Markets Update: Today’s action in the Markets (May 02)

15:00 Hrs: Where’s the Clever Money Going?

Nifty (-15, 11733): Market breadth turns Negative. The lacklustre day is being witnessed at Dalal Street. The indices are off day’s highs. The key equity benchmarks are trading with mild losses in mid-afternoon trade.

Among the sectors, Financials, Realty, and Metal indices are witnessing buying, while IT, Media and pharma are trading lower.

On the economic front, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) declined from 52.6 in March to 51.8 in April. A print above 50 means expansion while a score below indicates contraction.

The Indian rupee is trading at day’s high level at 69.50 per dollar versus Tuesday’s close 69.56.

In our sense, some kind of consolidation would now be seen for a while before unfolding the next leg of the rally.

The gyan mantra in such scenario is to trade selective on buy side.

Probable BTST/STBT trades:

Bullish looking BTST trades: KOTAK BANK, HDFC BANK, BAJAJ FINACE, HDFC, HEROMOTOCO .

Negative looking STBT trades: BRITANNIA, MARUTI, TATA MOTORS.

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14:00 Hrs: Life at Dalal Street after Europe’s opening bell

Nifty (-3, 11743): Indian indices are trading flat around noon amid gains in financials and energy stocks while IT stocks being the drags.

Overseas, Asian shares were mixed with two major centres – Japan and China – shut for holidays. Trading in Japan will resume next Tuesday while China will be back in action on Monday.

The Fed unanimously decided on Wednesday afternoon to maintain the target range for the federal funds rate at 2.25-2.50 percent as widely expected, in a bid to foster maximum employment and price stability.

Meanwhile, the US central bank lowered the IOER by 5 bp to 2.35 percent to keep the fed funds effective rate within its target range. Fed Chairman Jerome Powell’s said officials suspected recent softening in inflation was likely to be “transient.” But he added if this outlook proved wrong and the recent weakness in price pressures was persistent, that would be “something we would be concerned about.”

Also commanding attention would be:

• The Trump administration in the United States is close to revealing its much-awaited ‘deal of the century’ plan that aims to end the decades-long conflict between Israelis and Palestinians by fostering a peace agreement

• US and China closing in on a deal that includes broad agreement on how the Trump administration will roll back a portion of the tariffs it has imposed on more than USD250 billion worth of Chinese goods, after US Treasury Secretary Steven Mnuchin said in Beijing that the two countries completed “productive” talks in China’s capital. The two sides have also reached an understanding on how to enforce the agreement.

European markets are lower today with shares in France off the most.

DAX (-20, 12349)

FTSE (+17, 7364)

DOW Futures (+72, 26437)

NASDAQ Futures (+31, 7756)

HANG SENG (+233, 29899)

NIKKEI (+143, 22317)

SHANGHAI (+15, 3078)

Nifty (-5, 11786)

Sensex (+24, 39055)

Bank Nifty (-36, 29857)

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12:00 Hrs: Dalal Street’s top stories at mid-day

(Nifty 11762, Up 14 points): Benchmark indices bounced back and are trading higher amid firmness with banking shares.

• Crude oil price fluctuations, rupee movements, corporate earnings will drive Indian markets.

• Asian shares were mixed on Thursday with two major centres – Japan and China – shut for holidays.

• Trading in Japan will resume next Tuesday while China will be back in action on Monday.

• US stocks fell on Wednesday after Federal Reserve Chairman Jerome Powell acknowledged a slowdown in business and household spending, but described low inflation as “transitory” and denied there was a “strong case” to expect an interest-rate cut in the near term.

• The US Federal Reserve on Wednesday kept its benchmark interest rate in a range of 2.25% to 2.5%. Senior officials sounded more upbeat about the economy after a slow start in early 2019 and pointed to a recent decline in inflation as reasons to stand pat.

• On the US-China trade front, a trade deal between the two economic powerhouses could reportedly be announced by next Friday.

• Barring IT, Metal and Pharma, rest all the sectoral indices are in green, with maximum gains visible in Banking shares.

• The market breadth, indicating the overall health of the market is Positive.

NSE Advances: 23. NSE declines: 27.

• The NSE Mid-Cap index is Up 0.03% at 4,863. The NSE Small-Cap index is Up 0.50% at 6,500.

INDIA VIX index representing volatility is Up: 22.64 (+3.72 %)

• On the Positive side: YES BANK at 177.30 (+5.54%), INFRATEL at 269.75 (+2.74%) and BHARTIARTL at 327.20 (+2.15%) are in the green.

• On the flip side: BRITANNIA at 2843.85 (-2.11%), GAIL at 350 (-1.67%) & TCS at 2220 (-1.79%).

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09:30 Hrs: Make Informed Decision

(Nifty: -22, 11726): Nifty opens with a slight touch of red. Autos underperform. In early action, Nifty trades with caution — unable to carry forward Hang Seng’s upswing.

Amongst stocks on positive side are: INFRATEL (+3.10%, 271) YES BANK (+1.28%, 170) BHARTI AIRTEL (+1.08%,  324).

On the negative side are: TATA MOTORS (-2.75%, 208) HINDALCO (-2%, 202) EICHER MOTORS (-1.83%, 1995)

Among the sectoral indices, most of the sectors have witnessed Negative open with maximum pain visible in Auto sector which is down 1.5%.

 Meanwhile, the Indian rupee opened marginally lower at 69.61 per dollar versus previous close 69.56.

Key Themes:

  • As per Tuesday’s Provisional Data available on the NSE, FII’s bought shares worth Rs. 114.59 crores in the Indian Equity Market. DIIs too, bought shares worth Rs. 730.02 crores in the Indian Equity market.
  • BRITANNIA posts Q4 above street expectations.
  • Ongoing elections likely to add volatility in May series.
  • GST collection jumps to Rs 1.13 lakh crore in April, the highest since its rollout.
  • Maruti Suzuki passenger vehicle sales dropped 20% in April. Well, Maruti likely to be a underperformer in near term. Maruti slips 2% in early action.
  • As per media reports in the round 2 of PSB Merger: Punjab National Bank & Union Bank of India are likely to get a call.
  • Amongst Q4 results to trickle in today are BANDHAN BANK, TATA POWER.

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09:00 Hrs: What Caught Our Eye at 9 AM?

Volatility likely in near term as the street had high expectations with regards to the likelihood of a much more dovish outcome from US Federal Reserve.

Global Update:

DOW FUTURES (+63, 26428)
NASDAQ FUTURES (+32, 7756)
SGX NIFTY (-65, 11785)
NIKKEI (-49, 22259) (CLOSED)
HANG SENG (+171, 29870)
SHANGHAI (+16, 3078).

The key themes of the day:

1. The policy-setting Federal Open Market Committee kept interest rates unchanged at 2.25%-2.5%. The Fed noted that some key economic activity had slowed during the first quarter. Fed Chairman Jerome Powell said, “Incoming data since our last meeting in March have been broadly in line with our expectations.”As a result, Wall Street slumped, relinquishing their early morning gains to close deep in red. The Dow Jones index finished a turbulent session sharply lower, down 162 points to close at 26430.

STOCKS TO WATCH:

• BULLISH STOCKS: INDIGO, BALRAMPUR CHINNI, MCX, SUZLON, HAVELLS, SRF, KOTAK BANK, ICICI BANK, BAJAJ FINANCE, UPL, AIA ENGINEERING.

• BEARISH STOCKS: APOLLO TYRES, RAYMONDS, MARUTI, HERO MOTO CORP, VEDANTA.

All about stocks (F&O Trades):

• DIVIS LABS (CMP 1747): Buy at CMP. Targets 1781/1821. Stop 1709.

• HAVELLS (CMP 407): Buy at CMP. Targets 787/807.50. Stop 751.

• BAJAJ FINANCE (CMP 3096): Buy at CMP. Targets 3151/3251. Stop 3029.

All about stocks (Cash Trades):

• Buy INDIGO (CMP 1517). Buy at CMP . Targets 1537/1567. Stop 1461.

• Buy JINDALSTL (CMP 178.10): Buy between 171-173 zone. Targets 192.50/207.50. Stop 163.

• Buy AIA ENGINEERING (CMP 1815): Buy at CMP. Targets 1880/2000. Stop 1601.

SHOW ME THE MONEY:

• Option Trade: SELL NIFTY 9th May PE Strike Price 11500 at CMP 15.80. Maximum Profit: Rs. 1185/-. Loss: Unlimited. Stop: Exit Put option if Nifty spot moves below 11521. (Nifty CMP 11748).

Bulls Vs. Bears: Time to Pick a Side!!

Nifty likely to outperform Bank Nifty:

• Preferred trade on Nifty (11748): Buy between 11701-11721 zone. Targets 11857/12001. Stop 11439.

• Preferred trade on Bank Nifty (29765): Buy only above 30101 zone. Targets 30251/30751. Stop 29451.

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08:00 Hrs: Calculus Derivatives Corner

Market Summary:

• Nifty May Futures ended Tuesday’s session at a premium of +41 vs +53.

• The 02nd May expiry Put- Call Open Interest Ratio was at 0.85 for Nifty whereas it was 0.74 for Bank Nifty.

• The 02nd May expiry Put-Call Volume Ratio was at 0.72 for the Nifty and 0.83 for Bank Nifty.

• For Nifty, Maximum Call Open Interest (OI) stands at 11800 Strike Price, followed by 11900 Strike Price for 02nd May Series. Short Buildup was seen at strikes price 11800-11900.

• Maximum Put Open Interest (OI) was seen at strike price 11700 followed by 11600 strike price for 02nd May series. Short buildup was seen at strike prices 11200-11800.

• For Bank Nifty, Maximum Call Open Interest (OI) stands at 30000 Strike Price and Maximum Put Open Interest stands at 29500 Strike Price.

• As per Tuesday’s Provisional Data available on the NSE, FII’s bought shares worth Rs. 114.59 crores in the Indian Equity Market. DIIs too, bought shares worth Rs. 730.02 crores in the Indian Equity market.

• Long Buildup: JINDALSTL, BPCL, HCLTECH, HDFC, AXIS BANK.

• Short Buildup: YES BANK, AMBUJACEM, L&TFH, PCJEWELLER, POWERGRID.

• Short Covering: IOC, IGL, RBLBANK, MCDOWELL.

• Long Unwinding: FEDBANK, BEL, CGPOWER, M&MFIN.

• Stocks banned in F&O segment for today: NIL.

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07:00 Hrs: Know What Matters at Dalal Street at 7 AM!!

Global cues are slightly negative this Thursday morning after the overnight retreat at Wall Street. SGX Nifty is seen consolidating in early action.

GLOBAL UPDATE:

DOW (-163, 26430)
NASDAQ (-46, 8049)
SGX NIFTY (-50, 11800)
NIKKEI (CLOSED, 22259)
HANG SENG (+78, 29777)
BOVESPA (+165, 96353)

OIL (-0.01, $63.60)
GOLD (-7, $1277)

The numbers are in and the verdict is out. First the numbers!

The numbers: The policy-setting Federal Open Market Committee kept interest rates unchanged at 2.25%-2.5%. The Fed noted that some key economic activity had slowed during the first quarter.

Fed Chairman Jerome Powell said, “Incoming data since our last meeting in March have been broadly in line with our expectations.”

The Verdict: Wall Street slumped, relinquishing their early morning gains to close deep in red. The Dow Jones index finished a turbulent session sharply lower, down 162 points to close at 26430.

Denting optimism was the Federal Reserve Chairman Jerome Powell’s acknowledgment that denied a “strong case” to expect an interest-rate cut in the near term.

Bottom-line: Volatility likely in near term as the street had high expectations with regards to the likelihood of a much more dovish outcome.

SUCCESSFUL INVESTING IS ANTICIPATING THE TRENDS OF:

Global: Negative.
FII: Neutral.
DII: Positive.
F&O: Positive.
‪Sentiment: Positive.

NIFTY’s CRUCIAL LEVELS:

Nifty’s CURRENT MARKET PRICE: 11,755.

Nifty’s SUPPORT:
Intraday: 11651/11519.
Medium Term: 11,501/11,221.
Long Term: 10,251.

Nifty’s RESISTANCE:
Intraday: 11807/11857.
Medium Term: 12001/12,251.
Long Term: 12,501.

Nifty’s RANGE:
Intraday: 11,691-11811.
Medium Term: 11,301-12,001.
Long Term: 10,900-12,501.

Nifty’s OUTLOOK
Intraday: Buy on dips.
Medium Term: Positive.
Long Term: Positive.

Our chart of the day suggests establishing long positions in stocks like DIVIS LAB, HAVELLS and INDIGO on any early weakness with interweek perspective.

IMPORTANT THEMES FOR THE DAY:

Global cues are slightly negative this Thursday morning after overnight retreat at Wall Street. SGX Nifty is seen consolidating in early action.

Meanwhile, the three key positive catalysts driving optimism are:

1. GST collection jumps to Rs 1.13 lakh crore in April, the highest since its rollout.

2. Optimism amidst latest round of U.S.-China trade talks.

3. Crude oil prices continues to trade weak following President Donald Trump’s comments that he had called on OPEC to lower prices. Oil is also under pressure on signs of a sharp increase in U.S. crude inventories and concerns over global demand.

Outlook for Thursday: Volatile session likely.

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