Zubu Client Sentiment Nifty50 Report & Market Recap (Sep-18-2020)

Zubu Client Sentiment Nifty50 Report:

It is a Post Market Analysis, by which one can understand Retail trader’s sentiment and discover who was going long and short, the percentage change over time, and whether market signals are bullish or bearish.

Zubu Client Sentiment Nifty50 Report (Sep-18-2020)

Nifty50 Retail trader data shows 51.97% of traders are net-long ,while the number of retail traders net-short was 48.03%. FII’s created decent longs 4453 & unwind-ed huge shorts -18275, while retailers unwind-ed huge longs -24639 & created decent shorts 2763.

  • September expiry range is 11250 -12050
  • Medium term trend – Till Nifty is holding above 11086 on weekly basis we can stay long on Nifty

Market Recap:

It was an unusual session for the markets today. The benchmark Nifty50 showed all trends in a single day, i.e. uptrend, consolidation and downtrend. The Nifty50 index had a gap-up opening, consolidated in a range for most of the day, and finally fell in the last hour of trade before ending in the red. While the market breadth was balanced (28 of the 50 stocks gained), there was a tug-of-war between the banking bears and pharma bulls. The Nifty Bank index was down 1.3%, whereas the Nifty Pharma index was up 4.9%.

HDFC Bank stock drops after U.S. class-action suits
U.S.-based law firms—Rosen Law Firm, Schall Law Firm and Pomerantz LLP—have filed class-action suits* against HDFC Bank in the U.S. citing a failure on the bank’s part to inform investors about improper internal controls on vehicle loans. The stock dropped over 2.2% and was the top Nifty loser today. HDFC Bank has nearly 10% weightage in the Nifty50 index and consequently, a drop in its share price drags the index down. (*A class-action lawsuit is a legal action filed by more than one individual against a single defendant.)

Pharma stocks rise on positive news from the U.S.
Pharma stocks were in the limelight today. It seemed a bit unusual that several pharma companies were in the news on the same day. Dr. Reddy’s said it had settled a patent litigation with U.S.-based Celgene over its cancer drug Revlimid. It also launched over-the-counter (OTC) eye drops in the U.S. market. Dr. Reddy’s gained 9.9% during the day. Meanwhile, Irish pharma company Perrigo voluntarily recalled one of its inhalation products over dispenser concerns. Lupin and Cipla are Perrigo’s competitors in the U.S. market and could benefit from Perrigo’s recall. Share prices of Lupin and Cipla were up 4.5% and 7.1%, respectively. Zydus Cadila, a subsidiary of Cadila Healthcare, received USFDA approval for one of its mineral supplements. The Cadila Healthcare share price was up 3.8% today. Investors were upbeat on other pharma stocks as well; Divis Laboratories (+4.2%), Glenmark (+3.1%) and Sun Pharma (+2.3%) saw healthy gains.

Gold witnesses time correction
Gold prices have been consolidating for the past one month. Today, COMEX Gold was trading around $1,954/oz versus $1,949/oz on 13 August. What we are seeing is a typical time correction* after a strong rally from mid-July to early August. Gold prices haven’t seen a major price correction and are being supported by multiple factors. First, the U.S. Fed has clearly communicated its accommodative stance, which means that the liquidity flow would continue for a longer period of time. This, in turn, could result in further weakening of the U.S. dollar versus other major currencies. A weak dollar pushes up gold prices. Second, U.S. equities are on a weak wicket. The Dow Jones Industrial Average is down nearly 2% and the Nasdaq is down 7% in September, making gold an attractive hedge. Finally, the upcoming festive season in India could boost demand for the yellow metal. (*A sideways movement in the price of an asset, without any major gain or loss, is called a time correction).

Closing bell
This week, SEBI’s tweak on multi-cap funds put midcap and smallcap stocks back in action. The Nifty Midcap index was up 3.7% and the Nifty Smallcap index gained 6.0% over the week. In the coming week, banking stocks could be in action if the Mehrishi Panel submits its report on interest waivers on loans that were under the Covid-19-related moratorium.