Business

Bulls and bears are equally poised

World markets are reacting positively to the UBS buy-out of Credit Suisse. Dow futures is up around 100 points. Meanwhile, European markets are trading in the green as we write. Even though Dow futures is trading in the green, Indian markets are expected to open negatively fearing volatility. Asian markets are trading lower. SGX Nifty is trading 100 points down at 17070 but remains above 17000.
US indices fell as First Republic Bank (FRB) fell 33 per cent as it suspended its dividend. Despite receiving $30 billion the bank nosedived as investors feared a contagion effect.
If the important support levels are held, the indices may be on the verge of bottoming out. A pullback that can trigger a short covering is on the cards. Nifty and Bank Nifty closed in the green after falling in the first half on Friday. The second half of the Friday session saw a sharp pullback to close positive.
Today German PPI month-on-month data is expected to be released.
Local
Public sector banks are pressing for lower dividend pay-outs to the government in order to conserve capital to absorb any systemic shocks. The government expects banks to pay government dividends on the lines of Public Sector Enterprises (PSEs). The government takes away usually 30 per cent of the profit after tax or 5 per cent of the net worth whichever is higher than the PSEs. While this is a good move to conserve capital, PSU bans may react negatively.
The overseas banking crisis is unlikely to impact Indian Banking System said Ajay Seth, Secretary Department of economic affairs. However, it may impact capital inflows if the crisis deepens, he added. Banks may be volatile till the crisis stabilises.
Stocks to watch
Adani Green Energy has put on hold the Rs.35000 crore petchem project as a fallout of the Hindenburg report. It plans to consolidate resources. This is negative for the stock.

Cochin Shipyard wins Rs 550 crore order for zero emission feeder container vessels from Samskip Group. (Positive)

Rail Vikas Nigam Limited (RVNL) emerges as the lowest bidder for the HORC project worth Rs 1,088.49 crore (Positive)

Sumitomo Chemicals gets a respite as Gujarat Pollution Control Board Revokes Closure Order for Production at Bhavnagar Site. (Positive)

Saurashtra Cement receives NCLT Ahmedabad’s Merger approval of Gujarat Sidhee Cement with Saurashtra Cement. (Positive)

Equitas Small Bank– Two FPIs Vanguard and Norwegian Norges Bank have picked up stakes in Equitas Small Finance Bank via open market transactions. (Positive)

Bull vs Bear

It is going to be a volatile beginning to the week as FOMC meets on Tuesday to review a rate hike. Markets have already priced in 25bps hike. Anything less can have positive impact. The bears wants to exert pressure and break the psychological level of 17000 in the Nifty and trigger a panic. However, if the bulls are able to resist this pressure and continue to trade above 17000, we can assume a bottom is in place.

Hemant Ghai

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