Cooling off after highs! Nifty holds 9,250 as RBI announces lifeline for MFs

The Nifty formed a Gravestone Doji pattern on the daily charts.

Indian markets extended gains after the Reserve Bank of India (RBI) announced a special liquidity facility of Rs 50,000 crore for mutual funds to calm investors jittery after the Franklin Templeton fiasco.

However, the bulls failed to keep the momentum going and the Nifty saw some cooling off or profit-taking at higher levels above 9,300 towards the close of the trade. The S&P BSE Sensex rose over 400 points while the Nifty50 ended a shade below 9,300.

“This is more of a confidence-boosting measure. Most debt MFs invest in AA or higher rated paper and ‘A’ or below is a very small part of their portfolios. There is enough liquidity in the market for a good quality paper,” Ashish Shanker, Head of Investments, Motilal Oswal Private Wealth Management told Moneycontrol.

“However, it was important for RBI to issue this communication and support to calm nerves. This should help settle some of the panic that was caused over the weekend over the Franklin Templeton news. Even in 2008, when this measure was introduced, none of the MFs actually utilised it. So this is more of a backstop.”

Let’s look at the final tally on D-Street: the S&P BSE Sensex rose 415 points to 31,743 while the Nifty50 rallied 127 points to close at 9,282.

Sectorally, the action was seen in the Bankex, Finance, FMCG, Realty, and IT indices while profit taking was visible in the power space.

In the broader market space, the S&P BSE Midcap index rose 1.4 percent while the S&P BSE Smallcap index closed with gains of 1.37 percent.

The market direction will be charted by global central bankers action, March quarter earnings and news on lockdown in India.

“Going in to the week, on the domestic front, all eyes will be on earnings announcements and news related to the coronavirus front. Meanwhile, monthly derivatives expiry could further add to the volatility,” Ajit Mishra, VP- Research, Religare Broking Ltd, told Moneycontrol.

“On the global front, Fed meeting (April 28-29th) would be on investors’ radar as update w.r.t Fed’s recent actions to combat COVID-19, as well as economic outlook, will be keenly watched.”

Top Nifty gainers include Kotak Mahindra Bank, Bajaj Finserv, IndusInd Bank and Britannia Industries.

Top Nifty50 losers include M&M, HDFC Bank, and NTPC.

Stocks & sectors

Sectorally, the S&P BSE Bankex rose 3.5 percent, followed by the S&P BSE Finance which was up 2.09 percent, and the S&P BSE Realty index closed 1.6 percent higher.

A volume spike of more than 100% was seen in stocks like PVR, Ambuja Cements, YES Bank, Wipro, and MindTree.

Long Builup was seen in stocks like MFSL, ICICI Prudential, Sun Tv, and Ambuja Cements.

Short Buildup was visible in stocks like LIC Housing Finance, HDFC Bank, and NTPC.

Stocks in news

Reliance Industries gained for the 4th consecutive day, up 16% in four sessions

Mindtree: The share jumped over 12 percent after the company posted its March quarter earnings. Revenue rose 4.3 percent at Rs 2,050.5 crore versus Rs 1,965.3 crore, QoQ. The board recommended a final dividend of 100 percent (Rs 10 per equity share of face value of Rs 10/- each) for the financial year ended March 31, 2020.

JK Paper: The stock surged almost 12 percent on a buyback plan. The board will meet on April 28 to consider and approve the proposal for buyback of the fully paid-up equity shares of the company and other related matters, the company said in a filing to the exchanges.

IndusInd Bank: The share gained 5 percent ahead of its March quarter numbers. The private lender is expected to register an 80 percent year-on-year fall in Q4 FY20 profit due to pressure on its operating earnings and higher provisions.

ICICI Prudential: The share spiked almost 12 percent after Credit Suisse maintained a positive outlook on the stock. It has maintained an outperform rating on the stock and has cut target to Rs 440 from Rs 525 per share. CLSA has maintained a buy call on the stock with target at Rs 420 per share.

Pfizer: The stock surged over 10 percent after the board declared a special dividend of Rs 320 per equity share of Rs 10 each for the financial year ended March. The dividend will be distributed to shareholders on May 19.

Reliance Capital: The share spiked 5 percent after mortgage lender HDFC on April 25 said it acquired 6.43 percent stake in the debt-trapped company by invoking pledged shares. These shares were acquired pursuant to invocation of the pledge by the security trustee on behalf of the corporation, which was pledged against a loan given by the lender, HDFC Ltd said in a regulatory filing.

Technical View

The Nifty formed a Gravestone Doji pattern on the daily charts.

This inability of bulls to capitalise on strong opening gains was hinting that the market was stuck in a consolidation range of 9,400–8,900.

In the next trading session if it slips below 9,250, then it can slide into the nearest support placed in the 9,141 –9,079 zone.

A strong close below 13-Day EMA (9,079) can set the tone for corrective downswing with initial targets of 8,900 levels.

Upward strength can be expected to resume on a close above 9,400, with eventual targets placed around 9,950 .

Traders are advised to remain neutral on the long side till the Nifty registers a breakout above 9,400 on closing basis, whereas intraday traders can look to short in the next session if the index trades below 9250, say experts.