Market Mantra
Dovish tone by Fed! Sensex, Nifty set for better start
Federal Reserve Chairwoman Janet Yellen persisted with a dovish tone on monetary policy. In her speech at the Economic Club of New York, Yellen said that it was too early to tell if the recent pick-up in inflation would last and that the Fed needed to proceed cautiously on raising rates amid global risks. Following this, US indices advanced on Tuesday, with the S&P 500 and the Dow rising to their highest close of 2016.
The outlook is a positive start. After weakness on Monday, the indices turned choppy as they struggled for direction ahead of the F&O expiry. Selling pressure in Pharma dominated the headlines. Lupin dropped 6.3% after the drug major's Mandideep unit in Madhya Pradesh was inspected by USFDA in Feb. Pharma stocks in general and Lupin in particular have been under pressure amid fears of heightened regulatory scrutiny especially from US FDA.
Trading ideas (Time period: 1-3 days)
Pidilite Industries (BUY, above Rs602, Target Rs630, SL Rs590): Stock broke out from a triangle pattern in first week of Feb, thereby making new highs. Post this stock corrected and retested the trendline from where the breakout occurred. This is classical case of stock retesting the trendline support and moving up. The trendline support also coincided with the 100-DMA, and stock moved up with impressive volumes. Traders can enter longs above Rs602, for target of Rs630 and stop loss of Rs590. (Duration 3 days)
Derivative strategies (Time period: Till expiry)
² Buy Fut TataChem April Above Rs371 with SL of Rs365 for target of Rs383
Lot size: 1100 Remarks: Net maximum profit of Rs13,200 and net maximum loss of Rs6,600
Corporate Snippets
² Cadila Healthcare said that it has received the final approval from the US drug regulator to market an anti-viral drug Acyclovir capsules (200 mg). (BS)
² Ashok Leyland has won orders valued at Rs8bn from the Indian armed forces. The company will supply Field artillery tractor, super stallion vehicles and ambulance. (ET)
² Lupin has received a total of three observations relating to violation of production norms at manufacturing facilities at Mandideep, Madhya Pradesh from the US Food and Drug Administration. (BL)
² Reliance Defence Ltd, a 100% subsidiary of Reliance Infrastructure Ltd, and Rafael Advanced Defence Systems Ltd have decided to set up a joint venture (JV) company in India in the areas of air-to-air missiles, air defence systems and large aerostats. (BS)
² Sadbhav Infrastructure Project has been awarded "L1" status for road projects from National Highways Authority of India. The first is the four laning and design chainage of Rampur-Kathgodam section of NH-87 in the State of Uttar Pradesh under NHDP-III on hybrid annuity mode. (BS)
² Aurobindo Pharma Limited has received final approval from the US Food and Drug Administration to manufacture and market rivastigmine tartrate capsules USP in 1.5 mg, 3 mg, 4.5 mg and 6 mg strengths. (BS)
² Bank of India said the government has approved a capital infusion of Rs11.5bn in lieu of preferential allotment of shares. (BL)
² Adani Ports and special economic zone said it has raised Rs5bn through issue of debentures on private placement basis. (ET)
² GlaxoSmithKline Pharmaceuticals Ltd is looking at launching two or three combination vaccines in India in the near future, to address a host of paediatric disease. (BL)
² Alembic Pharmaceuticals, is likely to receive some minor observations (as a Form 483) from the US drug regulator for its Panelav facility. (ET)
Economy snippets
² The government permitted 100% FDI in the market place format of e-commerce retailing with a view to attract more foreign investments. (BS)
² Employees Provident Fund Organisation allowed interest payments on inoperative accounts with effect from April 1, 2016, reversing a five-year-old decision by the UPA government. (BL)
² RBI said foreign investors will be allowed to buy up to Rs275bn (US$4.13bn) in additional sovereign debt starting next month, as part of its previously announced plan to allow increased overseas investments. (ET)
² India is expected to produce 25.64 mn tonnes of sugar in the 2015/16 cane crushing season that began in October, a government source said, lower than the previous official forecast of 26 mn tonnes. (BS)
² National Bank of Agriculture and Rural Development (Nabard) said it has disbursed Rs25bn in refinance to non-banking lenders in the first year of starting the facility. (ET)
² Indian corporates raised over US$1.35bn (around Rs90bn) from overseas markets in February, down 40.2% over the same month a year ago, RBI data showed. (ET)
² The state-run Maharashtra State Electricity Distribution Company (MahaVitaran) has proposed an average tariff hike of 5.5% for 2016-17 across its 25 mn consumers. In its petition before the Maharashtra Electricity Regulatory Commission (MERC), it has argued that the rise in tariff is necessary to meet the revenue gap of Rs389.8bn. (BL)
Warm Regards,
Amar Ambani
IIFL
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