In the week gone by, global markets confidence got spooked on the back of weak I U.S. data and resurging of corona virus case in European countries. European governments have imposed tougher restrictions as many countries brace for a possible second wave of the coronavirus pandemic. However on later part of the week, markets rallied as investors took relief from the news that Democrats in the US House of Representatives are working on a $2.2 trillion coronavirus package that could be voted on next week. There is an expectation that if the bill gets pass in the US House of Representatives, it can give a massive boost to the economy and the world markets. In the interim, Fed has highlighted as much as $380 billion from the US Congress' last big coronavirus aid package is unused and this could help households and businesses if lawmakers approve.
Back at home, domestic market remained weak as it tracked weak global cues as the uncertainty witnessed in the last few days gave way to negativity, amid the expiry of September futures & options contracts and uncertainty over economic recovery due to rising COVID-19 infections. Meanwhile, the government on September 24 extended the suspension on new bankruptcy filings under the Insolvency and Bankruptcy Code (IBC) by another three months, effective September 25 and this is expected to give companies breathing time to recover from financial stress. Besides, the government is “actively” considering extending Covid-19 relief measures — due to end on September 30 — for the road sector by another six months. India Ratings and Research has maintained a negative outlook on non-banking financial companies (NBFCs) and housing finance companies (HFCs) for the second half of 2020-21. In another development, in a bid to revive Indian economy, Modi government takes another initiative to support farm and it is believed that this initiative is likely to lessen the distance between the trader and farmers. According to Federation of All India Farmer Associations (FAIFA), the newly passed farm bills will give farmers the freedom to trade across states and empower them to turn into traders of their own produce and be in control of the process. Besides, the FIAIFA says that these bills will ensure a sustainable and profitable future for the farming community. Going forward, market will continue to take direction from the global and the domestic factors.
On the commodity market front, it was a week when commodities saw change in major trend with sharp fall in bullion, base metals and in some agri commodities with surprise ride in dollar index. The major attraction was more than 15% fall in silver and more than 5% fall in gold prices. Bullion counter may continue to trade on negative note where Gold may test 49400 and facing resistance near 52200 while silver may test 56200 and facing resistance near 62000. Some lower level buying may be seen in bullion counter on value buying nevertheless stability at higher side is little questionable. In energy complex, natural gas may see further jump on expectation of improved winter demand. It may see the upside of 225 in days to come. Base metals may trade in a range on mix news. Manufacturing PMI of China, GDP of UK, Unemployment Rate of Germany, Core Inflation Rate of Euro Area, GDP, Core PCE Price Index, Manufacturing PMI Final, ISM Manufacturing PMI, Non Farm Payrolls, Unemployment Rate and Michigan Consumer Sentiment Final of US, RBI Interest Rate Decision etc are loads of important data and events schedule this week.
SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and its associate is member of MCX stock Exchange Limited. It is also registered as a Depository Participant with CDSL and NSDL. Its associates merchant banker and Portfolio Manager are registered with SEBI and NBFC registered with RBI. It also has registration with AMFI as a Mutual Fund Distributor.
SMC is a SEBIregistered Research Analyst having registration number INH100001849. SMC or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities market.
SMC or its associates including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company covered by Analyst. SMC or its associates and relatives does not have any material conflict of interest. SMC or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. The subject company has not been a client of SMC during the past twelve months. SMC or its associates has not received any compensation or other benefits from the company covered by analyst or third party in connection with the research report. The Analyst has not served as an officer, director or employee of company covered by Analyst and SMC has not been engaged in market making activity of the company covered by Analyst.
The views expressed are based solely on information available publicly available/internal data/ other reliable sources believed to be true.
SMC does not represent/ provide any warranty express or implied to the accuracy, contents or views expressed herein and investors are advised to independently evaluate the market conditions/risks involved before making any investment decision.
DISCLAIMER: This report is for informational purpose only and contains information, opinion, material obtained from reliable sources and every effort has been made to avoid errors and omissions and is not to be construed as an advice or an offer to act on views expressed therein or an offer to buy and/or sell any securities or related financial instruments, SMC, its employees and its group companies shall not be responsible and/or liable to anyone for any direct or consequential use of the contents thereof. Reproduction of the contents of this report in any form or by any means without prior written permission of the SMC is prohibited. Please note that we and our affiliates, officers, directors and employees, including person involved in the preparation or issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) may trade in this securities in ways different from those discussed in this report or (c) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instrument of the company (ies) discussed herein or may perform or seek to perform investment banking services for such Company (ies) or act as advisor or lender / borrower to such company (ies) or have other potential conflict of interest with respect of any recommendation and related information and opinions, All disputes shall be subject to the exclusive jurisdiction or Delhi High Court.
SAFE HARBOR STATEMENT: Some forward statements on projections, estimates, expectations, outlook etc are included in this update to help investors / analysts get a better comprehension of the Company's prospects and make informed investment decisions. Actual results may, however, differ materially form those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, Impact of competing products and their pricing, product demand and supply constraints. Investors are advised to consult their certified financial advisors before making any investments to meet their financial goals.
The company has maintained healthy business growth, supported by strong growth in premium collection and investment income. The management of the company expects share of protection to be in double digits in next three years on APE basis from 8% currently. While, the protection share is expected to touch 15% on NBP basis from 11%. Moreover, the company expects healthy growth in the productivity of banca channel, while aims to achieve 20% growth in banca channel. Thus, it is expected that the stock will see a price target of Rs.923 in 8 to 10 months time frame on a current P/Bvx of 9x and FY21 BVPS of Rs.102.60.
The company plans to focus more on markets like Canada and Brazil, which offer robust growth opportunities going forward. The company continues to lay good foundation for business growth in the AsiaPacific region. Thus, it is expected that the stock will see a price target of Rs.1008 in 8 to 10 months’ time frame on five year average P/E of 33.67x and FY21 EPS of Rs.29.93.
The stock closed at Rs 709.35 on 25th September 2020. It made a 52-week low at Rs 455 on 08th April 2020 and a 52-week high of Rs. 884.25 on 27th January, 2020. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 681.70
Short term, medium term and long term bias are looking positive for the stock as it is trading in higher highs and higher lows on charts, which is bullish in nature. Moreover, stock has witnessed healthy profit booking on higher levels which is a good buying opportunity at current levels. Therefore, one can buy in the range of 700-705 levels for the upside target of 770-790 levels with SL below 665.
The stock closed at Rs 137.05 on 25th September 2020. It made a 52-week low of Rs 60.20 on 30th March, 2020 and a 52-week high of Rs. 167 on 26th September, 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 121.15
After testing yearly low of 60 levels, stock started moving higher and trading in rising channel on weekly charts, which is considered to be bullish. From past few weeks, stock consolidated in narrow range with positive bias and has given the breakout of same along with volumes, and also has managed to close above the breakout levels so buying momentum may continue for coming days. Therefore, one can buy in the range of 132-134 levels for the upside target of 146-150 levels with SL below 125.
Disclaimer : The analyst and its affiliates companies make no representation or warranty in relation to the accuracy, completeness or reliability of the information contained in its research. The analysis contained in the analyst research is based on numerous assumptions. Different assumptions could result in materially different results.
The analyst not any of its affiliated companies not any of their, members, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of the analysis research.
SOURCE: RELIABLE SOFTWARE
Charts by Reliable software
Indian markets began October series on a positive note as bulls made a comeback in Friday's session with Nifty reclaiming 11000 levels after six consecutive days of losing streak. Gains were led by heavyweights like Infosys, TCS, ICICI Bank and Reliance industries. The sentiment was also lifted by stronger Asian peers on hopes of US stimulus. From derivative front, put writers added hefty open interest at 10900 & 10800 strikes which should act as strong support for the nifty.The Implied Volatility (IV) of calls closed at 21.92% while that for put options closed at 22.41%. The Nifty VIX for the week closed at 23.51%. PCR OI for the week closed at 1.22 slightly down from the previous week indicating put unwinding in OTM and call writing. From technical front as well nifty bounced back sharply after taking support at its 200 days exponential moving average on daily charts which is placed at 10845 levels. For upcoming week, data indicates that as far nifty is holding above 10800 levels, the bias is likely to remain in favour of bulls. On higher side, however, 11200 levels is strong hurdle for Nifty.
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**The highest call open interest acts as resistance and highest put open interest acts as support.
# Price rise with rise in open interest suggests long buildup | Price fall with rise in open interest suggests short buildup
# Price fall with fall in open interest suggests long unwinding | Price rise with fall in open interest suggests short covering
Turmeric futures (October) facing resistance near 5830 is likely to witness correction towards 5600-5500 levels. Spot Turmeric prices are quoting lower amid dull demand across the major mandis. The buyers quoted decreased price due to arrival of medium quality turmeric. Traders are purchasing to fulfil their local orders and waiting for bulk upcountry orders. At the Erode Turmeric Merchants Association sales yard, finger turmeric was sold at Rs.5,229-6,225 a quintal; root variety went for Rs.4,811-5,629. At the Regulated Marketing Committee, finger turmeric went for Rs.4,910-5,839 a quintal, while root variety was sold at Rs.4,590-5,799. Jeera futures (October) may continue to trade on bearish path & test 13200-13100. The sentiments prevailing on the spot markets are bearish as demand from bulk buyers slowed down against sufficient supply in the market. Rough jeera and Best quality was quoted at Rs.2115-2215 and Rs.2465-2515 per 20 Kgs, respectively. NCDEX quality was quoted at Rs.2315-2365 per 20 Kgs and Bombay Bold prices was priced at Rs.2615-2665 per 20 Kgs. Europe and Singapore quality were quoted at Rs 2380-2480 and Rs.2280-2425 per 20 Kgs, respectively. SingaporeMundhra was quoted flat at Rs.2730-2755 and Discolour variety was priced at Rs.2280-2330 per 20 Kgs, Dhaniya futures (October) will probably trade steady & consolidate in the range of 6400-6700. Spot coriander prices quoted firm across Rajasthan mandis amid reduced arrivals, while they were steady in Rajkot and Gondal mandis. The Madhya Pradesh mandis were shut due to state-wise traders’ strike starting 24th September for reduction in the mandi fee on the purchase of agricultural commodities. In Ramganj - Eagle and Badami varieties were quoted at Rs 5800-6000 and Rs 5600-5700 per quintal, respectively.
Bullion counter may trade in range with negative bias. Gold may inch lower as the dollar strengthened on concerns about rising coronavirus cases in Europe and US, although renewed hopes of more U.S. stimulus measures may limit the loss. Fed officials had reaffirmed their low interest rate policy until the labour market recovers or inflation rises to 2%. As much as $380 billion from the U.S. Congress' last big coronavirus aid package is unused and could help households and businesses if lawmakers approve, Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin said. Global central banks have rolled out massive stimulus and slashed interest rates to near zero to counter the economic damage from the pandemic, helping gold climb over 20% this year. The number of Americans filing new claims for unemployment benefits unexpectedly increased last week, supporting views the economic recovery was running out of steam. China's monthly net gold imports via Hong Kong edged lower in August, data showed, although a slight improvement in domestic demand pushed total imports to a five-month high. China's Shanghai Gold Exchange said investors should prepare risk contingency plans, raise awareness of risks, manage positions and invest rationally amid price fluctuations in gold and silver prices and ahead of long national holidays. Given that the coronavirus situation has not improved and interest rates are lower, gold is still bullish in the longer term. This week, gold may trade in the range of 47700-51500 and Silver may trade in the range of 55000-62000. Whereas on COMEX gold may trade in the range of $1820-$1980 and Silver may trade in the range of $21.00-$24.40.
Soybean futures (October) will continue to face resistance near 4080 and witness correction towards 3750-3700. The supply side is likely to get heavier as the arrivals from the fresh harvest is about to catch pace in the domestic market. In the international market as well, the harvest of soybean is rapidly advancing and adding pressure on prices. Forecast rain in the coming days is not seen impacting US soybean harvest, as most of the Midwest is set to remain dry. Secondly, the dollar is continuing to extend gains against most currencies as signs of economic slowdown in Europe and the United States renewed concern about a second wave of coronavirus infections. Mustard futures (October) is expected to trade steady in the range of 5300-5500 owing to prospects of higher demand after the Central government ordering to prohibit blending of other edible oil in mustard oil. New regulation will be effective from October 1, 2020. After due deliberation with various stakeholders, the government has decided and directed FSSAI to prohibit blending in mustard oil and to facilitate manufacture and sale of pure mustard oil for domestic consumption in public interest. Last week, soy oil futures on the national bourse were unsuccessful to cross its previous lifetime high of 955 and made a U-turn to 892, after making a high of 954.50. This correction phase is likely to prevail till 870-860. Meanwhile, CPO futures (October) may trade with a downside bias in the range of 725-770. Factors such as subdued demand in the physical market a higher rates and bearish trend prevailing in the edible oils on the international market, amid higher Dollar is expected to keep the upside capped.
Crude Oil prices may trade bearish as rising virus infections, renewed lockdowns, slowing economic recovery and stalled U.S. stimulus talks have put the brakes on the fragile revival in fuel demand. Both benchmarks are also on track for a monthly decline, which would be the first for Brent in six months. The prospect of the return of Libyan barrels to the market is adding to the bearish sentiment. In the United States, which has the highest death toll from the COVID-19 crisis and is the world’s biggest oil consumer, unemployment claims unexpectedly rose last week suggesting an economic recovery is flailing and pushing down fuel demand. In other parts of the world, daily increases of coronavirus infections are hitting records and new restrictions are being put in place that will likely limit demand for travel and fuel. In India, throughput by crude oil refiners in August fell 26.4% from a year ago, the most in four months, as fuel demand ebbed because surging coronavirus cases hindered industrial and transport activity. This week if the crude prices sustains below 3040 & it may slip to near 2800. If it sustains above 3040 then 3200 could be the next target. Natural gas prices are trading higher as bullish investors continue to bet on increased liquefied natural gas demand. The price action also suggests diminished worries about storage containment. Upside should continue on colder than normal weather is forecast to cover most of the mid-west for the next 2-weeks. EIA said U.S. utilities injected just 66 billion cubic feet (bcf) of gas into storage in the week ended Sept. 18. This week Natural gas may trade in wider ranges of 190-230.
Cotton futures on MCX is maintaining its upside course despite the steep correction being witnessed in the commodities market. The reason being is that the demand side fundamentals are strong. It is reported that the Cotton Corporation of India (CCI) is eyeing an important contract that will allow it to directly export around 10 to 15 lakh bales of cotton to Bangladesh. This would allow the government to directly export cotton to another country. Saying, this we may see an upsurge in prices towards 18300-18400, if it trades & sustains above 18100. Chana futures (Oct) is on a bull run & it shall prevail till 5400-5500 owing to good underlying demand. The Centre’s food support to the poor through the lockdown increased the demand for chana, causing its prices to head north. If the domestic consumption increases with opening up of hotels as well as restaurants and the upcoming festive season in OctoberNovember, traders expects the prices to increase further in days to come. In news, the Centre passed a bill to remove various agri commodities, which includes pulses from the list of essential commodities. Also, processors and value chain participants are exempted from the stock limit. This step taken by the Government would surely increase the demand for pulses and give a positive impact on the prices. Guar seed futures (Oct) is expected to witness correction towards 3850, while guar gum futures (Oct) is also likely to trade on a bearish path and move lower to test 5800 levels, respectively. The sentiments have dampened because of lower demand from guar gum powder manufacturers. There is negligible demand for crude oil grade guar gum powder. Guar gum powder manufacturers are producing food grade guar gum powder.
Base metals may trade in the range with negative bias on rising coronavirus infections stoking fears of lockdown that can delay the economic recovery, stronger dollar index, slow U.S. labour market recovery may weigh on prices. Nevertheless hopes of more stimulus in the United States may limit the downside. Democrats in the U.S. House of Representatives are working on a $2.2 trillion coronavirus stimulus package that could be voted on this week. Global copper smelting activity recovered in August, mainly due to a jump in activity in North America, data from satellite surveillance of copper plants showed. On supply side, Global refined copper production in the first half of the year increased by 1%, according to the ICSG. Copper can move in the range of 515-540 levels. Zinc may trade in the range of 185-200 while Lead can move in the range of 138-155 levels. The global zinc market was in a supply surplus of 265kt over the first seven months of the year, compared to a supply deficit of 141kt during the same period last year, data from the ILZSG shows. As for Lead, market encountered a surplus of 128kt over the first seven months of 2020, compared to a deficit of 31kt during the same time last year. Nickel may test 1150 levels by taking support near 1040 levels. Chinese stainless steel producers have increased their consumption of stainless steel scrap in the last two months in an attempt to reduce their input costs with nickel prices soaring since mid-July. Aluminum may trade in the range of 137-148 levels. China imported more aluminum for a second straight month in August, with imports reaching an 11-year high at 4,29,464 tone, according to customs data.
LEAD MCX (OCT) contract closed at Rs. 146.95 on 24th Oct’2020. The contract made its high of Rs. 157.20 on 01st Sep’2020 and a low of Rs.145.00 on 24th Sep’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs.145.75 On the daily chart, the commodity has Relative Strength Index (14-day) value of 30.57
One can sell aroundRs. 148.00 for a target ofRs.136.00with the stop loss ofRs.152.00.
NATURAL GAS MCX (OCT) contract closed at Rs. 213.20 on 24th Oct’2020. The contract made its high of Rs. 221.00 on 07th Sep’2020 and a low of Rs. 181.50 on 31st July’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 202.91 on the daily chart, the commodity has Relative Strength Index (14-day) value of 61.65.
One can buy around Rs.205.00 for a target of Rs. 245.00 with the stop loss of Rs. 185.00.
CHANANCDEX (OCT) contract was closed at Rs. 5266.00 on 24th Oct’2020. The contract made its high of Rs. 5388.00 on 25th Sep 2020 and a low of Rs. 4120.00 on 28th July’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 6062.60 on the daily chart, the commodity has Relative Strength Index (14-day) value of 74.74.
One can buy at Rs. 5250.00 for a target of Rs.5650.00 with the stop loss of Rs 5120.00.
It was a week when commodities saw change in major trend with sharp fall in few bullion, base metals and in some agri commodities with surprise ride in dollar index. The major attraction were more than 15% fall in silver and more than5% fall in gold prices. A general slowdown in Europe, alongside concerns expressed by U.S. state and U.S. Federal Reserve officials about the need for further stimulus measures, pushed gold prices down overnight to a two-month low. The greenback was supported by a strong U.S. housing market, and concerns over risk in other markets. Global events have also bolstered the dollar, with renewed U.S.-Sino tensions adding to the strength of the greenback, which has positioned itself as the default trade to the Trump administration’s war of words over China. In the energy counter, crude finally moved down to some extent whereas natural gas saw massive jump after a sharp fall on value buying. Oil futures fell on concerns the economic recovery in the United States, the world's biggest oil consumer, is slowing as the coronavirus outbreak lingers and a resurgence in European cases led to new travel restrictions there. In first half it saw some buying after government data showed U.S. crude and fuel stockpiles dropped last week. Gasoline inventories fell more than expected, sliding by 4 million barrels, and distillate stockpiles, which include diesel and jet fuel, posted a surprise drawdown of 3.4 million barrels. Rallying from a seven-week low in the prior session, natural gas futures rose more than 15% on Wednesday afternoon as the demand outlook for natural gas improves. Further bullish signals were sent to the market after Tropical Storm Beta came and went, leaving vessels free now—at least in some areas--to dock in the Gulf of Mexico, which has seen its fair share of disruptions this hurricane season. Some LNG facilities still remain shut-in as Beta moves its way through Texas after weakening to a post-tropical cyclone. Base metals were mostly traded on bearish side on poor data.The latest European purchasing manager indexes (PMI) gave rise to serious worries about the region’s recovery prospects, with the services index falling through the 50-mark separating growth from contraction. Oil seeds and edible oil futures felt the hit of selling pressure and refined soya and CPO reacted the most. Palm oil futures fell more than 3% on Wednesday, tracking weaker rival oils while expectations of rising production in top producing countries further pressured prices.Poor export demand caused for price fall in guar gum. Besides reports of damage to the standing crops of Moong and Urad in Madhya Pradesh on account of continuous rains, fresh hike in the MSP by the government has contributed to an uptrend in pulse seeds prices. Turmeric futures traded weak as the buyers quoted decreased price due to arrival of medium quality turmeric.
Amid the coronavirus lockdown across the country that brought economic activity to a near halt, the agriculture sector has become a silver lining for the Indian economy as per first Advance Estimates for 2020-21 (Kharif Only), total foodgrain production in the country is estimated at 144.52 million tonnes, higher by 9.83 million tonnes than the average foodgrain production of previous five years’(2014- 15 to 2018-19). Kharif sowing during this year up to September 11 stood at 1,113 lakh hectares, which is 46 lakh hectares more than normal. The farmers of India has taken a challenge and shown their courage against COVID-19 pandemic and lockdowns and went out for higher sowing in the kharif season while on other side the government had gone for taking revolutionary steps to strengthen agriculture infrastructure and economic condition of the farmers.
The First Advance Estimates of production of major Kharif crops for 2020-21 have been released by the Department of Agriculture, Cooperation and Farmers Welfare on 22ndSeptember, 2020. The production of most of the crops for the agricultural year 2020-21 has been estimated higher than their normal production. The total kharif food production during 2020-21 is higher by 9.83 million tonnes than the average foodgrain production of previous five years’ (2014-15 to 2018-19) as the cumulative rainfall during this year’s southwest monsoon season upto 16th September, 2020 has been 7% higher than Long Period Average ( LPA ). T h e government has set food grain production target at a record 301 million tonnes for the 2020- 21 crop year, up nearly 1.5 per cent from the previous year's output on the back of good monsoon rains and higher acreage in the kharif season.
Total production of kharif rice during 2020-21 is estimated at 102.36 million tonnes. It is higher by 6.70 million tonnes than the previous five years’ average production of 95.66 million tonnes.
Production of nutri / coarse cereals is estimated at 32.84 million tonnes is higher by 1.45 million tonnes than the average production of 31.39 million tonnes.
Total kharif pulses production during 2020-21 is estimated at 9.31 million tonnes. It is higher by 1.59 million tonnes than pulses production of 7.72 million tonnes in 2019-20 (fourth advance estimate).
Total kharif oilseeds production in the country during 2020-21 is estimated at 25.73 million tonnes which is higher by 3.41 million tonnes than the production during 2019-20. Moreover, the production of oilseeds during 2020-21 is higher by 5.90 million tonnes than the average oilseeds production.
Total production of sugarcane in the country during 2020-21 is estimated at 399.83 million tonnes. The production of sugarcane during 2020-21 is higher by 39.40 million tonnes than the average sugarcane production of 360.43 million tonnes.
Production of cotton is estimated at 37.12 million bales (of 170 kg each) is higher by 1.63 million bales than the production of 35.49 million bales during 2019-20. Production of jute & mesta is estimated at 9.66 million bales (of 180 kg each).
Indian Rupee this week hits one month low amid broad dollar recovery which posted the biggest weekly gains in over 5 months against major currencies. Rising covid cases as well as call for further fiscal stimulus from Federal Reserve prompted demand for dollar during uncertain time. At the latest Nancy Pelosi, the Democratic speaker of the House of Representatives, said she was “ready for negotiation” on a new corona virus relief plan. Accordingly dollar faced a modest sell-off to turn the risk-on sentiment. So far Congressional leaders and the White House have so far failed to agree more fiscal stimulus for the US economy, and talks stalled several weeks ago. Albeit, September quarterly bid for dollar may keep rupee on back foot however dollar inflows at regular intervals will cap any major blow in the downside of rupee move. Meanwhile, the dollar rally continues to push Euro lower as we rightly pointed in our last episode. Over the last few days, there has been a real shift in growth outlook in developed economies with the fears over the impact of covid cases across euro zone. Additionally Fed chair's statement for fiscal support boosted safe haven flows to the US dollar leaving the riskier currencies including euro. Apparently we will remain negative for euro looking at the rising concerns over covid cases in the euro-zone. After massive blow in Pound in last few weeks amid negative interest rate outlook as well as UK economy facing serious covid restrictions, some relief came from reports of progress being made in Brexit process and the announcement of fiscal support helped pound to recover against major currencies but the recovery in pound looks premature till now. It is expected that Brexit volatility will keep Pound at greater risk than any currency.
USD/INR (OCT) contract closed at 74.0975 on 24-Sep-20. The contract made its high of 74.2000 on 24-Sep-20 and a low of 73.5425 on 21-Sep-20 (Weekly Basis). The 21-day Exponential Moving Average of the USD/INR is currently at 74.04.
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 48.65. One can buy at 73.75 for the target of 74.50 with the stop loss of 73.25.
GBP/INR (OCT) contract closed at 94.47 on 24-Sep-20. The contract made its high of 95.585 on 21-Sep-20 and a low of 93.6525 on 23-Sep-20 (Weekly Basis). The 21- day Exponential Moving Average of the GBP/INR is currently at 95.96.
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 35. One can sell at 94.50 for a target of 93.60 with the stop loss of 95.10.
| 21th SEP | India passes farm bills amid protest from opposition parties |
| 21th SEP | Swedish government promised $12 billion to kick-start economy in 2021 budget |
| 22th SEP | Climate change since 2000 will cut U.S. growth over next 30 years –CBO |
| 22th SEP | U.S. existing home sales approached 14-year high; prices scale record peak |
| 23th SEP | Spain's second-quarter GDP fell less than expected, still worst decline on record |
| 23th SEP | German cabinet approved second-highest net new debt since WW2 in 2021 budget |
| 23th SEP | BOJ Kuroda said it may extend deadline for aid to pandemic-hitfirms |
| 23th SEP | Fed policymakers vowed to keep interest rates near zero, called for more fiscal help |
| 24th SEP | IMF official warned coronavirus will weigh on some economies for years |
EUR/INR (OCT) contract closed at 86.345 on 24-Sep-20. The contract made its high of 87.525 on 21-Sep-20 and a low of 86.2075 on 23-Sep-20 (Weekly Basis).The 21-day Exponential Moving Average of the EUR/INR is currently at 87.37.
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 32.81. One can sell at 86.25 for a target of 85.50 with the stop loss of 86.75.
JPY/INR (OCT) contract closed at 70.25 on 24-Sep-20. The contract made its high of 70.92 on 21-Sep-20 and a low of 70.07 on 24-Sep-20 (Weekly Basis). The 21-day Exponential Moving Average of the JPY/INR is currently at 70.20.
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 50.45. One can buy at 70.00 for a target of 70.75 with the stop loss of 69.50.
(3/5)
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The net proceed from the IPO will be used towards following objectives
Considering the valuation at upper price band of Rs.145, EPS and P/E of FY2020 are Rs. 19.02 and 7.62 multiple respectively and at a lower price band of Rs. 135, P/E multiple is 7.10; at upper price band of Rs.145 , book value and P/B of FY2020 are Rs.152.17 and 0.95 multiple respectively and at a lower price band of Rs. 135, P/B multiple is 0.89. No change in pre and post issue EPS and Book Value as the company is not making fresh issue of capital.
Incorporated in 1934, Mazagon Dock Shipbuilders Ltd is the India's leading defence public sector undertaking shipyard under the Ministry of Defence. Mazagon Dock is primarily engaged in constructing and repairing warships and submarines for the MoD and other types of vessels. It is the only shipyard to build destroyers and conventional submarines to be used by the Indian Navy. The business has 2 key operating divisions - Shipbuilding division that undertakes building and repairing of naval ships, whereas Submarine and heavy engineering division includes building, repairing, and refitting of diesel electric submarines.
Only public sector defence shipyard constructing conventional submarines: The company is India’s only shipyard to have built destroyers and conventional submarines for the Indian Navy. In the past it has constructed two SSK submarines, modernized and refitted four SSK submarines and this has enhanced its capability of handling construction of conventional submarines. Besides, it has delivered two of the Scorpene submarines, INS Kalvari and INS Khanderi to the MoD.
World class infrastructure capable of serving the requirements of the Ministry of Defence: The company believes that the infrastructure and facilities available at its shipyard combined with its vast expertise give the company a significant edge over its domestic peers. Till 2020, the company has built 795 vessels, including 25 warships, 4 missile boats, 3 submarines, 6 Leander class frigates, 3 Godavari class frigates, 3 Shivalik class frigates, 3 corvettes, and 6 destroyers. Mazagon Dock shipyard is strategically located on the west coast of India, the sea route that connects Europe, Pacific Rim, and West Asia.
Location of its facilities promotes closer association with its vendors and customers: Its shipyard is strategically located in Mumbai on the west coast of India, on the sea route connecting Europe, West Asia and the Pacific Rim, a busy international maritime route. Its customers, being the MoD and Indian Coast Guard and its vendors are based in Mumbai which have closer co-ordination and greater efficiencies and provides a strategic competitive advantage over its peers.
Established track record with strong financial position and strong Order Book: The company has seen profits continuously in the last three Fiscals. Its total income was Rs.4274.86 Crore , Rs.5027.63 Crore, Rs.5204.67 Crore and Rs.5535.30 Crore for Fiscals 2017, 2018, 2019 and 2020 respectively. Its profit for the year was Rs.598.26 Crore Rs.496.17 Crore , Rs.532.47 Crore and Rs.477.05 Crore for Fiscals 2017, 2018, 2019 and 2020 respectively. The company has a healthy order book worth Rs. 54000 cr. which is to be executed in the next six to seven years.
Export of its products to the international markets: The company intends to increase its presence globally by establishing an international marketing team to identify potential markets for its business growth.
Focus on ship repair: In order to diversify its revenue streams, it intends to increase its ship repair activities in the future. The company is also exploring the possibilities of developing a greenfield shipyard at Nhava, Navi Mumbai with a shiplift, wet basin, workshops, stores and buildings and a ship repair facility spread over an area of 37 acres which it believes will be suitable for construction and repair of warships and commercial ships with larger dimensions.
Augmentation of infrastructure and enhancing its manufacturing capacity: The company is currently undertaking capital expenditure for its submarine and heavy engineering division by way of construction of the submarine launch facility and blasting painting chamber. The submarine launch facility which is currently being constructed will enable it to execute future submarine orders. The company is exploring options to develop a greenfield shipyard at Nhava, Navi Mumbai to cater to its existing and future customers in the domestic and international markets.
Mazagon Dock Shipbuilders is a defence public sector undertaking shipyard under the Department of Defence Production (MoD) with a maximum shipbuilding and submarine capacity of 40,000 DWT. It constructs and repairs warships and submarines for use by the IndianNavy and other vessels for commercial clients. Itis India’s only shipyard to have built destroyers and conventional submarines forthe Indian Navy, besides being one ofthe initial shipyards to manufacture corvettes (or small warships). The company has a healthy order book worth Rs. 54000 cr. which is to be executed in the next six to seven years.
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Exchange-traded funds (ETFs) are gaining popularity among retail and high-net-worth individual (HNI) investors, show data from the Association of Mutual Funds in India (AMFI). The assets under management (AUM) of ETFs grew annually by 87% and 64% in the past five and 10 years respectively, compared with 18.5% and 14.5% growth in the total AUM of mutual funds. The AUM of ETFs reached a record high of Rs 2.1 lakh crore in August 2020, equivalent to the combined AUM of the large-cap and large and midcap categories of equity funds. Nearly half of the total ETF AUMs is linked to the Nifty50 index, followed by 19.3% with the BSE Sensex and 12.3% with the Nifty Bharat Bond index. The share of the ETF AUM in the total MF AUM rose to 7.5% in August 2020, compared with less 1% a decade ago. The expansion is the result of higher inflow in ETFs coupled with the gains in the underlying indices. In the first five months of the current fiscal, ETFs received a net inflow of Rs 19,779 crore, which is almost four times of the equity fund flow. In the previous five years, the ETF drew a net inflow of Rs 1.8 lakh crore compared with Rs 4.71 lakh crore in the equity funds. ETFs have added 7.35 lakh folios in the past six months taking the total tally to 25 lakh, implying a monthly run-rate of 1.2 lakh compared with the large-cap funds’folio runrate of 92,701.
The new fund offer of Axis Global Alpha Equity Fund of Fund has mobilised Rs 1200 crore with about 70,000 applications. The new fund offer closed on September 18 and it will reopen for subscriptions from September 29. The top five holdings in the funds are Amazon, Alphabet Inc, Microsoft, Visa Inc and Adobe. Axis Global Alpha Equity Fund of Fund gives investors an opportunity to ride on the expertise of Schroders and take exposure to a basket of global companies. Schroders operates in 37 locations across the globe and has over 400 fund managers and analysts worldwide.
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