Upcoming Month Nifty Movement

Shield Research

Monthly Report01st Marchto31st March 2018.

Upcoming Month Nifty Movement:

Nifty closed the month on negative note, broke its major support level and made low 10276, also gave closing near previous major breakout at 10490 (closed at 10492.85). AlthoughThe Union Budget which is expected to unveil steps to boost agriculture and announce farmer centric measures is not likely to lift the market on a large scale since market valuations are quite rich.

With implementation of GST, significance of budget has further reduced as tinkering with indirect taxation has mostly gone of the ambit of budget.

Last year, the Sensex rose 486 points higher to close at three-month high of 28,142 level after FM Arun Jaitley presented Union Budget on February 1. Financial and realty stocks powered the show. Markets welcomed the budgetary proposals of infusing Rs 10,000 crore in public sector banks and keeping long-term (LTCG) and short-term capital gains tax (STCG) unchanged for the capital market.

But this year, the market movement could be quite different.Sensex, Nifty may also take cues from global markets on February 1 if the Budget does not deliver positive news similar to last year.

The government will change the base year to 2017-18 for the calculation of GDP and IIP numbers while for retail inflation the year will be revised to 2018.

Markets continue to remain volatile after rising US government bond yields triggered global sell off. BSE Sensex has lost over 2040 points since the budget day. The markets have reacted negatively to the introduction of long term capital gains tax in Union Budget 2018. The impact is visible across all market sectors with all 19 BSE Sectoral indices declining since the budget day opening.

Capital goods index lost over 7 per cent since the budget day opening due to increase in customs duty which will affect the imports of capital goods industries. The index market cap went down from Rs 5.72 lakh crores to Rs 5.41 lakh crores between 31 January 2018 and 9 February 2018, eroding over Rs 30000 crores of investor’s wealth.

Bankex lost 6.7 per cent. Lack of adequate incentives to the banking sector in the Union Budget led to the selloff. Looking at the market cap of BSE Bankex, the investors wealth worth Rs 1.15 lakh crores was eroded between 31 January 2018 and 9 February 2018. The biggest losers are Punjab National Bank (-8.1 per cent), HDFC Bank (-6.3 per cent) and The Federal Bank (-6.2 per cent) between 1 Feb 2018 (opening) and 8 Feb 2018.

The Consumer durables index tanked over 5.8 per cent since the budget day opening and its market cap is eroded by Rs 11,282 crores. 8 out of the 10 stocks declined between budget day opening and 8 February 2018. The biggest loser is PC Jeweller that lost over 20% in the 6 trading days followed by Titan Industries (-7.97 per cent) and Symphony (-5.6 per cent). The two stocks that gained in the Index are Bajaj Electricals (4.5 per cent) and VIP Industries (3.4 per cent).

Market players in the realty sector were disappointed as the Finance Minister ignored sector demands on concessional GST, stamp duty regularization and change in capital gain tax window on REIT. In addition, RBI's decision to hold rates further dampened sentiments in the realty sector. The realty index declined by 5.3 per cent between budget day opening and 9 Feb 2018. Its market cap declined by over Rs 7100 crores since 31 January 2018. The biggest three losers are Unitech (-11.4 per cent), Oberoi Realty (-10.7 per cent) and Housing Development & Infrastructure(-10.2 per cent).

The healthcare scheme announced in the Budget will be a "game changer" for India’s health industry and generate substantial growth in insurers premiums, S&P Global Ratings said on 12 Feb. The insurance sector is slated to get a boost once the NHPS scheme is implemented as it reflects the government’s intent to expand the countries protection umbrella, and could have far-reaching implications for the domestic insurance sector, it said. "We believe the proposal has the potential to be a game changer for the health industry based on its sheer coverage size and scope," S&P said. "An effectively executed National Health Protection Scheme (NHPS) will bring coverage to 40 per cent of the population and generate substantial growth in health insurer’s premiums and increased cross-selling opportunities," it added.

The scheme, which would be the world’s largest government healthcare programme, was announced earlier this month in the Union Budget 2018-19 for providing medical cover of up to Rs 5 lakh to over 10 crore poor and vulnerable families, constituting 40 per cent of India’s total population.

The Fugitive Economic Offenders Bill 2017, which was approved by the Union Cabinet on Friday (02 March 2018), is expected to dominate the list of bills to be tabled in the parliamentfollowing the Nirav Modi-PNB multi-crore fraud.

The Bill aims to stop economic offenders who flee overseas to avoid getting caught in financial frauds or offences. The Bill was first mentioned by Finance Minister Arun Jaitley in his Budget speech in 2017-18 and is applicable for offenders against whom an arrest warrant has been issued for a scheduled offence.

MONTHLY INDEX LEVELS:

Nifty / CMP / Pivot Point / Support1 / Support2 / Support3 / Resistance1 / Resistance2 / Resistance3
10492.85 / 10628 / 10140 / 9788 / 8947 / 10981 / 11470 / 12311

Apollo Tyres on Tuesday reported 17% decline in consolidated net profit at Rs245.29 crore for the quarter ended 31 December 2017.

The company had posted a net profit of Rs295.69 crore during the October-December period of previous fiscal, Apollo Tyres said in a regulatory filing. Total revenue during the quarter under review stood at Rs4,096.44 crore. It was Rs3,740.77 crore in the corresponding period of previous fiscal.

Almost all the automakers posted a healthy vehicle sales figures for the month of February 2018 on Thursday with India’s top-notch car and bike manufacturing giantsMaruti Suzuki,TataMotors, Hero MotoCorp, Bajaj-Auto,Mahindra& Mahindra, TVS Motors, Eicher Motors reporting double-digit growth. Following the diverse sales, shares of all the listed automakers and auto ancillary companies ended mixed with the stock of Eicher Motors, Eicher Motors rising the most while, on the other hand, shares of Motherson Sumi Systems, Bharat Forge, MRF being the major laggards.

Shares of the Royal Enfield-maker Eicher Motors surged 1.96% to a day’s high of Rs 27960.5 before settling up 1.14% at Rs 27734.85 and the stock of battery-maker Exide Industries closed 0.87% higher at Rs 209. Shares of the major auto-ancillary company and the market capitalisation leader Motherson Sumi Systems slumped 2.97% to end at Rs 319.85 on BSE.

Shares of the automakers and auto part manufacturers settled flat including Maruti Suzuki (up 0.03%), Tata Motors (up 0.18%), Mahindra & Mahindra (up 0.58%), Bajaj-Auto (up 0.21%), Cummins India (up 0.72%), Ashok Leyland (down 0.39%), Hero MotoCorp (down 0.59%), TVS Motors (0.62%), Bosch (down 0.07%), MRF (down 0.74%) and Bharat Forge (down 0.83%).

IndiGo, India’s largest airline, has become the world’s second most expensive aviation stock. The company, with the lowest turnover among the world’s top 20 airlines, is now trading at 19 times its FY18 estimated PE.

Upcoming Week Bank Nifty Movement:

Bank Nifty also opened upside at 27430, took resistance major level and made high 27661. While downside took support 30 dema in weekly chart, closed above major resistance and pattern breakout 25000 (closed at 25170). Bank nifty break the major level 25000 but could not sustain below these levels & bounce back.

State-run Punjab National Bank (PNB) dropped a bombshell on 14 Feb 2018 with the disclosure that it has detected some "fraudulent and unauthorized" transactions worth Rs 11,300 crore at one of its branches in Mumbai.

The Department of Financial Services has asked all public sector banks to detect bank frauds and consequential wilful defaults in 15 days and refer cases to the Central Bureau of Investigation. The department has said all the non-performing assets above Rs 50 crore will be examined for possible fraud.

The banking sector took a hit after Punjab National Bank informed the exchanges on 14th February 2018 that it detected some unauthorized and fraudulent transactions worth $1.77 billion or Rs 11400 crores. 34 of the 39 listed banks' share prices fell between February 12 and February 15. The sudden volatility in the prices eroded the market cap of these 34 stocks by over Rs 36,380 crores. Benchmark BSE Bankex lost 1.2 per cent. PNB eroded investor’s wealth worth Rs 8,077 crores and its stock tanked 20.6 per cent between February 12 and February 15 2018. The share price loss widened to 25 per cent till 12 pm intra-day today. The value of PNBs fraudulent transactions are nearly 50 times the bank's Q3FY18 net profit of Rs 230.11 crores.

There are four banks that have been directly affected by such unauthorised transactions as they have offered credit based on the LoUs issued by PNB. These banks are Union Bank of India, Allahabad Bank, Axis Bank and SBI.

Although PNB managing director and chief executive Sunil Mehta had said the bank would honour all bona fide commitments under the LoUs, there are reports about some disputes between PNB and other lenders on repayment. While PNB is trying to make out that the LOUs are fraudulent as they were sent on the SWIFT system without putting it on the core banking server of PNB.

However, other banks such as SBI, Allahabad Bank and UCO Bank and Axis Bank are of the view that any bank guarantee that comes through to them on the SWIFT system from PNB is valid. According to them any short circuiting of norms is an internal problem for PNB. Interestingly, Mehta and a former PNB chief, Usha Ananthasubramanian have also been questioned by the CBI in connection with the mega fraud.

Country's largest lender State Bank of India on 01 March 2018 raised themarginal cost of funds-based lending rate (MCLR) for one year by 20 basis points to 8.15 per cent from 7.95 per cent.

The new MCLR or the minimum lending rate will be effective from March 1, 2018. The hike in lending interest rates comes a day after SBI hiked deposit rates across maturities.

This is the first time a bank has raised the benchmark lending rate after the MCLR system came into effect in April 2016. The MCLR system replaced the base rate from April 1, 2016.

Banks are likely to raise interest rates to increase their profitability. Indian banks reeling under gross non-performing assets worth Rs 7.34 lakh crore by the end of second quarter this fiscal have been asked by the RBI to raise provisioning on the loans.

The banks have no option but to raise lending rates to insulate their profitability against the provisioning of bad loans.

Another reason why lending rates are likely to rise is the increase in bond yields of the Indian government. The 10 year bond yield currently stands at 7.74% compared to 6.50 percent as on July 2017, up 124 basis points.Banks bear the burden of high bond yields, which leads to a fall in their profitability.The revised one-year MCLR comes as dampener for home loan borrowers as EMIs are likely to up.

The Icici bank is expected to soon start handling post-auction settlement for the Rs 8,000-crore-a-year tea auction business at all centers.The exposure of Indian banks in the alleged fraud involving jeweller Nirav Modi, his relatives and associated companies may touch Rs 20,000 crore, said bankers and government officials, almost twice the initial estimate. The amount cited above would include bonafide credit to related firms that now risks being classified as bad debt given that the promoters have been accused of fraud.

MONTHLY INDEX LEVELS:

Bank Nifty / CMP / Pivot Point / Support1 / Support2 / Support3 / Resistance1 / Resistance2 / Resistance3
25170.05 / 25810 / 23959 / 22749 / 19688 / 27020 / 28871 / 31932

Bank Nifty, on the other hand, continues to remain the pain point as the index has closed below the 200-DMA levels. The weight of the evidence conveys that heavyweights like Axis Bank, ICICI Bank, Yes Bank continue to show weakness. In addition, the index has also witnessed the 21-DMA crossing the 100-DMA with negative bias further adding weakness.

Technical Movement:

Apollo Tyre Limited: -

Apollo Tyre Limited: -

Trend of the stock is highly bullish, it took support previous breakout and major level 270, gave strong closing at pattern breakout at 272ifit sustains above 244one can go for buying with stop lossat 227for the targets of258-275Trend of the stock is up in weeklychart and strategy advised is buy on dips.

Bharat ForgLimited:-

Technical Movement:

Bharat Forg Limited:-

The stock is giving weeklyresistancebreakout 746.70 (Made high 802.50) &gave strong closing near weekly high at 794.15,also took support previous breakout in weekly chart.Next week If it sustains above 700one can go for buying with stop loss at 643for the targets of 740-790, Trend of the stock is up in dailychart and strategy advised is buy on dips.

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