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The RIL-Future-Amazon love triangle is getting interesting

 

‘Hurry!! It is time to short Nifty 50’ is what many people have been saying. Those who are walking the talk, have surely been booking losses.

If relative strength index (RSI) is anything to go by, one may yet again call it a short on the index. The current value of the index is 68, and on the weekly charts, there is a bearish RSI divergence.

A bearish divergence occurs when the RSI value doesn’t reach its earlier high, despite the index making a new high.

 

Let’s wait to see what our RSI traders have in store for the coming week.

 

 

Image: Nifty50 RSI Indicator | Source: Moneycontrol

 

Talking about specific sectors, no clear leadership was seen.

There is exhaustion visible in almost all indices. The heavyweight Reliance Industries (which is a sector in itself) has been consolidating in a range for many months now. Will RIL take leadership and steer the index ahead of 15200? If news flow is anything to go by, volatility in the stock is here to stay.

The RIL-Future-Amazon love triangle is getting interesting and the cupid (supreme court) is playing its role.

TVS group companies are looking interesting for momentum players. TVS Motor, TVS Srichakra, Sundaram Finance, TVS electronics, Sundaram fasteners have shown good momentum in the week gone by. A part of this momentum is justified by the 2 months old news flow around simplifying the group shareholding.

 

 

Image: TVS Stock Price Movement | Source: Moneycontrol

The TVS group is many decades old and had a complex shareholding structure. The market, as expected, is receiving the news of simplified shareholding with good enthusiasm.

The voluntary vehicle scrappage policy announced in the union budget is working in favour of the automobile sector. The party is on from tyres to other auto ancillaries to OEMs.

A specific name: MSTC Ltd had a gala time after the announcement of the scrappage policy. The company trades into metal scrap and is also a metal recycler. The momentum for MSTC slowed down on Friday owing to a disappointing set of numbers.

However, the scrappage policy is likely to keep the momentum strong for the coming weeks. This dip in price could be a good entry point for trend followers on long term charts.

The supreme court has entrusted SBI mutual fund with the responsibility of winding up Franklin Templeton debt schemes.

Let me revisit the Franklin saga for those who aren’t exactly aware of what happened.

Franklin Templeton AMC operated quite a few troubled mutual fund schemes. The trouble with these schemes was mainly because the underlying securities were illiquid. It means that the fund manager was unable to sell these securities when unitholders asked for their invested corpus.

A point came when Franklin decided to drop the news on the market: they decided to close the illiquid debt schemes. The matter ultimately reached the supreme court.

The apex court has now directed SBI MF to liquidate the assets and hand over the proceeds to investors.

Data to look for in the coming week

DateDatapointPreviousForecast
15-FebWPI inflation YoY Jan1.22%1.3%
15-FebBalance of trade Jan$-15.44 bn$-14.75 bn

 

 

 

 

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