Zubu Client Sentiment Nifty50 Report & Market Recap (Oct-16-2020)

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 (Oct-16-2020)

Nifty50 retail trader data shows 47.35% of traders are net-long ,while the number of retail traders net-short was 52.65%. FII’s unwind-ed decent longs -5381 & shorts -5495, while retailers created  decent longs 4252 & unwind-ed huge shorts -10100.

Market Recap:

After a sharp decline yesterday, the markets were range-bound today. Most sectoral indices ended the day on a positive note. The Nifty Metal index (+3.9%) and Nifty Bank index (+2%) saw healthy gains. JSW Steel (+6.6%), Tata Steel (+5.3%) and BPCL (+4.3%) were among the top Nifty50 gainers, whereas UPL (-7.7%), HCL Tech (-3.4%) and M&M (-1.8%) were among the top losers.

Tech stocks continue to fall despite strong Q2 results

IT major HCL reported Q2 net profit of ₹3,142 crore, up 7.4% over the last quarter. Similarly, Mindtree too reported strong Q2 results with ₹253 crore in net profit, up 19.1% as compared to the previous quarter. Both the companies saw strong deal wins during Q2. However, robust quarterly performance failed to restrict profit booking in these stocks. HCL was down -3.4% while Mindtree fell -6.8%. Interestingly, both of these stocks had risen over 50% since July. Shares of other IT majors also slumped post their Q2 results, due to profit booking.

AC import ban gives domestic players a boost

Yesterday, the government announced a ban on imports of air conditioners with refrigerants. This move is expected to help domestic manufacturing of ACs and also reduce the import bill to an extent. Imports account for over 30% (close to ₹9,000 crore) of the domestic demand for ACs in India. This ban opens up a huge opportunity for domestic AC manufacturers. Strong buying interest was seen in shares of domestic players such as Bluestar (+4.1%), IFB (+7.9%), Johnson Controls-Hitachi (+3.7%) and Voltas (+4.2%). Notably, Amber Enterprises, which makes ACs for most of the major brands in India, gained 8.5% today.

Metals shine on hopes of demand recovery

Metal stocks witnessed strong buying interest today and for most of this week after major steel makers released operational data for Q2. The data indicated an improvement in domestic sales volumes and an increase in production capacity utilisation. Tata Steel reported its highest-ever quarterly deliveries in India at 5.05 million tonnes due to strong demand from the passenger vehicle and two-wheeler segments, along with housing and industrial projects. Meanwhile, average production capacity utilisation at JSW has reportedly hit 86%, which is at par with pre-Covid levels. Optimism was seen in shares of Tata Steel (+5.3%), JSW Steel (6.6%) and Sail (3.6%), while the Nifty Metal Index rose by 4% today.

Closing bell

Although the markets were positive today, the movement of the index was within yesterday’s range and thus does not give any directional cues. A look at the Nifty50’s weekly picture indicates signs of fatigue, especially after gains of 7.8% made over the previous two weeks. Meanwhile, the global scenario is not exactly encouraging. Most countries in Europe are experiencing a second wave of Covid-19 cases. As we mentioned in yesterday’s newsletter, investors are likely to tread with ‘caution’ in the week ahead.