Adani Green Energy's  share price spiked 5 percent at open on May 19 after the company said it will acquire the renewable portfolio from SB Energy.

Adani Green Energy will acquire 5 GW of renewable power portfolio from SB Energy India for a fully completed enterprise evaluation (EV) of $3.5 billion (approx Rs 26,000 crore).

The share purchase agreement was signed on May 19 for the acquisition of 100 percent interest in SB Energy from SoftBank Group and Bharti Group, which held 80 percent and 20 percent stake, respectively.

The stock was trading at Rs 1,257.95, up Rs 59.00, or 4.92 percent at 09:28 hours. It has touched an intraday high of Rs 1,258.85 and an intraday low of Rs 1,217.90.

SB Energy has a total renewable portfolio of 4,954 MW in four states. This is the largest acquisition in India's renewable space.

Tata Motors share price gained 2 percent in the morning session on May 18 ahead of its Q4 results to be announced later in the day.

Brokerages expect a five-fold jump in earnings before interest, taxes, depreciation, and amortization (EBITDA) on the back of a 40 percent year-on-year (YoY) growth in revenue.

The auto major reported a 90 percent rise in standalone volumes (India) to 1.91 lakh units for Q4 FY21 driven by strong passenger vehicle demand and recovery in commercial vehicle demand. Its subsidiary, the UK-based luxury carmaker Jaguar Land Rover, is expected to report a 2 percent YoY decline in volume (excluding China JV) but a 7-8 percent YoY increase (including China JV).

The stock was trading at Rs 326.85, up to Rs 5.75, or 1.79 percent, at 0943 hours. It has touched an intraday high of Rs 328.20 and an intraday low of Rs 324.10.

Gasoline and diesel sales over May 1-15 fell by about 20%, while jet fuel consumption slumped by nearly 38%, versus April 1-15 levels, the data compiled by the state refiners showed.

"Trucking activity is almost half of what it used to be in normal times," SP Singh, a senior fellow at Indian Foundation of Transport Research & Training, said.

"Most of the business that they were getting from small and medium business has been hit due to lockdowns," Singh said, adding only a fraction of 5.5 million trucks is currently running on roads due to lockdowns.

Indian fuel demand had recovered to near pre-COVID levels in March but has been declining since April was given restrictions amid a staggering spike in infections to record highs.

The second wave of COVID-19 is far more severe compared to the first wave. The average daily cases are touching approximately 4 lakh a day whereas only 2.5 percent of the population is vaccinated till now. Vaccine manufacturers are expected to increase production in the coming days as the US has relaxed restrictions on the export of raw materials to manufacture vaccines.

With a complete national lockdown in March 2020, it appeared that most of India escaped the first COVID-19 wave. The national lockdown severely affected the economy as was reflected in negative growth numbers in subsequent quarters. However, this time around, the decision of the lockdown was left on the states. Of the 28 states and 8 union territories, only about 16 have declared full lockdown while the others are on partial lockdown as of May 10, 2021. We are likely to see these numbers going up in the coming days given the increasing case numbers.

Most states are allowing essential activities to continue however, the lockdown does affect businesses at varying degrees. While the non-essential establishments see business coming to a complete standstill, the establishments in the essential services also go through a lower volume of business due to various logistical issues. There is a complete loss of demand for non-essential items as people start focusing on only essentials viz. food and grocery. This leads to a significant output gap as idle production capacity far exceeds the demand in the economy. This in turn leads to the postponement of CAPEX cycles, which affects the capital goods markets as well. This singular survival focus of the people not only impacts the manufacturing sector but also the services sector. The construction sector is a highly labor-intensive sector and will remain a key factor from an employment perspective. The second wave and consequent restrictions on non-essential domestic manufacturing could adversely affect exports.

While the GST collections until April 2021 (reflecting activity of March 2021) have been record-breaking, lower numbers are expected in the coming months as the economy starts reflecting the impact of lockdowns.

Post the first COVID-19 wave, as lockdowns were being lifted partially, some revival was witnessed largely due to the pent-up demand in the economy. A big contributor towards this revival was also the strong demand witnessed in the rural economy as rural India was largely able to avoid the dreaded virus. A key difference in the second wave is that this time rural India is also witnessing a large number of cases, and the impact is expected to be much larger as health facilities there are much lesser as compared to towns.

The coming months will start reflecting the impact of lockdowns in the economy and as a proactive measure, we also saw the Reserve Bank of India announcing a slew of measures to combat this expected slowdown in the last week. The true damage of COVID-19 induced lockdowns will be only realized once the pandemic starts to ebb away, however, in anticipation, we have had multiple agencies lowering their growth estimates for FY22.

Whenever the economy starts to slow down, the central bank ensures easy monetary conditions along with a low-interest rate regime. The RBI had brought down interest rates to record lows to combat the COVID-19 induced slowdown and had flushed the system with surplus liquidity. As the Indian economy had started showing some signs of revival, the RBI had started to withdraw some of this surplus liquidity but the impact of the second wave has made the central bank once again reassure the markets that it would maintain an accommodative stance for "as long as necessary" and till it witnesses durable growth in the economy.

The investors in the fixed income markets can therefore expect rates to remain low for at least a few quarters more before the rate cycle starts to reverse. The Indian Debt Capital markets have witnessed significant bouts of volatility in the last couple of years, be it market-driven or at times due to regulatory changes. The rates in the up to 1-year segment are too low and unattractive whereas the volatility on the longer end of the curve is something that is unpalatable for fixed income investors. In such scenarios, it would be prudent to lock investments into the tax-efficient roll-down products that not only present a natural hedge against a rising rate scenario but, also protect the investments from intermittent volatility.

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India's April fuel demand slipped from the previous month as the world's third-largest oil consumer bore the brunt of raging coronavirus infections, with the prospect of further restrictions weighing on the outlook.

Consumption of fuel, a proxy for oil demand, fell 9.4% to 17.01 million tonnes from March, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed on Tuesday.

On a yearly basis, demand surged 81.5% from April 2020 lows, when consumption plunged to the lowest since 2006 as coronavirus restrictions during India's first wave-battered economy. This represents the biggest year-on-year increase since data going back to about 1999.

"India's second wave of virus infections and varying containment measures provides an uncertain outlook for the fuel demand," Edward Moya, senior market analyst at OANDA said.

India is nearing 400,000 infections a day and the second surge has increased calls for a nationwide lockdown and forced many states to impose tougher restrictions.

Prime Minister Narendra Modi's resistance to a full lockdown has supported consumption in the short term, Moya said.

Fuel demand had reached pre-pandemic levels of around 18.8 million tonnes in March, the highest level since end-2019.

However, the pandemic has led the country's top state oil refiners to reduce processing runs and crude imports, company officials told Reuters on Tuesday.

This trend is likely to extend into May as Indian refineries are reducing their refinery runs, UBS analyst Giovanni Staunovo said, adding that once mobility restrictions were lifted, demand should recovery swiftly.

Diesel consumption, a key parameter linked to economic growth in India, fell 7.5% to 6.68 million tonnes from the previous month but surged 105.5% year-on-year.

Gasoline, or petrol, sales fell 13.1% to 2.38 million tonnes in April- the lowest level since August 2020, and were 145% higher compared with the same period a year ago.

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India Gold June MCX Futures trade flat on May 11 following the muted trend in the international spot prices amid rising in the Dollar index.

A rise in the Dollar Index makes gold more expensive for other currency holders. The U.S. currency slipped to a more than two-month low in the previous session after U.S. non-farm payroll data on Friday showed jobs growth unexpectedly slowed in April, said a Reuters report.

On the Multi-Commodity Exchange (MCX), June gold contracts were trading lower by 0.01 percent at Rs 47,946 for 10 grams at 0935 hours. July silver futures were trading 0.18 percent lower at Rs 71,416 a kilogram.

Gold and silver showed mixed trends on Monday. Gold extended gains following weak U.S. data but Silver showed some profit-taking amid weakness in the base metals. Both the precious metals settled on a mixed note in the international markets.

“We expect both the precious metals to remain volatile in Tuesday’s session and gold could approach $1850 per troy ounce levels. Gold has support at $1824-1810 per troy ounce and resistance at $1850-1866 per troy ounce. Silver has support at $27.20-26.70 per troy ounce and resistance at $27.84-28.20 per troy ounce,” Manoj Jain, Director (Head-Commodity & Currency Research) at Prithvi Finmart said.

On MCX, Gold has support at Rs 47,800-47,580 and resistance at Rs 48,055-48,250. Silver has support at Rs 71,100-70,400 and resistance at Rs 72,000-72,700 levels. We suggest buying in gold around Rs 47,800 with a stop loss of Rs 47,580 for the target of Rs 48,200 and in silver around Rs 71,000 with a stop loss of Rs 70,200 for the target of Rs 72,500,” he said.

Technical indicators

Expert - Sriram Iyer, Senior Research Analyst at Reliance Securities

International gold prices ended flat to marginally higher on Monday as the dollar continued to struggle.

However, the benchmark Treasury yields recovered on Monday and capped upside in gold. Silver gave up all of its gains and ended in the red on Monday.

Technically, MCX Gold June resistances are at Rs 47,988 and 48,343. Supports are at Rs 47,600 and Rs 47,225, said Iyer.

Technically, MCX Silver July resistances are at Rs 72,228 and Rs 72,700. Supports are at Rs 71,380 and Rs 70,970.

Expert - Amit Khare, Commodity research head, GCL Securities Limited

Gold price closed higher on Monday to trade near a three-month peak, owing to positive global cues. On the Multi-Commodity Exchange (MCX), June gold contracts closed higher by 0.42% at Rs 47,951 for 10 grams. July contract silver futures closed on Monday at 0.16% higher at Rs 71,544 a kilogram.

If we talk about its technical, momentum indicators like RSI and moving average are giving positive signals, the daily technical chart is showing strength, so traders are advised to go long for intraday, below are some technical levels for intraday.

June Gold closing price Rs 47,951, Support 1 - Rs 47,700, Support 2 - Rs 47,500,  Resistance 1 - Rs 48,165, Resistance 2 - Rs 48,375.

July Silver closing price Rs 71,544,  Support 1 - Rs 70,800, Support 2 - Rs 70,150, Resistance 1 - Rs 72,250, Resistance 2 - Rs 72,920.

Expert - Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.

"COMEX gold trades little changed near $1837/oz after a 0.3% gain on May 10. Gold has turned mixed after testing a 3-month high amid choppiness in the US dollar.

The US dollar index turned choppy after hitting Feb low as easing concerns about US Fed's monetary tightening are countered by higher yields and persisting inflation concerns. ETF investors also moved to the sidelines after last week's inflows. Gold may witness choppy trade along with the US dollar, however, the general bias remains positive as the US Fed may continue to emphasize the need for lower rates.

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The Reserve Bank of India (RBI) may delay taking some state-run lenders out of the prompt corrective action (PCA) framework, due to concerns over capital adequacy.

The banking regulator has questioned the government's capital infusion into the banks through non-interest-bearing or zero-coupon bonds, The Economic Times reported.

The central bank is of the view that capital infusion through these bonds cannot be taken at face value, which means that banks may still be short of regulatory capital, the report said.

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The RBI had not yet responded when contacted by The Economic Times.

The Centre said in March it would infuse Rs 14,500 crore in four public sector banks through zero-coupon bonds - Central Bank of India (Rs 4,800 crore), Indian Overseas Bank (Rs 4,100 crore), Bank of India (Rs 3,000 crore) and UCO Bank (Rs 2,600 crore).

In December 2020, the government has issued Rs 5,500 crore in zero-coupon bonds to recapitalise Punjab and Sind Bank.

The Ministry of Finance and the RBI have differences on capital issuance through zero-coupon bonds and their calculation in capital adequacy ratio, The Economic Times reported

"The government went ahead despite RBI's initial reservations and now the regulator has expressed serious concerns. RBI may not allow banks to treat infusion through such bonds at par value," an official told the publication.

Since the entire fund infusion through such bonds will not count toward regulatory capital, the RBI will keep the banks under the PCA framework.

"RBI is not inclined to pull these lenders out of PCA framework based on such capital infusion," another official said.

"It may further direct lenders to recalculate their capital adequacy ratio based on the actual value of the bonds."

A bull call spread is a strategy where one buys a Call option and sells a higher strike call option. The net premium outflow reduces to the extent of sold options premium and yet the risk reduces as you have less to lose.

One of the key benefits of trading options is that instead of a straight-line Profit & Loss curve that Futures offer, options can be customized to fit the reward and risk of a trader.

Over millions of options strategy combinations can be achieved from the options chain and one of them is vertical spread. The vertical spread family can consist of multiple strategies, but the most popular ones are Bull Call Spreads & Bear Put Spreads.

At the same time, the trade-off is that a bull call spread offers a limited upside versus a simple long call. How much risk is one willing to take and how much reward one expects varies from trader to trader but in this article, we’ll learn that being an opportunist when should one prefer a bull call spread over a long call. Similarly, the concept could be applied for a Bear Put Spread versus a Long put.

A key input for choosing an options strategy revolves around time. If the time frame for a forecast is extremely short term i.e. 3-4 days then in most cases Long call will be a preferred strategy but, the moment the forecast is for a long time period then getting compensated for the time with a vertical spread is a good idea.

Vertical spread can improve the pay-off in terms of the reward to risk when the time frame is more positional (generally more than 4 days) and the strategy can also be carried till expiry.

Momentum

Consider a market that is oscillating within a few hundred points, it becomes a challenging task to identify stocks that may witness a directional move, in these cases, a lot of Theta is lost in expectations of breakouts which lacks due to the overall market structure.

In a market where momentum is lacking, vertical spreads can be a better bet than buying a single option.

Expiry Placement

Expiry placement or days to expiry is an important input when deciding on an options strategy and where are you placed in the expiry affects the decision. From mid expiry when the options theta starts to decay faster, it is generally a better idea to resort to vertical spread over single options contract.

Most importantly, in the expiry week when options are decaying very fast, it might always be a good idea to resort to a vertical spread for any trades being carried for more than a day.

Risk Aversion

Many investors look forward to options to build their portfolio and to make returns from medium-term moves. Since deploying a vertical spread is far cheaper than trading futures, it naturally restricts the risk.

A vertical spread with one OTM as buying and a few OTMs as sell strike typically offers a 3:1 reward to risk. It means that if you succeed you make 3 times more profit than the risk you take and for strategies with a medium-term approach, this helps in reducing risk yet providing a handsome profit potential.

Strategic Forecasts

In many cases, traders do forecast probable targets of underlying equity and trades for them. Vertical spreads are a good way to trade if you are confident that the target will act as a resistance. If your forecast suggests that the underlying equity may not move above those levels, then in those cases you may not want to pay a high premium that a single option brings to the table. Instead, selling the strike of the target reduces your premium outflow and optimizes your trade to customize to your forecast.

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