Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The September 2022 Rebalance results for the NIFTY 50, 100, and 500 Indices were announced after the close on 1st September 2022.</li>
<li>There will be one ADD/DEL for the NIFTY 50 Index and 6 ADDs/DELs for the NIFTY 100 Index, mostly in line with our expectations.</li>
<li>In this insight, we take a closer look at our expectations for index flows and potential trading ideas.</li>
</ul>


The September 2022 Rebalance results for the NIFTY 50, 100, and 500 Indices were announced after the close on 1st September 2022.
There will be one ADD/DEL for the NIFTY 50 Index and 6 ADDs/DELs for the NIFTY 100 Index, mostly in line with our expectations.
In this insight, we take a closer look at our expectations for index flows and potential trading ideas.


NIFTY Sep 2022 Rebal: Adani Enterprises and Adani Total Gas Are Top Positives

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Broad global MSCI equity indexes (ACWI, ACWI ex-US, EAFE, and EM) remain bearish, as do indexes in Japan, Hong Kong, China, Europe, and Germany.</li>
<li>Until we see these indexes break above downtrends and key resistance levels, we cannot be bullish.</li>
<li>Remain overweight Energy and Materials with the secular commodity bull market intact. Defensive Sectors are also hitting 1-2-year RS highs; we recommend overweights to Health Care, Utilities, and Consumer Staples.</li>
</ul>


Broad global MSCI equity indexes (ACWI, ACWI ex-US, EAFE, and EM) remain bearish, as do indexes in Japan, Hong Kong, China, Europe, and Germany.
Until we see these indexes break above downtrends and key resistance levels, we cannot be bullish.
Remain overweight Energy and Materials with the secular commodity bull market intact. Defensive Sectors are also hitting 1-2-year RS highs; we recommend overweights to Health Care, Utilities, and Consumer Staples.


Opportunities Within Energy and Materials

<ul>
<li>The broad global indexes are decisively below our "lines in the sand" of $54 on MSCI ACWI ex-US (ACWX-US), $75.25 on MSCI EAFE (EFA-US), and $99 on MSCI ACWI (ACWI-US).</li>
<li>As noted in our Feb. 15 Int'l Macro Vision, we are bearish at the index level as long as we are below the aforementioned levels.</li>
<li>Global 10-year sovereign yields remain elevated, leading to outperformance from value Sectors (Energy/Materials/Financials) which remain our preferred area of the market. We also continue to like defensive areas, especially Staples.</li>
</ul>


The broad global indexes are decisively below our "lines in the sand" of $54 on MSCI ACWI ex-US (ACWX-US), $75.25 on MSCI EAFE (EFA-US), and $99 on MSCI ACWI (ACWI-US).
As noted in our Feb. 15 Int'l Macro Vision, we are bearish at the index level as long as we are below the aforementioned levels.
Global 10-year sovereign yields remain elevated, leading to outperformance from value Sectors (Energy/Materials/Financials) which remain our preferred area of the market. We also continue to like defensive areas, especially Staples.


Buying Metals/Mining and Consumer Staples

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Event-Driven

<ul>
<li>An analysis of the shareholder register of<a href="https://www.smartkarma.com/entities/bhp-group-plc" target="_blank" data-smartkarma-citation="entities:28086:1" rel="noopener">BHP Group PLC (BHPBF US)</a> suggests that BHP has misunderestimated the passive ownership of PLC by a lot.</li>
<li>
<a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> looks set to add to its coffers on talk it is negotiating the sale of KFC and Pizza Hut franchises. </li>
<li>How the mighty have fallen. <a href="https://www.smartkarma.com/entities/cathay-pacific-airways-ltd" target="_blank" data-smartkarma-citation="entities:243:1" rel="noopener">Cathay Pacific Airways (293 HK)</a> has gone from the de-facto flag carrier to the obligatory kicking bag.</li>
</ul>


An analysis of the shareholder register ofBHP Group PLC (BHPBF US) suggests that BHP has misunderestimated the passive ownership of PLC by a lot.

Jardine Matheson Holdings (JM SP) looks set to add to its coffers on talk it is negotiating the sale of KFC and Pizza Hut franchises. 
How the mighty have fallen. Cathay Pacific Airways (293 HK) has gone from the de-facto flag carrier to the obligatory kicking bag.


Last Week in Event SPACE: BHP, Jardine Matheson, Cathay Pacific, HK&S Hotels, Large CCASS Moves

Travis Lundy

<ul>
<li>Vedanta Limited decided to delist its ADRs last autumn. They were delisted but the process of unwinding them comes down to selling the unconverted ADR underlying shares. </li>
<li>Citi is conducting an offering to sell those underlying shares. This will aid in setting the unwind price for existing but unsettled listed ADR derivatives (yay).</li>
<li>The offering itself is just over 1% of shares out, 4% of float, and 12% of foreign portfolio investor holdings. Not huge, but the trend vs peers gives one pause.</li>
</ul>


Vedanta Limited decided to delist its ADRs last autumn. They were delisted but the process of unwinding them comes down to selling the unconverted ADR underlying shares. 
Citi is conducting an offering to sell those underlying shares. This will aid in setting the unwind price for existing but unsettled listed ADR derivatives (yay).
The offering itself is just over 1% of shares out, 4% of float, and 12% of foreign portfolio investor holdings. Not huge, but the trend vs peers gives one pause.


India

Vedanta Limited mines, produces, and exports base metals. The Company mines and distributes metals such as zinc, iron ore, copper, silver, and aluminium, as well as operates power plants. Vedanta markets its products worldwide.

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Vedanta Ltd (VEDL IN)

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