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Trendlyne Marketwatch
Trendlyne Marketwatch
07 Nov 2022
Market closes higher, Bikaji Foods' IPO gets bids for 26.7X of the total available shares

Trendlyne Analysis

Indian indices settled in the green after gyrating between losses and gains on a volatile day of trade. The Nifty 50 closed just above the 18,200 mark for the first time since January. European indices followed the global trend and traded higher than Friday’s levels. Major Asian indices closed in the green, in line with the US indices which closed higher on a volatile day of trade on Friday. US stocks rose after the US jobs report indicated a higher-than-expected unemployment rate, which could discourage the US Fed to continue with its jumbo-sized rate hikes. The tech-heavy NASDAQ 100 rose 1.6% while the Dow Jones closed 1.4% higher. Brent crude oil futures fell from its two-month high after China commits to the Zero-Covid policy, which hurts the crude oil demand.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, following the benchmark index. Nifty Auto and Nifty Bank closed higher than Friday’s levels. Nifty IT closed in the green, taking cues from the NASDAQ 100, which closed 1.6% higher on Friday.

Nifty 50closed at 18,203.35 (86.2, 0.5%), BSE Sensexclosed at 61,185.15 (234.8, 0.4%) while the broader Nifty 500closed at 15,614.75 (83.9, 0.5%)

Market breadth is in the green. Of the 1,956 stocks traded today, 1,087 were on the uptrend, and 804 went down.

  • Britannia Industries sees a long buildup in its November 24 future series as its open interest rises 37.6% with a put-call ratio of 1.02.

  • Divi's Laboratoriesis falling as its Q2FY23 net profit falls 18.6% YoY to Rs 493.6 crore. Fall in revenue and rise in expenses caused the EBITDA margin to decline 7.7 percentage points to 33.5%. The company features on a screenerthat reflects stocks where mutual funds decreased their shareholding in the last quarter.

  • InterGlobe Aviation’s (Indigo) Q2FY23 net loss widens to Rs 1,583.3 crore against Rs 1,435.6 crore in Q2FY22 as expenses increased. Aircraft fuel expenses rose 3X YoY due to rising airline traffic. However, the company also records an increase in revenue by 2.2X YoY to Rs 12,497.6 crore in Q2. Indigo’s CEO Pieter Elbers says, "We witnessed good yields with strong demand across the network. However, fuel prices and exchange rates have impacted our financial performance."

  • Gautam Saraogi, CEO of Go Fashion, says that the company aims to acquire more than 25% market share in 3-4 years. He says that high ad spends caused the margin to fall in Q2FY23 to 29.8%, but maintains a margin guidance of 31-32% during FY23.

  • Global Health’s Rs 2,205.6 crore IPO gets bids for 9.6X of the available 4.7 crore shares on offer on the last day of bidding. The retail investor quota gets bids for 88% of the available 2.3 crore shares on offer.

  • Bikaji Foods' Rs 881.2 crore IPO gets bids for 26.7X of the available 2.06 crore shares on offer on the last day of bidding. The retail investor quota gets bids for 4.8X of the available 1.01 crore shares on offer.

  • Rajesh Exports is rising after being selected by the Centre for the Rs 18,100 crore production-linked incentive scheme to produce advanced chemistry cells. The company incorporates a wholly-owned subsidiary for manufacturing advanced chemistry cells.

  • ICICI Securities upgrades its rating on Akzo Nobel India to ‘Buy’ from ‘Add’ with a target price of Rs 2,800. This indicates an upside of 32.8%. The brokerage’s outlook on the company’s prospects improves on the back of market share gains and expansion of the distribution network despite inflationary pressures. It expects the company’s profit to grow at a CAGR of 20.2% over FY22-24.

  • Rail Vikas Nigam surges as it wins a contract worth Rs 137.6 crore from the Central Organisation of Railway Electrification. The order pertains to increasing the speed potential to 160 kmph on the Pradhankhanta-Bandhua section of the Dhanbad division under the East Central Railway.

  • Sanjiv Chadha, Managing Director and CEO of Bank of Baroda, expects credit cost to come down to 1-1.25%, compared to 1.25-1.5% earlier. He also expects the corporate segment's loans to grow.

  • Zydus Lifesciences is rising as it receives an establishment inspection report from the US Food & Drug Administration (USFDA) for its formulations facility in Moraiya, near Ahmedabad, Gujarat. The USFDA determined that the inspection classification of the facility is Voluntary Action Indicated. The inspection from July 26 to August 5 concluded with four observations.

  • Voltas plans to invest Rs 1,000 crore to expand its manufacturing capacity by adding a new plant near Chennai and a compressor plant in partnership with China's Highly International, according to reports.

  • Public sector banks like Bank of Baroda, Indian Bank, and Union Bank of India rise more than 4% in trade. The broader Nifty PSU Bank index trades above 3%.

  • Retail sales in the automotive industry rise 47.6% YoY to 20.9 lakh units in October, finds data from the Federation of Automotive Dealers' Association. Two-wheeler retail sales rise the most by 51.1% YoY. Retail sales of car makers are also up 40.5% YoY.

  • TVS Motor's Q2FY23 net profit rises 59.5% YoY to Rs 386.3 crore. Growth in revenue helps the EBITDA margin to increase 130 bps YoY to 12.7%. The company features on a screener reflecting stocks with high trailing twelve-month EPS growth.

  • Power Grid Corp of India is rising as its Q2FY23 net profit improves 8.1% YoY to Rs 3,650.2 crore. Its revenue grows by 8.6% YoY to Rs 11.150.6 crore. The company’s board approves the payment of an interim dividend of Rs 5 per share for FY23. It will be paid on November 30. The stock shows up on a screenerfor companies with increasing revenue sequentially for the past four quarters.

  • Indian rupee appreciates 33 paise to 82.11 from Friday's close of 82.44 against the US dollar in the early trade today.

  • Birlasoft's Chief Executive Officer (CEO) and Managing Director (MD) Dharmander Kapoor resigns due to personal reasons. His resignation will be effective from November 30. The company appoints Angan Guha in his stead for a period of three years, effective December 1.

  • Ashish Kacholia buys a 2.1% stake in Raghav Productivity Enhancers for Rs 19.5 crore in a bulk deal on Friday.

  • Britannia touches a 52-week high after reporting a 28% YoY increase in net profit to Rs 493.2 crore in Q2FY23. Managing Director Varun Berry says, "An increase in distribution reach helped deliver a robust topline growth of 22% YoY, aided by mid-single-digit volume growth, as we record our highest quarterly revenue." However, Marico’s Q2FY23 net profit fell 2.6% YoY to Rs 301 crore on rising input costs, the depreciating rupee and a higher tax rate.

  • State Bank of India’s Q2FY23 net profit surges 73.9% YoY to Rs 13,265 crore with net interest income rising 12.8%. The bank shows significant improvement in asset quality as gross NPAs fall 138 bps YoY to 3.5%. The bank revises its credit growth outlook to 14-16% in FY23 from the earlier 11-12%, as demand for corporate loans rises. It shows up on a screener of stocks with consistent high returns over the past five years.

Riding High:

Largecap and midcap gainers today include Bank of Baroda (158.25, 9.48%), Britannia Industries Ltd. (4,125.00, 8.43%) and Union Bank of India (58.80, 6.43%).

Downers:

Largecap and midcap losers today include Divi's Laboratories Ltd. (3,420.00, -8.71%), Marico Ltd. (504.90, -6.36%) and Vedanta Ltd. (306.35, -4.85%).

Movers and Shakers

26 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included JM Financial Ltd. (77.20, 10.36%), Rail Vikas Nigam Ltd. (50.70, 10.10%) and Bank of Baroda (158.25, 9.48%).

Top high volume losers on BSE were Divi's Laboratories Ltd. (3,420.00, -8.71%), Marico Ltd. (504.90, -6.36%) and Alkyl Amines Chemicals Ltd. (2,952.65, -1.98%).

Bombay Burmah Trading Corporation Ltd. (925.00, 5.37%) was trading at 28.9 times of weekly average. Britannia Industries Ltd. (4,125.00, 8.43%) and Sundaram Clayton Ltd. (4,925.00, 3.00%) were trading with volumes 14.0 and 13.0 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

34 stocks hit their 52-week highs, while 5 stocks hit their 52-week lows.

Stocks touching their year highs included - Bank of Baroda (158.25, 9.48%), Bank of India (70.25, 4.93%) and Bank of Maharashtra (23.25, 2.20%).

Stocks making new 52 weeks lows included - GlaxoSmithKline Pharmaceuticals Ltd. (1,337.00, -0.65%) and Voltas Ltd. (834.55, -1.27%).

20 stocks climbed above their 200 day SMA including Finolex Industries Ltd. (156.85, 7.76%) and Jindal Stainless Ltd. (164.80, 7.12%). 9 stocks slipped below their 200 SMA including Marico Ltd. (504.90, -6.36%) and Vedanta Ltd. (306.35, -4.85%).

 
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The Baseline created a screener Results declared today
07 Nov 2022
Stocks whose results have been declared today
 
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The Baseline
05 Nov 2022
Midcap private banks celebrate a profit bonanza | stocks outperforming their sector and index post results
By Tejas MD

The month of October sparkled for Indian investors, with the Nifty 50 rising nearly 5% to cross the key level of 18,000 last week. It is now just 3% shy of a life-high. ICICI analysts predict that the Nifty will near 18,900 by December end. That would be quite a new year.

Global indices are also showing some spirit despite inflation fears. The US Dow Jones index posted a 14% rise – its best month in 46 years.

The US Federal Reserve delivered an expected 75 bps rate hike on Wednesday, taking the federal funds rate from 3.75% to 4%, its highest level in 15 years. But what investors were looking for from the Federal Reserve Chairman Jay Powell was any sign that the Central Bank plans to slow rate hikes going forward.

Fed watchers study Jay Powell with as much intensity as a mother may study a young child with a stomach ache. They parse everything from his expressions, his sighs, to his carefully chosen words. Before the meeting, Lloyd Blankfein, the former CEO of Goldman Sachs, joked that the Fed would be sitting with a thesaurus to find a word that meant both "pause" and "not pause".

Jay Powell managed to pull this off by disappointing everyone. He said that it was "very premature to think about pausing", but also said that the Fed "may slow the pace of increases."

Central Banks like the Fed and the RBI are caught between two fires: raise rates too fast and you trigger a recession, but go too slow and you worsen inflation. More rate hikes by the RBI could impact several sectors, and we look at one such sector this week. 

In this week’s Analyticks, 

  • Young rockets: Private Midcap banks see growth momentum in Q2, as they benefit from rate hikes
  • Screener: Stocks outperforming the Nifty50 and their sector post results, with rising operating profit margins and cash flows 

India's private mid-cap banks beat the index

The banking sector has outperformed the benchmark index comfortably in the past month, quarter, and half-year. Banks are taking advantage of the Reserve Bank of India (RBI) raising the repo rate. RBI has raised the key rate by 190 bps since May to 5.9%. And high inflation levels mean that more hikes are on the way. 

How does this help banks? Banks want the best of both worlds - they are quick to hike interest rates on loans (which adds to their income) but are slow to hike deposit rates (which they pay to account holders). So rate hikes by the RBI helps banks improve their net interest margin, since they benefit from the difference between the bank’s interest income and the interest they pay to their lenders. 

However, banks cannot benefit from this for too long, as they need to hike rates on deposits eventually. Higher interest rates also bring down loan growth, especially in retail sector lending, which is mainly consumption driven. Companies also postpone their spending plans when interest rates are high, as businesses have to shell out more money to service loans. 

So despite a sunny outlook by both analysts and banks, we are cautious. There are several factors that are potential roadblocks to rising net interest margins and strong loan growth. 

Mid-cap banks join the party, and outperform their bigger peers

Mid-cap banks’ share prices are sharply up on the back of improving net interest margins, strong loan growth, and asset quality. The banks in focus–IDFC First Bank, Federal Bank, Karur Vysya Bank, and RBL Bank–outperformed the Nifty 50 by at least 12%, with Karur Vysya Bank leading the pack. 

Over the past quarter, the stock performance of these banks has been even more impressive. 

The rise in share price has come with strong results over the past three quarters. Q2FY23 results did not disappoint either. The revenue and net income of these banks rose sharply.

Several tailwinds like rising repo rates and strong loan book growth from high retail consumption, have helped banks post strong Q2 results. 

Housing and vehicle loans were the star segments for banks in Q2. 

But is this demand sustainable?  Housing and vehicle loans may become less attractive with rising interest rates and analysts predicting more hikes in the coming months. In addition, according to CMIE data, new investment proposals by the private sector have been falling since Q1FY23. This could slow loan growth. 

As if on cue, RBL Bank’s business loans (12% of the loan mix) decreased by 21% YoY in Q2FY23 and IDFC First Bank’s corporate banking loan book is yet to reach pre-covid levels. However, IDFC First’s management has guided a 25% loan book growth in FY23. Federal Bank and RBL Bank expect their loan books to grow over 15%. 

The net interest margin (NIM) has been on the rise for all four over the past five quarters and accelerated in the last two-quarters, thanks to the rising repo rate. 

NIM of the banks in focus rose both YoY and QoQ in Q2FY23. IDFC Bank enjoys the highest NIM among the four at 5.98%. Its management is confident about maintaining NIM at 6% in FY23. 

Key ratios paint a bright picture

Banks provide several health-check metrics to assess asset quality, risk levels, etc. One key ratio is the gross non-performing assets (GNPA), which helps us understand the level of non-performing assets relative to total advances. This ratio has been on the decline for the past five quarters for the banks in focus, indicating a significant improvement in asset quality. 

All four banks have also made rising provisions in case of future losses.

Another positive factor for these banks is their improving CASA ratio. The CASA ratio is the ratio of deposits in current and saving accounts to total deposits. The higher the CASA ratio, the better. A higher percentage indicates a lower cost of funds because banks do not usually give any interest on current account deposits, and the interest on saving accounts tends to be very low. 

Current valuations look attractive, but there are potential roadblocks

Despite a sharp run-up in share prices, three out of the four banks in focus are in the PE buy zone. 

According to Trendlyne’s DVM classification, IDFC First Bank and Karur Vysya Bank are strong performers (high on DVM scores) and are also in the PE buy zone – meaning that their PE ratios now are lower than historical levels.

While the outlook is strong for these banks, investors should keep in mind key risks going forward. Rising interest rates may slow down loan growth. Loan growth is also dependent on consumption-driven retail loans (especially in the housing sector), and rising mortgage rates could hurt demand in this sector.

Corporate loan books could also get affected as private companies cut back on spending due to fears of an economic slowdown and rising interest rates. 

Screener: Stocks Outperforming the Nifty50 and their Sector, with rising Operating Profit Margin and Cash Flow

At a time of rising interest rates, having a healthy cash flow is important for companies to keep interest payments and debt low. This screener reflects stocks that are outperforming the Nifty 50 index and their sectors over the past month with a rise in operating profit margin and cash flow from annual operating activities. It also lists companies with TTM PE lower than their sector PE.

The screener results are dominated by the Banking and Finance sector with the Software & Services, General Industrials and Utilities sectors also turning up. Major stocks featured in the screener are Union Bank of India, Axis Bank, Persistent Systems, CG Power and Industrial Solutions, and Angel One.

Union Bank of India has the highest YoY growth of 126.6% in operating profit in Q2FY23. The company also saw a rise in annual cash flow of 77% in FY22. The stock outperformed the Nifty 50 index and the Banking and Finance sector over the past 90 days by 15.3% points and 13.5% points respectively. It also has a trailing twelve month PE of 6.1, which is lower than the sector average PE of 28.8.

Axis Bank has an 80.4% YoY growth of operating profit in Q2FY23. The bank has seen its annual cash from operating activity rise 122.7% in FY22. Over the past 90 days, the stock has outperformed the Nifty 50 index and the Banking and Finance sector by 18.3% points and 16.4% points respectively. It has a lower trailing twelve month PE than its sector of 15.2.

CG Power and Industrial Solutions has an operating profit growth of 51.7% YoY in Q2FY23. The company saw a rise in annual cash flow of 77% in FY22. Over the past 90 days, the stock has outperformed the Nifty 50 index and the General Industrials sector by 5% points and 4.2% points respectively. It also has a trailing twelve month PE of 41.1, which is lower than the sector average PE of 51.2.

You can find more screeners here.

 
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The Baseline
04 Nov 2022
Five Interesting Stocks Today
  1. Varun Beverages: This soft drink bottler’s stock has improved 10% in the past three days and touched a new 52-week high on Thursday. The rise in share price could be attributed to robust Q2FY23 results. A strong rise in net profit and operating profit margin despite an inflationary environment excited investors. With this rise in stock price, Varun Beverages features in a screener that lists companies whose share prices are trading above short-, medium-, and long-term moving averages. 

Revenue rose 33% YoY and net profit increased by 58.7% in Q2. While a 24% YoY volume growth led revenue growth, a 7% rise in realisations on the back of price hikes led to increased profits. In addition, its higher-margin energy drink, Sting, was the star product in Q2, driving both top line and margins higher. The management said Sting’s overall realisation was higher than the average realisation by 65%, helping the EBITDA margin rise 140 bps YoY to 22%. 

Brokerages like Axis Direct, ICICI Direct and Motilal Oswal raised their target prices after the Q2FY23 results announcement. Brokerages are positive about the company on the back of its expanding distribution network and product mix shift towards higher margin products like ‘Sting’. 

  1. Bandhan Bank: This bank’s stock has been falling for the past 90 days. Looking at the technicals, the stock fell 17% in the past three months and 10% on Monday alone after reporting a 74.6% QoQ dip in net profit to Rs 209.3 crore. It missed Trendlyne’s Forecaster estimates by 72%. Although the bank’s profitability is positive considering its reported a net loss of Rs 3,008.6 crore in Q2FY22, this has not enthused investors as many key metrics including asset quality have worsened. It shows up on a screener of bearish stocks with low Trendlyne Momentum scores and falling RoE for the past two years.

The bank’s fall in net profit can be attributed  to an increase in provisions which almost doubled to Rs 1,279 crore in Q2FY23. A rise in provisions indicates that the bank has a higher pool of stressed loans. It has had some slippages in loan books despite no restructuring in the last two quarters. Overall, slippages amounted to Rs 3,954 crore with the maximum slippage (Rs 3,624 crore) coming from the EEB (Emerging Entrepreneur Business) segment. Bad loan write-offs stood at Rs 3,539 crore.

On the positive side, Bandhan Bank’s advances grew 17.4% YoY to Rs 95,834 crore. Despite muted Q2 growth, analysts maintain a sturdy rating and expect the bank to perform well in H2FY23. Consensus estimates from analysts show 17 analysts recommending a ‘Buy’ on the stock with five recommending ‘Hold’ and one recommending ‘Sell’. Emkay Global expects the bank to deliver an RoE of 20-22% by FY24-25E. The management offered a positive outlook in their earnings call, expecting to report better earnings in Q3 and Q4 with improving asset quality.

  1. Supreme Industries: This plastic processing company’s stock rose over 8% since announcing its results on October 31. This upswing comes despite a 64.1% YoY drop in net profit, with its EBITDA margin contracting 905 bps YoY to 7.1% in Q2FY23. This led the company to miss Trendlyne’s Forecaster profit estimates by 48.9%. The drop in profitability is due to inventory losses as polymer prices fell.  

However, the stock surged as the street has a positive outlook on the company’s prospects. This mostly comes on the back of the management raising its volume growth guidance to 20% from 15% for FY23. The firm’s top-line growth was supported by a 9% volume growth in Q2 due to softening resin prices. Also, the management believes that the price of Polyvinyl Chloride (PVC) resin dropping by 38% since April augurs well for volume growth from H2FY23. PVC-based products contributed around 80% of the firm’s sales volume in Q2. The company, while increasing its volume growth guidance, has lowered its operating margin guidance to 12-12.5% from 15% for FY23.

For H2FY23, the management expects robust demand for its piping products on recovery in rural demand and declining commodity and polymer prices. The stock shows up on the screener for companies that benefit from lower crude oil prices. According to ICICI Direct, the company’s piping segment’s volume will grow at a CAGR of 19% over FY22-24 on the back of a recovery in demand from the agriculture, housing, and infrastructure segments. Supreme Industries plans to incur a capex of Rs 700 crore in FY23, which will mostly be used to increase production capacity.

  1. FSN E-Commerce Ventures (Nykaa): This internet platform company posted a surge in its net profit, up  251.1% YoY to Rs 4.1 crore, and revenue grew 39% YoY to Rs 1,230.8 crore in Q2FY23, as a result of new launches and festive demand. But its revenue and profit missed Trendlyne’s Forecaster estimates by 0.3% and 30.5%, respectively. Nykaa’s gross merchandise value (GMV) also rose 45% YoY to Rs 2,345.7 crore during the quarter, with Fashion GMV contributing 26%.  

Falguni Nayar, Executive Chairperson, Managing Director, and CEO, said, "Consumer demand for premium beauty, personal care, and wellness is showing signs of buoyancy as we gear up for a promising H2FY23.”

However, the company has been underperforming ahead of the expiry of the one-year lock-in period for its pre-IPO shareholders on November 10. It hit a 52-week low in the past week due to a large sell-off, especially from foreign investors. 

On the bright side, several brokerages are optimistic about the company because of strong Q2 results. Foreign brokerage Jefferies said the company delivered better than estimates on the GMV, revenue, and EBITDA but maintains its ‘Buy’ rating with a target price of Rs 1,650 as it expects volatility ahead of lock-in expiry. 

  1. Triveni Turbines: Despite a fallout with its joint venture partners, the stock has managed to sail well, even as  markets turned volatile with rising inflation and recession fears. The stock has given decent returns as it shows up on a screener of stocks with consistently high returns over the last five years. The stock rose 20% in the last 30 days and nearly 46% in the past 90 days.

Triveni’s rise in share price comes as reports suggest that the company will cater to the entire 3-100 MW markets globally. The stock rose 5% in trade on October 21, after the news came to light. Currently, the company has a market share of more than 50% and the order book of the company stands at Rs 3,610 crore. With rising demand from international markets like Southeast Asia, Europe, West Asia and North America and the ongoing global energy crisis, energy transition through renewable sources and methods will be sped up which is an opportunity to grab.

The growth story does not stop here. The stock rose 2% on Wednesday after declaring its Q2FY23 results. It reports an increase in net profit by 21% QoQ to Rs 46.2 crore. On a YoY basis, this fell 73.4% because of an exceptional item gain in Q2FY22 (settlement amount from litigation between the company and its joint venture). Reports suggest that the management guides a 35% revenue growth for the next few years and aims to maintain the PBT above 20% to maintain high margins. Centrum Broking initiates coverage on the stock with a ‘Buy’ rating and expects a 14% CAGR growth on order inflows over FY22-25E. Triveni Turbines also shows up on a screener of stocks with improving book value per share for the last two years.

Trendlyne's analysts identify stocks that are seeing interesting price movement, analyst calls, or new developments. These are not buy recommendations.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
04 Nov 2022
Market closes higher, Fusion Microfinance's IPO gets bids for 2.95X of the total available shares

Trendlyne Analysis

Indian indices closed in the green after gyrating between gains and losses on a volatile day of trade. India’s October Services PMI rose to 55.1 compared to 54.3 in September on the back of strong domestic demand and fast-paced job growth. European indices traded higher than Thursday’s levels. Major Asian indices closed higher on speculations over lifting of Covid restrictions in China.

US indices fell on Thursday as investors assessed the US Fed’s Hawkish commentary while awaiting the US jobs report, scheduled to be released later today. The tech-heavy NASDAQ 100 fell 2% while the Dow Jones closed 0.5% lower. The Bank of England raised its key interest rate by 0.75% - its biggest rate hike in three decades to fight high inflation. Brent crude oil prices traded over 2% higher after falling by 1% on Thursday.

Nifty Smallcap 100 closed in the green, following the benchmark index. Nifty Media and Nifty Metal closed sharply higher than Thursday’s close. Nifty IT closed in the red, taking cues from the NASDAQ 100, which fell 2% on Thursday.

Nifty 50closed at 18,127.90 (75.2, 0.4%), BSE Sensexclosed at 60,950.36 (114.0, 0.2%) while the broader Nifty 500closed at 15,536.95 (52.3, 0.3%)

Market breadth is in the green. Of the 1,917 stocks traded today, 1,043 were on the uptick, and 824 were down.

  • Money Flow Index (MFI) indicates that stocks like Bank of India, Canara Bank, Syngene International, and Engineers Indiaare in the overbought zone.

  • State Bank of Indiaand Rail Vikas Nigamhit all-time highsof Rs 592 and Rs 46.5 respectively. Both stocks rise for five consecutive sessions.

  • Cipla is falling despite its Q2FY23 net profit rising 10.9% YoY to Rs 788.9 crore. Revenue grows by 5.6% YoY led by the pharmaceuticals segment rising 5.1% YoY. The stock makes it to the screener with companies that have low debt.

  • Global Health’s Rs 2,205.6 crore IPO gets bids for 49% of the available 4.7 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 25% of the available 2.3 crore shares on offer.

  • Jute & Jute Products, Commodity Trading & Distribution, and Financial Institutions industries rise more than 10% over the past week.

  • Bikaji Foods' Rs 881.2 crore IPO gets bids for 1.5X of the available 2.06 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 2.3X of the available 1.01 crore shares on offer.

  • Fusion Microfinance's Rs 1,103.9 crore IPO gets bids for 2.95X of the available 2.1 crore shares on offer on the last day of bidding. The retail investor quota gets bids for 51% of the available 1.07 crore shares on offer.

  • Indian Energy Exchange’s total production volume falls 13% YoY to 7,972 million units due to the high volume base of October 2021. However, according to National Load Dispatch Center’s data, energy consumption is up 1% YoY to 115 billion units.

  • Axis Direct upgrades its rating on Cholamandalam Investment & Finance Co to ‘Buy’ from ‘Hold’ with a target price of Rs 845. This indicates an upside of 13%. The brokerage’s outlook toward the company’s prospects turns positive on the back of rising loan disbursements, a comfortable liquidity position, and a diversified portfolio mix. It expects the company’s net profit to grow at a CAGR of 25.9% over FY22-25.

  • Brent crude prices fall to $94.45 per barrel amid higher interest rate concerns from the Central Bank of the US and fresh Covid outbreaks in China.

  • Bharat Electronics signs a memorandum of understanding (MoU) with Motorola for cooperation in broadband and push-to-talk service project, according to reports. It will permit the companies to connect their teams with higher speed and efficiency by utilising Motorola WAVE PTX, a push-to-talk service.

  • JK Lakshmi Cement is rising even though its Q2FY23 net profit fell 27.6% YoY to Rs 61 crore due to high power and fuel costs. Its revenue improved 13.6% YoY to Rs 1,373.6 crore. The stock shows up on the screener for companies with a rising revenue sequentially for the past three quarters.

  • RateGain falls in trade as 28 lakh shares (2.6% equity) amounting to Rs 78.9 crore change hands, according to reports.

  • IT stocks like Persistent Systems, Infosys, Coforge, and Mphasis are falling in trade. The broader sectoral index Nifty ITis also trading in the red.

  • Vodafone Idea, Jamna Auto Industries, and Hindustan Petroleum Corp trade below their second support or S2 level as the market grows volatile.

  • Cochin Shipyard is rising as it bags an order worth Rs 1,000 crore to construct two commissioning service operation vessels from a European client. The project is expected to be completed in 35 months. The company makes it on a screener for stocks that gained more than 20% in one month.

  • Nomura upgrades its rating on Larsen & Toubro to ‘Buy’ with a target price of Rs 2,425. The brokerage says that the capex plans in India and the Middle East seem to be going strong for the company. However, its EBITDA margin guidance of 9.5% may be difficult to attain.

  • Kalpataru Power Transmission rises as it receives new orders worth Rs 3,567 crore on a consolidated basis for transmission and distribution, water, railway, pipeline and other overseas projects. Its subsidiary JMC Projects is also increasing after bagging orders worth Rs 2,277 crore in the water and building & factories segments.

  • Metal stocks like Vedanta, Jindal Steel & Power, and Hindalco Industries are rising in trade. All constituents of the broader BSE Metal index are trading in the green.

  • Amara Raja Batteries is rising as its Q2FY23 net profit rises 39.4% YoY to Rs 201.2 crore. The rise in revenue aids the company's EBITDA margin to grow by 140 bps YoY to 13.3%. The company features in a screener reflecting stocks with zero promoter pledge.

  • Indian rupee rises to 82.66 against the US dollar in the early trade today.

  • Vodafone Idea’s Q2FY23 net loss widens to Rs 7,592.5 crore against Rs 7,295.7 crore in Q2FY22. However, its revenue from services rose 2% QoQ as average revenue per unit (ARPU) grew 2.3% QoQ to Rs 131. Akshaya Moondra, CEO of the company, says, "We continue to remain engaged with our lenders and investors for further fundraising to make required investments for network expansion and 5G rollout."

  • Hero MotoCorp’s Q2FY23 net profit falls by 7.7% YoY to Rs 688.4 crore on the back of high input costs and weakening rural demand. However, revenue rises 7.3% YoY to Rs 9,158.2 crore. Niranjan Gupta, CEO of the company says, “The global macro headwinds may keep the playfield a bit uncertain, and navigating the same over the next few quarters will be important.” The stock shows up on a screener of companies with an improving book value per share over the last two years.

Riding High:

Largecap and midcap gainers today include Indian Overseas Bank (21.70, 11.86%), Adani Enterprises Ltd. (3,833.25, 6.76%) and The New India Assurance Company Ltd. (94.75, 6.76%).

Downers:

Largecap and midcap losers today include Aditya Birla Fashion and Retail Ltd. (330.65, -6.17%), Varun Beverages Ltd. (1,138.90, -4.21%) and Hindustan Petroleum Corporation Ltd. (203.60, -3.53%).

Volume Shockers

42 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Indian Overseas Bank (21.70, 11.86%), Amara Raja Batteries Ltd. (569.40, 9.55%) and Punjab & Sind Bank (18.65, 9.06%).

Top high volume losers on BSE were Ajanta Pharma Ltd. (1,256.20, -6.79%), Aditya Birla Fashion and Retail Ltd. (330.65, -6.17%) and Hindustan Petroleum Corporation Ltd. (203.60, -3.53%).

GMM Pfaudler Ltd. (1,975.60, 6.12%) was trading at 14.8 times of weekly average. The New India Assurance Company Ltd. (94.75, 6.76%) and Exide Industries Ltd. (175.55, 6.49%) were trading with volumes 14.8 and 13.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

18 stocks overperformed with 52-week highs, while 6 stocks hit their 52-week lows.

Stocks touching their year highs included - Bank of India (67.50, 5.47%), Bank of Maharashtra (22.75, 7.82%) and Bharat Heavy Electricals Ltd. (76.05, 0.93%).

Stocks making new 52 weeks lows included - GlaxoSmithKline Pharmaceuticals Ltd. (1,345.80, -1.13%) and TV18 Broadcast Ltd. (36.25, 4.77%).

12 stocks climbed above their 200 day SMA including Amara Raja Batteries Ltd. (569.40, 9.55%) and Vedanta Ltd. (321.95, 6.29%). 14 stocks slipped below their 200 SMA including Indigo Paints Ltd. (1,542.65, -5.34%) and Kansai Nerolac Paints Ltd. (448.00, -3.52%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
03 Nov 2022
Market closes lower, Global Health’s IPO gets bids for 26% of the total available shares

Trendlyne Analysis

Nifty 50 recovered over 90 points from the day’s low but still closed in the red on a volatile day of trade. European stocks followed the global trend and traded lower than Wednesday’s close ahead of Bank of England’s key policy meeting. Major Asian indices closed in the red, in line with the US indices, which closed sharply lower on Wednesday.

The US Federal Reserve delivered another 75 bps rate hike on Wednesday, taking the federal funds rate from 3.75% to 4% - its highest level in 15 years. Though the Fed hinted at slower rate hikes going forward, Fed Chairman Jerome Powell said that it was too soon to speculate on a pause in rate hikes. In reaction, the tech-heavy NASDAQ 100 fell 3.4% while the Dow Jones closed over 1.5% lower on a volatile day of trade.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, despite the benchmark index closing in the red. Nifty Bank and Nifty Realtyclosed higher than Wednesday’s levels. Nifty IT closed in the red, taking cues from the NASDAQ 100, which closed over 3% lower on Wednesday.

Nifty 50closed at 18,048.05 (-34.8, -0.2%), BSE Sensexclosed at 60,836.41 (-69.7, -0.1%) while the broader Nifty 500closed at 15,481.50 (-16.1, -0.1%).

Market breadth is balanced. Of the 1,923 stocks traded today, 889 showed gains, and 976 showed losses.

  • Relative strength index (RSI) indicates that stocks like Godfrey Phillips India, Mazagon Dock Shipbuilders, Bank of India, and Sun Pharmaceutical Industries are in the overbought zone.

  • Housing Development Finance Corp's Q2FY23 net profit rises 17.8% YoY to Rs 4,454 crore. The monetary policy and interest rate hikes have aided the net interest income (NII) to grow 13% YoY to Rs 4,639 crore. The company features in a screenerfor stocks with an improving book value per share for the past two years.

  • Commodity Printing/Stationery, Biotechnology, and Non-Durable Household Productsindustries risemore than 3% in trade today.

  • Ed Yardeni of Yardeni Research expects further rate hikes by the US Federal Reserve to combat inflation. This comes after the Central Bank raised the policy rate by 75 bps yesterday.

  • Global Health’s Rs 2,205.6-crore IPO gets bids for 26% of the available 4.7 crore shares on offer on the first day of bidding. The retail investor quota gets bids for 12% of the available 2.3 crore shares on offer. The IPO consists of a fresh issue of Rs 500 crore and an offer for the sale of Rs 1,705.6 crore.

  • Bikaji Foods' Rs 881.2-crore IPO gets bids for 67% of the available 2.06-crore shares on offer on the first day of bidding. The retail investor quota gets bids for 1.1X of the available 1.01-crore shares on offer. The IPO consists entirely of an offer for sale of Rs 881.2 crore.

  • Cipla rises in trade as around 9.08 lakh shares (0.1% equity) amounting to Rs 106.1 crore change hands at Rs 1,168.8 per share, according to reports.

  • Alembic Pharmaceuticals rises with final approval from the US FDA for ketorolac tromethamine injections. It is used to treat acute pain in adults. According to IQVIA, the injection has an estimated market size of $ 59 million for 12 months ending June 2022.

  • Defence stocks like Bharat Electronics, Bharat Dynamics, and Data Patterns (India) are rising in trade. All constituents of the broader Defence industry trade in the green.

  • Fusion Microfinance's Rs 1,103.9-crore IPO gets bids for 29% of the available 2.1-crore shares on offer on the second day. The retail investor quota gets bids for 31% of the available 1.07-crore shares on offer.

  • PSU Banks like Punjab National Bank, Bank of Maharashtra, Central Bank of India, and UCO Bank are rising in trade. All constituents of the broader Nifty PSU Bank index are trading in the green.

  • Amid strong domestic demand and fast-paced job growth, India’s Services PMI rises to 55.1 in October, against 54.3 in September.

  • ICICI Securities upgrades its rating on Dalmia Bharat to ‘Buy’ from ‘Add’ and raises its target price to Rs 2,000 from Rs 1,750. This implies an upside of 25.4%. The brokerage turns positive on Dalmia Bharat despite the firm’s net profit falling 77.5% YoY in Q2FY23. It believes that the company's margin would improve in H2FY23 with the falling price of raw materials and fuel. The brokerage expects the company’s revenue to grow at a CAGR of 13.7% over FY22-25.

  • Triveni Turbine falls as its Q2FY23 net profit dips 73.4% YoY to Rs 46.2 crore. The net profit fell as a result of the high base in Q2FY22 due to the income from exceptional items. Its board of directors also seek shareholders' approval for a share buyback of Rs 190 crore at Rs 350 per share.

  • Goldman Sachs gives ‘Sell’ rating to Bajaj Finance, SBI Cards and Payment Services, and PNB Housing Finance as it believes that a higher loan-deposit ratio could impact NBFCs by tightening liquidity. ICICI Bank, Kotak Mahindra Bank, and State Bank of India are its top picks and gives them 'Buy' ratings.

  • The US FDA issued Form 483 to Lupin with five observations of the company. The inspection was conducted at Lupin’s Nagpur manufacturing unit. Reports also suggest that the US FDA issued a warning letter to Lupin on API manufacturing lapses at its Tarapur plant in Thane.

  • EIH is falling despite posting a net profit of Rs 24.6 crore in Q2FY23, compared to a loss of Rs 37.1 crore in Q2FY22. The company’s revenue surged 68.2% YoY to Rs 417 crore. The stock shows up on the screener listing companies with an improving cash flow and high durability.

  • Morgan Stanley maintains its ‘Overweight’ rating on Dalmia Bharat with a target price of Rs 1,850. The brokerage says that the company’s results were in line with the estimates, compared to its peers, but had lower volumes. This comes after the company's net profit fell 77.5% YoY to Rs 46 crore.

  • JK Paper is rising as its Q2FY23 net profit jumps 2.7X YoY to Rs 324.2 crore on the back of higher sales volume and realisations. Revenue jumps 74.1% YoY driven by growth in its paper and board segment. The stock shows up on a screener for companies with a high Piotroski score and high RoE and EPS growth.

  • Rakesh Jhunjhunwala's portfolio sees an addition of a 4.2% stake in Karur Vysya Bank, now holds 8.7% in the company.

  • Sunil Singhania and Ashish Kacholia buy 6.1% and 3.7% stakes respectively in Acrysil in Q2FY23. They now hold 12.3% and 7.5% stakes in the company.

  • Bikaji Foods raises Rs 262 crore from anchor investors ahead of its IPO by allotting 87.3 lakh equity shares at Rs 300 per share. Another IPO, Global Health, raises Rs 662 crore. The company allotted 1.9 crore equity shares for Rs 336 per share. Common investors include the Government of Singapore, HDFC MF, Aditya Birla Sun Life, and Max Life Insurance.

  • Relaxo Footwears' Q2FY23 net profit falls 67% YoY to Rs 22.4 crore with revenue decreasing 6.3%. The fall in revenue is because of reduced demand from the mass-selling segment. EBITDA margin dips 7.5 percentage points to 8.9% because of high raw material costs. Ramesh Kumar Dua, Managing Director of Relaxo says, "The consumers were facing inflationary pressures, which affected their affordability, moving them towards cheaper alternatives even at the cost of quality."

Riding High:

Largecap and midcap gainers today include Mahindra & Mahindra Financial Services Ltd. (219.90, 13.58%), Varun Beverages Ltd. (1,189.00, 5.45%) and Punjab National Bank (41.30, 5.22%).

Downers:

Largecap and midcap losers today include Tata Motors Limited (DVR) (229.80, -9.08%), Voltas Ltd. (861.25, -5.28%) and Relaxo Footwears Ltd. (932.25, -4.54%).

Volume Rockets

28 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Mahindra & Mahindra Financial Services Ltd. (219.90, 13.58%), Mas Financial Services Ltd. (904.20, 13.05%) and Indigo Paints Ltd. (1,629.70, 11.91%).

Top high volume losers on BSE were Aavas Financiers Ltd. (1,867.85, -4.74%), KSB Ltd. (1,915.70, -4.57%) and Relaxo Footwears Ltd. (932.25, -4.54%).

Alembic Pharmaceuticals Ltd. (658.15, 7.59%) was trading at 8.9 times of weekly average. Star Health and Allied Insurance Company Ltd. (711.60, -1.83%) and UCO Bank (14.45, 5.47%) were trading with volumes 8.0 and 8.0 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

18 stocks overperformed with 52-week highs, while 6 stocks hit their 52-week lows.

Stocks touching their year highs included - Bharat Forge Ltd. (857.20, 1.18%), Canara Bank (295.05, 1.25%) and Federal Bank Ltd. (137.25, 3.04%).

Stocks making new 52 weeks lows included - Motilal Oswal Financial Services Ltd. (682.00, -0.84%) and Relaxo Footwears Ltd. (932.25, -4.54%).

11 stocks climbed above their 200 day SMA including Indigo Paints Ltd. (1,629.70, 11.91%) and Redington Ltd. (157.20, 6.29%). 12 stocks slipped below their 200 SMA including Bata India Ltd. (1,832.10, -1.53%) and DCM Shriram Ltd. (1,024.05, -1.51%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
02 Nov 2022
Market closes lower, Fusion Microfinance's IPO gets bids for 7% of the total available shares

Trendlyne Analysis

Indian indices closed in the red with the Nifty 50 losing over 60 points and closing below the 18,100 mark. European stocks traded mixed as investors look ahead to the conclusion of a key US Federal Reserve policy-setting meeting today. Most major Asian indices closed higher, despite the US indices closing in the red on Tuesday. US stocks fell as stronger-than-expected US jobs report raised the possibility of the Federal Reserve continuing with its aggressive monetary policy tightening to combat elevated inflation. The tech-heavy NASDAQ 100 closed over 1% lower while the Dow Jones fell 0.2% on a volatile day of trade. Brent crude oil futures traded higher after rising over 2% on Tuesday after the industry report showed a surprise drop in US crude inventories.

Nifty Smallcap 100 and Nifty Midcap 100 closed flat, despite the benchmark index closing in the red. Nifty Bank and Nifty Realty closed lower than Tuesday’s levels. Nifty IT closed in the red, taking cues from the NASDAQ 100, which closed 1% lower on Tuesday.

Nifty 50closed at 18,072.10 (-73.3, -0.4%), BSE Sensexclosed at 60,906.09 (-215.3, -0.4%) while the broader Nifty 500closed at 15,486.70 (-50.7, -0.3%)

Market breadth is balanced. Of the 1,933 stocks traded today, 934 were gainers and 921 were losers.

  • LIC Housing Finance sees a short buildup in its November 24 future series as its open interest rises 100.6% with a put-call ratio of 0.55.

  • Bikaji Foods, a manufacturer of packaged snacks, opens for IPO subscription tomorrow. The price band for the issue is Rs 286-300 per share and is entirely an offer for sale for Rs 881.2 crore. Global Health, a multi-speciality healthcare provider, also opens for IPO subscription tomorrow. The price band for the issue is Rs 319-336 per share and is entirely an offer for sale for Rs 1,705.6 crore.

  • Telecom stocks like Bharti Airtel, Indus Towers, and Vodafone Ideaare falling in trade. The broader Telecom Servicessector drops more than 2%.

  • AIA Engineeringand Torrent Pharmaceuticals hit their 52-week highs of Rs 2,814 and Rs 1,708 respectively. AIA Engineering rises for three sessions, while Torrent Pharmaceuticals trades higher for four sessions.

  • Alembic Pharmaceuticals is rising as it receives final approval from the US Food & Drug Administration for its abbreviated new drug application for mesalamine extended-release capsules. The drug is used to treat inflammation in the digestive system in adults. It is estimated to have a market value of $133 million over the past year till June.

  • Fusion Microfinance's Rs 1,103.9-crore IPO gets bids for 7% of the available 2.1-crore shares on offer on the first day of bidding. The retail investor quota gets bids for 7% of the available 1.07-crore shares on offer. The offer consists of a fresh issue of Rs 600 crore and an offer for the sale of 1.36 crore shares.

  • Devyani International, Varroc Engineering, and Chambal Fertilisers & Chemicals trade below their third support or S3 level as market trades lower.

  • DCX Systems' Rs 500-crore IPO gets bids for 69.8X of the available 1.4-crore shares on offer on the last day of bidding. The retail investor quota gets bids for 61.8X of the available 25.3-lakh shares on offer.

  • Bofa upgrades its rating on FSN E-Commerce Ventures (Nykaa) to ‘Buy’ with a target price of Rs 1,555. The brokerage believes that the company is in a better position to sustain its revenue growth and margin improvement. This comes after the company's net profit rose 251.1% YoY to Rs 4.1 crore and revenue grew 39% YoY to Rs 1,230.8 crore in Q2FY23.

  • HDFC Securities upgrades its rating on Tata Power to ‘Add’ from ‘Reduce’ with a target price of Rs 243, indicating an upside of 6.1%. The brokerage’s outlook on the company’s prospects turns positive on the back of a growing order book and a decline in loss from the Mundra power plant. It expects the firm’s revenue to improve at a CAGR of 11.3% over FY22-25.

  • Distributors, Food & Drugs Retailing, and Jute & Jute Products industries rise more than 24% in trade in the past month.

  • NCC is rising as it wins two orders worth Rs 1,056 crore from state government agencies related to the water and environment division.

  • TVS Motor Co is falling despite its monthly sales in October rising by 2% YoY to 360,288 units, driven by a 7% YoY growth in domestic two-wheeler sales. Its scooter sales rise 20% YoY, whereas its motorcycle sales decline 4.5% YoY. Three-wheeler sales rise 16% YoY to 15,658 units.

  • Centre reduces the windfall tax on locally produced crude oil to Rs 9,500 per tonne from Rs 11,000 earlier. But it increases the export tax on diesel to Rs 13 per litre from Rs 12 and aviation turbine fuel (ATF) to Rs 5 per litre from Rs 3.5.

  • Fusion Microfinance raises Rs 331.2 crore from anchor investors ahead of its IPO, which opens up for subscription today. The company allotted 89.99 lakh equity shares at Rs 368 per share to anchor investors. The investors include Nomura Trust, ICICI Prudential, Edelweiss and others.

  • Infosys' board of directors to seek approval from shareholders for a share buyback of Rs 9,300 crore from November 3 to December 2. The IT company's board had previously announced the buyback at Rs 1,850 per share through the open market route.

  • BC Asia Investments VII sells a 0.54% stake (1.6 crore shares) in Axis Bank for Rs 1,486.8 crore in a bulk deal on Tuesday.

  • Kansai Nerolac Paints’ Q2FY23 net profit rises 23.4% YoY to Rs 113.7 crore with revenue improving 19% YoY. The management says that raw material prices have started to cool off. However, the company reports an increase in input costs by 11.2% YoY in Q2. Anuj Jain, Managing Director of Kansai Nerolac Paints, says, “Company has taken price increase in both decorative and industrial segments and continues to be in discussion with OEMs for further price increases.” The company shows up on a screener of stocks with improving book value for the last two years.

  • Karnataka Bank rises in trade as around 22.57 lakh shares (0.7% equity) amounting to Rs 25.13 crore change hands, according to reports.

  • Adani Ports & Special Economic Zone (APSEZ) is falling despite its Q2FY23 net profit rising 76.3% YoY to Rs 1,677.5 crore on the back of robust cargo volumes. Revenue improves 47.5% YoY, driven by a 30.5% growth in the port activities segment. Karan Adani, CEO and Managing Director of the company, said, “Extending this strong performance into October, APSEZ achieved 200 MMT of cargo throughput within seven months, another milestone.”

  • Tech Mahindra’s Q2FY23 net profit rises 13.6% QoQ to Rs 1,285.4 crore. Revenue grows by 3.3% QoQ on the back of communications, media, and entertainment (CME) segment. In terms of geography mix, the US market drives revenue growth for the company. Its attrition rate falls by 200 bps QoQ to 20%. The stock shows up on a screener for companies with revenue rising sequentially for the past eight quarters.

Riding High:

Largecap and midcap gainers today include Gland Pharma Ltd. (1,879.95, 5.25%), Cholamandalam Investment & Finance Company Ltd. (744.70, 4.96%) and Sun TV Network Ltd. (544.10, 4.11%).

Downers:

Largecap and midcap losers today include LIC Housing Finance Ltd. (366.65, -8.45%), Kansai Nerolac Paints Ltd. (467.10, -3.57%) and Bharti Airtel Ltd. (809.85, -3.08%).

Crowd Puller Stocks

26 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Mazagon Dock Shipbuilders Ltd. (724.60, 13.56%), Vakrangee Ltd. (34.00, 7.94%) and Redington Ltd. (147.90, 7.68%).

Top high volume losers on BSE were LIC Housing Finance Ltd. (366.65, -8.45%), Chambal Fertilisers & Chemicals Ltd. (308.05, -5.54%) and Devyani International Ltd. (187.30, -3.63%).

Westlife Development Ltd. (763.50, 2.89%) was trading at 19.6 times of weekly average. Bayer Cropscience Ltd. (4,584.80, -0.65%) and Kansai Nerolac Paints Ltd. (467.10, -3.57%) were trading with volumes 7.1 and 6.2 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

13 stocks took off, crossing 52-week highs,

Stocks touching their year highs included - AIA Engineering Ltd. (2,773.70, 2.74%), Bharat Forge Ltd. (847.20, -0.41%) and Coal India Ltd. (245.80, 0.06%).

19 stocks climbed above their 200 day SMA including Vakrangee Ltd. (34.00, 7.94%) and Redington Ltd. (147.90, 7.68%). 7 stocks slipped below their 200 SMA including LIC Housing Finance Ltd. (366.65, -8.45%) and Shree Cements Ltd. (22,327.20, -1.38%).

 
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The Baseline
02 Nov 2022
Chart of the week: Subscriptions spike for Reliance Jio, Bharti Airtel as telcos get ready for 5G
By Abdullah Shah

India is all set to go 5G as major telecom companies, including Jio and Bharti Airtel, have started the rollout. India's 5G entry was made official at the Indian Mobile Congress (IMC) event held in New Delhi on October 1. 

Reliance Jio picked Diwali to launch 5G, hinting that beta testing had launched on October 5. Bharti Airtel launched the service in eight Tier 1 cities on October 8. Vodafone Idea however, has not yet announced the date of its 5G launch or the cities where the service would be available.

5G will be the next big battle for domination among India's telecom companies. In the meantime, we take a look at their monthly subscription numbers over the past six months in this edition of chart of the week.

Reliance Jio’s active subscriptions took a hit in July but bounced back in August as it rose almost 1% to 38.5 crore. The data indicates that 91.8% of its total subscribers are active. The company had posted an average revenue per unit (ARPU) of Rs 176 in Q1FY23. 

Bharti Airtel’s active subscribers in August rose 0.5% to 35.8 crore. It has the highest proportion of active subscribers to total subscribers, 98.3%. The company’s average revenue per unit (ARPU) has also been the highest, at Rs 183.

Vodafone Idea on the other hand, has seen its active subscribers decline in the past six consecutive months and fell 1.4% to 21.4 crore in August. Only 84.8% of the company’s total subscribers are currently active. The company had posted an average revenue per unit of Rs 128 in Q1FY23.

According to ICICI Direct, the telecom sector is due to see a rise in ARPU in H2FY23. This rise will come on the back of a higher number of days and residual benefits of the tariff hike. 

 
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The Baseline
01 Nov 2022
As investors seek alpha, DVM investing strategies beat benchmarks by big margins
By Tejas MD

Investors and traders are always on the hunt for alpha –  gaining excess returns on an investment relative to the benchmark index. But managing a portfolio that delivers this magic consistently, and over a period of time is something very few investors/traders are capable of. 

Why is this so difficult? A lot of factors come in the way of consistent alpha. A rising dollar may force foreign investors to temporarily exit the market, and cause indices to fall. Stocks in entire industries may fall as the sector struggles. Trading volumes may decline with changes in government regulations, or with a sharp economic downturn.

Investors also differ from traders, in seeking returns over a longer period, while investing in fewer stocks.  These investors don’t like bear market periods as a result, as even sound investments can see share price declines. Traders on the other hand, take advantage of both rising and falling markets to enter and exit positions over a shorter period, and take smaller and more frequent profits. 

Using DVM scores to deliver alpha on investments

Trendlyne’s durability (D), valuation (V), and momentum (M) scores allow investors to evaluate all aspects of a stock. By choosing from curated screeners or by creating your own, users can make use of these stock scores to devise a high-return trading or investing strategy. One can also backtest these screeners on Trendlyne to see how a particular strategy performed in the past. The backtests also have various filters that let you change the frequency of portfolio review, control for the number of stocks invested in each period, etc. 

There is no one-size-fits-all strategy in investing or trading. A Momentum Score strategy, which looks for stocks with bullish technicals, is more suitable for traders with an appetite for higher risk, who are very active in the stock market. While the Valuation Score strategy is suitable for value investors who are always looking for stocks that are undervalued, a Durability Score strategy which selects financially healthy companies, is for those looking for lower risk and in it for the long game.

Finally, combinations of these scores help investors identify high-quality stocks that may favor one approach over another. 

Let’s look at strategies that use these three DVM metrics individually, evaluate the results and then move on to combining these parameters in search of a better strategy. 

A Momentum Score strategy favours traders, but comes with caveats

This Momentum Score screener helps select high-momentum (technically bullish) stocks with sufficient volumes, so that it is easy for investors to enter and exit. This strategy outperformed all others as it delivered the highest CAGR over a shorter time frame (one to three years). This is optimal for short-term traders who are active in the stock market. Surprisingly, it also performed the best even in volatile markets, as it focuses only on stocks with the highest momentum score. With weekly portfolio reviews, this strategy delivered a stellar three-year CAGR of 301% against Nifty 50’s CAGR of 16%. 

The period analysis, which shows the returns every week, is also mostly in green. However, the maximum drawdown over longer investing time periods. 

Maximum drawdown is the biggest observed loss from a peak to a trough of a portfolio before a new peak is attained. This did not have a stop loss, so the drawdowns show the maximum possible with this strategy. 

Things to watch out for while employing this strategy: 

  1. A weekly portfolio review is essential since the momentum score is sensitive to share price changes, and can cause higher stock entries and exits. A stop loss can also reduce negative return periods. 
  2. Some stocks hit the upper/lower circuit as soon as the markets open–sometimes even before the market opens–in pre-market trading itself. Hence, in some cases, it can become difficult to enter/exit the stock when required. 
  3. For longer term investors, other strategies are more optimal as weekly portfolio reviews may not be feasible for everyone. In those cases, valuation and other strategies perform better. 

A Valuation Score strategy delivers stellar long term returns, but has the highest drawdown

The Valuation Score trading strategy performs best in a longer time frame (10 years). This could be due to markets taking time to discover the stock’s true value and price it accordingly. The screener includes high valuation score stocks with sufficient volumes so that it is easy for investors to enter and exit.

Since the stock's Valuation Score changes with share price movement, it is necessary to review the portfolio every quarter. In fact, a quarterly review (as opposed to a yearly review) allows investors to select optimal stocks based on the screener and get maximum returns. In addition, limiting the number of stocks selected during each period keeps this number manageable (stocks can be limited under the ‘Advanced’ option in the screener - see image below)

Under these conditions, the strategy delivered a staggering 93.7% CAGR over 10 years. 

However, investors will have to endure a high drawdown when following this strategy. Another important thing to note is that a single stock could be responsible for a significant portion of the returns. 

In the top valuation score strategy for instance, Sunil HiTech Engineers (now delisted) delivered over 5,400% returns. So, missing a key stock could lead to lower-than-expected returns. In addition, not all low-valuation score stocks are undervalued stocks. There could be several reasons for low share price relative to earnings–litigations, distorted earnings due to one-time gains, etc. So, there is a chance that affordable stocks can plunge further in share price. In this strategy for example, Gitanjali Gems lost big as long-hidden fraud came into view –95% of its value. 

Good for low risk investors: With lower drawdowns, the Durability Score strategy delivers results when combined with other metrics

The Durability Score strategy is most effective in relatively short terms (three years) for investors, as it delivers higher returns during this period, compared to others. Like the other two strategies, a quarterly review of stocks and controlling the number of stocks to five shows high returns for investors.

Compared to other strategies which are heavily dependent on the share price, this has a relatively lower drawdown. This could be due to the presence of fundamentally strong companies in this screener. However, it becomes more effective when combined with other metrics like valuation score. 

One such strategy can be devised, by using a screener that lists high DVM-score stocks with tradable volume. Another option is to use one of Trendlyne’s expert screeners–DVM - High Return, Highly Durable Companies. This includes companies with high DVM scores with rising stock prices and strong fundamental growth. When this expert screener is used, returns increase significantly, compared to the high DVM strategy that only uses stock scores. 

This is particularly effective for a long term (10 years), with quarterly portfolio review, and controlled for five stocks. The top strategy in this category delivered 85.4% CAGR with a maximum drawdown of 53%. In addition, filtering for Nifty 500 stocks made marginal changes in the returns, but reduced drawdown. But filtering for Nifty 50 stocks led to underperformance, mainly because of the low number of stocks selected due to stringent parameters. 

Not surprisingly, period analysis is mostly in the green as the stocks selected here are fundamentally strong. 

The DVM expert screener performs the best, when accounting for drawdowns

When mid to long-term strategies across different categories are considered, high-valuation stocks deliver the highest returns. But when we consider the maximum drawdown along with the CAGR, the expert screener comes out ahead as it has a lower drawdown. 

The expert screener (DVM - High Return, Highly Durable Companies), delivered returns at a whopping 85% CAGR–meaning an investment of Rs 10,000 10 years ago is now worth over Rs 38.2 lakh. All an investor needed to do was to review the portfolio quarterly and shuffle it according to the entry and exit of stocks in the expert screener and stay invested. 

This is just the tip of the possibilities available to investors. Investors can use several different parameters such as PE ratio and ROE  to create screeners and backtest it to calculate the returns that particular strategy has delivered over a selected period. Combining these with Trendlyne’s stock scores can, as we saw above, substantially increase your alpha.

Investors can also choose several expert screeners encompassing different parameters and investment philosophies and backtest them to come up with a trading strategy that works for them. 

 
Trendlyne Marketwatch
Trendlyne Marketwatch
01 Nov 2022
Markets close higher, Dhanuka Agritech approves share buyback

Adani Enterprises Ltd. (3575.70, 6.82%), Adani Wilmar Ltd. (716.45, 6.55%) are among the top gainers as markets close higher. Nifty 50 closed at 18145.40 (133.2, 0.7%) , BSE Sensex closed at 61121.35 (374.8, 0.6%) while the broader Nifty 500 closed at 15537.40 (113.4, 0.7%)

Market breadth is horizontal. Of the 1928 stocks traded today, 971 were gainers and 883 were losers.

Markets will be closely watching comments from the US Federal Reserve tomorrow. Even as the Fed struggles to control inflation, it is facing financial markets and a non-bank sector that has adapted to a very low-interest rate regime. 

While the Fed is expected to make another big interest rate hike of 75 bps, Fed watchers are hoping that the Fed will signal a slowdown in subsequent hikes to limit the fallout in the domestic and international economy. But historically, control over persistent inflation has not come without economic pain. 

  • India's foreign exchange reserves are set to drop more than was predicted by the end of the year, as the Reserve Bank of India cushions the rupee against a rising dollar, according to a Reuters poll of economists. The RBI has drawn down approximately $118 billion from its currency reserves (from a peak of $642 billion in September 2021). Despite this, the rupee has dropped over 10% in the past year against the dollar.

  • Dhanuka Agritech board approves a share buyback at Rs 850 per share. The board has fixed November 18 as the record date for the buyback offer.

  • Steel Strip Wheels in its October update, says that revenue grew by 11% YoY  for the month, with the biggest jump (103%) in the alloy wheels segment. 

  • India's manufacturing PMI rose in October, to 55.3 from 55.1 in September (a reading above 50 indicates expansion in manufacturing activity). 

  • Pharma companies Torrent Pharma and Cipla hit their all time highs today. Pharma and healthcare indices are among those rising sharply today.

  • Brokerages expect the Indian stock market to be resilient according to an ET survey, despite rising global stresses and a strengthening dollar. 

  • Crude oil prices are rising again after it had softened from the ~$120 per barrel levels it hit mid June 2022. With prices hovering at around $95 per barrel, analysts predict that it will cross "well above" $100 levels in December, as EU restrictions on Russian oil go into effect on December 7.  

  • Recently listed startups Delhivery and Nykaa are rising sharply today on the back of earnings buzz. In its recent October update, Delhivery said that it had "successfully onboarded 200+ new customers in Q2FY23, driven by improving service metrics". Nykaa's long term share price trend has been unfavourable - the stock has fallen over 12% in the last three months.  

  • HDFC Securities downgrades Bandhan Bank from 'Buy' to 'Accumulate' after the bank's Q2 results missed its estimates, and saw its asset quality weaken and write-offs accelerate. The analysts' outlook on the bank minced no words, saying that Bandhan Bank faces "existential questions on the quality and recoverability of its core customer franchise."

  • Speaking of FIIs, they have turned net buyers in the Indian stock market over the last three days, after selling Indian stocks in the last month. 

  • FII shareholding in infrastructure conglomerate Larsen & Toubro recovered in the September quarter after falling in June. 

  • Axis Bank is an outlier among finance stocks today, as it falls sharply on news that Bain Capital plans to sell a 1.24% stake in the bank through block deals. This stake would be worth around Rs 3,400 crore.

Riding High:

Largecap and midcap gainers today include Adani Enterprises Ltd. (3575.70, 6.82%), Adani Wilmar Ltd. (716.45, 6.55%) and Divi's Laboratories Ltd. (3836.45, 6.31%).

Downers:

Largecap and midcap losers today include Punjab National Bank (40.10, -5.98%), Axis Bank Ltd. (871.75, -3.78%) and Union Bank of India (52.60, -2.41%).

Movers and Shakers

25 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included ITI Ltd. (115.10, 8.48%), Shree Renuka Sugars Ltd. (58.35, 7.96%) and Godfrey Phillips India Ltd. (1590.55, 7.14%).

Top high volume losers on BSE were Timken India Ltd. (2828.85, -5.72%), Escorts Kubota Ltd. (2008.50, -1.46%) and IFB Industries Ltd. (939.80, -1.24%).

TCI Express Ltd. (1873.95, -1.01%) was trading at 12.0 times of weekly average. Heidelberg Cement India Ltd. (199.10, 5.29%) and Divi's Laboratories Ltd. (3836.45, 6.31%) were trading with volumes 6.3 and 5.6 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

22 stocks overperformed with 52 week highs, while 2 stocks tanked below their 52 week lows.

Stocks touching their year highs included - AIA Engineering Ltd. (2699.65, 0.67%), Bank of Baroda (147.70, 0.00%) and Bharat Forge Ltd. (850.70, 1.98%).

Stocks making new 52 weeks lows included - Intellect Design Arena Ltd. (425.10, -1.51%) and Chemplast Sanmar Ltd. (381.00, 1.55%).

21 stocks climbed above their 200 day SMA including ITI Ltd. (115.10, 8.48%) and Equitas Holdings Ltd. (107.95, 6.99%). 5 stocks slipped below their 200 SMA including Swan Energy Ltd. (211.70, -6.53%) and Blue Dart Express Ltd. (7347.30, -3.16%).