WEEKLY TRENDSETTER (July 29th,2022)
| 2022 | July 15 | July 22 | Ch % |
| NIFTY | 16049 | 16719 | 5.93 |
| BANK NIFTY | 34682 | 36738 | 4.18 |
| USD/INR | 79.85 | 79.91 | 0.08 |
MARKET REVIEW–The turnaround witnessed towards closing of the previous Friday turned out to be the beginning of a solid extended run with the indices clocking smart gains. The IT pack showed a turnaround with short covering in all the large caps and the rest followed with good delivery-based buying. Infy’s results is scheduled on July 24, unusually on a Sunday which has opened up speculation on possible surprise on cards when the market opens on Monday.ICICI Bank’ results were decent and thus with Reliance already posting good results post Friday’s market closing, the stage seems set for an action-packed opening for next week. There is some positive news on the Russia Ukranian front as both countries signed a deal on Friday to reopen Ukraine’s Black Sea ports to grain exports raising hopes that an international food crisis caused by Russia’s invasion could be eased. Meanwhile Russia resumed supply of gas to Germany last week and despite some hiccups the resumption itself could be a sentiment booster.
BACK TO RESULTS (June qtr.)
The June quarter results are getting announced. The small and mid-cap segments are the ones where some interesting results could be looked at. This week let’s explore some of them:
Rs in cr, Bracket indicates ch in % against June,21 quarter.
| Company | Revenue | Net profit |
| Meghmani Fin | 533(+83) | 108(+192) |
| Polycab | 2736(+46) | 224(+189) |
| JSW Energy | 3026(+75) | 551(+205) |
| GSFC | 3018(+63) | 346(+154) |
Meghmani Finechem (1526)-manufacturing of caustic soda, caustic potash, chlorine, hydrogen, chloromethanes and Hydrogen Peroxide. MFL caters to domestic as well as export markets. The company has seen a scorching growth over the past few quarters and with a quarterly EPS of Rs 26 looks poised for another stellar year. Margins at 30+ might be difficult to maintain in the long run but even a moderation on this front should be offset by the topline which has shown robust growth. The scrip has managed to post a life time high price of 1650 and despite a cool off, lower levels could see buying resuming.
Polycab (2211)-The company is well on its way to its ambitious target set for the coming years with yet another strong set of numbers though on a sequential basis the revenue and profits have seen a dip. The Cables &wires division saw exports jump by 62% though exports contribute just 6.7% of the revenue. Fans, conduit pipes and solar business (FMEG) also posted healthy growth. The company plans to launch its “Etira” range of products in the 2 divisions and targets to achieve 12% EBIDTA for the FMEG division by 2024.With an EPS of 15 for the quarter, the stock price looks attractive after a decent correction from 2800.
JSW Energy (237)-The company has seen a remarkable turnaround in the past quarters which has seen its debt levels coming down and with margins getting boosted, it has resulted in a magnifying impact on the bottom-line. The increase is primarily attributable to higher contribution from short-term sales, solar capacity addition at Vijayanagar. Long-term sales during the quarter at 4,976 mn units were at similar levels of Q1 FY22 (4,994 mn units) as the higher sales at hydro business were offset by lower sales at thermal businesses. The stock has seen a decent correction from levels of 400 levels and with growth momentum intact it could see buying interest at lower levels.
GSFC (164)-The company has always seen a lower valuation multiple as compared to others. With a blockbuster set of numbers it already reacted with a sharp uptick and remains to be seen if the stock gets re-rated in the coming months which it definitely deserves. The stock looks a decent bet at declines.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY-The index was on a roll for the whole of last week and cleared the 16400 hurdle to close strong above 16700.Going into expiry week, some caution is advised as profit-taking could emerge. Ideal levels for entry should be around 16400-500.Levels of 17000 could be expected where the 200-dma could see the rally pause.
BANK NIFTY-The index was also on a roll and infact touched the 200-dma around 36400 and managed to close above that. Any cool off could find support at around 36000.Profit-taking in the short term looks likely.
SCRIPS TO WATCH OUT
HSCL (85)-The stock was a high-flier in 2016-18 surpassing 200 before a correction taking it down to 27 and it did not perform in the 2020-21 mid-cap rally. However, a strong resurgence is seen from 55 in mid-June to 85 on good volumes. The stock is clearly on an accumulation zone and levels of 70-75 should provide good support. The stock could see levels of 125 in the coming weeks.
Jamna Auto-(125)-The stock has been an outperformer in the last 5-6 months when the broader market has seen a correction. Though it looks overbought in the near term, accumulation could be considered for levels of 160-70 in the coming weeks with levels of 110-115 likely to provide decent support.
Have a great trading week! Note: Any queries /clarifications may be addressed to stockmasala@gmail.com