Morning Notes. Domestic Market View. LKP Advisory. 22-Dec-2015

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1 Morning Notes 22-Dec-2015 Indices 21-Dec 18-Dec % Chg. Major Indices 21-Dec 18-Dec % Chg. FII's & DII's in equity Rs.Crs S&P BSE SENSEX 25,736 25, % CAC 40 Index 4,565 4, % 21-Dec Buy Sell Net S&P CNX NIFTY 7,834 7, % DAX Index 10,498 10, % FII / FPI Investments NIFTY MIDCAP ,280 13, % Dow Jones Industrial A 17,252 17, % DII's Investments NIFTY SMALL 100 5,533 5, % FTSE 100 Index 6,035 6, % FII's contribution to the total turnover 31% Nasdaq Composite Ind 4,969 4, % DII's contribution to the total turnover 15% BSE Sectoral Indices NIFTY FMCG 20,135 19, % Major Asian Indices 21-Dec 18-Dec % Chg. FII's in Derivatives Rs.Crs NIFTY METAL 1,800 1, % Hong Kong 21,792 21, % 21-Dec Index Fut Index Opt Stock Fut Stock Opt NIFTY BANK 16,825 16, % Nikkei ,916 18, % Net NIFTY PSU BANK 2,942 2, % Korea 1,981 1, % OI NIFTY FIN SERVICE 6,976 6, % Shanghai 3,642 3, % Chg.OI -0.5% 2.6% 1.3% 4.2% NIFTY MEDIA 2,522 2, % Taiwan 8,282 8, % FIIs' contribution to the total Derivatives turnover 20% NIFTY REALTY % NIFTY AUTO 8,155 8, % Commodities (MCX) 21-Dec 18-Dec % Chg. Curr. Derivatives (NSE) 21-Dec 18-Dec % Chg. NIFTY CONSUMPTIO 3,556 3, % Aluminium (31DEC % USDINR 29-DEC % NIFTY IT 11,225 11, % Copper(29FEB2016) % EURINR 29-DEC % NIFTY INFRA 2,699 2, % Crude (19FEB2016) 2,477 2, % JPYINR 29-DEC % NIFTY ENERGY 8,344 8, % Gold (05FEB2016) 25,385 25, % DJIA ( ) % NIFTY PHARMA 11,557 11, % Silver (4MAR2016) 34,301 33, % S&P500 ( ) % Top Gainers Top Gainers Top Gainers Top Gainers BSE Smallcap BSE Midcap BSE 100 CNX Nifty Company LTP Chg % Chg Company LTP Chg % Chg ONGC SUNPHARMA Top Losers ICICIBANK GAIL POWERGRID HINDUNILVR IDEA ASIANPAINT M&M ULTRACEMCO Company LTP Chg % Chg Company LTP Chg % Chg HDIL SUNPHARMA Top Losers ICICIBANK TITAN ONGC GODREJCP POWERGRID GAIL SRTRANSFIN EICHERMOT Company LTP Chg % Chg Company LTP Chg % Chg ADANIPOWER TITAN Top Losers NATIONALUM MINDIA SJVN MRPL SRTRANSFIN BERGEPAINT RPOWER MPHASIS Company LTP Chg % Chg Company LTP Chg % Chg GUJNRECOKE GBFL Top Losers VIKASECO AMMLTD GUJNREDVR KSCL BODALCHEM VIVIDHA MONTECARLO HBLPOWER CNX Nifty BSE 100 BSE Midcap BSE Smallcap Domestic Market View Markets to make a flat-to-cautious start after the big rally The Indian markets posted remarkable rally in last session with benchmarks gaining around a percent. Today, the start is likely to be flat-to-cautious and markets may consolidate after the big rally. Meanwhile, former RBI Governor C Rangarajan has said that the proposed 1 percent additional tax on inter-state sales is against the spirit of Goods and Services Tax (GST) and that should not be implemented. Industry body Assocham has said that GST is critical for India to revive economy. However, as the disappointing winter session of Parliament will be concluding on Wednesday, the government hopes that the Congress and other Opposition parties would stand by their promise and help in passing of the pending Bills as there is no possibility of extension of Parliament as of now. The telecom sector is likely to be in action with the Telecom Regulatory Authority of India (TRAI) saying that it will come up with its recommendations on spectrum pricing for the next round of auction by mid-january. TRAI has floated a consultation paper on reference made by the government to suggest the base or floor price for all available airwaves for mobile services. \

2 Domestic Market Overview Markets enter the jubilation mood with the start of Christmas week A session after displaying a distressing performance, Indian benchmark indices managed to pull through a scintillating performance by vivaciously rallying about a percentage point on the first day of Christmas week, thanks to the hefty short covering in the beaten down Metal and Banking counters. Sentiments remained buoyant on hopes of government getting three critical bills passed through the parliament including bankruptcy code, legislations on setting up of commercial courts and amendments to the Arbitration and Conciliation Act. Some support also came with the government plans to award Rs 28,000 crore worth of highways development projects in the current fiscal under the newly conceived hybrid annuity model amid renewed interest among private firms. This will be the largest chunk of investment under public private partnership or PPP in the sector in any single year since The benchmark got off to a soft start as the indices showed signs of consolidation in early trade, with investors remaining worried on uncertainty over the GST Bill following the standoff between the government and the Congress. But the frontline indices slowly but steadily started gathering steam and surged by over half a percent by late morning trades. The bourses further capitalized on the momentum and spurted in afternoon trades on the back of broad based buying in undervalued stocks. The northbound journey only concluded with the close of the session helping the key gauges in recovering the ground lost in last trading session. Buying was seen across the board, with six of every 10 BSE stocks ending in the green for the day. Meanwhile, strong buying was witnessed in Telecom Services companies after the industry body COAI report that the GSM mobile subscribers base in the country increased by 9.69 million in November to reach million. Shares of Airline companies too remained in limelight on the report that domestic air traffic grew by nearly 25 per cent in November to 7.32 million passengers as compared to 5.82 million passengers in the same period last year. Global Market Overview Asian markets end mostly in green on Monday Asian equity markets ended mostly in green on Monday as Chinese shares climbed to the highest level in almost four weeks after the government took unprecedented measures to prop up equities and speculation grew policy makers will take more steps to bolster the economy. Hong Kong stocks were also firm, bolstered by Chinese companies, as strength in the Chinese equity market helped investors shrug off the gloom in US and European stocks in the wake of last week's post-fed rate hike rally. However, Japanese stocks edged down in thin trading after the yen gained against the dollar, putting pressure on exporters after the Bank of Japan disappointed markets with minor adjustments to its massive stimulus program. US markets closed higher; investors shrug off weak oil prices The US markets closed higher on Monday, as investors shrugged off weak oil prices. Advances in stocks come as oil prices continued to tumble and gas prices at the pump fell to below $2 for the first time since The main indexes gave up early gains after a harsh selloff in European markets and continued weakness in energy shares that were hit by falling oil futures. However, stocks rebounded in late trading, with telecoms and technology sectors leading gains. On the economy front, US economic growth in November remained below the historical trend rate for the second month in a row, according to update of the Chicago Fed National Activity Index. Revised data for the benchmark s three-month moving average slipped to a negative 0.20 reading last month - down slightly from in the previous month and the lowest since March. Although US economic activity decelerated in November, the current reading is still above the tipping point that marks the start of recessions.

3 Index Futures (OI in '000 Shares) Future Chg Spot Chg Prem / Total Open Interest 21-Dec (%) 21-Dec (%) Disc 21-Dec Chg (%) NIFTY 7, , , CNXIT 11, , BANKNIFTY 16, , , Increasing OI, Increasing Delivery Qty & Increasing Price in Stock Futures (Open Interest in '000 Shares) Symbol Total OI Del Qty Cash Market Prev Increase Spot Fut Spot Fut Prem / 21-Dec % Chg. 21-Dec % Del. % Del. Del Qty (Rs.) (Rs.) Chg (%.) Chg (%.) Disc TV18BRDCST 59,585 19% 7,034,703 27% 20% 3,124, % 7.0% 0.3 HDIL 20,778 6% 1,967,854 15% 11% 928, % 6.4% 0.3 TATACOMM 4,335 2% 76,775 28% 13% 36, % 1.1% 1.8 ADANIPOWER 68,360 2% 3,566,525 19% 30% 1,543, % 9.0% 0.1 VOLTAS 7,070 1% 1,287,030 46% 33% 563, % 0.9% -1.3 COLPAL 1,917 1% 207,026 66% 47% 127, % 0.6% -2.9 BANKBARODA 42,234 0% 1,645,995 33% 24% 208, % 0.3% 0.6 Increasing OI, Increasing Delivery Qty & Decreasing Price, (Open Interest in '000 Shares) Symbol Total OI Del Qty Cash Market Prev Increase in Spot Fut Spot Fut Prem / 21-Dec % Chg. 21-Dec % Del. % Del. Del Qty (Rs.) (Rs.) Chg (%.) Chg (%.) Disc KSCL 3,054 53% 608,366 20% 39% 336, % -8.9% 0.2 CADILAHC 5,135 6% 576,569 55% 49% 18, % -0.9% 1.2 SUNTV 8,704 4% 379,040 46% 36% 53, % -0.6% 1.6 PIDILITIND 780 4% 358,887 75% 48% 212, % 0.2% 1.8 SUNPHARMA 16,579 4% 5,531,787 45% 69% 2,692, % -4.8% 0.4 BATAINDIA 4,807 1% 190,359 56% 16% 158, % 0.6% PAGEIND 47 1% 22,925 28% 30% % -0.2% Open Interest Break-up (Rs. in Cr.) 21-Dec 18-Dec Change in OI % Chg INDEX FUTURES 20,045 20, INDEX OPTIONS 137, ,693 2, TOTAL INDEX 157, ,714 2, STOCK FUTURES 67,479 66, STOCK OPTIONS 20,763 20, TOTAL STOCKS 88,242 86,813 1, GRAND TOTAL 245, ,527 4, FII's 146, , Others 98,898 97,

4 Corporate News Cipla has unveiled generic tablets used for treating of hepatitis C under the brand name 'Hepcvir-L' costing Rs 25,000 for a bottle of 28 tablets in India. Hepcvir-L is the first once-a-day, fixed dose oral combination therapy that has been approved for chronic hepatitis C genotype 1 patient. The company's product is a generic version of the S-based drug maker Gilead Sciences Inc's Harvoni tablets. Clearwater Capital Partners Singapore Fund III has sold 3 lakh shares of Diamond Power Infrastructure through the open market route. The shares were sold on an average price of Rs valuing the transaction to Rs 1.28 crore. Reliance Communications (RCOM) has sold nearly 150 residential flats situated at Sea Woods complex in Navi Mumbai. The disposal marks the commencement of RCOM s monetization programme for surplus real estate owned by the Company. The sale consideration for the disposal of the flats at Navi Mumbai has been finalized at over Rs 330 crore. RCOM has already received more than 50% of the sale proceeds and the balance amount will be realized during the current financial year, upon completion of documentation, etc. presently underway. Simplex Projects has received a notice from one of its creditors intimating that he has filed a winding up petition before the High Court, Calcutta. However, the company has already initiated appropriate legal recourse in the matter. Strides Shasun has received approval for manufacturing generic version of Sofosbuvir 400 mg (Gilead s Sovaldi) from Drug Controller General of India, Government of India (DCGI). In September 2014, Strides entered into a licensing agreement with Gilead Sciences, Inc to bring Hepatitis C cure to 91 developing countries. The product will continue to be marketed under the brand name Virso in India and overseas. Thomas Cook (India) has signed a strategic partnership with ItzCash to extend its outreach to India's rapidly growing unbanked inward remittance market, by offering remittance services (Xpress Money & MoneyGram) across an extensive network of over touch points, pan India. Diamond Power Infrastructure has received an order for supply of 11 KV, 3 CX185 & 3CX120 HT XLPE Insulated Armoured Shielded PVC sheathed Power Cable from Jaipur Vidyut Vitran Nigam, vide award no JPD/SE (PROC)/SPO-I/TN -4522/D In line with company s growth strategy, Good Luck Steel Tubes has received approval from Research Design & Standards Organization (RDSO), Ministry of Railway, for fabrication and supply of SteelBridge Griders. MSR India has launched 'DR. Copper Thamra Jal, a packaged drinking water. The packaged drinking water industry in INDIA is estimated to be at Rs crore and MSR India wants to make its presence felt with introduction of its innovative product DR. Copper Thamra Jal. NHPC has resumed operations at its Sewa II power station in Jammu & Kashmir. Earlier, the company s Sewa-ll Power Station (120 MW) had been completely shut down for attending annual maintenance of machines/mivs for about 20 days with effect from December 07, Glenmark Pharmaceuticals and Glenmark Pharmaceuticals Inc., USA, have entered into a Settlement Agreement with Forest Laboratories, LLC, Forest Laboratories Holdings, and Royalty Pharma Collection Trust to settle and dismiss the outstanding patent litigation related to Glenmark s Abbreviated New Drug Application for Milnacipran Hydrochloride 12.5 milligram, 25 milligram, 50 milligram, and 100 milligram tablets, the generic version of Forest s Savella. Mindteck (India) has signed a memorandum of understanding (MoU) with Alafdaliyah Group at the India-Saudi Arabia Business Meet 2015 held on December 17th at Hotel Le Meridian in Bengaluru. Granules India s two facilities located in Vizag in Andhra Pradesh and Jeedimetla in Telangana have completed U.S. Food and Drug Administration (US FDA) inspection. There are no observations for Vizag facility and 3 observations for Jeedimetla facility. The Company will respond to the observations in 15 business days.

5 IVRCL has received its board s approval to split its engineering procurement construction (EPC) and assets - land and buildoperate-transfer (BOT) - businesses - to float two separate companies. The company felt that the spinning off of EPC business would enable investment by potential equity investors. 20 Microns has received an approval for the extension of mining lease, by the concerned Mining Authorities, for a further period up to June 24, 2033 of the Morus Calcite Mines situated at Sirohi in the state of Rajasthan. The board of directors at their meeting held on December 18, 2015 has taken the note of it. Eicher Motors two wheeler division Royal Enfield has resumed normal operations at its manufacturing plants in Chennai, where production activity was impacted due to heavy rains. Royal Enfield produces popular bikes like Bullet, Classic, Thunderbird and Continental GT at the two plants. Due to heavy rains and flooding in Chennai, Royal Enfield s production facilities in Thiruvottiyur and Oragadam were shut between the December 1 and 6. Reserve Bank of India (RBI) has allowed foreign institutional investors (FIIs) and registered foreign portfolio investors (RFPI) to buy up to 45% stake in Jubilant Life Sciences under the portfolio investment scheme. CES subsidiary CES USA Inc., has incorporated a subsidiary company in USA CES Enterprise LLC, which is controlled by CES USA Inc. The company had last month withdrawn its decision for subscription of 6,93,000 shares of Rs 10 each in CES Information Technologies, a subsidiary of the company. Kesoram Industries has received its board s approval to raise around Rs 650 crore through issue of securities. The board also approved disposal and transfer of the company s Spun Pipe and the Heavy Chemicals undertakings both located in West Bengal. Such disposal will be subject to receipt of such permissions and consents, if any, that may be required. Artech Power Products has received requisite statutory approval for commencing new business of buying, selling, importing, exporting and trading on retails as well as on wholesale basis of all types of goods, articles and commodities. The company s new Business activity is expected to commence from December 21, Avanti Feeds has executed a Business Transfer Agreement (BTA) with Avanti Frozen Foods on December 18, The company had entered into BTA for transfer of the Shrimp Processing Business to Avanti Frozen Foods on a slump sale basis, to be effective from November 01, 2015 for a lump sum consideration of Rs 128 crore..economy Indian economy to more than double to $5 trillion in 10 years: Jayant Sinha Minister of State for Finance Jayant Sinha has said that if 7 percent growth rate sustains for next 10 years, the size of the Indian economy will more than double to $5 trillion. India is going to go from $2 trillion economy to $4 trillion economy and further $5 trillion economy, if the rupee strengthens. He said That s going to happen; we just have to keep doing what we are doing. Sinha further added that About $4 trillion GDP per capita will roughly double to $3,500 from about $1,600 per capita at present. At $3,500, the country is solidly middle income. Commenting on the fiscal deficit target, Sinha said that we will meet the 3.9 percent target for current fiscal and 3.5 per cent for the next fiscal, adding that next year will be challenging because of implementation of the 7th Pay Commission and One Rank One Pension (OROP) and the two major factors viz agriculture and exports slowdown. Highlighting key legislations, Sinha said that the government is ready and prepared to introduce the bankruptcy legislation. If indeed the government is able to bring in the bankruptcy legislation, it will be the second best relative to getting GST. FDI focus to improve external finances, support rupee: Moody's Moody's Investors Service describing India s focus on Foreign direct Investment (FDI) as credit positive has said that the improvement in the external situation will also provide support to the rupee. Moody's Investors' Senior VP Rahul Ghosh has said

6 that improvement in India's external accounts in recent quarters, coupled with the country's growth out performance against major emerging markets, should provide a measure of support to capital inflows.and, by extension, the rupee. In the last month, the government has significantly liberalized the foreign direct investment (FDI) regime, putting most of the sectors on the automatic route. Ghosh further said that If recent changes in the policy successfully shift the composition of foreign capital inflows towards foreign direct investment, it would lower capital account volatility, a credit positive. In the mid-year economic analysis , the government said India's external position appears robust, with the current account deficit (CAD) at a comfortable 1.2 per cent of GDP. The net FDI inflows have grown to over $17 billion in April- September of the current fiscal from $15.8 billion in the same period last fiscal This is noteworthy against the background of uncertainty in other capital inflows. No service tax on payments to expats working in local arms of MNCs: AAR Authority for Advance Ruling (AAR) has notably said that Payments to expats working in India for local arms of multinationals by the foreign parent won't attract service tax. The decision is important as it brings some relief to MNCs that have been served with notices in similar cases. This followed a plea by North American Coal Corp. India, the local subsidiary of US-based North American Coal Corp. It sought a ruling on the application of service tax on social security benefits given by the parent to an employee working in India on contract. Authority for Advance Ruling said 'There shall be no liability to pay service tax on the salary and the allowances payable by the applicant to the employee in terms of the dual employment agreement and such salary will not be eligible to levy the service tax as per the provisions of the Finance Act. Recently, the tax authority was issuing notices to MNCs in a number of cases where an expat employee received payments from the parent in his home country. Their contention is that the practice of paying salaries for work in India that are then transferred to foreign accounts by the parent company and reimbursed to it by the Indian subsidiary make it akin to supply of manpower and therefore taxable. India witnesses significant macro-economic stability despite uncertain global condition: Jaitley Finance Minister Arun Jaitley highlighting that India is one of the fastest growing economies in the world, has said that in terms of low levels of inflation, fiscal deficit and current account deficit, Indian economy has witnessed significant improvement in the macroeconomic stability. Jaitley further said that at current point of time, the macroeconomic outcome in India is one of the consolidation of the economic recovery evidenced in recent years, adding that the outcome is creditable considering that the global economic situation continues to be uncertain transmitting negative spill-over s, because of which emerging markets and developing economies have in general, become more vulnerable and fragile. He also said that the current macroeconomic outcome is far superior to that in early when the situation was worrisome in terms of high current account and fiscal deficits with high inflation, high interest rates and low growth. He said that the Government continues to adhere to the path of fiscal consolidation, despite the pressing need for enhanced public investment to boost the economic growth and tough commitments on account of requirements of federal structure. Signalling that India is firmly on the path of economic revival, in the fiscal year , India clocked 7.3 per cent growth rate in Gross Domestic Product (GDP), higher than 6.9 per cent growth achieved in and 5.1 per cent in , showing that India is firmly on the path of economic revival. Mid-year economic analysis pegs GDP growth at 7-7.5% The mid-year economic analysis has came up with a somewhat soothing picture of the economy, highlighting that the Indian economy this fiscal was being powered by private consumption and government investment and that the economy was doing 'remarkably well. Though the mid-year economic analysis of , has lowered the forecast for GDP growth to per cent for the fiscal, against per cent growth projected in February this year. Nominal GDP growth is likely to be 8.2 percent for

7 FY as a whole. This estimate implies that nominal growth in the second half will be greater than that in the first half based on the likelihood that the fourth quarter will not witness severe expenditure cuts unlike in previous years. CPI inflation is likely to be within the RBI s target of about 6 percent. The latest GDP estimates suggest that real GDP in the first half of grew at 7.2 percent as compared to 7.5 percent in the first half of FY In contrast, nominal GDP growth declined substantially from 13.5 percent in H1 FY 2015 to 7.4 percent in H1 FY The mid-year analysis has said that decline in nominal GDP growth relative to the budget assumption will pose a challenge for meeting the fiscal deficit target of 3.9 per cent of GDP. Slower-than-anticipated nominal GDP growth (8.2 percent versus budget estimate of 11.5) will itself raise the deficit target by 0.2 percent of GDP. However, it said that tax collections have been buoyant. That plus the additional revenue measures (the Swachh Bharat cess and recent increases in excise) will ensure that central government's target will be met. Inflation has continued to moderate steadily. Consumer price inflation (measured by the CPI-NS) has declined from 5.4 percent in February 2015 to 5 percent in October The WPI has been in negative territory for 12 months since November 2014 and is at (-) 3.8 percent in October It further said that the outlook for inflation would of course depend on international prices and the state of domestic demand. ource: Reuters, Ace Equity & LKP Research

8 Tech View CNX Nifty Technical View As mentioned in earlier report Nifty was seen taking support near 7720 levels and witnessed a strong bounce closing near high point of the day. However, it is now trading near the immediate resistance of 7850 which if crossed can lead to further rise till levels. The immediate supports are seen at 7750 levels. Nifty is expected to open on flat note and may test 7850 levels which if not held can lead to an intraday fall till 7800 levels. IMPORTANT LEVELS FOR THE DAY Support BSE NSE BANKNIFTY S1 25, S2 25, Resistance R1 25, R2 26, Pivot 25,636 7,803 16,751

9 Tech View PIVOT POINTS Scrip Name CMP RB2 RB1 PP SB1 SB2 Scrip Name CMP RB2 RB1 PP SB1 SB2 ACC GAIL ADANIENT GLENMARK ADANIPORTS GMRINFRA ADANIPOWER GODREJIND ALBK GRASIM AMBUJACEM HAVELLS ANDHRABANK HCLTECH APOLLOHOSP HDFC APOLLOTYRE HDFCBANK ARVIND HDIL ASHOKLEY HEROMOTOCO ASIANPAINT HEXAWARE AUROPHARMA HINDALCO AXISBANK HINDPETRO BAJAJ-AUTO HINDUNILVR BANKBARODA HINDZINC BANKINDIA IBREALEST BATAINDIA ICICIBANK BHARATFORG IDBI BHARTIARTL IDEA BHEL IDFC BIOCON IFCI BPCL IGL CAIRN INDIACEM CANBK INDUSINDBK CENTURYTEX INFY CESC IOB CIPLA IOC COALINDIA IRB COLPAL ITC CROMPGREAV JINDALSTEL DABUR JISLJALEQS DISHTV JPASSOCIAT DIVISLAB JPPOWER DLF JSWENERGY DRREDDY JSWSTEEL EXIDEIND JUBLFOOD FEDERALBNK JUSTDIAL

10 Tech View Scrip Name CMP RB2 RB1 PP SB1 SB2 Scrip Name CMP RB2 RB1 PP SB1 SB2 KOTAKBANK TATACHEM KTKBANK TATACOMM L&TFH TATAGLOBAL LICHSGFIN TATAMOTORS LT TATAMTRDVR LUPIN TATAPOWER M&M TATASTEEL M&MFIN TCS MARUTI TECHM MCDOWELL-N TITAN MCLEODRUSS UBL MRF UCOBANK NHPC ULTRACEMCO NMDC UNIONBANK NTPC UNITECH OFSS UPL ONGC VOLTAS ORIENTBANK WIPRO PETRONET YESBANK PFC ZEEL PNB POWERGRID PTC RCOM RECLTD RELCAPITAL RELIANCE RELINFRA RPOWER SAIL SBIN SIEMENS SRTRANSFIN SUNPHARMA SUNTV SYNDIBANK

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