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Geopolitical Tensions, Rising Inflation, and Slow Growth: What Next?

Geopolitical Tensions, Rising Inflation, and Slow Growth: What Next?

Share Market Updates, Stock Markets

In this Weekly Market Newsletter:

Grab your morning tea and read up! Here’s a quick snapshot of what the markets were up to last week and what to watch out for in the next week.

As we analyzed in our latest feature “The War Radar”, the ongoing war has created major supply chain disruptions; and sanctions imposed by the US and its allies have cut off the Russian economy from the global financial system. Inflation and high crude prices continue to rattle the economy, to add to it, Indian GDP growth numbers for Q3 are out, suggesting sluggish growth.

All in all, the major benchmark indices continued their journey south for the fourth week in a row making D-street investors lose more money than the GDP of Ukraine!

Sensex 54,334 ▼1,525 (-2.73%)Nifty 16,245 ▼413 (-2.48%)
Bank Nifty 34,408 ▼2,023(-5.55%)Nifty Midcap 27,517 ▼436 (-1.56%)

As the commodity exports from Russia and Ukraine come to a halt, prices of all commodities shot up globally. With various commodities achieving yearly highs, Nifty Metal became the biggest sectoral gainer at 6,010 (▲6.97%).

The biggest loser on the other hand is Nifty Auto which ended at 9,897 (▼9.17%)

Now let us see how the other sectors performed with the bulls & the bears

Nifty Oil & Gas 7,388 ▲4.31%Nifty Financial Services 16,080 ▼5.57%
Nifty IT 34,177.70 ▲2.09%Nifty Bank 34,408 ▼5.55%

Let’s check out the movers and shakers across all industries

Top GainersTop Losers
Tata Steel 11.5%Maruti -13.3%
Coal India 10.7%Asian Paints -12.2%
Hindalco 9.3%Eicher Motors -11.0%
UPL 9.0%Hero Motocorp -9.7%
Powergrid 9.0M&M -9.0%

📈 What to Expect from the Markets?

Mr. Abhishek Jain, Arihant Capital’s Research Head

We continue to believe that this is a good time to build a portfolio for the long term. We maintain our view that the current situation between Russia and Ukraine will cool off in the next few weeks.

As per our discussion with various financials, this is a good time to build a portfolio for financials as things are looking good on the ground in terms of disbursements and recovery basis.

We like banks like SBI, ICICI Bank, and Bandhan bank among our coverage stocks. Among NBFCs & HFCs, one can start adding Indostar with a price objective of ₹440 in the next 18 months in tranches.

🔭Market Outlook

  Mr. Ratnesh Goyal, Senior Research Analyst

Nifty Outlook

The daily chart of Nifty shows a “Doji” candle formation. The weekly chart shows  “Rising wedge” formation. We can conclude that Nifty Futures may show the sell on rising movement and still we need to be cautious from higher levels. If it crosses the 16,400 level it will see a bounce towards 16,650 and 16,800 levels, but if it crosses below 16,150 then it can test the 15,980 and 15,700 levels.

Bank Nifty

On the daily chart of Bank Nifty, it has given a breakdown of the lower trendline. Whereas on the weekly chart it has formed “Bearish” candle formation. Analyzing them together, we conclude that Bank Nifty may also follow the sell-on-rising movement and still we need to be cautious from higher levels. This week Bank Nifty futures closed at 34,425 levels. In the coming trading session if it holds below 34,100 then weakness could take it to 33,800 and 33,500 whereas minor resistance on the upside is capped around 35,200-35,500 levels.

💰Stock Picks

From the Fundamental Desk

Fundamental Stock Picks from Mr. Abhishek Jain, Arihant Capital’s Research Head

We believe Indostar has the potential to grow its balance sheet 3-4 times in the next 5 years. It targets a ₹1,500 cr quarterly run rate of disbursements. In the next 4-5 quarters, it will be a pure-play retail company, with reducing provisioning for old CVs.  The management has opened 65 new branches during Q3FY22 achieving a total of 343. They plan to increase branches to 400 by FY22 and add another 100-150 by FY23.

We have a Buy rating on the stock with a target price of 414. At CMP, it is trading at 0.6x FY24E P/ABV. The company has reported a second consecutive quarter of strong disbursements growth driven by CV and housing finance business which is expected to continue.

From the Technical Desk

Technical Stock Picks from Sr. Equity Research Analyst Kavita Jain’s Desk

BUY Deepak Fertilizers CMP 598 SL 540 Tgt 623/650 Duration 1-2 Weeks

The counter has regained its closing above all its important SMA’s and has witnessed piercing line candlestick formation on a daily chart. In bearish trading, the sentiment counter is looking buoyant on the chart set up and closed at 598.65 with a 3.10% rise last week. On a higher timeframe, we are witnessing follow-through buying after Doji Candlestick formation. Relative strength is also supporting.

📰News You Shouldn’t Miss!

  • Fed chair Powell talks about a possible 0.25% hike in interest rates as part of measures to curb inflation
  • The Indian economy slowed in Q3 (5.4%), missing forecast of 6% after seeing a Q2 growth of 8.5%. GDP growth is estimated at 8.9% for fiscal 2021-22.
  • Gross GST collections cross ₹1.3 lakh crore mark for 5th month in a row.
  • It is not a good time to be unemployed! Unemployment rate touched 8.1% in February. Rural joblessness is at an 8 month high of 8.35% .
  • Coal India produced 64.3 million tonnes in Feb (up 3.8% y-o-y) ,may end FY22 with an output of up to 630 million tonnes.
  • Adani Media Ventures all set to acquire an undisclosed minority stake in Quintillion Business Media (QBM), an indirect subsidiary of Quint Digital Media.
  • Reliance Retail acquires majority stake in designer brand Abraham & Thakoe.
  • Final round of negotiations begin for RIL’s acquisition of Sintex.
  • INOX and Esports Federation of India (ESFI)  partner to enable community viewing of Esport tournaments. Project may earn upto ₹5-8 crore.
  • Reliance to invest $220 mln in Sanmina JV in electronics manufacturing push
  • Tech Mahindra Ltd has entered the metaverse with the TechMVerse launch, to offer interactive and immersive experiences to customers.
  • Vodafone Idea board approves 14,500 crore fund-raising plan.
  • Lupin gets USFDA nod for Sevelamer Hydrochloride medicines, plans to manufacture in Nagpur plant.
  • Wockhardt Ltd plans ₹748-crore rights issue has fixed issue price at ₹225 per share
  • Wipro has introduced a cloud car platform for software-defined vehicles.
  • ABB completed the slump sale of its turbocharger business to subsidiary Turbocharging Industries and Services for ₹310 crore.
  • Manufacturing activities grew at a strong pace in February on a rise in new work intakes and output.
  • Sterilite Technology launched an industry-first end-to-end 5G enterprise solution to address  5G enterprise connectivity for campus, industrial and venue applications.
  • Sales volume of FMCG fell 2.6% YoY in Q3, due to sharp dip in rural demand on account of inflation.
  • PE major Carlyle plans to acquire 10 per cent in Yes Bank for $500-600 million.
  • NMDC reported a 26% YoY rise in its iron ore output and 25.5% rise in sales for April-February period of 2021-22.
  • Tata Motors Finance and Tata Motors Finance Solutions (TMFSL) to sell part of their loan assets and receivables to free up capital.
  • Dabur’s Burmans “Eveready” for acquisition.
  • Bharti Airtel approved the issue of equity shares to Google to buy 1.28% for ₹7,500 crore.
  • Aurobindo, Sun Pharma recalling different products in the US markets due to deviation from FDA requirements.
  • Hinduja Global Solutions acquires Australian company Diversify.
  • TCS to play a key role in overhauling Tata group-owned Air India.
  • Wheat at 14-year high, up nearly 25% this week on supply woes.
  • Reliance keen on buying Future Retail’s assets at agreed price.

📋Key Results:

Vedant Fashions reported a 24.1% on-year rise in consolidated profit to 127.8 crores in Q3. Backed by strong sales and operating income the company’s revenue grew 28% year-on-year to 384.8 crores.

🚀IPO Corner

  • Government may review timing of LIC IPO after Ukraine invasion, may push it to next FY
  • Cabinet gives nod for up to 20% FDI in LIC under auto mode

🔌Sustainability Corner

  • India’s solar push breaks all records, adds 10 gigawatts of solar power in 2021.
  • SBI and PNB to fund two of SJVN’s hydroelectric projects totalling up to ₹1.8 k crore.
  • Mahindra & Mahindra is likely to invest at least 3,000 crore for developing electric vehicles (EVs) over the next three years.
  • Mahindra & Mahindra (M&M) also aims to launch its first EV SUV, XUV 400, in the first half of the next financial year.
  • Sony and Honda partner to make electric vehicles, first EV expected in 2025.
  • Mahindra & Mahindra partners with CSC Grameen e-Store to facilitate Mahindra vehicle enquiries and lead generation from rural India.
  • Hero MotoCorp unveils new brand identity “Vida” for EVs; lines up a $100mn sustainability fund to help entrepreneurs on environmental, social and governance solutions.
  • India’s largest EV charging station for 4 wheelers opens in Gurugram.
  • MG Motor India to raise funds for EV push.
  • Pinnacle to invest 2,000 cr to build EV manufacturing units in Pune, Indore.
  • Tata Elxsi and Renesas, a Japanese advanced semiconductor provider, establish an innovation centre for electric vehicles.
  • Bihar government to launch electric vehicle policy soon.
  • Simple Energy e-scooters to be on roads from Jun.

That’s all for now folks!  We will be back with new market insights next week!

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