Market Mantra
US indices rally on Monday as globally quantitative easing is set to make a comeback with Germany kick starting the call after growth slips. US President calls for 100 basis point rate cuts and easing to reinvigorate growth. Bond yields trade near 1.59% as US$ sees highs of 2019 with Euro weakness seeing $ buying.
Asian markets opened marginally in the green after a superb rally on Monday led by the Chinese and Hong Kong markets which rallied over 2%. With global call for easing and lower rates 'risk on trade' should be back as yields hit over 4 year lows. Expect some more color from Chinese stocks as further relaxation on Huawai curbs by President Trump could see sentiment improve.
Nifty saw a solid start get sold into in the last hour as no news from the Government on stimulus prompted 'bears' to press short sales with Nifty losing over 100 points from the day's high. Foreign investors sold stocks marginally while local mutual funds were buyers, even as the Rupee hit a 6-month low. Select pharma, private banks and consumer stocks saw gains, while Yes Bank, Gail, Coal India and Indiabulls were the prominent losers. Expect volatile movement both sides as lack of communication from the Government will embolden bears to sell on all rallies with falls being bought into.
Technical view:Nifty finds support around 11000 while, 11150 will act as resistance on the upside. Bank Nifty finds support around 28050, while 28450 will act as resistance.
Trading Ideas (Time period: 1-7 days)
Biocon Aug Futs (Sell at Rs215-217, Target Rs212, Stop Loss Rs218): The stock has been trading in a narrow band for the past two weeks and has finally broken down from a consolidation base on the daily chart. Biocon has also formed a bearish engulfing pattern on the daily hart which further accentuates our short term bearish stance on the stock. Hold short positions with mentioned stop loss on closing basis.
Derivative strategies (Time period: Till expiry)
Buy NTPC August future at Rs118.5-119.5, Stop Loss 116.65 and Target Rs121.5-121.75.
Derivative Snippets
Nifty/Bank Nifty Weekly expiry update:On the options front (August 22, 2019 expiry), across the board short selling was seen in Nifty out the money call and put option strikes for the third day in a row, making 10,900 & 11,200 level as an immediate floor & ceiling level for the index in the weekly series.
India vix closed at 16.75, up 0.5%.
FIIs were net sellers in the cash market segment to the tune of Rs306 cr.
Corporate and Economy Snippets:
Care Ratings downgraded long term rating of Tata Motors to ‘AA-’ from ‘AA’, with outlook changing from ‘Stable’ to ‘Negative’.
Vodafone Idea's Chief Executive Officer Balesh Sharma stepped down from the role with immediate effect due to personal reason. Vodafone Group’s representative in India, Ravindar Takkar appointed as Managing Director and CEO for period of three years.
India notified imports of 30,000 tonne of crude soya oil from Paraguay at concessional customs duty rate of 10% under a trade agreement.
Sugarcane, cotton, apple crops hit by late rainfall pan-India.