Budget day! Weak start, Jaitley to call the shots later
After a week of decline, Monday morning has nothing positive to offer given the subdued global sentiment. Yes, all eyes will be on the Union Budget which Finance Minister Arun Jaitley will present around 11 am. Corporate tax reduction, increasing service tax rate, some steps towards GST implementation, capital support for PSU banks and divestment of government stakes in PSUs along with some reforms are among the broad expectations.
The outlook is a weak start. The run-up to the budget has been one of the worst for the market with the indices seeing one of its worst fall from calendar year to Budget date. Can Arun Jaitley turn the tide remains to be seen today. Nifty staged a smart comeback ahead of budget on Friday. Nifty needs to surpass the 7090 mark on closing basis beyond which we see Nifty making a dash towards the 7240 resistance mark."
Trading ideas (Time period: 1-3 days)
IGL (BUY, below Rs508, Target Rs535, SL Rs496): IGL had been on a downward trend since last week of January after forming a double top. However, this decline could easily turned out to be a correction in a bull market for IGL as the stock found support around its 78.6% retracement of its previous upmove. The same also coincided with the support of its 187-DMA. On intra-day charts, it gave a breakout from downward sloping trendline, suggesting an end to the current decline. (Duration 4 days)
Derivative strategies (Time period: Till expiry)
² Buy TATAMOTORSDVR Put March 220 Above rs 6 with SL of 2 for target of 14/18
Lot size: 2100 Remarks: Net maximum profit of Rs25,200 and net maximum loss of Rs8,400
Corporate Snippets
² The consortium of 17 lenders to the long grounded Kingfisher Airlines have decided to move the Debt Recovery Tribunal (DRT) against the airline Chairman Vijay Mallya to stake claim on the USD75mn severance package he will be getting for quitting United Spirits (USL). (ET)
² Realty major DLF has given an about Rs8bn contract to L&T for construction of its new office complex in Gurgaon. (BL)
² Aurobindo Pharma has received tentative approval from the US health regulator for its Ritonavir tablets used for treatment of human immunodeficiency virus infection.
² Adani Enterprises, the flagship firm of the Adani Group, has incorporated subsidiary Korba Clean Coal Pvt Ltd for carrying on the business of coal washing. (BS)
² Dr Reddy's Laboratories Limited had initiated a voluntary recall of Paricalcitol capsules of different dosages in the US market in November last year owing to the reports of breakage of capsules. (BS)
² JustDial is set to launch a Rs1bn marketing blitz. The company, which recently launched a seller app, has tried to pivot away from its simple listing model. JustDial has started transactions on its app and is in the final stages of introducing one-click payment - like Amazon in the US - effectively entering the e-commerce race. (BS)
² In one of the biggest transactions in the cement industry, the debt-laden Jaypee group signed a binding agreement to sell its cement business, with a capacity of 18.4mn tonnes per annum (mtpa), to the Aditya Birla Group's UltraTech Cement, for an enterprise value of Rs165bn. Under the deal, UltraTech will pay an additional Rs4.7bn for completion of the grinding unit for 4 mtpa capacity under implementation. (BS)
² Ashoka Buildcon said it has won road projects worth Rs4bn in Jharkhand. (ET)
² Suzlon Group announced that it has bagged an order for 71.40MW wind power project from state public sector undertaking (PSU) Gujarat Industries Power Company Ltd (GIPL).
Economy snippets
² Indian Railways will lay 7 km of tracks every day in 2016-17 as against an average of 4.3 km per day in the last six years, as part of its capacity augmentation plan. The drive is expected to gather further pace in 2017-18 when rails will be laid in about 13 km every day. The bar will be raised further in 2018-19 to 19 km per day, according to an action plan formulated by the public sector behemoth to bolster rail network. (ET)
² Prime Minister Narendra Modi has asked the Power Ministry to target electrification of around 200 villages every week by holding regular follow ups with the state implementing agencies. (BS)
Warm Regards,
Amar Ambani
IIFL
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