The Rising sun bleeds, Lanka is in the eye of a storm; TCS kicks off the results season. Weekly Market Wrap-up | 10 July
Arihant Capital’s Weekly Market Wrap-up – catch up on all that’s happened in the stock markets this week before Monday hits us again.
In this article
The last week witnessed the fall of several political leaders: Japan’s longest-serving (former) Prime Minister Shinzo Abe was killed in an assassination attempt during an election campaign. UK PM Boris Johnson resigned and the Sri Lankan president and PM had a narrow escape from the clutches of protestors.
Talking about narrow escapes, it seems that Elon Musk is having cold feet. The $44 bn Musk-Twitter deal may fall out over the non-disclosure of the number of spam accounts. The much-awaited result season has started with the TCS numbers coming in with some good returns and robust deal pipelines.
The benchmark indices on Friday closed in the green following a 4-day gaining streak. Nifty closed the week with a 2.97% at 16,221 increase of 469 pts while BSE Sensex ended the week at 54,482. On a week-on-week basis, Sensex increased 1,574 pts or 2.97%. Bank Nifty increased by 4.72% during the week, ending at 35,124. On the sectoral front, all the sectoral indices ended positively for the week ending on the 9th of July. Nifty Bank, Nifty Auto and Financial Services led the rally by 6.63%, 5.96%, and 5.68% respectively.
📈What to expect from the Markets
-Mr. Abhishek Jain, Head Research, Arihant Capital
Indian markets rose in the third-week session before the June quarter earnings season. The benchmark indices rose amid a fall in crude prices, backed by Banking, FMCG, and Realty sectors. Global sentiments are also boosted by the Fed commentary on the possibility of only a 50-bps hike in the next Fed meeting on the 27th of July. We continue to maintain a positive stance on the market.
📈Market Outlook
–Mr. Ratnesh Goyal, Senior Research Analyst, Arihant Capital
Nifty
On the daily chart of the Nifty, it has given a breakout of the downward sloping trendline and is trading above the short-term moving averages. On the weekly chart, the index is closing above the upward gap area. We are likely to see stock-specific activity, but it seems that the downside risk is limited. Nifty can face resistance around the 16,250 level. If it starts to trade above it then it can touch 16,500-16,750 levels. The downside support is 16,050 if the Nifty trades below this level then it can test the level of 15,850 and 15,700.
Bank Nifty
On the daily chart of Bank Nifty, it has also given a breakout of the downward sloping trendline and on the weekly chart, a “Bullish” candlestick pattern is visible. On analyzing both the charts, we feel that it can outperform the Nifty, but it seems that the downside risk is limited. In the coming trading session if it trades above 35,300 then it can touch 35,700 and 35,950 levels. However, the downside support comes at 34,880 below that it may touch 34,500-34,300 levels.
💰Stock Picks
From the Fundamental Desk
-Mr. Abhishek Jain, Head Research, Arihant Capital
We recommend Bajaj Consumer Limited for adding to your portfolio. We believe that the stock is available at a very attractive level at 6x EV/EBITDA and expect the margins to pick up substantially going forward. An Almondz portfolio is also likely to get a boost with aggressive marketing spending by the management. We are recommending stock with a price objective of ₹210.
From the Technical Desk
-Ms. Kavita Jain, Head Learning and Senior Research Analyst, Arihant Capital
🔎Quick Bites
Global
- Copper prices have hit a 17-month low, with copper inventories rising over 20% last week.
- The euro has declined to its lowest level in 20 years against the US dollar to hit $1.0281.
- Boris Johnson has resigned as the PM of the UK.
- Protestors swarm the residences of the Sri Lankan President and Prime Minister over economic unrest.
- Elon Musk pulls out of Twitter acquisition alleging multiple breaches of agreement; Twitter may take Musk to court.
Economy
- The unemployment rate in June climbed to 7.8% from 7.12% in May.
- The exchange rate closed at an all-time low of Rs 79.36/USD.
- The total funding raised by India’s startups in the June quarter fell 33% quarter-on-quarter to $6.9 billion.
- RBI liberalises norms to boost forex inflows to shore up the rupee. The measures include easing norms for FPI investment in the debt market and increasing the ECB limit under the automatic route from $750 mn to $1.5 bn.
- Services Purchasing Managers’ Index (a measure of the growth of the services industry) rose to 59.2 in June from 58.9 in May, its highest since April 2011.
Automobile
- HC upholds disqualification of Tata Motors from the e-buses tender process in Mumbai.
- Passenger vehicle sales rose 40% to 2.6 lakh units in June 2022 from 1.86 lakh units a year ago: FADA.
- TVS goes retro, forays into the premium lifestyle segment with the launch of the industry-first ‘modern-retro’ motorcycle.
Banking and Finance
- HDFC, HDFC Bank merger gets RBI nod.
- RBI has imposed a monetary penalty on Kotak Mahindra Bank, IndusInd Bank, Bank of India and Federal Bank due to non-compliance on separate items.
- Induslnd Bank will leverage MoEngage’s technology platform to deliver a ‘Gen Z’ digital banking experience to its customers.
Energy and Infrastructure
- J Kumar Infra and Michigan Engineers JV wins ₹571 crore LoA from BMC for the design, build and commission of a sewer tunnel in Mumbai.
- Coal India‘s domestic coal production rose sharply by 32% to 67.59 million tonnes (MT) in June 2022 compared to 50.98 MT in the same month last year, the Coal Ministry said on Wednesday.
- The government has approved a ₹2,415 crores project to connect Haryana to the upcoming Jewar International Airport (Noida) in Uttar Pradesh.
IT and Telecommunications
- Tech Mahindra opens new campus in Coimbatore and aims to hire 1,000 in FY23 to grow India operations.
- Equitas Holdings sells an entire stake in Equitas Tech.
Industry
- Tata Steel completes a 93.71% acquisition of Neelachal Ispat Nigam for ₹12,100 crores.
- Kirloskar Ferrous completes the up-gradation of MBF-II at the Koppal plant and resumes operation at an expanded capacity of 6.09 lakh tonnes per annum.
- Vedanta reported a 3% increase in its aluminium production to 5,65,000 tonnes in the April-June quarter.
- Tata Steel India posted a 2.16% fall in deliveries at 4.06 million tonnes (MT) in the first quarter of the current fiscal, due to moderation in exports following the imposition of a 15% export duty.
- JSW Steel reported a 16% YoY jump in its consolidated crude steel production for the three months ended 30 June 2022. Its total output stood at 5.88 million tonnes.
Other
- USFDA issues two observations for Cipla‘s Indore plant.
- Marico increased its stake in Apcos Naturals by 4.14% to 56.52% for an undisclosed consideration.
- KEC International is aiming to double its revenue this year through its civil business. The firm has 290 projects in the pipeline in India and abroad, with orders of over ₹8,000 crores for the civil business.
- Aurobindo Pharma arm receives USFDA nod for Triamcinolone Acetonide injectable suspension.
🔌Key Results
- Equitas Small Finance Bank reported a 22% on-year growth in Q1FY23 gross advances at INR 21,699 crore and the sequential increase was 5%, while deposits growth was 19% YoY and 8% on-quarter at INR 20,386 cr.
- Jewellery and watchmaker Titan in its quarterly update said its sales jumped by 205% year-on-year (YoY) and a CAGR of 20.5% between Q1FY20 and Q1FY23.
- Vakrangee has clocked a profit at ₹4.53 crore in quarter ended June 2022, down significantly from ₹23.33 crore in Q1 due to the launch of additional franchisee incentive schemes.
- TCS posts its Q1 results. See the full report here.
🔌Sustainability Corner
- KPI Green Energy receives its biggest order for 2-MWdc solar power project.
- Upcoming Mahindra EV subsidiary raises ₹1,925 crores investment from British International Investment at a valuation of up to ₹70,070 crores.
- Vedanta to acquire Athena Chhattisgarh Power (which is a 1200MW coal-based power plant) for ₹564.67 crore.
- Nykaa launches an innerwear and athleisure brand for men using fibres with an 83% lower carbon footprint as compared to a generic comparable fibre.
- Tata Power plans a ₹75k-cr capex push in green energy and advances its net-zero carbon target to 2045.
- L&T Technology Services was awarded a $100 million+ electric air mobility program from Jaunt Air Mobility.
- GKN launches next-gen inverter compatible with 800V EV technology.
- MAHLE develops the ‘most durable’ electric motor.
- Tata Power signs MoU with Tamil Nadu for ₹3,000 crores mega solar plant.
- NTPC arm to develop 10GW renewable energy park in Rajasthan.
- Volkswagen, partners to invest over $20 billion in car battery business.
- Mahindra & Mahindra are open to investing in EV battery cell makers to secure supplies: CEO.
- BHEL commissions a 100-MW floating solar photovoltaic plant in Telangana.
- NTPC REL joins hands with GACL to set up India’s first commercial-scale green ammonia project.
- EV maker Rivian’s deliveries were nearly quadrupled as it ramps up production.
That’s all for now folks! See you next week!
