Zubu Client Sentiment Nifty50 Report & Market Recap (Oct-19-2020)

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-19-2020)

Nifty50 retail trader data shows 46.46% of traders are net-long ,while the number of retail traders net-short was 53.54%. FII’s created decent longs 2166 & shorts 218, while retailers unwind-ed  decent longs -1408 & created decent shorts 2744.

Market Recap:

The rise in the Nifty50 today was largely driven by banks, but the market sentiment was also positive, with gains seen in 36 of the 50 stocks. ICICI Bank (+5.1%), Nestle (+4.5%) and Gail (+4.1%) were the top gainers. The hopes of a viable Covid-19 vaccine by the end of the year led to optimism not only in the Indian indices, but also in the European and key Asian markets.

HDFC Bank’s Q2 results beat street expectations

HDFC Bank, India’s largest private sector lender, reported net profit ₹7,513 crore in Q2, an 18% increase over the same period last year. The bank’s gross non-performing assets or NPAs (which reflect the quality of the loans given) improved and stood at 1.08% (versus 1.36% on 30 June 2020). Buying interest was also seen in other bank stocks, such as ICICI Bank (+5.1%) and Axis Bank (+4.1%). However, HDFC Bank’s shares witnessed profit booking, and the stock ended with a modest gain (+0.2%) after the initial cheer. PSU banks shares had an additional reason to rise, as there were reports that the government is looking to exit the PSU banks entirely when they are privatised. Smaller PSU banks, such as Central Bank (+9.8%), Bank of Maharashtra (+6.7%) and UCO Bank (+3.5%), saw a surge in stock prices.

Rise in D-Mart’s net profit triggers buying interest

Avenue Supermarts, which owns and operates D-Mart stores, reported a strong sequential rise in its net profit to ₹199 crore in Q2 (versus ₹40 crore in Q1) due to the improvement in month-on-month sales. In Q2, the demand for FMCG and staples was robust. However, demand for general merchandise and garments is yet to see a major pick-up as consumers have reduced discretionary spends. Also, supply-side challenges in that category are a cause for concern. In the coming quarter, consumer spending during the festive season in the wake of the pandemic will be a key to growth. Meanwhile, D-Mart’s stock rose 5.4% thanks to above-average volumes, indicating strong buying interest. Stock performance of other retailers such as Trent (-2.5%), Aditya Birla Fashion (+5.8%) and V-mart Retail (-0.5%) was mixed.

Revival plans bring cheer to DHFL & Jet Airways
Jet Airways (+4.9%) and DHFL (+9.9%), both of which are mired in financial troubles, hit the upper circuit today. In fact, Jet Airways has gained nearly 47% this month. The buying interest is due to the positive developments towards reviving these companies. In the case of Jet Airways, the committee of creditors approved the resolution plan of the Kalrock Capital–Murari Lal Jalan consortium, which has proposed to re-launch Jet as a full-service carrier, with an initial investment of ₹1,000 crore. On the other hand, four entities have reportedly submitted bids for a part of DHFL’s portfolio or the company as a whole. The revival of these troubled companies could turn into a win-win proposition for stakeholders.

Closing bell
The market seems to be witnessing sector rotation—movement of funds between sectors with the passage of time and change in business cycles. Metals and FMCG stocks, which were laggards until recently, are seeing investor interest whereas IT, pharma and auto stocks are seeing profit booking. Such moves also seem to be driven by the market perception that valuations in certain sectors are attractive. The market has started the week on a positive note, and one could expect volatility to rise in the second half of the week with the US Presidential debate scheduled on Thursday, 22 October.