WEEKLY TRENDSETTER (FEB 25th,2022)
| 2022 | FEB 18 | FEB 25 | Ch % |
| NIFTY | 17375 | 17276 | -0.57 |
| BANK NIFTY | 38517 | 37599 | -2.38 |
| USD/INR | 75.35 | 74.6 | -1.00 |
MARKET REVIEW–The market saw a massive gap down in the beginning of the week from which it never really recovered as geopolitical tension continued. Another matter of caution is that even good results were greeted with profit -taking and bad results resulted in sharp cuts. Thus, the market also seems to be in a profit-taking mode after sharp gains registered in the last 2 years.
BACK TO RESULTS (Dec qtr)
The Dec quarter results are almost getting over. The small and mid-cap segments are the ones where some interesting results could be looked at. This week let’s explore some results:
Rs in cr, Bracket indicates ch in % against Dec,21 quarter.
| Company | Revenue | Net profit |
| Andhra Sugar | 509(+43) | 37.1(+112) |
| BSE Ltd | 193(+60) | 41.7(+111) |
| Trident | 1980(+52) | 211(+88) |
| Lux Inds | 662(+69) | 101(+84) |
Andhra Sugar (144)-The company has an interesting mix of products. Infact caustic soda accounts for 40% of revenue followed by industrial chemical (21%) and sugar (17%). The company recently went for a stock split from Rs 10 to Rs 2 and the adjusted EPS stands at Rs 4 for the Dec quarter. At current market price of 144 its valuation looks attractive. Besides with the caustic soda prices ruling firm and sugar getting a sweetener in the form of a favourable ethanol blending policy from the Govt.prospects look bright.
BSE Ltd (2263)-The stock is a proxy to the increasing retail participation in the Indian markets and with the NSE also looking to list in the near future, these two exchanges could be expected to churn profits on a sustained basis. The company also recently declared bonus in the ratio of 2:1. Recently the company also got approval for introducing Electronic Gold Receipt (EGR)on its stock exchange platform. While valuation looks expensive and the stock could see some profit booking once it goes ex-bonus on any sharp correction it could be considered for a long-term hold.
Trident Ltd (53)-The company is a leading manufacturer of yarn, linen, wheat straw-based paper, chemicals and captive power. It claims to have clientele in around 100 countries and has manufacturing facilities in Punjab and MP. The US and Europe are major importers of home textile products globally. The industry saw a rebound in sales due to pent-up demand. This led to strong growth in the Dec qtr, and the momentum is expected to continue in the 4th qtr as well. The stock has seen a steep run up. Near term caution is advised as profit taking could continue.
Lux Inds (2703)-The company is a leading hosiery maker with well established brands like One8 and ONN, followed by mid-premium and economy brands such as Lux Cozi, Lyra, GenX, and Lux Venus. The Dec quarter saw a robust working and increasing margins also saw profits showing a healthy growth. With a near 150 Rs EPS on annual basis, low equity base and growth prospects likely to continue, the stock is available at a reasonable valuation not withstanding a recent corporate governance issue which saw the scrip plummeting. Near term weakness could persist but closer to levels of 2200, it could offer a decent entry.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY-The index has seen a decent correction and could steadily go below 17000 to test previous lows of 16400.Any bounce to levels of around 17400-500 could act as near-term resistance. Long term chart still looks stretched and the broader market could with continue to witness profit-taking.
BANK NIFTY-The index has already tested the 200-dma around 36500 several times and any bounce to close to levels of 38000 selling pressure could emerge. It remains the most vulnerable to any rate sensitive announcement and bias looks negative.
SCRIPS TO WATCH OUT
Power Grid (196)-The scrip has seen long unwinding going into expiry and any recovery to levels of 200-205 selling pressure could increase. The scrip could be expected to slide to levels of 170-75 in the near term.
Tata Power (226)-After a stellar run to levels past 250 the scrip appears to be losing steam. Closer to levels of 230, selling pressure could increase and in the near term the scrip looks poised to touch levels of 210.
Have a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam