards 2.50 levels, which will further provide steam to banking stocks.
Gainers/Loser:-
Euro zone manufacturing PMI at 57.4 in August
August saw a strong and accelerated increase in euro zone
manufacturing production as robust demand and rising
employment underpinned a solid improvement in overall operating
conditions. The final IHS Markit Eurozone Manufacturing PMI
rose to 57.4, up from 56.6 in July and equalling June’s 74-month
high.
The PMI has remained above the 50.0 no-change mark for 50
successive months. The expansion was led by a strong core of
Germany, the Netherlands and Austria. PMI readings for Austria and the Netherlands both hit 78-month highs
while the rate of growth signalled for Germany was among the best registered since early-2011.
August saw the euro area manufacturing production rise at one of the fastest rates since April 2011, bettered
or equalled only by the expansions seen in May and June of this year. The trend in new order inflows also
improved, with the rate of expansion similarly among the best since early-2011.
Employment rose in all of the nations covered during August. The steepest increases were signalled in
Austria, the Netherlands and Germany. However, only Italy, Austria and Greece reported sharper rates of
expansion than in the prior month. Finally, the euro area manufacturers maintained a positive outlook for the
sector during August.
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