Global Stock market witnessed profit-taking after major indices hit records in anticipation of earnings season. Meanwhile, the number of Americans applying for unemployment benefits has reached its lowest level since the pandemic struck last year, further evidence that the U.S. economy and job market are quickly rebounding from the pandemic recession. On the flip side, Federal Reserve Chairman Jerome Powell said the economy is “a ways off” from where it needs to be for the central bank to change policy. “Conditions in the labor market have continued to improve, but there is still a long way to go,” he said, adding that inflation has “increased notably” due mostly to temporary factors. Meanwhile, China has reported that its economy grew in the second quarter by 7.9% year-on-year which was marginally lower than expectations of 8.1%.
Back at home, domestic markets continued to move higher emboldened by US Fed’s resolve to support the economy. Sentiments were upbeat with a private report stated that IT spending in the country is expected to grow at 8% to $92.7 billion in 2021. The Reserve Bank of India (RBI) on July 15 announced the second purchase of government bonds under the government securities acquisition programme 2.0 (G-SAP 2.0). This will be conducted for Rs 20,000 crore on July 22. Wholesale price inflation eased marginally in June but remained in double digits for the third consecutive month, highlighting the price pressures in the economy against the backdrop of the Covid-19 pandemic. Inflation eased to 12.1% in June, slower than the 12.9% in May. In the same period last year, it had posted a deflation of 1.8%. The Index of Industrial Production (IIP) in May rose by 29.3% as compared to the last year on the back of the low base effect. Going forward, dovish remark of Federal Reserve Chairman Powell in his testimony despite surge in inflation should continue to offer comfort to global equities including India. Back home, investors would be looking at the quarterly earnings numbers for stock-specific cues. Besides, money flow and liquidity continue to guide markets to new highs. On the flip sides, higher crude prices, spread of delta plus variant globally and weakening INR could dent the market sentiments.
On the commodity market front, CRB was steady in the week gone by on mixed fundamentals. OPEC+ talk, Fed meeting and some slow down in China were the major triggers for the market. Both dollar index and gold saw safe haven buying though they have inverse correlation; in general. The latest breakthrough proposal gives the UAE a higher input quota, with talks continuing. However, other OPEC+ members are also seeking better terms, with Iraq reportedly pursuing a higher production baseline. Crude has seen a jerk in the prices from higher side and now expected to trade in a wide range of 5200-5650. Bullion has taken the center stage with its recent upside and both gold and silver try to remain in higher range. The expected range for gold and silver is 47500-49500 and 68000-71500 levels respectively. Base metals is expected to trade flat. In agri, we may see some correction in oil seeds and edible oil pack. Inflation Rate of Japan, ECB Interest Rate Decision, ECB Press Conference, Markit Manufacturing PMI etc may give direction to the commodities.
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.
of the total revenue. The Infrastructure segment recorded customer revenues of Rs 26,240 crore for the quarter January-March 2021, registering year-on-year (YoY) growth of 5% with pick up of execution momentum in projects. For FY21, it has reported 21% rise in consolidated net profit to Rs 11,583 crore on a 7% decline in revenues to Rs 135,979 crore in the year ended March 2021 over the year ended March 2020.
The company will maintain leadership in the E&C segment in India, and is positioned to benefit from the large infrastructure spending in India, over the medium term. Moreover, the company is likely to maintain its healthy cash accrual despite the challenging market conditions for the E&C segment. The management of the company expects the company will continue to aggressively pursue opportunities for growth, both in domestic and international markets. The focus would be on large project wins, efficient execution of its large order book, productive utilization of its monetary resources, all targeted to ensure a sustainable business model. Thus, it is expected that the stock will see a price target of Rs.1821 in 8 to 10 months time frame on a target P/bvx of 3.1x and FY21 EPS of Rs.587.31.
debt to equity ratio is lowest ever at 0.19x. Company’s consolidated net debt has come down to Rs.1,314.1 crore from Rs.8,464.5 crore previous quarter. It had lined-up over 15 million square feet for launch this year across cities and have 40 million square feet under planning.
Despite the challenging environment, the company has recorded the highest ever sales and collections during the fiscal year. The record sales were backed by the great response to newly launched projects as well as ready to move in inventory. The strong performance reflected the increasing consumer preference to own a Prestige group's residential property. Thus, it is expected that the stock will see a price target of Rs.413 in 8 to 10 months time frame on a target P/BV of 2.3x and FY22 BVPS of Rs.179.48.
The stock closed at Rs. 688.60 on 16th July, 2021. It made a 52-week low at Rs. 452.25on 29th October, 2020 and a 52- week high of Rs. 721.85 on 11th May, 2021. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 611.06.
As we can see on charts that stock is continuously trading in higher highs and higher lows on charts which is bullish in nature. Last week, stock has given the breakout of “Bullish Flag” pattern along with high volumes and also has managed to close above the same so buying momentum may continue for coming days. Therefore, one can buy in the range of 680- 684 levels for the upside target of 740-760 levels with SL below 655 levels.
The stock closed at Rs. 124.15 on 16th July, 2021. It made a 52-week low of Rs. 45.95 on 16th July, 2020 and a 52-week high of Rs. 132.70 on 09th June, 2021. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs. 93.86.
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. Apart from this, stock has consolidated in narrow range and formed a “Bullish Pennant” pattern on weekly charts, which is bullish in nature. Last week, the stock tried to give the breakout of pattern and closed on verge of breakout, so follow up buying may continue for coming days. Therefore, one can buy in the range of 121-122 levels for the upside target of 126-140 levels with SL below 114 levels.
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 climbed to its record highs in the week gone by, but still could not manage to surpass above the key psychological mark of 16000 as Banking stocks remain laggard. However IT metal and pharma stocks shone on the board to support the markets. On the derivative front, tussle between bulls and bears was seen in range of 15900 and 16000 as all writers’ holds maximum open interest at 16000 strike while put writers seen adding open interest in 15900 puts. The Implied Volatility (IV) of calls closed at 11.62 % while that for put options closed at 12.07%. The Nifty VIX for the week closed at 12.27%. PCR OI for the week closed at 1.42. Technical setup suggests that 36000 mark will act as crucial resistance for banking index above which we could witness fresh breakout on the charts which could take Nifty towards all-time highs and above 16000 levels this time while Bank nifty could surge towards 36800 levels in upcoming sessions.
|
|
|
|
|
**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) have recovered in the last week from the low of 7134 to 7400 levels mostly on low level buying and expectation of revival of local and export demand. It has potential to touch 7700 levels in this week. The current turmeric prices are higher by more than 25% as compared to the last year despite substantial decline in prices during last three months. According to the data by the Dept of Commerce, GoI, the exports of turmeric achieved largest volume at 1.84 lakh tonnes during last FY2020-21. Turmeric exports volume is highest during in the months of May, Jun and July. Spot prices in Erode and Nandedmandis, started to improve last week after relaxation of lock down in certain states. Jeera futures (Aug) is expected to trade lower towards 13100 levels this week due to higher availability with the farmers and normal demand from the stockiest. Uncertainty over the lock-down due to possible third Covid wave and lower demand from the hotel industry, prices this year trading near 7-year low. In Unjha, arrivals are declining as prices are low at 13,200 rupees per 100 kg. Dhaniya futures (Aug) recovered last week from lowest level this season. Prices are still under pressure and expected to trade range of 6400-6700 tracking normal demand and good supplies in spot market. Currently, the bulk buyers and stockiest are avoiding purchases due to uncertain business activities. Higher production estimates in 2020-21 by Spices Board are also keeping the prices in check. However, coriander exports during the first 4 months in 2021, according to government data is higher by 41% at 19,771 tonnes compared to last year exports for same period.
Gold prices climbed to a one-month peak after U.S. Federal Reserve Chair Jerome Powell soothed investor fears by reassuring that he was in no rush to tighten policy, lifting the metal’s appeal as an inflation hedge. Powell stuck to the view that the current price increases are transitory and the Fed expects to continue its bond-buying until there is “substantial further progress” on jobs, with interest rates pinned near zero likely until at least 2023. The biggest rise in U.S. consumer prices in 13 years has intensified investor focus on messaging from the Fed. Futures on the federal funds rate raised bets that the Fed would tighten monetary policy between December 2022 and early in the first quarter of 2023 after stronger-than-expected U.S. inflation data. Large stimulus measures tend to support gold, which is often considered a hedge against inflation and currency debasement. Powell’s comments muted the dollar, while benchmark 10-year U.S. Treasuries yields fell, reducing the opportunity cost of holding bullion, which pays no return. Some investors view gold as a hedge against higher inflation, but a Fed rate hike would dull bullion’s appeal as that increases the opportunity cost of holding the non-yielding metal. Meanwhile, a slight retreat in the dollar and benchmark U.S. 10-year Treasury yields are supporting gold prices. Ahead in this week, we may continue to witness huge volatility and gold and range would be 46500-49200 whereas, Silver may trade in the range of 67300-71400 levels. Whereas on COMEX gold may trade in the range of $1780-$1860 and Silver may trade in the range of $25.40-$27.40.
Soybean futures (Aug) is currently trading near all-time high of 7777 and going ahead we may see 8000-8500 levels, buoyed by lower area under cultivation. On the spot, the sentiments are upbeat due to slow start of sowing amid reports of shortage of the oilseed. In 2021-22 (Jul-Jun) kharif season, so far, farmers have sown soybean across 8.21 mln ha, down 11% from a year ago. RM Seed futures (Aug) is looking bullish and can see higher levels of 7500-7700. The counter is attracting positive cues from life time high prices of soybean & bullrun of edible oils. Secondly, there might be shortage of this Rabi oilseed as according to market reports, out of 86 lakh tonnes availability only 41.50 lakh tonnes of mustard is left for remaining 8 months. Edible oil prices are expected to continue its upside rally on the back of lower imports & gradually picking up demand. The lesser area of sowing in soybean, it will lesser availability of its derivative oil in the domestic market. Secondly, palm oil on the Bursa Malaysia Derivative is at 4 week high on higher exports in the first half of July and expectations of a sluggish rise in production. Investors are now awaiting production figures to determine the price trend, but there are expectations of July output to be below potential despite the peak production season due to a labour shortage. Dry weather in the United States and Canada is also curbing soybean and canola yields. NOPA reported soyoil stocks fell for a third straight month to 1.537 billion lbs, below most trade estimates, supporting CBOT soyoil futures. Saying this, soy oil futures (Aug) is expected to see 1400-1430 & CPO futures may continue to gain towards 1120-1140 levels, respectively.
Crude Oil is heading for their biggest weekly drop since at least May as expectations of more supplies spooked investors, with OPEC likely to add output to meet a potential revival in demand as more countries recover from the pandemic. Discussions on supply policy within the OPEC+, ended without agreement this month after the United Arab Emirates (UAE) objected to extending the output policy beyond April 2022. Saudi Arabia and the UAE reached a compromise in few days, paving the way for OPEC+ to finalise an agreement that would allow more supply into the market. OPEC said that it expects world oil demand to increase next year to around levels seen before the pandemic, about 100 million barrels per day (bpd), led by demand growth in the United States, China and India. OPEC output in June increased by 590,000 bpd to 26.03 million bpd, the report showed. Ahead in the week crude oil prices may continue to trade with bearish bias in the range of 5120-5780 with higher volatility. Natural Gas fell bigger-than-expected storage build and forecasts for less hot weather and lower air conditioning demand over the next two weeks than previously expected. That price decline came ahead of a federal report expected to show a smaller-than-usual storage build last week when production was lower and exports were rising. Data provider Refinitiv said U.S. output in the Lower 48 states slipped to 91.3 billion cubic feet per day (bcfd) so far in July, due mostly to pipeline problems in West Virginia earlier in the month. Ahead in week it is expected that prices may continue to trade with mixed bias as range would be 245-280.
Cotton futures (July) is trading at over bought positions and expected to correct to 25000 levels as the monsoon progresses. Currently, the sowing acreage is lagging in all the cotton producing states due to erratic rainfall distribution. USDA has forecasted that India will be the largest cotton producing country contributing about 24% of world cotton production. The sowing is expected to pick up in this week. In the recent development, India to sign MoU with Bangladesh to export 10 lakh bales of cotton annually. As per the commerce ministry data, cotton exports form the country jumped more than 100% in first 8 months of current cotton year starting October. Cotton exports touched 63 lakh bales till Jun 2021. The Cotton Association of India has estimated exports at 72 lakh bales for the current season. Guar seed futures (Aug) expected to trade with positive bias towards 4380 levels mainly due to erratic rainfall across Rajasthan – the main guar producing state. Guar seed prices have now trading above 4000 levels since April which is now a good support. Area under guar cultivation is decreasing in Rajasthan with target area of 2.6 lakh ha.compared to five-year average of 3.5 lakh ha. The exports of guar gum also decline by more than 35% in FY2020/21 compared to previous year. Chana futures (Aug) is expected to trade in a range 4700-5000in this week on expectation of steady demand from the market players. Sentiments of pulses industry were dampen after government-imposed stock limit on pulses and ask to declare their stocks on the government website. Selling pressure is seen from big corporates and importers. NAFED is also selling the it’s old chana into the market at lower price of 4400-4500 levels.
Base metals may trade in range with bearish bias as well as high volatility. The prices may get support as weaker-than-expected economic data from top consumer China raised hopes the country would implement further monetary easing to prop up growth. China's gross domestic product expanded 7.9% yearon- year in the second quarter, missing expectations of a 8.1% rise in a Reuters poll, due to slowing manufacturing activity, higher raw material costs and new COVID-19 outbreaks. However, tepid demand in China and uncertainty about rising inflation may weigh on counter. The rapid spread of the highlycontagious Delta variant of COVID-19 in many countries has raised concerns that the global economic rebound might be derailed, dampening expectations for metals demand. Copper may trade with bearish bias in the range of 700- 750 levels. China, the world’s biggest metals consumer, will take “comprehensive measures” to ease rising commodity prices, Premier Li Keqiang said. Zinc may trade in the range of 235-248 levels. Zinc smelters in Southwest China’s Yunnan province received notices asking them to reduce power use by 25%. Lead can move in the range of 176-185. Wood Mackenzie expects demand for lead for replacement car batteries to rise 5.9% from 2020 to 6.5 million tonnes this year, back to pre-pandemic levels. Nickel may trade in the range of 1370-1440 with positive bias. While nickel demand for electric vehicle batteries is forecast to climb in the coming years, stainless steel still accounts for the bulk of the metal's consumption. Aluminum may move in the range of 190-205 levels. China churned out 3.29 million tonnes aluminium in June down from May’s 3.32 million tonnes, but up 9.3% year on year, the National Bureau of Statistics said.
NATURAL GAS MCX (JUL) contract closed at Rs. 271.10 on 15th Jul’2021. The contract made its high of Rs. 283.40 on 29th Jun’2021 and a low of Rs. 215.00 on 27th May’2021. The 18-day Exponential Moving Average of the commodity is currently at Rs 269.80. On the daily chart, the commodity has Relative Strength Index (14-day) value of 57.036.
One can sell near Rs. 270 for a target of Rs. 245 with the stop loss of Rs. 283.
LEAD MCX (JUL) contract closed at Rs. 178.95 on 15th Jul’2021. The contract made its high of Rs. 181.80 on 30th Jun’2021 and a low of Rs. 169.70 on 18th Jun’2021. The 18-day Exponential Moving Average of the commodity is currently at Rs. 178.11. On the daily chart, the commodity has Relative Strength Index (14-day) value of 60.685.
One can buy near Rs. 176 for a target of Rs. 184 with the stop loss of Rs. 172.
REF. SOYA NCDEX (AUG) contract was closed at Rs. 1350.30 on 15th Jul’2021. The contract made its high of Rs. 1390.60 on 03rd Jun’2021 and a low of Rs. 1157.30 on 18th Jun’2021. The 18-day Exponential Moving Average of the commodity is currently at Rs. 1298.76. On the daily chart, the commodity has Relative Strength Index (14-day) value of 61.847.
One can buy near Rs. 1336 for a target of Rs. 1420 with the stop loss of Rs 1294.
CRB was steady in the week gone by on mixed fundamentals. OPEC+ talk, Fed meeting and some slow down in China were the major triggers for the market. Both dollar index and gold saw safe haven buying though they have inverse correlation; in general. Dollar was up, reacted on economic data from China showing a slowdown in GDP growth and the economic recovery from COVID-19 alongside further dovish comments from U.S. Federal Reserve Chairman Jerome Powell over. Powel said that monetary policy would remain accommodative and inflationary pressures will likely moderate. However, he also warned that the Fed would act if inflation was persistently and materially above its 2% target. Oil was down, with a recent rally fizzling, as a build in U.S. gasoline inventories and a potential Organization of the Petroleum Exporting Countries and allies (OPEC+) agreement to increase supply clouded the black liquid’s outlook. Saudi Arabia and the United Arab Emirates (UAE) reportedly resolved a dispute that caused the breakdown of an OPEC+ meeting earlier in the month and hung August supply increases in the balance. Crude oil breached the level of 5400 on MCX. Natural gas remained firm on continuous increase in physical demand. Bullion saw a breakout after a long consolidation though the upside was capped as U.S. Federal Reserve Chair Jerome Powell signaled the central bank’s “powerful support” for economic recovery. Low GDP data also stimulated safe haven buying in gold. Second-quarter GDP grew 7.9% year-on-year while growing 1.3% quarter-on-quarter. Gold crossed 48400 on MCX and $1840 on COMEX. Similarly, silver saw a jump in the prices. Base metals traded mix on their own fundamentals. Aluminum traded up despite the fall in crude with which it is highly correlated. Lead was in a range with downside bias.
On agri, chana saw further decline as the Government opted for strict measures. Guar counter was trying to make a base at current level. Progress of monsoon may force farmers to cultivate guar due to delay in the sowing of other crops. In spices, jeera and turmeric saw lower level buying. Turmeric was marginally up though export demand is very negligible in all the mandis. In positive news, garment exporters will continue to get a rebate on central and state taxes on their outward shipments as the government on Wednesday approved extension of RoSCTL scheme till March 2024. The move is aimed at enhancing competitiveness of the labourintensive textiles sector. Oil seeds and edible oil saw jump despite all effort taken by government to give the port clearance on urgent basis, as they were tracking the firm trend of international market. Dry weather is expected to continue in the northern Plains for at least the next 10 days, which will maintain severe stress on spring wheat, corn, and soybeans.
Natural gas prices have more than doubled since last year’s pandemic-induced slump. Prices surged in the second quarter of 2021 by 40% percent, registering the largest quarterly rise since the second quarter of 2016 and more than 50% gain in this year till date. Extreme heat, rising LNG exports, and lower than usual gas stocks in storage continue to support prices at the start of the third quarter.
Weather model is one of the key factors
Weather models anticipated heat waves will be one of the key factors in determining price actions. As per National Oceanic Atmospheric Administration (NOAA) report, weather is expected to remain warmer than normal for the next two weeks, which is likely to increase cooling demand. The latest models are anticipating higher near-term consumption prompted by hot trends over much of the Lower 48, putting upward pressure on prices.
Production & storage
Natural gas production in US has stayed relatively flat in recent months, due to lower production of associated gas from oil-directed rigs. EIA expect U.S. dry natural gas production to average 92.6 Bcf/d in 2021, up by 1.3% from 2020, and then rise to 94.7 Bcf/d in 2022.
U.S. working natural gas in storage ended the winter withdrawal season in March 2021 at 1.8 trillion cubic feet (Tcf), slightly less than the five-year (2016–20) average. EIA forecast that flat U.S. natural gas production this summer combined with record U.S. NG exports will contribute to slightly lower-than-average inventory builds during the remainder of the summer build season, which ends in October. Forecast natural gas inventories end October 2021 at 3.6 Tcf, which is 3% lower than the five-year average.
Demand
Rising natural gas demand outside the power sector and higher exports resulted in an average Henry Hub spot price of $3.25/MMBtu in the first half of 2021, also because of the brief spike in prices to $5.35/MMBtu during the Texas Freeze in February.
Demand for U.S. exports of LNG is running high from both Asia and Europe, following cold winters that depleted stockpiles and several hot weeks to start the summer. With vessels of LNG heading to Asia, buyers of Europe have struggled to replenish tanks and caverns after a long and cold winter. Storage levels are the lowest for this time of year in a decade. With European and Asian gas both trading over $12 per mmBtu, expects LNG exports from US to remain high. U.S. pipeline exports to Mexico averaged 6.5 bcfd so far in July, down from a record 6.7 bcfd in June.
Searing heat in Canada and the Pacific Northwest has also lifted gas demand. Strong demand in China is sucking in chilled cargoes of gas from the U.S., after a year in which American energy companies throttled back production. A drought in Brazil has added to the competition by curtailing power output from hydroelectric dams.
India’s share
India’s annual gas consumption is expected to increase by 25 billion cubic
metres (bcm) in the 2020-2024 period, which translates into a 9% annual
average growth rate, IEA said. India has plans to increase the share of gas in
its energy basket to 15% by 2030 from the current level of 6%.
The Indian Rupee largely remains unchanged this week amid strong IPO flows capped the downside in rupee, however consistent dollar buying from RBI halted any big surge in rupee as well. Going forward next week risk sentiment in global markets will drive the USDINR pair. We think the pair may trade in a consolidation phase for next few sessions in absence of major triggers in coming week. Meanwhile dollar index slightly edge higher fueled by Fed’s Bullard hawkish comments. In an interview with Bloomberg, he said the Fed has reached both its inflation and employment goals, suggesting that the Fed should move forward with tapering its bond purchases. Bullard is not currently a voting member of the FOMC. Fed Chair Powell is the key voting member, and he remains dovish, committed to continue stimulus until further progress is seen with economic recovery and employment. On the majors, the UK pound moved this week but outperformed nearly all its peers in strong dollar environment. Higher-than-expected inflation and strong employment data fueled demand for the currency. The modest uptrend in pound will continue in coming days. While the euro fell slightly in line with the broadly stronger US dollar. ECB central bank governor Ignazio Visco said that tapering would be avoided, and “monetary policy not be tightened for a long period.” Next week ECB monetary policy is likely to remain unchanged and we don’t think there will be major swing in the common currency.
USD/INR (JUL) contract closed at 74.6475 on 15-Jul-21. The contract made its high of 74.7900 on 12-Jul-21 and a low of 74.5350 on 13-Jul-21 (Weekly Basis). The 21-day Exponential Moving Average of the USD/INR is currently at 74.5248.
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 58.21. One can buy at 74.40 for the target of 75.40 with the stop loss of 73.90.
GBP/INR (JUL) GBP/INR (JUL) contract closed at 103.4900 on 15-Jul-21. The contract made its high of 103.7625 on 13-Jul-21 and a low of 103.1025 on 15-Jul-21 (Weekly Basis). The 21-day Exponential Moving Average of the GBP/INR is currently at 103.4800
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 47.56. One can sell at 104.00 for a target of 103.00 with the stop loss of 104.50.
| 16th JUL | Bank of England urged to spell out plans to curb inflation |
| 16th JUL | China snubs senior US official in worsening diplomatic stand-off |
| 15th JUL | Second MPC member hints BoE needs to tighten UK monetary policy |
| 15th JUL | Jay Powell dismisses claims of Fed complacency on inflation |
| 14th JUL | UK gilts/inflation: stand down from panic stations |
| 14th JUL | Supply bottlenecks drag down eurozone manufacturing output |
| 13th JUL | The BoE’s mixed messages on UK banks |
| 13th JUL | Global investors’ exposure to Chinese assets surges to $800bn |
| 12th JUL | Pandemic and higher food prices fuel sharp rise in global hunger |
EUR/INR (JUL) contract closed at 88.2600 on 15-Jul-21. The contract made its high of 88.7525 on 12-Jul-21 and a low of 88.0175 on 14-Jul-21 (Weekly Basis). The 21-day Exponential Moving Average of the EUR/INR is currently at 88.6949.
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 3797. One can sell at 88.50 for a target of 87.50 with the stop loss of 89.00.
JPY/INR (JUL) contract closed at 67.8650 on 15-Jul-21. The contract made its high of 67.9825 on 15-Jul-21 and a low of 67.5225 on 13-Jul-21 (Weekly Basis). The 21-day Exponential Moving Average of the JPY/INR is currently at 67.5694.
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 54.47. One can buy at 67.50 for a target of 68.50 with the stop loss of 67.00.
(2.5/5)
|
|
Funding capital expenditures requirements for expansion of Dahej manufacturing facility.
Considering the P/E valuation, on the upper end of the price band of Rs.1083, the stock is priced at pre issue P/E of 41.63x on FY21 EPS of Rs. 26.02. Post issue, the stock is priced at a P/E of 45.93x on its EPS of Rs. 23.58. Looking at the P/B ratio at Rs. 1083 the stock is priced at P/B ratio of 13.11x on the pre issue book value of Rs.82.62 and on the post issue book value of Rs. 176.39 the P/B comes out to 6.14x.
On the lower end of the price band of Rs.1073 the stock is priced at pre issue P/E of 41.24x on FY21 EPS of Rs. 26.02.Post issue, the stock is priced at a P/E of 45.51x on its EPS of Rs. 23.58. Looking at the P/B ratio at Rs.1073, the stock is priced at P/B ratio of 12.99x on the pre issue book value of Rs. 82.62 and on the post issue book value of Rs. 176.39, the P/B comes out to 6.08x.
Incorporated in 1996, Tatva Chintan Pharma Chem Limited is a chemical manufacturing company that manufactures structure directing agents (SDAs), phase transfer catalyst (PTCs), pharmaceutical and agrochemical intermediates, and other specialty chemicals. Its products are not only sold in India but also export to 25+ countries all over the world such as the USA, Germany, South Africa, China, and the UK. In FY 2020, total export contributed to 76% of total revenue from operations. Currently, it has two manufacturing facilities at Ankleshwar and Dahej in Gujarat.
Leading manufacturer of structure directing agents and phase transfer catalysts, with consistent quality: With very few players in the Indian and global market, Tatva Chintan is the largest and only commercial manufacturer of SDAs for zeolites in India. It also enjoys the 2 nd largest position globally. Its strategically located manufacturing facilities and robust and technically sound R&D capabilities have enabled the company to maintain the quality of its products.
Global presence with a wide customer base across various industries having high entry barriers: Tatva Chintan supply its products to customers in India and export its products to over 25 countries, including the USA, China, Germany, Japan, South Africa and the UK. During the Fiscals ended March 31, 2019, 2020 and 2021, exports of products accounted for 69.57%, 76.74% and 70.58% of its revenue from operations, respectively. It also has two wholly owned subsidiaries in the USA and Netherlands, to facilitate its overseas operations.
Diversified specialised product portfolio requiring strong technical know-how: As of March 31, 2021, the company offered 47 products under its SDA product portfolio, 48 products under the PTC product portfolio, 6 products under the electrolyte salts for super capacitor batteries portfolio and 53 products under its PASC portfolio. Its R&D capabilities and technical expertise has enabled it to become one of the leading manufacturers of SDAs for zeolites and PTCs in the world.
Modern manufacturing facilities with a focus on ‘green’ chemistry processes: The company operates through two of its manufacturing facilities situated at Ankleshwar and Dahej. The company has successfully converted its Ankleshwar Manufacturing Facility into a ‘zero liquid effluent discharge’ facility from January 2020. Its aggregate manufacturing capacity as on March 31, 2021, comprised an aggregate reactor capacity of 280 KL and 17 Assembly Lines. Currently, each of its manufacturing facilities has accreditations including the ISO 14001:2015 and ISO 9001:2015 certifications for quality management, environment and health & safety systems.
Expand existing product portfolio: The company has consistently sought to diversify its portfolio of products which could cater to customers across segments, sectors, and geographies. It also intends to further diversify into products with prospects for increased growth and profitability. TCPCL plans to continue to increase offerings in current business segments as well as diversify into new products by tapping into segments which in the view of the management have attractive growth prospects.
Further develop R&D capabilities: Its research and development capabilities have enabled it to expand product offerings from 72 products as at March 31, 2011 to more than 154 products as at March 31, 2021. In this regard, of the 2,787.00 square meters of land leased to the Company pursuant to agreements with the GIDC for premises at Vadodara, the company now intends to expand its R&D facility at Vadodara and utilise 1,887.00 square meters of the available land for the same.
Increase wallet share with existing customers and continued focus to expand customer base: The company believes that long standing relationships that it has enjoyed with customers over the years and the repeat and increased orders received from them are an indicator of its position as a preferred supplier to customers.
Expand its existing manufacturing capacities to capitalise on industry opportunities: The company’s aggregate manufacturing capacity has increased at a CAGR of 20.59% from an aggregate reactor capacity of 82 KL and zero Assembly Lines as of March 31, 2010 to 280 KL Reactor Capacity and 17 Assembly Lines as of March 31, 2021.
The Company is one of the leading global producers of an entire range of PTCs in India and one of the key producers across the globe. SDA and PTC products have various applications in green chemistry, which is pertinent considering the growing focus on green and sustainable technologies. Factors such as robust earnings growth outlook with strong market share, consistent focus on R&D, greater control over cost and strong long-standing relationships with key customers augurs well for the company. On the valuation front, the issue is reasonably priced.
|
The gross purchase of equities by the domestic fund managers in the secondary market reached Rs 83,006 crore in June compared with the five-year average of Rs 58,187 crore, the data from SEBI showed. The gross purchase in a single month in June is the second highest after Rs 1.2 lakh crore in March 2020. The equity exposure of mutual funds includes equity funds, index funds, exchange traded funds (ETFs), and balanced funds for trades in the secondary market. The domestic funds chose to increase allocation amid the selling by foreign funds. The elevated purchase lifted the gross buyredemption ratio of local funds to 1.08 in June 2021, which was a tad better than the long-term average of 1.06 reflecting easing redemption pressure. Net deployment by local funds in the equities was Rs 6,437 crore in June, the highest in 13 months. This was the fourth month in row when local funds were net buyers in equities. Their cumulative net investment at Rs 17,212 crore was slightly higher than the inflow of Rs 15,083 crore by foreign portfolio investors in the said period.
Indian savers continue to repose their trust in equities to help build a nest egg for the future, with mutual funds focused on stocks drawing more funds in June despite headline indices hitting record highs and discussions on valuations consuming more column inches than ever. Investors put in Rs 5,988 crore in June, lower than May’s Rs 10,083 crore, but registering net additions to the equities kitty for the fourth straight month. Debt funds, too, saw net flows of Rs 3,566 crore, taking the total assets under management of the mutual fund industry to Rs 34.1 lakh crore. Monthly flows through systematic investment plans (SIPs) rose to Rs 9,156 crore as compared to Rs 8,818.90 crore in the previous month. The midcap category saw the highest flows at Rs 1,729 crore, followed by flexicap at Rs 1,087 crore, and focused funds at Rs 569 crore.
Tata Mutual Fund has announced the launch of Tata Business Cycle Fund - an open-ended Equity Scheme following business cycles based investing theme. The New Fund Offer (NFO) opens on July 16 and will close on July 30. According to a press release, Tata Business Cycles Fund aims to deploy the business cycle approach to identify economic trends and invest in sectors and stocks that are likely to outperform. During an expansion phase it will buy either the sector leaders or companies benefitting disproportionately from the sectoral tailwinds during economic and business cycles. During a contraction phase it will Invest in companies from sectors which provide cushion during downcycles.
TRUST Asset Management Company has announced the launch of a new fund – TRUSTMF Short Term Fund. The NFO will be open for subscription from 20th July to 3rd August and will be managed by Anand Nevatia, Fund Manager, TRUST Mutual Fund. This is the third launch from TRUST Mutual Fund. According to the press release, the fund will focus on top quality investible universe of filtered AAA issuers and focus on consistent risk adjusted returns in back testing of Model Portfolio prepared by CRISIL.
|
|
|
|
|
