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Trendlyne Marketwatch
Trendlyne Marketwatch
14 Jun 2022, 03:50PM
Market closes lower, Bajaj Finance touches a new 52-week low of Rs 5,284

Trendlyne Analysis

Indian indices closed in the red after gyrating between losses and gains on a volatile day of trade. India’s consumer price index or CPI eases to 7.04% in May but remains well above the central bank’s upper tolerance level of 6%. Most European indices trade higher amid mixed global cues. Major Asian indices closed lower, tracking the US indices, which closed deep in the red on Monday. The S&P 500 officially entered the bear market territory after falling more than 20% from its high. The tech-heavy NASDAQ 100 fell 4.7% and the Dow Jones declined by 2.8% on Monday. Crude oil edges higher despite recessionary fears and reduced demand from China due to new Covid curbs.

Nifty Next 50 closed in the green, despite the benchmark index closing flat. Nifty Metal and Nifty Realty closed higher than Monday’s levels. Nifty IT closed marginally higher, taking cues from the tech-focused NASDAQ futures, which is trading in the green.

Nifty 50 closed at 15,732.10 (-42.3, -0.3%), BSE Sensex closed at 52,693.57 (-153.1, -0.3%) while the broader Nifty 500 closed at 13,388.30 (-28.6, -0.2%)

Market breadth is in the red. Of the 1,873 stocks traded today, 771 were on the uptrend, and 1,034 went down.

  • ZF Commercial Vehicle Control Systems India, Relaxo Footwears, Ratnamani Metals & Tubes, and Jyothy Labsare trading with higher volumesas compared to Monday.

  • Adani Enterprisessees a long build-up in its Jun 30 futures series as its open interest rises 1.9% with put to call ratio at 0.81.

  • Shares of oil marketing companies like Hindustan Petroleum Corp and Bharat Petroleum Corp hit their new 52-week lows after reports of reduction in marketing margins.

  • Stocks like National Aluminium Co, ICICI Lombard General Insurance Co, V Mart Retail, Metropolis Healthcare, and Aditya Birla Sun Life AMC are in the oversold zone according to the technical indicator relative strength index or RSI.

  • Shares of rice mills like Kohinoor Foods and KRBL rise after food secretary Sudanshu Pandey clarifies that there are no plans to restrict rice shipment as there are ample stockpiles of rice.

  • Chemplast Sanmar and Medplus Health Services hit their all-time lows of Rs 430 and Rs 714.5 respectively. While Medplus Health Services trades lower for eight consecutive days, Chemplast Sanmar falls for four days.

  • The Centre plans to restart NTPC plants with a capacity of more than 5 GW to supply power as the monsoon approaches, according to reports. This move comes in as the Centre plans to import gas to meet the rise in power demand. According to a report, the electricity produced from natural gas may cost up to Rs 22-23 per unit, up to 5X higher than the current tariffs.

  • LIC trades in the green for the first time in June 2022. This arrests the stock's 10-day losing streak after listing

  • ICICI Securities maintains a ‘Hold’ rating on Voltas, with a target price of Rs 1,033 indicating an upside of 4%. The brokerage sees limited upside in the stock’s price at current valuations as the company’s market share declines in FY22 and high raw material prices are expected to increase margin pressure in FY23.

  • Shilpa Medicare is trading with more than nine times its weekly average trading volume. SIS, G R Infraprojects, Bajaj Holdings & Investment, and TCNS Clothing Co.are trading at more than three times their weekly average trading volumes.

  • ICICI Direct maintains a ‘Buy’ rating on Trent, with a target price of Rs 1,470, indicating an upside of 34%. The brokerage remains positive on the company’s prospects due to its efficient supply chain, expansion plans, strong liquidity position, and rising online presence. The company’s revenue is expected to grow at a 32.1% CAGR over FY22-24, the brokerage said.

  • India's May wholesale price index comes in at 15.88% against 15.08% in April. This comes after the consumer price index slowed to 7.04% in May against 7.79% in April.

  • G R Infraprojects falls and touches a new 52-week low on reports that the Central Bureau of Investigation conducted searches at various locations. The raids are in connection to an alleged irregularity in the national road highway project in Assam.

  • Adani New Industries, an arm of Adani Enterprises, and TotalEnergies from France ink an agreement to create a green hydrogen ecosystem in India. TotalEnergies will acquire a 25% stake in Adani New Industries. Adani New Industries plans to invest $50 billion over the next 10 years in green hydrogen and associated ecosystem.

  • Shares of Bajaj Finance fall to a new 52-week low of Rs 5,284.2 apiece after falling nearly 5.5% on Monday.

  • WPIL rises in trade as it receives an order worth Rs 430.9 crore from the government of West Bengal to execute a turnkey project. The project involves the construction, design, and commissioning of a clear water reservoir. The project is expected to be completed over a period of 24 months.

  • India's retail inflation marginally slips to 7.04% in May, but stays well above the upper limit of the Reserve Bank of India's target range. Food inflation, which counts for nearly half of the retail inflation basket rises 7.97%, marginally lower than 8.31% in the previous month.

  • Asian Paints touches its 52-week low of Rs 2,585 on the BSE, due to growing margin concerns on account of rising inflation.

  • Dynamatic Technologies is rising as the company receives a contract from Selia Aeronautique Canada, a subsidiary of Airbus Atlantic SAS, to manufacture the escape hatch door for Airbus A220 aircraft.

  • Srei Equipment Finance, a wholly-owned subsidiary of Srei Infrastructure Finance, receives a report from the transaction auditor of fraudulent transactions worth Rs 3,250.7 crore in FY20-21. The application regarding the fraud transactions is filed with the NCLT (National Company Law Tribunal) against 14 respondents, by the auditor. The Srei group companies are currently undergoing an insolvency resolution process.

  • Metropolis Healthcare is falling as reports suggest that, chief executive Ameera Shah and her family have initiated a formal process to sell a part of the promoter stake in the company. However, in a media statement in reference to such reports, the company clarifies that the promoters have no intention of exiting the business and are focusing on strengthening the company’s brand.

  • Amara Raja Power Systems, an arm of Amara Raja Group, grabs a contract from NTPC to set up a green hydrogen fueling station in Leh, according to reports. The pilot project will produce 80 kg per day of 99.97% pure hydrogen which will be utilized for compression, storage, and distribution of the fuel. NTPC also plans to ply five hydrogen fuel buses in the region.

Riding High:

Largecap and midcap gainers today include Adani Enterprises Ltd. (2,196.45, 5.61%), Aurobindo Pharma Ltd. (535.75, 3.67%) and Varun Beverages Ltd. (773.70, 3.43%).

Downers:

Largecap and midcap losers today include Oil India Ltd. (268.15, -5.80%), Hindustan Petroleum Corporation Ltd. (214.00, -5.66%) and Bajaj Auto Ltd. (3,681.75, -5.14%).

Movers and Shakers

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

Top high volume gainers on BSE included TCNS Clothing Co. Ltd. (559.65, 8.35%), Shilpa Medicare Ltd. (449.65, 6.69%) and Swan Energy Ltd. (234.40, 6.47%).

Top high volume losers on BSE were Indiabulls Housing Finance Ltd. (101.75, -3.23%), Crompton Greaves Consumer Electricals Ltd. (317.45, -3.07%) and Tech Mahindra Ltd. (1,030.15, -2.07%).

SIS Ltd. (445.15, -0.84%) was trading at 11.4 times of weekly average. Bajaj Holdings & Investment Ltd. (4,912.40, -0.31%) and Page Industries Ltd. (39,999.75, -1.33%) were trading with volumes 6.4 and 4.3 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock hit its 52-week highs, while 53 stocks tanked below their 52-week lows.

Stock touching their year highs included - Varun Beverages Ltd. (773.70, 3.43%).

Stocks making new 52 weeks lows included - Asian Paints Ltd. (2,635.40, -0.95%) and Bajaj Consumer Care Ltd. (132.15, -2.22%).

4 stocks climbed above their 200 day SMA including Balrampur Chini Mills Ltd. (395.80, 2.69%) and Jyothy Labs Ltd. (149.90, 1.08%). 22 stocks slipped below their 200 SMA including Gujarat State Fertilizer & Chemicals Ltd. (134.30, -5.22%) and Grindwell Norton Ltd. (1,609.95, -3.81%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
13 Jun 2022
Market closes in the red, HDFC Securities maintains a ‘Reduce’ rating on Siemens

Trendlyne Analysis

Nifty 50 fell over 2.6% and closed deep in the red with the volatility index, India VIX, rising above 22%. European indices follow the global trend and trade sharply lower than Friday’s levels. Major Asian indices also closed lower, tracking the US indices which closed in the red on Friday. The US indices fell following a surprise rise in the US consumer price index or CPI to 8.6% in May, which may lead to an aggressive monetary policy from the US Federal Reserve. The tech-heavy NASDAQ 100 fell 3.6% while S&P 500 declined 2.9% on Friday. The shorter term five-year US treasury yields surged higher than the 30-year Treasury notes on fears of recession. Investors also continue to monitor the resumption of Covid-19 lockdowns in parts of China, which could slow down the global economy and disrupt supply chain. India’s index of industrial production or IIP rises to an eight-month high of 7.1% YoY in April led by higher electricity and mining output.

Nifty Next 50 and Nifty Smallcap 100 closed in the red, following the benchmark index. Nifty Media and Nifty Auto closed lower than Friday’s levels. Nifty IT closed in the red, following the NASDAQ 100, which fell 3.6% on Friday.

Nifty 50closed at 15,774.40 (-427.4, -2.6%), BSE Sensexclosed at 52,846.70 (-1,456.7, -2.7%) while the broader Nifty 500closed at 13,416.90 (-364.9, -2.7%)

Market breadth is overwhelmingly negative. Of the 1,900 stocks traded today, 152 were in the positive territory and 1,726 were negative.

  • Orient Electric, Gujarat Fluorochemicals, TTK Prestige, and Macrotech Developers are trading with higher volumes as compared to Friday.

  • Pidilite Industries sees a long build-up in its Jun 30 futures series as its open interest rises 2.2% with put to call ratio at 0.64.

  • Cement stocks like UltraTech Cement, Grasim Industries, Ambuja Cements, Shree Cements, ACC, JK Cement, The Ramco Cements, among others, are falling in trade today. Brokerage Nirmal Bang expects earnings to fall for cement companies because of prolonged cost inflation. Also, falling demand, low pricing power, and rising crude oil prices may dent growth for this sector.

  • Stocks like Chambal Fertilisers & Chemicals, Birla Corporation, Vijaya Diagnostic Centre, Vardhman Textiles, and GMM Pfaudler are in the oversold zone according to the technical indicator relative strength index or RSI.

  • Life Insurance Corp of India hits an all-time low of Rs 669.7, falls for 10 consecutive days. The company falls more than 23% since its listing.

  • Hindustan Zinc touches a 52-week low of Rs 276.25 as the government plans to sell its stake in the company in tranches, the Secretary of Department of Investment and Public Asset Management said on Friday. Last month, the cabinet approved the sale of the government’s stake of 29.5% in the company to raise Rs 38,000 crore.

  • Bajaj Finserv and NMDC touch their 52-week lows of Rs 11,482.5 and Rs 114.8 respectively. While Bajaj Finserv falls for three days, NMDC trades lower for four consecutive days.

  • Future Retail rises as National Company Law Appellate Tribunal (NCLAT) upholds the Competition Commission of India’s decision to suspend the deal between Amazon and Future Coupons, a subsidiary of Future Retail. NCLAT also orders Amazon to pay a Rs 200-crore fine within 45 days for suppressing information during its 2019 deal with Future Coupons.

  • The Nifty IT is falling and is on track for its worst day in over two weeks. All stocks part of the index are falling, with Mindtree and Coforge being losing the most during trade today.

  • G R Infraprojects is trading with more than 28 times its weekly average trading volume. Rajesh Exports, RBL Bank, Relaxo Footwears, and Minda Industriesare trading at more than four times their weekly average trading volumes.

  • HDFC Securities maintains a ‘Reduce’ rating on Siemens and reduces the target price to Rs 2,071 from Rs 2,120. The brokerage cut its target price and continues to remain bearish on the company’s prospects due to supply chain issues impacting its order execution.

  • Rajesh Exports is rising after a subsidiary of the company inked a pact with the Telangana government to set up a fabrication facility in the state with an investment of Rs 24,00 crore. The stock is at the highest level seen in three months.

  • Adani Group is in talks with foreign banks to raise $4.5 billion through a mix of overseas loan instruments, according to reports. The proposed loan structure includes stock-backed bridge loans and a senior debt facility for 18 months. The proceeds of this fundraising will be utilized n the acquisition of Holcim’s stakes in the listed companies Ambuja Cements and ACC.

  • Coal India floats two international competitive bidding e-tenders of three million tonnes each to import coal from abroad. The two medium-term tenders have an option of increasing the bid quantity by 100% to 12 million tonnes.

  • Media stocks like Zee Entertainment Enterprises, Sun TV Network, PVR,Network 18 Media & Investments, and Saregama India, among others, are falling in trade today. The broader sectoral index Nifty Media is also trading in the red.

  • RBL Bank is falling in trade after the RBI appoints R Subramaniakumar as the company’s new Managing Director (MD) and CEO. The appointment comes after the former MD and CEO unexpectedly stepped down.

  • Foreign Portfolio Investors (FPI) pull out Rs 14,000 crore from equities this month because of economic slowdown, high inflation in the US, and supply constraints. Net outflow by FPIs reaches Rs 1.8 lakh crore in 2022.

  • Pharma stocks like Sun Pharmaceutical Industries, Divi’s Laboratories, Dr. Reddy’s Laboratories, Aurobindo Pharma, Abbott India, among others, are falling in trade as the pharma sector continues to underperform due to rising costs and prevailing pricing pressures in the US generic market.

  • Rupee falls to a new all-time low of Rs 78.14 since breaching the record low of Rs. 77.80 and touching new lows over the past few weeks.

  • Public sector banking stocks like State Bank of India, Canara Bank, Punjab National Bank, and Indian Overseas Bank, among others, are falling in trade today. The broader sectoral index Nifty PSU Bank is also trading in the red.

  • CDC Group PLC, a British investment firm, sells a 4.2% stake (1.6 crore shares) in IIFL Finance, worth Rs 526.9 crore, through bulk and block deals. Max Life Insurance and Nomura India Investment Fund pick up 1.8% stake through a bulk deal in IIFL Finance. Superstar Sunil Singhania’s Abakkus Growth Fund-2 also purchases 3.1 lakh shares (0.08% stake), Nomura Funds Ireland PLC buys 6.5 lakh shares (0.17% stake), Employee Provident Fund purchases 5 lakh shares (0.13% stake), L&T Mutual Fund purchases 4.8 lakh shares (0.13% stake), among others.

Riding High:

Largecap and midcap gainers today include Adani Green Energy Ltd. (1,798.70, 2.34%), Honeywell Automation India Ltd. (33,450.05, 2.30%) and Marico Ltd. (500.15, 1.54%).

Downers:

Largecap and midcap losers today include Gujarat Gas Ltd. (447.65, -7.40%), Bajaj Finserv Ltd. (11,386.05, -7.08%) and JSW Energy Ltd. (230.75, -6.86%).

Volume Rockets

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

Top high volume gainers on BSE included Rajesh Exports Ltd. (548.35, 4.91%), Minda Industries Ltd. (895.70, 3.47%) and Sheela Foam Ltd. (2,803.75, 0.10%).

Top high volume losers on BSE were RBL Bank Ltd. (87.85, -22.67%), Punjab & Sind Bank (14.30, -4.35%) and Zee Entertainment Enterprises Ltd. (226.70, -4.00%).

Gillette India Ltd. (4,948.25, -0.12%) was trading at 15.3 times of weekly average. Relaxo Footwears Ltd. (974.90, -1.01%) and Cholamandalam Financial Holdings Ltd. (615.95, -1.29%) were trading with volumes 5.0 and 4.5 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock overperformed with 52-week highs, while 63 stocks were underachievers and hit their 52-week lows.

Stock touching their year highs included - Mahindra Lifespace Developers Ltd. (403.15, -1.71%).

Stocks making new 52 weeks lows included - Astral Ltd. (1,635.90, -0.73%) and Bajaj Finance Ltd. (5,358.25, -5.46%).

27 stocks slipped below their 200 SMA including Sunteck Realty Ltd. (430.80, -7.97%) and Cholamandalam Investment & Finance Company Ltd. (609.00, -6.36%).

 
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The Baseline
13 Jun 2022
In a volatile market, five analyst picks outperforming the Nifty 50

The market opened in the red on Monday after inflation in the US came in hot at 8.6%, a 40 year high. In this volatile market with rising interest rates, analysts are moving towards relatively safer sectors like energy and financials in their picks, as well as sectors with beaten down valuations like hotels.  

Here are five analyst picks that outperformed the Nifty 50 over the month and have a buy call.

  1. Oil India: Prabhudas Lilladher retains its ‘Buy’ call on this oil explorer, with a target price of Rs 344. This indicates an upside of 19.1%. This stock outperformed the Nifty 50 index by 37.5% over the past month. 

“Oil India has aggressive growth plans as it expects a 30% increase in oil volumes to 4 million tonnes per annum by FY25, with the commencement of brownfield expansion projects in Assam,” says analyst Avishek Datta. The company doesn’t expect any cap on gas prices and remains hopeful of another price hike in October 2022. The Numaligarh Refinery (NRL) (Oil India has a 69% stake in the crude oil refiner) is a highly complex refinery and is a prized asset for Oil India, according to the analyst. In FY22, NRL posted an EBITDA of Rs 5,050 crore (up 16% YoY) and profit of Rs 3,560 crore (up 17% YoY).

Datta added that the company invested $990 million in Russian oil and gas fields in CY16. Till the end of FY22, the company received $660 million in dividends from its investment in these fields. The company spent Rs 4,280 croreon capex in FY22 and Datta expects a similar capex in FY22.

  1. City Union Bank: HDFC Securities maintains its ‘Buy’ call on this bank’s stock with a target price of Rs 218, indicating an upside of 62.6%. This stock outperformed the Nifty 50 index by 13.2% over the past month. 

“Despite a higher credit cost (1.8% annualized), City Union Bank’s Q4FY22 earnings were 8% ahead of our estimates on account of higher recoveries from written-off accounts and lower employee costs,” say analysts Krishnan ASV, Deepak Shinde and Neelam Bhatia. The bank’s net interest income grew 16.8% YoY to Rs 500 crore in Q4FY22. The analysts added that “on the back of healthy repayment trends and a highly-secured loan book (99% of loans), the management has guided for higher recoveries and lower credit costs.”

The bank’s gross non-performing assets and net non-performing assets improved QoQ in Q4FY22 to 4.7% and 2.9% (from 5.2% and 3.4%), respectively.  They conclude that  “with credit costs gradually reducing, a stable margin outlook, sustained market share gains will remain a key monitorable for the bank”.  

  1. HDFC Life Insurance: Geojit BNP Paribas reiterates its ‘Buy’ call on this life insurer with a target price of Rs 750, indicating an upside of 29.1%. The company outperformed the Nifty 50 index by 6.8% over the past month. 

In Q4FY22, the company’s gross premium income rose 11.7% YoY to Rs 1,442 crore, (vs. 11.1% industry growth). This, according to the brokerage, was driven mainly by growth in renewal premium (up 15.6% YoY to Rs 734 crore) and first-year premium (up 7.8% YoY to Rs 257 crore). 

The brokerage feels that the “macro drivers for the life insurance sector remain positive, and growth can be witnessed in the significantly under-penetrated prosperous middle class for life insurance in India. Favourable regulatory environment and rapid digitalization initiatives could boost the product mix in the protection business”

  1. Bharat Electronics (BEL): ICICI Direct maintains a ‘Buy’ rating on this defence electronics maker with a target price of Rs 290, indicating an upside of 21.8%. The company outperformed the Nifty 50 index by 9.8% over the past month.

Analysts Chirag Shah and Vijay Goel expect the company’s revenue growth to be driven by growth in orders, a robust balance sheet, and a strong order book. They added that the strategy to diversify into non-defence areas, and a focus on improving exports and services share in revenue would boost long-term revenue growth and reduce risk in its business. The company plans to increase the revenue contribution of the non-defence segment to 20% in 2-3 years from 12% at present, they noted.

BEL bagged orders worth Rs 19,200 crore in FY22, taking its total order backlog to Rs 57,750 crore as of March 2022  The company received export orders worth $179 million in FY22, and the analysts expect the company’s revenue to grow at a 16.8% CAGR over FY22-24.

  1. Lemon Tree Hotels: ICICI Securities maintains a ‘Buy’ rating on this hotel chain and increases its target price to Rs 84 from Rs 80, indicating an upside of 32.8%. The company outperformed the Nifty 50 index by 11.3% over the past month.

The analyst Adhidev Chattopadhyay increased his target price for the stock “owing to the better-than-expected average room rates (ARRs) and occupancies across assets.” According to the analyst, in Q4FY22 ARR grew 54% YoY to Rs 4,093 and in March 2022 occupancies rose to 60%. He added that a strong recovery in business travel and resumption of international flights led to the improvement in occupancy rates in Q4FY22.

Chattopadhyay noted, “based on the strong recovery in demand between March and May 2022, the company now expects FY23 consolidated revenue to grow 100% YoY to Rs 800 crore”. He expects the company’s occupancy rate and ARR to increase further during H1FY23 led by an uptick in business travel. He estimates the company’s revenue to grow at a 52.5% CAGR over FY22-24.

Note: These recommendations are from various analysts and are not recommendations by Trendlyne

 
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The Baseline
10 Jun 2022
Five Interesting Stocks Today
  1. PB Fintech (Policybazaar): On June 6, 2022, the stock price of this insurance aggregator nosedived nearly 12% after its promoter announced plans to sell 37.7 lakh or 0.84% stake in the company. Notably, this stock has lost over 60% of its value from its life-high achieved in November 2021.

PB Fintech’s co-founder Yashish Dahiya held an 11.3% stake in the company back in June 2020 i.e., in the pre-IPO era. His holdings stood at 5.45% as of May 2022 and reduced further to 4.6% post the share sale executed on June 7. According to the official statement, Dahiya seeks to meet his tax obligation arising out of the exercise of employee stock options through this sale deal. Previously in February 2022, the other cofounder Alok Bansal cited a similar reason while selling a 0.6% stake in the company. However, this failed to placate the concerns of investors. Under employee stock option plans, shares of a particular company are granted to key personnel at a very low strike price, generally close to the face value of the share. So, while promoters made a big profit in these deals, retail investors have lost money in PB Fintech ever since its listing. The recent financial performance of the company is also nothing to cheer about.

PB Fintech’s net losses magnified 5.5X YoY to Rs 833 crore in FY22 with its operating cash flows sliding into negative territory. While its topline grew over 60% YoY in FY22, advertising and employee expenses as a % of sales grew sharply by 20%. Moreover, the company's overall contribution margins fell continuously over the last 5 quarters owing to the business initiatives. The new-age startups are clearly playing the greater fool theory quite well. (This theory basically means that investors buy overvalued securities believing that there will be a greater fool willing to pay an even higher price for the same).

  1. Bata India: This footwear retailer’s stock fell over 8% in the last seven trading sessions after its promoters sold a 2.8% stake on June 1, 2022. However, mutual funds increased their holdings in Bata India in the past month. As a result, it shows up in this screener that lists stocks where mutual funds have raised their stakes.

Promoters selling their stake in the company come at a time when it is facing challenging times in terms of revenue growth due to the Covid 19 pandemic. This is reflected in Bata India’s revenue CAGR over FY18-FY22, which stands at -6.6%. However, the company is on a recovery path in FY22. Its revenue rose 12.8% YoY to Rs 684 crore in Q4FY22 and profit jumped 2.1 times to Rs 65 crore. Despite strong YoY growth, both revenue and profit missed Trendlyne’s Forecaster estimates. Operating profit margin rose 5.4% YoY to 24.4% on the back of price hikes and operational efficiencies. Sneakers and casual segments led revenue recovery while the kid’s footwear segment still struggles to grow, according to the management.

The company plans to leverage the franchise model to grow in tier two and three cities, where the unorganized players’ market share is higher. In addition, Bata is also expanding its footprint through multi-brands footwear shops. Going forward, the execution of this aggressive expansion will be a key determining factor for growth, and the success of this strategy is currently unclear. As a result, brokerages have different takes on this stock. While HDFC Securities maintained its ‘Sell’ rating, Axis Securities has a ‘Buy’ rating.

  1. Mangalore Refinery And Petrochemicals (MRPL): This petrochemical stock rose 20% on Tuesday and was locked in the upper circuit for the third consecutive day. The stock surged 9% touching a 52-week high, on Wednesday. The share price doubled in less than six months delivering a 140% return on the stock. Its Q4FY22 results have also been off the charts as it records a net profit growth of 8.2X YoY to Rs 3,008.2 crore. It beat Trendlyne Forecaster’s net income estimate by 44.7%. The rise in profit was because of higher crude output and improving gross refining margin (GRM). Its capacity utilization increased to 116.9% in Q4FY22 as compared to 107.5% in Q4FY21. With a continuous increase in capacity utilization, refining output will remain strong and generate revenues for the company.

Because of the recovery in demand for crude oil, its revenue from operations increased 36% YoY to Rs 28,227.8 crore. This is also because MRPL took certain initiatives to improve revenue from marketing margins through domestic demand and exports. Analysts from ICICI Securities expect MRPL to report healthy earnings in the near term because of a favorable global refining scenario. The brokerage expects GRM to increase to US $12 per barrel in FY23.

The surge in Brent crude prices to above $124 per barrel and WTI crude prices above $122 per barrel also bodes well for this stock. Reports suggest that with the ongoing conflict in Europe, supply concerns remain a major problem but with increasing GRMs, MRPL stands to gain the most from the situation.

  1. Life Insurance Corporation of India (LIC): This life insurance stock is falling for the last seven consecutive sessions. It hit an all-time low, twice, on Thursday. The stock is now down 25% from its IPO issue price of Rs 949. The street is abuzz with talk of the stock falling continuously since its listing and eroding more than 25% of its market cap value. During the time of its listing, LIC’s market cap was around 6 lakh crore, which fell to 4.6 lakh crore within a month of its listing. The loss in value is equivalent to the market cap of companies like Tata Motors and JSW Steel.

It might not just be an overall bearish sentiment that is hitting the stock. In the last week of May, the company released its Q4FY22 results and the numbers were not very impressive, despite LIC being the market leader in the life insurance space. It reported a fall in net profit by 18% YoY to Rs 2,371.6 crore. Its new business margins were low and a lot of analysts do not see much growth potential. Emkay Global gives a ‘Hold’ rating for the stock as it believes that LIC has limited scope in product and channel distribution.

However, not everything is negative for LIC.  It has a competitive edge over other private players - the company has a large network of agents with a good distribution network and it can work on improving its new business premiums and margins to retain its elephant’s share in the market.

  1. Cyient: This technology solutions company’s stock rose by 5% on Monday after it announced the acquisition of Celfinet, a wireless engineering services company. The company will be acquiring Celfinet for a total cash consideration of 41 million euros (Rs 342.2 crore). This is the company’s third acquisition so far in FY23 and the total cost of these acquisitions is $181.8 million (Rs 1,413.1 crore).

These acquisitions were all-cash deals as the company has a healthy cash position of Rs 1,569 crore in FY22. The company’s net profit in Q4FY22 also rose by 17% QoQ to Rs 154.2 crore driven by the services business. It beat Trendlyne’s Forecaster estimates by 21.4%. The company shows up on a screener of companies with rising net profit QoQ for the past four quarters. 

So far the acquisitions in FY23 are in line with the company’s long-term strategy to diversify its segment revenue and geographical revenue mix. Cyient is looking at acquisitions that build scale in its existing business verticals where it does not have a geographical presence. According to reports, the company has focused on expanding in Europe and Japan.

Among the three companies acquired, two are from Europe, namely Citec and Celfinet. Citec is a plant and product engineering services company mostly catering to the energy sector in Europe. Cyient also acquired Singapore-based Grit Consulting, which provides consulting services to mining and energy companies. Currently, the communication and utilities segment makes 28% and 7% of the segment revenue mix of the company. Through these acquisitions, Cyient management expects to increase its revenue contribution from the two business segments by expanding its global presence.

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
10 Jun 2022
Market closes lower, Medplus Health Services trades below its issue price

Trendlyne Analysis

Nifty 50 fell over 250 points and closed in the red amid weak global cues. Major Asian indices closed lower, tracking the US indices which also closed in the red on Thursday. The US indices closed sharply lower led by the tech-focused NASDAQ 100, which fell over 2.7%. S&P 500 lost 2.4% while Dow Jones fell 1.9% as investors look ahead to the inflation print to be released later today. Brent crude oil edges lower but continues to trade at elevated levels as China imposes new Covid-19 lockdown measures in parts of Shanghai. On Thursday, the European Central Bank said it would raise the interest rate next month, its first hike since 2011. European indices follow the global trend and trade lower than Thursday’s levels.

Nifty Smallcap 100 and Nifty Next 50 closed in the red, following the benchmark index. Nifty Pharma and Nifty Metal closed lower than Thursday’s levels. Nifty IT closed in the red, tracking the NASDAQ 100, which fell over 2.7% on Thursday.

Nifty 50closed at 16,201.80 (-276.3, -1.7%), BSE Sensexclosed at 54,303.44 (-1,016.8, -1.8%) while the broader Nifty 500closed at 13,781.75 (-195.4, -1.4%)

Market breadth is sharply down. Of the 1,880 stocks traded today, 557 were in the positive territory and 1,274 were negative.

  • GMR Infrastructure, ZF Commercial Vehicle Control Systems India, Kansai Nerolac Paints, and Krishna Institute of Medical Sciencesare trading with higher volumesas compared to Thursday.

  • Grasim Industries sees a long build-up in its Jun 30 futures series as its open interest rises 1.1 % with put to call ratio at 0.46.

  • Strides Pharma Science's Singapore arm receives approval from the US FDA for Ibuprofin oral suspension drug. This is a non-steroidal and anti-inflammatory drug used as a pain killer for various conditions. Strides Pharma has a competitive generic therapy designation for the drug with 180 days of exclusivity.

  • Oil India rises 18.2% this week on account of rising crude oil prices. India's crude oil basket reached a decade high of $121 per barrel, as retail fuel prices continue to remain unchanged. The company’s three-year average annual ROE stands at 16.7%.

  • India's auto sector's May wholesales indicate that the worst might be over for the industry as car and bike sales surge.

  • Stocks like Birla Corporation, Jindal Stainless, Equitas Small Finance Bank, UltraTech Cement, andAmber Enterprises India India are in the oversold zoneaccording to the technical indicator relative strength index or RSI.

  • Morgan Stanley gives an ‘overweight’ rating to Tata Consumer Products with a target price of Rs 888, indicating an upside of 18%. It expects the company to expand its sales and distribution infrastructure to become the largest FMCG company. The management believes that reducing costs, building strategic partnerships, and improving cash flows will drive margin growth. However, the brokerage expects fluctuations in input costs, and weak profitability in the packaged food business to affect the earnings of the company.

  • Bank stocks like HDFC Bank, ICICI Bank, State Bank of India, Kotak Mahindra Bank and Bandhan Bank, among others, are falling in trade. The broader sectoral index Nifty Bank is also trading in the red.

  • Sugar companies like Shree Renuka Sugars, EID Parry India, The Andhra Sugars, among others, are rising. This is because state-owned fuel retailers--Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp--agree to provide relief to sugar mills, and other producers of ethanol (which is blended with motor fuel). The fuel retailers will compensate ethanol producers for higher energy costs by paying Rs 1,604 per kilolitre for ethanol produces from sugarcane juice, Rs1,439 for B-heavy molasses and Rs 1,179 for ethanol produced from C-heavy molasses. This relief is available between June 1 to November 30.

  • IIFL Finance is trading with more than 33 times its weekly average trading volume. Tata Teleservices (Maharashtra), TTK Prestige, V-Guard Industries, and Sheela Foam are trading at more than three times their weekly average trading volumes.

  • Axis Direct maintains a ‘Buy’ rating on Ambuja Cements with a target price of Rs 405, indicating an upside of 11%. The brokerage remains positive on the company’s prospects due to its focus on selling premium products, sharp cost optimization, new capacity expansion, and higher sales of blended cement. The company's net profit is expected to rise 25.1% in CY23 over CY22, the brokerage added.

  • Medplus Health Services hits a new 52-week low as the stock trades below its issue price of Rs 796. The stock is falling for the last six consecutive sessions.

  • IIFL Finance is trading with more than 33 times its weekly average trading volume. Tata Teleservices (Maharashtra), TTK Prestige, V-Guard Industries, and Sheela Foamare trading at more than three times their weekly average trading volumes.

  • Omaxe is rising after the company announces its partnership with Reliance Jio-BP. It plans to establish a battery charging ecosystem for electric vehicles. Jio-BP will set up electric vehicle charging and swapping infrastructure at various Omaxe properties gradually.

  • Shares of Deepak Nitrite rise as the company clarifies that it will restart its plant that caught fire only after complying with the Gujarat state government's order. The plant needs to undergo stability studies and other compliances before reopening.

  • Fitch Ratings revises the outlook on India’s long-term foreign-currency issuer default rating to ‘stable’ from ‘negative’. It expects India’s fast economic recovery and stabilization of the financial sector to bode well for its growth. The rating agency forecasts India’s GDP growth for FY23 at 7.8%

  • Metal stocks are trading in the red. Stocks like Tata Steel, Hindalco Industries, Jindal Steel & Power, NMDC, Steel Authority of India and National Aluminium Co or NALCO are falling below 2%. The broader sectoral index Nifty Metal is also falling in trade.

  • Alembic Pharmaceuticals receives tentative approval from the US FDA for its Abbreviated New Drug Application (ANDA) for dasatinib tablets. The drug will be used to treat 'Philadelphia Chromosome-positive Chronic Myeloid Leukaemia'. The dasatinib tablets have an estimated market size of $1.46 billion.

  • IT stocks like Tata Consultancy Services (TCS), Infosys, HCL Technologies, Wipro, and Tech Mahindra are falling in trade today. The broader sectoral index Nifty IT is also trading in the red today. According to reports, IT stocks are falling as TCS warns of low growth and a high inflation environment going forward. IT stocks are falling despite the Indian rupee falling 4 paise to hit its all-time low of Rs 77.82 against the dollar in early trade today.

  • Shares of IIFL Finance rise the most in six weeks to nearly 9% as its subsidiary IIFL Home Finance enters into definitive agreements to raise Rs 2,200 crore of primary capital for a 20% stake from the Abu Dhabi Investment Authority.

  • Welspun Enterprises is rising as it plans to plans to sell its operating road projects at an aggregate enterprise value of Rs 6,000 crore to Actus. These projects comprise five completed hybrid annuity models and one tolled road.

  • HFCL is rising as it receives orders worth Rs 73.4 crore to supply unlicensed band radio (UBRs) and optical fibre cables. The order for the supply of UBRs is worth Rs 51.1 crore and the order for the supply of optical fibre cables is worth Rs 22.3 crore.

  • Dr Reddy’s Laboratories arm Aurigene Discovery inks a global licensing pact with Olema Pharmaceuticals to research, develop, and commercialise novel small molecule inhibitors for a cancer project. Olema will pay a license fee of $8 million to get access to Aurigene's existing cancer research project. Dr Reddy's arm can gain up to $430 million based on clinical development and milestones, and there will also be royalties on annual net sales.

Riding High:

Largecap and midcap gainers today include Deepak Nitrite Ltd. (1,853.40, 3.82%), Trent Ltd. (1,113.30, 2.68%) and Emami Ltd. (422.00, 2.30%).

Downers:

Largecap and midcap losers today include Godrej Properties Ltd. (1,313.40, -4.24%), Adani Total Gas Ltd. (2,398.30, -3.99%) and Kotak Mahindra Bank Ltd. (1,791.80, -3.94%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Tata Teleservices (Maharashtra) Ltd. (140.50, 9.98%), IIFL Finance Ltd. (353.70, 7.72%) and IOL Chemicals and Pharmaceuticals Ltd. (355.00, 7.28%).

Top high volume losers on BSE were PNB Housing Finance Ltd. (369.45, -7.04%), V-Guard Industries Ltd. (230.45, -2.39%) and TTK Prestige Ltd. (792.25, -2.38%).

Sheela Foam Ltd. (2,801.05, -0.62%) was trading at 5.1 times of weekly average. JSW Energy Ltd. (247.75, 1.75%) and Torrent Power Ltd. (466.00, 1.89%) were trading with volumes 4.3 and 3.7 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

2 stocks overperformed with 52-week highs, while 14 stocks tanked below their 52-week lows.

Stocks touching their year highs included - GHCL Ltd. (663.40, -0.81%) and Oil India Ltd. (300.20, 0.98%).

Stocks making new 52 weeks lows included - Grasim Industries Ltd. (1,326.50, 1.33%) and Gujarat State Petronet Ltd. (237.30, -1.45%).

7 stocks climbed above their 200 day SMA including Tata Teleservices (Maharashtra) Ltd. (140.50, 9.98%) and Trent Ltd. (1,113.30, 2.68%). 15 stocks slipped below their 200 SMA including Suzlon Energy Ltd. (8.60, -3.37%) and Network 18 Media & Investments Ltd. (78.60, -2.90%).

 
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The Baseline
10 Jun 2022
One consumer sector rises despite inflation, screener for stocks valued cheaper than their peers

"We are facing new challenges everyday," RBI Governor Shaktikanta Das said after the interest rate hike this week. The RBI and central banks the world-over are fighting inflation, which is taking big bites out of everyone's wallets.

While this hurts most of the economy, one consumer facing industry is not that worried.

In this week’s Analyticks:

  • Fast food, growing fast: Quick service restaurants are growing, and making big expansion plans
  • Screener: Companies trading at cheaper valuations compared to peers

Let’s get into it.

Customers are queuing up at quick service restaurants

Analysts often say that “pizza is recession proof". When money is tight, fast food wins over restaurant meals, as more people become cost-conscious while eating out. 

Quick service restaurants (QSR) not only saw a swift revenue recovery in FY22 after the pandemic, they also sustained their margins. They were able to pass on price increases quite easily onto consumers. 

In April 2022, QSR chains hiked prices by 3-6% to manage their input price inflation. Despite menu prices increasing, demand was robust in April and May, helped by cricket season and the Indian Premier League, and the onset of summer vacations. 

And it's not just delivery. Restaurant Brands Asia (earlier Burger King India) also saw average daily dine-in sales recover to 96% of pre-Covid levels in May 2022, while average daily sales in delivery grew by 46% over May 2019 levels. Quick service restaurants have clearly evolved to become multi-channel fast-food businesses.

Leading QSR chains like Jubilant Foodworks and Devyani International plan to add 500 stores on an average in the next two years, to leverage these emerging trends. 

The pandemic disrupted same-store sales growth in Q4FY22

Although QSRs witnessed healthy double-digit YoY revenue growth in Q4FY22, their revenues fell sequentially as the third pandemic wave hit business for the first 4-6 weeks of the quarter. 

The third Covid wave also impacted same-store sales growth (SSSG) for QSR chains. The SSSG for all chains moderated sequentially, with KFC and Pizza Hut franchisees owned by Devyani International witnessing very low growth (2-3%) in Q4FY22.

Interestingly, the like-for-like (LFL) growth for Jubilant Foodworks slowed to 5.8% in Q4FY22 from 7.5% levels in Q3FY22. Both Jubilant and Devyani International saw YoY revenue growth of 20%+ on a company level, but lower sales growth for each existing store in Q4FY22. New store additions clearly drove Q4FY22 sales growth for both companies.

Restaurant Brands Asia’s net losses increased 3X QoQ to Rs 67 crore in Q4FY22 due to poor performance of the newly acquired unit i.e. Burger King Indonesia.

Chicken dishes a big bet as chains see non-vegetarian customers as majority

If there is one product area where QSRs are pinning their hopes on, it is chicken-based offerings. According to Devyani International’s management, nearly 70% Indians are non-vegetarian, while menus right now tilt more towards vegetarian items. In southern and eastern India, the proportion of non-vegetarians in the population is over 94%.

As a result, Westlife Development is planning to aggressively market its popular McSpicy Chicken burger, given the fact that this product added incremental sales of Rs 50 lakh per year per store for the company in FY22. It also introduced McSpicy Chicken in a few stores in western India to gauge the response. 

Jubilant Foodworks also saw a strong response for the four stores of its fried-chicken chain Popeyes’, which it launched in Bengaluru back in Q3FY22. Now, the company is planning to launch 250-300 stores of this franchisee in the next 4-5 years. Clearly, the competition will be hotter with KFC, McDonald’s and Popeyes all vying for a higher wallet share of its non-vegetarian customer.

Finding new (and old) customers in small towns

Two years of the pandemic caused lakhs of salaried professionals to head back to their hometowns, as work from home became a reality. Companies sensed their lack of intention to return to crowded metros. Hence, Indian IT services and engineering companies are planning to open more offices in tier-2 and 3 cities to retain their employees.  

This is one of the reasons that QSR chains plan to enter smaller cities through store expansions. In fact, some companies are seeing encouraging results already. Westlife Development saw stronger sales momentum in new stores launched in Vellore, Bhilai and Bilaspur, than at those in metro city stores. 

Another reason behind QSRs’ aggressive store expansions is reducing their distance to customers, to increase sales via the delivery channel. Devyani International is planning to expand its store count by over 50% to nearly 1,300 in the next two years to achieve this. The company guided for single digit SSSG for KFC (4-5%) and Pizza Hut (7-8%) in FY23 - clearly, the focus is to raise sales at the company level rather than store level.

Consensus estimates from Trendlyne’s Forecaster shows that revenues of the QSR players are expected to be higher by nearly 33% YoY in FY23 backed by robust consumer demand and store additions. 

Now all eyes are on the execution of these plans, and whether the tier-2 and 3 cities actually drive the next phase of growth for QSRs.

Screener: Companies that grew at a decent rate and are trading at affordable valuations vis-à-vis their peers

In this week’s edition, we bring you a list of companies that maintained a double-digit growth trajectory in FY22, but are available at a discounted price on the bourses. 

This screener throws up 76 companies in total and 18 companies within the Nifty 500 that are trading below the industry PE and P/BV (price to earnings and price to book). Power utility NTPC features in this list. Its top line grew at 15%+ in FY22 backed by higher power trading revenues.  It has plans within the renewable power space of setting up projects worth 60 GW.  

IT companies like Tech Mahindra and Zensar Technologies are also trading at a significant discount to their peers. Although these companies witnessed healthy QoQ revenue growth of 4-5% in Q4FY22, margin pressure has persisted. In the past month, foreign brokerages like JP Morgan and Nomura downgraded the Indian IT sector on the back of slowing revenue growth momentum, fear of recession in the US and pricey valuations.

Gas companies like GAIL and Indraprastha Gas also appear in this list. These companies maintained a robust growth momentum in FY22. However, a sharp spike in gas prices have cast a shadow on their profit margins in the near future. 

You can find some popular screeners here.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
09 Jun 2022
Market closes higher, Dalmia Bharat commits to a capex of Rs 9,000 crore on rising demand for cement

Trendlyne Analysis

Nifty 50closed in the green with the volatility index, India VIX, falling by 3.5%. Indian indices fell on Wednesday after the Reserve Bank of India (RBI) increased the repo rate by 50 bps to 4.9% as it withdrew its ‘accommodative stance’ for economic growth. Most Asian indices closed lower, tracking the US indices, which closed in the red on Wednesday. US indices closed lower amid rising bond yields as investors await the global inflation print releases and monetary policy decisions by global central banks this week. Brent crude oil rises above $123 per barrel and hits a 13-week high as the commodity’s demand is expected to rise with easing lockdowns in China. European indices follow the global trend and trade lower than Wednesday’s levels.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, following the benchmark index. Nifty FMCG and Nifty Pharma, which opened lower, also closed in the green. Nifty IT closed higher despite the tech-heavy NASDAQ 100 falling by 0.8% on Wednesday.

Nifty 50closed at 16,478.10 (121.9, 0.7%), BSE Sensexclosed at 55,320.28 (427.8, 0.8%) while the broader Nifty 500closed at 13,977.10 (90.2, 0.7%)

Market breadth is neutral. Of the 1,867 stocks traded today, 922 were on the uptick, and 889 were down.

  • Supreme Industries, Krishna Institute of Medical Sciences, Grindwell Norton, and Indigo Paintsare trading with higher volumesas compared to Wednesday.

  • Reliance Industries sees a long build-up in its Jun 30 futures series as its open interest rises 3.4% with put to call ratio at 0.68.

  • Shares of UPL reverse a 1% loss and gain nearly 2% after the company announces launch of new insecticides in India with patented active ingredient Flupyrimin.

  • Stocks like Aditya Birla Sun Life AMC, Aptus Value Housing Finance India, Birla Corporation, Symphony, and Amber Enterprises India are in the oversold zone according to the technical indicator relative strength index or RSI.

  • Dalmia Bharat expects cement demand to increase on the back of rising capital expenditure by the government and through PLI schemes. The company is committing to a capex of Rs 9,000 crore to expand manufacturing capacity over the next few years, to meet growing demand.

  • SBI Cards and Payment Services and One97 Communications (Paytm) fall in trade today after the Reserve Bank of India allows the linking of credit cards to UPI platforms. Analysts from Axis Securities expect this move to favor credit card issuers more as it would increase spending and boost credit-card usage in the long run.

  • Gujarat State Petronet and Nuvoco Vistas Corporation touch their 52-week lows of Rs 237.8 and Rs 282 respectively. While, Gujarat State Petronet trades lower for four days, Nuvoco Vistas Corporation falls for five consecutive days.

  • Tata Power's arm Tata Solar Power Systems commissions 450 megawatts dc capacity solar pant for Brookfield Renewable India. The project will produce over 800 gigawatt-hours of clean energy annually.

  • Strides Pharma Science is trading with more than four times its weekly average trading volume. Krishna Institute of Medical Sciences, Computer Age Management Services, United Breweries, and Amber EnterprisesIndia are trading at more than two times their weekly average trading volumes.

  • BOB Capital Markets maintains a ‘Buy’ rating on Polycab India with a target price of Rs 3,000, indicating an upside of 24%. The brokerage remains positive on the company’s prospects given its robust balance sheet, high growth in all its business segments, and expanding distribution network. The brokerage expects the company’s revenue to grow at a 15.1% CAGR over FY22-24.

  • Sugar exports increase 22.9% YoY to 8.6 million tonnes till May 2022 (the ongoing marketing year, ending September). Last month, the Centre capped sugar exports to 10 million tonnes to ensure domestic supply and keep a check on retail prices. Sugar stocks like Shree Renuka Sugars, EID Parry (India), Balrampur Chini Mills among others continue to fall in trade.

  • Deepak Nitrite touches a 52-week low after reports emerge of the Gujarat Government issuing a closure notice to the company. This is in connection to the fire incident at the Nandeswari plant.

  • Metals stocks like JSW Steel, Tata Steel, Vedanta, Hindalco Industries, and Jindal Steel & Power, among others are falling in trade. The broader sectoral index Nifty Metal is also trading in the red.

  • Coal India floats their maiden international competitive bidding e-tender, seeking bids for the import of 2.41 million tonnes of coal. The coal is being sourced on behalf of the state generating companies and independent power plants for the July-September period of the current fiscal year.

  • LIC drops to a new all-time low today after another decline of 0.95%.

  • Vedanta pledges a 5.77% stake in Hindustan Zinc for a term loan of Rs 8,000 crore. The company’s earlier pledge of a 14.82% stake in Hindustan Zinc to secure a term loan facility of Rs 10,000 crore has been released.

  • Shares of MRPL gained nearly 5%, on course to rise for the 5th consecutive day while ONGC gained more than 2% in a weak market. Oil India went up 7% whereas BPCL and HPCL declined. This rise comes amid increase in brent crude prices going above $124 per barrel and WTI crude prices above $122 per barrel.

  • Paints stocks like Asian Paints, Berger Paints, Kansai Nerolac, and Shalimar Paints, among others are falling in trade as crude prices increase.

  • Indian rupee falls by 4 paise to Rs 77.78 against the dollar in early trading today.

  • India’s coal production rises 34% YoY to 71.3 million tonnes in May 2022, according to the provisional data released by the Ministry of Coal. Coal India, and Singareni Collieries’ coal production increases 30% and 11% YoY, respectively. 23 out of 37 coal productive mines produced more than 100% coal.

Riding High:

Largecap and midcap gainers today include Oil India Ltd. (297.30, 6.16%), Container Corporation of India Ltd. (656.55, 5.53%) and Biocon Ltd. (337.15, 5.18%).

Downers:

Largecap and midcap losers today include Tata Steel Ltd. (1,044.85, -3.86%), Vedanta Ltd. (302.90, -3.30%) and Au Small Finance Bank Ltd. (613.35, -2.52%).

Volume Shockers

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

Top high volume gainers on BSE included PNB Housing Finance Ltd. (397.45, 15.14%), Tata Teleservices (Maharashtra) Ltd. (127.75, 9.99%) and IFB Industries Ltd. (926.55, 9.21%).

Top high volume losers on BSE were Swan Energy Ltd. (258.75, -6.05%), Strides Pharma Science Ltd. (314.70, -4.26%) and Garware Technical Fibres Ltd. (2,991.90, -3.37%).

Gulf Oil Lubricants India Ltd. (422.85, -0.72%) was trading at 9.9 times of weekly average. Mas Financial Services Ltd. (539.35, 6.19%) and Amber Enterprises India Ltd. (2,326.25, -0.01%) were trading with volumes 4.8 and 4.6 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock made 52-week highs, while 12 stocks were underachievers and hit their52-week lows.

Stock touching their year highs included - Oil India Ltd. (297.30, 6.16%).

Stocks making new 52 weeks lows included - Gujarat State Petronet Ltd. (240.80, -0.60%) and Shree Cements Ltd. (19,198.00, -1.97%).

13 stocks climbed above their 200 day SMA including Tata Teleservices (Maharashtra) Ltd. (127.75, 9.99%) and Suzlon Energy Ltd. (8.90, 9.20%). 9 stocks slipped below their 200 SMA including Au Small Finance Bank Ltd. (613.35, -2.52%) and Canara Bank (207.50, -1.61%).

 
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The Baseline
08 Jun 2022
Chart of the Week: India's forex reserves rise for two consecutive weeks

The RBI raised its policy rate (repo rate) today by 50 bps from 4.4% to 4.9%, signaling that it is going to aggressively battle inflation. At this juncture, the RBI’s Monetary Policy Committee voted to move away from the ‘accommodative stance’ it had previously held to boost economic growth. This had contributed to increasing inflation, which was already up due to the rise in crude prices.

With a lot of uncertainty on the economic front, foreign institutional investors (FII) pulled out money from the Indian market. According to a report, FIIs pulled out more money from January-May 2022 than they invested in the Indian market in the last 12 years. FII activity in the last 30 days alone shows a net sale in Indian shares of Rs 35,800.7 crore.

This exit hurt India’s foreign exchange reserves. The dip in India’s forex reserves began in March 2022, when they fell 1.5% in seven days to $622 billion. Then on May 13 forex reserves plunged again by 6% to USD 593.3 billion. This is the highest decline in India’s forex reserves since March 04, 2022.

Now, India’s forex reserves are back over the $600 billion mark. This was because of the appreciation of non-US currencies like the euro, pound sterling, and the yen held in foreign exchange reserves. India’s forex reserves are in various global currencies but are denoted in dollars for easy comparison. As the dollar index fell nearly 1.5% against major currencies like the euro and pound, the value of India’s forex reserves in those currencies increased. 

With crude oil rising every week and China’s economy opening up, India’s forex reserves will be closely watched. India imports over 80% of its crude oil - as fuel demand continues to rise, there will be a higher price to pay for imports.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
08 Jun 2022
Market closes lower, RBI raises repo rate by 50 bps to 4.9%

Trendlyne Analysis

Nifty 50 closed in the red, with the Indian volatility index, India VIX, falling below 20%. The Reserve Bank of India (RBI) increased the repo rate by 50 bps to 4.9% as it withdrew its ‘accommodative stance’ for economic growth. RBI retained the FY23 real GDP growth estimate at 7.2%. The World Bank cut India’s economic growth forecast for the current fiscal to 7.5% from 8% due to rising inflation and supply chain disruptions. Most Asian indices closed higher, tracking the US indices, which closed in the green on Tuesday. US indices rose led by technology and energy stocks. S&P 500 rose close to 1% while Dow Jones increased by 0.8% on Tuesday. Brent crude oil edges higher and trades above $120 per barrel ahead of US oil inventories data release. European indices trade lower than Tuesday’s levels as investors assess the impact of aggressive monetary policy tightening on global economic growth.

Nifty Midcap 100 and Nifty Smallcap 100 closed in the red, tracking the benchmark index. Nifty Media and Nifty Realty closed higher than Tuesday’s levels. Nifty ITclosed in the green, tracking the tech-heavy NASDAQ 100, which rose 0.9% on Tuesday.

Nifty 50 closed at 16,356.25 (-60.1, -0.4%), BSE Sensex closed at 54,892.49 (-214.9, -0.4%) while the broader Nifty 500 closed at 13,886.90 (-48.7, -0.4%)

Market breadth is in the red. Of the 1,877 stocks traded today, 755 showed gains, and 1,079 showed losses.

  • GlaxoSmithKline Pharmaceuticals, Tube Investments of India, Bajaj Holdings & Investment, and ZF Commercial Vehicle Control Systems Indiaare trading with higher volumesas compared to Tuesday.

  • Deepak Nitrite sees a short build-up in its Jun 30 futures series as its open interest rises 16.2% with put to call ratio at 0.52.

  • Stocks like Mangalore Refinery And Petrochemicals, Praj Industries, Elgi Equipments, TCNS Clothing Co., Engineers India, TV18 Broadcast and PNB Housing Financerise by more than 5% in trade today.

  • Stocks like Aditya Birla Sun Life AMC, Symphony, Birla Corporation, and JK Cement, among others, are in the oversold zone according to the technical indicator relative strength index or RSI.

  • ICICI Direct maintains a “Buy’ rating on MM Forgings with a target price of Rs 1,250, indicating an upside of 40%. The brokerage expects robust revenue growth for the company on healthy demand growth, new product launches, and an increasing share of machining in its product profile. The brokerage estimates the company’s profit to grow at a 39% CAGR over FY22-24.

  • One97 Communications (Paytm) rises as Reserve Bank of India (RBI) proposes the linking of credit cards to UPI platforms. RuPay credit cards will be the first to be linked to UPI platforms.

  • Central Banks of the major economies have begun to respond to inflation by tightening their monetary policies. After the RBA, RBI also raised its policy rate by 50 bps.

  • Sapphire Foods India and The New India Assurance Company touch their 52-week lows of Rs 932.5 and Rs 95.8 respectively. Both stocks are trading lower for the sixth consecutive day.

  • YES Bank gains as it initiates the process of setting up an alternate board in line with the YES Bank Reconstruction Scheme March 2020. The constitution of the alternate board will be recommended for approval to shareholders at the annual general meeting on July 15.

  • Biocon is trading lower and hit an over two-year low of Rs 312. In the past six weeks, shares of the pharmaceutical company is down 18% after it reported a 4% YoY fall in consolidated net profit to Rs 283.9 crore in Q4FY22.

  • Lupin is rising after it gets a tentative nod from the US FDA to market ivacaftor tablets. Ivacaftor is used to treat specific types of cystic fibrosis, a hereditary disease that causes problems with breathing, digestion, and reproduction in adults. The drug will be manufactured at its Nagpur facility. Ivacaftor tablets have an estimated annual sales of $109 million in the US, according to IQVIA.

  • PNB Housing Finance is trading with more than 14 times its weekly average trading volume. Engineers India, Sterlite Technologies, GlaxoSmithKline Pharmaceuticals, and Mangalore Refinery And Petrochemicalsare trading at more than three times their weekly average trading volumes.

  • ICICI Direct maintains a ‘Buy’ rating on TCI Express with a target price of Rs 2,000, indicating an upside of 21%. The brokerage remains positive on the company’s prospects due to its strong free cash generation, better margins from new businesses, and robust capital structure. The brokerage expects the company’s revenue to grow at a 20.8% CAGR over FY22-24

  • Reserve Bank of India increases repo rate by 50 bps to 4.9% as it withdraws its ‘accommodative stance’ for economic growth. Marginal Standing Facility (MSF) and bank rate stand at 5.15%.

  • Realty stocks like DLF, Macrotech Developers, Godrej Properties, Oberoi Realty, among others, are on the rise, after RBI doubles cooperative banks’ housing loan limits. The broader sectoral index Nifty Realty is also trading in the green.

  • Ramkrishna Forgings receives an export order worth Rs 115 crore from a European supplier for a new differential housing case business.

  • ITD Cementation is rising as it receives an order for a road construction project worth Rs 4,850 crore. The project involves the construction of a six-lane greenfield expressway in Uttar Pradesh on an EPC (Engineering, Procurement and Construction) basis.

  • Indian rupee appreciates 9 paise to Rs 77.69 against the US dollar in early trade today.

  • FMCG stocks like Hindustan Unilever, ITC, Nestle India, Britannia Industries, Tata Consumer Products, among others, are falling in trade due to rise in Covid cases. The broader sectoral index Nifty FMCG is also trading in the red.

  • Adani Power invests a total of over Rs 609 crore in Support Properties and Eternus Real Estate to acquire 100% stake in them. The companies will help Adani Power set up infrastrcuture facilities.

  • Zomato board will meet on June 17 to consider the acquisition of quick commerce company Blinkit, according to reports. The value of the final deal is yet to be finalized. Blinkit’s largest investor SoftBank Vision Fund will get a 4% stake in the company. The deal will involve a stock swap in the ratio of 1:10, where Zomato gets 10 shares of every one share of Blinkit.

Riding High:

Largecap and midcap gainers today include Macrotech Developers Ltd. (1,099.60, 5.07%), SBI Cards and Payment Services Ltd. (784.90, 2.65%) and Dalmia Bharat Ltd. (1,269.70, 2.58%).

Downers:

Largecap and midcap losers today include Gujarat Gas Ltd. (489.10, -7.03%), Deepak Nitrite Ltd. (1,798.45, -4.84%) and Polycab India Ltd. (2,314.10, -4.31%).

Volume Shockers

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

Top high volume gainers on BSE included TV18 Broadcast Ltd. (45.00, 10.84%), Mangalore Refinery And Petrochemicals Ltd. (118.00, 9.11%) and Dishman Carbogen Amcis Ltd. (129.40, 8.65%).

Top high volume losers on BSE were Gujarat Gas Ltd. (489.10, -7.03%), Mas Financial Services Ltd. (507.90, -5.84%) and Polycab India Ltd. (2,314.10, -4.31%).

PNB Housing Finance Ltd. (345.20, 4.59%) was trading at 18.1 times of weekly average. Engineers India Ltd. (62.90, 4.75%) and Hawkins Cookers Ltd. (5,211.00, 0.30%) were trading with volumes 11.9 and 8.9 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock took off, crossing 52-week highs, while 13 stocks tanked below their 52-week lows.

Stock touching their year highs included - Mangalore Refinery And Petrochemicals Ltd. (118.00, 9.11%).

Stocks making new 52 weeks lows included - Biocon Ltd. (320.55, 1.20%) and Birla Corporation Ltd. (856.75, -0.43%).

11 stocks climbed above their 200 day SMA including Network 18 Media & Investments Ltd. (80.05, 5.47%) and Aster DM Healthcare Ltd. (193.55, 2.14%). 18 stocks slipped below their 200 SMA including Polycab India Ltd. (2,314.10, -4.31%) and Aegis Logistics Ltd. (216.90, -3.21%).

 
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The Baseline
08 Jun 2022
Up up and away: oil prices just keep rising

As China comes out of lockdowns, the competition to buy oil just got much more expensive. US oil reserves are also down, and Saudi Arabia is busy raising prices. Brent crude just hit $120 per barrel.

Does anyone remember April 2020, when oil prices briefly fell below zero because storing oil was more expensive than buying it? 

To combat rising prices, India has been making very large purchases of discounted Russian oil -  purchases from Russia jumped 500% to 840,000+ barrels per day this May, compared to May last year (when it was 136,774 bpd). With Reliance, IOC, BPCL and HPCL planning new six-month contracts for Russian crude, the purchases are not stopping anytime soon. 

Interactive chart - hover to see data

Despite these big buys, the price of India's oil basket is getting costlier and crossed above $116 per barrel in June (see chart above). The rise in oil prices will fuel inflation, an important issue as the RBI met this week to push through another rate hike, raising the repo rate by 50 basis points to 4.9%.

Stock markets: All eyes are on earnings now

US equities have fallen 15% from the peak they saw in the first week of January. India's Nifty50 on the other hand, has fallen just 3.1% over the past six months. Earnings Per Share (EPS) has risen steadily for Nifty50 companies over the same period (pink line in the chart):

 Nifty50's performance over the coming months will depend on how Indian companies' earnings are in the June quarter.

Management across sectors - from FMCG to specialty chemicals - have all said they have hiked prices. Rising prices may hit company earnings in the June quarter, as consumer spending slows. India's consumer spending growth fell to 1.8 percent in the Jan-March period from a year earlier. It had grown at 7.4 percent in the previous quarter.  

Lose lose situation for India's loss-making startups

As the RBI hikes rates amid high prices, investors should be careful about newly listed high-growth, loss-making companies. These businesses - like Zomato, Paytm, PB Fintech - rely on a steady inflow of investor money to keep growth going. But investor capital is likely to see a sharp slowdown in the coming weeks and months as interest rates go up and capital becomes more expensive. 

So are Indian startups losing their shine? See Deeksha Janiani's video analysis: 

Interesting reads

One of India's fastest growing specialty chemicals companies has aggressive growth plans, Ketan Sonalkar writes.

L&T has outlined its hopes and dreams in its Lakshya 2026 plan. Can it execute?

Mid-tier IT firms - Mindtree, Tech Mahindra, Coforge and others - are set to have a topsy-turvy FY23, Vivek Ananth says.