Report by- Sabyasachi Bhattacharya
JET Airways finding it difficult amidst tough competition-
JET Airways has been a hit among the news channels but not on a positive note. The company’s stock was hit with bad news on December 17th resulting in its share price falling nearly 4 percent, on a day when the market was up. The first news was that SBI, the lead banker for Jet Airways, had ordered a forensic audit of the company’s books for the period between April 1, 2014, and March 31, 2018. Any banker ordering a forensic audit on a company is not good news since the impression it gives is that the bank suspects something. Why else should it not trust the books of accounts? In the case of Jet Airways, it is even more intriguing as the chosen period of 2014-2018 is right after Etihad invested over Rs 2,000 crore for a 24 percent stake in the company in 2013. Some bankers have been quoted as saying ordering a forensic audit on the company is merely a procedural matter as Jet Airways has approached the banks for a restructuring of its loans. If that is indeed the case and the banks are seriously considering restructuring Jet’s loan then it is good news for the company that is struggling to keep afloat. There have been reports of Jet Airways not paying salaries on time, cutting unviable routes and moving towards a no-frills airline by stopping free meals. Jet Airways had earlier said it intends to cut its operating cost by Rs 2,000 crore over the next two years. But this is where the restructuring story takes a U-turn, especially after the second news that hit the stock on December 17. Nikos Kardassis, the former CEO of Jet Airways, who was advising the company on restructuring and tasked with turning around the company has bailed out. The money and more importantly the business which came in with Eithad was good enough for Jet Airways to survive for a few years. But a big reason for its survival was the low oil prices prevailing at the time. As soon as oil prices started rising, Jet was back in trouble. Investors generally look for cues like insider buying or selling, management recruitment or layoffs, to get an idea on the goings on within a company. Recently, a number of companies in India saw senior management quit, especially their CFOs, resulting in their stocks being hammered. For Jet Airways, Kardassis quitting the company is one such moment where the man spearheading the restructuring has quit. His exit from the company suggests either Kardassis was not given a free hand to bring the company back in shape or he was found to be not good at his job. For a man who was the CEO of Jet Airways for 14 years and was brought in by the promoter Naresh Goyal himself in May 2018, it is unlikely that he was not good at his job. The fact remains that Jet Airways is gasping for air and its fundraising efforts have not been successful. Plans of raising money from the Tata group or its knight in shining armour – Etihad— have not been fruitful. Banks led by SBI seems to be biding their time by ordering a forensic audit at a moment when every day is important for the airline.
Source- MoneyControl, Purple Trades Research Department
Indian markets bounced back after the election turmoil-
Chart source- ChartInk
Indian markets had a good outing today as major Indices moved ahead after all the initial elections turmoil. This move indicates that BULLS might take the charge this entire week but only time will tell how strong the momentum is. The Index Nifty opened up with a gap-up and then for the most part of the day moved in a range bound manner. The Index hit support at 10,850 and resistance at 10,875 many times today after which a last hour buying made sure that the resistance at 10,875 was broken and a new high was produced. At the end of the day benchmark indices ended on strong note with Sensex closed up 300 points, while Nifty ended just below 10,900. At the close, the Sensex was up 307.14 points at 36,270.07, while Nifty was up 82.90 points at 10,888.40. About 1400 shares have advanced, 1192 shares declined, and 150 shares are unchanged. Power Grid Corp, Tata Motors, HDFC, Coal India and Vedanta are the top gainers on the Sensex, while Kotak Mahindra Bank, Infosys, Bharti Airtel, Hero Motocorp and L&T are among major losers. All the sectoral indices ended in green led by metal (up 2 percent) and energy stocks (up 1.5 percent) followed by auto, bank, infra and pharma space. Bulls continued their journey ahead as Nifty50 registered a gap up opening which resulted in a small bullish candle as trading confined to narrow range of 56 points throughout the session. Contrary to this if strength continues on the upside initial targets shall be 10,940 and thereafter a bigger target of 11,069 can’t be ruled out. VIX has seen a sharp cut of 32.50 percent in last five sessions which suggests that now bulls are getting a grip on the market with the expectation of limited downside. On the options front, maximum Call open interest (OI) was seen at the 11,000 strike price followed by 10,900 and 11,200 strikes while maximum Put open interest was seen at the 10,500 strike price followed by 10,800 and 10,700 strikes. Meaningful Call writing was seen at 11,400 followed by 11,100 and 11,200 strikes while Put writing was seen at the strike price of 10,900 followed by 10,800 and 10,500 strikes. Option band signifies a trading range in between 10750 to 11000 zones. Bank Nifty remained positive throughout the session, closing 189.80 points higher at 27,015.80 and forming bullish candle on the daily charts.
Let’s take a look at the heat map-
Let’s take a look at the performance of major Indices-
Global markets had a mixed reaction today as US market Index NASDAQ was seen in the RED along with all three of the European market Indices DAX< CAC< FTSE. The Asian market Indices though were seen in the GREEN as NIKKEI and KOSPI moved upwards.
Source- MoneyControl, Purple Trades Research Department
Key Points for Traders to watch out for while trading Nifty tomorrow-
- 10,850 is a short term support for Nifty.
- If Nifty breaks 10,850 then it has the potential to go down.
- 10,930 is a short term resistance for Nifty.
- If Nifty breaks 10,930 then it has the potential to go up.
Top sectors that moved the market today- Data source- Moneycontrol
Top Gainers for today- Data source- Moneycontrol
Top losers for today- Data source- Moneycontrol