Markets Update: February 8, 2019 – Today’s action in the Markets

16:00 Hrs: Latest After the Closing Bell

In line with our morning notes, the benchmark Nifty tumbled in today’s trade as bears were everywhere on backdrop of deteriorating global cues.

We suspect, dark clouds will continue to hover at Dalal Street as investors will be unable to quell their fears over U.S-China trade and sluggish global growth backdrop.

To put it straight, ‘Cash will be king — until we can knock off U.S-China trade issues from the front pages’. Immediate downside risk on Nifty seen at 10901-10911 zone. Buying advised only above 11125 mark on Nifty.

GLOBAL UPDATE:

DOW Futures (-69, 25076)
NASDAQ Futures (-33, 6865)
DAX (-8, 11027)
FTSE (-10, 7102)

OIL (-0.01, $52.64)
GOLD (-0.05, $1314)
DOLLAR INDEX (+0.106, 96.398)
COPPER (-34, 6226)

How Asia fared today:

HANG SENG (CLOSED, 27989)
NIKKEI (-192, 20369)
SHANGHAI (CLOSED, 2618)

Nifty (-126, 10943.60)
Sensex (-425, 36546.48)
Bank Nifty (-93, 27294)
SGX NIFTY (-149, 10946)
USD/INR (-0.105, 71.19)

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15:00 Hrs: Where’s the clever money going at 3 PM?

Nifty (-75, 10995): Nifty looks to end the day on a negative note as investors are unable to quell their fears over U.S-China trade relations and global growth. Profit booking or taking money off the table is the preferred theme at Dalal Street at the moment.

Amidst this backdrop, leveraged long positions not advisable. Downside risk on Nifty seen at 10901-10925 zone. Buying advised only above 11125 mark on Nifty.

Probable BTST/STBT trades:

Bullish looking BTST stocks: BAJAJ FINANCE, BEML

Negative looking STBT stocks: PNB, MRF, NALCO, RELIANCE INDUSTRIES, GLENMARK, TATA POWER, MCX.

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14:30 Hrs: Life at Dalal Street after Europe’s Opening Bell

A rough session seen at Dalal Street as investors are unable to quell their fears over U.S-China trade relations and global growth. Amidst this backdrop, investors are preferring to taking money off the table.

At the time of writing, Europe too was seen picking up the selling baton from Asia after U.S. President Donald Trump’s remarks that he has no plans to meet with Chinese President Xi Jinping before a March 1 trade-deal deadline.

Trump’s stance is likely to rattle sentiments and investors nerves; amidst this backdrop leveraged long positions not advisable. Buying advised only above 11125 mark on Nifty.

Well, if benchmark Nifty has to climb from current higher levels then a quick resolution needed in the 11-month old longstanding trade tensions between the U.S. and China.

DAX (-11, 11010)
FTSE (+18, 7111)

DOW Futures (-92, 25039)
NASDAQ Futures (-39, 6867)

HANG SENG (-44, 27946)
NIKKEI (-418, 20333)
SHANGHAI (CLOSED, 2618)

Nifty (-51, 11018)
Bank Nifty (-18, 27369)

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12:30 Hrs: Dalal Street’s Top Stories at Midday

(Nifty 10998, Down 71 points): Dalal Street is trading nervous and you can blame it to –

1. The Bank of England and the European Commission offering downbeat outlooks, reaffirming growing fears about the health of Europe’s economy.

2. White House Adviser Larry Kudlow (President Donald Trump’s national economic council director) who said a “sizable distance” remains between the U.S. and China in protracted trade negotiations.

3. Media reports reigniting U.S.-China trade war fears, Trump and Chinese President Xi Jinping were unlikely to meet before a March 1 deadline for tariffs to increase on Chinese goods.

4. Among the culprits for warning about sluggish global growth is also weak German industrial data which released on Thursday.

Well, unless U.S and China negotiators come to a new agreement, the U.S. is expected to raise import taxes from 10% to 25% for $200 billion in Chinese goods. This is the biggest headwind for worldwide stock markets at the moment.

Against this backdrop, it will be difficult for the benchmark Nifty to move past its biggest resistance at 11,125 mark.

The other key highlights of today’s trade:

• Amongst sectoral indices, NSE REALITY is trading in green, up 0.78% followed by NSE IT index which is trading just a tad above the dotted lines, up 0.12%. The biggest loser is NSE AUTO index, down 3.06% followed by NSE PSU Banks, down 1.79. NSE METALS index is down 1.61%.

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

• NSE Advances 14. NSE declines 36.

• The NSE Mid-Cap index is down 1.33% at 4,596. The NSE Small-Cap index is down 1% at 5,969.

• In F&O space, RELIANCE CAPITAL, R POWER & REL INFRA are seen rebounding from oversold conditions, up 12%, 10% & 9% respectively; while on flip side TATA MOTORS, UCO BANK & DHFL are down 19%, 6% & 5% respectively.

• Q3 RESULTS TO TRICKLE IN:

Mahindra & Mahindra, NHPC, BPCL and Engineers India.

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10:30 Hrs: Pursue Opportunities in Commodities

Dollar index smart recovery weighs on precious metals, however, risk-off sentiment, on the back of weakness in global stock markets should cap losses for haven gold.

Oil could slip on backdrop of sharp decline on energy demand risks and a possible boost to Libya output

Gold (-1, 1312): Buy only on corrective declines.
MCX Gold (-0.12%, 33130). Interweek strategy: BUY between 32901-33101 zone, targeting 33601 and then at 33901 and then finally at 34751-35001 zone with stop at 32751.

Silver (-0.22%, 15.68): Positive bias to continue.
MCX Silver (+0.13%, 39874): Interweek strategy: Buy at CMP, targeting 40750 mark and then aggressive targets at 41500-41698 zone with stop at 39301.

Crude Oil (-0.46, 52.18). Key support remains at 49 zone. Interweek strategy: Establish sell positions at CMP, targeting, 51 and then at 49 and finally at 45-46 zone with strict stop at 55.
MCX Crude Oil (-0.51%, 3732). Oil may slips amidst global growth concerns. Interweek strategy: Aggressive traders can look to establish buy positions only abbove 3911.

Copper (+0.19, 6232): U.S-China trade truce key positive catalyst.
MCX Copper (-0.11%, 445): Interweek strategy: Establish sell positions between 451-457 zone, targeting 433 mark and then aggressive targets at 421-427 zone with stop at 461.

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

Nifty’s (-60, 11011): Nifty continues to trade depressed amidst profit booking and on backdrop of subdued global cues.

Technically, the benchmark Nifty faces major hurdles at 11,125 mark. Confirmation of strength if Nifty closes above 11,125 mark.

All eyes now turn to the biggest intraday support on Nifty for the day at 11001 mark. Below 11001 mark, the technicals will turn in favor of bears.

What Technical Tells Us On Nifty:

Nifty’s KEY SUPPORTS: 11001/10901/10813.
Nifty’s KEY HURDLE: 11111.

Nifty’s INTRADAY RANGE: 11001-11089.
Nifty’s OUTLOOK FOR THE DAY: Caution Advised.

Q3 Results to trickle in today: Mahindra & Mahindra, NHPC, BPCL and Engineers India.

09:30 Hrs: Make Informed Decisions

(Nifty: -39, 11030): Nifty trades with negative bias in line with weak subdued global cues. Nifty hurdles now are at 11125 mark.

Tata Motors slumps after dismal Q3 result.

Amongst stocks on positive side are: INFRATEL(+2.14%, 312) TITAN (+1.49%, 1073) POWERGRID (+1.38%, 187)

On the negative side are: TATA MOTORS (-14.60%, 156.15) SUN PHARMA (-1.66%, 428) ZEE ENTERTAINMENT (-1.46%, 403).

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

DOW FUTURES (-118, 25013)
NASDAQ FUTURES (-37, 6869)
SGX NIFTY (-30, 11066)
NIKKEI (-360, 20391)
HANG SENG (-299, 27690)
SHANGHAI (CLOSED, 2599).

STOCKS TO WATCH:

Despite positive and constructive backdrop on Nifty, most of the momentum stocks are simply seen struggling. The market breadth continues to be weak and most importantly relatively narrow at Dalal Street in terms of leadership.

To put it straight, ‘Cash is king — even in a bull market’

• Bullish stocks: REC, Dr. LAL PATH LABS, TEAMLEASE, PI INDUSTRIES, APOLLO HOSPITALS, DABUR, LARSEN, NESTLE, LTI, BRITANNIA.

• Bearish stocks: CUMMINS, KSCL, TATA COMMUNICATION, MCX, MUTHOOTH FINANCE, MRF, NALCO.

• SHOW ME THE MONEY: BUY RELIANCE INDUSTRIES FEBRUARY PE strike price 1280 at CMP 27.35 zone. Profit: Unlimited. Maximum Loss: Rs. 13,675/-. Stop: Hold Put option till expiry. RELIANCE INDUSTRIES FEBRUARY Futures CMP 1295.90).

Q3 RESULTS TO TRICKLE IN TODAY:

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

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

Nifty has been resurgent lately, but for the day an uninspiring session quite likely!

Preferred trade on Nifty (11069): Sell at CMP, targeting 11001 and then at 10901-1045 zone with strict stop at 11221.

Preferred trade on Bank Nifty (27387): Key near term supports at 26381. Confirmation of strength only above 27751. Buy only on any sharp declines between 26951-27101 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 8, 2019 – Today’s action in the Markets

Liquidity in favor of the bulls.

In yesterday’s trade, the FIIs were again net buyers to the tune of Rs. 418.01 crores and the DIIs camp too mopped up shares worth Rs. 294.11 crores.

In February by far, FIIs are net buyers to the tune of 2737.29 Cr.

Market Summary:

• Nifty 28th February Futures ended Thursday’s session at a premium of +13 against +26.

• The Put- Call Open Interest Ratio was at 1.60 for Nifty whereas it was 1.32 for Bank Nifty.

• The Put-Call Volume Ratio was at 1.03 for the Nifty and 1.25 for Bank Nifty.

• For Nifty, Maximum Call Open Interest (OI) stands at 11000 Strike Price, followed by 11300 Strike Price for 28th February Series. Short build up was seen at strike price 11300-11500.

• Maximum Put Open Interest (OI) was seen at strike price 11000 followed by 10700 strike price for 28th February series. Short buildup was seen at strike prices 11000-11200.

• 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 Thursday’s Provisional Data available on the NSE,FII’s bought shares worth Rs. 418.01 crores in the Indian Equity Market. DIIs too bought shares worth Rs. 294.11 crores in the Indian Equity market.

• Long Buildup: PC JWELLERS, AXIS BANK, IGL, SBIN, BANK OF BARODA.

• Short Buildup: RPOWER, RELIANCE, NPTC, UJJIVAN.

• Short Covering: GMRINFRA, ITC, SAIL.

• Long Unwinding: BANK INDIA, TCS, BPCL, ICICI BANK.

• Stocks banned in F&O segment for today: ADANIENT, DHFL, IDBI, JETAIRWAYS, RELINFRA, RPOWER.

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

Markets Update: February 8, 2019 – Today’s action in the Markets

State of Flux. Trade Trouble!

SGX Nifty in early action is indicating a gap-down opening as there are more discouraging news from global markets.

7 AM GLOBAL UPDATE:

DOW (-221, 25169)
NASDAQ (-87, 7288)
SGX NIFTY (-56, 11039)
NIKKEI (-280, 20471)
HANG SENG (-372, 27618)
BOVESPA (-230, 94406)

OIL (-0.168, $52.47)
GOLD (-1, $1314)

SUCCESSFUL INVESTING IS ANTICIPATING THE TRENDS OF:

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

NIFTY’s CRUCIAL LEVELS:

Nifty’s CURRENT MARKET PRICE: 11,069.

Nifty’s SUPPORT:
Intraday: 11000/10,969/10,901.
Medium Term: 10,813/10,583.
Long Term: 9,951.

Nifty’s RESISTANCE:
Intraday: 11,125.
Medium Term: 11,251/11,501.
Long Term: 11,751.

Nifty’s RANGE:
Intraday: 10,969-11125.
Medium Term: 10,801-11,251.
Long Term: 10301-11,701.

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

Our call of the day says the suggests an uninspiring day quite likely at Dalal Street.

Our chart of the day suggests establishing long positions in stocks like REC & SIEMENS on any sharp declines with interweek perspective.

Q3 EARNINGS TO TRICKLE IN TODAY:

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

IMPORTANT THEMES FOR THE DAY:

Here are the catalysts that caught our eye in last 24 hours:

1. Setback quite likely at Dalal Street as investors resume worrying about heath of global economy!

2. Overnight, Wall Street traded with negative bias after White House Adviser Larry Kudlow (President Donald Trump’s national economic council director) said a “sizable distance” remains between the U.S. and China in protracted trade negotiations.

3. As per separate media reports reigniting U.S.-China trade war fears, Trump and Chinese President Xi Jinping were unlikely to meet before a March 1 deadline for tariffs to increase on Chinese goods.

4. Among the culprits for warning about sluggish global growth is weak German industrial data which released on Thursday.

5. Yesterday, RBI took a sharp U-turn, lowers repo rate by 25 bps in first cut since Aug 2017. The MPC also changed the policy stance to ‘neutral’ from ‘calibrated tightening’.

6. In yesterday’s trade, the FIIs were again net buyers to the tune of Rs. 418.01 crores and the DIIs camp too mopped up shares worth Rs. 294.11 crores.

In February month, FIIs are net buyers to the tune of 2737.29 Cr.

7. Hurdles for Nifty seen at 11125 mark!

Disclaimer: LotusFunds subscribers/clients may have positions in the stocks  recommended in this note. Please note that the actual subscribers may receive additional information in real time not available to the viewers of this note.

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