Weekly Wrap -- IIFL IJK Market Outlook Continued - TopicsExpress

Weekly Wrap -- IIFL IJK Market Outlook Continued strengthening of the rupee and better-than-expected trade deficit data saw the Nifty advancing for the second consecutive week. Global markets moved higher as tensions around US military strike on Syria eased. Domestic IIP data for the month of July also positively surprised with 2.6% growth indicating a pick-up in manufacturing and power generation. With not so encouraging job creation data, the QE3 tapering by US Fed is expected to be modest. Back home, the new RBI governor Mr.Raghuram Rajan has started his tenure with a bang by announcing a slew of measures to support currency and exhibiting a strong intent to liberalize the banking sector. However, monetary policy outlook remains uncertain amidst high retail inflation, anemic growth and volatile currency. In most likelihood, RBI would keep the repo rate unchanged and announce incremental measures to stabilize the currency. We also expect the RBI to rollback the liquidity tightening measures announced in July in the next couple of months. Technical View Nifty advanced for second consecutive week to close higher by 3%. Despite the recent upmove, one cannot ignore resistance of 5,990 levels which turn out to be 78.6% retracement from May 2013 peak of 6,229 till August 2013 low of 5,119. Hence rounds of profit booking would be expected as Nifty approaches the psychological barrier of 6,000 levels. F&O View Fresh longs were seen in Nifty and Bank nifty future in last few trading days. FIIs again turned net buyers in cash and index future segment. On option front, Nifty 6000 call has seen buying in last few trading session, while put writing was visible at 5800 strike. Nifty might hold it support level of 5800 which is also its 200DMA and one year VWAP. On sector front, Banks, Metals and Cement stocks have seen fresh buying in last few trading days. Investment Idea:- BUY Motherson Sumi - CMP Rs.214 • Standalone performance: Strength across most parameters. • SMR and SMP performance improving. • Synergies materializing for SMR and SMP. • FY15E P/E of 11.8x attractive given FY13-15E PAT CAGR of 55%. • With lower capex ahead… expect stronger FCFF accruals. • Maintain our BUY recommendation with a 9-month price target of Rs.255. Book Closure & Record Date • 13 Sep - Shivam Autotech - AGM, Dividend - Rs.4.00 • 13 Sep - Hindustan Copper - AGM, Dividend - Rs.1.00 • 16 Sep - Ess Dee Aluminium - AGM, Dividend - Rs.2.50 • 16 Sep - Financial Tech - AGM, Dividend - Rs.2.00 • 16 Sep - United Spirits - AGM, Dividend - Rs.2.50 • 16 Sep - ONGC - AGM, Dividend - Rs.0.50 Major Events • 10-16 Sep - Aug Imports & Exports. • 16 Sep - Wholesale Price YoY. • 20 Sep - RBI Policy Meet.