NSE-INDEX OUTLOOK – 18 December-22 December, 2017

For educational purpose only, please trade after consulting with your advisor.

NIFTY 50: On last week of trading session we have seen a sharp movement in Nifty on Both sides. Nifty Started the week at 10310.50 with gap-up and touched a low of 10141.55 and then shown a sharp recovery and close a week 10333.25 with a overall gain of 67.60 Points.

Now what’s next: 

On the Weekly Charts we have strong Support at 10,094 and 9709 wherein Resistance is at 10389 and 10410.

Once Nifty close above 10410 on a weekly basis, then we may see a strong upmove. But i am not expecting the upmove will sustain longer.  

If i have to go for fresh position in this Market, then i will short Nifty future when Nifty spot is trading near 10400. I will take a stop loss of 10490( spot) on closing Basis. My first Target will be 10145 and second target will be 10033.

How Any Share of Future & Open will Enter into Ban Period

Dear Reader,

Today i am sharing the basis on which any stock of Future & Option will Enter into Ban Period.

The Key terms are as under:

1. Open Interest: This is the number of open Outstanding Contract in the Market.

2. Market Wide Position Limit: This is applicable only in the case of Stocks and not in the case of Index. Market Wide Position Limit is lower of:
    (A) 30 Times of the Average number of shares Traded daily during Previous Calender Month in  case of Cash segment of the Exchange,
    (B) 20% of the share not held by Promoter group . In other words, 20% of Free Float Share Capital of the Company.

Any Share will go into a Ban when its Derivative contract cross 95% of the Market Wide Position Limit. In other words, when the Open Interest in all the Future & Option Contract exceeds 95% of the Market Wide position Limit.

Once Any scrip will enter into a Ban Period, then no new position is allowed to enter. However, Intraday trades are allowed. If by mistake any new contract was entered, then there is a fine of Rs 5,000.

The Stock will enter into Normal Trading only if overall Open contracts fall below 80% of Market wide position limit.

On Monthly Basis, a stock Exchange release the Market wide position limit.

To get the detail of latest Stock wise Market Wide Position Limit, then please click on the below link.

https://www.nseindia.com/products/content/derivatives/equities/position_limits.htm

How to Read P/E and P/B Value and its Impact

Dear Reader,

Greetings from ANKIT STOCK VIEW TEAM!

Today we are going to share the How to read P/E( Price to Earning Ratio) and P/B ( Price to Book Ratio).

Calculation of Price to Earning Ratio:

PE ratio measures the PE ratio of the  company . PE ratio is also known as "price multiple" or "earnings multiple". If P/E is 20, it means that the price of the stock is 20 times its earnings. 

Formula for Calculating P/E= Price of the Share/ Earning per Share

For stock Selection purpose, we considered the P/E of industry and P/E of that particular Stock.
However in relation to Index as a whole,  as a general practise, we calculate the P/E of Nifty.

Nifty PE ratio measures the average PE ratio of the Nifty 51 companies covered by the Nifty Index. If P/E is 15, it means Nifty is 15 times its earnings.

History clearly indicates us that Nifty is considered to be in oversold range when Nifty PE value is below 14 and it's considered to be in overvalued range when Nifty PE is near or above 22. The market quickly bounces back from the oversold region because intelligent investors start buying stocks looking to snatch up bargains and they do the exact opposite when Nifty P/E is in the overbought region.
Below is the Tabular Table clearly indicating How Nifty perform in relation to its P/E

Considering the Closing Price of Nifty 51 as on 16th March,2017, the P/E Value of Nifty is 23.65.

Calculation of Price to Book Ratio:

This is Similar to P/E Ratio. The only difference is that while calculating P/B Value, we considered the Book Price of Share (Market price in case of P/E Ratio). The Rest Concept is Same.
But while doing decision making considering P/B Ratio, we also consider the Dividend Yield Concept.

Nifty is considered to be in oversold range when Nifty P/B ratio is below 2.5 and it's considered to be in overbought range when Nifty P/B is near 4. Dividend yield generally bounces between 1 and 1.5. A dividend yield above 1.5 means its a good time to buy.

A long term investor should buy Nifty Bees as well as individual stocks when P/B ratio is near 2.5 to get maximum return from stock market. This is the point where Nifty is lowest which of course means that the so called "stock market gurus" on TV would be screaming gloom and doom messages about the world when the index reaches its lowest level.

Considering the Closing Price of Nifty 51 as on 16th March,2017, the P/B Value of Nifty is 3.47 and the Dividend Yield of Nifty 51 is 1.21.

This Article is only for your Knowledge Purpose. The Data is taken from various Websites Available on Google.

Allotment status of CPSE ETF

CPSE ETF Background

CPSE ETF FFO was a success with bid were done for 12,000 crore while the offer was only for 6000 crore. There allotment is going to take place within 10 days from the date of closing of issue i.e by the end of Jan 2017.

Anchor investors portion was Rs. 1500 crore but the bid was received for almost Rs. 6,000 crore on 17^thJanuary 2017 which is 4 times of the amount decided for retailers to be offered. 

The quantum of bids for Qualified institutional buyers and retail investors was opened from 18^th January 2017 to  20^th January 2017 received was over two-and-half times of the base issue size of Rs 4,500 crore i.e. Rs. 6, 000 crore.

As part of the CPSE ETF FFO norms Retail Investors will get first preference and assured allotment for a minimum of 5000 units. What it mean is if there is oversubcription, the minimum unit you will receive would be 5000 units.

A finance ministry statement said ,”This was the largest Disinvestment Program undertaken by the Government of India using ETF and largest fund offering by any Mutual Fund in India till date”.

Allotment Price

Purchase price will be average of the full day volume weighted average price of the constituents of Nifty CPSE Index on NSE during Jan 18 and Jan 20.  Based on this the price is expected to be around 26.70 but then there is a 5% discount for retail investor which should bring the allotment price closer to 25.5

Allotment Status-

CPSE ETF allotment status is not available at this time. The CPSE ETF allotment is expected to take place within 10 days from the closing of the issue on January 20th. The issue was oversubscribed, so partial allotment is expected. You should be able to check the status of the issue on your Demat account.

India to start taxing capital gains to Singapore investors from 01st April,2017

Dear Reader,

Now, India will start imposing capital gains tax on investments coming from Singapore from 01st April 2017 and fully withdraw exemptions in two years as the two countries agreed to amend a decade-old treaty after New Delhi rolled back similar concessions to Mauritius and Cyprus earlier this year.

With the amendments, announced by Finance Minister Arun Jaitley on today(30th December,2016), investors based in Singapore will no longer benefit from tax exemptions on capital gains taxes.

Changes to the treaty with the Asian financial centre had been widely expected after India this year similarly re-drafted a 33-year old tax treaty with Mauritius.

The tax treaty between India and Singapore had a provision that any changes in the Mauritius treaty would automatically apply to the one with the Asian country.
The move to tighten tax treaties is part of Prime Minister Narendra Modi's anti-corruption drive, which includes tightening loopholes for firms or rich individuals setting up a presence in jurisdictions with tax exemption treaties.

Regulators have long suspected rich Indians were routing cash through these tax jurisdictions, and channeling money back to India in a practice known as "round tripping".
"We are able to give a reasonable burial to this black money route," Jaitley told reporters at a news briefing.

Capital gains tax will be imposed on investments from Singapore that are made from April onwards. The tax rate will be half the prevailing Indian rate for the next two years and rates will then be equated by April 2019. Jaitley said.

Singapore has been an increasingly popular source of foreign investment into India.
Foreign direct investment flows from Singapore stood at $50.6 billion between April 2000 and Sept 2016, contributing more than 16 percent to total capital inflows during that period, second only to Mauritius.

The curious case of Bearish Head and Shoulder Pattern on NIFTY 50

The curious case of Bearish Head and Shoulder Pattern on NIFTY 50

NIFTY 50 taking a pounding from the double Ds, the reason for a sleepless night for fund managers? Let's find out.

Demonetization and Dollar Strength: The surprise move of currency ban of Old Rs 500 and Rs 1000 notes has affected the Indian consumer to refrain from spending in the absence of adequate cash in the system, causing another year of disappointment of earning revival for fund managers it won’t be wrong to considered a strong reason to grow impatience for DIIs to throw in the towel.

FIIs the largest yet panicking shareholder group in India, the sell-off in the emerging market due to FED rate hike seemed like an excuse to run back to green back, shocked FIIs accelerated the withdrawal of funds and pulled the maximum amount from Indian Asset classes on concerns of India’s Consumption Economy slowdown.

The above events are very clearly visible on the Weekly Charts of NIFTY 50 showing markets are preparing for lower levels, The index has shaped up a prominent bearish technical pattern; head and shoulders with the critical neckline support near 7910-7920, In the event of maturity of pattern NIFTY, could crash down to Feb’16 lows of 6800-6900 which was tandem in the free fall of global market due to sudden Chinese Yuan Devaluation tantrum.

Look at NIFTY WEEKLY CHART below.

So, WHY exactly this is so crucial the correction of 10% from here and the fact the head and shoulders bearish patterns can’t change the fundamentals of India’s phenomenal growth potential story, some analyst might welcome it is a healthy correction in bull market, I could have agreed only if Charts were not showing a serious concern for markets. NIFTY monthly chart indicates a free fall below sub 7000 levels now will violate the 2009 onwards intact bull market trend, the multi-year this curious Head and Shoulders Bearish pattern needs to be cautiously played in the market if it breaks the crucial levels. We may see a long term trend reversal and hence a bear market.

So really will this actually materialise? I say we will find out.

NIFTY Monthly Chart.

NSE-INDEX OUTLOOK – 02 December, 2016

For educational purpose only, please trade after consulting with your advisor.

NIFTY 50: On last trading session we have seen a sharp fall in Nifty. It was mentioned in our previous update that Nifty is in Buy Zone and go Long with strict stop loss.

Now what’s next: NIFTY is still in buy zone but we are expecting that market will see lower levels in the days to come. So it is better to sit set aside or go with hedging the portfolio. We are expecting lower levels in Nifty and Bank Nifty. Yesterday also we have seen a huge upmove in Crude oil and Brent. Further we have also seen fall in Dollar Index.

Support: 8160/8117/8100/8050

Resistance: 8250/8288/8305/8400

For short term, we are having negative view on Oil Marketing Companies, Tyre Company, Paints Companies and Aviation Company. However we have positive view on IT and Pharma Companies. 

NIFTY BANK: On last trading session we have seen a fall in Bank Nifty. It was clearly mentioned in my last update that short term rally not ruled out but go with strict stop loss. Further it was also mentioned that for entering into negative zone, we need a closing below 18573 and we have seen 18428.

Now what’s next: Now Bank Nifty enter into Sell Zone. Further Bank Nifty is now trading  below its short term moving average but above long term moving average. Now 18180 to 18130 is the key level to watch in Bank Nifty Spot. If the breach, we may see sharp fall till 17500. If that happen then bank nifty will trade its long term moving average.

Support: 18325/18265/18185/18000

Resistance: 18535/18695/18785/18886