24/02/2019
*Weekly Outlook for Indian Stock Market (25 Feb to 1-Mar)*::
{Spare your 5 Minutes and Must Read}
Volatility marked the proceedings on Dalal Street throughout last week, as headline indices Sensex and Nifty swung between gains and losses as investors remained wary about the Indo-Pak tension and political uncertainty in the run-up to general election.
However, there was a gradual ebb in volatility by the end of the week, as volatility gauge India VIX, fell some 3.75 per cent to end at 15.45 on Friday.
During the week, Sensex broke its nine-day losing streak, its longest in almost eight years. On a weekly basis, the 30-share index inched up marginally by 63 points, or 0.17 per cent. NSE’s Nifty50 climbed 67 points, or 0.63 per cent.
*Key support and resistance level*::
*NIFTY*
Nifty closed at 10,791.65 on February 22. The key support level is placed at 10,620, followed by 10,580. If the index starts moving upward, key resistance levels to watch out are 10,820 and then 10,950-11,100.
*Nifty Bank*
The Nifty Bank index closed at 26,867.55, down 184.85 points on February 22. The important level, which will act as crucial support for the index, is placed at 26,750, followed by 26,600. On the upside, key resistance levels are placed at 27,100, followed by 27,550.
*Going into a new week, F&O expiry, outcome of the US-China trade talks and some key macroeconomic numbers will decide the course for the market*.
*Call options data*
Maximum Call open interest (OI) of 41.10 lakh contracts was seen at the 11,000 strike price. This will act as a crucial resistance level for the February series.
This was followed by the 10,900 strike price, which now holds 29.17 lakh contracts in open interest, and 10,800, which has accumulated 28.40 lakh contracts in open interest.
Significant Call writing was seen at the strike price of 10,800, which added 1.74 lakh contracts, followed by 11,100 strike that added 1.22 lakh contracts and 11,200 strike that added 1.08 lakh contracts.
Call unwinding was seen at the strike price of 10,700 that shed 1.92 lakh contracts, followed by 10,600 strike that shed 0.31 lakh contracts and 10,500 strike that shed 0.25 lakh contracts.
*Put options data*
Maximum Put open interest of 35.78 lakh contracts was seen at the 10,700 strike price. This will act as a crucial support level for the February series.
This was followed by the 10,400 strike price, which now holds 30.69 lakh contracts in open interest, and the 10,500 strike price, which has now accumulated 27.81 lakh contracts in open interest.
Put writing was seen at the strike price of 10,800 which added 2.74 lakh contracts, followed by 10,700 strike that added 0.46 lakh contracts and 10,900 strike that added 0.27 lakh contracts.
Put unwinding was seen at the strike price of 10,600 that shed 3.63 lakh contracts, followed by 10,300 strike that shed 1.6 lakh contracts.
*FII & DII data*
Foreign Institutional Investors (FIIs) bought shares worth Rs 6,311.01 crore and Domestic Institutional Investors purchased Rs 838.88 crore worth of shares in the Indian equity market on February 22, as per provisional data available on the NSE.
*Highlights*
• All eyes will be on India's third quarter GDP numbers to be released on Thursday.
• Fiscal deficit and infrastructure output numbers for January will also be released on Thursday.
• Market may witness increased volatility as February series futures & options contracts expire on Thursday.
• Development in US-China trade talks will be keenly observed by market.
*US-China talks*:-
Offering big relief to markets across the globe, the ongoing US-China trade talks sending out some positive signals. US President Donald Trump's optimistic tone is expected to bolster market mood. Media reports suggested the US might extend the deadline to raise tariffs and Trump and his Chinese counterpart Xi Jinping may meet next month to ink an amicable trade agreement.
*GDP numbers*:-
All eyes will be on India's third quarter GDP numbers to be released on Thursday, February 28. India's growth this financial year is projected at 7.2 per cent. GDP expanded at 8 per cent, 8.2 per cent and 7.2 per in the previous three years. According to a Niti Aayog, while the world GDP growth would be 3.7 per cent in 2018-19, India is likely long 7.2 per cent growth. The median estimate for seven emerging market economies (Brazil, China, Indonesia, Philippines, Russia, South Africa and Turkey) is 3.5 per cent.
*Infrastructure output, fiscal deficit data*:-
Fiscal deficit and infrastructure output numbers for January will be released on Thursday. Both are major macroeconomic indicators which can say a lot about the health of the economy and its prospects in the near future. The growth of India’s infrastructure industries slowed to an 18-month low in December, as coal, crude and fertilisers sectors proved a drag. Fiscal deficit narrowed in December but still stood at 112.4 per cent of the budget estimate of Rs 6.24 lakh crore for 2018-19.
*Political landscape*:-
General elections are expected to take place in April-May. There are speculations that the Election Commission of India may announce election dates in the first week of March. Financial markets hate political and economic instability and cannot keep aloof from political developments ahead of a key election. Talks of alliances and projections possible outcome will continues to sway the market in the weeks ahead.
*Crude oil*:-
Crude oil prices have been on an upward trajectory again amid tight supply from Opec and its allies. Moreover, hopes of a trade deal between the US and China have also boosted oil prices, which touched their highest since mid-November on Friday. Oil prices have a direct relation with India’s fiscal math, as the nation is a major importer of crude oil. The domestic market may see some capital outflow if the rise in crude oil prices continues.
*Bulk Deals on February 22*:-
*IndInfravit Trust*: Omers Infrastructure Asia Holdings Pte Ltd bought 8,28,00,000 shares of the company at Rs 104.5 per share on the NSE. However, ICICI Prudential Mutual Fund (1,00,00,000 shares), L&T Transportation Infrastructure Limited (26,00,000 shares), Larsen & Toubro Limited (6,62,00,000 shares) and Yes Bank (26,00,000 shares) were net sellers at same price.
*Kotak Mahindra Bank*: ING Mauritius Investments I sold 2,92,26,738 shares of the bank at Rs 1,228.51 per share and bought the same number of shares at Rs 1,225.14 per share.
*Nagarjuna Oil Refinery*: Zuari Investments sold 25,24,278 shares of the company at 38 paise per share.
*Refex Industries*: Sheil Atulbhai Patel sold 90,000 shares of the company at Rs 27.5 per share.
*Reliance Communications*: STCI Finance Limited sold 2,60,00,000 shares of the company at Rs 6.75 per share.
*Sanco Industries*: Ajay Kumar Bokadia sold 98,100 shares of the company at Rs 13.90 per share.
*Silver Touch Techno*: Thakkar Keyur Balkrishna HUF purchased 72,000 shares of the company at Rs 122.05 per share.
*Sintercom India*: Pivotal Enterprises Private Limited sold 1,64,000 shares of the company at Rs 58.92 per share.
*Analyst or Board Meet/Briefings*:-
*Som Distilleries & Breweries*: Board meeting is scheduled on March 2 to consider allotment of 12,88,906 equity shares upon conversion of an equal number of convertible warrants and to convey an EGM on March 26.
*Zeal Aqua*: Company's officials will be meeting Trust Capital, M3 Investments and Moneybee Securities on February 25 in Mumbai.
*KNR Constructions*: Company will be participating in HDFC Infra Day conducted by HDFC Securities on February 25 in Mumbai.
*Power Grid Corporation*: Board meeting scheduled on March 7 to consider and approve the declaration of interim dividend for the financial year 2018-19.
*Pacific Industries*: Board meeting is scheduled on February 27 to consider the rights issue of equity shares to the existing shareholders of the company.
*Ashoka Buildcon*: Company will be attending the Investors Conference organised by HDFC Securities on February 25 in Mumbai.
*PNC Infratech*: Company will be attending the Investors Conference organised by HDFC Securities on February 25 in Mumbai.
*JMC Projects*: Company will be attending the Investors Conference organised by HDFC Securities on February 25 in Mumbai.
*Stocks in news*:-
Results on February 25:
1. JMT Auto
2. Khaitan India
3. Rollatainers
4. United Drilling Tools.
*NBFCs*: RBI to merge 3 categories of NBFCs to create a new category called NBFC-ICC.
*Motilal Oswal, IIFL Holdings*:
SEBI declares commodity arms of Motilal Oswal, IIFL 'not fit and proper'. IIFL Holdings clarification: SEBI order on IIFL Commodities has no impact on businesses of other companies of IIFL Group.
Motilal Oswal Financial Services clarification: SEBI order against subsidiary company Motilal Oswal Commodities Broker Private Limited will have no impact on overall business activities of companies of Motilal Oswal group.
*NTPC*: Nabinagar Thermal Power Project has been declared running commercial operation.
Sharon Bio-Medicine: API facility located at Taloja, Maharashtra received 4 Form 483 observations after the inspection completed by USFDA
*Corporation Bank*: Company received Rs 9,086 crore from Government of India.
*Hubtown*: Company divested and transferred its entire holding of 4,720 equity shares in its subsidiary Heet Builders.
*Tulive Developers*: Board approved the buyback of up to 4,80,000 equity shares of the company at a price of Rs 350 per equity share.
Vyapar Industries*: Board approved the buyback of up to 15,30,000 equity shares of the company at a price of Rs 29 per equity share.
*Jet Airways*: An additional two aircrafts have been grounded due to non-payment of amount outstanding to lessors under their respective lease agreements.
*GVK Power & Infrastructure*: Equity shareholding of the GVK Group will increase to 64 percent from the existing 50.5 percent of the total paid-up share capital of Mumbai International Airport Limited after the acquisition of 13.5 percent stake from Bid Services Division (Mauritius).
*Shakti Pumps*: Akhilesh Maru tendered his resignation from the post of Chief Financial Officer as he is looking to start his own enterprise.
*Adani Green Energy*: Company awarded 150 MWac solar power project to its wholly-owned subsidiaries.
*Adani Power*: Board approved the proposal for acquisition of entire stake of Adani Power Dahej Limited; Adani Pench Power Limited; and Kutchh Power Generation Limited, which are wholly owned subsidiaries of Adani Enterprises (AEL) from AEL.
*Adani Ports & Special Economic Zone*: Subsidiary Adani Logistics approved the proposal for acquisition of 100 percent equity shares of Adani Agri Logistics Limited, Adani Agri Logistics (Dahod) Limited, Adani Agri Logistics (Darbhanga) Limited and Adani Agri Logistics (Samastipur) Limited from Adani Enterprises Limited.
*Sandhar Technologies*: India Ratings and Research assigned a rating of A1+ to company's commercial paper.
*Lux Industries*: Company incorporated subsidiary Altai Industries Private Limited.
*Manappuram Finance*: Board approved equity infusion up to Rs 100 crore in its subsidiary Asirvad Micro Finance Ltd.
*Seven stocks under ban period on NSE*:-
Securities in ban period for the next day's trade under the F&O segment include companies in which the security has crossed 95 percent of the market-wide position limit.
For February 25:-
1. Adani Enterprises
2. Adani Power
3. Allahabad Bank
4. IDBI Bank
5. Jet Airways
6. PC Jeweller
7. Reliance Power - are present in this list
*Boost to real estate sector, slashes tax rate on under-construction residential properties*:
GST Council headed by Finance minister Arun Jaitley approved the proposal of 5 percent tax on normal residential properties and 1 percent for affordable housing.
Ahead of the Lok Sabha elections, the Goods and Services Tax (GST) Council on February 24 slashed tax rate on under-construction residential properties, making the effective tax rate 5 percent for the normal category and 1 percent for the affordable housing category. In both cases, builders will not be able to claim the input tax credit (ITC).
The new rate will be applicable from April 1, 2019.
The decision is expected to boost demand and increase sales of under-construction properties as well as simplify tax structure and compliance for builders. The move is also in line with the government’s vision of ‘Housing for all by 2022’.
Currently, GST is levied at an effective rate of 12 percent (standard rate of 18 percent less a deduction of 6 percent as land value) on normal housing and effective rate of 8 percent (concessional rate of 12 percent less a deduction of 4 percent as land value) on affordable housing on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.
“The elimination of input credit tax benefit may hit profitability for the supply side; however, the potential demand generation as a result of this move will far outweigh any negative aspects leading to greater sales numbers and revenues," said Shishir Baijal, Chairman & Managing Director, Knight Frank India.
"We estimate that the reduction in GST can potentially reduce the buyers' payout by 6-7 percent on the overall purchase, depending on the category. The increase in sales will bring down the unsold inventory that has been afflicting the real estate sector.”
The Council also brought in a twin definition of affordable housing, on the basis of carpet area and cost, finance minister and head of the Council Arun Jaitley said.
A residential apartment, with a carpet area of up to 90 sqm in non-metropolitan cities and 60 sqm in case of metros with value up to Rs 45 lakhs will fall under the affordable housing category, Jaitley said.
Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR) will be considered metropolitan cities.
“With these reductions, the GST rate on normal under-construction apartments would be a little lower than that prior to the introduction of GST and affordable housing would be significantly lower than before,” MS Mani, Partner at Deloitte said.
Besides, GST exemption on Transferable Development Rights (TDR), long-term lease (premium), FSI will be exempted only for such residential property on which GST is payable, a move that is expected to solve the cash flow problem for the sector.
“Details of the scheme shall be worked out by an officers committee and shall be approved by the GST Council in a meeting to be called specifically for this purpose,” a government release said.
While the new date (April 1, 2019) will give some time to the industry to assess the impact and work out the new prices, an expert believes that developers will need to increase the base price to recover the loss of input credit but would need to be cautious given the surge in anti-profiteering investigations for restaurants, in similar circumstances.
“Also, it was mentioned that the new rates are likely to come with a condition that majority of purchases would need to be from GST registered vendors. Therefore, monitoring the compliant vendor eco-system would continue to be critical for the industry,” Pratik Jain, Partner, PwC India said.
Besides, the decision on real estate, the Council has asked the GoM on lottery to meet once again to work out a possible consensus. A panel headed by Maharashtra Finance Minister Sudhir Mungantiwar on the uniformity of taxation on lottery under GST and had recommended 18 or 28 percent tax rate.
Under GST, state-organised lottery falls under the 12 percent tax slab while state-authorised lottery attracts 28 percent tax.
07/11/2018