WEEKLY TRENDSETTER (JULY 23rd ,2021)
| 2021 | JULY 16 | JULY 23 | Ch % |
| NIFTY | 15923 | 15856 | -0.42 |
| BANK NIFTY | 35751 | 35034 | -2.01 |
| USD/INR | 74.61 | 74.43 | -0.24 |
MARKET REVIEW –It was a truncated week and after 2 days of correction some recovery was seen though finally both indices closed with losses. Banking counters were the drag with HDFC Bank leading the downtrend. The coming week will begin with market reaction to two index heavyweights RIL and ICICI Bank.
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 |
| India Pesticide | 170(+28) | 42(+57) |
| Rallis India | 740(+57) | 82.3(+914) |
| Polycab | 1880(-38) | 77(-73) |
| Mahindra EPC | 38.6(-46) | -3.3(profit of 4cr) |
India Pesticides (347)-After the recent resounding IPO success, the company posted a decent set of numbers for the June quarter. Infact the company has seen tremendous growth in the last 3 years FY-19-21 with revenue almost doubling from Rs 340 cr to Rs 642 cr and profits tripling from Rs 61 cr to Rs 180 cr during the period. With such a track record, the scrip could see attention increasing in the months to come. It had posted an EPS of Rs 12 for FY 21. A scrip to watch out!!
Rallis (318)-The company has a good mix of domestic crop protection, international business, contract manufacturing, seeds, plant growth nutrients, etc. The company’s long-term goals are investment into R&D to built a strong and innovative product portfolio, contract manufacturing with international majors, backward integration to de-risk from supply disruptions. The company has negligible debt which leaves scope for meeting capex from internal accruals. It posted an EPS of Rs 4.2 for the June quarter. With international presence as well, it is perfectly hedged against erratic domestic weather conditions. Exports hold the key.
Polycab (1891)-The company has begun FY21-22 on a mixed note again due to the Covid impact. Management states that the progress on larger projects is slow, while smaller projects are tracking well. Overall demand for the B2B segment is still below pre-Covid levels. Additionally, the real-estate recovery is on track and is seeing a slew of new launches in H2FY21.Since listing the scrip has seen good DII (8.7%) /FII (6.5%) interest. Promoter holding is at 68%. The scrip has seen a very sharp run up in the last few months which could result in profit taking.
Mahindra EPC (149)-The company has seen a sharp setback in revenue resulting in a net loss. Management indications are towards the negative impact of the 2nd Covid wave. Looking at a broader picture the company is a pioneer in drip irrigation and has also been performing well with EPS of Rs 7 posted for FY20-21. Long term prospects look bright notwithstanding the setback. Levels of 130-135 are good support levels.
MARKET OUTLOOK.
1.The market goes into monthly expiry for the July series. To begin with global cues have again been positive and the market should begin on the front foot. Following this the results of June quarter will dictate sentiments.
2.The coming week see results from several index majors like Axis Bank, Kotak Bank, SBI Life, L&T, DrReddy, Maruti Suzuki and Tech Mahindra. Other results to look forward to are KPIT Tech, Route Mobile, JM Fin, Happiest Mind, FSL, Deepak Nitrite.
3.A decisive move could be expected in the coming week as the market has been in a narrow band and 15900-16000 has been proving to be a resistance zone. ICICI Bank and Infy hold the key.
Results will again be critical for sustenance of the sharp rally in many scrips. 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.
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. Trade but also exercise caution. Following scrips look promising with a small to medium term horizon.
Goodyear (1258)- This blue chip MNC has seen a steady accumulation and now is close to its all-time high level of 1300. While near term it looks overbought, levels closer to 1220 could again see buying emerging. Gradual accumulation could be considered for possible levels of 1600 in the short to medium term
Bayer India (5781)-Another blue chip MNC the scrip has been in a narrow band for 5-6 months with very good support near levels of 5200-5300. It is a portfolio stock and long-term potential of 7000 in the coming months.
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!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam