WEEKLY TRENDSETTER (AUG 13th ,2021)
| 2021 | AUG 6 | AUG 13 | Ch % |
| NIFTY | 16238 | 16529 | 1.79 |
| BANK NIFTY | 35809 | 36169 | 1.01 |
| USD/INR | 74.11 | 74.27 | 0.22 |
MARKET REVIEW –The momentum slipped mid-week around 16350 but the recovery was swift and finally the Nifty closed at a historic high. The Bank Nifty was relatively subdued.
BACK TO RESULTS (JUNE QTR)
With the mid-cap and small cap witnessing a great rally time to catch up on the results which will give cues on moves ahead! Broadly results should be seen sequentially rather than y-o-y as the June ,20 quarter was a wash out for most companies as it was the first Covid affected quarter.
Rs in cr, Bracket indicates ch in % against March,21 quarter
| Company | Revenue | Net profit |
| EID Parry | 4354(+11.4) | 132(loss 6.3) |
| Punjab Chem | 211(+1) | 24.3(+131) |
| Tata Chem | 2977(+12.9) | 291(+999) |
| Sumitomo | 782(+46.4) | 105.7(+95) |
1.EID Parry( 401)-The company is into manufacture of sugar, nutraceuticals and sanitizer. For the June quarter nutrients division has done the best with profits doubling at net level. Sugar division has posted a loss. With an EPS of Rs 7 for the quarter despite no contribution from the sugar division, outlook looks bright.
2.Punjab Chem (1639)-The company has an array of products under agrochemicals, pharma, fine chemicals and speciality chemicals. The company has posted impressive numbers consistently for the last few quarters. For the June quarter it has posted an EPS of Rs 19.8. With revenue and profitability improving over the last 5 years the company could see value buying emerging at lower levels.
3.Tata Chem (879)-After a disappointing March quarter the company has shown a resurgence in performance and it is attributed to hardening of soda ash prices. The company is also planning expansion of soda ash capacities from 9.17 lac MT to 11.47 lac MT in the next 2 years. Salt capacity is being ramped up from 11.70 lac MT to 15.10 lac MT which is expected to be completed by mid FY 22-23. With an EPS of Rs 11.30 on a consolidated basis, expectations are high on the company.
Sumitomo (421)-The company is into manufacture of insecticides, fumigants, household pesticides, animal nutrition, etc. Over the last 5 years the company has seen a consistent growth in revenue and profitability. The company posted an EPS of Rs 6.92 for FY20-21 and looking at its product profile, it could be seen making bigger strides in the years to come. Sumitomo Chem, its parent company holds 75% stake in the company. A scrip to watch out!
MARKET OUTLOOK.
1.The Indian markets have seen a stand out performance among the Asian peers and with a strong breakout past 16000 ,sentiment is on a high as Covid worries look like receding .New leaders are emerging on the large caps with L&T making a life time high during the week along with Bharti Airtel which now seems like a preferred bet along with Reliance in the telecom space with VI’s woes continuing to worsen .With a launch of Jio phone round the corner the customer addition numbers will be keenly watched in the months to come .
2.The crude prices have been on a correction mode and this could be one of the primary reasons for buoyancy in Indian markets as this will also have a positive impact on inflation. With festive season round the corner, auto and consumables will be in focus as well as beaten down sectors like hotels, tourism, restaurants, etc. Optimism is returning with easing of lockdown in several states.
3.The expected resistance around 16300 -400 on the Nifty was short lived and the recovery was sharp. Banking has still to catch up and that could bring the next leg of the rally along with telecom and capital goods. Some consolidation could be expected in a truncated week. A range of 16350-16600 on the Nifty is likely.
Some technical cues are as follows going by market trends
Scrips to watch out
The mid-cap and small-cap rally have been breathtaking in the last 18 months. However, some caution also needs to be exercised. Several stocks have risen sharply and look overbought. Investors should not get carried away by chasing many of these.Last week advance decline ratio was largely negative indicating profit-taking at higher levels . Trade but also exercise caution. Couple of technical set-ups are discussed with potential trades for the coming week: –
BPCL (454)-The scrip has been an underperformer in the past few weeks. However, recent trend suggests that the scrip has good support at levels of 440-450 where short covering is also seen. Accordingly, accumulation can be considered for target of 500.
NMDC (172)-The scrip touched a 52-week high of 213 in May and since then has been on a corrective mode. Near term support lies at 160-170. Accumulation could be considered for possible target of 185-90 in the coming days.
There is still a lingering fear that the 3rd wave of Covid could be round the corner. Optimism is however prevalent going by crowded tourist spots. Stay positive but take precautions as well so that we live to see better times!
Have a great trading week!Wishing all readers a Happy Independence Day !