(Nifty 11117, Down 26 points)
Benchmark indices are trading in a narrow range amid a drop in global market after escalation in trade tensions between the United States and China. It’s better to adopt a stock specific approach and should ideally remain light on positions
• On the economic front, the all-India general Consumer Price Index (CPI) inflation rose to 2.92% in April 2019, compared with 2.86% in March 2019. The inflation based on CPI was 4.58% in April 2018. The Central Statistics Office (CSO) released the data aftermarket hours yesterday, 13 May 2019.
• Asian shares declined Tuesday following a sharp fall in US stocks overnight as the trade war between China and the United States escalated.
• China announced on Monday that it will raise tariffs on $60 billion worth of US goods, beginning on 1 June 2019.
• The goods targeted include a broad range of agricultural products. Last week, US President Donald Trump raised duties on $200 billion in Chinese goods to 25% from 10%.
• US Trade Representative’s office reportedly said it planned to hold a public hearing next month on the possibility of imposing duties of up to 25% on a further $300 billion worth of imports from China.
• The rupee on Tuesday opened 7 paise higher at 70.44 against the US dollar on Tuesday amid weak global cues and rise in crude oil prices.
• Shares of automobile and auto-related companies were under pressure with Nifty Auto index hitting 3-year low on Tuesday on subdued volume growth and disappointing set of financial numbers for the quarter ended March 2019 (Q4FY19).
• Sectoral indices are mixed, with maximum gains visible in PSU banks, while maximum pain is visible in IT index.
• The market breadth, indicating the overall health of the market is Negative.
• NSE Advances: 18. NSE declines: 31.
• The NSE Mid-Cap index is Up 0.09% at 4,593. The NSE Small-Cap index is Down 0.19% at 6,087.
• INDIA VIX index representing volatility is Down: 27.05 (-1.18%)
• On the Positive side: SUNPHARMA at 410.80 (+3.19%), VEDL at 158.80 (+2.98%), and IBULHSGFIN at 676.60 (+2.66%), are in green,
• On the flip side: TECHM at 793.05 (-2.97%), TCS at 2079.85 (-2.30%) & BAJAJ FINANCE at 2870 (-2.11%).
Market Summary:
• Nifty May Futures ended Monday’s session at a premium of +43 vs +73.
• The 16th May expiry Put- Call Open Interest Ratio was at 0.49 for Nifty whereas it was 0.45 for Bank Nifty.
• The 16th May expiry Put-Call Volume Ratio was at 0.80 for the Nifty and 0.86 for Bank Nifty.
• For Nifty, Maximum Call Open Interest (OI) stands at 11300 Strike Price, followed by 11500 Strike Price for 16th May Series. Short Buildup was seen at strikes price 11200-12000.
• Maximum Put Open Interest (OI) was seen at strike price 11000 followed by 11100 strike price for 16th May series. Short Covering was seen at strike prices 11300-11600.
• For Bank Nifty, Maximum Call Open Interest (OI) stands at 29500 Strike Price and Maximum Put Open Interest stands at 28000 Strike Price.
• As per Monday’s Provisional Data available on the NSE, FII’s sold shares worth Rs. 1056.10 crores in the Indian Equity Market. DIIs on the other hand, bought shares worth Rs. 1057.91 crores in the Indian Equity market.
• Long Buildup: HDFC, TITAN, TECHM, BAJFINANCE.
• Short Buildup: PNB, UNION BANK, ITC, SUN PHARMA.
• Short Covering: BATA INDIA, MINDTREE, NESTLEIND.
• Long Unwinding: NCC, AXIS BANK, TATA MOTORS, CADILA.
• Stocks banned in F&O segment for today: NIL.
DOW (-617, 25324)
NASDAQ (-262, 7324)
SGX NIFTY (-80, 11105)
NIKKEI (-317, 20874)
HANG SENG (-599, 27951)
BOVESPA (-2531, 91727)
OIL (+0.40, $61.12)
GOLD (+1, $1303)
SUCCESSFUL INVESTING IS ANTICIPATING THE TRENDS OF:
Global: Negative.
FII: Negative.
DII: Positive.
F&O: Negative.
Sentiment: Precarious.
NIFTY’s CRUCIAL LEVELS:
Nifty’s CURRENT MARKET PRICE: 11,148.
Nifty’s SUPPORT:
Intraday: 11119/10961.
Medium Term: 10,701.
Long Term: 10,251.
Nifty’s RESISTANCE:
Intraday: 11209/11405.
Medium Term: 11587.
Long Term: 12,001.
Nifty’s RANGE:
Intraday: 11,061-11,261.
Medium Term: 10,701-11,551.
Long Term: 10,250-12,001.
Nifty’s OUTLOOK
Intraday: Neutral.
Medium Term: Neutral.
Long Term: Positive.
Our call of the day suggests that the next few days could be more rocky. Blame it to the U.S-China trade deal which may not materialize soon.
Our chart of the day suggests initiating short positions in stocks like MARUTI, HERO MOTO CORP and YES BANK on any early strength with inter-week perspective.
IMPORTANT THEMES FOR THE DAY:
The big question of the day: Is this the beginning of a trade war ?
Digging deeper, on Friday, the United States imposed 25% tariffs on $200 billion of Chinese products. And overnight, China announced retaliatory tariffs on $60 billion of United States products.
Well, these retaliation clearly suggests that the trade relations between the U.S. and China are headed towards a new low. And if China’s retaliation of higher tariff is any indication then it is almost certain that the trade deal will take its sweet time. That’s purely because President Trump and the Chinese both need one to make their respective constituencies happy.
As we always say, ‘A war is harder to stop than to start — the same goes with trade war too’.
The reality of trade war is sinking in worldwide stock markets as overnight S&P 500 and Dow both tumbled 2.4% — a 617-point loss for the Dow and its worst day since January.
One of them have to blink else the wise voice will whisper hard from the grave — expect market volatility, volatility and volatility.
Now, the U.S-China enter effect June 1 — unless a negotiated truce first washes them out.
Also keeping investors’ on edge are catalysts like:
1. Uncertainty of general election outcome on May 23.
2. Selling intensifying from FIIs camp. The Foreign Institutional Investors have sold shares worth Rs. 1056 crore in the Indian equity markets in Monday’s trade. In the month of May, as of now, the FIIs have pulled out Rs 4,273 crore.
3. Oil prices have spiked after Saudi Arabia reported an attack on two of its tankers.
4. Uninspiring March quarter earnings.
5. Sluggish macro data. India just posted the worst car sales data in 8-Years.
Meanwhile, Q4 earnings to trickle in this week:
• Tuesday: SIEMENS, IIFL, UCO BANK, UNION BANK, PTC INDIA, L&TFH, INDIAN BANK.
• Wednesday: JUBILANT FOODS, J&K BANK, KARURVYSYA, MANAPPURAM, AMARARAJA BATTERIES, LUPIN, CENTRAL BANK, PETRONET.
Outlook for Tuesday: Stay Cautious. Stay Light.
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