Markets Update: February 22, 2019 – Today’s action in the Markets

15:30 Hrs: Latest After the Closing Bell

Nifty (+1.80, 10791): All is well that ends well. The benchmark nifty ended today’s session a tad bit above dotted line, marking gains for 3rd straight day.

The three positive catalysts in favor of bulls:

1. U.S – China trade optimism.

2. MPC minutes reading suggests switch from hawkish to dovish on backdrop of lower-than-expected inflation and signs of a slowdown in growth.

3. Boosting trading sentiments at Dalal Street were also the government’s approval of recapitalization of Rs 48,239 crore in 12 public sector bank.

Now, judging by today’s trading action at Dalal Street, the make-or-break resistance levels on Nifty for Monday’s trade will be at 10809 mark. Above 10809 clear skies till Nifty 10921 mark.

Before we end, please note that only a negative outcome from President Donald Trump’s meeting with China’s top trade negotiator this Friday afternoon U.S time could take the wind out of the equity market sails.

Now let’s look at major instruments-

3.30 PM GLOBAL UPDATE:

DOW Futures (+86, 25931)
NASDAQ Futures (+22, 7052)
DAX (+28, 11436)
FTSE (+15, 7177)

OIL (-0.36, $67.27)
GOLD (-2.78, $1323)
DOLLAR INDEX (-0.01, 96.60)
COPPER (+46, 6176)

How Asia fared today:

HANG SENG (+186, 28816)
NIKKEI (-18, 21425)
SHANGHAI (+52, 2804)

Nifty (+4 , 10809)
Sensex (-29, 35869)
Bank Nifty (-179, 26928)
SGX NIFTY (+1, 10791)
USD/INR (-0.06, 71.19)

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

Nifty (-1, 10788): Dalal street continues to witness flat trade.

In absence of any major event on the local front, Nifty will dance to outcome from President Donald Trump’s meeting with China’s top trade negotiator this today afternoon U.S time.

Probable BTST/STBT trades:

Bullish looking BTST stocks: AXIS BANK, YES BANK, BEML & SRTFIN.

Negative looking STBT stocks: GAIL, KOTAK BANK, CIPLA, and ADANIPORTS.

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14:00 Hrs: Life at Dalal Street after Europe’s Opening Bell

(Nifty 10786, -2 points): Nifty trades a tad bit lower. The benchmark indices are trading in a narrow range amidst mixed Asian markets.

Worldwide stock markets have paused as Investor sentiments weighed due to concerns about world economic growth following weak economic data from both US and Europe.

Rising crude oil prices also seen denting sentiments.

All eyes are now on the high-level talks between US and Chinese trade negotiators in Washington, with little more than a week left before a US-imposed deadline for an agreement expires, triggering higher tariff.

European markets are hovering above dotted lines.

DAX (+0.09, 11433)
FTSE (+0.17, 7179)

DOW Futures (+27, 25872)
NASDAQ Futures (+8. 7035)

HANG SENG (+0.65, 28816)
NIKKEI (-18, 21425)
SHANGHAI (+2, 2804)

Nifty (-2, 10786)
Sensex (-18, 35884)
Bank Nifty (-145, 26909)

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

(Nifty 10783, Down 7 points): In line with our call for buy on dips, benchmark indices recovered from the day’s low, now hovering around the dotted line. Nifty nears the 10809 resistance zone. Strong breakout expected on breaching that mark.

Advance to decline ratio remains positive at 37:13. However, index is below the dotted line on account of some heavy weights like Kotak Bank being top loser by 3.86% and Reliance down at 1.24%.

At global level, American indices are down about 0.40%. Europe indices showing a mixed bouquet of sentiments. Asian peers too trading slightly below the dotted line.

Amongst sectoral indices at NSE, all the indices are in green except NSE Pvt Banks, Bank Nifty and NSE Financial Services which are pointing down 0.68%, 0.55% and 0.40% respectively.

The market breadth, indicating the overall health of the market stands positively at 1148:510.

The NSE Mid-Cap index is up 0.46% at 5922. The NSE Small-Cap index is up 0.88% at 5,879.

INDIA VIX index representing volatility is at 15.63 (-2.60%).

On the Positive side: IOC at 136 (+3.85%), Hind Petro at 230 (+3.36%), IBULHSGFIN at 703 (+2.86%) are in green.

On the flip side: Kotak Bank at 1238 (-3.90%), Reliance at 1232 (-1.22%) & Cipla at 540 (-0.93%).

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10:30 Hrs: Pursue Opportunities in commodities

Crude-oil still steady, looks to to test $ 60 mark soon on U.S.-China trade talk progress, signs of falling crude output from Saudi & OPEC cuts. Copper firm. Bullions under pressure Attention squarely on U.S.-China trade talks.

Gold (-0.05%, 1327.15): Interweek Strategy: Buy between 1333-1337 zone, targeting 1351-1368 zone and then aggressive targets at 1389 with stop below 1299.

MCX Gold (-0.22%, 33375). Interweek strategy: Buy at CMP, targeting 34200 and then at 34751-35001 zone with stop at 33150.

Silver (-0.09%, 15.787): Interweek Strategy: Buy between 15.75-15.87 zone, targeting 16.15 zone and then at 16.71-16.75 zone with stop below 15.27.

MCX Silver (-0.29%, 40050): Interweek strategy: Buy only above 40275, targeting 40721 mark and then aggressive targets at 41400 zone with stop at 40150.

Crude Oil (-0.18%, 56.86). Interweek strategy: Establish buy positions at CMP targeting 59 and then finally at 62 zone with strict stop at 54.

MCX Crude Oil (-0.07%, 4057). Interweek strategy: Buy between 3901-3925 zone, targeting 4076 mark and then aggressive targets at 4250-4315 zone with stop at 3771.

Copper (+0.62%, 6391): Progress in U.S-China trade truce key positive catalyst.

MCX Copper (-0.11%, 455): Interweek strategy: Establish buy positions between 442.50-446 zone, targeting 461 mark and then aggressive targets at 475-481 zone with stop at 434.

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

Nifty’s (-18, 10770): Nifty witnessing slight profit booking

Nifty’s hurdles seen at 10809 and then next at 10921 mark. The biggest interweek support for Nifty now seen at 10583 mark. Intraday support at 10721.

What Technical Tells Us On Nifty:

Nifty’s KEY SUPPORTS: 10721/10689/10583.

Nifty’s KEY HURDLE: 10809/10921.

Nifty’s INTRADAY RANGE: 10721-10811.
Nifty’s OUTLOOK FOR THE DAY: Positive bias. Buy on dips.

The Indian rupee opened flat at 71.25 per dollar today v/s its previous close 71.25.

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09:30 Hrs: Make Informed Decisions

(Nifty: 10,768, -22 points): As anticipated, in early action, the benchmark Nifty opened slightly lower. Perhaps some profit booking over last 2 days consecutive gains can be seen. PSU Banks witness profit booking after yesterday’s heavy gain.

4.2% equity for Kotak Bank changed hands on the exchange, taking the stock down by 4%.

Nifty’s intraday support seen at 10721 mark and then at 10689 mark. Nifty’s interweek support seen at 10583 mark.

Amongst stocks on positive side are: BPCL (342, +2.18%) IOCL (133, +1.75%) Infratel (316, +1.28%)

On the negative side are: KotakBank (1241, -3.69%) JSW Steel (273, -1.3%) Tata Steel (495, -0.78%).

Advance to Decline ratio stands at 30:20 stocks.

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

This Friday morning, global cues are indicating a pause for our stock markets too. That said, the needle could move on the positive side if Nifty is able to sustain above 10809 mark.

Commanding attention would be President Donald Trump’s meeting with China’s top trade negotiator this Friday afternoon U.S time. The U.S. is looking to sign a preliminary deal with its biggest economic rival China.

DOW FUTURES (-2, 25844)
NASDAQ FUTURES (-8, 7026)
SGX NIFTY (-36, 10778)
NIKKEI (-88, 21375)
HANG SENG (-79, 28551)
SHANGHAI (+5, 2757).

STOCKS TO WATCH:

• BULLISH STOCKS: MFSL, EXIDE INDUSTRIES, LEMON, REC, PFC, RELAINCE INDUSTRIES, UPL, DLF, BATA, Dr. LAL PATH LABS, ASIAN PAINTS, TATA STEEL, TEAMLEASE, PI INDUSTRIES.

• BEARISH STOCKS: BHARAT FIN, DIVIS, CONCOR, HPCL, IOC, ACC, AMBUJA CEMENTS, CUMMINS, KSCL, MCX, NALCO.

• SHOW ME THE MONEY: BUY PFC (CMP 110.45) PFC is seen signaling a breakout from a probable ‘higher consolidation zone’ on daily charts. Key interweek support seen at 99. Strength seen above 110. Interweek Strategy: Buy between 106-108 zone, targeting 110 zone and then aggressive targets at 117.50 zone. Stop below 102.45.

• Buy MFSL at 409.35 Targets : 421.7 / 434.05 Stop Loss – 397.

• Buy EXIDEIND at 214.95 Targets : 221.9 / 228.85 Stop Loss – 208

• Cash Trades: Buy LEMONTREE at 74.85 Targets : 77.2 / 79.55 Stop Loss – 72.5

If you are from long term investors’ camp; then should recall Mr. Spock’s infamous line “a difference that makes no difference is not a difference”.

The bottom line? There are plenty of things to worry about in near term at Dalal Street. But the timing of timing of tremors related to geopolitical tensions is probably not one of them, if you are long term buy-and-hold investor.

We say so because; it will be a cakewalk for Indian investors as sentiments are bound to be uplifted, on any hints with regards to BJP getting re-elected or any amicable resolution between U.S-China trade truce bring back global economies in growth trajectory.

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

Biggest hurdles for Nifty at 10809 mark.

Preferred trade on Nifty (10790): Buy between 10721-10745 zone, targeting 10809 and then aggressive targets at 10901-10921 zone with strict stop at 10621.

Preferred trade on Bank Nifty (27052): The biggest near term supports at 26381. Confirmation of strength only above 27751. Buy at CMP, targeting 27251 and then at 27551-27751 zone and finally at 28000 mark with strict stop at 26381.

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08:00 Hrs: Calculus Derivatives Corner

Market Summary:

• Nifty 28th February Futures ended Thursday’s session at a premium of +18 against +21.

• The Put- Call Open Interest Ratio was at 1.12 for Nifty whereas it was 1.30 for Bank Nifty.

• The Put-Call Volume Ratio was at 0.95 for the Nifty and 0.99 for Bank Nifty.

• For Nifty, Maximum Call Open Interest (OI) stands at 11000 Strike Price, followed by 10900 Strike Price for 28th February Series. Short covering was seen at strike prices 10600-10800.

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 10500-10800.

• For Bank Nifty, Maximum Call Open Interest (OI) stands at 27500 Strike Price and Maximum Put Open Interest stands at 27000 Strike Price.

• As per Thursday’s Provisional Data available on the NSE, FII’s bought shares worth Rs. 55.48 crores in the Indian Equity Market. DIIs too bought shares worth Rs. 202.10 crores in the Indian Equity market.

• Long Buildup: RELIANCE, ICICI BANK, TECHM, CENTURY, HDFC.

Short Buildup: BHARAT FIN, DIVIS, CONCOR, MARUTI, CHOLAFIN.

• Short Covering: L&TFH, MANAPPURAM, HDFC BANK, DLF.

• Long Unwinding: AXIS BANK, BOSCH, COLPAL.

Stocks banned in F&O segment for today: ADANI ENT, ADANI POWER, ALBK, IDBI, JETAIRWAYS, KSCL, PC JEWELLER, RELCAP, RELIANCE INFRA, RPOWER.

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07:30 Hrs: Audio Podcast

Here is an Audio Podcast for you to know the pulse of the Market on the Go!!

Markets Update: February 22, 2019 – Today’s action in the Markets

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

Markets Update: February 22, 2019 – Today’s action in the Markets

SGX Nifty in early action is suggesting a flat open or just slightly below the break-even line.

7 AM GLOBAL UPDATE:

DOW (-104, 25851)
NASDAQ (-29, 7460)
SGX NIFTY (-15, 10799)
NIKKEI (-93, 21371)
HANG SENG (-134, 28469)
BOVESPA (+387, 96932)

OIL (-0.16%, $56.87)
GOLD (-0.04%, $1327)

SUCCESSFUL INVESTING IS ANTICIPATING THE TRENDS OF:

Global: Negative.
FII: Positive.
DII: Positive.
F&O: Positive.
‪Sentiment: Buy on dips.

NIFTY’s CRUCIAL LEVELS:

Nifty’s CURRENT MARKET PRICE: 10,790.

Nifty’s SUPPORT:
Intraday: 10721/10689.
Medium Term: 10,583/10,333.
Long Term: 9,951.

Nifty’s RESISTANCE:
Intraday: 10809/10921.
Medium Term: 11,001/11,125.
Long Term: 11,751.

Nifty’s RANGE:
Intraday: 10,745-10821.
Medium Term: 10,501-11,125.
Long Term: 9950-11,725.

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

Our call of the day suggests that green will be color of choice for today’s trade.

Digging deeper, the rare shade of green which we have witnessed at our stock market in last two days will get more prominent if Nifty moves above its key hurdles at 10,809 mark. Please note, above 10,809, we believe the bears will get completely knocked down in the ring.

Long story short: The bears’ case crumbles above Nifty 10809 mark.

Our chart of the day suggests establishing long positions in stocks like MFSL, EXIDE INDUSTRIES and LEMON TREE with interweek perspective.

IMPORTANT THEMES FOR THE DAY:

The positive catalysts in favor of bulls:

1. U.S – China trade optimism.

2. Both, the FIIs and the DIIs camp were net buyers in yesterday’s trade.

3. MPC minutes reading suggests switch from hawkish to dovish on backdrop of lower-than-expected inflation and signs of a slowdown in growth.

4. Boosting trading sentiments at Dalal Street would be the government’s approval of recapitalization of Rs 48,239 crore in 12 public sector bank. This decision is welcome and quite positive as it comes at a time when NBFCs are facing liquidity issue, and most importantly, the capital will help banks to be out of PCA norms so that lending can pick up and increase market share of public sector banks specially the recent banks which have exited PCA.

If you recollect, the government in December 2018 had infused Rs 28,615 crore into seven public sector.

The negative catalysts in favor of bears:

1. Bears can hang on their hopes as rising crude oil prices are the negative catalysts for our markets.

2. Bears can also hang on their hopes on overall economic activity in the eurozone which has slowed more sharply as eurozone manufacturing enters first downturn since Mid-2013. You can blame it to trade frictions and uncertainty about the severity of China’s economic slowdown.

3. Worldwide stock markets have failed to move substantially following the release of minutes from the Federal Reserve’s January policy meeting. Fed’s January policy meeting signaled that the economic outlook is increasingly uncertain.

4. The border tension which has been gripping our stock markets since last Thursday on wake of terrorist attack in Pulwana, Kashmir.

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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