WEEKLY TRENDSETTER (AUG 20th,2021)
| 2021 | AUG 13 | AUG 20 | Ch % |
| NIFTY | 16529 | 16450 | -0.48 |
| BANK NIFTY | 36169 | 35033 | -3.14 |
| USD/INR | 74.27 | 74.37 | 0.13 |
MARKET REVIEW –It was a truncated week and global markets witnessed some profit -taking which also triggered selling pressure towards end of week in India and barring IT all sectors were affected.
BACK TO RESULTS (JUNE QTR)
The June quarter results season has almost ended! 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 |
| Titagarh Wagon | 507(+18) | 17.4(+999) |
| Lyka Labs | 49.4(+104) | 19.5(+999) |
| Trident | 1482(+10) | 207(+170) |
| Banco Products | 500(+12.6) | 45.9(+149.6) |
Titagarh Wagon (92)-The company has gone from strength to strength in the last few quarters and the June quarter has seen a good jump in revenue and profitability. It started off with making foundry for Indian Railways. Subsequently it integrated forward to manufacture freight wagons catering to Indian Railways and even exporting. Now it is also involved in manufacturing of transit trains and even acquired a company in Italy which specializes in manufacture of double-decker trains, EMUs, metros, LRTs, DMUs, propulsion systems, etc. The company is also into constructing bridges, ship-building, defence equipment. Thus, it has an all-round presence. The stock has seen a sharp run up in the last few months but with its improving performance looks a decent bet at declines.
Lyka Labs (73)-The company saw a jump in revenue for the quarter and that has seen a jump in profitability. The jump in revenue is due to contractual manufacturing arrangement with other companies for manufacture of Remdesivir. The company posted a Rs 6.80 EPS for the June quarter. Whether this will trigger a turnaround in the company will be keenly watched.
Trident (20)-A consistent growth in revenue and profits has been seen in the last few quarters. The company is a vertically integrated textile (yarn, bath & bed linen) and paper (wheat straw-based) manufacturer and is one of the largest players in the home textile space in India. It has recently ventured into manufacture of detergent named “Tri -Safe” which is neem based and the company plans to launch it nationally. The investment is 25 lacs and currently the capacity is only 10MT/day.EPS for the quarter stands at 0.41. Clearly one of the mid-caps to watch.
Banco Products (179)-The company is into manufacture of radiators, coolers, engine sealing systems supplying to OEMs of vehicles. A consistent performer over the last few quarters it also has an EOU unit at Baroda exporting to mainly to EU. With an EPS of Rs 6.4 for the quarter and getting a strong foothold into OEM manufacturers in India and abroad, clearly a scrip to watch out.
MARKET OUTLOOK.
1.After a volatile week the market goes into Derivative expiry for the Aug series and after touching an all time high followed by a pause, the action could resume after some consolidation. Some weak spots of weakness were metal and pharma. Banking continues to be an under performer and with auto also on a sluggish mode, leadership clearly lies with IT. The metal weakness is largely on the back of Chinese curbs which has resulted in a correction in commodity prices. However, domestically commentary from industry captains looks optimistic though some price correction could be seen in metals which should be welcome from the consumers point of view.
2.The crude prices have been on a correction mode and this could be one of the primary reasons for buoyancy in Indian markets as this will also have a positive impact on inflation. With festive season round the corner, auto and consumables will be in focus as well as beaten down sectors like hotels, tourism, restaurants, etc. Optimism is returning with easing of lockdown in several states.
3.The Nifty touched 16700 before some correction creeped in. Levels of 16250 will be critical on the downside. Much will depend upon the metal and pharma pack which have bore the brunt of selling.
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: –
Tata Steel (1376)-Last week saw a sharp correction in metal stocks. After a stellar rally for several months, the scrip looks overbought and could see lower levels. Selling could be considered on a bounce up to levels of 1450.The scrip could test levels of 1270 in the coming weeks.
Hindalco (404)-A vertical rise in the last few months has seen the scrip rising from 220 to 461.Last week the scrip saw long unwinding as well as short built up and levels of around 425 -30 could again see selling emerging. Accordingly, the scrip can be sold for a possible target of 360 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