Geopolitical tensions from the Russia-Ukraine crisis, Fed rate hike, and rising crude oil prices weighed on the domestic share prices this week and the benchmark indices continued their descent. Weakness in banking, realty, and metal stocks, and heightened volatility dragged Nifty down 0.57% closing at 17,276 (down 98.45 pts). BSE Sensex closed at 57,833 with a steep decline of 320 points (-0.55%); the Nifty Midcap 100 index faced the brunt as it fell close to 3.9% to end the week at 28,934.35 points. Bank Nifty was down 2.38% during the week too.
Most sectoral indices ended on a negative, Nifty PSU Bank and Nifty Metals faced the most pressure with the PSU Bank index facing the highest loss of 4.66% followed by Nifty Metals (4.07%) and Nifty Realty (2.62%). Meek gains were seen only in NIFTY Consumer Durables (0.71%) and Nifty IT (0.3%).
The top gainers of the week were Eicher Motors up 101.1 points (+3.9%) followed by TCS (2.7%), Hind Unilever and Tata Consumer both up by 2.4% and Hero Moto (2.0%). Top Losers were Power Grid (-5.8%); JSW Steel (-5.7%); UltraTech (-5.6%) ICICI Bank (-5.3%).
On a separate note, the much-awaited giant IPO of LIC is close enough as the insurance behemoth, the biggest insurance company in India and the 5th largest insurer in the world, finally submitted its draft red herring prospectus last Sunday. More on it in the IPO corner below.
From the fundamental desk: What to expect from the markets this week?
- Mr. Abhishek Jain, Arihant Capital’s Research Head
We believe geopolitical tensions like Ukraine- Russia crisis & Inflation would weigh global markets in the near term. Indian markets may outperform due to its stronger fundamentals and excitement ahead of its largest IPO – LIC INDIA.
One can maintain a positive outlook on insurance companies and selective picks from the housing finance sector also. Pick up in real estate should augur well for Housing finance companies. Our top pick would be HDFC Limited, Home First and LIC Housing Finance Limited.
A look at the daily chart of Nifty shows a series of narrow range body formations, struggling to cross 50-day SMA. Nifty also formed a series of narrow range body formation when we see the week as a whole. It follows that Nifty may consolidate further and investors need to be cautious. If Nifty crosses the 17,450 level it is likely to see a bounce towards 17,600 and 17,750 levels, while on the downside if it crosses below 17,200 then it can test 17,050 and 16,800 levels.
On the Daily chart of Bank Nifty, it is getting a support of 50-day SMA. Whereas Bank Nifty’s weekly chart shows “Doji” Candle formation. Together we conclude that Bank Nifty may consolidate further and that it may show pressure at higher levels. This week Bank Nifty closed at 37,604 levels. In the coming trading session if it holds below 37,500 then weakness could take it to 37,100 and 36,800 whereas minor resistance on the upside is capped around 38,100-38,350 levels.
Bear Put Strategy Coforge
|Strategy||Max Profit||Max Loss||Break-Even||Risk Reward||Estimated Margin|
|Buy Coforge 4200 PE @68.40 Sell Coforge 3800 PE @10.45||₹ 34205||₹ 5795||0-4142||1:5.9||₹ +15,110|
Technical Set-Up: Counter has witnessed breakdown below 20WMA on the weekly chart and also showing descending triangle breakout. It is trading below all its moving averages on the daily chart. Relative strength is confirming a bearish trend.
Few Headlines That Should Be on Your Radar
- India’s WPI rate eased to 12.96% in January from 13.56% in Dec. Food inflation rose to 10.33% while manufactured items witnessed a fall in inflation to 9.42%.
- India’s merchandise trade deficit in January stood at $17.42 B. Exports rose to $34.50 B from $27.54 B of January ‘21 while imports rose to $51.93 B in January from $42.03 B Jan ‘21.
- India’s coal output witnessed an increase of 6.13% to 79.60 million tonnes in January.
- Promoters of Cipla, Yusuf Khwaja Hamied and Mustafa Khwaja Hamied, have reportedly sold a 2.5% of their stake in the company to institutional investors.
- The Appellate Tribunal for Electricity (Aptel) rejected Tata Power’s plea upholding MERC’s decision to award a ₹7,000 crore transmission contract to Adani Power without bidding
- BHEL bags order to supply compact heat exchanger sets for Tejas aircraft to Hindustan Aeronautics.
- Motherson Sumi expects the semiconductor shortage issue to get resolved by Sept- Oct.
- Vedanta has signed a joint venture (JV) with Foxconn for manufacturing semiconductors in India.
- Carmakers to ramp up production by 18-20% as semiconductor shortage eases, production likely to exceed pre-covid levels of Q4FY20.
- Jio Platforms announced joint venture with Luxembourg-based SES to deliver scalable and affordable broadband services in India.
- Jio Platforms will invest $200 million in Singapore-based mobile content company glance.
- Reliance Jio lost 1.29 crore wireless subscribers in December 2021, Vi lost 16.14 lakh subscribers while Airtel added 4.75 lakh subscribers.
- Paytm records 105% growth in Gross Merchandise Value (GMV) in January, at ₹83,481 crore ($11.2 billion). GMV is the merchant payments processed through all instruments (Paytm Wallet, Paytm Payments bank account, other banks net banking, credit and debit cards, UPI).
- Ambuja Cement approved an investment of ₹3,500 cr for a cement grinding expansion plant.
- 😊Grasim’s consolidated revenue for the Q3FY22 stood at ₹24,402 crore – an increase of 16% quarter-on-quarter. Consolidated PAT increased 26% to ₹1,746 cr while standalone PAT stood at ₹522 crore a 46% increase yoy.
- 😊Coal India reported a consolidated net profit of ₹4,556 crore for the quarter – a 48% increase yoy.
- 😞Eicher Motors’ consolidated net profit for the quarter fell 14.35% to ₹456.13 crore. Revenue from operations stood at ₹2,880.65 crore, a 1.85% yoy increase.
- 😊SpiceJet reported standalone net profit of ₹23.28 cr for Q3 2021, finally after seven quarters of consecutive losses. The total revenue from operations for the quarter came in at ₹2,259.30 crore, up 33.95% yoy.
- 😞Nestle India reported a net profit of ₹386.66 cr for Q3FY22, a 20% fall yoy. Revenues increased 8.44% yoy to ₹3,706 cr.
- The biggest and much awaited IPO in Indian stock market history – LIC finally filed DRHP on February 13, 2022. The IPO will be entirely an offer for sale by the government, where the government intends to sell a 5% stake in the company. The IPO will have a 50% reservation for Qualified Institutional Buyers (QIB), not less than 15% for Non-Institutional Investors (NII). The rest 35% of the public issue is reserved for retail investors. The quota for eligible policyholders will be a maximum of 10% of the offer size while the employee quota has been capped at 5%. Let’s talk a little bit about the company itself. The embedded value of India’s largest insurance company has been pegged at a whopping ₹5.39 lakh crore as of September 31, 2022. They own 4% of all stocks listed on the Indian stock market and are sitting on unrealised gains to the tune of ₹4 lakh crores. They hold more government bonds than the RBI and manage more money than the entire mutual fund industry combined. No one can deny the this will be one heck of an IPO. The question is – will you invest, esp given the track record of other PSU firms?
- Macleods Pharmaceuticals has filed draft papers with SEBI to raise ₹5,000 cr through IPO.
- Jesons Industries has acquired SEBI’s approval for an initial public offering (IPO) to raise ₹900 crore. Jesons Industries is a Maharastra-based manufacturer of specialty coating emulsions (SCE).
- Fintech company Pine Labs has raised $150M in a pre-IPO round from Alpha Wave Venture.
- Vedant Fashions Limited IPO, which owns the men’s ethnic wear brand Manyawar made a tepid debut on Dalal street. The Company listed at ₹936 on BSE, a premium of 8%, over its issue price of ₹866.
- Delhivery and OYO startups delayed amid cues of low investment sentiment towards tech startups
🔌EV and Sustainability Corner
- Around 6.5 million electric vehicles were sold worldwide in 2021, up 109% from 2020, as per market research firm Canalys.
- Power Ministry’s efforts expands electric vehicle charging stations 2.5 times in 9 mega cities in the last 4 months in India. These cities are Surat, Pune, Mumbai, Ahmedabad, Bengaluru, Hyderabad, Chennai, Delhi, Kolkata
- Noida, Aurangabad and Thane ramp up plans to install electric vehicle charging stations to push towards the goal to move to cleaner sources with 69, 200 and 30 planned/installed stations.
- Dabur announced that it has become a 100% ‘Plastic Waste Neutral company’ in India.
- Bajaj Auto is looking to double the network for its electric scooter Chetak.
- Vedanta has signed a pact with The Energy and Resources Institute, India (TERI) to accelerate its Environmental, social, and governance (ESG) goals.
- Mahindra Electric ties up with CSC (Common Services Center) to promote EV adoption in rural India.
- Tata motors says, “EVs are the future; Hybrid Tech will only sustain for a few years”.
- Hero Electric joins hands with Grip to offer lease finance solutions for last mile delivery, logistics, and e-commerce players.
- Capital A launches $10 million cleantech fund to boost EV ecosystem in India.
- Bharat Petroleum rolls out EV fast-charging corridor with 7,000 retail outlets on Chennai-Trichy- Madurai highway. More key routes planned for future
- Battery swapping to push EV sales in India. Battery swapping allows a user to replace a depleting battery with a charged one at a swapping station. This tech will be a major breakthrough for fleet owners who want to keep vehicles at lowest down time. Exide Industries and Amara Raja remain our picks and key beneficiary of battery swapping but these benefits are still in nascent stage.
- Karnataka announces that green vehicles running on electricity and alternative fuels such as methanol and ethanol will not require permits to ply in the state. These vehicles will have to comply with other rules such as fitness certificate and passenger insurance cover. This move encourages an increase in the number of electric buses and battery-run auto rickshaws.
- Govt allows PSUs to offer land to private agencies to set up EV public charging stations starting with a floor price of INR 1 per unit. The tariff on public charging stations is capped to not exceed average cost of supply till March 2025 (at 15% the average cost of supply).
That’s all for this week’s market wrap-up. We will be back with new market insights next week!