Good Morning & Welcome to Wednesday's trading action at Dalal Street, dated 7th August 2019

In early action, SGX Nifty is seen slipping down amidst subdued Asian cues.

Stocks in Asia Pacific traded mixed Wednesday morning as investors waited for the People’s Bank of China (PBOC) to set its daily midpoint fix for the Chinese yuan.

That brings us to our call of the day which suggests that caution should be the buzzword until there are signs of a further de-escalation. But having said that, we suspect, things could improve significantly only if there are bigger rate cuts by RBI. The street expects a 25 basis points rate cut. But we firmly believe that the trigger on the buy side only if the RBI cuts interest rates by at least 50 bps to boost consumption demand in the decelerating economy.

So all eyes will be glued to the Reserve Bank of India (RBI) which is expected to cut interest rates for the fourth time in a row in it's today's meeting.

Long story short: DO NOT LOOK FOR BARGAIN HUNTING UNLESS YOU SEE 50 BASIS POINT RATE CUT.

7 AM GLOBAL UPDATE:

DOW (-100, 25859)

NASDAQ (-32, 7475)

SGX NIFTY (-38, 10925)

NIKKEI (-55, 20530)

HANG SENG (+24, 26000)

BOVESPA (+2066, 102164)

OIL (+0.07, $53.70)

GOLD (+11, $1496)

USD/INR: 71.04

Institutions:

FII: - 2107.93 Cr

DII: +2289.05 Cr

SUCCESSFUL INVESTING IS ANTICIPATING THE TRENDS OF:

Global: Slight positive.

FII: Negative.

DII: Positive.

F&O: Negative.

‪Sentiment: Negative.

NIFTY’s CRUCIAL LEVELS:

Nifty’s CURRENT MARKET PRICE: 10,948.

Nifty’s SUPPORT:

Intraday: 10751/10701.

Medium Term: 10001.

Long Term: 9,251.

Nifty’s RESISTANCE:

Intraday: 11071/11139.

Medium Term: 11287/11507.

Long Term: 12,001.

Nifty’s RANGE:

Intraday: 10711-11175.

Medium Term: 10701-11507.

Long Term: 10001-11901.

Nifty’s OUTLOOK:

Intraday: Volatile.

Medium Term: Neutral.

Long Term: Neutral.

Our chart of the day suggests establishing short positions in stocks like BALKRISHNA INDUSTRIES, SUN TV and CIPLA with interweek perspective.

IMPORTANT THEMES FOR THE DAY:

1.The good news this Wednesday morning is that the recent fall at Wall Street is proving to be a buying opportunity as Dow Jones overnight ended 300 points plus on reports that the Chinese central bank signaled that it would keep the yuan from falling further.

2. The backdrop is slightly positive after the government said it will soon hold discussions with representatives of foreign portfolio investors, amid continuing overseas fund outflow from the markets following the decision to impose surcharge on certain class of such investors.

Please note, the street is facing severe negativity and blame the same to FIIs camp who have been in exiting mode in Indian stock markets, selling close to Rs 16,870 crore worth of equities in July alone. That was the largest monthly outflow since October 2018. In the first four trading days of August, FIIs have sold shares worth Rs. 8069 cr.

Well, things could improve only if there are bigger rate cuts by RBI. The street expects a 25 basis points rate cut. But we suspect, the trigger on the buy side only if the RBI cuts interest rates by at least 50 bps to boost consumption demand in the decelerating economy.

Low inflation and subdued consumption demand are key positive catalysts in favors of rate cuts. India's inflation has remained below the central bank's medium-term target of 4% for almost a year.

Outlook for Wednesday: Dalal Street likely to trade volatile ahead of RBI policy decision.

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