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FED’S NEW MANTRA: CUT RATES AT FIRST SIGN OF STRESS - HDFC Securities
Our markets were expecting a down day in US markets as American futures were trading under water when we downed the shutters yesterday. U.S. stocks closed higher, recovering from early losses, after New York Federal Reserve President John Williams said the central bank’s wisest strategy is to cut interest rates at the first sign of economic distress. Dow futures are up in three digits and that has turned around mood in our markets at the opening. Expect Nifty to score a half century at the open.
The sixth tranche of Central Public Sector Enterprises exchange-traded funds - CPSE ETFs is opening for subscription today, expect a good response for the offer.
Derivatives data suggest markets are light and foreigners have started covering their short positions in index futures. There is a room for Nifty to recover back to higher boundary of the range but all that will depend on the Reliance. Reliance Industries is slated to reports its quarterly results today. The street expect it announce 8% reduction in profits to Rs. 8375 Cr. due to lower GRMS. How reliance fares at these quarterly test will drive the marketsin the near term.
Support for the Nifty is seen at 11461, below which it could plunged towards its 200 DMA, placed at 11123. Amongst nifty constituents Kotak Bank, Ultratech cement and Zee looksstrong on short term charts.
Reliance Industries Q1 PAT seen down 8% to Rs 8735cr RIL may report GRM of USD 8.5/bbl in 1QFY20 vs. USD 10.5/bbl in 1QFY19 and USD 8.2/bbl in 4QFY19. This implies a premium of USD 5.0/bbl over SG GRM.
Refining throughput for the quarter is expected at 17.5mmt (+5% YoY, +9% QoQ). Petchem volume is expected to increase 13% YoY and 11% QoQ to 3.1mmt.
Overall revenues may rise 14% yoy to Rs 1.47 lakh cr. Consolidated EBITDA may come in 4% yoy lower to Rs 19810cr. EBITDA margin is estimated to dip 150bps qoq while it may slip 250bps yoy. Consolidated PAT is estimated at Rs 8735cr (-8% YoY, -16% QoQ).
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HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475
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