THE MONTHLY MONITOR

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INDEX

S. No. Content Page No.

1 Introduction 3

2 CNX Nifty Overview 5

3 BankNifty Overview 7

4 CNX Mid cap Overview 9

5 CNX Small cap Overview 11

6 Sectoral Analysis Matrix (October) 12

7 Sectoral Analysis Matrix (November) 13

8 CPI V/s WPI Inflation MoM 14

9 IIP Data MoM 15

10 ValueMax Picks (November) 16

11 Conclusion 17

3

INTRODUCTION

“The Monthly Monitor” is a product which gives an overview of broad indices listed on

the NSE, based on technical analysis.

The main concept of this report is to determine whether the sector can go the extra mile to give the investors the desired returns.

A comprehensive technical view on the indices will be provided by blending it with bit of crisp fundamental analysis for the month to come and how they performed over the period of last month.

Sectoral Analysis with regards to their performance in the previous month & the sectors to watch out for in the next month will be projected on a simple matrix.

Two Stocks which have performed better /worse than others from all the indices will be highlighted and a brief introduction / analysis may also be presented on the said stocks.

The product will be released at the beginning of every month so as to give the reader a valuable insight of the mentioned major indices.

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CNX NIFTY

5

TECHNICAL SNAPSHOT~ CNX NIFTY

Nifty zoomed past its previous all time high level of 8180.20 and clocked a new all time high of 8330.75 on the last trading day of the month of October.

The month of October had merely 18 trading sessions. Earlier , in the month of September 2014, Nifty had formed a “Doji” candlestick pattern at the top of the rally on monthly charts, indicating indecision. However, the indecisiveness was overtaken by the index’s stellar up move to close higher by close to 4.49 %.

During the pervious month, lethal movement on either side ruled the roost as huge volatility was seen amid global selloff from higher levels and also concerns with regards to the crumbling reputation of a few European banks.

The result season is in full swing as 577 companies have already declared their quarterly results. The index has now shifted its base to a higher zone of 7840-8000, and the likely zone for the index for the month of November is likely to be 8000-8700.

In the month of November, we expect markets to surge higher towards the upper end of the mentioned zone, while any breach below the level of 7950 would spell trouble for the markets.

Monitor Reading : The Monthly monitor suggests that the index still has good potential to surge higher towards 8700 levels . However, if the index slides below crucial support levels, then caution is advised.

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BANK NIFTY

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TECHNICAL SNAPSHOT~ BANKNIFTY

BankNifty led the markets to mark higher highs and struck a new all time high of 17060.15 during the month of October, 2014, and closed higher by more than whopping 10%.

Staggering buying was witnessed in certain PSU Banks and most Private sector banks as companies like Indusind Bank posted a robust set of numbers in its Q2 results.

ICICI Bank, Yes Bank and Axis bank followed suit with stellar set of numbers which ensured that BankNifty surged higher and higher, contributing the most towards the overall market’s up move.

Technically, the next projected resistance for the index is pegged at levels around 17550-17800 on the up side above which the index can march towards 18000-18200 as well. Whereas on the downside the BankNifty can negate the recent upswing if it drifts below 16800-16700 levels.

Breaching the said support zone , would open up possibilities of the previous supports at 16300-16250 being tested yet again. During the month we expect BankNifty to trade in a broad range of 16300-18500.

During the month of November,2014 we expect private sector banks like Indusind Bank, Axis Bank, ICICI Bank. Among PSU banks, SBIN and Bank of Baroda are likely to outperform in the banking space.

Certain PSU banks among the overall baking stocks like Union Bank, Indian Overseas Bank and State Bank of Bikaner and Jaipur are likely to remain subdued during the month of November,2014.

Monitor Reading : The Sentimeter suggests that the index is likely to continue its up move with private sector banks , leading from the front. We recommend traders to stick to quality names like HDFC Bank, ICICI Bank, Axis Bank, SBIN, Federal Bank & Indusind Bank.

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CNX MIDCAP

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TECHNICAL SNAPSHOT ~ CNX MIDCAP

CNX Midcap ended at a new all time closing high of 11841.10 during the month of October,2014 after clocking an all time high of 12000.60 in the month of September,2014, to close higher by 3.7%.

Last month, most of the midcap stocks recovered a lot of lost ground amid intense volatility in the broader markets.

In the midcap space , significant pullback in certain stocks from lower levels was seen . Stocks like Oriental Bank of Commerce, GMR Infrastructure, Bank of India, Torrent Power, Larsen & Toubro and Power Finance were top five performers, gaining between 20.30%-24.20% during the month of October,2014.

Other stocks that gained significantly during the month were Union Bank of India, SAIL, Emami Ltd, IDBI Bank and Allahabad Bank .

On the other hand, stocks like CMC Ltd, Biocon Ltd, Bhushan Steel, CESC Ltd and Crisil Ltd were top underperformers during October,2014.

In the month of November 2014, we expect stocks like Adani Ent, Adani Ports , Bharat Forge, Britannia , Crompton Greaves, Eicher Motors, M&M finance , PEL, Reliance Capital, Reliance Infra, Tata Communication and PGHH are likely to continue their uptrend. While Tata Chem , Mphasis, J&K Bank, Exide Inds, Biocon and Bhushan steel are likely to remain under pressure again.

Monitor Reading : The monitor clearly suggests that midcaps are likely to outperform along with small caps during the month of November,2014. Therefore we recommend traders to buy good quality Banking, Auto and Metal stocks.

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CNX SMALLCAP

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TECHNICAL SNAPSHOT ~ CNX SMALLCAP

CNX Small cap ended the month on a winning note too and showed first signs of moving out of the consolidation range by closing higher by just under 3% for the month of October,2014.

In the month of October, Small caps were seen staging a firm bounce back after most of the stocks stocks were literally murdered amid high volatility and most companies lost in a big way by erasing notable gains, in the month of september,2014.

Among stocks which made a positive impact in the CNX Small cap space, NCC Ltd, Sintex Industries Ltd, Andhra Bank, IVRCL Infra Ltd & JM Financial Ltd witnessed superb buying interest with NCC ltd sweeping gains of as much as 53.34%, while the others managed to end with a gains between 21%-34% during the month of October,2014.

Stocks like Era Infra Ltd, Amtek Auto Ltd, Opto Circuits, Mcleod Russel, and Cox & Kings Ltd were top five losers among the CNX Small cap stocks. Era Infra continued to slip lower during most trading sessions in October. The stock lost more than 25% during the last month. On the other hand, the other top four loser lost between 9%-18% respectively.

During the next month, we expect stocks like Kaveri Seeds, Whirlpool, IL& FS Trans, Escorts, Ajanta Pharma , Hexaware and Sintex Industries to out perform from the list of CNX Small cap stocks.

Monitor Reading : Certain Small cap stocks are likely to stage a bounce back as most of them have remained subdued during the last month while the broader markets have rallied significantly. We still feel sticking to stocks with safer fundamentals is a better bet in the Small cap space.

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SECTORAL ANALYSIS MATRIX (OCTOBER)

SECTOR GAINERS LOSERS SENTIMENT

CNX AUTO Ashok Leyland, Bajaj Auto Amtek Auto Ltd, Exide Inds

BANKNIFTY Bank Of India, Yes Bank Ltd -

CNX ENERGY GAIL, Tata Power Cairn India, ONGC

CNX FINANCE REC, PFC Bajaj Finserv

CNX FMCG Emami Ltd, Britannia Inds Rasoya Proteins, Mcleod Russel

CNX IT Infosys Ltd, Cyient Ltd Just Dial Ltd, CMC Ltd

CNX METAL SAIL, JSW Steel Ltd Jindal Steel, Bhushan Steel

CNX MNC Ranbaxy Labs Ltd, Mphasis Glaxo, GSK Consumer

CNX PHARMA Cipla, Cadila Healthcare Glaxo, Lupin

CNX REALTY Phoenix Mills, Oberoi Realty DLF ltd, HDIL

CNX CONS TorntPower, McDowell-N ITC Ltd, Bata India

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SECTORAL ANALYSIS MATRIX (NOVEMBER)

SECTOR LOOKING STRONG LOOKING WEAK SENTIMENT

CNX AUTO Bharat Forge, Maruti Amtek Auto, Exide Inds

BANKNIFTY Yes Bank, State Bank of India -

CNX ENERGY BPCL, GAIL Cairn India, Indian Oil Corp

CNX FINANCE REC ltd, PFC ltd Bajaj Finserv

CNX FMCG Britannia, Asian Paints Mcleod Russel, UBL

CNX IT Tech Mahindra Eclerx, Mphasis

CNX METAL NMDC, Tata Steel Bhushan Steel, Jindal Saw

CNX MNC Cummins India, Siemens Castrol , OFSS

CNX PHARMA Lupin, Divis Labs Glaxo, Ranbaxy

CNX REALTY Godrej Prop, IB Real Estates Anantraj, DLF

CNX CONS Zeel, Torrent Power Sun TV, Bata India

14

WPI v/s CPI

The consumer price inflation for the month of September cooled off to its all-time low of 6.46 percent, the lowest since India started computing consumer price index (CPI) in January 2012, led by lower food prices and fuel costs. The food inflation trimmed down to 7.67 percent against 9.42 percent month-on-month. The vegetable price inflation lowered significantly to 8.59 percent versus 15.15 percent from August. Continuing decline in food prices, including vegetables, pulled down the September wholesale price inflation to a five year low of 2.38 per cent. The Wholesale Price Index (WPI) based inflation was at 3.74 per cent in August and 7.05 per cent in September 2013.

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WPI CPI

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IIP DATA (M.o.M)

Business sentiment has significantly improved as clearly seen in the CII business confidence index, and we expect this sentiment to translate on the ground soon. The sluggishness in the manufacturing sector still continues to be under stress as no fresh orders are pouring in , in the desired manner. Last month, the IIP slowed down to 5-month low of 0.4 per cent in August mainly due to contraction in manufacturing output and lower off take of consumer goods. However, we feel that there are definite signs of improvement in automobile industry and a few other core sectors are doing well, therefore we feel that the IIP data for August,2014 will not have a major impact on the second quarter of GDP growth. We maintain a positive outlook on the overall Indian economy.

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VALUE MAX PICKS FOR THE MONTH OF NOVEMBER 2014

STOCK SECTOR CMP ACTION AVERAGE SL TGT 1 TGT 2

Asian Paints Paints 657.00 Buy 640 625 695 720

Bharat Forge Auto Ancillary 813.05 Buy 775 760 890 920

BHEL Capital Goods 256.70 Buy 242 235 278 290

Coal India Mining 370.55 Buy 352 340 400 410

IDFC Financials 156.30 Buy 148 142 170 178

Lupin Pharma 1369.05 Buy 1320 1300 1440 1475

Rel Infra Infrastructure 637.05 Buy 600 585 700 720

SBIN Banking 2702.80 Buy 2600 2550 2850 2950

Tata Steel Metals 490.00 Buy 465 455 540 560

Tech Mahindra Software Services 2517.70 Buy 2400 2350 2650 2720

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CONCLUSION

We feel that there is still a lot of steam left in the broader markets and sectors like Auto, Paints, Metals and the Banking stocks will be looking to move higher as the earning season continues.

We are bullish on stocks like Asian Paints, Bharat Forge, BHEL, Coal India, IDFC, Lupin, Reliance Infrastructure, State Bank of India, Tata Steel and Tech Mahindra can outperform their peers over the period of one month. The above mentioned stocks also constitute the Valuemax for the month of November,2014.

On the flip side, stocks which are likely to remain laggards are FMCG and Certain IT stocks. Stocks like Mc Leod Russel and UBL which look weak on charts among the FMCG stocks. While Eclerx and Mphasis among the CNX IT stocks can remain under pressure.

We recommend our valuable clients to trail their stop loss’ to higher levels and take timely profits as we feel that till such time the markets keep making higher highs and higher lows, traders needn't worry. But any sustainable drop below the level of 8100 on a closing basis could trigger a fresh round of selling towards 8000-7900 too. We maintain a positive view on the markets.

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LEGEND

All charts have been obtained from Spider Iris software.

Data for WPI/ CPI and IIP have been obtained from Bloomberg.

The image refers to stocks having bearish sentiment.

The image refers to stocks having bullish sentiment.

ValueMax Picks: ValueMax helps clients to take a directional long stance on stocks from the BSE - 100 Universe comprising monthly technical investment ideas. ValueMax will provide up to 10 stock recommendations, which will be issued at the beginning of every month. The selection and recommendation criteria will be based on Technical Analysis.

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DISCLAIMER

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KARVY RESEARCH DESK – STOCK BROKING

JK Jain Jambu@karvy.com +91-9618087899