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Equity Research Report Ways2Capital 2 January 2017

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TECHNICAL TREND ( NIFTY – BANK NIFTY FUTURES )
NIFTY FIFTY : – The Equity benchmark Nifty closed at 8000 levels last week, the Index tested levels of 7950 which is just 30 points shy of the previous month low of 7921. The benchmark Index remained weak in the last five trading sessions with FII’s turning out as net sellers in the market. Nifty dropped almost 200 points from 8148 to 7953 in the course of the week’s trading session. Indian benchmark Index opened gap down On Monday trading Session at 7965 down by 20 points or 0.25 percent as Prime Minister Modi gave ample hints of raising taxes in the capital markets, this will dent the sentiments as the market tries to recover from the demonetization set back. The markets in the December series saw heavy selling by FII’s in the cash and F&O segment. There was a possibility that Nifty could close at the lowest level in this clearing if it is unable to close above 7954. The Index is trading above an important gap level of 8160 and it could test the next target 8200-8280 if 8180 level is breached. Nifty January Series has started on a positive note. The benchmark index ended the December series with an upward bias as it closed above the 8100 mark. After making a low of 7894 early this week, Nifty bounced back convincingly and tested 8100 levels. The data for the Jan series shows that short positions have been squared off, so the market is likely to trade with a bullish bias. If Nifty stays above 8130 today, then the next target is 8278. On Technical chart, Nifty is in positive zone. We are into last trading Session of the calendar year 2016 and overall market would remain in a Positive territory. Market can see some profit booking but overall market is positive as of now and traders can go long at dips with strict stop loss of 7980 levels for Nifty on closing basis as market would enter into negative zone once Nifty closes below the levels of 7980-7960. The Crucial Levels for Nifty is 8220-8280 is Upside and 8130-7980 is Down side.

BANK NIFTY : – The Banking Shares Index Bank Nifty opened in a Negative Note on Monday trading Session Down by 59 points or 0.32 per cent at 17825. The banking sector continues to face “significant” level of stress as the asset quality has deteriorated further with the banks’ Gross Non-Performing advances increasing to 9.1 per cent in September from 7.8 per cent in march, says the Reserve Bank of India. Bank Nifty Need to close below 18255 levels to enter into negative zone. Traders can initiate short positions only if Bank Nifty closes below 18255 levels. Bank Nifty has broken its major support level of 18250 and has traded below it for consecutively for 2 sessions. The Bank Nifty was also trading down below the gap level of previous month low of 17911 and closed on Thursday at 17700 with a possible price target of 17346. Bank Nifty has major support at 17986 and Resistance at 18329 above which next target is 18647. Sustaining above 18200 zone, Bank Nifty may further rebound towards 18350-18475 & 18550-18600 area and if it Sustaining below 17960 may drag the Bank Nifty toward 17656-17458 Level for next trading week sessions.

NSE – WEEKLY NEWS LETTERS
✍ TOP NEWS OF THE WEEK

Household owned majority of deposits in banks till March 2016: RBI – Majority of deposits in banks was held by the household sector at 61.5 per cent as on March 31, 2016, the Reserve Bank said today. This was followed by the Government sector which accounted for 12.8 per cent of total deposits. The private corporate sector came next with a contribution of 10.8 per cent. Total deposits as on March 31, 2016 was Rs. 98,41,290 crore, as against Rs. 89,72,710 crore till March 2015. “A majority (63.8 per cent) of the deposits was term deposits. The combined share of current and savings deposits, however, increased from 34.9 per cent in 2015 to 36.2 per cent in 2016,” the RBI said. More than half (51.5 per cent) of the total deposits was raised by metropolitan branches followed by urban branches (22.8 per cent) and semi-urban branches (15.4 per cent). While term deposits dominated the total deposits in these branches, savings deposits dominated in rural branches. Public sector banks continued to maintain the largest share (70.6 per cent) in total deposits. Private sector banks had a share of 21.6 per cent in total deposits

India’s forex reserves fall $ 2.4 billion to reach one of the lowest levels since May – India’s foreign exchange reserves dipped $ 2.4 billion to settle at $ 360.6 billion, one of the lowest levels since May of this year, as market sources said that the Reserve Bank of India could be selling dollars heavily in order to arrest the slide in the value of Rupee. A combination of factors may have triggered the fall,” said Ashutosh Khajuria, executive director, Federal Bank. “The last leg of FCNR(B) redemptions has put pressure on the Rupee to an extent while RBI’s routine intervention may also have led to an erosion of the reserves. While one of the steepest falls in the last few months in RBI’s dollar reserves was seen in early October due to FCNR(B) outflows starting off, a strengthening dollar and consistent outflow of foreign portfolio investors from the country has also created some pressure on the Rupee lately. “The RBI had definitely intervened when Rupee had hit 68.8 few days back and even now the value of the currency has been held steady at around 68 due to heavy selling of dollars,” said market sources.

Demonetisation: India’s GVA growth to be at 6.6 per cent in 2016-17, says rating agency ICRA’s – India’s gross value added growth is likely to be at 6.6 per cent in 2016-17 as economic activity will take more time to normalise following the government’s move to demonetise high-value notes, Icra has said. “Although currency liquidity is likely to improve significantly by the end of January 2017, economic activity may take longer to normalise, based on which we have revised our forecast for GVA growth in 2016-17 to 6.6 per cent,” the domestic rating agency said in a report. It said the pace of revival of economic activity in the fourth quarter of the current financial year is likely to take a cue from how quickly currency in circulation gets replenished and digital transactions become more widespread. Between November 10 and December 19, banknotes of Rs. 5.9 trillion were issued to the public through the banking system, as indicated by the Reserve Bank, equivalent to an estimated 38 per cent of the value of currency that ceased to be legal tender.

Government reviews capital needs of banks – The government is reassessing the capital needs of state-run banks after some lenders and the Reserve Bank of India raised concerns over stressed assets turning non-performing if demonetisation impacts demand for long. “There were accounts that were already under stress. Banks say they may be further impacted due to the demonetisation drive,”a senior government official said, requesting anonymity. “If they move in the non-performing category—from substandard to doubtful—provisioning will increase, which will further impact banks’ capital.” The official said banks are also worried as demonetisation has led to a surge in their deposits but they cannot deploy this money because of low credit growth. This means they will have bear more of the interest burden, which will ultimately impact their profitability. The Narendra Modi-led government had on November 8 demonetised old Rs 500 and Rs 1,000 notes. The two notes accounted for about 85% of the cash in circulation.

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