WEEKLY TRENDSETTER (AUG 27th,2021)
| 2021 | AUG 20 | AUG 27 | Ch % |
| NIFTY | 16450 | 16705 | 1.55 |
| BANK NIFTY | 35033 | 35628 | 1.70 |
| USD/INR | 74.37 | 73.60 | -1.04 |
MARKET REVIEW –Last week ‘s correction was short -lived and the Nifty managed to erase all losses and closed above 16700.While the banking and metal counters lent support, the surprise element was the sharp gain in the rupee vis-à-vis the dollar. In the near-term dollar inflows are expected post the successful sale of dollar denominated bonds by HDFC Bank to raise $1 billion.
DID YOU KNOW
L&T-Remember buyback proposal 3 years back? – The combined market capitalization of L&T ‘s 4 listed subsidiaries namely LTT, LTI, Mindtree and L&T Fin stands at 1.9 lac cr which is 80% of L&T s market capitalization.L&T itself is in a sweet spot with the Govt boost for infra and interestingly for a capital-intensive company the debt equity has been gradually coming down and interest cover now stands at a healthy 5-6 times from 1.5 a few months back. While the tech firms have been the growth driver. L&T Finance could emerge as a dark horse as a beneficiary of funding infra projects. Investors may recall L&T had proposed a buyback 3 years back at 1450 which was not allowed by SEBI in view of the high debt equity ratio. Things have now radically changed and the stock could see a re-rating in the coming months.
IPO market boom -India is not alone –TheSouth EastAsian countries seem to the favourite investor destination.IPO funds raised mainly by tech companies have already touched a whopping $8bn in 2021 which is the highest in the last 14 years. The Indian market has seen likes of Zomato, Nazara raising funds and the next couple of issues to look forward to in the space are Paytm and Policy Bazaar.
MARKET OUTLOOK.
1.The Nifty’s swift recovery to close above 16700 again puts focus on the broader market which again has been sluggish with the mid-caps and small caps showing a mixed trend. Pharma seems to be making a comeback after a decent correction and the next leg will be keenly watched if there is follow up buying.
2.The rupee’s sudden strength is not reflected in the FII appetite for shares in the secondary market as they were sellers during the week. However, import intensive counters like OMC s could see some gains on the back of this move.
3.The Nifty managed to close above 16700 and banks, metals were the leaders during the recovery. The index could see a dash up to levels of 16800-850.
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: –
L&T (1662)-After consolidating above 1600 over the past few weeks the scrip could see levels of 1800-1850 in the coming weeks. Buying could be done in a staggered manner.
Finolex Inds (169)-The scrip saw a decent correction from levels of 190.Levels of 160-65 could act as a decent long term support level. Buying could accordingly be considered for possible levels of 190-200 in the coming weeks.
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