Index trend and stocks in action October 04, 2019

After a day’s break, the bears were eagerly waiting to pounce on the prey and tighten their grip on D-Street. Helping their cause were the weak global cues as rumblings of recession got louder after disappointing data from the western markets. As a result, the Nifty opened the session on a weak note and soon after almost witnessed a fall of triple digits. As such, once again the most popular and widely followed lagging indicator amongst the trader fraternity came to rescue the markets i.e. the 200-DMA. However, the price activity thereafter remained in a confined range and pretty much lacklustre with bouts of volatility. This led to formation of a ‘Doji’ like pattern on the daily timeframe, which clearly echoes indecisiveness amongst the market participants ahead of the crucial event i.e. the RBI bi-monthly MPC outcome.

Technically, Nifty has bounced twice from the 200-DMA in the last couple of days and it has marked almost identically lows on Tuesday and Thursday. Hence, the level of 11,247 is slated to lend crucial support level in the near term. The Nifty retraced and is, currently, hovering in the close vicinity of 38.2 per cent level of last week’s huge surge. Now, going ahead, the immediate task for the bulls is to cross the level of 11,400 and sustain above these levels. In case of failure to move beyond the 11,400 mark, the bulls will once again hope that the 200-DMA will come to their rescue. However, the only question then would be whether buyers will cling to the magnetic support of 200-DMA? We believe that the repeated test of moving averages in quick succession would not attract buyers and also, the negative market breadth and selling by the FPIs will continue to be cause of worry for the traders.

And, once the level of 11,247 is breached and markets sustain below this level, it would be curtains for the bulls in the near term. We could see quickly squaring up of long positions as many traders would have placed ‘stop loss’ of their long positions at the 200-DMA. A lot would depend on the RBI since any announcement may decide the fate of the markets in the near term. The consensus on the street is that there would be a rate cut of 25 bps. Now, the big question is will the RBI governor pull out his ace and surprise the markets by another unconventional rate cut like he did in August? Only time will tell and until then our advice for traders would be to strictly mark your levels on the charts and follow them religiously. Unprepared traders will be in for a hangover as volatility will rule the roost and in all probability we will witness wild swings.

HDFC: During the quarter ended September 2019, the profit on sale of investments was Rs 1,632 crore. Profit on sale of investments in the quarter ended September 2019 includes profit from on sale of part stake of equity shares in Gruh Finance.

Engineers India: Engineers India’s bid has not been accepted for acquisition of Projects and Development India Limited (PDIL).

Dhampur Sugar Mills: The company has successfully launched a country liquor unit at its distillery at Dhampur.

Hindalco Industries: Novelis has received approval from the European Commission for the proposed acquisition of Aleris Corporation.

New India Assurance Company: The company has signed a Deed of Accession for entering into an Inter-Creditor Agreement for the company’s exposure to the debt instruments of Reliance Home Finance Ltd. and Dewan Housing Finance Ltd.

Indian Hotels: Anheuser Busch InBev (AB InBev), the world’s leading brewer, signed an agreement with The Indian Hotels Company Limited (IHCL) to launch a premium chain of microbreweries within its marquee hotels across key locations in India. This collaboration is worth Rs 150 crore with plans to open 15 microbreweries over the next five years.