2. Monthly Market Mirror
31 August 2019
1
MONTHLY MARKET – OVERVIEW
• On a monthly basis Nifty50 was down by 0.85 percent. However, on a weekly basis, Nifty50 gained 1.79 percent
• Nifty50, staged a strong comeback and ended the week on a buoyant note. The broader market relatively
outperformed the benchmarks in the week gone by but underperformed for the month of August.
• The weekly price action formed a high wave candle with significant lower shadow, reflecting strong recovery
after factoring in global volatility as buying demand emerged from 61.8% retracement of major up move
(10,005-12,103)
• Going ahead, we expect the index to undergo base formation in the broad range of 10800-11200 amid stock
specific action in the upcoming truncated week, setting the stage for eventual resolve above last four weeks high
of 11,200,
• If the index closes above 11,200 then it would take the index towards 11,500 in the coming month, so any dips
should be capitalized as a buying opportunity
• Any dip towards 10,800 should be used as an incremental buying opportunity in the upcoming truncated week
Nifty 50 Overview
NIFTY VIEW:
Monthly Closing 11,032.20
Monthly High 11181.25
Monthly Low 10638.35
Support Level 10800
Resistance Level 12000
MOVING AVERAGE
50 Days 11,341.83
200 Days 11,209.66
SECTOR OUTPERFORM
Short-term Neutral
Medium-term Positive
Long-term Positive
RETURN
1 Month -0.60%
1 Year -5.60%
3. 2
NIFTY BANK - OVERVIEW
• The Bank Nifty traded with high volatility on account of the monthly F&O expiry as it witnessed profit booking
for a second consecutive session and ended down 1.8% on Thursday. The decline was broad based as 10 out of
12 index constituents ended in the red. The Bank Nifty ended the session at 27305, down by 499 points or 1.8%
• the sharp up move of 1600 points in just three sessions has led the daily stochastic to enter overbought
territory, which has led to a healthy consolidation in the last two sessions. However, we believe a base formation
near 27000-26900 (i.e. 80% retracement of the last three session’s up move from 26560 to 28277) should be
used as an incremental buying opportunity for up move towards 28500 in coming weeks. This is since it is
confluence of the 200 days SMA and 38.2% retracement of entire fall (31783 to 26560)
• In the coming session, the Bank Nifty future is likely to open on a flat note. We expect the index to consolidate in
next week session, hence intraday dip towards 27310-27350 should be used as a buying opportunity for target
of 27490
• Structurally, on expect lines, the index witnessed a meaningful pullback after approaching time wise maturity. As
discussed earlier, since 2008, major correction has been of 12-14 weeks in a row followed by a sizable technical
pullback. In the current scenario, the index witnessed a sharp bounce after correcting for the past 12 weeks.
SECTOR OUTPERFORM
Short-term Neutral
Medium-term Positive
Long-term Positive
RETURN
1 Month -4.70%
1 Year -2.40
NIFTY BANK VIEW:
Monthly Closing 27,476.80
Monthly High 28,818.20
Monthly Low 26,563.10
Support Level
Resistance Level
MOVING AVERAGE
50 Days 29,359.84
200 Days 28,580.31
Monthly Market Mirror
31 August 2019
4. 3
MONTHLY EQUITY STRATEGY VALUATION METRICS
BSE 30 INDEX
12 MONTH ROLLING FORWARD P/E (X)
Monthly Market Mirror
31 August 2019
5. 4
NIFTY PRICE BOOK RATIO, DIVIDEND YIELD
PERFORMANCE OF GLOBAL INDICES – MONTHLY
-1
-0.5
0
0.5
1
1.5
2
2.5
Sensex 30+ Nifty 50 Nasdaq Dow S&P500 NIKKIE Hang Seng Shanghai Comp. Kospi
Return%
Sensex 30+ Nifty 50 Nasdaq Dow S&P500 NIKKIE Hang Seng Shanghai Comp. Kospi
Monthly Market Mirror
31 August 2019
9. 9
STOCK ANALYSIS- MONTHLY Fundamental Stocks Pick
SUNPHARMA LTD.
Better Than Expected Performance
in 1QFY20
• Sun Pharmaceutical Industries (SUNP) has reported
higher-than-expected performance in 1QFY20 led
by healthy growth across geographies.
• Its reported sales/EBITDA/PAT grew by
16%/14%/15% YoY to
Rs83.7bn/Rs19.3bn/Rs13.9bn, respectively while
EBITDA margin remained flat on YoY basis at 23%.
• Sequential performance is not comparable due to
one-off sales loss of Rs10.85bn in domestic business
in the previous quarter. SUNP has completed
business related transition of distribution business
from Aditya Medisales (AML) to its WOS in 1QFY20.
• Domestic sales grew by 8% YoY to Rs23.1bn, which
adjusted for AML transition stood at 12% YoY. Its US
business – including revenue from generic business
revenue supply which will not be there from
2QFY20 onwards – grew by 12% YoY to US$424mn.
RoW business grew by 56% YoY to US$167mn on
account of consolidation of Pola Pharma in Japan
and ramp-up in its base business. EM (flat on YoY
basis) and API business (+13% YoY) stood at
US$194mn and US$66mn, respectively.
• Gross margin remained flat on YoY comparison at
71% due to product-mix across geography and
transition in domestic business.
COMPANY SHAPSHOT
CMP 450.65
TARGET 555
TIME FRAME 6 MONTH
NSE CODE SUNPHARMA
BSE CODE 524715
CMP 24 Aug 2019 450.65
EQUITY CAPITAL 239.93 CR
FACE VALUE Rs. 1.00
EQ SHARE O/S 29.83 CR.
MARKET CAP 108,066 CR
BOOK VALUE 172.59
AVG 52 WEEK
VOLUME
1770810
52 WEEK HIGH 679.30
52 WEEK LOW 344.55
Monthly Market Mirror
31 August 2019
10. 10
VALUATION AND OUTLOOK
SUNP has reported a strong performance in 1QFY19 on the back of healthy growth across geographies. On positive note, it
completed the transition in distribution in India business from AML to WOS, following which it reported 12% YoY underlining
growth and expects better-thancovered-market growth of 9-10%.
While fundamental thesis of positive operating leverage in the US business and steady India/EM business dynamics remains intact
and is expected to drive sustained earnings momentum for SUNP (+23% CAGR over FY19-FY21E), We believe the recent corporate
governance issues limit scope for a valuation rerating in the medium term.
We retain our FY20/FY21 EPS estimates of Rs 20/Rs 23 and maintain Buy with a rollover to a Sep’20 target price of Rs 555 Our target
EV/EBITDA multiple is unchanged at 11x (18x implied P/E).
Monthly Market Mirror
31 August 2019
11. 11
PIRAMAL ENTERPRISES
Solid start to the year
Piramal Group is a diversified global business
conglomerate, which has presence across various
sectors such as healthcare, life sciences, drug
discovery, healthcare information management,
financial services and real estate.
• Q1 FY20 sales surged 20.8% YoY to Rs. 3,506cr
helped by robust growth in Financial Services
revenue (+29.2%)
• EBITDA margin improved 887 bps YoY to 62.0% with
healthy spreads in Financial Services and expanded
margins in Pharma business.
• Adjusted PAT was up 20.6% YoY to Rs. 462cr
(excluding one-off severance payments of Rs. 11cr
in Q1FY20).
• Company reported strong topline growth in Q1FY20
(+20.8 per cent y-o-y to 3,506 crore). Growth is
primarily led by robust performance in Financial
Services division (+29.2 per cent y-o-y to 2,014
crore), despite liquidity tightening in the NBFC
space and overall slowdown across sectors.
• Total loan book rose 20.2 per cent y-o-y to 56,605
crore, while gross NPA ratio stood at 0.9 per cent
(63 per cent q-o-q decline in stage 2 assets),
maintaining healthy asset quality.
COMPANY SHAPSHOT
CMP 2048.45
TARGET 2260.00
TIME FRAME 3 MONTH
NSE CODE PEL
BSE CODE 500302
CMP 2048.45
EQUITY CAPITAL 39.77 Cr
FACE VALUE 2.00
EQ SHARE O/S 19.89
MARKET CAP 40,383 Cr
BOOK VALUE Rs 1370
AVG 52 WEEK VOLUME
52 WEEK HIGH 3307.95
52 WEEK LOW 1651.80
Monthly Market Mirror
31 August 2019
12. 12
VALUATION AND OUTLOOK
We believe the ongoing growth momentum will continue to support upside potential for the company. We
value the stock using (SOTP) valuation methodology (based on P/B for Financials and P/E multiples for other
businesses) and rate it a BUY with a price target of Rs. 2260.
Monthly Market Mirror
31 August 2019
13. 13
TECHNICAL STOCKS PICK
HAVELS LTD
• In the last four weeks, the stock has been forming a higher base at the major support area of | 630-640 being the confluence of the
61.8% retracement of the previous up move (| 550 to 806)
• The last two month’s corrective decline has helped the stock work off the overbought condition developed after strong rally between
October 2018 to June 2019 (| 550 to 806)
• The weekly stochastic is seen rebounding from the oversold territory and has generated a bullish crossover above its three periods
average thus supports the positive bias in the stocks
• The current consolidation of the last four weeks is approaching maturity and we expect the stock to resume up move towards | 715
levels being the 50% retracement of the entire previous decline (| 806 to 622)
TECHNICAL EVIDENCES
BUY - 680 TARGET 720 STOPLOSS 650
Monthly Market Mirror
31 August 2019
14. 14
CEAT LTD.
• The stock registered a resolute breakout above the falling channel containing the entire corrective decline since May 2019 high (|
1054) signalling a reversal of the corrective trend and offers fresh entry opportunity to ride the next up move in the stock
• After sharp up move in the first week of August, the stock consolidated in a range in the last two weeks and is seen resuming up move
during current week trade
• It has maintained a higher high and higher low during the last four weeks and moved above the 50 days EMA at 889 signalling base
formation with positive bias
• We expect the stock to continue its current up move and head towards 948 in coming weeks as it is the high of July 2019 and the
61.8% retracement of the last major leg of decline (1054 to 776) at 948
TECHNICAL EVIDENCES
BUY - 910 TARGET 948 STOPLOSS 880
Monthly Market Mirror
31 August 2019
15. 16
DERIVATIVE OUTLOOK
The Nifty futures open interest has decreased by 24.09% Bank Nifty futures open interest has decreased 29.77% as market
closed at 10948.30 levels
The Nifty OI decreased by 24.12% and currently stands at 18.03 million.
The Nifty September future closed with a premium of 54.05 points against a premium of 38.80 points in last trading session.
The October series closed at a premium of 94.65 points.
The INDIA VIX has increased from 16.01 to 16.42. At the same time, the PCR-OI of Nifty has increased from 1.11 to 1.31.
At present, we are starting a new series with lower base, fresh build-up going ahead shall give more clearity for the upcoming
trend. At current juncture, 10700-10800 is an immediate support zone; whereas, 11100-11200 shall act as a hurdle for the time
being.
Monthly Market Mirror
31 August 2019
16. 17
DERIVATIVE STRATEGIES:
The short put ladder, or bull put ladder, is a unlimited profit, limited risk strategy in options trading that is employed when the options
trader thinks that the underlying security will experience significant volatility in the near term.
Sell 1 ITM Put
Buy 1 ATM Put
Buy 1 OTM Put
Maximum gain is limited to the initial credit received if the stock price rallies above the upper breakeven point but large unlimited profit
can be achieved should the stock price makes a dramatic move to the downside below the lower breakeven point.
Maximum loss for the short put ladder strategy is limited and occurs when the underlying stock price on expiration date is trading
between the strike prices of the put options bought
Bull Call Spread on NIFTY (CMP 11864)
Sell Nifty 10900 call around 300
Buy Nifty 11100 call around 150
Buy Nifty 11200 call around 100-110 .
Max. Profit : Undefined
Max. Loss : Undefined
Breakevens : 11300.0
Total PNL : +17,347.5
Estimated Margin +284,694
Monthly Market Mirror
31 August 2019
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