Tit - bits

The key domestic bourses ended with steep losses on Monday, extending their losing streak for fourth consecutive trading session. Weak domestic economic data, surge in fresh coronavirus cases and intensifying US-China tensions spooked the markets.

The S&P BSE Sensex slumped 667.29 points or 1.77% to close at 36,939.60 while  the Nifty50 index lost 173.60 points or 1.57% to end the day at 10,899.85. Interestingly, the Nifty declined 3.55% in four sessions.

Private banks where many of our TV Analysts suddenly became bullish saw the brunt of the bear pressure.

Also, the index heavyweight Reliance Industries (RIL) fell 2.83% to 2008.45, as was expected and mentioned on my blog several times. There is an old saying that when RIL moves, it means we have probably come at the end of the current phase of a rally.

In the broader market too, the sentiment were conflicting. The BSE Mid-Cap index fell 0.31%, while the BSE Small-Cap index rose 1.02%. Both these indices outperformed the Sensex.

The market breadth was slightly positive. On the BSE, 1416 shares rose and 1234 shares fell. A total of 180 shares remained unchanged.

The artificial rally, which started with massive infusion of liquidity into the system, should not continue for too long. Hence, any rise in the markets should be used to lighten your positions.

#Meanwhile, there were media reports that RJ has recently increased his stake in the  beleaguered JP Associates Ltd (Rs.3.45).

But, you must be aware that as per a recent media (source) based report, Serious Fraud Investigation Office (SFIO) has probably been entrusted to probe Jaypee group's flagship firm JP Associates and its bankrupt Jaypee Infratech (Rs.1.40) for alleged financial irregularities. The probe agency comes under the corporate affairs ministry. The source based news said the ministry has ordered an SFIO probe against both the JP group companies. In such a situation, apart from debt burden that both the companies are reeling under, it doesn't make it a good bet, inspite of the RJ - factor. He may exit at any time or decrease holding without informing you like his many other misadventures (DB Realty, DHFL, Bilcare, Mandhana Retail Ventures, Autoline Industries, HOEL, etc)

There were also news from Rakhesh Jhunjhunwala himself, as SEBI has started investigating the role of his family members, including his brother Rajesh Kumar Jhunjhunwala and wife Rekha Jhunjhunwala in an insider trading case with Aptech Ltd (Rs.108.75). Hence, there is no reason, to get excited if RJ has entered a company.

Hence, I would suggest you to stay clear from the JP Group like ADA Group of Anil Ambani.

#There was also a report in the Asian Chronicle,  that COVID-19 had made an immense impact on healthcare and economic recession. Economic Recession had built a huge crisis in India for job seekers. The Global Consultants has submitted a report that India is set to lose around 130 million jobs due to the Covid-19 lockdown. This is further blow to the Bull camp.

#Short Bank Nifty (21070.10) for a short term price target 18700. The Chief Economic Adviser Krishnamurthy Subramanian, recently said that 

a big reason for the current slowdown is because of problems in the banking sector such as soured loans, risk aversion, and an impact of a decline in corporate lending on investment, Mr.Subramanian further mentioned that the decline in investment has slowed down growth with a lag, impacting consumption. According to me, with the prevailing set of conditions, it will take a long time, before the banking sector comes out of this "Chakravyuh".

#Buy GAIL (Rs.94.10) near Rs.91/92, during market dips for short term targets of Rs.97/103. There are two positive factors according to CLSA. 

• GAIL offers a 20% upside at a spot Brent of $41 per barrel.
• The domestic gas price is set to be cut by 25% by September, which is a big positive for GAIL since it is a consumer of this gas and will benefit because of lower input costs.

However, with Brent Crude Oil price trading at $43.70, I don't see too much upside from the CMP.