Mubadala to Invest Rs 9,093 Crore in Jio Platforms; DLF Q4 Results Miss Estimates

June 05 2020

Market Preview

At 8:00 am IST, the SGX Nifty Futures was trading at 10,048, compared with Nifty’s close of 10,029 yesterday with Mubadala to invest in Jio.

Market status: Confirmed Uptrend

Global stock markets: Dow 30, +0.1%; S&P 500, -0.3%; Nasdaq, -0.7%; KOSPI, +0.6%; Nikkei, -0.3%; Hang Seng, -0.1%; Shanghai Composite, +0.1%.

Yesterday, after opening flat, Nifty advanced over 70 points to make an intraday high of 10,123. However, it quickly succumbed to selling pressure and closed the day 32bps lower. Nifty escaped a distribution day as today’s volume was lower compared with the previous session. Barring financial related sectors, all sectoral indices closed in the green. Nifty Media (+4.1%) and Nifty Pharma (+3.1%) were the major advancers. FIIs’ net buying was Rs 2,905 crore and DIIs’ net selling was Rs 847 crore.

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.

Rationale

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

Dlf (Nse) reported Q4 FY20 results. It missed consensus on all front. Revenue was down 32% y/y to 1,694 crore. EBITDA was down 40% y/y to Rs 316 crore as Marfin contracted 260bps y/y to 18.7%.

Reliance Industries: Mubadala (the Abu Dhabi-based sovereign investor) to Invest Rs 9,093 crore in Jio Platforms.

Telecom Department asks Power Grid Corp.Of India to pay Rs 13,614 crore on account of the license fee, interest, and penalty for FY07 to FY10.

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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