Markets for the Week : 11th to 15th July
WELCOME TO THE WEEKLY BLOG ON INDIAN EQUITIES MARKETS
Important Weekly Closes:
|
PARTICULARS |
WEEKLY
CLOSE VALUE |
% CHANGE |
|
Sensex |
54481.84 |
+2.97% |
|
Nifty50 |
16220.60 |
+2.97% |
|
BankNifty |
35124.05 |
+4.72% |
|
Gold |
50779.00 |
-2.19% |
|
Silver |
57131.00 |
-1.79% |
|
Crude Oil |
104.79
USD/Barrel |
-3.36% |
|
USDINR |
79.27 |
+0.44% |
Snapshot of the Important Results declared during the week are as follows:
|
Positive Results |
Negative Results |
|
DMART Sales Growth +94.9% (YoY) | +14% (QoQ Pre-Tax Profit Growth +537% (YoY) | +44% (QoQ) Post-Tax Profit Growth +574% (YoY) | +51% (QoQ) Operating Margins are
at a 12 Quarter High. |
TCS Sales Growth +16% (YoY) | +4% (QoQ) Pre-Tax Profit Growth +5% (YoY) | -4% (QoQ) Post-Tax Profit Growth +5% (YoY) | -4% (QoQ) Operating Margins are
at a 12 Quarter LOW. |
Important Results for the upcoming week:
1. 12th July - HCL Technologies
2. 12th July - Sterling & Wilson Solar
3. 13th July - Mindtree
4. 14th July - ACC
5. 14th July - AngelOne
6. 14th July - L&T Infotech (LTI)
7. 14th July - Tata Elxsi
8. 15th July - Federal Bank
9. 15th July - Jindal Steel
10. 15th July - LTTS
11. 16th July - HDFC Bank
12. 16th July - ICICI Prudential Life
SECTOR SPECIFIC OUTLOOK
Bank Nifty - Positive
1. Updated since last 2 weeks that Bank Nifty was Positive and was at an important support and had shown its first sign of reversal. ICICIBank was the top performer as stated in earlier blog.
2. This week Bank Nifty rallied by almost 1600 points and closed positively by approximately 5%.
3. As the Indian Economy recovers from the Covid disruptions the Private Banks positively saw an increase in their Deposits & Advances.
4. HDFCBank has received a clearance from both the exchanges (NSE and BSE) with regards to the HDFC Ltd and HDFC Merger.
5. There has been a decline in Banking Frauds above Rupees 100 crores on YoY basis. The number of reported cases for FY2021-22 has reduced by approx. 55%.
6. The Corporate credit growth hit a 7 year high as per data from RBI.
7. To stabilize the Rupee the RBI has exempted the banks from CRR and SLR on all Non-Resident deposits.
Nifty Auto - Positive
1. This has been the only sector that has remained positive through all the last 2 months.
2. However, it has a strong resistance at 12000 on the auto Index.
3. Expect this Sector to outperforms once it breaks 12000 on the auto Index.
4. EV sales registrations are up 10% for the month of June - strong demand in both 2 and 3 wheeler segments.
5. Indian Passenger Vehicle Sales grew by +40% during June-2022.
6. Tata Motors : Targets a 5 times Sales volumes of EV cars by the end of Financial Year 2024. Automobile sector volumes grew by 15% in the last year, however the domestic volumes of Tata Motors grew by 49% on comparative basis.
7. Maruti Suzuki : The company is aiming at a 22 month high vehicle output for the month of July 2022, on account of the easing in the semi-conductor supplies.
8. BMW India reported its highest ever sales for the period Jan-June 2022, a growth of
on YoY basis. Audi India also recorded the highest ever sales by registering a +49% growth on YoY basis.
9. Hindustan Motors: A company famous for its ambassador cars plans to launch 2 wheeler EV by the next year.
Nifty FMCG - Positive
1. The prices of Crude Palm oil continued to fall through-out this week (a fall of almost -12%). This remains extremely positive for the FMCG stocks like HUL, Britannia, Dabur, PGHH.
2. NiftyFMCG index was up +5.65% for the week. The FMCG Index is now at a very strong resistance of 42000 levels (approx. 4% from the current close). A breakout only above these levels would make the FMCG stocks scale to new highs.
3. While the declining Crude Palm Oil Prices are positive for the FMCG companies, the demand continues to remain weak.
Oil & Gas - Negative
1. As mentioned in the previous blog the Windfall Tax which has been levied on the export of domestically produced Petrol, Diesel & ATF is detrimental for the margins of standalone refineries like Chennai Petro, MRPL and Reliance.
2. Another blow to the above companies except for the additional taxes is that there is a fall in Gross-Refining Margins by a staggering -40% during the week. This will further squeeze the Operating Margins for the above companies.
3. Also the Government of India has specifically mentioned that there is no clear deadline / timeline as when these taxes will be uplifted back.
Information Technology - Negative
1. US court has levied a penalty of approx. 7.92 crore on TCS (USD 140 million) by a case filed by Epic Systems against the company for stealing internal trade secrets & important documents - the company however denied the allegations and continues it appeal.
2. TCS reported muted / negative earnings. Operating Margins fell to the lowest levels in the last 12 quarters. Also the Quarterly operating margins are the lowest as compared to the Annualized Operating Margins of last 10 years. With TCS reporting very muted results, the entire IT results is expected to be subdued.
3. The employee Hiring and Retention cost remains the highest in the IT sector, thus increasing the fixed-costs and squeezing the margins further.
Metals - Neutral
1. An announcement during the course of this week by China to declare a USD 22000 crore (equivalent to INR 17.5Lakh crores) stimulus package lifted the sentiments of Metals Shares as China which is the largest consumer of Metal Products and also the curb in Chinese Metal production has increased its reliance on other Asian Countries including India.
2. Tata Steel completed its Rupees 12,100 crores acquisition of Neelachal Ispat Nigam Limited (this will aid in company's future expansion plans).
3. The sector however being Capital - Intensive will continue to underperform on account of mounting global recession.
4. The price revision on Hot-Rolled Coils by almost -25% continues to create pressure on Steel stocks.
OTHER SECTORAL NEWS
1. Cement companies are witnessing a fall in Per Bag prices for a second consecutive month. However the pet-coke prices have fallen down by -10% on monthly basis, which will act as a safety cushion for Cement companies. Many companies (including Ultratech) have started importing Russian Coal which is available at a 20% discount.
2. Textile Sectors : sees lackluster demand on account of Global Economic Slowdown. Duty free cotton import time-line has been extended upto 31.10.2022 on account of unavailability of cotton to domestic manufacturers.
3. Tata Power plans to set-up a Solar Plant in Tamil Nadu for Rupees 3,000 crores. The company also plans a Rupees 75000 crore capex in the renewable energy space over a period of next 5 years.
4. Paper Stock Companies continue to remain in demand on back of government's decision to completely ban the usage of Single-use plastic items.
OTHER GENERAL NEWS
Positive News
1. India Service Sector PMI (Purchasing Manager's Index) rose to the highest level in last 11 years for June-2022. However this is contrasting to Manufacturing Sector PMI (which is at lowest level since September 2021.)
2. GST Collections at Rupees 1.45 lakh crore for June-2022, this is the second highest collection ever by GOI.
3. To combat the challenges of depreciating rupee, the GOI has eased norms for deposits by NRI's and FPI and the limits for Commercial Borrowing have been doubled.
Negative News
1. Private Equity Investments in India saw a de-growth : -25% (YoY) | -30% (QoQ).
2. Imports Rise by 51.02% (due to Weaker Rupee & High Inflation) in June-2022 widening the Trade Deficit.
3. June-2022 saw the highest outflow (Rupees -50203 crore) from Foreign Portfolio Investors - the highest in last 2 years.
4. EMPLOYEE COSTS OF NIFTY500 companies reached at 8 years' high.
5. Indian gold imports increased by almost 3 times in June 2022 as compared to 2021, which further adds risk of widening current account deficit.
6. India's manufacturing activity hit a 9 month low for June-2022 a contrary observation as compared to Service Industry activity.
7. Retail participation in the cash market segment sees a YoY dip.
INTERNATIONAL NEWS
1. Germany recorded its 1st export deficit in over 30 yrs due to high import costs. (-ve).
2. Australian Central Banks raised RATES for the third time in a row. (-ve).
FUTURE OUTLOOK:
1. Both the Indices Nifty50 and NiftyBank looks positively placed on a weekly closing basis.
2. BankNifty still looks better placed as compared to other sectoral indices.
3. 16000-16200 was a clear strong resistance on the Index which has been broken and we can expect Nifty50 to be a BUY-ON-DIPS.
4. NiftyAuto, NiftyFMCG are at a Resistance Zone. NiftyIT and NiftyMetals still look negative.
5. INDIAVIX looks highly undervalued as compared to global volatility indicators. This states that in the days to come the Markets may experience increase in Volatility, this would cause the markets to consolidate in the near future.
6. India is clearly outperforming global peers on account of stable domestic data.
7. On a larger time frame the NIFTY50 has following levels
Resistance : 16800 / Support : 15250 (both on weekly closing basis)
8. CAUTIOUS : Any negative geo-political factor would cause a sharp drawdown on the markets. Currently the markets have discounted the rising Inflation data and rate-hikes. The Q1 results are expected to remain flat this would continue keep to maintain pressure on the Market upside. The markets have become highly dynamic globally where Raw Material Prices (for all industries) are now being tracked on daily basis by all investor-classes and a Fall/Rise on them brings an immediate reaction to stock prices. THIS MARKET STILL DOESNT LOOK VERY ATTRACTIVE FOR INVESTMENTS. Its a traders paradise.
DISCLAIMER : THE ABOVE VIEWS ARE EXPRESSED ON BASIS OF BROAD MARKET NEWS. THERE ARE NO SPECIFIC RECOMMENDATIONS TO BUY SELL OR HOLD. KINDLY CONSULT YOUR FINANCIAL ADVISOR BEFORE INVESTING INTO STOCK MARKETS. INVESTMENT INTO EQUITY MARKETS ARE SUBJECT TO RISKS
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