CCI NG 3.7 Product: ETBangaloreBS PubDate: 01-12-2017 Zone: Bangalore Edition: 1 Page: ETBGCFM User: ravi.

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BENGALURU, FRIDAY, 1 DECEMBER 2017

CAUTION ON STREET Options data show Nifty has major support at 10,000 & faces resistance at 10,500

Traders Carry Fewer Nifty Futures into

Dec Series Amid Poll, Rate Uncertainties
Our Bureau
Mumbai: Traders rolled over a
higher percentage of stock fu-
tures than Nifty futures com-
pared to their respective three se-
ries’ averages at expiry of the
November series of derivatives,
reflecting a degree of caution
ahead of the all-impor tant
Gujarat poll outcome and the RBI
policy meet next month, which
will set the tone for the markets.
This was borne out by traders roll-
ing over 63% of overall positions in
Nifty futures against average rolls
of 71% in the past three series, ac-
cording to Edelweiss Financial
Services. The Nifty cost to roll over
long positions declined from 39 ba-
sis points to 32 on Thursday, indicat-
ing that fewer bullish bets were car-
ried forward ahead of the major
events.
However, market-
Traders wide rolls (index
roll over 63% plus stocks) at 80%
of overall is higher than the
three series’ aver-
positions in
Nifty futures a g e o f 7 7 % ,
against aver- Edelweiss adds.
age rolls of 71% Further, cost to
in past 3 series rollover stock fu-
tures remained
strong at 48-50 basis points (one bps
is 0.01%), indicating that bullish
stock futures bets were rolled over.
The positions built on Nifty call
and put options expiring on
December 28, show that the market
gets major support at 10,000 and
Nifty 50 faces resistance at 10,500. This
10226.6 means the Nifty has the potential of
initially rising by 2.7% from
Thursday’s close of 10,227 or falling
by more than 2% from it.
Options also indicate that depend-
ing on the Gujarat poll outcome on
10363.7 December 18, the market could have
a shy at 10,600 or extend its fall to
9,800. Among stocks, Ashok
Leyland (91%), Bajaj Auto (90%),
Bharat Financial Inclusion (91%),
Bank Of Baroda (89%), BHEL
(91%), L&T (83%), ACC (90%),
Dabur (89%), RIL (88%), HPCL
(87%) and HCL Technologies (87%)
Oct 30, 2017 Nov 30, 2017 witnessed strong rollovers.
The RBI policy outcome on inter-
est rates would be known on
December 6 while the Gujarat elec-
tion results will be declared on
December 18.
Chandan Taparia, derivatives ana-
lyst at Motilal Oswal Securities, ex-
pects that till then the market could
be a “bit choppy.” “If the market
sustains below 10,300, it could de-
cline to 10,178, while immediate hur-
dles are seen at 10,250,” he said.
However, certain derivatives ana-
lysts, like Amit Gupta of ICICI
Securities, remain positive that
the index would continue its outper-
formance. He points to the 52-point
premium Nifty December contracts
was trading at to the spot Nifty to
substantiate his claim that traders
still continued to remain bullish.

Market Trends OR STAY AWAY ALTOGETHER? FINANCIAL RESOLUTION AND DEPOSIT INSURANCE BILL
STOCK INDICES
Nifty 50 10226.55
% CHANGE
1.30
How to Ride the Uninsured Depositors Likely to Get
Sensex

MSCI India
33149.35

858.11
1.35

1.41 Bitcoin Rally in India Preference over Other Creditors

MSCI EM 2438.47 1.59 What is a Bitcoin?
Here’s a primer on
MSCI BRIC 622.64 1.65 It’s not a coin, but a code or a virtual token that “The bail-in provision relates to instru-
Bitcoins. Read this can be freely transferred from one user to another
MSCI World 8304.87 0.01 ments spe-cifically issued with a bail-in
and a lot more, through a secured network. Bitcoin is the most A bankruptcy framework clause upfront with the specific understand-
SX 40 19761.04 1.25 popular cryptocurrency.
Nikkei 22724.96 0.57
prior to investing covering all financial ing that these liabilities can be called up
Where do you buy in India? when the financial institutions are deemed
in cryptocurrencies. There are about 11 trading platforms in India to buy critical,’’ said Usha Thorat, former deputy
Hang Seng 29177.35 1.51
One should not invest Bitcoins. Those include Unocoin, Zebpay, Coinsecure,
institutions, too, likely to governor of the Reserve Bank of India.
Strait Times 3433.54 0.16
Coinmama, LocalBitcoins, Bitcoin ATMs. “This bill will also look to clarify some infir-
Values in US $, Gross At 7 pm IST large sums of money be part of the proposed mities in the pre-sent scheme and provide
Is it too expensive to buy?
OIL ($) BOND
in Bitcoins as it is a Globally, the cryptocurrency surged past $11,000 to Financial Resolution and uninsured depositors preference over other
creditors. The resolution corporation will be
DUBAI CRUDE 10-YR YIELD
very volatile asset hit a record high on Wednesday. In rupee terms, it
under the finance ministry un-like the
60.86 7.06 class. Cryptocurrencies recently touched `8.6 lakh per unit. Deposit Insurance Bill DICGC (Deposit Insurance and Credit

ANIRBAN BORA
0.26 0.03 are not issued or So, are Bitcoins a rich man’s asset class? Guarantee Corp) which is under the RBI.”
Absolute Change Figures in % You can buy even a fraction of a unit with a A separate law to wind down institutions in
backed by banks minimum of `1,000. Consider Bitcoin as a rupee coin Joel.Rebello@timesgroup.com the fi-nancial services is in the works in line
GOLD RATE with global developments where many coun-
Prices per Troy Ounce ($) or governments. now; it can be fragmented into smaller bits (like
paisa in a rupee). So you can buy even 0.2 or 0.3 ‘bit’ Mumbai: A proposed Financial Resolution tries have evolved special laws post the col-
US India Absence of a regulator of a Bitcoin as well. Bitcoins can be fragmented far and Deposit Insurance Bill (FRDI), that is lapse of Lehman Brothers in 2008 which
OPEN 1286.90 1408.97 makes legal recourse more times than fiat currencies. aimed at orderly resolu-tion of bankruptcies ance scheme, deposits up to `1 lakh would be roiled the global financial system.
LAST* 1409.70 in the financial services sec-tor, includes a insured but there is also a proposal for a new While the Parliament has enacted a law for
1284.10 almost non-existent Where can Bitcoins be used in India?
special high-risk deposit instru-ment, regu- kind of high- yielding deposits which can be resolv-ing other enterprises styled the
As of now, there aren’t many avenues to use
*At 10.30pm, After adjusting for import duty, In-
dian spot gold lower by $ 2.81 to US Comex gold
in cryptocurrency Bitcoins in India. But ecommerce players such as
latory supervision by the finance minis-try, called whenever they are deemed critical, Insolvency and Bankruptcy Code, the finan-
and a bankruptcy framework that will enve- which can be referred to as a bail-in clause. cial sector ones is still hanging fire.
price on Thursday. The premium on local gold is
due to tight supply following import curbs.
investments. Flipkart, Amazon and MakeMyTrip run voucher
lope all financial institutions. These instruments would be last in the line
programmes for people using Bitcoin exchanges,
but they do not accept payment in Bitcoins. Many
Just like the current bank deposit insur- for payments in case of liquidation. Continued on XX SMART INVESTING
FOREX RATE (`-$ Exchange Rate) a time, exchanges convert Bitcoin into normal
OPEN LAST* currency.
64.57 64.46 How many Bitcoins are traded in India currently?
Market on Twitter@ETMarkets Bitcoin trading volumes could be in the range of
`200–250 crore every month.
What other cryptocurrencies are in play apart
from Bitcoins?
Ethereum, Litecoin, Dash and Ripple are quite
popular among cryptocurrency users. The prices of
many of these digital currencies have gone up in
tandem with Bitcoins.
How many people are using cryptocurrencies
globally?
More than three million people are estimated
to be actively using cryptocurrencies, like Bitcoin.
(Source: Cambridge Centre for Alternative Finance).
Bonds, Call Rates Slip How ‘powerful’ is Bitcoin in terms
G-Secs slipped on selling pressure of purchasing power?
from banks and corporates and the In 2013, a US-based cryptocurrency enthusiast
bought a Tesla Model S paying just under 92
Interbank call rates also ended low- Bitcoins. The real currency value of Model S was
er due to lack of demand from bor- over $100,000 at the time.
rowing banks amidst ample liquidity Text: Shailesh Menon & Saikat Das
situation in the banking system.

Straight Talk Express

Manufacturing Back in Business,

Shrugs off GST, DeMo Blues
R SRIRAM
Stunning. That was the only word to de-
scribe the number flashing on television
screens on the evening of August 31 this
year. The first-quarter GDP numbers had
just been released and growth had
slipped to 5.7%, a three-year low. While
that in itself was shocking, what was
even more stupefying was the collapse of
manufacturing. Quarterly gross value
added (GVA) growth for the sector
slipped to 1.2% compared with 10.7% in
the previous year. 1.2%!, that’s it.
Private sector growth, deduced from the
data available from listed companies on
the stock exchanges was even more stun-
ning. A negative 0.9% compared with a
10.2% growth in year-ago period!
It took some time for the numbers to
sink in. But when it did, the full extent of
the problems in manufacturing induced
by GST rollout became apparent.
Businesses had stopped or sharply cut
back production of goods in May-June
ahead of the GST rollout on July 1. Small
businesses still facing demonetisation af-
ter-effects suffered even more and that
was fully reflected in the data captured by
government’s statisticians.
Cut to November and the picture has
changed. On Thursday, the second quar-
ter GDP estimates were released showing
a smart bounce in GDP and manufactur-
ing. GVA for manufacturing rose 7% in
the quarter compared with 1.2% in April-
June, while private sector corporate
growth was a healthy 11.4%. Of course,
the numbers were still lower than 7.7%
manufacturing growth in second-quar-
ter of 2016/17 when the economy was
humming along before the demonetisa-
tion shock in November last year. So
there is a lot of room to do more. This is
obviously not the best performance and
one should refrain from celebrating too
much or calling this a spectacular turna-
round. But there is no doubt that the woes
caused by GST and demonetisation, at
least for big and medium manufacturers,
have ebbed and that they are on the cusp
of faster growth.
Consider the following: GVA for mining
and quarrying grew 5.5%, the highest
growth rate the sector has posted in the
first-half of the fiscal year since 2015/16.
Electricity, gas water supply and utilities
recorded a growth of 7.6% in GVA com-
pared with 5.1% in the year-ago quarter.
The star performer here was electricity
which grew by 6.1% in July-September
compared with 3.1% last year.
Commercial vehicle sales jumped 21% in
the second-quarter, while cargo handled
by civil aviation grew by 18.9%; railway
freight growth measured by net tonne kil-
ometres was up 5.0%. Construction has
been having a bad time but second-quar-
ter numbers show that it has actually held
up quite well. Now, construction here cov-
ers cement production, consumption of
finished steel. These haven’t grown as
much as the previous year but the catego-
ry has grown 2.6%, which is up from 2.0%
growth in the first-quarter.
An interesting anomaly needs to be
mentioned here and that is the discrep-
ancy between the cement production
data and the actual volume growth re-
ported by major cement companies in the
three-months ended September 30.
Almost all the big cement firms reported
double-digit volume growth in the sec-
ond-quarter with ACC and UltraTech vol-
umes rising 18% followed by Gujrat
Ambuja’s 12% growth. Smaller JK
Lakshmi Cement too reported 10% vol-
ume growth. New capacities through
mergers helped support this growth but
still this is surprising as the second-quar-
ter is generally weak for cement compa-
nies due to monsoon and dull construc-
tion activity across the country. So one
shouldn’t read too much into the dip in
cement production and I think a fuller
analysis is needed to understand the de-
mand conditions for cement companies.
On Thursday, we had another interest-
ing data release and that was the perfor-
mance of core industries. The eight core
industries, that is cement, steel, fertiliser,
natural gas, crude oil, refinery products,
coal and electricity grew by 4.7%, com-
pared with 7.1% last year. The figure was
the same as previous month and the joint
highest growth for this fiscal year. Once
again, it shows a revival in manufactur-
ing led by steel, refinery products, coal
and electricity.
Continued on XX MONEY MATTERS