WEEKLY TRENDSETTER (August 5th,2022)
| 2022 | July 22 | July 29 | Ch % |
| NIFTY | 16719 | 17158 | 2.62 |
| BANK NIFTY | 36738 | 37491 | 2.05 |
| USD/INR | 79.83 | 79.30 | -0.72 |
MARKET REVIEW–The week saw further extension of the previous week’s rally as 17000 on the Nifty was surpassed on the back of strong US markets which took signal from the Fed speech that rate hikes may be tempered in the months to come. This came even as the Fed raised rates by 75 bps which now stands at 2.5%. The June quarter results have so far been better than expected. The next big trigger for Indian markets is the OPEC meet scheduled on Aug 3. Brent crude is trading just above $100 and still looks a critical level for an energy hungry domestic market.
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 |
| Zim Lab | 92.7(+44.5) | 5.1(+999) |
| Nilkamal | 740(+50) | 26.8(+999) |
| Chemfab Alkali | 98 (+108) | 21.3(+600) |
| UBL | 2438(+118) | 163(+425) |
Zim Lab (242)-The little-known BSE listed company has shown a smart jump in profits which has caught the eye of investors. It has an interesting mix of pharma (67%) and nutraceuticals (33%).82% of the revenue is towards exports. The company is research oriented as it invests 5% of its revenue towards R&D. The promoters hold 67% of the equity. With an EPS of Rs 3.2 for the quarter and decent growth outlook, the scrip could be kept on radar to be accumulated on dips as it has already seen a 30% jump in July.
Nilkamal (1985) –The company continued its solid performance with a good June quarter show. It is the world’s largest moulded furniture and Asia’s largest processor of plastic moulded products. While the company has been investing in increasing capacities, focus is also on channel expansion, new product launches and e-commerce. It is focusing to deliver customizable Material Handling Solutions to its various new age Online & logistic companies to gain large market share of this new segment. The raw material price volatility is a matter of concern but the buoyant demand for its products should enable the company to address the same. With an EPS of 19 for the quarter and with clear growth potential, the price looks attractive and re-rating could see the stock rising to much higher levels in the years to come. This could be a mini–Asian Paints in the making.
Chemfab Alkali (183)-The company operates in 2 segments -Chlor Alkali and PVC Pipes segment. There has been a clear turnaround in both the segments post Covid as the last 3 quarters working reflect. The company is on course to post EPS in excess of Rs 50 for the year. Valuation for the stock clearly looks subdued but at current levels downside looks limited.
UBL (1629)-The Heineken -Kingfisher partnership is clearly keeping the stock robust as it posted another set of decent numbers. While y-o-y the numbers look solid, sequentially there are signs of margin pressure. The topline grew 40% against the March quarter though bottom-line remained flat. The best days for the company are ahead and expectations are high. With healthy cash flows, buoyant demand and strong sustained growth potential, the stock could scale its previous high of 1800 in the coming months and long-term investors could look to add on at declines.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY-The index moved just as expected as it took support at around 16450 and zoomed past 17000 to close above the 200-dma. After such a sharp rise some profit taking is likely around 17250-300 levels. On the lower side 200-dma around 17000 should act as a support.
BANK NIFTY-The index was in no mood to oblige on the downside as the 200-dma at around 36300 provided support and it closed near 37500.The next leg could attract profit-taking though 38000 looks on cards sometime during the week.
SCRIPS TO WATCH OUT
Coal India (211)-The continues its incredible run as it posted a 52-week high towards close of the week. Momentum looks good and the stock looks poised to touch 230-235 in the coming weeks.
PC Jewellers (46.80)-The beaten down stock has sprung into action in the last few weeks with it rising from 25 to 58 on huge volumes before cooling off. However, the momentum clearly is visible as previous levels of 58 could be surpassed. Buying could be considered accordingly.
Have a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com . Krish Subramanyam