WEEKLY TRENDSETTER (Nov 4th,2022)
| 2022 | Oct 21 | Oct 28 | Ch % |
| NIFTY | 17576 | 17787 | 1.2 |
| BANK NIFTY | 40784 | 40991 | 0.51 |
| USD/INR | 82.70 | 82.48 | -0.27 |
MARKET REVIEW–The truncated week saw some spirited action and Nifty managed to close near 17800 despite some profit-taking in banking counters which saw the Bank Nifty trimming some of the gains for the week. The US markets have shown a sharp upward spiral and though other markets in Asia and Europe are still sulking, Nifty could make an attempt to go past 18000!
BACK TO RESULTS (Sept qtr.)
The Sept quarter results are getting announced. The small and mid-cap segments are the ones where some interesting results could be looked at. This week let’s explore some of them:
Rs in cr, Bracket indicates ch in % against Sep,21 quarter.
| Company | Revenue | Net profit |
| NELCO | 75.44(+23.2) | 4.47(+31.47) |
| GMDC | 583(+29) | 151(+270) |
| Focus Lighting | 40.3(+76) | 4.8(+206) |
| VIP Inds | 515(+56) | 43.4(+134) |
NELCO-This company is a leading satellite service communication provider. It recently tied up with Intelsat which operates one of the world’s largest integrated satellite and terrestrial network and a leading provider of inter flight connectivity. The Govt is keen to take satellite communication forward which will enable digital connectivity reaching the remotest parts of the country and these services could be rolled out in the next 7-8 months. Besides Jio and One web Elon Musk ‘s Starlink has also applied for licence. On the performance front the company came out with a decent quarter. With an EPS of Rs 2 for the quarter, the stock seems to have raced ahead of expected performance and looks well priced.
GMDC(137) –The company is the largest producer of lignite and along with the robust performance has also initiated geological research for mineral exploration activities over 1400 hectares in Gujarat around Ambaji.Preliminary investigations suggest high IHMS deposits which are significant sources of base metals such as lead, zinc and copper as well as some traces of gold and silver. The reported resource is estimated at 6.28 mn tons with nearly 10% total metal content. With an EPS of Rs 4.75 for the quarter the stock looks promising and has seen some strong correction as well. Levels of 120-25 appear to be a decent long-term support.
Focus Lighting (216) –The company is engaged in manufacturing and innovating LED lighting solutions. The company is making a comeback post the pandemic. Management commentary suggests that the company has plans to enter new verticals like Project & Railways which is expected to provide good margin business. The company posted EPS of Rs 4.53 for the Sept quarter and the stock has also seen a huge surge in the last few months. Margins are at nearly 18% which might be difficult to achieve going forward. However,with improved volumes this should be addressed. At current levels the stock could witness some profit taking.
VIP Inds(705)-The company showed a robust growth in revenue of 56% which came on a low base due to the pandemic effect. However, the bottom-line did not show the desired growth which was largely due to raw material prices which are linked to crude prices. The company already undertook a 20% hike in prices. Going forward the management has indicated that cost control will be the focus. The company has also embarked on a Rs 100 cr capex to enhance capacity by 25% by FY24.As of FY22 the company had capacity of 5.1 million of hard luggage and 7.2 million of soft luggage. The company also plans to adopt the franchisee route for expansion after closing loss making branches. Currently the company has a 44% market share. Exports are at 5% of total revenue which could see steady growth in the coming years with capacities coming up in Bangladesh as well. The stock is a portfolio candidate at declines.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY –The closing for the week near 17800 should give confidence to bulls and coming week could see 18000 getting revisited.
BANK NIFTY-The level of 41500 has acted as resistance level. However, going by the strength 40500-700 could now act as the support and odds are high that the index will scale past 41500 in Nov and make an attempt to go past the all-time levels of 41840.
SCRIPS TO WATCH OUT
KSB Pump-(2036)-The stock has been on a strong uptrend in the past few months breaking life time high regularly. It is an investment candidate at declines with potential to scale past 2500 in the coming months.
Schneider Electric (176)-After a long accumulation phase the stock broke past 150 on huge volumes. After touching 195 it has seen some correction. Its an ideal accumulation candidate with possible target of 225 in the coming months.
TVS Srichakra (2507) -The stock has correction from 2900 to 2400 and looks poised to resume its uptrend. Ideally, it’s an investment candidate and could be expected to scale past 3000 in the coming months.
Have a great trading week!Wishing all readers a very Happy Diwali !
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam