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Market status: Confirmed Uptrend ;ADIA to Invest Rs 5,683.5 Crore in Jio Platforms

June 08 2020

Market Preview

At 8:00 am IST, the SGX Nifty Futures was trading at 10,249, compared with Nifty’s Friday close of 10,142. So, the market status is Confirmed Uptrend.

Market status: Confirmed Uptrend

Global stock markets: Dow 30, +3.2%; S&P 500, +2.6%; Nasdaq, +2.1%; KOSPI, +0.04%; Nikkei, +0.8%; Hang Seng, +0.6%; Shanghai Composite, +0.4%.

Last week, Nifty continued its positive momentum and closed nearly 6% higher. It is inching closer to its 100-DMA (10,323.10). All the sectoral indices edged higher. Nifty PSU Bank (+22.7%) led the rally, followed by Media (+18.0%) and Realty (+12.2%). In addition, Nifty Midcap (+6.7%) and Smallcap (+10.5%), advanced further.

The confidence in the current rally will build up if Nifty is able to trade above its 21-DMA for a few more sessions. In addition, Nifty’s 50-DMA starting to turn upward and 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.

At the beginning of the move in the general market, there are usually a few stocks that have already completed bases and are breaking out. Often, these early leaders will cluster into groups that may represent where the most institutional appetite exists. Ideally, this is where we try to "buy right." There are a few things that work to our favor when we do this. One is that these primary leaders usually have bigger upside moves and will lead throughout a cycle. A second is that the cushion we gain as the trend progresses allows us to truly capitalize on the move. O'Neil has said that if you can get through the first correction you are in the driver's seat. That cushion from "buying right" allows for a clear head when determining if normal volatility is a threat to your position or not.

Key News

Divis Laboratories (Nse): reported Q4 FY20 results. Consolidated net income stood at Rs 1,466.4 crore as against Rs 1,307.97 crore for the same period a year ago. Net profit was up 33% y/y to 388.23 crore.

Welspun (Nse): The company redeemed commercial paper worth Rs 150 crore.

Reliance Industries: Abu Dhabi Investment Authority (ADIA), one of the world’s biggest sovereign wealth funds, will invest Rs 5,683.5 crore into Jio Platforms.

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, 88%; Rally Attempt, 0%; Uptrend Under Pressure, 12%; Downtrend, 0%.

For the 24 developed markets tracked by our institutional research team, the market status breakdown is as follows: Confirmed Uptrend, 92%; Rally Attempt, 0%; Uptrend Under Pressure, 8%; Downtrend, 0%.

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Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.For more information, see our Legal disclosures here.

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