WEEKLY TRENDSETTER (APRIL 10th ,2021)
| 2021 | MARCH 26 | APRIL 1 | Ch % |
| NIFTY | 14867 | 14835 | -0.21 |
| BANK NIFTY | 33858 | 32448 | -4.16 |
| USD/INR | 72.61 | 74.73 | 2.91 |
MARKET REVIEW –The flat closing belies the volatility that we saw during the week. The surge in Covid cases unnerved the market to begin with. However, metals, pharma and IT ensured a strong recovery. The banking pack remained the weak link and kept the uptrend under check.
NEWS FLOW
1.STEEL PRICES ON A ROLL
Revenue from steel is expected to rise 20% q-o-q and by 40-45% on y-o-y basis .This is on the back of a world wide surge in demand and also a surge in iron ore prices .While steel companies have already seen a steep rise in prices ,iron ore major NMDC still looks to have steam left on the upside .The company has been increasing lump -ore prices steadily besides fines .While resumption of mining in the Donalamalai mines (7 MTPA) is over due the capacity expansion in Chhattisgarh mines could further boost output .The value unlocking from strategic sale of Nagarnar Steel plant is still a strong possibility .
2.TELECOM RIVALS IN A SWEET PACT
In what is expected to be a win- win for both telcos, Bharti sold airwaves in the 800MHz to Jio for Rs 1038 cr. This is likely to save 50% cost for Jio which otherwise would have to be incurred by buying in the Govt auction. For Bharti, in any case this was an unutilized spectrum as it already has existing network in the circles.
3.ADANI STOCKS BOOST ON MSCI INDEX INCLUSION
On the heels of a spectacular year for Adani stocks, the 3 stocks Adani Enterprises, Adani Transmission and Adani Total Gas are likely to be part of the MSCI index. The group is now matching the Reliance and Tata group with over $100bn market cap.
4.RBI s Rs 1 lac cr bond buying commitment in Q1 fails to enthuse banking stocks
This could potentially keep bond yields under check and with no leg room for rate cut this policy measure should ideally boost banking stocks in the coming weeks.
POINT OF VIEW
1.PAINT INDUSTRY THE LATEST FOCUS OF BUSINESS ATTENTION
The industry has been largely dominated by 4-5 strong players over the years. However, recently the segment has seen some new entrants which is expected to increase competition but also witness widening of market space .74% of the industry is dominated by decorative paints and this is the segment Grasim is targetting with an initial capex of Rs 5000 cr over the next 3 years. The confidence of cracking this market stems from the already existing strong marketing network of 54000 outlets selling Birla white cement and putty.
Another company which went public recently was Indigo Paints which is the fifth-largest company in the Indian decorative paint industry in terms of revenue from operations for fiscal 2020 and the fastest growing amongst the top five paint companies in India. The company manufactures a complete range of decorative paints including emulsions, enamels, wood coatings, distempers, primers, putties and cement paints.
The raw material surge in the last few months could see some margin pressure for the paint companies but pricing power and expanding markets in the semi-urban and rural markets could see the same getting passed on to consumers. All in all, an exciting space which has reaped rich gains for investors over the years.
MARKET OUTLOOK
1.The coming week will see the beginning of the result season with TCS, INFY, WIPRO, Mindtree expected to announce results and the markets are already excited over the prospects going by management commentaries. Besides, the weakening of the rupee also has aided sentiments as investors take stock of the overall market where auto and banks are witnessing selling pressure.
2.Technically, the market could again advance to levels of 15100-200. The Nifty high of 15431 touched in Feb 21’ is the critical resistance. The broader market however continues to be strong.
Some technical cues are as follows going by market trends
NMDC -Has seen a monthly break-out past 140 and could potentially could touch 160-65 in the coming weeks.
CIPLA -Another strong break out past 870. the counter could see gains upto 900 in the short term
DABUR -After months of consolidation the stock has closed strong at 560. A surge past 600 is likely in the coming weeks
AARTI DRUGS-After a strongconsolidation in the 615-720 band, this stock is now ready for a break out past 750 to touch levels of 800.
ADVANCED ENZYME -350 levels have seen good accumulation and the stock is readying for the next uptrend which could potentially lead to levels of 450
CAPTAIN POLYPLAST –An emerging dark horse, the stock has been consolidating in the 40-45 range for the past few weeks. A break out past 45 could potentially see the stock hitting 55-60 as it enters new orbit. Steady accumulation is advised.
Market spirits are high and notwithstanding worrying news on the Covid front, broader market is providing opportunities! Happy investing and wishing a great trading week!
Krish Subramanyam