WEEKLY TRENDSETTER
| 2021 | 8th Jan | 15th Jan | Ch % |
| NIFTY | 14347 | 14433 | 0.60 |
| BANK NIFTY | 32084 | 32247 | 0.50 |
| USD/INR | 73.26 | 73.09 | -0.23 |
The markets scaled a lifetime high but towards close of week showed signs of profit -taking. Good results from the IT sector were greeted with selling which is an early sign of near term market topping .Some cooling off is healthy as we approach the Budget which will provide fresh direction to the market .
Mid -cap and small caps also witnessed select profit -taking and sectoral rotation remained high
BIG PLAYERS ACTIVITIES
The FII s continue to be on a buying spree over the week . DII s were more focused on profit taking .
RESULT SEASON IS BACK!!
A keenly awaited result season is back. The intensity of the stock market rise has caught all and sundry by surprise. Now the result season will be the litmus test . With the heavyweights widely covered we delve into some of the less discussed results :-
| Company | Revenue | Net profit |
| Bhansali Engn | 411(+58) | 136(+704) |
| GNA Axles | 276(+29) | 26.6(+249) |
| Tata Elxsi | 477(+12.7) | 105.2(+40) |
| Karnataka Bank | 1596(-1.6) | 135.4(9.9) |
| Steel Strips & Wheel | 524(+53) | 28.8(+357) |
(Figures in bracket indicates change in %)
Bhansali Engn-A manufacturer of ABS which goes into manufacture of auto, home appliances, telecom,luggage ,etc clearly looks poised for a strong growth in a consumption driven economy .With an EPS of Rs 8 for the quarter,the outlook looks robust
GNA Axles -The auto ancilliary company has repeated its excellent Sept quarter performance and posted an EPS of Rs 12.4 for the qtr.With this the 6 month EPS stands at Rs 23 .Its been listed since Sept ‘16 and has shown impressive growth over the years.An auto revival would see the company benefitting immensely!Watch out!
Tata Elxsi-The design led technology company has presence in new age businesses like embedded product design,industrial design,visualization.The margin expansion was sharp at 28% against 19.60% in the corresponding previous quarter.While the last 5 years has seen a sharp rise in topline ,bottomline has been sluggish and has not kept pace .This margin expansion could be the trigger for future.
Karnataka Bank –Management commentary post results were interesting .NII showed a 20% growth and NIM was at an all time high of 3.26%.Provisions are expected to come down going forward.The stock has seen value buying at lower levels .After skipping dividend in FY20 ,a return to the payout mode could be the right catalyst for investor sentiment !!
Steel Strip & Wheels-The company has seen profits under pressure in the last 5 years and further impacted by the auto slow down .Interest costs have also impacted profits.The Dec quarter saw a good revival in fortunes .Further recovery hinges on the prospects of the auto sector
WHAT DOES THE COMING WEEK HOLD ?
1.Some reversal signs are visible in dollar index which has clawed back above 90 as well as gold which has seen profit taking in the early weeks of Jan .There were also rumours of interest rates reversal in US from zero levels .
2.Next week will be dominated by results from several small and mid cap companies .Notable ones are Mindtree,Alembic Pharma,CEAT,L&T Infotech,Tata Comm,Philips Carbon,Zensar,JSW Steel besides several others.
3.On the market front,with equity markets at high levels world over ,profit taking is expected as investors exit before taking a fresh stance.
Did you know ?
Which is the best performing commodity in the New Year so far ? Its palladium !Unlike its more exotic peers ,gold and silver ,it has some important properties which could see prices sustaining over a longer period of time.It is an ingredient for cleaner emissions and better performance from gasoline-powered engines. Majority of the world’s palladium is produced by a single company – Russia-based Norilsk Nickel(40%).Miners are looking to develop new products to challenge this monopoly. As it is heavily dependant on the auto industry prices are likely to follow demand trends but consensus seems to suggest any strong correction is unlikely
Some stray thoughts –
What is the Russell 2000 Index ?
It is an index measuring the performance of approximately 2,000 smallest-cap American companies in the Russell 3000 Index, which is made up of 3,000 of the largest U.S. stocks. It is a market-cap weighted index. Many regard the Russell 2000 as an important bellwether of the American economy because it measures the performance of smaller, domestically focused businesses.After a sluggish two year period 2018-19 ,the index took a plunge in March 2020 on the outbreak of Covid .Subsequently ,it rallied from a low of 1014 to 2123 .Patience of two years were paid off in one year !
Wishing all readers a great trading week ! Book profits periodically ,do not go overboard but remain optimistic !!
Krish Subramanyam