Nifty Pre-Open Update Monday: Jack Ma resigns from SoftBank Board

18052020 Pre-Open Update: Jack Ma resigns from SoftBank Board, FM announces fresh disinvestment in PSU. Lockdown extended till May 30. FED Reserve Chairman Jerome Powel to testify on Tuesday to Congress on Stimulus.

Nifty50 Weekly Stats: Open- 9348.15, High- 9584.5, Low- 9043.95, Close- 9136.85 (-114.65). Nifty is expected to open mixed following cues from SGXNifty, which is trading lower than the previous close, while Global Markets are trading higher, SGXNifty trading below 9100 levels (08:30hrs) with DJIA, HangSeng, and Nikkei all in green.

DJIA on Friday managed to close in Green after looking at economic data, which is showing a weak picture as US Retail Sales and Manufacturing Output declined in April. BrentCrude also settled down at $29.52/bbl. We need to closely watch on FED Reserve Chairman Jerome Powel to testify on Tuesday to Congress on Stimulus.

We could foresee a fall in oil demand as Precious Gold swings to over 7 year high, and production cuts of 10000bpd-15000bpd is expected. Past week we had Metals (+ 1.61%), Energy (+1.04%) and FMCG (+0.09%) closing in green while Media (-1.82%), PSUBank (-1.64%), Reality (-1.54%) BankNifty (-1.23%) and Auto (-1.01%) are worst performers.

Alibaba's JackMa resigns from SoftBank Board on Late Sunday and the company has also announced buy back of shares worth $4.7bn. New members will be announced on June 25, AGM. FM over the weekend announced that Foreign Investors can pickup stake up to 74% in Defense Manufacturing, that's a steep jump from the current 49%.

This move is on the impact of the major drop in revenues amid the Coronavirus lockdown crisis. Clearly, our Markets had not taken cheer from the 20lakh Cr stimulus package, which the Government had declared last week. 

Some of the key findings from the package are

• Additional Job Push through allocation increase to MGNREGS to tune of Rs. 40000Cr
• Privatization of Non-Strategic PSUs and Rs. 2.1 Lakh Cr is expected out of this
• Strengthening of post-harvest infrastructure and stimulus for Civil Aviation Maintenance. Leather, Jewellery, Solar, Renewables, Pharma and Textiles are identified as Champion Segments for attracting more business share from Chin.

Top Gainers from Nifty200 for past week were BHEL 22.97%, Jubilant 21.56%, VEDL 20.09%, Infratel 16.21% and IDEA 15.48%. Top Losers were IBVENTURES -15.74%, FCONSUMER -14.97%,SRTRANSFIN -13.84%, BIOCON  -8.56%  and LandTTech  -8.48%. IndiaCem, APL and AjanthaPharma hit fresh 52 week Highs while Inox, PVR, Chalet, Quess and ShoppersStop hit a fresh 52 week low on Friday.

17 shares hit Upper Circuit while 140 Shares hit Lower Circuit. Huge Volumes were witnessed in Spicejet, JPPower, DigVijayCem, Edelweiss, DHFL, MahindraEPC and AUBank with upper circuit and Huge volumes were witnessed in IBVentures, Suven, KPITTech and Satin with the lower circuit. 

On the earnings front, AartiDrugs reported a jump of 114.5% in net profit at Rs. 58.86Cr while sales dropped by 2.1% at R. 449.64Cr, NAMLtd reported a profit of Rs. 2.72Cr down by 97.5% and sales down by 20%V at Rs. 274.5Cr, LTTech reported a jump in Net at Rs.208Cr against Rs.191.5Cr while revenue stood at Rs.1446.6Cr vs Rs.1343.1Cr YOY, LTFH reported a drop of 29.5% on Net Profit at Rs. 386.15Cr while Sales Grew by 1.1% at Rs. 3355.24Cr. 

Cipla reported a 33% fall in Net Profit at Rs.346Cr against Rs. 367.2Cr and revenues were also lower by Rs. 28Cr T Rs. 4376.2Cr. NELCO and MahaEPC reported a surge in both Net Profit and Sales. Stocks reporting results today are Airtel, Astrazen, DrLal Pathlabs, Maha Scooters, Glaxo, Torrent Power, AllsecTech.

Based on monthly OI Distribution, we reckon that Nifty would broadly move only between 8700 – 9700. We could see Long Built-up in Escorts, MuthootFin, Reliance  Manappuram and Indigo, while Cummins UBL, Equitas, PVR and Ujjivan are witnessing Short Built-up. GAIL, MRF, Eicher, BHEL and YesBank to have short-covering while HPCL, Wipro, Petronet, Baj-Aut0 and HCLTech have seen Long Unwinding. 

Almost all sectoral indices closed in Red except FMCG and Pharma. From Next week Expiry, we have Nifty10000CE, 9500CE and 9400CE have got OI Increase and Nifty8500PE, 8800PE, 8700PE have got OI Increase. FIIs were net sellers to the tune of -3004Cr (Combined) while DIIs bought 1225Cr in equity. 

Based on our Proprietary Algorithm, we see Critical Resistances for Nifty at 9228, 9273, 9320, 9365 and 9412 while Supports are placed at 9045, 8999, 8954, 8907 and 8862. For BankNifty Resistances are at 18930, 19024, 19118, 19216 and 19398, while Supports are at 18738, 18644, 18550, 18454 and 18285. Indigo, AsianPaint, Britannia, Reliance, BajFinServ, RamcoCem, HUL, ApolloHosp, GodrejCP, BajFinance and PVR are stocks to watch out.