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Nifty listless, tests 5900 levels: Top ten stocks in focus

Sep 252013
 

 

Nifty listless, tests 5900 levels: Top ten stocks in focusNEW DELHI: The 50-share Nifty index turned choppy after opening on a flat-to-positive note on Wednesday ahead of the September series expiry. Gains in realty, capital goods and auto sectors were offset by losses in banks, technology and oil & gas stocks.

According to dealers, the trade is likely to remain choppy in absence of cues from global peers and as traders square-off open positions.

At 10:05 a.m.; the 30-share index was at 19,932.18, up 12 points or 0.06 per cent. It touched a high of 19,978.49 and a low of 19,897.15 in early trade.

The Nifty was at 5,891.95, down 1.5 points or 0.01 per cent. The index touched intraday high of 5,910.40 and a low of 5,885.45.

“The Nifty is expected get support around 5855 and resistance will be at 5935,” said Somil Mehta, Senior Tech Analyst (Equity) at Sharekhan.

“The Nifty has completed a five-wave pattern from 5118 to 6142 and is now expected to retrace the entire rally till the 40-weekly moving average (WMA), ie 5755,” he added.

Mehta is of the view that the short term bias for the Nifty remains negative for a target of 5755 with reversal around 6150.

The medium-term outlook remains positive because the Nifty has retraced 61.8% of the previous rally from 4770 to 6229 and is trading above the 20-WMA and the 40-WMA, ie 5822 and 5755 respectively, he added.

Here is a list of ten stocks which are in focus in trade today:-

Tata Motors Ltd: Tata Motors-owned Jaguar Land Rover (JLR) today announced a multi-million-pound investment in research and development in the UK that will be focused on a state-of-the-art centre at the University of Warwick campus.

At 10:05 a.m.; the stock was trading 2.4 per cent higher at Rs 344.75.

Tata Consultancy Services Ltd: TCS said it would set up an all-women business processes outsourcing centre in Saudi Arabia, a conservative Islamic nation where women must be accompanied by a male relative when in public and are not allowed to drive.

At 10:05 a.m.; the stock was trading 0.6 per cent lower at Rs 1,927.75.

Hexaware Technologies Ltd: Approving one of the biggest deals in the Indian IT space, fair trade watchdog CCI has cleared Baring Private Equity’s proposed acquisition of controlling stake in outsourcing firm Hexaware Technologies, saying the transaction will not adversely impact competition.

At 10:05 a.m.; the stock was trading 1.4 per cent higher at Rs 128.65.

Kingfisher Airlines Ltd: Criris-hit KFA said it is in talks with a foreign investor for potential stake sale, its Chairman Vijay Mallya said on Tuesday. The stock gained nearly 10 per cent on Tuesday and is likely to see further traction on Wednesday.

At 10:05 a.m.; the stock was trading 9.9 per cent higher at Rs 5.65.

Ashoka Buildcon Ltd: The company said it has received orders valued at Rs 494.50 crore from Maharashtra State Electricity Company Ltd (MSEDCL).

At 10:05 a.m.; the stock was trading 3.6 per cent higher at Rs 46.65.

Fertiliser stocks: The total fertiliser subsidy budget for the fiscal 2013-14 is anticpated to be in the range of Rs 65,000-70,000 crore excluding carryover subsidy of last years, a ratings agency said in a report.

At 10:05 a.m.; Coromadel International Ltd was trading 0.1 per cent higher at Rs 221.05.

Financial Technologies Ltd: Just a day before Financial Technologies (FT), the MCX Group’s flagship company, planned to meet its shareholders at the annual general meeting in Mumbai, its auditor Deloitte Haskins and Sells has withdrawn its audit report saying that the company’s standalone and consolidated results are not to be relied upon.

At 10:05 a.m.; the stock was trading 5.6 per cent lower at Rs 157.80.

Unitech Ltd: The world’s largest property investor, Blackstone, has agreed to buy out a 3.6-million-sqft IT SEZ in Gurgaon, partly owned by Unitech, for 2,600 crore.
At 10:05 a.m.; the stock was trading 0.9 per cent higher at Rs 16.85.

SAIL: State-owned steelmaker SAIL has tied up with Siemens to upgrade the technical competence of its work force. Siemens will offer training in automation, DC/AC servo drives, switchgears and other related technologies such as process instrumentation and mechatronics at the steel major’s units in Bhilai, Bokaro, Durgapur, Rourkela, Burnpur, Salem, Bhadravati and Kolkata.

At 10:05 a.m.; the stock was trading 0.4 per cent lower at Rs 52.20.

Hindustan Motors Ltd: Crisis-ridden Hindustan Motors, a C K Birla group company, is gearing up for the launch of a small car in the next fiscal, its MD and CEO Uttam Bose said on Tuesday.

At 10:05 a.m.; the stock was trading 1.4 per cent higher at Rs 8.67.

 

NSE trading positions worth around Rs 300-500 crore in the options segment under regulatory scanner

Jul 022013
 

NSE trading positions worth around Rs 300-500 crore in the options segment under regulatory scannerMUMBAI: Trading positions worth around Rs 300-500 crore in the options segment on National Stock Exchange (NSE) have come under the regulatory scanner on suspicion that these could have been pre-negotiated trades between buyers and sellers, said three sources aware of the probe under way by capital market regulator Sebi and NSE.

All positions being looked into are in deep-in-the-money Nifty call and put options of June and December 2013 expiry series. Though legally, nothing prevents anybody from buying or selling deep-in-the-money or far-dated options, regulatory concerns have arisen that the funds raised through the sale of these instruments may have been pre-negotiated. Another worrying factor was the possibility of default by the sellers of the options as the shares they placed as collateral with the bourse for writing the options may have dwindled in value.

What alerted the authorities was the fact that these options had generated significant participation despite their being of levels or strikes of 2700 and 8500, which are very costly and relatively less liquid than at-the-money or out-of-the-money options.

Till recently, it was learnt that NSE had withheld payments to clients of Mumbai-based broker Prime Securities, which owes money to the exchange, as margins (shares) the brokerage placed with it to take positions on equity derivatives had shrunk because of the fall in their prices.

Prime has moved the Securities Appellate Tribunal against NSE. Market players wonder why certain brokers have not been officially declared defaulters if they have failed to meet margin requirements. As per Sebi guidelines and exchange byelaws, any member failing to fulfill margin requirement at the time of inadequate collateral should be immediately declared a defaulter.

In derivatives trading, a buyer or seller bets on the future price of an underlying. Options are a form of derivatives instruments that are settled in cash in India. Exposure is taken in futures against payment of a margin, which is marked-to-market daily while an option can be purchased by payment of a premium.

Stockbrokers and derivatives experts say deep-in-the-money positions like the one seen in June and December series were nothing but financing deals using the exchange platform. Stockbrokers, such as Chetan Jain of Anand Rathi, say the financier (buyer) for such deals charges interest around 13-14% to the borrower.

The mechanics work like this. An entity needing funds sells a 2700 Nifty call for Rs 3,080 and an 8500 put for Rs 2,370 (both prices as of last Friday) in June to a buyer, earning a total premium of Rs 5,450. Both contracts expire in December. The maximum loss the trader will have to take if the Nifty trades between 2700 and 8500 (5800 range) is Rs 350 (5800-5450). This Rs 350, or 6.4%, for six months is the interest that the seller pays to the buyer. At end of trade, the funds (5450) are returned to the buyer.

The breakeven point – the level above which option seller will have to pay the buyer – is 5780 (2700 + 3080) for the call and below 6130 (8500 – 2370) for the put. So, if the Nifty closes at say 6000 by December, the seller pays the buyerRs 220 on the call and Rs 130 for the put, which is 350. If Nifty closes at 5780, the call expires worthless, but the seller has to pay Rs 350 (6130 – 5780) to the buyer on the put.

Since it is unlikely for Nifty to reach either 2700 or 8500 by December, this arrangement is ideal for such financing deals to be struck. The number of shares comprising Nifty outstanding on the 2700 call expiring in December was around 341,950 last Friday while that on the 8500 put was 247,200. Multiplying this with the premia gives the price the writers have made. As of last Friday, the outstanding positions were worth Rs 105.3 crore on the 2700 call and Rs 58.5 crore on the 8500 put.

Alook at the Nifty option data on NSE for December (as on last Friday) shows that the most active call was the 6500 strike Nifty with outstanding shares at 1,291,100 and the most active put is the 5000 strike with outstanding shares at 1,025,850. The premium on the 6500 call is Rs 94 while that on the 5000 put is Rs 58.

Sensex shrugs off better IIP data

Jul 122012
 

The better than expected IIP numbers failed to lift investor sentiment as Infosys’ quarterly numbers continued to loom large. The Sensex slipped further on heavy profit booking.

At midday, the 30-share BSE Index was at 17,264.71, down 224.43 points or 1.28 per cent. It has touched a high of 17,329.46 and a low of 17,244.09 today.

The 50-share NSE index was at 5,246.10, down 60.20 points or 1.13 per cent. It has touched a low of 5,234.30 and a high of 5,261.75 today.

IT bellwether Infosys crashed more than 10 percent in early trade to Rs 2,216 a share after the company reported a drop in dollar revenue, lower margins and dollar guidance for the financial year 2012-13 which has been scaled downwards. The stock is currently trading at Rs 2,241.40, down 224.95 points or 9.12 per cent.

“Overall, disappointing results from the IT major as revenue in dollar terms dropped 1.07 percent to USD 1,752 million from USD 1,771 million and even earnings per share slipped to USD 0.73 from USD 0.81 a share,” A.K. Prabhakar, Senior Vice President – Equity Research at Anand Rathi, said.

“Guidance too was revised to 5 percent from 8-10 percent earlier,” he added.

All sectoral indices were in the red with the BSE IT Index plunging 5.80 per cent to 5,344.86.

The BSE Realty Index was 1.38 per cent lower and the BSE Capital Goods Index declined 0.83 per cent. The BSE Oil & Gas Index was up 0.28 per cent and the BSE FMCG Index edged 0.16 per cent higher.

Infosys Technologies (9.18 per cent), Wipro (4.18 per cent), TCS (2.44 per cent), Bharti Airtel (1.85 per cent) and M&M (1.56 per cent) led the Sensex decliners. Gainers included Hindustan Unilever (1.37 per cent ), ONGC (1.11 per cent), Hero MotoCorp (0.59 per cent), Cipla (0.43 per cent) and GAIL (0.39 per cent).

The market breadth was negative on the BSE with 1,494 losers against 890 gainers.

Strange ways of stock

May 182009
 

finance-companiesUnreal and surreal, the Sensex surged by 17.3 per cent – 2,110 points – in an unprecedented single-day surge in the market, but its fine print was fuzzy. The answer lies in technicalities that reflected an unusual day.

The index levels are decided by individual components trading at a particular price and even if only one share gets transacted at that price it will decide the visible market value.

This is what happened today as in the absence of sellers, a few transactions at high prices took the Sensex up ,

Since both BSE and the National Stock Exchange applied their circuit-breaker rules after the record surge, no transaction was there to check if the rally actually was sustainable.

The index hit the circuit twice during the day. A circuit limit is one beyond which the stock price cannot either up or down within one trading day.

If the exchange has fixed a circuit for the index or a stock at 10 per cent, then as soon as the price hits this limit, the exchange will stop trading on the concerned stock or index.

Different stocks have different limits prescribed by the exchanges.

Short covering, the practice of speculators buying shares to make up for their bearish positions, was a major factor on Monday.
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