WEEKLY TRENDSETTER (DEC 10th,2021)
| 2021 | DEC 3 | DEC 10 | Ch % |
| NIFTY | 17197 | 17511 | +2.51 |
| BANK NIFTY | 36197 | 37105 | +1.83 |
| USD/INR | 75.12 | 75.70 | 0.77 |
MARKET REVIEW–Another volatile week which finally closed with gains. The FII s relentless selling pressure continued though there were pockets of strength like power and capital goods. The market is again approaching strong resistance levels where hedging would be advised to protect portfolios.
INTERESTING TIDBITS
Inflation uptick
US inflation hits 39 years high of 6.8% on the back of steep rise in prices of gas, food, rent, etc. While economists expect this to subside in 2022 attributing this to supply chain disruption leading to short supplies, odds are high that the interest rates have bottomed out and commentary in 2022 could be more hawkish.
The upcoming US Fed meeting on Dec 16 could have some interesting pointers given that the US economy is going strong and inflationary pressures are higher. Even the Bank of England review is due while they draw up plans to withdraw ultra-loose monetary policies.
Interestingly even in India a couple of pointers did creep up last month when HDFC Limited and Bajaj Finance marginally increased deposit rates for tenures of 2-7 years.
Post -Covid demand slump puts medical devices companies at crossroads
Capacities were ramped up in early 2021 when Covid cases showed a sharp upturn. However, subsequently with things improving there has been a slide in demand which has resulted in capacity utilization slumping from 100% to 40%. Imports from China were already very high and the further complication was that even if finished goods could be manufactured in India the raw material imports still continued from China. This has also resulted in poor response coming from local companies for the PLI -linked schemes of the Govt.
Cigarette manufacturer forays into nasal spray
ITC Ltd has started clinical trials for nasal spray aimed at Covid prevention. If trials show that these work in prevention, there could be several uses of such sprays, espe[1]cially at a time when schools, colleges, offices and public transport are opening. The launch could be under the established brand Savlon under which the company launched a slew of products during the pandemic from disinfectant sprays, masks to wipes. That pushed the Savlon consumer spend to more than Rs 1000 cr in FY21, a fourfold jump over the previous year and about 15-16 times since its acquisition in 2015.
Interestingly the company is planning to have an “Investor day “ on Dec 14 where analysts are anticipating some plans which will finally lead to value unlocking for shareholders.
MARKET OUTLOOK.
Some technical cues are as follows going by market trends: –
NIFTY– Last week the 17300-400 levels were expected to be a slippery zone. However, despite some hiccups around that zone, the index still managed to close above 17500 which is encouraging for the coming week. However, the climb from here may find resistance around 17700 where hedging is advised as strong reversal from there cannot be ruled out.
BANK NIFTY -The index has been relatively weak and levels of 37600-800 itself could see selling pressure emerging.
SCRIPS ON RADAR
Burger King (159)-One of the recent listings the scrip touched a euphoric high of 196 before correcting to 126. Subsequently the scrip has slowly risen and enjoys good buying support at around 140-45. The scrip should ideally be accumulated at dips and it has the potential to go past its previous highs in the coming months.
Yes Bank (14.45)-A trader ‘s delight the scrip has seen tumultuous times. It recently crossed its 200-dma of 13.5 which augers well for medium to long term. Patient investors could look to accumulate as risk reward looks attractive. While a target of 18 could be expected, the scrip could surprise investors on the upside.
Have a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam