WEEKLY TRENDSETTER (OCT 22nd,2021)
| 2021 | OCT 14 | OCT 22 | Ch % |
| NIFTY | 18338 | 18114 | -1.22 |
| BANK NIFTY | 39341 | 40323 | +2.50 |
| USD/INR | 75.27 | 74.86 | -0.54 |
MARKET REVIEW–The market showed a clear divergence as the broader market witnessed selling pressure, banking stocks were in the forefront and though the Nifty was down, the Nifty Bank was sharply higher, a phenomenon very rarely seen.
DID YOU KNOW
IRCTC provides interesting valuation lesson
All of use are aware of the popular market saying that “market discounts the future”. If one needed an example, IRCTC is an apt one. With rail travel getting paralyzed due to the pandemic, revenues took a heavy beating. However, the stock price was not suppressed by this and the contrary reaction happened as the stock zoomed from sub 1000 levels in March 20 to 5467 ie 5.5 times increase in 18 months! While stock split announcement could be one of the reasons, the company’s business model is in for a strategic change. While rail ticketing remains the bread and butter the other divisions which are expected to contribute are catering, tourism and Rail neer (water). Each division has its own potential as they can see exponential growth once things normalize. Another high-profile segment the company has entered is an offering which is in water ie luxury cruise which intends to provide recreational and leisure activities such as restaurants, swimming pools, bars, open cinemas, theatre, kids area, gymnasium, etc.
Valuations have risen sharply but going by other companies valuation which are based on e-commerce venture, one can expect high discounting to prevail for this company as well in the times to come!
MARKET OUTLOOK.
The market has seen a sharp run up in October and even with losses in the last week, the Nifty is up 2.8% and the Nifty Bank is up by 7.74% and the last week is yet to play out! Clearly an outperformance which has surprised even the most optimistic bull. However, any underperformance in Sept 21 quarter earnings is greeted with a sharp sell off as witnessed in the likes of HUL and Asian Paints. So, caution is advised.
Some technical cues are as follows going by market trends: –
NIFTY -Near term resistance could be at 18450-500 on the Nifty and support should be around 17900-18000.The lower band could be used for a short covering rally in the coming week.
BANK NIFTY -Levels of 39500-800 could be near term support and levels 40800-900 could see profit-taking.
Scrips to watch out
Couple of technical set-ups are discussed with potential trades for the coming week: –
Indus Tower (302)-The scrip is on a comeback trail with it bouncing from 200 to 332 before cooling off. Buying could be considered around levels of 300 for target of 340-50 in the coming weeks.
Concor-(680)-The scrip has been in a range of 630-720 for the last few months. Levels of 660-680 offer decent support. Accumulation could be considered around these levels. Gradual appreciation to 800-850 could be seen.
The economy is opening up and restrictions on travel are gradually getting relaxed. While the Covid 3rd wake still looms large one has to stay positive but take precautions as well so that we live to see better times!
Have a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam