Biggest Hurdle For Nifty At 9,400 Mark
As we all know, crude oil grabbed everyone’s attention, right at the beginning of the week by doing something which people had never imagined. The crude oil prices on the futures contract for WTI fell into a negative territory thereby, raising everyone’s eyebrow! This was mainly because the storage space was just not able to keep pace with the rising inventories. Oil traders wanted to sell oil somehow, even with losses, just to get rid of the inventories. With the crude oil prices falling like ninepins, the stock markets got severely impacted worldwide.
Nifty recorded its second biggest single-day fall in this month and the volatility surged as India Volatility Index- INDIAVIX, rose by four per cent to 45. However, with fresh hopes of the second set of economic package and due to the mammoth deal between Reliance Industries and Facebook, the bulls fought back and recouped majority of the losses, which was witnessed on Tuesday. Further, Senate’s approval to $484 billion in stimulus to counteract the damage from Coronavirus shutdown, kept the flame of optimism going and as a result, the bulls extended Wednesday’s rally.
Let’s connect the dot and see what does the deal between Facebook & Jio Platforms, a wholly-owned subsidiary of Reliance Industries means. The deal between the social media giant and Jio is the largest investment for a minority stake by a technology company anywhere in the world and the largest FDI in Indian technology sector. The investment has a strong value unlocking opportunity for the company. Reliance Industries (RIL) has taken a few significant as well as aggressive steps to achieve its debt reduction target. RIL’s outstanding debt stood at Rs 3,06,851 crore as on December 31, 2019. Major part of this amount is attributed to the large expansion of Jio, which was launched at USD 40 billion in 2016. The deal with Facebook will help RIL to reduce its debt burden. This also has a scope of further expansion with RIL staging itself for new spectrum auctions. Concurrent with the investment, Jio Platforms, Reliance Retail and WhatsApp have also entered into a commercial partnership agreement to further accelerate Reliance Retail’s new commerce business on JioMart platform, with an ultimate purpose to support small businesses on WhatsApp. The companies will work closely to ensure that consumers are able to access the nearest retail stores, which can provide products & services to their homes by transacting seamlessly with JioMart using WhatsApp platform.
Nifty continues to remain within the rising wedge and for the second time, it tested 8,947 levels & bounced sharply. This 23.6 per cent retracement level is working as a strong support for now. Further, Nifty is currently trading in 8,821-9,390 zone since the last nine trading sessions. This tight range consolidation needs to break for a decisive move. Either side breakout will give a surprising sharper move. An oscillation between these levels will not give any clear trade.
Markets are afloat on the expectations of a new financial package that may be announced by the government in the coming weeks, followed by the ongoing two-day meeting of Economic Advisory Council. This financial package expectation has formed a centre stage as it is being presumed that the future direction of the market could be dictated by this.
Besides, in the coming days, if it’s able to negotiate this rising wedge resistance, which is placed around 9,400 mark and clears it off in style with a gap-up, we may see a good short and medium-term rally towards 9,800-9,900 mark.
