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

Synopsis:

Indian equity markets witnessed a volatile session today as RBI kept credit policy unchanged and suggested food inflation risk to the headline inflation number. After RBI guidance that any change in monetary policy would be triggered by sustainable level in inflation, triggered buying in markets with Nifty breaching 8000 levels. But weak currency and global weakness weighed and Nifty soon erased all gains and hovered near 7950 mark. Power, metal and major private banks dragged the benchmark while FMCG, pharma and IT stocks traded in green. Nifty closed at 7964.80 defending 7950 level.

Indian Markets

Indian equity markets witnessed a volatile session today as RBI kept credit policy unchanged and suggested food inflation risk to the headline inflation number. After RBI guidance that any change in monetary policy would be triggered by sustainable level in inflation, triggered buying in markets with Nifty breaching 8000 levels. But weak currency and global weakness weighed and Nifty soon erased all gains and hovered near 7950 mark. Power, metal and major private banks dragged the benchmark while FMCG, pharma and IT stocks traded in green. Nifty closed at 7964.80 defending 7950 level. Rupee continued to depreciate today as USD rallied further with USD index rallying to 86.03 by 0.47%.

USD was strong against major world currencies and most Asian currencies were mixed against Dollar with USD showing strength. Month end demand from importers weighed on currency. On policy front RBI maintained a status quo which has minimum effect on Rupee. USDINR pair traded near its intraday high at 61.7350 as equity markets closed.

Other Asian Markets

Asian indices closed on the lower side as Hong Kong protests remained in focus. HSI dropped to three month low losing 1.28% while SSE gained 0.26%. Nikkei also lost 0.84% as Yen showed some strength against USD.KOPSI also closed lower as August industrial output disappointed markets.

Commodity Outlook:

Commodity Market was very volatile in the morning session. Gold and Silver Prices were cautious in the initial hours ahead of RBI monetary policy but slipped later as Equity Markets showed strength after good Inflation numbers in Europe. Crude Oil continued to show strength due to supply concerns in USA while Natural Gas Prices also gained due to warm temperature forecast in USA. Base Metals were mixed in the morning session. Aluminum showed strength due to strong Chinese demand while Copper prices were weak due to strong dollar and supply concerns

Evening outlook:

Gold and Silver Prices are expected to remain weak; Crude Oil and Natural Gas are expected to make gains while Base Metals could be steady in the evening session.

Stock Recommendations:

HUL – Buy at Rs.746.00(CMP); Target –Rs.754.00; Stop Loss –Rs.739.00

Cairn India Ltd –Buy at Rs.311.85(CMP); Target –Rs.315.00; Stop Loss – Rs.308.50

BPCL – Buy at Rs.655.40(CMP); Target –Rs.663.00; Stop Loss – Rs.649.00

Sectors Snapshot

Bank Nifty:Bank Nifty opened lower ahead of policy and gained momentum as RBI maintained status quo, but weak currency weighed on markets triggering profit booking at higher levels. Bank of India was top loser on index losing more than 3%.

CNX Energy: Energy index erased from yesterday’s losses and closed in green. The recovery was seen as Oil prices remained at lower levels. OMCs gained today with IOCL (4.92%)as top gainer on the index. Media reports suggested a cut in diesel and petrol prices soon.

CNX Pharma: Pharma index yet again witnessed buying as cyclical remained weak. Most stocks rallied with major stocks rallying. Sun Pharma and Ranbaxy rallied more than 2%.

CNX Media: Media index gained sturdily and witnessed buying interest in major stocks such as Zee, Eros and Sun TV. Other stocks were mixed with a positive bias. Eros was top gainer on the index while Zee lifted the index rising 3.54%.

India VIX: India VIX lost 1.79% after RBI Policy event.

Market Movers

Gainers

Zee Entertainment: The shares of the company were seen up by 3.54% as the company reported that they have completed the acquisition of certain businesses of group company Diligent Media Corp Ltd. It was the best performer amongst the Nifty constituents and closed at 314.15.

Losers

DLF: It was the worst hit among the Nifty constituents and fell by 4.71% to close at 150.85. The realty space was down as RBI left the rates unchanged and where DLF was the major loser. Also the company shares are a cautious buy as under scanner for alleged service tax evasion.

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