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Indian Indices: Asian indices opened flat as overnight US cues turned negative with bond yields rising indicate Fed rate hike in June now a certainty. Consolidation could be the key this week as markets digest the gains of the previous 6 weeks. Positive manufacturing data from China could see sentiment improve as growth slowly picks up. 

Nifty closed over 9600 for another day led by Pharma and PSU banks while FMCG stocks witnessed profit booking. The breadth is getting more skewed in favor of declines as markets punish under performers. For today expect Nifty to see range bound trade while the broader market sees stock/sector rotation.      

The BSE Sensex is currently trading at 31162.70, up by 3.30 points or 0.01% after trading in a range of 31107.48 and 31233.68. There were 14 stocks advancing against 16 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.64%, while Small cap index was up by 0.83%.

The CNX Nifty is currently trading at 9619.15, down by 5.40 points or 0.06% after trading in a range of 9610.80 and 9638.70.  There were 21 stocks advancing against 30 stocks declining on the index.

Technical view: Nifty witnessed strong support around 9548 which was the last few days low while 9640/9650 act as resistance on the upside, any break either side will trigger rise or fall. Bank Nifty also finds strong support around 23094 which was yesterday's low while 23450 will act as resistance on the upside.

The South Indian Bank (Buy Above 28 with Stop Loss at 27 for Target of 30): Our daily chart analysis indicates that South Indian Bank after consolidating for over a week has finally broken out from a Flag pattern. The stock found strong support at its 15-DMA and bounced back to break out convincingly. Other momentum oscillators also indicate that the current upswing is likely to prolong.

Derivative Snippets   

Pharma Sector: Attractive Valuations

Structurally Pharma is a sector which has high ROCE and has a significant stable demand in addition to growth opportunities. The recent fall in the stock prices by 25 to 35% in last three months provides a decent entry point from a risk reward perspective. Most of the stocks are trading at a relative discount of 40% to the index for the first time in the past two decades. Hence, we suggest doing Systematic Investment Plans (SIP) in some select Pharma stocks or in Pharma focused mutual funds.

In the last trading session, Nifty ended on a flat note. Nifty ATM/OTM put option strikes continued to see short selling, while Bank Nifty OTM call strike of 23500 saw fresh long build up, indicating a continued uptrend.FIIs were net sellers in cash market segment to the tune of Rs 217 Cr.FIIs index future long short ratio at 5.5x vs 5.7x.

Nifty Movers: The top gainers on Nifty were Mahindra & Mahindra up by 5.93%, Ultratech Cement up by 2.89%, Power Grid up by 2.01%, Lupin up by 1.84% and Indian Oil Corporation up by 1.64%. On the flip side, Vedanta down by 2.27%, BhartiInfratel down by 2.24%, AurobindoPharma down by 1.60%, ONGC down by 1.48% and Yes Bank down by 1.34% were the top losers.

Top Sectoral& Stock Screening: The top gaining sectoral indices on the BSE were Realty up by 1.46%, Auto up by 1.15%, Consumer Disc up by 1.05%, Utilities up by 1.02% and Power up by 0.69%, while Metal down by 0.85%, FMCG down by 0.23%, IT down by 0.21%, TECK down by 0.20% and Telecom down by 0.13% were the losing indices on BSE.

On the global front:On the global front, Asian shares were trading mostly in red, even as China re-opened after a two-day break and brought along some upbeat news. China’s manufacturing sector expended faster than expected in May, highlighting continued steady growth.  The National Bureau of Statistic’s official Purchasing Managers’ Index (PMI) came in at 51.2 higher than the 51.0 expected and even with 51.2 in April.

Global Signals:The Asian markets were trading mostly in red; Taiwan Weighted decreased 58.99 points or 0.58% to 10,042.96, Nikkei 225 decreased 50.46 points or 0.26% to 19,627.39, Hang Seng decreased 35.6 points or 0.14% to 25,666.03 and FTSE Bursa Malaysia KLCI decreased 0.37 points or 0.02% to 1,764.97.On the other hand, KOSPI Index increased 1.09 points or 0.05% to 2,344.77, Shanghai Composite increased 5.51 points or 0.18% to 3,115.57 and Jakarta Composite increased 10.92 points or 0.19% to 5,704.31.