WEEKLY TRENDSETTER (FEBRUARY 20TH ,2021)
| 2021 | Feb 12th | Feb 19th | Ch % |
| NIFTY | 15163 | 14982 | -1.19 |
| BANK NIFTY | 36108 | 35841 | -0.73 |
| USD/INR | 72.58 | 72.51 | +0.09 |
The week began in a robust manner and Nifty hit an all-time high of 15431. Towards close however it slipped below 15000 forming what is known as an engulfing bearish pattern on weekly charts. Going into expiry the market could see some more shedding of gains after stellar Feb gains post the budget.
BIG PLAYERS ACTIVITIES
The FII s were largely buyers while DII s continued with their profit taking.
RESULT SEASON IS COMING TO AN END!
Some results which caught the eye are featured below: –
| Company | Revenue | Net profit |
| Manali Petro | 349(+105) | 86(+999) |
| Mahendra CIE | 1957(+13.6) | 111.7(+702) |
| Globus Spirits | 316(-11.3) | 38.3(+207) |
| Jamna Auto | 343(+50) | 30(+198) |
| Ramco System | 171(+16.5) | 18.1(+205) |
Rs in cr (Figures in bracket indicates change in %)
Manali Petro – The only manufacturer of propylene glycol (PG) in India, the company aims to expand its capacity by 48,000 tpa in two phases by investing Rs 150 cr in ramping up its annual production capacity from 22,000 tpa to 70,000 tpa. The move is aimed to increase the domestic market of the MPL by reducing the dependence of the country on imports from China and Middle East countries. The annual demand for PG in the country is estimated at about 100,000 tonnes, of which about 75,000 tonnes are imported from various countries. The Dec quarter results saw a sharp rise in bottom-line resulting in EPS of Rs 5 for the quarter.
Mahindra CIE – The company witnessed a sharp 10% plus growth in its two principal geographies – India business and the Europe business. While interest costs seem under control, margins still have scope for improvement to have a buoyant bottomline.
Globus Spirits – The recovery staged in the 2nd quarter continued in the 3rd quarter as well as the company posted strong set of numbers. Newer brands for IMIL, opportunities for ethanol utilization are expected to lead to greater usage of captive ENA (extra neutral alcohol).
Jamna Auto – The company is an auto ancilliary and is the largest manufacturer of Tapered Leaf and Parabolic Springs for Commercial Vehicles (CVs) in India. The rise in revenue at 50% was noteworthy as festive demand drove sales of the auto sector. It also needs to be noted that the company has had a slump in revenue in the last 2 years which has been managed well with interest costs well under control arresting the fall in profitability.
Ramco System –A high flyer of 2020, the company posted another strong set of numbers. With this the EPS for the 9-month period stands at Rs 16. During the quarter, the company signed six, million-dollar-plus deals with the average deal size moving beyond $1 million. Among the deals, Iberia Maintenance, one of Europe’s leading MRO service providers, selected Ramco to digitally transform its business operations on a unified platform. Management commentary continues to be bullish as it capitalizes on increasing digitalization world over.
WHAT DOES THE COMING WEEK HOLD?
1.Gas counters were prominent gainers last week on the back of the news that natural gas would be included in GST. While this rationalization of taxes is expected to have some benefits to the industry, the plans to spend Rs 7.5 lac cr over the next 5 yrs in the oil& gas sector could see immense benefits accruing to companies catering to this industry like L&T, Engineers India, etc.
2.Two consecutive quarters of auto numbers seem to suggest that worst might be over. Auto offtake for January 2021 suggest that the festive season bump might continue into the next quarter, too. Maruti Suzuki India’s total sales were up 4.3% over a year ago. Hero MotoCorp exports climbed up to 18,113 units (+33%). Bajaj Auto’s total sales increased 8%, with two-wheeler sales up 16% and exports spurting26%. Total Royal Enfield sales jumped 8% to 68,887 units and exports soared 103%. TVS Motor ‘s total auto sales improved 31%, with exports advancing 43% despite scarcity of containers
The commercial vehicle segment staged a comeback and tractor sales maintained their momentum. Ashok Leyland’s total sales grew 11%, with domestic sales up 14%. Mahindra & Mahindra’s auto sales jumped 11.25% and exports 30%. Escorts’ total tractor sales surged 49%, with domestic tractor sales springing 45%. VST Tillers & Tractors sold 2,258(+14.5%).
3.The market showed a mixed trend towards end of week. Banks showed terrific momentum during early part of the week with the privatization of PSU banks announced in Union budget fueled speculation in all these beaten down counters. However, Friday saw the rally fizzling out. The rest of the market also showed signs of profit-taking. The correction in Nifty could take it to levels of 14600-700 which should be considered healthy.
DID YOU KNOW
The U.S. electric vehicle maker Tesla has bought $1.5 billion worth of bitcoins and said it would accept it as a form of payment for its cars in the near future — adding to the buzz around both carmaker and cryptocurrency.
The announcement pushed bitcoin to an all-time high of above $48,000 last week. The company had $19.38 billion in cash and cash equivalents on hand as of the end of 2020.
Tesla is not the first company to add bitcoin to its balance sheet. MicroStrategy, a U.S. software company, bought $250 million worth of bitcoins in August, which are now valued at about $3.1 billion. The bet has helped to push the share price of the Nasdaq-listed company more than 800% higher.
Some stray thoughts –
Two recent acquisitions of NBFC s has set the market abuzz that more such could follow .Firstly the Piramal’s acquired the beleaguered DHFL and last week Adar Poonawalla acquired Magma Microphone of the reasons cited is that RBI is largely in favour of converting large NBFC s into banks as recently recommended by a RBI Working Committee .This comes as a boost to the sector as a whole after the IL&FS debacle followed by DHFL in 2018 .A consolidation with cash rich promoters will go a long way to capturing an underpenetrated market as potential was never in doubt .
Wishing all readers, a great trading week! Great opportunities are emerging outside the large cap space!
Krish Subramanyam