Market Commentary

Market ViewPoint - March 29, 2022 - Prabhudas Lilladher

Posted On : 2022-03-29 10:26:53( TIMEZONE : IST )

Market ViewPoint - March 29, 2022 - Prabhudas Lilladher

Oil Prices drop as China lockdowns prompt demand worries - Crude slide helps ease selling in US government bond that was sparked by inflation worries.

Dollar Index 99.02 & INDIAVIX 22.61 Gold $ 1923.80 & Silver $ 25.08 DOW FUT 34836 -17 (-0.06%) DOW 34955.89 +94.65 (+0.27%) BRENT OIL 108 US 10YRS BOND YIELD: 2.45%

Oil slumps as demand outlook worries - Price of crude oil futures are extending loses this afternoon. Fears triggered by the announcement of lockdown restrictions in the Chinese city of Shanghai are weighing on the black gold, sending its 6% lower. Though, technicals are showing oversold regions, with RSI below 30

Consumer discretionary sector shares were the best performers in the S&P500, up 2.7% followed by the other growth-oriented groups like technology.

While Sentiment is very negative, markets are reacting less to WAR Headlines Many hurdles remain, suggesting a choppy quarter ahead.

Federal Reserve speakers - whether doves or hawks - have increasingly embraced the possibility of accelerated monetary tightening, including 50 basis point hikes at upcoming meetings. Inflation will stay even higher for even longer, weighing on consumer sentiment and potentially destroying demand.

For now - the all-important 2-year/10-year curve remains positive, but a mere 20 basis points stand between it and inversion Over the medium term, we remain constructive as a lot of bad news is priced in already

Nifty SetUp - Today likely to see 17300 & 17385 as strong resistance points. Nifty did not break 17000 so we can presume it should move higher to test the upper band 17550.

BankNifty SetUp - BankNifty held the support near 20 DMA 35000 and bounced back. 36150 is the immediate resistance at 40 DEMA and above that the upper band is at 37250.

Multiplex (Click on the Link for Detailed Report)<Report> Event Update - Multiplex behemoth in the making

It is a super transaction as far as shareholders of both companies are concerned - We have seen an up move which is part adjustment - part ecvitement.

We believe PVR and Inox merger is a win-win situation as it would lend invincible size advantage to the combined entity (pre-COVID screen/BO market share of ~46%/30% respectively) and result in material revenue & cost synergies by improving bargaining power with film distributors, real estate developers, ad-networks and ticket aggregators. Merger will relegate competition to backyard (Carnival & Cinepolis have ~400 screens each) and would further strengthen the size advantage as combined entity plans to add ~200 screens each year. For merged entity we expect revenues, pre Ind-AS EBITDA and pre Ind-AS PAT of Rs72.6bn/Rs14.6bn/Rs6.6bn in FY24E. Given the impending synergy benefits we assign EV/EBITDA multiple of 15.5x to our proforma FY24 EBITDA of merged entity and arrive at a TP of Rs2,224 per share. Implicit TP of Inox from the given swap ratio turns out to be Rs667 per share. Possible challenge in seeking CCI approval is a key risk to merger.

PL Derivative Insight (Shilpa Rout) Yesterday's session saw the turnaround story from the crucial support zones for both thr INDICES. Daily indicators stay neutral: PCR OI at 0.93, RSI at 55, with VIX correcting further - now below 23 zones. FIIs data reflects on positive session, as buying seen in INDEX FUT and INDEX OPT.

NIFTY for the series expiry witnesses the CE writers adding up positions of more than 2 lakhs contract at 18000 strike, followed by over a lakh at 17500 strike. PE writers active at 16500/17000 zones - each with overall more than a lakh contracts, with PCR OI at 17200 is just below 1, which if increases will lead to 17450 zones, otherwise a 17000 will be seen again.

BANKNIFTY for the monthly expiry witnesses PE writers active at 34000PE/35000 PE (each with more than 59 thousand contracts overall), with CE writers adding max concentration at 38000 strike, followed by 36000CE. Thus the data hints on the strong support zones of 35000, with immediate resistance strongly placed at 36200 levels.

Source : Equity Bulls


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