January 21, 2020

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REC Ltd Buy
Vedanta Buy
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Voltas Buy
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ICICI Securities – Retail Equity Research

New recommendations in the report
Action I-Direct Code Target 1 Target 2 Stoploss Time frame Hindustan Unilever Buy

Buy ITC JAN Fut at | 242.50-243.00 ITC 245.5 249.6 240.0 Intraday Duration : 1-3 months
Sell UJJFIN JAN Fut at | 331.00-332.00 UJJFIN 327.8 322.1 335.3 Intraday
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Research Analysts
Amit Gupta Raj Deepak Singh
amit.gup@icicisecurities.com rajdeepak.singh@icicisecurities.com

Nandish Patel Dipesh Dedhia

nandish.patel@icicisecurities.com dipesh.dedhia@icicisecurities.com
Intraday Outlook: Sell Bank Nifty in the range of 31300-31350

Index Outlook
 Nifty Future: The Nifty is likely to open gap down on the back of negative global cues. Sell Nifty in the range of 12278-

Derivatives View
12300 Target: 12262-12235 Stop loss: 12317
Bank Nifty Future
 After opening near 32000, Call writing was clearly visible for a major part of the day. The index tested its highest Put base
of 31000 in intraday. Selling pressure was seen in private and PSU banks. Looking at the current OI set-up in select private
banks, we feel the index may slide further once it move below 31000. Sell Bank Nifty in the range of 31300-31350, Target:
31200-31000 Stop loss: 31450
F&O Highlights
 The Nifty finally paused its upward move and ended with loss of 128 points. Profit booking was seen from 12400, where
most of the pain was seen in index heavyweights like Reliance Industries, HDFC Bank and Kotak Mahindra Bank. However,
on the weekly option front, Call writing was seen at the 12300 strike that may act as a hurdle on upsides. If any intraday
pullback is seen towards 12300, it can be utilised to sell at higher levels

ICICI Securities – Retail Equity Research

Stock Analysis
Long build-up/short covering: NMDC, Bharti Airtel, NMDC, Tata Global, Escorts, Jubilant Foods and ITC
Short build-up/profit booking: IOC, PFC, Oil India, RBL Bank, Kotak Mahindra Bank, Ujjivan and Just Dial
FIIs & DII Action
 FIIs bought | 6 crore while DIIs sold | 1420 crore in the cash segment. FIIs bought index futures worth | 134 crore while in
index options they bought | 271 crore. In the stock futures segment, they sold | 647 crore
 Intraday Recommendations
i) ITC ii) Ujjivan Financial


Buy ITC JAN Fut at | 242.50-243.00

22

Sell UJJFIN JAN Fut at | 331.00-332.00 Note:

Call initiation message will be
CMP: 242.5 CMP: 332
broadcast on iclick-2-gain
Target 1: 245.5 Target 2: 249.6 Target 1: 327.8 Target 2: 322.1
Stop Loss: 240 Stop Loss: 335.3
Source: NSE, Seediff, Bloomberg ICICI Direct Research
January 21, 2020 ICICI Securities Ltd. | Retail Equity Research Back
Daily Nifty Snapshot

Highlights of the last session & Pivot Levels

Spot Fut Basis Future OI PCR OI PCR Vol ATM IV Nifty futures ended
Current 12224 12263 39 14803800 1.13 1.18 15.41
at a premium of 39
Previous 12352 12384 32 15126825 1.46 1.22 14.12
points with a rise in
IVs by 8.37%
Change (%) -1.04% -0.98% - -2.14% - - 8.37%
Pivot levels (Jan) S3 S2 S1 Piv R1 R2 R3
Nifty future 11977 12144 12204 12311 12371 12479 12646
Bank Nifty future 29692 30564 30873 31435 31744 32307 33178

Monthly Nifty Options OI build-up

40 Call OI Put OI

35 The highest Put base is at

12000 strike with almost 34

ICICI Securities – Retail Equity Research

30

25 lakh shares while the

OI in Lacs

20 highest Call base is at the

15 12500 strike with 31 lakh
10 shares
5

0
Note: The given index recommendation in
11500

11600

11700

11800

11900

12000

12100

12200

12300

12400

12500 this report is intraday recommendation and

should not be linked with positional view &
Strategy follow up
recommendations given in Derivatives
Date Stock View Strategy Reco Target SL P&L Comment Strategy report, which may have a different
20-Jan-20 CESC Buy Long Fut 775.0 782.5 767.5 - Not Initiated view
20-Jan-20 BHAPET Sell Short Fut 453.5 445.2 456.8 - Not Initiated Back
Source: NSE, Seediff, Bloomberg ICICI Direct Research

January 21, 2020 ICICI Securities Ltd. | Retail Equity Research 3

January 21, 2020
100
150
250
300
350

200

50

100
150
200
250
300
350
400
450

50
0
1-Jan-18 1-Jan-18

1-Mar-18 1-Mar-18

Source: NSE, Seediff, Bloomberg ICICI Direct Research

1-May-18 1-May-18

1-Jul-18 1-Jul-18

1-Sep-18 1-Sep-18

1-Nov-18 1-Nov-18

1-Jan-19 1-Jan-19
ITC

1-Mar-19 1-Mar-19
Ujjivan Financial

1-May-19 1-May-19

1-Jul-19 1-Jul-19
Recommended Stocks : Historical price performance…

ICICI Securities Ltd. | Retail Equity Research

1-Sep-19
1-Sep-19

1-Nov-19
1-Nov-19

1-Jan-20
1-Jan-20
4

ICICI Securities – Retail Equity Research

Weekly Recommendation

Weekly future recommendation:

Buy Lupin (LUPIN) January future in range of | 765-770. Target: | 850; Stop Loss: | 725

Derivatives View
Rationale

Pharma stocks have been witnessing renewed buying recently while the NSE Pharma index has moved to its highest levels since
May 2019. We believe the ongoing momentum in the space may continue while stocks with high short build-up are likely to
witness short covering. Lupin is one such stock that has seen short addition of almost 20% in the ongoing series. Among Call
strikes, closure of positions is already visible at ATM and OTM strikes while the highest Call base of 790 strike is witnessing
closure. We expect the ongoing momentum to continue in the coming sessions.
Price performance
1200

1000

ICICI Securities – Retail Equity Research

800

600

400

200

17-Jul-19
17-Jan-18

17-Jul-18
17-Aug-18

17-Dec-18
17-Jan-19

17-Aug-19

17-Dec-19
17-Jan-20
17-Feb-18

17-Apr-18

17-Feb-19

17-Apr-19
17-Oct-18
17-Nov-18

17-Oct-19
17-Mar-18

17-May-18

17-Mar-19

17-May-19

17-Nov-19
17-Sep-18

17-Sep-19
17-Jun-18

17-Jun-19
Recommendation follow up
Underlying View Strategy Reco Target Stoploss Profit/Loss Comment
Asian Paints Bullish Long Futures 1800 1870 1740 28800 Profit Booked

Source: Bloomberg, ICICI Direct Research

January 21, 2020 5
ICICI Securities Ltd. | Retail Equity Research
Level of 12200 to remain support for the week

• After four weeks of consolidation below 12300, the Nifty finally ended above the level. A gradual and consolidated move towards
12600 is expected in the coming weeks. However, some volatility may be seen near expiry. The Put base has become higher at
12200 while it would remain a support on any intermediate decline

• Call positions have been the highest at 12500 since the start of the series with additions seen even at the 12600 strike. These would
be the Nifty target levels

• Volatility has been on an upward bias as we are moving into Budget. This week also it reverted from lower levels of 12.5% to 14%.
The hurdle for volatility is placed at 16% from where it should again start reverting lower, thus keeping the overall bias of the equity
index positive

• The Nifty is getting support from non-banking heavyweights from the cement, metals, pharma, FMCG and auto pack, which is also
keeping the momentum intact in the broader market. We believe midcaps from these sectors would remain in the limelight even in

ICICI Securities – Retail Equity Research

the coming sessions
Nifty options OI build-up
45
40 Call OI Put OI
35
30
OI in Lacs

25
20
15
10
5
0
11800 11900 12000 12100 12200 12300 12400 12500 12600

Source: Bloomberg, ICICI Direct Research

January 21, 2020 ICICI Securities Ltd. | Retail Equity Research 6
Bank Nifty: Close above 32000 required for fresh up move…

• On the back of global jitters, volatility remained high in the currency market. Due to this, movement was seen on both sides in
the banking and financial space. The OI declined in the past few days as the Bank Nifty moved towards the lowest level of the
series. However, it reverted from its highest Put base of 31000

• PSU banks remained under pressure but participation continued in private banks, which provided cushion. Stocks like HDFC
Bank and Axis Bank are likely to perform well from the current levels, which will pull the index higher

• The highest Put base is placed at 31500 and 31000 whereas a close above 32000 would trigger fresh upsides. Recently, yields
had moved up due to higher inflation. Later, it was supported by a surge in crude oil prices. With crude seemingly making a top
near $72, we also expect limited upsides in yields. This should bode well for the banking space

• The current price ratio of the Bank Nifty/Nifty fell towards 2.55. We feel that once the index manages to end above 32000,
outperformance can be seen in the banking space, which will pull the ratio higher towards 2.60

ICICI Securities – Retail Equity Research

Bank Nifty options OI build-up
1200
Put OI Call OI
1000

800
OI in Thousands

600

400

200

0
31300

31400

31500

31600

31700

31800

31900

32000

32100

32200

32300

32400

32500
Source: Bloomberg, ICICI Direct Research
January 21, 2020 ICICI Securities Ltd. | Retail Equity Research 7
FII flows in India remain muted despite broad market rally…

• EM markets witnessed mixed flows during the week after an easing of Middle East tensions and signing of a trade deal between the
US and China. South Korea saw highest inflows among emerging markets with almost $ 390 million in the week. India has not seen
any major flows last week. It saw outflow of $20.7 million. Taiwan and Indonesia saw inflows of $176 and $41 million, respectively,
while Philippines saw outflows of $ 23 million

• FIIs have remained net positive till now in January and bought almost | 2040 crore in Indian equities. In the F&O space, they sold
stock futures worth $149 million while they sold index futures to the tune of $66 million last week

• After witnessing the sharpest decline in almost a year, Brent has been consolidating at lower levels and remained below 65 levels.
We do not expect it to test $70 once again, which should be positive for emerging market economies like India. FII flows are likely to
resume in the coming sessions ahead of the Union Budget

• Higher-than-expected inflation numbers have put bond yields under pressure while 10 year yields have moved above 6.60 despite

ICICI Securities – Retail Equity Research

three OMOs being announced by the RBI recently. Higher bond yields may restrict RBI capacity to further lower interest rates

FII/DII buying in equities (in $million)

FII DII
Date Index Fut Stock Fut Index Opt Cash Cash
10-Jan 43.5 -57.1 94.1 92.9 -35.5
13-Jan 29.3 -13.2 42.0 16.9 -159.2
14-Jan -10.3 45.3 218.0 -45.7 -90.5
15-Jan -128.3 -124.1 14.5 11.4 -91.3
16-Jan -82.6 -30.4 89.7 -26.1

Source: Bloomberg, ICICI Direct Research

January 21, 2020 ICICI Securities Ltd. | Retail Equity Research 8
Rupee to consolidate above 70.8…

• The rupee appreciated from 72 to 71 on the back of a cool-off in

EM, DM currency vs. US$…
sentiments from US-Iran tussle. The signing of phase-1 deal from
cmp pvs week change % Status
US-China also soothed sentiments and led to rupee appreciation Dollar index 97.32 97.36 -0.04 Depreciated
Euro € 1.1137 1.1121 0.14 Appreciated
• G-sec yields had seen a surge due to surge in inflation. Yields are
Japanese ¥ 110.16 109.45 0.65 Depreciated
expected to cool down as the RBI has announced an operation UK £ 1.3080 1.3064 0.12 Appreciated
Australian $ 0.6898 0.6901 -0.04 Depreciated
twist on January 23. The cooling down of bond yields may attract
Canadian $ 1.3042 1.3050 -0.06 Appreciated
foreign flows, which has been absent from the debt market so far Swiss franc 0.9647 0.9726 -0.81 Appreciated
Emerging currencies v/s US$
• On the equity front, FII flows have become quite volatile as the Indian rupee 70.94 70.94 -0.01 Appreciated
Budget period is approaching. Thus, continuously sharp Chinese yuan 6.88 6.92 -0.54 Appreciated
Brazilian real 4.18 4.10 2.11 Depreciated
appreciation in the rupee may not be seen while it may Russian rubble 61.65 61.03 1.02 Depreciated
consolidate above 70.8 in the coming week South african rand 14.41 14.37 0.34 Depreciated
Indonesian rupee 13643 13772 -0.94 Appreciated
S.korean won 1161 1162 -0.02 Appreciated

ICICI Securities – Retail Equity Research

India 10-year yield remains resilient… US$INR January options build-up
8.5
300
India-Sovereign 10-yr yields

Call OI Put OI
8
250

In 000's
7.5
200

US$INR Options OI
150

6.5 100

6 50
Sep-19

Dec-19
Dec-19
Feb-19
Jan-19
Jan-19

Jun-19

Oct-19
Oct-19

Jan-20
May-19
May-19

Nov-19
Jul-19
Jul-19
Aug-19
Mar-19
Mar-19
Apr-19

73.5
70.00

70.50

71.00

71.50

72.00

72.50

73.00
Source: Bloomberg, ICICI Direct Research
January 21, 2020 ICICI Securities Ltd. | Retail Equity Research 9
Forthcoming Events…

India:

• 23 January : Jan Economic Survey

• 17 to 24 January : Quarterly Numbers

Japan:

• 20 January : Industrial Production and Capacity Utilization

• 21 January : BoJ Policy Balance Rate
• 23 January : Trade Balance, Machine Tool Orders
• 24 January : Natl CPI

US:

ICICI Securities – Retail Equity Research

• 22 January : MBA Mortgage Applications
• 22 January : Existing Home Sales
• 23 January : Initial Jobless Claims and Continuing Claims, Leading Index
• 24 January : PMI Data

Euro zone:

• 23 January : ECB Main refinancing rate and Consumer Confidence

• 24 January : Markit Eurozone Manufacturing, Services PMI
• 24 January : Composite PMI

Source: Bloomberg, ICICI Direct Research

January 21, 2020 ICICI Securities Ltd. | Retail Equity Research 10
Derivatives Strategies: Open recommendations

Date Scrip Action Recommendation

27-Dec-19 REC Ltd Buy Positional Option: Buy REC Ltd January 145 Call at 3.3-3.8; Target: 8; Stop loss: 0.9; Time Frame: Till January expiry
10-Jan-20 Vedanta Buy Long/Short Strategy : Bull Call Spread: Buy Vedanta Ltd Jan 165 Call at 4.50-4.90 and Sell Vedanta 180 Call at 1.40-1.60. Target: 180; Time Frame: Till January expiry

ICICI Securities – Retail Equity Research

Back

Source: Bloomberg, ICICI Direct Research

January 21, 2020 ICICI Securities Ltd. | Retail Equity Research 11
Quant Picks: Open recommendations…

Date Scrip Action Buy Price Target SL CMP %Ret Time Frame
23-Oct-19 Voltas Buy 685-700 815 630 700 0.0% 3 months
31-Oct-19 Exide Industries Buy 186-191 230 171 195 2.7% 3 months
05-Nov-19 Dabur India Buy 465-475 550 432 486 2.3% 3 months
13-Jan-20 Hindustan Unilever Buy 1940-1970 2285 1775 2063 4.7% 3 months
16-Jan-20 Pidilite Industries Buy 1410-1440 1670 1290 1440 0.0% 3 months

Yearly Quant Picks

13-Dec-19 Wipro Buy 232-242 298 204 248 2.5% 12 Months
13-Dec-19 HDFC Ltd Buy 2285-2335 2880 2015 2454 5.8% 12 months
13-Dec-19 Divis Lab Buy 1790-1830 2280 1560 1892 4.0% 12 months

ICICI Securities – Retail Equity Research

Back
Source: NSE, Seediff, ICICI Direct Research
January 21, 2020 ICICI Securities Ltd. | Retail Equity Research 12
 Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road no.7, MIDC
Andheri (East)
Mumbai – 400 093
research@icicidirect.com

ICICI Securities – Retail Equity Research

Source: Bloomberg, ICICI Direct Research
January 21, 2020 ICICI Securities Ltd. | Retail Equity Research 13
Disclaimer

We /I, Amit Gupta B.E, MBA (Finance), Raj Deepak Singh BE, MBA (Finance), Nandish Patel BCOM, Dipesh Dedhia BCOM, MBA (Finance), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this
research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Analysts are not registered
as research analysts by FINRA and are not associated persons of the ICICI Securities Inc. It is also confirmed that above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve
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January 21, 2020 ICICI Securities Ltd. | Retail Equity Research 14