In the week gone by, global stock markets continued to see volatile movement as I investors worried about another round of business shutdowns to contain a surge in coronavirus cases and they began to shift their focus to earnings. Tensions between the US and China have grown after Beijing last to last week passed a new security law in Hong Kong, restricting free speech. According to Dun and Bradstreet's, the global economy is likely to contract by 5.2 per cent in 2020 with the coronanvirus still spreading and the economic prospects of countries across the world looking muted. Oil prices dipped following a surge in coronavirus cases in the United States and elsewhere will suppress fuel demand.
Back home, Indian market also witnessed bouts of the volatility, as caution prevails amid rising coronavirus cases and falling macroeconomic indicators. There is an expectation that the government will undertake measures to boost demand and there is both monetary and fiscal headroom available. Recently, Prime Minister Narendra Modi invited global companies to set up businesses in India, listing various reforms and ‘green shoots’ of recovery that provide attractive investment avenues and highlighting defence and space among the sectors that offer new economic opportunities. In another development, E-commerce companies have not just recovered, but surpassed pre-Covid-19-level sales as more people shop online due to the pandemic. India’s fuel demand in June extended its recovery from a 13-year low hit in April, lifted by a pickup in activity as the economy gradually reopens from lockdown restrictions imposed to combat the coronavirus pandemic. The government has retained the working hours at eight hours per day for determining wages of factory workers, in a set of draft rules made public on Thursday. Investors are looking forward to another earnings season, even as COVID-19 cases both domestic and abroad continue to soar.
On the commodity market front, some fresh buying emerged in commodities with another round of selling in dollar index amid some improvement in economic data especially PMI data of China and US. CRB index closed above 141. Nevertheless the market was also in pressure of rising infection data and fear of imposition of lockdown again to contain the infection. Gold is roaring higher as a number of uncertainties to the outlook persist and as the dollar slides. It is expected to trade in a range of 48200- 50000 whereas silver may move in range of 50500-53000. Crude rally looks tired from hire side on increasing case of Covid 19. Buy on dips should be the appropriate strategy. It is expected to trade in a range of 2800-3200. New Yuan Loans, GDP 3- Month Average of UK, ZEW Economic Sentiment Index of Germany, Core Inflation Rate, Retail Sales and Michigen Consumer Confidence of US, BoJ Interest Rate Decision, Unemployment Rate of Australia, GDP Growth Rate of China, ECB Interest Rate Decision, ECB Press Conferenceetc are some very important events scheduled in coming days.
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.
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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 is doing well and Q4FY20 has been a strong quarter for the company marked by double digit revenue growth and significant expansion in operating margins. It has continued its outperformance in the India market driven by strong brands, effective sales and marketing strategies and new product launches. In the US market also, the company grew at a healthy pace on the back of new product launches. The management of the company expects the momentum would improve further with the efforts towards cost optimization and process improvement which would give steadily growth to the financials. Thus, it is expected that the stock will see a price target of Rs.2816 in 8 to 10 months time frame on a current P/Ex of 27.19x and FY21 EPS of Rs.103.56.
The company is doing well and Q4FY20 has been a strong quarter for the company due to adoption of innovative technological tools, self-reliant model, strong brand, on time delivery, robust balance sheet, presence in major cities, availability of sufficient liquidity and huge land bank for future growth. The management of the company strongly feels that the company is well equipped to face the recent challenges. Moreover, Real estate sector is expected to perform better due to all time low housing loan interest rates, inherent demand for housing, various tax exemptions under income tax, CLSS (Credit linked subsidy scheme) scheme & other government benefits. Thus, it is expected that the stock will see a price target of Rs.274 in 8 to 10 months time frame on an expected P/BVx of 1x and FY21 BVPS of Rs.274.06.
The stock closed at Rs 493.90 on 10th July 2020. It made a 52-week low at Rs 312.0 on 30th March 2020 and a 52-week high of Rs. 512.70 on 09th June, 2020. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 444.29
As we can see on chart that stock is trading in narrow range of 440 to 490 levels with positive bias and formed a “Bullish Diamond” pattern, which is bullish in nature. Last week, the stock was on verge of breakout of pattern and gained 3.5% along with rise in volumes so buying momentum may continue for the stock. Therefore, one can buy in the range of 487-490 levels for the upside target of 525-535 levels with SL below 465.
The stock closed at Rs 430.10 on 10th July 2020. It made a 52-week low of Rs 213.70 on 24th March 2019 and a 52-week high of Rs. 437.75 on 10th July, 2020. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 333.99
Short term, medium term and long term bias are positive for the stock as it is trading in higher highs and higher lows on charts which is considered to be bullish. Last week, stock gained over 8% and registered all time high along with high volumes, which shows buying is aggressive for the stock. Therefore, one can buy in the range of 420-424 levels for the upside target of 460-470 levels with SL below 399.
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
Nifty indices rallied for the fourth consecutive week and ended with gains of nearly 1.5% backed by sharp surge in some of the front line names TCS, Reliance, HDFC and Bajaj Finance. From derivative front, call writers were seen adding hefty open interest in 10800 & 10900 calls which points towards limited upside in prices. However, on downside 10700 & 10600 levels should act as strong support levels from technical front. The Implied Volatility (IV) of calls closed at 21.61% while that for put options closed at 24.28%. The Nifty VIX for the week closed at 24.91% and is expected to remain sideways. PCR OI for the week closed at 1.62 indicates more put writing as compared to call. Overall we expect markets to remain in consolidation zone in coming week with some stock specific action on radar. However, broader structure still remain positive for both the indices, so any dip into prices should be used to create fresh longs.
**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 (Aug) is expected to consolidate in the range of 5500-5800 levels. The spot prices of turmeric are increasing at the markets due to the arrival of good quality in Erode. At the Erode Turmeric Merchants Association, finger variety was sold at Rs.5,289-6,288 a quintal, root variety was sold at Rs.4,709-5,788. Jeera futures (Aug) holding on to the support near 13600, may witness gain & test 14200-14400 levels. The demand side is looking to be optimistic as the exporters who have held back some consignments would now start shipments to China following easing of border tensions between India and China. Dhaniya futures (Aug) is likely to trade with a positive bias in the range of 6000-6450 levels. The spot prices are gaining as the arrivals in the mandies are lesser in the present scenario. The supplies have started waning in the key markets of Gujarat, Madhya Pradesh and Rajasthan as the peak arrival season has almost come to an end. Cardamom futures (Aug) may witness an extended correction towards 1300-1200 levels. In the upcoming season with likely higher production and the COVID-19 pandemic hitting demand, cardamom growers are starting to get worried as prices are expected to fall further in days to come. The growers have already stocked up old stocks in anticipation of a further rise in prices but the pandemic has unfortunately prolonged. On the trade front, buyers are in a wait-and-watch mode before making bulk purchases, fearing lower returns. Currently, the first round of picking has started in Kerala and new crop of cardamom is arriving in small quantities at auctions. The quantity will increase in August and the second round of picking will start in September.
Bullion counter may trade with a bullish bias. Gold may test 50100 and taking support near 48200 levels while silver may test 53500 while taking support near 49200. Gold set for a fifth straight weekly gain as a spike in U.S. COVID-19 infections underpinned safe-haven appetite. Gold has risen about 18% this year, with safe-haven demand fuelled by the surge in coronavirus cases driving the metal to a near nine-year peak of $1,817.71. More than 60,000 fresh COVID-19 cases were reported across the United States, the largest one-day increase by any country since the pandemic emerged in China last year. Reflecting the resultant risk-off sentiment, Asian equities fell on concerns of fresh lockdowns in the U.S.; which also boosted the dollar, a rival safe-haven, and making gold more expensive for holders of other currencies. For gold, longer-term technicals suggest a slowing in the price momentum, with positioning pointing to a market very long on gold and implying a short-term pullback is possible. The Chinese rally came despite growing pressure from the West over Beijing’s tightening grip on Hong Kong, surging U.S. coronavirus cases, and a fresh lockdown of almost 5 million Australians in Melbourne. Gold has been overbought quite a bit after it surpassed the $1,800 level and now we are seeing some investors selling off. For the next week, we may witness selling form higher levels and then any dip near support considered as buying opportunity. Buildup in gold ETF's worldwide in the first half of 2020 along with buying by Central Banks compensate the sharp fall in physical demand and thus in net gold demand move upside.
Soybean futures (Aug) is expected to witness a consolidation in the range of 3650-3950 levels. The upside may remain capped as there are bearish cues from the demand as well as from the supply side. This Kharif season, the sowing is robust in major growing regions on the back of good monsoon, which has raised the prospects of higher production. On the other side, soybean meal exports from India are plummeting, amid non-competitive prices in the global market amid a poor crop last year and rival countries eating into the traditional markets such as South East Asian countries. However, the counter is expected to take support from the elevated soybean on CBOT owing to weather concerns & good amount of exports being reported to China. There are fewer than eight weeks left in the 2019-20 U.S. marketing year, and soybean exports appear more likely to meet the USDA full-year prediction. Mustard futures (Aug) may trade sideways in the range of 4600-4800 levels. The recent statistic show that that crushing is steady at 8 lakhs tons per month and on the supply side, stock with processors & stockists & NAFED/HAFED is about 17.75 lakh tons. The upside momentum of edible oils may remain restricted from hereon as the imports have started rising and filling up the pipelines that were empty due to lockdown. Moreover, soy oil on CBOT facing resistance near its 200 days moving average of 28.70 and witnessing correction may lend negative cues to the domestic edible oils. Saying this, soy oil futures (Aug) is likely to trade with a downside bias in the range of 800-830, while CPO futures (July) ma consolidate in the range of 660-680 levels with upside getting capped.
Crude oil to steep losses from the previous session, and were headed for weekly declines on worries that renewed lockdowns following a surge in coronavirus cases in the United States and elsewhere could suppress fuel demand. We are expecting economies and fuel demand to bounce back from the pandemic, record daily increases in coronavirus infections in the United States, the world’s biggest oil consumer, raised concerns about the pace of any recovery. In Australia, the government will consider reducing the number of citizens allowed to return to the country from overseas, after authorities ordered a new lockdown of the country’s second-most populous city, Melbourne. Oil inventories also remain bloated due to the evaporation of demand for gasoline, diesel and other fuels during the initial outbreak. U.S. crude oil inventories rose by nearly 6 million barrels last to last week after analysts had forecast a decline of just over half that figure. This week crude oil may extent its fall till the level of 2680 from there we again see buying pressure which takes the bullish rally towards 3060. U.S. natural gas futures fell over 5% decline in crude futures related to worries about ongoing coronavirus demand destruction despite a report showing a smaller-thanusual weekly gas storage build that was in line with estimates. That price drop also came as gas output slowly rises and liquefied natural gas (LNG) exports slowly fall, despite forecasts for hot weather and high air conditioning demand over the next two weeks. For the next week Natural gas may trade with bullish bias where it may test 160 and take support near 128.
Cotton futures (July) is expected to remain stable in the range of 15800-16400 levels. The domestic market is taking positive cues from the higher quoting cotton on the international market as there are anticipation that the world production is going to be down because U.S. supply will be less and world carryover stocks are probably going to be lower, so the inventories may tighten up a little bit. The world is starting to slowly recover from the COVID19 scare and clothing stores are starting to open again after being closed for weeks. In guar complex, the factors of rising acreage in the major growing states & tiredness in rally of oil in the international market may restrict the gains. Guargum futures (Aug) is expected to face resistance near 5650-5720, while guar seed futures may remain below 3800 and witness profit booking from higher levels. Coming back to the fundamentals, these commodities being correlated with oil prices, and being no shortage of oil in storage across the U.S., and with demand faltering, the prospects for further oil price rises look limited in the short term. Regarding sowing in Rajasthan, it is done on about 3.59 lakh hectares till 7 July as compared to 2.96 lakh hectares. Target to grow guar in Rajasthan this year is on 30 lakh hectare this year. Chana futures (Aug) is expected to witness a steep fall towards 4070-4030, facing resistance near 4190 levels. In days to come, NAFED may start offloading more pulses, including chana, from its stocks to bring down prices. Prices of pulses may remain subdued as a normal monsoon this year will encourage farmers to sow more this Kharif season.
Base metal may trade in range with positive bias. Copper can move towards 500 by taking support at 465 levels. The copper prices may get support by hopes of a faster recovery in top consumer China and supply concerns in the world’s biggest producer Chile. The metal, used as a gauge of economic health, is up 2.7% so far this year and has largely recovered from a sell-off sparked by the COVID-19 pandemic. Infections are also slowing the mining recovery in Peru, the second-biggest producer. China’s factory gate prices fell for a fifth straight month in June, although signs of a pickup in some parts of the sector suggest a slow economic recovery remains intact. But profit booking at higher level cannot be denied as surging coronavirus cases could stall a global economic recovery and reduce the demand of metals also. Zinc may move towards 180 and taking support near 160. Zinc prices are getting support on the latest shipping issue from Red Dog Mine in Alaska. Shipping is forecast to be delayed with only one barge operational in 7 days and repairs for the other barge will take about 4 weeks, affecting deliveries to customers. Lead can move towards 150 while taking support near 140. Nickel may test to 1030 by taking support near 975. Electric vehicles hold the promise of increased demand for nickel as a cathode in batteries, which brings Nickel Mines ((NIC)) into the spotlight. Aluminum may move towards 145 while taking support near 135. Rio Tinto said that it will close its aluminium smelter operation in New Zealand due to high costs and a challenging market.
ALUMINIUM MCX (JUL) contract closed at Rs. 138.55 on 09th Jul’2020. The contract made its high of Rs. 140.90 on 09th Jul’2020 and a low of Rs. 132.65 on 28th May’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 137.76. On the daily chart, the commodity has Relative Strength Index (14-day) value of 59.478.
One can buy near Rs. 137 for a target of Rs. 147 with the stop loss of Rs. 132.
NICKEL MCX (JUL) contract closed at Rs. 997.80 on 09th Jul’2020. The contract made its high of Rs. 1019.40 on 09th Jul’2020 and a low of Rs. 924.10 on 27th May’2020. The 18- day Exponential Moving Average of the commodity is currently at Rs. 984.90. On the daily chart, the commodity has Relative Strength Index (14-day) value of 56.557.
One can buy near Rs. 975 for a target of Rs. 1020 with the stop loss of Rs. 948.
GUARGUM NCDEX (AUG) contract was closed at Rs. 5447.00 on 09th Jul’2020. The contract made its high of Rs. 5775.00 on 08th Jun’2020 and a low of Rs. 5374.00 on 29th Jun’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 5505.90. On the daily chart, the commodity has Relative Strength Index (14-day) value of 52.967.
One can buy above Rs. 5500 for a target of Rs. 5950 with the stop loss of Rs 5300.
Some fresh buying emerged in commodities with another round of selling in dollar index amid some improvement in economic data especially PMI data of China and US. CRB index closed above 141 levels. Nevertheless the market was also in pressure of rising infection data and fear of imposition of lockdown again to contain the infection. The number of cases in the U.S. surpassed 3 million as of July 9. India also saw its biggest single-day spike on Wednesday, with over 25,000 new cases. Top U.S. pandemics expert Anthony Fauci warned recently that the daily case growth could reach 100,000 without proper social-distancing and other safety measures. Gold stormed past $1,800 for the third time in a week on Wednesday as bulls seized on the precious metal’s upward momentum to drive its prices to new nine-year highs. On MCX, it made a high of Rs 49348 on Wednesday. Silver too show the muscles and gained the momentum on strength in both gold and base metals. Silver is also making impressive moves on Wednesday, climbing over 2.2% to above $19, and having closed at almost a 4-year high. The industrial metal appears ready to break out and test the $20 level in September futures, carrying silver ETFs higher along with it. Base metals performed well amid a continuous rally in Chinese equity markets. The CSI 300 Index rose for an eighth straight day and the Shanghai Composite Index reached a fresh 2.5-year high. LME copper reached an almost 6-month high on Thursday as money kept flowing into Chinese equity markets. China's factory deflation eased in June, signaling a slow recovery. Rio Tinto has decided to close its New Zealand Aluminium Smelters (NZAS) joint venture with Japan’s Sumitomo Chemical Co. due to high electricity costs and low aluminium prices. Oil prices rose as traders focused on government data showing a huge drawdown in U.S. gasoline stockpiles last week, while sweeping aside an equally stunning, unexpected build in crude inventories, nevertheless it took correction later on. Natural gas moved down after making highs.
In agri, jeera was steady in futures taking cues from spot. The spot rates are quoting higher as the arrivals have slowed down owing to heavy rains in one of the major producing states of Gujarat. Coriander futures was down as the arrivals have started increasing in the spot markets. Soyabean was down on increasing sowing area this Kharif season, thanks to more than normal rainfall in the major growing states.U.S soybean futures eased as concerns eased over adverse weather in the Midwest crop belt. Cotton is gathering strength from downside levels on firm international cues. The cues from the international market is bullish, the reason being ICE cotton futures has scaled to 4 months high & this elevation is likely to stay due to lower U.S. planting estimate and dry weather concerns in the top growing-state Texas.
Gold is always considered a good hedge & safe haven against numbers of uncertainties such as from financial crisis to risk of inflation and most recently corona pandemic. To provide a better investment and hedging tool, NSE has started the option trading in gold mini. The 'Gold Mini Options' contract on spot gold prices is now available for trading from June 8. Currently, the leading commodity derivatives exchange MCX provides gold options trading which devolve on underlying futures contract. The 'Gold Mini Options' product has been designed as options on physical gold unlike the existing product in the market which is options on future. So it is a direct product on the physical gold itself. It is a 100 gram gold product. Idea of keeping it 100 grams of higher quantity is again to keep it closer to the investors as well as traders. So it helps the small hedgers, particularly the bullion merchants and jewellers, to hedge their positions using the options. It is a fairly easy to use product and gives a lot of flexibility. It is a one-month product that allows a quick turnaround and we have ensured that it results in delivery at the delivery centres.
Instrument type - Options Contract with Spot as Underlying (gold)
Options type - The Options Contracts shall be European styled which can be exercised only on the expiration date.
Trading unit-100 grams
Underlying quotation / base value - ₹ per 10 grams
Maximum order size - 10 Kg
Tick size (minimum price movement) - ₹ 0.50
Strike interval - 250
Minimum number of strikes - 10 - 1 - 10
Maximum allowable open position - For a member collectively for all clients: 100 MT or 20% of the market wide open position whichever is higher, for all Gold Options contracts combined together. For individual client: 10 MT or 5% of the market wide open position whichever is higher, for all Gold Options contracts combined together.
Settlement logic - Compulsory Delivery
Delivery unit - 100 grams
Delivery centre - Ahmedabad
Additional delivery centres - Delhi, Mumbai and Chennai
Delivery order rate-On expiry date, the delivery order rate shall be the Strike price. Settlement obligation shall be computed at respective strike prices of the Options contracts.
Clearing and Settlement
NSE Clearing Limited is the clearing and settlement agency for all deals executed on the Derivatives segment. NSE Clearing acts as legal counter-party to all deals on NSE's Derivatives segment and guarantees settlement.
A Clearing Member (CM) of NSCCL has the responsibility of clearing and settlement of all deals executed by Trading Members (TM) on NSE, who clear and settle such deals through them.
Despite rupee climbed the highest in three months, concerns over rising cases in India will push back the rally in rupee. This week India become the third-worst affected country by the Covid19 outbreak as cases surpasses over 7.5 lacs behind only the US & Brazil. Later next week headline inflation number will give us the broad picture of spending pattern in domestic economy although numbers for April and May weren’t published due to the lockdown. Figures for June could face a similar issue. From the majors, euro continue to hold its upside trend after euro zone economic data turns favorable for euro. Next week European Central Bank policy meet will guide the euro pairs. We do not expect any major changes in the policy based on present situation. Meanwhile Pound is trying to surpass its April high after some another round of fiscal support over £30bn announces by the UK government. Overall the package is still not enough to bring quick recovery in the economy and pound may face downside pressure in coming days unless any Brexit headlines reverses the trend.
USD/INR (JUL) contract closed at 75.1225 on 09-Jul-2020. The contract made its high of 75.2500 on 08-Jul-2020 and a low of 74.6000 on 06-Jul-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheUSD/INR is currently at 75.55.
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 40. One can buy at 75.25 for the target of 76.00 with the stop loss of 74.75.
GBP/INR (JUL) contract closed at 94.9525 on 09-Jul-2020. The contract made its high of 95.1700 on 09-Jul-2020 and a low of 93.2500 on 06-Jul-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheGBP/INR is currently at 94.37.
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 54. One can buy at 94.70 for a target of 95.70 with the stop loss of 94.20.
|06th JUl||French economy probably bouncing back faster than expected: Central bank|
|06th JUl||UK's Sunak plans tax cuts to boost COVIDrecovery,theTimes reports|
|07th JUl||Bank of England gives banks 18 months to manage climate risks|
|07th JUl||Euro zone agrees 750 million euros of debt relief measures for Greece|
|07th JUl||Japan skips budget-balance mention in policy roadmap as pandemic changes priorities|
|09th JUl||Debt reduction only way to end 'poverty trap' for some countries - World Bank chief|
|09th JUl||Fed balance sheet below $7 trillion, repo drops to zero for first time since Sept|
EUR/INR (JUL) contract closed at 85.0700 on 09-Jul-2020. The contract made its high of 85.3950 on 09-Jul-2020 and a low of 83.9550 on 06-Jul-2020 (Weekly Basis).The 21-day Exponential Moving Average of the EUR/INR is currently at 85.00
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 50.90. One can buy at 84.90 for a target of 85.70 with the stop loss of 84.40.
JPY/INR (JUL) contract closed at 69.9925 on 09-Jul-2020. The contract made its high of 70.1375 on 09-Jul-2020 and a low of 69.3100 on 06-Jul-2020 (Weekly Basis). The 21-day Exponential MovingAverage ofthe JPY/INR is currently at 70.37
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 52. One can buy at 70.25 for a target of 71.00 with the stop loss of 69.75.
The company proposes to utilise the Net Proceeds towards funding the following objects:
Considering the P/E valuation on the upper end of the price band of Rs. 425, the stock is priced at pre issue P/E of 33.06x on its FY20 EPS of Rs. 12.86. Post issue, the stock is priced at a P/E of 33.82 x on its EPS of Rs. 12.57. Looking at the P/B ratio at Rs. 425 the stock is priced at P/B ratio of 7.52x on the pre issue book value of Rs.56.49 and on the post issue book value of Rs. 64.83 the P/B comes out to 6.56x.
On the lower end of the price band of Rs.423 the stock is priced at pre issue P/E of 32.90x on its FY20 EPS of Rs. 12.86.Post issue, the stock is priced at a P/E of 33.66x on its EPS of Rs. 12.57. Looking at the P/B ratio at Rs. 423, the stock is priced at P/B ratio of 7.49x on the pre issue book value of Rs. 56.49 and on the post issue book value of Rs. 64.83, the P/B comes out to 6.52x.
Incorporated in 2009, Rossari Biotech Ltd is a manufacturer of textiles specialty chemicals. It provides customized solutions to the apparel, animal & poultry feed, and FMCG industries by offering a diversified product portfolio. Rossari Biotech operates in 18 countries including India, Bangladesh, Vietnam, and Mauritius.
Diversified product portfolio: The company caters to various customers’ needs across FMCG, apparel, and poultry and animal feed industries through its diversified product portfolio comprising home, personal care and performance chemicals; textile specialty chemicals; and animal health and nutrition products. The company has 1,948 different products range under these three categories. The company enjoys relationships in excess of five years with 11 out of its top 15 customers.
In-house manufacturing unit: : It has a manufacturing unit located at Silvassa, Dadra & Nagar Haveli with an installed capacity of 100,000 MTPA. The company is also setting up a manufacturing unit at Dahej in Gujarat with an installed capacity of 132,500 MTPA. It has more than 194 distributors across India and 27 distributors spread in other 17 countries.
Strong R&D facility: : Rossari Biotech also has two R&D facilities in Silvassa and Mumbai locations to focus on new product development, formulations, and cost competitiveness. Its R&D team has focused on manufacturing a wide range of eco-friendly sustainable products including Greenacid, Greensoda, Bioclay (a clay based product), Greenhydro 400 Pdr, Greenboost which are not only ecofriendly but also competitively priced.
Pan-India distribution network: The Company’s pan-India distribution network has over 204 distributors as on May 31, 2020. It has a wide network of 22 distributors spread over 9 states for its home, personal care and performance chemicals in India. HUL, IFB Industries & Arvind Ltd are some of its key customers and the firm counts Aarti Industries, Galaxy Surfactants , Atul Ltd , Vinati Organics & Fine Organics Industries as some of its listed peers.
Expand manufacturing capacity and increase production efficiency: The company seeks to capitalize on the growth opportunities in the specialty chemicals industry based on its well positioned operations, network of distributors and dealers and being led by an experienced management team.
Introduce new products and focus on green products which promote sustainability: The company is planning to launch 2 new products in the textile finishing range. Additionally, it is also working towards launch of products in the anti-microbial and electromagnetic protection range. It is also planning to manufacture specialty chemicals for cement industry which improves the overall productivity and reduces production cost for cement manufacturers.
Increase wallet share with existing customers and continued focus to expand customer base: The long-standing relationships that the company has enjoyed with its customers over the years and the repeat and increased orders received from them are an indicator of its position as a preferred supplier to leading FMCG, apparel, textile and poultry feed companies. The company has served 593 customers in Fiscal 2018 and 743 customers in Fiscal 2020.
Expand its international operations: Rossari Biotech seeks to expand its international footprint and increase its sales from exports. In Fiscal 2020, Fiscal 2019 and Fiscal 2018, the revenue from exports was 11.04%, 13.92% and 13.77% of its total revenue, respectively. The company also seeks to enter into co-branding arrangements with such companies.
Rossari Biotech Ltd is a leading specialty chemicals manufacturing company. The company is reliant on the demand from the textile industry for a significant portion of its revenue. However, it derives a significant portion of its revenue from a few major institutional customers in its TSC and HPPC product categories. Moreover, its manufacturing facility situated in Silvassa is critical to its business and any disturbance, slowdown or shutdown of its Silvassa Manufacturing Facility, may have an adverse impact on its business. The company intends to raise Rs 500 crore from the issue, of which 450 crore is offer for sale by the promoter. From the valuation front, the issue looks expensive. On the flip side, from the same domain, many other listed companies with proven track record are available at same or lower valuation.
Liquid funds registered outflows of whopping Rs 44,226 crore in June on the back of advance tax outflows, as per the latest data released by the Association of Mutual Funds in India (AMFI).
Net equity inflows into mutual funds fell sharply in June to around Rs 240.55 crore from Rs 5,256.52 crore in May, reveals the latest data released by Amfi. Large cap funds and multi cap funds, the highest grossing categories in May, saw outflows in June. Multi cap funds saw outflows of Rs 777.60 crore in June. Similarly, large cap funds witnessed outflows of Rs Rs 212.78 crore. Value funds also saw an outflow of Rs 136.44 crore. Mid cap inflows also slowed down: the inflows in the mid cap category fell from Rs 279.69 crore in May to Rs 36.70 crore in June. Small cap funds bucked the trend. ELSS and small cap categories witnessed the highest inflows worth Rs 586.67 crore and Rs 249.20 crore in June. There is a minor fall in small cap inflows as well.
Since December 2018, investors were contributing Rs 8,000-crore plus every month. But in June this year, total monthly mutual fund SIP flows fell below that mark for the first time in 18 months to Rs 7,927 crore, Amfi data showed.
LIC Mutual Fund (LICMF) has launched eKYC services. These services will be now available for all the members on BSE StAR MF platform. BSE has partnered with LIC Mutual Fund for the eKYC services on BSE StAR MF. The digital KYC process will facilitate all BSE StAR Members to ensure zero contact, hassle-free customer onboarding process, especially during this COVID situation. The entire process is very user friendly and simplifies the user experience to perform the entire KYC process seamlessly.