WEEKLY TRENDSETTER (July 14th,2023)
| 2023 | June 30 | July 7 | Ch % |
| NIFTY | 19189 | 19332 | 0.75 |
| BANK NIFTY | 44747 | 44925 | 0.40 |
| USD/INR | 82.06 | 82.73 | 0.82 |
MARKET REVIEW–The market was robust for most part of the week. However, the global markets were not supportive as rate hike fears attracted profit booking. Finally, towards close of week profit-booking was seen across the board which pared some of the gains. Still both indices closed in the positive. The coming week could be volatile with some negative bias as rupee weakening, rate hike fears and the HDFC -HDFC Bank post -merger issue causes uncertainty among marketmen.
Interesting cues
HDFCBANK HDFC merger impact on Bank Nifty
The much-awaited merger will finally see its impact on the indices next week on July 13. While HDFC Bank has a whopping 28.66% weightage on the Bank Nifty currently, with the merger the weightage will increase by approx. 35% based on market cap of HDFC Ltd. The Bank Nifty currently has 12 banking stocks .Despite the smart gains registered by the Bank Nifty in the past 2 months,HDFC Bank has been a relative underperformer.This could be partly due to uncertainty of possible price movement post the merger.With Bank Nifty nearing 45000,the index could see a sharp movement towards the record date which is on July 13.Interestingly HDFC Bank will replace HDFC Ltd in the MSCI Global indices from July 13.This actually creates headroom of 17% for foreign investors.However a note released by MSCI has indicated that adjustment factor of 0.5 will be used instead of 1 given that the stock could be highly volatile post merger.This could see an outflow of funds of $150-200 mn post merger .While all this is a conjecture based on pre merger analysis,its unlikely the merged entity will see any big crack and odds are high any sharp dip will actually attract buying given the exciting long term prospects for the merged entity with possible improvement in NIMs.
Dabur now has 17 brands with over 100 cr
In FY23 5 brands crossed Rs 100 cr sales which includes Honitus, Real Drinks, Odomos and Herbal.There are 2 brands which clock more than Rs 500 cr and 4 brands which clock over Rs 1000 cr turnover. In FY 23 it added Badshah masala to its portfolio and the company aims to expand its food business to Rs 500 cr in 3 years. The cooling off commodity prices is expected to boost margins in the current fiscal. The stock is trading at 59 times its trailing EPS of 9.7.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY –The last 2 weeks rally has seen the index surge from 18665 to 19332 and posting an all-time high. The coming week will be interesting as the merger of HDFC -HDFC Bank will impact indices. Technically the index could slide to 19100-200 where some consolidation could take place.19500 remains immediate resistance level.
BANK NIFTY-The index could not sustain above 45000 and by close of week shed most of the gains. Technically levels of 44200-300 could be touched as profit taking could continue. Levels of 45300 could be the near-term hurdle.
PICKS FOR THE WEEK-
Mahindra Holidays (299)- The stock has been a steady mover and levels of 250-275 have provided decent support in the past few weeks. Accumulation could be considered at dips for a possible target of 340 in the next few weeks. The stock is also an ideal long term portfolio candidate.
Torrent Power (634)-The scrip touched an all-time high of 745 last month and since then has seen a good correction. It touched its long-term breakout support at around 590 and has bounced back. While near term volatility could be expected, accumulation could be considered for a possible target of 680 in the coming weeks.
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam