Saturday, 30 June 2018

Top 5 reasons why Rupee is on a tricky road ahead; could well hit Rs 70/USD soon

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Rising oil prices, political risk in a pre-election year, low equity risk premia pointing towards relative high valuation and tightening financial conditions in the domestic economy are major factors specifically hurting the Rupee

By Anindya Banerjee
The Rupee has had a rough 2018, which is not surprising as a number of factors are stacked against the currency. INR has weakened three-fourths of its major emerging market (EM) peers.
Rising oil prices, political risk in a pre-election year, low equity risk premia pointing towards relative high valuation and tightening financial conditions in the domestic economy are the major factors specifically hurting the Rupee.
Strong US economy is prompting the US Fed to tighten monetary policy and trade war are affecting more or less all emerging markets and hence not a Rupee-specific risk.
As a result, carry trade which is the biggest force that drives currency markets, especially EM currencies, is on reverse gear for Rupee in 2018.
Unlike last year, inflows in the bond market have turned negative, with $6.2 billion in the June quarter. FX traders who used to bet on Rupee appreciation last year by taking short positions in the USDINR forwards and futures are sitting on the sidelines.
Trade war & Chinese Yuan   - Share Market Tips
A trade war is an election issue in America, as they head to mid-term polls in November 2018. Trump is determined to win the elections for Republicans and retain a majority in Senate and House.
He believes that spending, tax cuts, trade, and emigration are issues which can get his party the winning votes. China is caught right in the middle of the trade fiasco, which is causing capital flight.
As a result, Chinese Yuan is spiraling lower and that is bad news for Rupee too, as weaker Yuan, in parity terms drags down INR too.
Higher oil prices
Iran sanctions are driving oil prices higher. Higher oil is bad news for India too. As a heuristic a $10/barrel average increase in oil prices can add 10 bps to India’s fiscal deficit through higher fuel subsidy.
Additionally, if the government reduces excise duty on petroleum products to reduce the burden on the citizens, then the exchequer takes an additional hit of around Rs 10,000 crore, which is around 6 bps of increase GFD.
Additionally, rising oil prices feed into consumer inflation through direct and indirect channels. As a rule of thumb, it can be said that a $10/barrel average increase in oil prices can increase CPI by around 40-50 bps.
Higher inflation is not only a drag on household consumption but also raises the possibility for RBI to tighten its monetary policy.
Strong US economy & Fed
With US economy enjoying strong economic momentum and US government very much committed to using the fiscal levers to keep it that way, wage inflation has begun to rise.
This emboldens Fed and they can continue to hike rates and lower reserves in the system. That is also bad news for EM currency like Rupee.
A domestic political risk in a pre-election year
This is not going to go away soon, as elections are still a year out.
Financial conditions are tightening in the domestic economy
The Reserve Bank of India (RBI) has begun the rate hike cycle, which is a headwind for domestic equity markets and bond markets. It discourages inflows and can cause Rupee to weaken.
Going forward, it is expected to be a challenging year for the Rupee, as most of the above factors are not expected to change much.
Oil prices remain the joker in the pack. As long as oil prices do not come down, we can expect INR to depreciate further against USD and can even test the level of 70 during the course of the year.

Friday, 29 June 2018

Today's Update Share Market - Trade India Research

MCX SUPPORT & RESISTANCE LEVEL


GOLD AUG FUTURE
R2–30700
R1-30600
S1-30400
S2-30300
SILVER JULY FUTURE
R2 –39600
R1- 39400
S1-39000
S2-38800
CRUDE OIL JULY FUTURE
R2 –5090
R1-5060
S1-5000
S2-4970
COPPER JUN FUTURE
R2 –455
R1-452.50
S1-447.50
S2-445



GOLD $ 1240.00 (+1.40)

SILVER $ 16.065(-0.114)

COPPER 2.990 (+0.021)

CRUDE OIL $ 73.22 (+0.23)

INR 68.5600(-0.2325)

NCDEX SUPPORT & RESISTANCE LEVEL



SOYBEAN FUTURE

R2–3560
R1 -3530
S1-3470
S2-3440

RMSEED FUTURE

R2 –4020
R1- 3990
S1-3930
S2-3900

JEERA FUTURE

R2 –18500
R1-18300
S1-17900
S2-17700

DHANIYA FUTURE

R2 –4900
R1-4800
S1-4500
S2-4400

CASTOR SEED FUTURE

R2 –4240
R1-4210
S1-4150
S2-4120

Market Live - Sensex up 200 pts, Nifty above 10,650 on Day 1 of July series

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Asian markets are mixed on the last trading day of the quarter, shrugging off gains seen on Wall Street overnight.

Market Update: The market remained strong in morning with the Nifty holding 10,650 level on the very first day of July series, backed by oil, metals, infra and FMCG stocks. 
The 30-share BSE Sensex gained 194.71 points at 35,232.35 and the 50-share NSE Nifty rose 64.00 points to 10,653.10. About three shares advanced for every share falling on the BSE.
Buzzing: Shares of Indo Rama Synthetics rose 10.6 percent on issuance of equity shares on private placement basis.
The company in its board meeting held on June 28 has approved issuance of 90.90 lakh equity shares by way of preferential issue on private placement basis.
The company issued 31,81,818 equity shares to EC Special Situations Fund and 59,09,091 equity shares to Edelweiss India Special Situations Fund- II.
The 32nd annual general meeting (AGM) of the company will be held on July 28, 2018.
Rupee Update: The rupee recovered from its record low by rising 20 paise to 68.58 against the US dollar on fresh selling of the American currency by banks and exporters.
The Indian currency had yesterday breached the 69-mark but covered lost ground to finally close at an all-time low of 68.79 with a fall of 18 paise against the US dollar due to multiple headwinds like weak global cues and concerns related to inflation and fiscal slippage.
Selling of dollars by banks and exporters today made the greenback weak against some currencies overseas, which supported the rupee, forex dealers said.
Higher opening of the domestic equity market also propped up the rupee, they added, reports PTI.
Buzzing: Share price of Newgen Software Technologies rose 5.3 percent intraday as the company received work order worth Rs 63.93 crore.
The company has received a work order for document management system (DMS) and digitization project of the records of District and Subordinate courts in the state of Maharashtra on the turnkey basis, subject to the approval of pilot phase.
This work order pertains to digitisation of Judicial Records for Rs 63,93,24,000.
The work order does not fall within the definition of related party transaction as specified in the Companies Act, 2013.
Market Update: The market extended its opening gains with the Nifty trading above 10,650 levels on the first day of July series, backed by metals, oil and banking & financials stocks.
The 30-share BSE Sensex rose 223.45 points to 35,261.09 and the 50-share NSE Nifty gained 71.80 points at 10,660.90. About four shares advanced for every share falling on the BSE.
The Nifty Midcap rose over a percent on short covering.
All sectoral indices are in the green with Metal and PSU Bank leading the charge with over 2 percent gains.
Buzzing: Share price of Bang Overseas touched a 52-week high of Rs 50.75, rising 5.5 percent intraday Friday as the company entered into an MOU for sale of the land.
The company has entered into an MOU with the buyer for sale of land situated at EPIP Industrial Estate, Hobli Bangalore, measuring to an extent of 4781 sqm.
The sale/disposal is likely to get completed in 7 months for a consideration of Rs 20 crore.
Crude Update: US. oil prices held around three-and-a-half year highs touched the previous day as a Canadian production outage disrupted the North American market.
International oil markets also remained firm as looming sanctions by Washington against Iran are expected to lead to a sharp drop in supplies from the OPEC-member.
US West Texas Intermediate (WTI) crude futures were at $73.18 a barrel, down 0.37 percent from their last settlement.WTI on Thursday hit its highest since November 2014 at $74.03 per barrel.
Brent crude futures were at $77.74 per barrel, down 0.14 percent, reports Reuters.
Buzzing: Shares of Kalpataru Power Transmission added 4 percent as company secured new orders/notification of award of Rs 1,235 crore.
The said orders include, order for railway infrastructure construction from Bangladesh Railways in a consortium wherein KPTL’s share is Rs 553 crore and orders for transmission line and substation in Tajikistan and India totaling Rs 346 crore.
It also received orders from RVNL for design, supply, erection, testing & commissioning for railway electrification, signaling and associated civil works of Rs 185 crore in a consortium.
And order for laying of pipeline & associated works of Rs 151 crore from Andhra Pradesh Gas Distribution Corporation.
Rollover Analysis by ICICI Securities: Nifty rolls were at 64 percent, lower than the 3M average of 66.33 percent
A market-wide rollover was at 84.09 percent, in line with the 3M average of 84.98 percent
Sectorally, realty, textile and metal stocks witnessed high rollover of positions while stocks from the oil & gas, FMCG and cement space witnessed relatively low rolls into the July series
The highest rollover was observed in JSW Steel (97 percent), Dabur (95 percent), Britannia (94 percent), M&M Finance (94 percent) and LIC Housing Finance (93 percent) while rollover activity was relatively low in OFSS, Indian Bank, Torrent Power, KPIT and ACC
Among index stocks, Sun Pharma, Tech Mahindra, Bajaj Auto and Tata Motors witnessed high rolls into the July series while Adani Ports, Titan, HCL Tech and Tech Mahindra witnessed relatively low rolls into the next series
Among heavyweights, auto and metal stocks saw fresh short additions while relatively low short positions were seen in cement and oil & gas space
The open interest in Nifty futures at 18.8 million shares is in line with the open interest seen in the last couple of months at inception. The roll spread in the Nifty remained subdued throughout the settlement week and finally declined further to 17 points in the last session. Activity suggests continued short rollover in the Nifty in the July series as well. The Nifty has major support around 10550 while 10600 Put strike has the highest Put option base.

At the same time, Bank Nifty open interest has declined substantially to 1.93 million shares from 2.84 million shares in the last series at inception. The roll spread in the banking index has remained under continued pressure indicating consolidation in coming sessions. Roll spread in the banking index has declined to almost 90 points during the settlement suggesting continued short bias.
Market Opening: Benchmark indices started off the July series on a positive note despite mixed Asian cues, after rattled in previous two consecutive sessions.
The 30-share BSE Sensex rose 115.70 points to 35,153.34 and the 50-share NSE Nifty gained 38.60 points at 10,627.70.
Tech Mahindra, Tata Motors, Tata Steel, Titan Company, HPCL, BPCL, IOC, Infosys, Reliance Industries and Hindalco Industries are early gainers.
Dr Reddy's Labs, NTPC, Asian Paints and Axis Bank are under pressure.
The Nifty Midcap index gained 150 points and Nifty Bank rose 33 points.
Mahindra CIE rallied 5.5 percent post block deal in the morning.
HEG, Graphite India, V-Mart Retail, Kaya, Future Consumer, Delta Corp and InterGlobe Aviation are early gainers.
Market Pre-opening: Benchmark indices are trading flat in pre-opening on last day of the quarter, following mixed trade in Asian stocks.
The Sensex rose 58.92 points to 35,096.56 while the Nifty fell 9.90 points to 10,579.20.



Thursday, 28 June 2018

Free Stock Market Tips – Trade India Research - 28 June 2018

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SOYBEAN FUTURE 

R2–3580R1 -3550 S1-3480S2-3450

RMSEED FUTURE 

R2 –4060R1- 4030S1-3970S2-3940

JEERA FUTURE 

R2 –18300R1-18100S1-17700S2-17500

DHANIYA FUTURE 

R2 –4850R1-4750S1-4550S2-4450

CASTOR SEED FUTURE 

R2 –4210R1-4230S1-4200S2-4110



GOLD AUG FUTURE 

R2–30900R1-30800S1-30600S2-30500 

SILVER JULY FUTURE 

R2 –40000R1- 39800S1-39400S2-39200

CRUDE OIL JULY FUTURE 

R2 –5080R1-5050S1-4980S2-4950

COPPER JUN FUTURE 

R2 –459R1-456.50S1-451.50S2-448


INTERNATIONAL MARKET UPDATE

GOLD $ 1253.90 (-2.20)

SILVER $ 16.075(-0.076)

COPPER 2.999 (+0.001)

CRUDE OIL $ 72.56 (+0.20)

INR 68.4750(+0.2200)



Top three stocks to buy ahead of June expiry which could give 8-14% return

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Going forward, the bias is expected to remain sideward to negative. On the lower end, 10,600 may act as crucial support for the index. However, a sustained trade below 10,600 may induce correction towards 10,525-10,472 levels, says Achin Goel of Bonanza Portfolio.
Achin Goel
On the hourly chart, the Nifty gave a breakdown of a ‘Head and Shoulder’ pattern, which led to a steep fall on Wednesday. On the lower end, the index slipped towards the 50% retracement of the previous rise from 10,417 to 1,893.
On further observation, Nifty is seen to have slipped below a range-bound pattern on the daily chart. The momentum oscillator, RSI has been hovering within the bands of 63 and 45, which suggests ongoing consolidation nature. A penetration below 45 will would mean negative range shift in the index momentum.
Going forward, the bias is expected to remain sideward to negative. On the lower end, 10,600 may act as crucial support for the index. However, a sustained trade below 10,600 may induce correction towards 10,525-10,472 levels.
At the higher end, the Nifty has resistance placed at 10,750, and if the index closed above this level then the pullback target is placed around 10,850/10,910 over the short term.
Here is a list of top three stocks which could give 8-14% return in about a month:
Aurobindo Pharma: Buy| CMP: Rs 616.40| Target: Rs 700| Stop loss: Rs 584 | Return: 14%
The stock has been in a consolidation phase after a trend line breakout on the daily chart. In addition, the price has formed a green candle with the backing of decent volumes.
The momentum oscillator, RSI (14) has been in a bullish crossover and currently hovering strongly around 59.75. Moreover, MACD is in Buy mode.
Traders can accumulate the stock in the range of Rs 610-617 for the target of Rs 700 with a stop loss below Rs 584.
Bharti Infratel: Buy | CMP: Rs 299.55 | Target: Rs 330 | Stop loss: Rs 284 | Return: 10%
The stock is showing signs of a reversal from its long downwards pattern on the daily chart. On the weekly chart, a Hammer candlestick pattern is formed which suggests growing optimism in the stock.
The momentum oscillator, RSI (14) saw a bullish crossover and is currently hovering strongly above 50 for the first time in several days. Moreover, MACD is in a buy mode.
Traders can accumulate the stock in the range of Rs 297-300 for the target of Rs 330 with a stop loss placed below Rs 284.
Dabur India: Buy | CMP: Rs 393.50 | Target: Rs 424 | Stop loss: Rs 379 | Return: 8%
On the daily chart, the stock has moved above the falling trendline which indicates the demand has surpassed the supply in the stock which in turn may take the stock price upward over the very short term.
In addition, price breakout was backed by a spurt in volumes. The momentum oscillator RSI (14) has entered in a bullish crossover and currently hovering above 65.
Traders can accumulate the stock in the range of Rs 390-394 for the target of Rs 424 with a stop loss placed below Rs 379.
Disclaimer: The author is Head of Wealth Management and Financial Planning, Bonanza Portfolio Ltd. The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Wednesday, 27 June 2018

Don’t miss them! Brokerages initiate coverage on these 5 stocks that can give 20-40% returns

The focus of investors should be on buying quality which could withstand the correction and outperform index when the market starts rising.

A new business, a new idea is something that always excites value investors. Indian market did manage to climb all wall of worries and trade back in green for the year 2018 but the same can’t be said for stocks belonging to the mid- and small-cap space.
Even the quality stocks across the board saw selling but the fall was not as severe as compared to other stocks which have lost up to 80 percent of their value in a matter of just six months.
It looks like the market is adjusting to the new reality of US Fed liquidity withdrawal and India has seen outflows from foreign institutional investors segment. Earnings have failed to pick up while trade war fears have capped upside for markets not just for India but across the globe.
On a year-to-date (YTD) basis, many stocks have corrected but quality stocks have declined lesser. Amid the carnage, high-quality names, especially within midcaps, haven’t corrected that much, suggest experts.
The focus of investors should be on buying quality stocks which could withstand the correction and outperform index when the market starts rising.
“While valuations of smallcaps and midcaps have reduced, sharp downward revisions to earnings in the smallcap and midcap space is keeping valuations punchy,” Nitin Bhasin, Managing Director and Head of Research at Ambit Capital told Moneycontrol.
“Rather than focusing on stocks which have declined sharply and optically offering a value or bargain, we advise investors to hunt for quality businesses which are investing for building competitive advantages for long-term growth, irrespective of the near-term business environment,” he said.
Here is a list of 5 stocks where brokerages initiated coverage in June for the first time and said that they could give 20-40% returns in the next 12 months:
Avanti Feeds: Buy| Target: Rs 1,901, after split Rs 633| LTP: Rs 521| Return 21%
ICICI Securities initiated coverage on Avanti Feeds for the first time with a buy rating and a target price of Rs 1,901. The company is a market leader in shrimp feed and a growing player in shrimp exports.
Avanti benefits from 1) numerous moats such as strong brands, established distribution, multiple manufacturing units and sub-segmentation strategy; and 2) relationship with global sea food major, Thai Union.
ICICI Securities expect India’s shrimp exports (value) to grow in mid-teens and Avanti to be a major beneficiary of this trend. With strong financials, the domestic brokerage firm expects Avanti’s earnings growth to resume in FY20E after a decline in FY19E due to lower margins.
Exide Industries: Buy| Target: Rs 322| Return 28%

Centrum Broking initiated coverage on Exide Industries with a buy rating and a target price of Rs 322. Exhaustive channel check with over 125 dealers pan India across the company’s three major brands (Exide, SF Sonic, and Dynex) indicates that the management’s significant efforts to address ground-level issues in the replacement market (which is critical for overall demand and remains the major revenue and profitability driver).

The company’s efforts have translated into positive material difference and a pick-up in momentum across the brands. Further, the meaningful transition expected in commercial vehicle segment towards organized players post GST implementation will prove beneficial for EXIDE.
ICICI Prudential Life Insurance: Buy | Target: Rs 480 | Return 26%
Motilal Oswal initiated coverage on ICICI Prudential Life Insurance company with a target price of Rs 480. ICICI Prudential Life Insurance (IPRU) is amongst the market leader in the private sector life insurance space, aided by its strong brand, distribution capabilities, and product portfolio.
It has increased its market share in retail weighted premium to 12 percent in FY18 (6% in FY12) and has alongside reported sharp improvement in persistency ratios, said the note.
This coupled with a change in product mix in favor of protection business and strong cost control has enabled healthy margin expansion. Motilal Oswal expects margins to improve further to 18.2 percent by FY20E, boosting average operating RoEV to 20 percent over FY18-20E.
RBL Bank: Buy| Target: Rs 780| Return 40%
ICICI Securities initiated coverage on RBL Bank Ltd with a target price of Rs 780. Investing in a high-growth stock like RBL Bank (RBL) at a time when system loan growth is near historic lows may appear to be a contradiction, but it is allayed by:
1) RBL’s relatively small market share of less than 0.5%,
2) The large opportunity presented by the space being vacated by several PSU banks, and

3) Considerable opportunity for RBL to improve its RoA to similar levels as peers.
The global investment bank does not see too many similar instances of small, well-run, high-growth private banks with reasonable assurance of improving RoA.
Amber Enterprises: Buy| Target: Rs 1272 | Return 31%
Angel Broking initiated coverage on Amber Enterprises with a buy rating and a target price of Rs 1,272. Amber Enterprises India Ltd. (Amber) is the market leader in the room air conditioners (RAC) outsourced manufacturing space in India.
It is a one-stop solutions provider for the major brands in the RAC industry and currently serves eight out of the ten top RAC brands in India. Angel Broking expects Amber to report consolidated revenue/PAT CAGR of 28%/51% respectively over FY2018-20E.
It is currently trading at 21x FY 2020 earnings which is at 25-30% discount than its closest peer – Dixon Technologies. The recent correction has provided a very good entry point for the investors to take a bet on the booming AC space.


Tuesday, 26 June 2018

13 stocks available at reasonable pricing, should you try your luck

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At a time when most companies are struggling to show a consistent track record of growth, these 13 stocks are priced to perfection at current levels in comparison to return on capital employed (RoCE).


The first rule of trading, which everyone tries to follow or implement, is to buy at a lower price and sell at a higher price. But this is easier said than done.
It is difficult to time the Share Market Tips, which means it is hard to predict the bottom or top of the market. The same rule applies to stocks as well. To make the job simpler, Morgan Stanley in a recent strategy report highlighted 13 stocks in which growth is available at reasonable prices.
At a time when most companies are struggling to show a consistent growth track record, these 13 stocks are priced to perfection at current levels in comparison to their return on capital employed (RoCE). However, one should note that these are not 'buy or sell' recommendations from the global investment bank.
The list includes companies like Asian Paints, Bharat Petroleum Corporation (BPCL), Cadila Healthcare, Dabur India, Godrej Consumer Products, Havells India, India Oil Corporation, Infosys, ITC, JSW Steel, Petronet LNG, Indraprastha Gas and Mphasis.
Why is growth, EPS or RoCE so important?
Growth is a predominant factor why the stock price of a company rises or falls. This is the untold truth of the market. At the same time, efficiency of capital is equally important, which is measured by calculating RoCE.
Theory suggests that earnings per share is the portion of a company's distributable profit allocated to each outstanding share of common stock.
“Generally, any company with more than 15 percent EPS is considered to be a great investment bet. If the RoCE of the company also supports EPS, then the company will offer better returns,” Ritesh Ashar, Chief Strategy Officer at KIFS Trade Capital, said.
The second most important factor is efficiency, which is measured by capturing RoCE. Thus, a growing company with higher RoCE is a great recipe for identifying wealth-creating companies.
Theoretically, RoCE is a profitability ratio, which is used to find out how efficient the company is in generating profit out of the capital employed in the business.
“If the company generates economic profits, it means it is generating returns in excess of the risk free rate. In that case, it can be said the company’s existence is justified based on value addition to the economy,” Jimeet Modi, Founder & CEO, SAMCO Securities, said. “A growing company with higher RoCE is a great recipe to identify wealth creating companies.”
Investment bets
Both EPS and RoCE help investors find out the capability of a company, apart from long-term financial planning, experts suggest.
If RoCE is less than the amount at which the company borrowed the capital, then it is incurring losses. “Both these ratios indicate if the company is eligible to offer higher returns to investors or not. Looking at the above list, EPS is quite robust in the case of Infosys. Its RoCE is also constantly above 20 percent, which gives investors a thumbs up to buy the stock,” Ashar added.
Other stocks which he likes are Dabur, ITC, JSW Steel and Cadila Healthcare. “They all have a great EPS and RoCE record which makes them an ideal choice for investment purposes.”
Ashar said if one looks at the valuation of Tata Consultancy Services, its EPS has constantly increased over the years. “RoCE is above 30 percent, which makes it an attractive buy for investors. Same is the case with Maruti. Its EPS has seen a constant growth and also returns have been increasing.”
Modi of SAMCO Securities acknowledges that all companies listed in the table are reasonably priced, but added that the composition is little concentrated. “Financials like YES Bank and HDFC should be added to make it a more diversified portfolio.”
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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