Comments on the Market by Mr. Kiran Kumar Kavikondala, Director & CEO, WealthRays Securities

Synopsis:

Indian equity markets witnessed a weak session as global weakness continued. IMF upgraded India's GDP forecast for FY15 to 5.6% from earlier 5.4%. This provided little support to equity markets. Rupee also remained unchanged with FII outflows continuing. Global cues remained weak with European markets opening in red and Asian markets closing in negative after a choppy session. Major IT and Pharma stocks saw profit booking and dragged the index while metal, capital goods and banking stocks supported the index. Nifty closed below 7850 mark in a choppy session. USDINR opened slightly lower at 61.39 and remained in a narrow range of 2 paisa. FOMC minutes were in focus which will provide cues for further strength in USD. Most of the Asian currencies were mixed today against Dollar. USD Index was flat and saw a pause in Dollar rally. Equity markets also traded with negative bias and a FII outflow continued from capital markets no further cues were present for Rupee to register strong gains. USDINR pair is seen a range of 61 to 61.5 for coming week.

Indian Markets

Indian equity markets witnessed a weak session as global weakness continued. IMF upgraded India’s GDP forecast for FY15 to 5.6% from earlier 5.4%. This provided little support to equity markets. Rupee also remained unchanged with FII outflows continuing. Global cues remained weak with European markets opening in red and Asian markets closing in negative after a choppy session. Major IT and Pharma stocks saw profit booking and dragged the index while metal, capital goods and banking stocks supported the index. Nifty closed below 7850 mark in a choppy session. USDINR opened slightly lower at 61.39 and remained in a narrow range of 2 paisa. FOMC minutes were in focus which will provide cues for further strength in USD. Most of the Asian currencies were mixed today against Dollar. USD Index was flat and saw a pause in Dollar rally. Equity markets also traded with negative bias and a FII outflow continued from capital markets no further cues were present for Rupee to register strong gains. USDINR pair is seen a range of 61 to 61.5 for coming week.

Other Asian Markets

Most Asian indices closed in red tracking weakness and sell off from US markets in previous session. SSE closed higher by 0.8% after witnessing weakness in initial hour of the trade. August Current account surplus for Japan came better than expected which provided strength to Yen and Nikkei closed down by 0.68%.

Commodity Outlook:

Commodity Market showed good volatility in the morning session. Gold and Silver Prices made some gains as Global sell off in Equity Markets increased the significance of safe haven bid for Gold and Silver. Crude Oil continued to dip in the morning session due to ample global supply and sluggish demand. Natural Gas traded weak in the morning session but fundamentals still remain strong for the commodity. Base Metals showed some strength in the morning session. Zinc showed positive movement fuelled by Global demand and Copper prices remained weak on strong dollar.

Evening outlook:

Gold and Silver are expected to remain strong on weak Equity Markets; Crude Oil could continue to fall while Natural Gas is expected to make gains; Base Metals are expected to be steady in the Evening session

Stock Recommendations:

IOCL – Buy at Rs.382.00(CMP); Target - Rs.386.00; Stop Loss – Rs.378.00

ICICI Bank–Buy at Rs.1448.55(CMP); Target - Rs.1465.00; Stop Loss – Rs.1435.00

Cipla– Sell at Rs.585.65(CMP); Target - Rs.579.00; Stop Loss – Rs.591.50

Sectors Snapshot

Bank Nifty: Bank Nifty recovered after weakness in previous sessions. Private Banks showed strength ahead of IIP and CPI data while PSBs also registered gains. SBI gained 1.9% while ICICI gained 1.32% lifting the index by 163.75 points.

CNX Energy: Energy index also recovered losses from previous sessions. IOCL was the top gainer on the index after news of its JV with HPCL. IOCL gained 6.85%. Most OMCs were strong today as global oil prices fell further. Overall breadth remained positive on the index.

CNX Pharma: Defensive pharma stocks major profit booking today as investors exited the stocks. The selloff in pharma index was led by all major stocks. Majors like Dr. Reddy, Sun pharma, Ranbaxy fell close to 4%. Cipla closed down by 2.75%.

CNX Media: Media index gained in second half of the session. Gains were led by all major stocks like Sun TV, ZEE Entertainment and Network 18 while other constituents traded with negative bias.

India VIX: VIX lost 2.42% as markets were in a range.

Market Movers

Gainers

DLF: The shares of the company were seen up in today's session on account of buying at lower levels after it hit 3 month low. DLF has moved the case regarding scrapping of 350 acres Gurgaon land allotment to SC. The shares were up by 5.12% to close at 148.85.

Losers

Infosys: The shares of the company were down after Citigroup Global Markets downgraded the shares of Infosys, Tech Mahindra and Mind Tree as the companies have outperformed in past two years and only limited upside is seen. It was the worst hit amongst Nifty constituents falling 4.73% to close at 3650.15.