WEEKLY TRENDSETTER (JULY 3rd ,2021)
| 2021 | JUNE 25 | JULY 2 | Ch % |
| NIFTY | 15860 | 15722 | -0.87 |
| BANK NIFTY | 35364 | 34809 | -1.57 |
| USD/INR | 74.20 | 74.71 | 0.69 |
MARKET REVIEW –The Nifty fell back on profit -taking and dipped below 15800. This was largely due to weakness in the banking counters and metals which did not see follow up rally of the previous week. The midcap and small cap did see some good outperformance in several counters.
DID YOU KNOW?
Why sugar companies are celebrating?
In the last 20-25 years while stock market booms have been regular every 7-8 years, sugar companies have by and large failed to lift sentiments of investors as it is a regulated sector with political overtones. However, the recent ethanol blending policy of the Govt has changed the dynamics of the industry which could harden margins in the years to come. Blending petrol with more of home-grown ethanol can reduce India’s oil import bill by $4 billion a year, and is great news for sugar mills as it is produced from a byproduct besides helping farmers. To meet the government’s target of 20% blending of ethanol, storage capacity of sugar companies needs to expand to three times the current level of about 300 crore litres.
About 10 billion litres of ethanol would be required each year to meet the 20 percent ethanol-blended fuel standard by 2025.Sugar manufacturers have already started investing to increase their ethanol storage capacity.
The resurgence in the sugar companies can be gauged from the fact that debt ridden companies like Bajaj Hindustan, Renuka Sugars, etc see some hopes of a gradual revival in fortunes. Last month Shree Renuka Sugars announced that it will invest Rs 450 cr to expand its ethanol capacity.
Praj Industries which is a pioneer in setting up of ethanol plants has seen its order inflow surging in the last few months and so has the stock price.
Given the above scenario, the best of the sugar industry is yet to come and surging stock prices are already reflecting the optimism!
Rubber production now goes to North -east India
Rubber production is ideally associated with Kerala for years. However, in a bid to meet demand, North-east States like Assam and Tripura are taking the lead. After Kerala, Tripura is the largest producer of natural rubber. Against Kerala’s 6 lac hectares, Tripura has 85000 hectares of land under rubber cultivation. Another 2 lac hectares is planned to be added in the coming years in neighbouring states as well. Besides providing critical revenue for the States, it is also providing employment to over 3 lakh people.
MARKET OUTLOOK.
1.The news on the oil front will be in focus next week. The OPEC meeting is still on and consensus on increasing production of oil is still awaited. The current production from OPEC countries is about 25 million barrels per day as against 30 million before pandemic. Oil prices were again surging and though there is a debate whether it will sustain or not, in the short-term traders are taking bullish bets.
2.Though the US markets were buoyant, domestic markets were subdued and gap ups were greeted with selling. However, going into the weekend it did regain some of the losses.The result season beginning with IT could see action returning to large caps.
Some technical cues are as follows going by market trends
Scrips to watch out
Tata Power (121)-The scrip saw some bullish momentum in June before cooling off. It is forming a classic flag pattern on weekly charts. Levels of 115-120 could again attract buying and the scrip could retest the recent high of 132.
BSE (958)-The rush of retail investors in the last one year has seen capital market institutions also witnessing flocking of investors. The scrip is on the verge of crossing 4-figure mark and it saw huge surge in volumes. Ideal levels for entry will be 925-30 as it looks poised to continue the bullish momentum towards 1100.
Some Covid concerns have returned again and States are rightfully taking a cautious stance. However, more worrying is the absence of rains which by now should be plentiful in cities like Mumbai! Maybe a revival in rains will be the ideal tonic for markets! Let’s hope for the best!
Have a great trading week!
Krish Subramanyam