Chart of the day: Cash market turnover is steadily increasing

Riken Mehta
Moneycontrol.com

Follow me on Twitter @mehtariken

May is turning out to be a good month for stock brokers, with daily average cash market turnover (both exchanges combined) touching Rs 25,000 crore. This is the highest in five years, and offers some relief for broking firms, which have been grappling with low volumes for some time now.  While total traded turnover on the bourses (cash + derivatives) has grown over four-fold in the last five years, much of the rise has been driven by increased activity in options contracts, where brokerage charges are a fraction of cash market transactions.

Till mid-2009, cash market turnover would track the rise and fall in benchmark indices. But things changed from 2010 onwards, with cash market turnover falling for extended periods even as benchmark indices were rising.

The rise in average daily cash market turnover in May has been sharp. Between September last year, when the market began rising, till April this year, average daily turnover ranged between Rs 14,000-17,000 crore.

How India grew under various PMs since 1951

Ritesh Presswala, Riken Mehta 
moneycontrol.com 

Follow me on Twitter @mehtariken

The verdict is out. BJP has created history and is set to form the government at the Centre for the next five years, replacing the UPA who was at the helm for last 10 years. Narendra Modi is set to become the first prime minister who was born in independent India. This is the third time that BJP will lead the country after Atal Bihari Vajpayee's stint in 1996 and 1998-2004. The Indian economy is grappling with series of problems like poor infrastructure, stalled projects, high inflation and job creation. The GDP growth is now at decade low and the nation expects Narendra Modi to revive it in his term. Let us see how India grew under various Prime Minsters since 1951.

Graphics by Ganesh Govalkar

F&O Check: Option buyers book out; IVs halve, premium falls

Riken Mehta 
moneycontrol.com 

Follow me on Twitter @mehtariken

F&O players had geared themselves for volatility on the day of the election results and took heavy positions in the options market mostly on the long side. A trader or investor bullish on a particular index or stock would buy at the money or out of the money calls to cash in on upside in it.

Traders bought Nifty out of the money calls earlier this week especially 7200, 7500, 7700 and 8000 calls in anticipation of 5 to 10 percent rally today. The Implied Volatility or IV shot up to as high as 40 levels yesterday on huge positions in calls.

Nifty rallied to 7500, gain of 400 points on early trends predicting BJP win and the premiums in most of the calls doubled leading to profit booking in out of the money calls. The Nifty is now down 300 points from day’s high and IVS have fallen to sub 25 levels.

What to buy if Narendra Modi comes to power?

Riken Mehta
Moneycontrol.com

Follow me on Twitter @mehtariken

The judgement day is here and market is buzzing with various scenarios and probabilities of how many seats will the Modi led BJP and NDA alliance will be able to get in the Loka Sabha elections 2014. While most exit polls predict the formation of NDA led government with majority, markets will react to final numbers today. Prominent brokerage houses are out with their shopping list for investors if Narendra Modi comes to power. The consensus top stock recommendations by brokerages are  ICICI Bank, Axis Bank, SBI, L&T, Maruti and Reliance Industries.

CLSA 

CLSA in its note to clients said, “NDA will be able to form the next government without much trouble which will be positive for investment plays like ICICI bank, Axis, SBI and L&T. We expect market to remain in consolidation phase in the short term after election. The next government will have the difficult task of managing inflation, fiscal deficit and weak monsoon,” added CLSA.

Axis Capital 

Axis Capital recommends to buy Maruti, ICICI Bank, SBI, HDFC, L&T, Coal India and Sesa sterlite from the Nifty basket. The broking firm also advises to buy REC, PFC, Shriram transport, JSW Energy, Bajaj Finance, Eicher, Motherson Sumi and LIC Housing finance. Capital raising candidates like Aban Offshore, Adani Power, GMR Infra, GVK Power and Idea cellular are also likely to benefit from it.

Macquarie   

Macquarie expects the market rally to continue and in best case scenario market may see 15-20 percent upside. The brokerage house believes an absolute majority for NDA might lead to PE re-rating to 16-17 multiple from the current level of 14. Top picks are L&T , SBI , Axis bank , IRB and Adani Ports, said Macquarie.

Bank Of America Merrill Lynch 

Bank Of America Merrill Lynch expects another 8% return by year end. The broking house has year end target of 25500 on the Sensex. The growth will gradually recover to 5.4 percent in FY15 and 6.5 percent in FY16, added broking firm. On currency front, the rupee is expected to appreciate to 57 to the dollar. “We prefer high quality cyclicals like Maruti , ICICI bank and reform exposure stocks like ONGC and SBI. In midcaps, we prefer Eicher, Motherson, Yes bank and Aurobindo ,” said BoA-ML in its note.

CHART: Gold vs Sensex between last Akshaya Tritiya and now

Riken Mehta
moneycontrol.com
 
Follow me on Twitter @mehtariken

After outperforming equities a handsome margin in FY13, gold lost much of its ‘safe haven’ sheen last year, and ended up lagging the Sensex. Prospects for the yellow metal, in comparison to equities, do not look too bright this year too. Investors are betting on a global economic recovery later this year. Also, the Fed is expected to reduce the pace of its monthly bond purchases going ahead. This in turn should strengthen the dollar. Should the much anticipated global economic recovery materialize, equities will be the clear favourites.

Note: Dont use this chart without credits/attribution