Nifty: 16,614.20 | -371.00 (-2.18%)
FII Net Sold: INR 3,565.36 crore

Sensex:  55,822.01 | -1,189.73 (-2.09%)
DII Net Bought: INR 2,764.02 crore

Howdy Toasters!

In today’s issue of the Morning Toast, we discuss

• Nifty50 sheds 371 and sets-up for the short term?
• CCI makes bold calls on the Amazon-Future deal
• An education concept to keep you chugging along

Nifty50 sheds 371 and sets-up for the short term? What’s up and What do you need to know? 🤑

• Analysing Nifty 50 on a daily time-frame, indicates that the index had been declining in the last 3 trading sessions and is trading close to a falling trendline (see image below)
• This falling trendline is a part of a falling channel, where prices have been taking support (making lower lows) in the past, which consequently increases the chances of prices going up in the short term (corrective move).
• Prices have been facing resistance along the higher trendline resulting in Nifty making lower highs

Nice! Tell me more? Any other tools? 🤩

• Looking at the chart on an intraday time-frame (60-mins), prices had a gap down opening today, i.e. 20th December, and the momentum continued downwards before the formation of an inside bar (see image below)
• Prices gave a breakout on the higher end of the inside bar (positive sign), with the gap down (between 16,830-16,970) now acting as a resistance level.
• The breakout above the inside bar might lead to prices breaking upcoming resistance levels (though retesting that level is key to avoid traps)

That’s Great! How do I enter/exit such a setup? 🤔

• You should wait for prices to fill the gap (16,830-16,970), and going long post breakout would make most sense; stop-loss can be placed just below the lower end of the resistance band, which will help limit your losses.
• Post breakout prices might test the upcoming resistance levels (17,600), with 17,600 Nifty CE, a possibility

Interesting! Final thoughts?🧐

• Prices have been trading close to a falling trendline where they tend to take support, this suggests the index having positive bias in the short term.
• On a 60-minute time-frame, prices have given a breakout above the inside bar showing strength

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CCI makes bold calls on the Amazon-Future deal; What’s up and what do you need to know? 😧

• The Competition Commission of India (CCI) has put in abeyance (i.e temporarily suspended) Amazon’s investment in Future Coupons, stating that Amazon India categorically misled the commission into believing that they were actually interested in Future’s core business
• This dispute started with Amazon objecting the sale of the retail business of the Future Group to Reliance
• CCI has also imposed a INR 202 crore penalty on Amazon for failure to furnish true details about the transaction, stating that the American retailer ‘Suppressed actual scope’ of the arrangement
• By stopping Reliance they are ensuring that ‘piece of the pie it cannot have, no one else can either since regulations do not allow Amazon to take over the bankrupt retail arm of the Future group

Ouch! What’s the background? 🙄

• Amazon had acquired a 49% stake in Future Coupons which owns 7.3 per cent equity in listed Future Retail through convertible warrants, with the right to buy into the flagship Future Retail after a period of 3 to 10 years.
• It had used this investment to block Future’s sale to Reliance Industries for $3.4 billion (which would significantly help the business retire debt and continue operations)
• According to Amazon, covenants in the deal prevent the parent, Future Group, from selling its Future Retail Ltd business to certain rivals, including Reliance

What’s next? 🧐

• Future will most likely move courts to terminate all pending cases pertaining to the sale of its retail assets to Reliance, while Amazon India has been given 60 days to file a notice with true and correct information
• The CCI order, however does not have a direct impact on the international arbitration proceedings pending before the Singapore International Arbitration (SIA) centre, with that tribunal tasked with deciding the dispute
• Likewise, the current ruling does not ‘de-freeze’ the August 2021 SC judgement that no authority / regulatory body can pass / approve any final orders pertaining to the deal, till the issue is resolved in arbitration (confusing??)
• Future retail jumped to Rs. 57.5 from Rs.47.95 on the NSE with other Future stocks adding on average 20% too

Keep a track for next rulings at SIA 

What else caught our eye? 👀

Tata’s finally get their legacy back 

• The CCI today approved the acquisition by the Tata Group of Air India (and low cost carrier Air India Express + various other assets)
• The Tata Group had won the bid for the national carrier for Rs. 18000 crore (including Rs. 15300 Crore of debt and the remainder as cash)
• Meanwhile the Tata Group is considering both internal and external talent for key roles including CEO and CFO!

Vedanta has a monopoly of its own 

• Vedanta Ltd. has acquired Nicomet ( a leading cobalt and nickel producer based in Goa) for an undisclosed amount making it the only producer of nickel in the country
• Surge in battery demand and an increase in global stainless-steel production in recent years have been cited as major reasons behind the acquisition
• The move plays well into the GoI’s Aatma Nirbhar Bharat Scheme as India currently imports 100% of its nickel requirements (Vedanta can now cater to 50% of this demand)

India’s employment gaining traction 

• Retirement Fund EPFO has added 12.73 lakh net subscribers in October (an increase of 10% Y-o-Y)
• The age group of 22-25 years has shown the highest enrollments while the age group of 18-21 also showed a healthy amount
• The EPFO is country’s principal organization responsible for providing social security benefits including pension and insurance benefits to the country’s workforce

Iron Condor Strategy

An iron condor is an options strategy consisting of two puts (one long and one short) and two calls (one long and one short), and four strike prices, all with the same expiration date.
The iron condor earns the maximum profit when the underlying asset closes between the middle strike prices at expiration.