Dalal Street week ahead: Bank Nifty, FMCG, pharma should do better now

In our weekly note last week, we had discussed about the likelihood of the Nifty attempting to move past its falling trend line resistance, which joins the lower tops.

In the week gone by, the benchmark index struggled throughout to move past this pattern area resistance but could not make any clear headway on the upside. The pullback seen on the last trading session of the week helped the Nifty index close the week with a gain of 50.05 points, or 0.46 per cent.

However, though this may restrict and resist the immediate upward move in the present context, but the RSI is seen trying to break out of a pattern formation. The weekly MACD is bullish as it trades above the signal line. No significant formations were observed on the candles. 
Next week is going to be critical for the markets as Nifty moving past the pattern resistance of the trend line joining a probable lower tops will be very important. We expect the market to remain rangebound. F&O data suggests the range might get a little broader, but downsides will certainly remain capped.

The coming week is likely to see the market turn highly stock and sector specific. One should continue to guard profits at higher levels. Shorts should be avoided, unless some critical supports are breached, as the undercurrent continues to be buoyant. 

A study of Relative Rotation Graphs shows PSU banks have further improved in terms of their relative momentum and are expected to continue this trajectory in the coming weeks as well. Along with this, the Bank NIFTY pack has moved into the leading quadrant and is expected to outperform on a relative basis. It is likely to have the company of the financial services sector, which is also expected to outperform. 

The FMCG pack is likely to do well but performance may remain stock specific. Apart from this, the pharma pack is expected to put up a better show on the relative momentum front. Broader indices such as CNX 100, CNX 200 and CNX 500 will continue on the falling trajectory and this may check any runaway rise in the broader market. Auto, midcaps, smallcaps and Nifty Next 50 continue to deteriorate on the momentum front. No show is expected from the media pack. IT and realty may see sporadic outperformance.

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CAPITALSTARS-CORPORATE NEWS

Dr. Reddy's launches gSuboxone

Dr Reddy Lab Dr. Reddy's Laboratories has announced that it is launching generic of Buprenorphine and Naloxone Sublingual Film (Suboxone) following a final USFDA approval in the US market.

The product is being launched with USFDA’s approved Risk Evaluation and Mitigation Strategy (REMS) Program. US Company, Mylan has also launched this drug in the US market. Considering that the patent on this drug is still valid, this is at risk launch.

Buprenorphine and naloxone are used to treat adults with opioid dependence/addiction. The combination of these medications is used as part of a complete treatment program including prescription monitoring, counselling, and psychosocial support. The launch has been very important as per the USFDA’s recent statements indicating increasing opioid addiction in America.

Maruti Suzuki likely to bid adieu to Ignis Diesel variant

India’s largest passenger vehicle (PV) manufacturer Maruti Suzuki India Limited (MSIL) is likely to stop production of diesel variant of its hatchback Ignis, as per media reports. The Ignis was launched in January 2017 with both variants – petrol and diesel. While the petrol variant will be retained, diesel version will be likely discontinued. Several reasons could be responsible for the decision.

Firstly, the steep pricing proved to be a deterrent. While the petrol Ignis is priced between Rs4.66Lakh and Rs6.51Lakh, the diesel variant ranges between Rs6.32Lakh and Rs8.12Lakh (ex-showroom price in New Delhi as per website www.cardekho.com). Secondly, consumers are increasingly sceptical of owning diesel cars given that price difference between diesel and petrol in the retail market (fuel pumps) is narrowing. As per media reports, about 90% of Ignis models sold so far have been petrol variants and only 10% have been diesel variants. Lastly, it makes more sense for MSIL to free up capacity for its best-selling models rather than continuing with laggards.

Avanti Feeds surges after shareholders approve stock split

Avanti Feeds registered gains at the equity market after it announced its decision to sub-divide equity shares from face value of Rs2 each to Rs1 each. Further, it decided to issue bonus equity shares of Rs1 each in the ratio of 1:2, that is, one equity share of Rs1 each for every two and equity shares of Rs1 each (after sub-division of shares). Shareholders approved this recommendation with the requisite majority.This could be good news for the company.

The company is a leading manufacturer and exporter of shrimp feeds and shrimp processor. It also operates wind mill with an installed capacity of ~3.2 megawatt in Karnataka. It derived ~83% revenue from shrimp feeds and ~17% revenue from processed shrimp during FY18. The total feed capacity stands at six lakh tonnes per annum as on March 31, 2018.

Alembic Pharma rises on getting EIR from USFDA for Panelav unit

Alembic Pharmaceuticals Alembic Pharmaceuticals is currently trading at Rs520.35 up by Rs13.8 or 2.72% from its previous closing of Rs506.55 on the BSE. The pharma company said it received establishment inspection report (EIR) from USFDA for the inspection carried out by them at the company’s formulation facility at Panelav during the period from March 1, 2018 to March 20, 2018.

On Thursday, the firm announced during trading hours that day that it has received approval from USFDA for its ANDA for Doxycycline Hyclate capsules USP, 50mg and 100mg. The approved ANDA is therapeutically equivalent to the reference listed drug product (RLD), Vibramycin capsules, 50mg and 100mg, of Pfizer Inc.

NBCC bags contracts worth Rs480.6cr in May

NBCC NBCC (India) is currently trading at Rs85.50 up by Rs0.2 or 0.23% from its previous closing of Rs85.30 on the BSE.

The company has secured the total business of Rs480.65cr (approx) in the month of May, 2018.

NBCC is a Navratna PSU engaged in the business of project management consultancy (PMC), real estate and EPC. PMC and redevelopment comprises 87%, real estate and EPC forms 13% of the company’s order book. Through PMC, the company has been executing many landmark projects.

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CAPITALSTARS:- MARKET WRAP-UP

Sensex slips 139 pts, Nifty manages to hold 10,800; RIL at record close

Benchmark indices ended lower on Thursday as investors looked cautious ahead of ECB policy rate decision due later in the day after the US Federal Reserve raised interest rate by 25 basis points

The 30-share BSE Sensex declined 139.34 points to 35,599.82 and the 50-share NSE Nifty slipped 48.70 points to 10,808

TCS, Infosys, SBI, ICICI Bank, Axis Bank, Titan Company, Vedanta and L&T were under pressure while Lupin, Sun Pharma, Cipla and Coal India gained.

HEADLINES OF THE DAY

Ruchi Soya gains after co gives updates about bidding.

India May WPI rises 4.43%; Fuel price inflation at 11.22%.

ICICI Bank to sell 2% stake in life insurance arm.

The crucial resistance for Nifty spot is now seen at 10880 and above this 10960. Support for the immediate term is now placed at 10760 next support will be 10690.

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CAPITALSTARS:CORPORATE NEWS UPDATE

Karur Vysya Bank enters into Bancassurance agreement

The bank has entered into Bancassurance agreement with Max Bupa Health Insurance for distributing retail and group health insurance products to suit the needs of KVB customers.

Bharat Forge stock gains after picking strategic stake in UKs Tevva Motors

The company has entered into an investment agreement with Tevva Motor, Bharat Forge International, UK and existing shareholders of Tevva.

Pursuant to agreement, the company has acquired 34.53% and Bharat Forge International, UK, a wholly owned subsidiary of company, has acquired 0.73% stake in Tevva, aggregating to combined stake of 35.26%.

Dish TV stock rises after block deal

Shares of Dish TV India Ltd are currently trading at Rs74.50 up by Rs1.85 or 2.55% from its previous closing of Rs72.65 on the BSE. About 41 million shares changed hands in six block deals in today’s trade. The stock has erased three day’s losses and gained after block deal.

The scrip opened at Rs73.80 and has touched a high and low of Rs76.35 and Rs71.25 respectively.

RIL completes acquisition of 73% stake in AI firm Embibe

Pursuant to the definitive agreements executed by Reliance Industries (RIL) to acquire majority shareholding from existing investors of Indiavidual Learning Pvt Ltd (Embibe), a leading AI-based education platform leveraging data analytics to deliver personalized learning outcomes to each student, RIL, Embibe and the other stakeholders have completed all the closing conditions and have successfully completed the sale and purchase of the shareholding of the existing investors in Embibe to RIL.

With this transaction, RIL will hold 73% (on fully diluted basis) in Embibe. The founder and CEO of Embibe, Aditi Avasthi will continue in her leadership role and will drive the growth of the business.

TCS stock rises 2% after buyback plan

Tata Consultancy Services Tata Consultancy Services Ltd is currently trading at Rs1,812.90 up by Rs31.9 or 1.79% from its previous closing of Rs1,781 on the BSE.

The Board of Tata Consultancy Services will consider a proposal for buyback of equity shares of the company, at its meeting to be held on June 15, 2018.

However, the company did not disclose any further details about the buyback proposal.

On last year, the IT company had undertaken a Rs16, 000cr mega buyback offer, entailing 5.61cr shares at a price of Rs2, 850 per equity share.

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