Morning Newsletter - September 15 - YES Securities

Highlights:

US indices rallied overnight amid fresh hope for a coronavirus vaccine, a flurry of IPO offerings & potential corporate mash-ups, including reports that Oracle plans to form a partnership with TikTok. Back home, yesterday's appearance of a bearish candle in Nifty suggests influence of 11,550-11,600 resistance zone.

TECHNICALS

Whenever the market struggles to clear a well-defined resistance zone i.e. three-digit Gann number of 116(00), momentum tend to shift towards broader markets. Index marked a peak of 11,569 in yesterday's session placed around four-digit Gann number and midpoint of Big Tall Red Bar seen on 31st August 2020. Failure to surpass recent peak of 11,585 resulted in sharp reversal as index erased early gains. In the process, it fell below Friday's low. Eventually, Nifty settled the session lower by 43 points at 11,421. An appearance of a bearish candle suggests influence of 11,550-11,600 resistance zone. Nifty advance decline breadth turned mildly negative with 34 out of Nifty50 constituents settling lower. Sustenance below 11550 is likely to keep Nifty under pressure; support is likely to emerge around 11,300-11,350 zone.

DERIVATIVES

- Massive churn of portfolio seen as mid and small caps rally while Nifty ended flat on back of sharp underperformance of banking stocks. SGX Nifty indicates flat start for the day.

- IT stocks remained buoyant as fresh rally added fuel to momentum, HCLtech, TCS, Wipro rallied to fresh highs with long futures additions and short covering from call writers.

- Options writers tighten grip as fresh additions to 11550/11,600 strikes ~1mn shrs on weekly strikes while no major traction seen on downside. Trading band of 11,350 to 11,600 seen for the week.

- FII's on index futures saw fresh short additions to tune ~10k contracts while massive long index put additions continues and stock futures hint of reversal as additions ~4.5k contracts on long.

CURRENCY

Pound is having a rough time after the government said that it might break international law in a "limited way" by breaching parts of the Withdrawal Agreement treaty it signed with the EU last January. It is not clear whether PM Johnson will have the votes to get his way in Parliament on a new proposal as a growing number of members in his party have all come out against the government's revised stance.

COMMODITIES

Oil futures remain on the defensive in the wake of announcements made by Saudi Arabia and Kuwait saying that they would be cutting their official selling prices to Asia. An OPEC monitoring committee will meet on Sept. 17 to consider how to further tweak supply in order to bring it more in line with demand levels.

CORPORATE SNIPPETS

- Ashok Leyland aims to more than double volumes with the help of new light truck platform.

- Omaxe reported a loss of Rs 63.9 crore in Q1 FY21 against a profit of Rs 14.9 crore, revenue dropped to Rs 50.7 crore versus Rs 353 crore YoY.

- Mirza International reported a loss of Rs 23.23 crore in Q1 FY21 against a profit of Rs 9.5 crore, revenue fell to Rs 83.1 crore versus Rs 308 crore YoY.

- Munjal Auto Industries reported a loss of Rs 11.30 crore in Q1 FY21 against a profit of Rs 4.3 crore, revenue declined to Rs 212.7 crore versus Rs 301 crore YoY.

- SREI Infrastructure Finance reported a profit of Rs 23 crore in Q1 FY21 against a profit of Rs 42.67 crore, revenue fell to Rs 1,188.6 crore against Rs 1,582.6 crore YoY.

ECONOMY SNIPPETS

- India's retail inflation stood at 6.69% in August.
- Retail inflation to come down with easing of lockdowns: Chief Economic Advisor.
- One-time restructuring to be beneficial for stressed developers :ICRA.
- Auto component industry seeks long term roadmap for regulatory changes.
- China warns United States over US-Taiwan economic talks.
- India says China laying cables to bolster communications at border flashpoint.

Source : Equity Bulls

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