Adjusting to neutral Budget! Indices may chart own course at start
The big event is now behind us and what lies ahead is hope that GST will sooner than later get passed and that the RBI may get into action and lower rates. With none of the feared negatives making it into the Union Budget (no increase in time frame for long term capital gains or super-rich tax or hike in basic excise), it remained more of a neutral event. The silver lining was that the fiscal deficit target of 3.9% was met and target of 3.5% has been maintained for FY17. This raises expectations of a rate cut from the RBI. The two other big positives are the Rs2 lac crore capital expenditure on roads and railways and continued flow of funds and autonomy from Centre to State.
The outlook is a flat to positive start as indices look to chart their own course in the morning. Auto numbers and PMI manufacturing data will be eyed besides continued dissecting of the budget. Global cues are not helping really as Asian indices are mixed with Nikkei lower and Shanghai higher.
Trading ideas (Time period: 1-3 days)
ICICI Bank (BUY above Rs190, Target 205, SL Rs181): ICICI Bank is showing some signs of the strong bounce, on analyzing the hourly charts, the stock is on the verge of a declining trend breakout. On the daily charts, RSI is also showing positive crossover which indicates that the upswing is here to stay for a while. In addition, volumes have also picked up surpassing previous weeks volumes. We advise trades to BUY ICICI Bank above Rs190 with stop loss placed at 181 for Target of 205. (Duration 2-3 days).
Derivative strategies (Time period: Till expiry)
² Buy FUT Kotak Bank March Above Rs630 with SL of Rs604 for target of Rs682
Lot size: 700 Remarks: Net maximum profit of Rs36,400 and net maximum loss of Rs18,200
Corporate Snippets
² Budget airline IndiGo said it would receive its first A320neo jet in March, three months later than originally planned after manufacturer Airbus said it could not deliver the aircraft on time. (BS)
² Tata Group's Tata Communications Payment Solutions (TCPSL), which operates white and brown-label ATMs under the Indicash brand, is in talks with payments and small banks for use of its physical infrastructure in towns and villages as micro bank branches.
² Zee Entertainment group has acquired the exclusive telecast rights for the Times of India Film Awards (TOIFA) 2016 across the world excluding India. (ET)
² Maruti Suzuki India (MSI) has started shipping its premium hatchback Baleno to Europe, ahead of the formal launch of the model by its Japanese parent Suzuki Motor Corp. (ET)
² Indian Oil Corp has bought 1 million barrels of March-loading Urals crude via a tender, the country's first purchase of the Russian grade in a year, two sources close to the matter said. (ET)
² Drug major Lupin said its wholly-owned Japanese subsidiary, Kyowa, plans to set up a manufacturing plant at Tottori, Japan as part of expansion plans in the country. "In order to meet the rapidly growing demand of generics, the Kyowa board has proposed the setting-up of a two billion tablets capacity plant at Tottori, Japan which would be designed to efficiently handle mass volume products and provide flexibility in allowing easy future expansion," Lupin Ltd said in a regulatory filing. (ET)
² Thailand based Indorama Ventures (IVL), one of the world's leading petrochemicals producers and Dhunseri Petrochem have agreed to enter into a 50:50 joint venture to manufacture polyethylene terephthalate (PET) resins for domestic as well as international markets. (ET)
² "The doubling of the clean energy cess on coal announced in the budget is disappointing as the hike would amount to about 6% additional burden on fuel cost", M S Unnikrishnan, Managing Director, Thermax Ltd said. "The gencos will pass it on to already stressed discoms that will not be able to share it with consumers as power prices are regulated by the Government. This proposal could adversely affect the balance sheets of discoms". (BL)
² Jaiprakash Power Ventures has commenced commercial operations at the 660 MW unit-1 of the Bara Super Critical Thermal Power Project, the company said in a notification to the stock exchanges. (BL)
Economy snippets
² India's infrastructure output grew 2.9% in January 2016 compared with 2.3% a year ago. (BS)
² In a significant development, the Delhi High Court upheld telecom regulator's Trai decision asking operators to mandatory compensate mobile users with rupee one for every call drop, maximum to three calls per day. (BS)
² Oil Marketing Companies (OMCs) slashed prices of petrol by Rs3.02 per liter and raised diesel rates by Rs1.47 per liter in order to align the domestic rates of the automobile fuels with global benchmarks. (BS)
² In a bid to curb cigarette smoking in the country, the government has increased excise duty on tobacco products other than Bidi by 10-15%. The hike for FY17 however is lower than the rate of excise duty increase in the previous year. (BS)
² The government proposed to give income tax exemption to foreign companies for storing and selling oil to local refiners, a move that could spur interest from global oil producers in leasing the country's strategic petroleum reserve (SPR) facilities. (ET)
² Providing clarity on spectrum trading deals, Finance Minister Arun Jaitley said right to use spectrum and its subsequent transfer is a service which will attract service tax. (ET)
Warm Regards,
Amar Ambani
IIFL
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