Daily Big Picture : Nifty Gains 1%; Metal and Media Stocks Lead the Rally

Today’s Action

Nifty, +1.0%; Sensex, +1.0%; Nifty Midcap, +1.1%; Nifty Smallcap, +0.7%; and Model Portfolio, 0%.

Daily Market Review

Market Status: Rally Attempt 

Nifty made a sharp recovery today after falling more than 1.5% in yesterday’s session. The rally was broad-based and was driven by the news that the U.S delayed tariff on some of the Chinese goods until mid-December. This news relieved market participants from trade worries, which reflected in gains in all major Asian indexes. The broader market also joined the rally as Midcap and Smallcap surged 1.1% and 0.7%, respectively. Nifty is currently trading 1.3% below its 200-DMA.

Barring Nifty Pharma (-1.4%), all the sectoral indices closed in the green. Nifty Media (+2.8%) was the top gainer followed by Nifty Metal (+2.3%) and PSU Bank (+1.5%). Gains in Nifty Metal was led by Jindal Steel & Power (+9.5%), Tata Steel (+4.6%), and Vedanta (+4.9%).

On the macro front, WPI in July declined for the third consecutive month to 1.08% on account of cheaper prices of food item, fuel, and manufactured products. The lower CPI (released yesterday at 3.15%) and WPI is an indication of a further rate cut in October MPC meet.

The advance-decline ratio leaned toward gainers. Out of 2,096 stocks traded on the NSE, 949 advanced, 808 declined, and the rest remained unchanged.

Looking ahead, we would prefer to see a follow-through day before shifting the market to a Confirmed Uptrend. On the flip side, if Nifty breaches its day 1 low of 10,814, the market will be moved back to a Downtrend.

Key News

Dr Reddys Laboratories: The US FDA issued a Complete Response Letter (CRL) to Dr Reddy’s Laboratories for its generic version of contraceptive NuvaRing. The stock fell 8% intraday and closed 1.7% lower.

Grasim Industries: The Company reported Q1 FY20 results during market hours. Its profit fell 69% y/y to Rs 201.7 crore dragged by a one-time loss of Rs 290 crore. EBITDA fell 22% y/y and EBITDA margin contracted 560bps to 22.5%. The stock gained 3.5% today.

Idbi Bank: The bank reported its Q1 results today. Its net loss widens to Rs 3,800 crore compared with Rs 2,410 crore in Q1 FY19. NII was down 11% to Rs 1,458 crore. While GNPA was up 160bps to 29.1%, NNPA fell 210bps to 8%. The stock closed 1.7% higher.

What do you think? Please email us any questions or comments.

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