Markets Update: February 04, 2019 – Today’s action in the Markets

16:00 Hrs: Latest After the Closing Bell

Nifty (+19, 10912): Nifty ends above 10,900 mark.

Despite volatility and languishing most part of the session in red, the benchmark Nifty made a spectacular comeback in final hours of trade to end above the dotted lines, and most importantly ended in green for 3rd consecutive session.

Index heavyweights like Reliance Industries, TCS and HDFC were star performers, but the market breadth, indicating the overall health of the market, was weak. The BSE Mid-Cap index fell 0.82%. The BSE Small-Cap index fell 1.17%. Both the indices under-performed the benchmark Nifty.

The positive takeaway from today’s trade is that Nifty did bounce from the mentioned support at 10813 mark.

Now technically speaking, and judging by today’s price action at Dalal Street, the benchmark Nifty now needs to close above 11001 mark to fuel further optimism. Above 11001, Nifty will gear up for a big rally which should take Nifty towards 11111 mark. The must watch support for Nifty from here on is at 10813 mark.

Now before we sign off for the day, let’s look at major instruments.

GLOBAL UPDATE:

DOW Futures (+15, 25011)
NASDAQ Futures (+7, 6885)
DAX (+3, 11184)
FTSE (+17, 7038)

OIL (+0.32, $55.59)
GOLD (-7, $1315)
DOLLAR INDEX (+0.12, 95.73)
COPPER (-26, 6115)

How Asia fared today:

HANG SENG (+59, 27990)
NIKKEI (+95, 20884)
SHANGHAI (+0, 2618)

Nifty (+19, 10912)
Sensex (+97, 36566)
Bank Nifty (+101, 27186)
SGX NIFTY (+0, 10949)
USD/INR (+0.45, 71.69)

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12:00 Hrs: Dalal Street’s Top Stories at Midday

(Nifty 10838, Down 54 points): Caution prevails at Dalal Street as the street suspects that the interim budget 2019-2020 is deviating from the path laid down in the Fiscal Responsibility and Budget Management (FRBM) Act, where the government has pegged the fiscal deficit for the next financial year at 3.4% of GDP, as against the original target of 3.1%.

As per the Moody’s Investors Service, the government will find it difficult to meet the fiscal deficit target of 3.4% in 2019-20 on account on higher spending and low revenue growth.

The Indian Rupee is too witnessing pain, now down 44 paise at 71.68 against the U.S Dollar.

The street is also taking a cautious stand as optimism from a surge in January US job growth was offset by a weaker-than-expected outlook from Amazon.com Inc. US economy created 304,000 new jobs in January. At the same time, job growth for December was reduce by 90,000, somewhat blunting the impact of the headline number.

Some sluggishness is also on backdrop of China’s financial markets which are closed all week for the Lunar New Year holiday.

In the near term, we would advise staying light as we may see higher volatility on account of RBI policy on February 7.  Technically, below 10813, expect Nifty to slide towards 10739-10745 zone.

• All the sectoral indices are in red, with maximum pain visible in Metal stocks. Metal shares fell across the board. Tata Steel (down 4.15%), Hindalco Industries (down 2.72%), Hindustan Copper (down 2.07%), Steel Authority of India (down 2.70%), JSW steel (down 2.15%).

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

• NSE Advances 9. NSE declines 41.

• The NSE Mid-Cap index is down 0.92% at 4,676. The NSE Small-Cap index is down 1.36% at 6,055.

• In F&O space, DHFL, DIVISLAB & TITAN are in green, up 5.26%, 5.25 & 5.09% respectively; while on flip side RCOM, RPOWER & RELCAPITAL are down 37.07%, 28.22% & 17.53 respectively.

• Q3 RESULTS TO TRICKLE IN: Coal India (Buy Back), IDBI Bank, IRB Infrastructure, Indian Overseas Bank and Exide Industries.

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10:30 Hrs: Pursue Opportunities in commodities

Venezuela turmoil, OPEC output cuts feeding optimism in oil markets. U.S. oil-rig count declines; WTI crude was up nearly 3% in last week’s trade.

Gold (-9, 1317): Buy only on corrective declines.
MCX Gold (-0.12%, 33365). Interweek strategy: BUY between 33001-33251 zone, targeting 33901 and then at 34751-35001 zone with stop at 32751.

Silver (+0.118, 16.047): Positive bias to continue.
MCX Silver (+0.13%, 40389): Interweek strategy: Buy between 40001-40101 zone, targeting 41698 mark and then aggressive targets at 41751-42001 zone with stop at 39301.

Crude Oil (+0.39, 54.62). . Interweek strategy: Establish buy positions between 52.50-53 zone, targeting, 57.50 and then at 59-60 zone with strict stop at 51.

MCX Crude Oil (-0.51%, 3887). Interweek strategy: Aggressive traders can look to establish buy at CMP, targeting 4071 and then at 42751-4315 zone with stop at 3791.

Copper (+0.001, 2.775): U.S-China trade trade truce key positive catalyst.
MCX Copper (-0.11%, 436.20): Interweek strategy: Establish buy positions between 429-433 zone, targeting 445 mark and then aggressive targets at 457 with stop at 421.

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10:00 Hrs: Nifty’s Crucial Levels at 10 AM

Nifty’s (-47, 10846): The make or break support for the day is at 10813 ( Friday’s intraday low). Long positions advised only above Nifty 10921 mark.

What Technical Tells Us On Nifty:

Nifty’s KEY SUPPORTS: 10813/10737/10583.
Nifty’s KEY HURDLE: 10921/11001/11111.

Nifty’s INTRADAY RANGE: 10813-10901.
Nifty’s OUTLOOK FOR THE DAY: Volatile and choppy session likely.

Q3 Results to trickle in: Coal India (Buy Back), IDBI Bank, IRB Infrastructure, Indian Overseas Bank and Exide Industries.

Amongst stock specific action, Reliance Communications Ltd lost 41% in today’s trade to trade at Rs 6.90. Titan Company was up 4.12%. The company’s consolidated net profit rose 43.49% to Rs 413.19 crore on 35.35% rise in total income to Rs 5934.11 crore in Q3 December 2018 over Q3 December 2017.

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09:30 Hrs: Make Informed Decisions

(Nifty: -32, 10861): The benchmark Nifty is trading nervously in early action. Blame it to a cautious stance by investors as they await the outcome of RBI policy meet scheduled on 7th February. Nifty hurdles continue to remain at 10921-10931 zone.

Amongst stocks on positive side are: TITAN (+3.37%, 1027), DR REDDY (+0.60%, 2808), ONGC (+0.49%, 142.50)

On the negative side are: ZEEL (-2.68%, 344.90) INFRATEL (-1.33%, 292.25) UPL (-1.10%, 771.25).

The Indian rupee opened lower by 40 paise at 71.86 per dollar

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

DOW FUTURES (+18, 25059)
NASDAQ FUTURES (+10, 6889)
SGX NIFTY (-41, 10871)
NIKKEI (+15, 20789)
HANG SENG (+34, 27934)
SHANGHAI (+34, 2618).

STOCKS TO WATCH:

Bullish stocks: TITAN, BIOCON, RELIANCE INDUSTRIES, HAVELLS, NESTLE, DIVIS LAB, LUPIN, BRITANNIA NIIT TECH, REC, PFC, BIOCON, LUPIN, VOLTAS, DIVIS LAB.

Bearish stocks: MRF, MCX, AJANTA PHARMA, BPCL, HPCL, RELIANCE POWER, RELIANCE CAPITAL, BHEL, NALCO.

SHOW ME THE MONEY: BUY DIVIS LAB (CMP 1532): DIVIS LAB is likely to enjoy strong session in near term as the stock is signalling a major breakout on the upside. Key intraday support seen at 1493. Interweek Strategy: Buy at CMP, targeting 1579 and then at 1621-1645 zone. Stop below 1491.

Q3 RESULTS TO TRICKLE IN TODAY:

4-Feb: Coal India (Buy Back), IDBI Bank, IRB Infrastructure, Indian Overseas Bank and Exide Industries.

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

Positive global cues to keep downside limited. That said, sharp rebound in oil prices will keep upside capped.

Preferred trade on Nifty (10894): Buy between 10845-10851 zone, targeting 10945 and then at 11000-11111 zone with strict stop at 10739.

Preferred trade on Bank Nifty (27086): Key near term supports at 26301. Confirmation of strength only above 27751. Buy between 26951-27001 zone, targeting 27751 and then at 28101-28251 mark with strict stop at 26301.

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08:00 Hrs: Calculus Derivatives Corner

Markets Update: February 04, 2019 – Today’s action in the Markets

The FIIs were again buyers to the tune of 1315.89 crores in Friday’s trade perhaps taking positive cues from the Union Budget. FIIs have been net buyers in last two consecutive sessions.

However please note, Foreign investors have pulled out more than Rs 5,300 crore from the Indian equity markets in January 2019.

Market Summary:

• Nifty 28th February Futures ended Friday’s session at a premium of +24 against +18.

• The Put- Call Open Interest Ratio was at 1.35 for Nifty whereas it was 1.46 for Bank Nifty.

• The Put-Call Volume Ratio was at 0.90 for the Nifty and 1.04 for Bank Nifty.

• For Nifty, Maximum Call Open Interest (OI) stands at 11000 Strike Price, followed by 11200 Strike Price for 28th February Series. Long build-up was seen at strike prices 10900-11200.

• Maximum Put Open Interest (OI) was seen at strike price 10700 followed by 10400 strike price for 28th February series. Short buildup was seen at strike prices 10100-10500.

• For Bank Nifty, Maximum Call Open Interest (OI) stands at 27500 Strike Price and Maximum Put Open Interest stands at 27500 Strike Price.

• As per Friday’s Provisional Data available on the NSE, FII’s bought shares worth Rs. 1315.89 crores in the Indian Equity Market. DIIs on the other hand, sold shares worth Rs. 5.07 crores in the Indian Equity market.

• Long Buildup: JUBLFOODS, HERO, BATA, CHOLAFIN, VOLTAS.

• Short Buildup: VEDL, SBIN, DHFL, JINDALSTL, ICICI BANK.

• Short Covering: ASHOK LEYLAND, BIOCON, EQUITAS, BHARAT FORGE, MANAPPURAM

• Long Unwinding: PETRONET, AXIS BANK, REPCOHOME.

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

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

Markets Update: February 04, 2019 – Today’s action in the Markets

Wall Street ended Friday’s trade with modest gains on backdrop of an unexpectedly strong January jobs report. The U.S. economy created 30400 new jobs in January, well above the consensus estimate of 172,000.

Also helping sentiments would be reports of positive comments from U.S on the ongoing trade talks. Positive bids quite likely after U.S. President Donald Trump’s weekend remarks that trade talks with Beijing are “doing very well”.

GLOBAL UPDATE:

DOW (+64, 25063)
NASDAQ (-18, 7263)
SGX NIFTY (-22, 10891)
NIKKEI (+72, 20860)
HANG SENG (+55, 27985)
BOVESPA (+467, 97861)

OIL (-0.10, $55.17)
GOLD (-2, $1320)

SUCCESSFUL INVESTING IS ANTICIPATING THE TRENDS OF:

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

NIFTY’s CRUCIAL LEVELS:

Nifty’s CURRENT MARKET PRICE: 10,893.

Nifty’s SUPPORT:
Intraday: 10,851/10,739.
Medium Term: 10,583/10,333.
Long Term: 9,951.

Nifty’s RESISTANCE:
Intraday: 10,945/11001.
Medium Term: 11,111/11,221.
Long Term: 11,701.

Nifty’s RANGE:
Intraday: 10,821-10931.
Medium Term: 10,333-10,921.
Long Term: 9,951-11,701.

Nifty’s OUTLOOK
Intraday: Neutral.
Medium Term: Neutral.
Long Term: Positive.

Our call of the day says focus now turns to the RBI policy meeting on Thursday, 7th February.

The street expects a softer stance from the central bank in the wake of easing inflation. But having said that, the street will take a cautious stand to governments missed revenue and expenditure estimates and most importantly, the expansion of ongoing welfare schemes. The fiscal deficit for FY19 has breached the target of 3.3%, touching 3.4%.

Amidst this backdrop, the Indian Rupee may witness pain and weaken further towards 75 against the US Dollar. This will dent optimism for the newly optimistic bulls and keep upside capped at Dalal Street.

Our chart of the day suggests establishing long positions in stocks like DIVIS LAB, LUPIN & BIOCON with interweek perspective.

Q3 EARNINGS TO TRICKLE IN THIS WEEK:

• 4-Feb: Coal India (Buy Back), IDBI Bank, IRB Infrastructure, Indian Overseas Bank and Exide Industries.

• 5-Feb: Mahindra, GAIL, HPCL, ACC, BHEL, Punjab National Bank, Oriental Bank of Commerce, IDFC First Bank, DLF, Apollo Tyres, Tata Global and Dish TV.

• 6-Feb: Lupin, Cipla, Siemens, Adani Ports, Adani Power, JSW Steel and Allahabad Bank.

• 7-Feb: Tata Motors, Aurobindo Pharma, Britannia, Adani Enterprises, Coffee Day, Cadila Healthcare, Arvind and Grasim.

• 8-Feb: Mahindra & Mahindra, NHPC, BPCL and Engineers India.

IMPORTANT THEMES FOR THE DAY:

Our call of the day says tricky days lies ahead for investors at Dalal Street. The street is seen entering this time of year with apprehension and anxiety and the only thing certain for investors’ is uncertainty. Expect volatility to hit the roof amidst uncertainty ahead of general elections in April-May 2019.

Digging deeper, predicting elections in India is a mug’s game and the element of volatility in next three months will depend on the three big questions:

1. Will Narendra Modi return to power?
2. Will Priyanka/Rahul Gandhi beat expectations and win?
3. Will a Third Front government emerge, as in 1996-98?

Long story short: Dalal Street will simply zoom on the upside if BJP comes back to power, and probably live with a Congress victory, but please note a imminent crash on cards if the Third Front assumes power.

Technically speaking, the technical conditions could worsen significantly if Nifty is unable to move above its major hurdles at 11,111 mark. The landscape will worsen considerably only if Nifty moves below 10,551 zone. If this most watched 10,551 support-level is violated on the downside then expect major downside risk in the system which can take Nifty initially to psychological 10,000 mark and then aggressive targets located at 9,500-9,750 zone. Alternatively, if 10,551 zone holds then Dalal Street would be the much preferred investment destination.

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