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Equity Research Report: Market Explorer

The US Federal Reserve bond-buying is a major source of liquidity in Indian equity market. Recently, Fed has taken step toward exiting its controversial bond-buying program and also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market. The next batch of Q3 December 2013 results, trend in Investment by FIIs, trend in global markets and the movement of rupee against the dollar will dictate the direction to near term.
07 Feb 2014 | 04:25 PM

Market Outlook

 

The US Federal Reserve bond-buying is a major source of liquidity in Indian equity market. Recently, Fed has taken step toward exiting its controversial bond-buying program and also signaled that it is likely to keep reducing its purchases in the coming months, citing a pickup in economic activity and improvement in the labor market. The next batch of Q3 December 2013 results, trend in Investment by FIIs, trend in global markets and the movement of rupee against the dollar will dictate the direction to near term. 

 

Investment Idea – Amara Raja Batteries Ltd.

 

CMP – ` 351 Target – ` 400

The demand in industrial segment is strong and growth in the replacement market augurs well for the company. Strong auto sales in earlier years should now support replacement demand for batteries. The company has big expansion plans and entering new verticals and geographies translating into   quicker growth. The DoT mandate about reduction of dependence on diesel also provides strong business opportunity in the telecom segment. Looking to the strong demand we expect that the company will continue to show its strong financial performance in the near future.

 

Technical Outlook for CNX Nifty

 

 

Market witnessed a sluggish start of the new calendar year as it lost nearly 3.5 percent in January month. Basically, lack of sustainability around the all-time high zone and continuous underperformance from global markets (especially US market) has been hurting sentiments. This month, we expect index to spend some time within broader consolidation range 5800-6300 zone but we’ll continue to find ample trading opportunities. So, it’s better to maintain stock specific approach but follow the short term trends within that range.

 

Technical Picks

Company Name

CMP (`)

SL (`)

TGT (`)

Marico Ltd.

219

205

250

Voltas Ltd.

114.85

102

135

 

 

Rollover Synopsis

 

The January expiry corrected by 3.3% shedding all the gains of December expiry to close below 6100 levels failing to cross the all-time high making a lower top in the current expiry. Total rollover of 79% (6m-avg 78%) and Nifty rollover was at 67% (6m-avg 63%).  The February futures traded at a premium of 30-35 points between the two months.

The sectors witnessing strong roll overs are Banking, Telecom, and Infrastructure sectors while weak rollovers were in FMCG, Oil-Gas, and Power sectors. Among the individual stock with high roll overs were Federal Bank, Mcdowell-N, McLeod Russell and IRB while stocks like GSK Consumer, Gail, UPL and NMDC had weak rollovers. 

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