It was a stellar comeback by the bulls during yesterday’s session. Initially, the benchmark indices started the session with an upside gap but remained flat. However, strong short covering during the second half helped the markets to close with spectacular gains. The index NIFTY sneaked above the 11000 mark during the process and closed with gigantic gains of 177 points. On the other hand, NIFTY BANK index too ended with hefty gains of 400 points. During the first half, market breadth turned in the favor of declining counters but in the final hour of the session it changed to positive. On the sectoral front, none of the pockets ended in loss which indicates broad based buying. Form the pack of gainers, NIFTY AUTO (+3.03%) and NIFTY REALTY (+1.86%) stocks were the top performers. From the F&O pack, AUROPHARMA (+7.93%), HCLTECH (+7.10%) and TATAMTRDVR (+6.64%) were the top gainers. In line with our buy recommendation, we observed a sharp rally during the previous session. The index Nifty initially oscillated in a range of 10900 – 10850 but then a breakout during the final hour helped the index to close above 11000 mark. Now this move has confirmed a higher top and higher bottom formation confirmation on the hourly chart which means that the very short term trend has changed. Hence, index has now potential to test 11150 which is the placement of 200 DSMA and then 11200 too. On the downside, the support has shifted to 10970 followed by 10840.
TATASTEEL : BULLISH
Since past couple of years, TATASTEEL was trading within a downward sloping channel.
At this juncture, TATASTEEL has approached the lower end of falling channel.
Also it is now trading at the PRZ (Potential Reversal Zone) of bullish DEEP CRAB harmonic pattern.
The stock could be accumulated between 365 – 345 levels with a stop of 330 for a bounce towards 420.
Posted by Mehul Kothari | Published on 09-AUG-2019
RBI CUTS POLICY RATE BY 35BPS. THE GDP PROJECTION HAS BEEN REVISED DOWNWARDS TO 6.9% OWING TO DEMAND AND INVESMENT SLOWDOWN
In the 3rd bi-monthly monetary policy, the RBI reduced the repo rate by 35bps bringing it down to 5.4%. Consequently, the reverse repo rate stands reduced to 5.15%. The MSF rate stands at 5.65%. The MPC has maintained “accommodative” stance. The decision to reduce the repo rate was unanimous however a 35bps cut was favored by 4 out of 6 members of the monetary policy committee while 2 members favored a 25bps cut. With this reduction the policy rate is at near 9 year lows. The last time the rate was seen at these levels was during 2010, which was the year of extreme slowdown post the financial crises and the policy rates were reduced significantly. Rates were reduced to 4.75% in 2009 to boost economic growth and investment demand.
The key takeaways are as below:
INFLATION OUTLOOKConsumer Price Inflation has been quite muted despite the recent marginal upward movement, mostly on account of deflation in food prices. Food inflation remains low at2.4% causing retail inflation print to be in comfortable zone of 3.18%. Inflation in the fuel and light group moderated in June, with electricity moving into deflation. Fuels such as firewood and chips, and dung cake have been in deflation from April. Core inflation remains in comfortable zone at 4%. Growth in wage cost is muted both in rural and manufacturing sector.
Monsoon so far has been lower with uneven spatial distribution which might put pressure on food prices, but the recent pick up in rainfall may offset the price impact.Crude oil price has fallen significantly over the past one year and has provided a good cushion to the domestic inflation. The crude oil prices though may remain volatile, but the global slowdown narative remain overpowering on the current price movement. CPI inflation is projected at 3.1 per cent for Q2FY20 and 3.5-3.7 per cent for H2FY20, with risks evenly balanced. CPI inflation for Q1FY21 is projected at 3.6 per cent.
LIQUIDITY POSITIONAverage liquidity in the system has risen significantly in the past 3 months. The system which was running in deficit turned positive by end of May and hover at near 2 lakh cores. Some of the reasons pointed out for large surplus are:a) Return of currency to the banking system;b) Drawdown of excess cash reserve ratio (CRR) balances by banks;c) OMO purchase auctions done worth ₹52,500cr since Apr’19d) The Reserve Bank’s foreign exchange market operations.A high liquidity surplus helps in easy transmission of policy rates and hence further aids the cause of the RBI rate dissemination. However, despite the large surplus the transmission is quite low. The capital markets have been more efficient in aligning to the policy rate while the bank have reduced the rates by meagre 29bps as compared to rate cut of 75bps by the RBI since Feb 2019. Moreover, with lack of investment opportunities, banks are benefited by the increase in deposit growth.
ECONOMIC GROWTHIndex of industrial production (IIP), moderated in May 2019, pulled down by manufacturing and mining. The production of capital goods and consumer durables decelerated. The monsoon rainfall so far has been 6% lower than the long period average leading to a 6.6% reduction in kharif crop sowing. Rainfall for the second half is expected to be normal by IMD. High frequency indicators of services sector activity for May-June present a mixed picture. Tractor and motorcycle sales – indicators of rural demand – continued to contract. Amongst 3 indicators of urban demand, passenger vehicle sales contracted for the eighth consecutive month in June; however, domestic air passenger traffic growth turned positive in June. Commercial vehicle sales slowed down even after adjusting for base effects. Various high frequency indicators suggest weakening of both domestic and external demand conditions. With above factors in play the RBI has revised downward its forecast for GDP to 6.9% from 7%. The RBI has taken in to consideration the expected positive impact of reduced interest rates and lower base in arriving at the GDP projection.
VIEWBond markets had already factored in a rate cut before the policy announcement and hence the movement of the yield curve remained restricted. The short end of the sovereign curve saw yields coming down by 6-10bps, however the 10 year yield which has already demonstrated a strong rally saw some profit booking. The forward glide path for the interest rates remains downward sloping and hence investment in short to medium duration instrument is advisable. As the per the policy statement
“Even as past rate cuts are being gradually transmitted to the real economy, the benign inflation outlook provides headroom for policy action to close the negative output gap. Addressing growth concerns by boosting aggregate demand, especially private investment, assumes the highest priority at this juncture while remaining consistent with the inflation mandate.”
Although with the current rate reduction, the policy rates have dropped to nearly a decade low, the current growth situation and the enhanced focus of the central bank towards boosting private investment and aggregate demand, presents a glimmer of hope for further mild rate reduction.
Investor in long and medium duration bonds and funds may continue to hold till the complete cycle of rate reduction is complete. Fresh investment in short to medium term is recommended with a 1 year above investment horizon. We recommend investment in good quality short term Funds and Banking & PSU Debt Funds. Investors are advised to take a cautious stance toward credit risk funds and avoid fresh investment at this juncture. A mix of good quality debt funds, tax free bonds, FMPs, NCDs, etc., would be ideal for a moderate risk investor.
Please see below the recommended schemes:
Disclaimer: This document is STRICTLY for authorised recipients only and is prepared for information purposes only. The information provided herein, we believe, is from reliable sources. IndiaNivesh is not liable for the accuracy of the source data as well as the results of the calculations based on the same. We do not claim that the data provided herein is accurate and complete in all respects. This is not an offer or solicitation of any offer to buy or sell securities. No action is intended to be taken by the recipients based on this document. The recipients may take their decisions based on their own judgement and independent advice that they may receive before making any investment or disinvestment decisions. The recipients are advised not to take any decision only on the basis of this document. No portion of this document should be printed, reprinted, redistributed, reproduced, duplicated or sold.)
Posted by Mehul Kothari | Published on 14-AUG-2019
Tata Capital Financial Services – NCD Issue
About the Company:
Tata Capital Financial Services Limited (TCFSL) is a Systemically Important Non-Deposit Accepting Non-Banking Financial Company (“ND-SI-NBFC”) focused on providing a broad suite of financing products customized to cater the needs of various segments.
TCFSL was incorporated in 2010 and was registered with the RBI to commence the business of an NBFC without accepting the public deposit with effect from November 04, 2011.
TCFSL is promoted by and is wholly owned subsidiary of Tata Capital Limited (TCL). TCL is a diversified financial services company providing services through its subsidiaries to retail, corporate and institutional clients. TCL is the financial services arm of the Tata group, which is a diversified global business group serving a wide range of customers across varied sectors such as steel, motors, power, chemicals, telecommunications and hospitality.
TCFSL’s financing products have been categorized into
Commercial and SME Finance Division: The Commercial and SME Finance Division offers commercial financing to corporates which includes vanilla term loans, working capital term loans, channel finance, bill discounting, construction equipment finance, leasing solutions, lease rental discounting, promoter finance and structured products.
Consumer finance and Advisory Business: The Consumer finance and Advisory Business division offers a wide range of consumer loans such as auto loans (used car and two wheeler loans), business loans, loans against property, personal loans, consumer durable loans and loans against securities as well as wealth management.
Disclaimer:This document is prepared by the Research Division of IndiaNivesh Securities Ltd (The Company) on the publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been taken based upon this information. IndiaNivesh Securities Ltd does not warranty either expressly of impliedly, the accuracy, completeness or reliability of any information provided herein. Neither IndiaNivesh Securities Ltd nor any of its employees / Directors / authorized representatives shall be liable for any direct, indirect, special consequential, punitive or exemplary damages including lost profits arising in any way from the information contained in this material, and hereby disclaims any liability with regard to the same. This report is disseminated for the information of authorized recipients only and is not to be relied upon or taken is substitution for the exercise of due diligence and judgment by any recipient. This report does not provide individually tailored investment advice; investor should seek independent financial advice with respect to the merits and risks involved in any of the matters concerning investment in the Schemes / products mentioned in the report.)
Share Market Today - 9th August 2019
NIFTY Daily Chart
It was a stellar comeback by the bulls during yesterday’s session. Initially, the benchmark indices started the session with an upside gap but remained flat. However, strong short covering during the second half helped the markets to close with spectacular gains. The index NIFTY sneaked above the 11000 mark during the process and closed with gigantic gains of 177 points. On the other hand, NIFTY BANK index too ended with hefty gains of 400 points.
During the first half, market breadth turned in the favor of declining counters but in the final hour of the session it changed to positive. On the sectoral front, none of the pockets ended in loss which indicates broad based buying. Form the pack of gainers, NIFTY AUTO (+3.03%) and NIFTY REALTY (+1.86%) stocks were the top performers. From the F&O pack, AUROPHARMA (+7.93%), HCLTECH (+7.10%) and TATAMTRDVR (+6.64%) were the top gainers.
In line with our buy recommendation, we observed a sharp rally during the previous session. The index Nifty initially oscillated in a range of 10900 – 10850 but then a breakout during the final hour helped the index to close above 11000 mark. Now this move has confirmed a higher top and higher bottom formation confirmation on the hourly chart which means that the very short term trend has changed. Hence, index has now potential to test 11150 which is the placement of 200 DSMA and then 11200 too.
On the downside, the support has shifted to 10970 followed by 10840.
TATASTEEL : BULLISH
Disclaimer
Previous Story
Monetary Policy: Policy Rates now at 9 year low
RBI CUTS POLICY RATE BY 35BPS. THE GDP PROJECTION HAS BEEN REVISED DOWNWARDS TO 6.9% OWING TO DEMAND AND INVESMENT SLOWDOWN In the 3rd bi-monthly monetary policy, the RBI reduced the repo rate by 35bps bringing it down to 5.4%. Consequently, the reverse repo rate stands reduced to 5.15%. The MSF rate stands at 5.65%. The MPC has maintained “accommodative” stance. The decision to reduce the repo rate was unanimous however a 35bps cut was favored by 4 out of 6 members of the monetary policy committee while 2 members favored a 25bps cut. With this reduction the policy rate is at near 9 year lows. The last time the rate was seen at these levels was during 2010, which was the year of extreme slowdown post the financial crises and the policy rates were reduced significantly. Rates were reduced to 4.75% in 2009 to boost economic growth and investment demand. The key takeaways are as below: INFLATION OUTLOOKConsumer Price Inflation has been quite muted despite the recent marginal upward movement, mostly on account of deflation in food prices. Food inflation remains low at2.4% causing retail inflation print to be in comfortable zone of 3.18%. Inflation in the fuel and light group moderated in June, with electricity moving into deflation. Fuels such as firewood and chips, and dung cake have been in deflation from April. Core inflation remains in comfortable zone at 4%. Growth in wage cost is muted both in rural and manufacturing sector. Monsoon so far has been lower with uneven spatial distribution which might put pressure on food prices, but the recent pick up in rainfall may offset the price impact.Crude oil price has fallen significantly over the past one year and has provided a good cushion to the domestic inflation. The crude oil prices though may remain volatile, but the global slowdown narative remain overpowering on the current price movement. CPI inflation is projected at 3.1 per cent for Q2FY20 and 3.5-3.7 per cent for H2FY20, with risks evenly balanced. CPI inflation for Q1FY21 is projected at 3.6 per cent. LIQUIDITY POSITIONAverage liquidity in the system has risen significantly in the past 3 months. The system which was running in deficit turned positive by end of May and hover at near 2 lakh cores. Some of the reasons pointed out for large surplus are:a) Return of currency to the banking system;b) Drawdown of excess cash reserve ratio (CRR) balances by banks;c) OMO purchase auctions done worth ₹52,500cr since Apr’19d) The Reserve Bank’s foreign exchange market operations.A high liquidity surplus helps in easy transmission of policy rates and hence further aids the cause of the RBI rate dissemination. However, despite the large surplus the transmission is quite low. The capital markets have been more efficient in aligning to the policy rate while the bank have reduced the rates by meagre 29bps as compared to rate cut of 75bps by the RBI since Feb 2019. Moreover, with lack of investment opportunities, banks are benefited by the increase in deposit growth. ECONOMIC GROWTHIndex of industrial production (IIP), moderated in May 2019, pulled down by manufacturing and mining. The production of capital goods and consumer durables decelerated. The monsoon rainfall so far has been 6% lower than the long period average leading to a 6.6% reduction in kharif crop sowing. Rainfall for the second half is expected to be normal by IMD. High frequency indicators of services sector activity for May-June present a mixed picture. Tractor and motorcycle sales – indicators of rural demand – continued to contract. Amongst 3 indicators of urban demand, passenger vehicle sales contracted for the eighth consecutive month in June; however, domestic air passenger traffic growth turned positive in June. Commercial vehicle sales slowed down even after adjusting for base effects. Various high frequency indicators suggest weakening of both domestic and external demand conditions. With above factors in play the RBI has revised downward its forecast for GDP to 6.9% from 7%. The RBI has taken in to consideration the expected positive impact of reduced interest rates and lower base in arriving at the GDP projection. VIEWBond markets had already factored in a rate cut before the policy announcement and hence the movement of the yield curve remained restricted. The short end of the sovereign curve saw yields coming down by 6-10bps, however the 10 year yield which has already demonstrated a strong rally saw some profit booking. The forward glide path for the interest rates remains downward sloping and hence investment in short to medium duration instrument is advisable. As the per the policy statement “Even as past rate cuts are being gradually transmitted to the real economy, the benign inflation outlook provides headroom for policy action to close the negative output gap. Addressing growth concerns by boosting aggregate demand, especially private investment, assumes the highest priority at this juncture while remaining consistent with the inflation mandate.” Although with the current rate reduction, the policy rates have dropped to nearly a decade low, the current growth situation and the enhanced focus of the central bank towards boosting private investment and aggregate demand, presents a glimmer of hope for further mild rate reduction. Investor in long and medium duration bonds and funds may continue to hold till the complete cycle of rate reduction is complete. Fresh investment in short to medium term is recommended with a 1 year above investment horizon. We recommend investment in good quality short term Funds and Banking & PSU Debt Funds. Investors are advised to take a cautious stance toward credit risk funds and avoid fresh investment at this juncture. A mix of good quality debt funds, tax free bonds, FMPs, NCDs, etc., would be ideal for a moderate risk investor. Please see below the recommended schemes: Disclaimer: This document is STRICTLY for authorised recipients only and is prepared for information purposes only. The information provided herein, we believe, is from reliable sources. IndiaNivesh is not liable for the accuracy of the source data as well as the results of the calculations based on the same. We do not claim that the data provided herein is accurate and complete in all respects. This is not an offer or solicitation of any offer to buy or sell securities. No action is intended to be taken by the recipients based on this document. The recipients may take their decisions based on their own judgement and independent advice that they may receive before making any investment or disinvestment decisions. The recipients are advised not to take any decision only on the basis of this document. No portion of this document should be printed, reprinted, redistributed, reproduced, duplicated or sold.)
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Tata Capital Financial Services – NCD Issue Details
Tata Capital Financial Services – NCD Issue About the Company: Tata Capital Financial Services Limited (TCFSL) is a Systemically Important Non-Deposit Accepting Non-Banking Financial Company (“ND-SI-NBFC”) focused on providing a broad suite of financing products customized to cater the needs of various segments. TCFSL was incorporated in 2010 and was registered with the RBI to commence the business of an NBFC without accepting the public deposit with effect from November 04, 2011. TCFSL is promoted by and is wholly owned subsidiary of Tata Capital Limited (TCL). TCL is a diversified financial services company providing services through its subsidiaries to retail, corporate and institutional clients. TCL is the financial services arm of the Tata group, which is a diversified global business group serving a wide range of customers across varied sectors such as steel, motors, power, chemicals, telecommunications and hospitality. TCFSL’s financing products have been categorized into Commercial and SME Finance Division: The Commercial and SME Finance Division offers commercial financing to corporates which includes vanilla term loans, working capital term loans, channel finance, bill discounting, construction equipment finance, leasing solutions, lease rental discounting, promoter finance and structured products. Consumer finance and Advisory Business: The Consumer finance and Advisory Business division offers a wide range of consumer loans such as auto loans (used car and two wheeler loans), business loans, loans against property, personal loans, consumer durable loans and loans against securities as well as wealth management. Disclaimer:This document is prepared by the Research Division of IndiaNivesh Securities Ltd (The Company) on the publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been taken based upon this information. IndiaNivesh Securities Ltd does not warranty either expressly of impliedly, the accuracy, completeness or reliability of any information provided herein. Neither IndiaNivesh Securities Ltd nor any of its employees / Directors / authorized representatives shall be liable for any direct, indirect, special consequential, punitive or exemplary damages including lost profits arising in any way from the information contained in this material, and hereby disclaims any liability with regard to the same. This report is disseminated for the information of authorized recipients only and is not to be relied upon or taken is substitution for the exercise of due diligence and judgment by any recipient. This report does not provide individually tailored investment advice; investor should seek independent financial advice with respect to the merits and risks involved in any of the matters concerning investment in the Schemes / products mentioned in the report.)