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NIFTY predictions for Monday: know where the Index will move next week, Q2 results of Dr. Reddy and ICICI Bank, Indian Markets bleed on Dalal Street…. Market updates for 26/10/18

PurpleTrades - stock market courses > News > NIFTY predictions for Monday: know where the Index will move next week, Q2 results of Dr. Reddy and ICICI Bank, Indian Markets bleed on Dalal Street…. Market updates for 26/10/18

Report by- Sabyasachi Bhattacharya

 

Dr. Reddy announced their Q2 results; Profit rises by 77% to Rs 503.8 crores-

Pharma major, Dr. Reddy’s Labratories, reported a rise of 77 percent (year-on-year) in its net profit at Rs 503.8 crore. The company had reported a profit of Rs 284.9 crore during the same period of last year. Growth is primarily on account of improved volume offtake in the existing markets and scale up in thier new markets. Let us take a look at the key insights of their report-

  • The revenue rose to Rs 3,797.8 crore against Rs 3,546 crore that the company posted during the corresponding quarter of last year. This implies a rise of 7 percent.
  • At an operating level, the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) rose to Rs 864.6 crore, a rise of 25.5 percent from Rs 688.8 crore reported during the previous year.
  • The operating margin came in at 22.8 percent against 19.4 percent year on year.
  • The company reported research and development expenses of Rs 412 crore during the quarter.
  • Revenues from emerging marketswas at Rs 750 crore.
  • North Americabusiness of the firm reported revenues of Rs 1,426.5 crore during the quarter, down from Rs 1,431.8 crore in Q2 of FY18.
  • Europe segmentfell to Rs 5 crore from Rs 242.4 crore last year.
  • Its India business revenuesgrew to Rs 686.4 crore against Rs 637 crore in September quarter of FY18.

 

Let us take a look at the company’s Q2 report-

Source- MoneyControl, Purple Trades Research Department 

 

ICICI Bank announced their Q2 results; Profit declines 56% to Rs 909crores-

Country’s largest private sector lender ICICI Bank’s second quarter profit fell sharply by 55.84 percent to Rs 908.88 crore compared to the year-ago period. Elevated provisions and high treasury base hit the bottom line. Let us take a look at the key insights of the company’s report-

  • Profit in the corresponding period last fiscal stood at Rs 2,058.2 crore. Overall numbers were in line with analyst expectations.
  • Net interest income, the difference between interest earned and expended, grew 12.41 percent on year to Rs 6,417.6 crore with good loan growth of 12.8 percent YoY and margin improvement.
  • Domestic loan growth for the quarter was at 16 percent YoY driven by retail loans that grew 20 percent YoY and constituted 57 percent of the total loan portfolio at the end of the quarter
  • Deposits also registered a double-digit growth in Q2, growing 12 percent YoY to over Rs 5.58 lakh crore.
  • ICICI Bank said the net interest margin at 3.33 percent in second quarter of current financial year improved 14 basis points (bps), from 3.19 percent in first quarter FY19.
  • Asset quality improved during the quarter. Gross non-performing assets as a percentage of gross advances were lower at 8.54 percent against 8.81 percent in the previous quarter due to fall in slippages.
  • Gross NPA additions (slippages) decreased from Rs 4,036 crore in the quarter ended June 2018 to Rs 3,117 crore in Q2FY19. Gross NPA additions included the impact of currency depreciation on existing foreign currency NPAs of Rs 1,304 crore. In absolute terms, gross NPAs were higher by 1.92 percent sequentially to Rs 54,489 crore but net NPAs were lower by 8.6 percent at Rs 22,086 crore compared to June quarter.
  • Recoveries and upgrades from non-performing loans for the quarter were Rs 1,006 crore in Q2FY19. Net loans to companies whose facilities have been restructured were flat Rs 1,413 crore sequentially.
  • The bank said provisions and contingencies at the end of September quarter stood at Rs 3,994.3 crore, sharply lower by 33 percent sequentially and 11.3 percent compared to year-ago period.
  • The other income (non-interest income) during the quarter fell 39 percent year-on-year to Rs 3,156.5 crore. The other income of Rs 5,186.2 crore in Q2FY18 had included a share of stake sale in Lombard Insurance. Adjusted non-interest income grew by 6.6 percent YoY.
  • Operating profit for the quarter was lower by 25 percent at Rs 5,249.7 crore YoY. Consolidated profit after tax was Rs 1,205 crore in September quarter 2018, which was down by 42 percent compared to Rs 2,071 crore in Q2FY18. It included income from life insurance, general insurance, securities and AMC segments.
  • The bank said consolidated assets grew by 11.4 percent year-on-year to Rs 11.37 lakh crore at September 2018.

 

Let us take a look at the company’s Q2 report-

 

Source- MoneyControl, Purple Trades Research Department 

 

Indian Markets gripped by BEARS as major Indices bleed RED-

Chart source- Upstox

Indian Markets bleed on Dalal street as Nifty and Sensex shed points heavily. Such a move was expected after the day of expiry as many experts believed that if Nifty crosses the 10,100 mark then it will straight go down to the 10,000 mark and that mark will provide a major support to the falling index. As you can see in the charts as the markets opened the BEARS took charge of the situation and dragged the markets to the 10,000 level, but the market beautifully respected the 10,000 mark and made some recovery in the mid hours of the day but couldn’t hold on to it and fell aggressively throughout the ending hours of the day. From the lunch hours the market fell in a linear sort of fashion and closed near the 10,000 mark. A largely choppy session has ended around the low point. However, the Nifty held psychological 10,000-mark, while the Sensex ended over 300 points lower.  The 50-share index has had a wobbly start to November series. Selling was visible across all sectors, with banks, consumption, IT, metals and pharmaceuticals witnessing weak trades. The Nifty Midcap was mildly lower. A drop in crude oil prices too failed to lift up sentiment on D-Street. At the close of market hours, the Sensex closed lower by 340.78 points or 1.01% at 33349.31, while the Nifty closed down by 94.90 points or 0.94% at 10030.00. The market breadth was negative 1,090 shares advanced, against a decline of 1,438 shares, while 1,087 shares were unchanged.

 

Let’s take a look at the performance of major Indices-

The major Indices of the European Markets, DAX and CAC and the Asian markets, Nikkei and Straits Times were in the RED. But the US market Index NASDAQ was seen in the Green.

Source- MoneyControl, Purple Trades Research Department 

 

THREE MAJOR REASONS WHY NIFTY WILL BOUNCE BACK ON MONDAY –

We saw major selling across all the sectors today but will this selling continue tomorrow as well? Our experts in Purple Trades  do not think so. Let us review the three key points which tell us that Monday will probably be a Bullish day-

 

  1. OPTION CHAIN ANALYSIS-

Chart source- NSE India

If you look at the option chain for Nifty, you’ll see that there has been a lot of change in Open Interest for different strike prices as shown in the data above. Let us analyze some of the key strike levels. As you can see 10,000 is our ATM strike, and this is the most crucial level for Nifty right now. If you look at the change in open Interest for the 10,000 mark you’ll see that about 3 Lakh contracts have been written by the PUT writers on the left. Which is a healthy number but the most important data for the 10,000 strike price is the cumulative Open Interest which is about 30 Lakhs or 3 million which is way too much for a strike price. This means that the PUT writers which are termed as the experts are not at all expecting Nifty to go down below the 10,000 mark. Now as we are saying based on this information that Nifty will not break below the 10,000 mark but it means that if it goes up then it’ll incur some resistance too. That resistance will be provided by the 10,100 and the 10,200 mark. The main resistance will obviously be the 10,200 mark as it has a Cumulative Open Interest of 1 million or 10 Lakhs, which means almost 1 million CALL option writers are. Now as we know that markets are not 100% predictable, hence we also know that if Nifty breaks below the 10,000 mark then it will further go down to 9,900 level or 9,800 level where it will face a support by PUT Option Writers who have a cumulative Open Interest of 9 Lakhs on 9,900 strike price and a whopping Cumulative Open Interest of 2 Million at the strike price of 9,800. Hence, with this data we can say Nifty might go up on Monday.

 

 

  1. BULLISH DIVERGENCE ON 1HR CHART-

Chart source- Upstox

As you can see on the Hourly chart there is a visible bullish divergence of Nifty, Bullish Divergence occurs when prices make lower lows but the indicators show higher lows, which means that the prices are expected to go up from these levels. Divergence is a very powerful tool used by almost every trader to find price reversals, hence we can conclude that Nifty is expected to show a reversal or bounce back from the current levels.

 

 

  1. Major support on Daily charts for the past one Year-

Chart source- Upstox

As you can see on the Daily charts above, 10,000 mark denoted by the PURPLE LINE has acted as a major support for the past ONE YEAR. This support is expected to hold up this time of the year as well for Nifty and breaching this support will be a very difficult task for the BEARS. The BULLS are expected to take the prices higher from these levels and no more selling is expected on Monday.

Thus to conclude our experts in PURPLE TRADES don’t expect Nifty to fall below the 10,000 mark and expect the bulls to take charge of the day on Monday. But we all know that Stock Market is a beautiful source of turn of events, hence nothing is 100% sure. But probabilistically with the help of the above mentioned 3 points we can expect that the markets will move upwards on Monday.

Source- Purple Trades Research Department 

 

 

 

Top sectors that moved the market today- Data source- Moneycontrol

 

 

Top Gainers for today-   Data source- Moneycontrol

 

 

Top losers for today- Data source- Moneycontrol

 

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