Morning Newsletter - October 12, 2020 - YES SECURITIES

Highlights:

US indices closed higher as President Trump threw his support behind a big stimulus package, saying he'd like to see more than what's on the table now - from either side. Back home, ideal strategy is to ride ongoing uptrend till any significant signs of reversal are visible. Immediate floor for Nifty is now seen near 11,800.

TECHNICALS

Nifty posted gains of over 4% last week, which is the highest weekly jump since June'20. Appearance of a bullish candle along with a series of ascending tops and bottoms ensures consistent buying interest during intraday decline. Shift of an orbit above three-digit Gann number of 116(00) as per Gann parlance indicates a move towards 12,100 in near term. Comeback of financials & banks and ongoing outperformance of IT index was among the main contributors in this week's trade. However, in last few sessions; Nifty advance-decline breadth continues to be unimpressive which implies sector specific action on Dalal Street going forward. BankNifty rallied by 11% previous week and hovering around 24k mark, further outperformance from this leadership index is possible. On P&F chart, BankNifty has staged a bear trap reversal followed by strong follow through in double top pattern. Within banking space, positive traction is now visible in PSU Bank index.

DERIVATIVES

- Nifty continued to extend its rally nearing 12k mark, SGX Nifty indicates positive start. Banking leading the start as Bank Nifty posting another 3% gains.

- BankNifty added long buildup of ~8% OI in futures, Index options PCR OI on Nifty moved to 1.6x mark.

- India VIX held near 20 mark, as trend of rising vol's with rising markets seen in past couple of days, monthly options max call writers shifted base from 12k mark to 12,500 mark holds ~2mn shrs in OI, while put writers aggressively sold near the money options.

- FII's index futures long to short ratio moved to highest during the series now at 2.52x on back of short unwinding and fresh long creation.

CURRENCY

Yuan registered biggest intraday rise since February 2016 as China returned to work after an eight-day holiday. Indian Rupee traded firm after Reserve Bank of India left its repurchase rate at 4.00%, as expected, and announced an expansion of its special open market operations.

COMMODITIES

In base metals, zinc, copper, nickel and aluminum were the major standouts. Aluminum was close to its 2020 high. In the meantime, December to January LME Aluminium spread moved into a backwardation of $2/ton with cash-to-3's last quoted at $13-18/ton, well in from the $37/ton level we saw last week. Copper was at a two-week peak, helped along by confirmation from Lundin's Candelaria copper mine that workers from at least one of its unions have now walked off their jobs after government mediation efforts failed.

CORPORATE SNIPPETS

- Honda Motorcycle & Scooter India working on entry motorcycles to shore volumes.

- UTI AMC to list its equity shares on October 12 after fixing issue price of Rs 554 per share.

- Mazagon Dock Shipbuilders, the state-owned defence company to debut on bourses on October 12. The issue price is fixed at Rs 145 per share.

- Indiabulls Housing Finance raised Rs 441 crore by selling a part of its stake in OakNorth Bank Ltd.

- Glenmark Pharma clinical study says no significant clinical benefit with Umifenovir addition in COVID-19 treatment.

- GSK Pharma's growth challenges to remain in near term as Covid dents sales.

ECONOMY SNIPPETS

- Not possible to extend loan moratorium period beyond 6 months: RBI tell SC.

- Irdai panel suggests reducing entry-level capital requirement for micro-insurance companies.

- RBI's targeted long-term liquidity measures to ease borrowing cost for NBFCs: Industry.

- RBI says no to automatic caution-listing of exporters.

- Business Expectations Index improved substantially for Q3 of 2020-21.

- Deadline for filing GST returns for 2018-19 extended to 31 October 2020.

Source : Equity Bulls

Keywords