SGX Nifty Indicates Positive Opening, Britannia outperforms Q4 expectations

Market Preview

At 8:00 am IST, the SGX Nifty Futures was trading at 10,068, compared with Nifty’s yesterday’s close of 9,979.

Market status: Confirmed Uptrend

Global stock markets: Dow 30, +1%; S&P 500, +0.8%; Nasdaq, +0.6%; KOSPI, +2.6%; Nikkei, +1.4%; Hang Seng, +1.1%; Shanghai Composite, +0.4%.

Yesterday, after opening on a higher note, Nifty moved in a zig-zag manner and turned negative in the first half of the trading session. Further buying came in the second half as Nifty advanced as much as 100 points post noon. It closed near the day’s high and slightly below 10,000. Volume was lower, compared with the previous session.

Barring Nifty FMCG (-0.7%), all sectoral indices closed in the green. Nifty Realty (+4.9%) led the rally followed by Nifty Media, Financial Services, and Pvt Bank, which gained 3–4%. FIIs’ net buying was Rs 7,500 crore and DIIs’ net buying was Rs 411 crore. The buying by FIIs reflects the block deal by Kotak Mahindra Bank.

The confidence in the current rally will build up if Nifty is able to trade above its 21-DMA for a few more sessions and if we see the downward trending 50-DMA starting to turn upward. In addition, the broader market participation in the rally is a good sign. We remain in a Confirmed Uptrend and are open to increasing risk selectively in quality names coming out of proper bases.

Key News

Icici Bank reduced interest rate on saving accounts by 25bps. Deposits of above Rs 50 lakh will now fetch an interest rate of 3.5%, while the interest rate for deposits below Rs 50 lakh will be 3.0%.

Granules India reported Q4 FY20 results. Revenue down 2.2% y/y due to restriction imposed on export of Paracetamol API, PFI, and FD’s. However, it was removed for PFI and FDs in April and for the API in May. Gross margin expanded by 750 bps y/y, mainly due to the launch of new profitable products from GPI and an increase in FD sales.

Britannia Inds. announced its Q4 results. PAT and revenue beat consensus estimates, while margin was in line. Revenue increased 2.5% y/y to Rs 2,867 crore. EBITDA margin expanded 20bps to 15.8%. PAT increased 26.1% y/y to Rs 374.7 crore further being testimony to the fact to Britannia outperforming its Q4 expectations.

O’Neil Market Condition Report

For the 24 emerging markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 60%; Rally Attempt, 0%; Uptrend Under Pressure, 40%; Downtrend, 0%.

For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 80%; Rally Attempt, 0%; Uptrend Under Pressure, 20%; Downtrend, 0%.

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