In the week gone by, global markets witnessed volatile movements over multiple headwinds including the Ukraine war, surging inflation, central banks monetary tightening and Chinese Covid lockdowns. Meanwhile, Russia’s President Vladimir Putin has warned the West of a “lightning fast” response to any country that intervenes in its war against Ukraine and creates what he called “strategic threats for Russia.” It has told the US to stop sending arms to Ukraine, saying large Western deliveries of weapons were inflaming the conflict. On the Chinese front, Chinese President Xi Jinping called for an “all-out” effort to construct infrastructure. His comments came as mainland China has, since March, been facing its worst outbreak of Covid-19 since the initial shock of the pandemic in early 2020. The Bank of Japan has announced its decision to hold steady on its monetary policy settings. The Japanese central bank also said in its monetary policy statement that it “expects short- and long-term policy interest rates to remain at their present or lower levels.”
Back at home, volatility in the domestic markets continued to rule on rising inflation, possible interest rate hikes and fluctuating oil prices ahead of the monthly expiry of April series derivatives. It could be seen that foreign players are in a selling mood while domestic investors looked active and has focused on defensives sectors such as Consumption, Infra & capital goods. On the earning front, banking sector is staging a strong rebound with good credit growth and improving asset quality. Going forward volatility will continue to rule due to weakening global cues. The Fed policy outcome on May 5th will set the tone for the short-term trend of the market. As we are in result session, we may see stock specific action in the market.
On the commodity markets front, CRB saw recovery from the lower side despite terrific rally in dollar index. Overall, commodities lost their upward momentum; however, there are still positive factors in the form of supply risks relating to Russia and inflation concerns which may continue to support prices. The next major event for commodities is the Fed's monetary policy decision in early May but until then commodities may get the impact by development relating to Russia-Ukraine war as well as China's efforts to get virus spread under control and support economic growth. The global economy will expand more slowly than predicted three months ago. Gold and silver will move in the range of 49500-52000 and 62000-66000 respectively. Global demand for gold surged in the first quarter of 2022 to the highest in over three years, driven by investors worried about the war in Ukraine and inflationary pressures, according to the World Gold Council. Natural gas will remain higher as Russia halted gas supplies to Bulgaria and Poland for rejecting its demand to pay in roubles. Base metals may move in a range on mixed triggers. ISM Manufacturing PMI, ISM Non- Manufacturing PMI, Fed Interest Rate Decision, Non-Farm Payrolls and Unemployment Rate of US, RBA Interest Rate Decision, Unemployment Change and Unemployment Rate of Germany, RBNZ Financial Stability Report, Employment Change QoQ, Unemployment Rate and RBNZ Press Conference of New Zealand, RBA Chart Pack, Balance of Trade of Canada, BoE Interest Rate Decision, RBA Statement on Monetary Policy and many more events and data scheduled this week, which must be taken care of while trading in 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.
The Company continues to maintain its leadership position among private life insurance company`s in India and increased its market share on the back of innovative product launches which helped higher contribution from VNB. The company is expected to show consistency in growing the business on the back of growing agent network, valuable partnerships and innovative product launches. Thus, it is expected that the stock will see a price target of Rs.603 in 8 to 10 months’ time frame on a current P/Bv of 8.28x and FY23 BVPS of Rs.72.88.
The company is doing well and has strong balance sheet. According to the management of the company, it has taken initiatives to streamline the processes by adopting new technologies in the areas of engineering for its sustainable growth. It is also looking forward for remote operation of some of its power stations. The company continues to remain comfortable by low overall gearing and stable debt coverage metrics. Thus, it is expected that the stock will see a price target of Rs.43 in 8 to 10 months time frame on a target P/BVx of 1.20x and FY23 BVPS of Rs.35.61.
The stock closed at Rs 256.50 on 29th April, 2022. It made a 52-week low at Rs 103.88 on 03rd May, 2021 and a 52-week high of Rs. 260.45 on 13th April, 2022. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 192.88.
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, it has formed a “Bull Flag” pattern on daily charts, which is bullish in nature. Last week, the stock has given the pattern breakout along with high volumes, which indicates buying is aggressive in the stock. Therefore, one can buy in the range of 250-252 levels for the upside target of 280-286 levels with SL below 235 levels.
The stock closed at Rs 117.75 on 29th April, 2022. It made a 52-week low of Rs 104.40 on 07th March, 2022 and a 52-week high of Rs. 153.75 on 18th October, 2021. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 115.05.
After correcting sharply from yearly high, the stock is continuously trading in narrow range from past few weeks and forming an “Inverse Head and Shoulder” pattern on weekly charts, which is considered to be bullish. Although it doesn’t have the pattern breakout but its consolidation in narrow range indicates that there may be a strong spurt in coming days. On the technical indicators front, both RSI and MACD are also suggesting buying in the stock. Therefore, one can buy in the range of 114-116 levels for the upside target of 132-136 levels with SL below 108 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
Once again volatility gripped the Indian markets in the week gone by as Nifty and Bank nifty both, went through a roller coaster ride. May series begin on a negative note as selling pressure was observed in Friday's session across the board with Nifty seen ending the week above 17100 mark while Banking index managed to hold 36000 levels on the local bourses. From the derivative front, put writers remained active at 17100 & 17000 strikes while call writers added hefty open interest at 17300 strike. Implied volatility (IV) of calls closed at 18.45% while that for put options closed at 19.89. The Nifty VIX for the week closed at 19.38%. PCR OI for the week closed at 1.70. For upcoming week, we expect markets to trade on a volatile path on the back of ongoing earning season from the domestic front while mixed cues from the global front as well. From the technical front, 16900-16800 zone is likely to act as strong support for Nifty while 17300-17400 zone may cap any sharp upside in prices.
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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
Last week we have witnessed pressure in prices at higher levels broadly due to good arrivals and lower demand from the exports and bulk buyers. Overall arrivals of most of the spices in the physical market were normal as per the seasonality. Turmeric May slipped to 5-week low last week and expected to trade in a range of 8350 and 9100 with negative bias. Currently, export demand is normal but is expected to pick up after Ramzan while arrivals have been slowing down with prices. New season sowing also started in south India. Currently, the prices are 9.5% higher as compared to last year but down about 11% in 2022. As per first advance estimates by the Govt for 2021/22 season, turmeric output is pegged at 11.76 lakh tonnes against 11.24 lt in 2020-21. Turmeric exports have been lower this season due to higher prices and higher consumptions locally while the production is good as compared to last year. Turmeric exports during FY 2011-22 (Apr-Feb) down 20% at 1.37 lakh tonnes as compared to last year but higher by 8.3% as compared with 5-year average. Jeera May closed lower for 4th consecutive week due to higher prices and normal demand from the bulk buyers. However, the prices are supported above the 22700 due to lower arrivals in the physical market. The price is expected to trade in a range of 21600-23300 with positive bias. Traders expect jeera production in 2021/22 at 5.0-6.0 mln bags (1 bag = 55 kg), down from 8.0-8.5 mln bags the previous year. As per govt data, jeera exports in Feb 2022 down by 23.6% Y/Y at 14000 tonnes compared to 18300 tonnes while exports for FY 2021/22 (Apr-Feb) period is also down by 23% Y/Y at 2.02 lt compared to 2.62 lt last year. Dhaniya May is facing resistance 12750 levels and it is expected to trade towards 13300 levels if it break the resistance while the support seen at 12110 levels. Currently, processors and traders are buying as per their current requirement as market as prices are still ruling high as compared to last year. Currently prices are higher by 80% y/y and up 38% since January on lower crop estimates. However, good export demand is supporting prices. As per data release by Dept of commerce, coriander exports in Feb 2022 up 5.5% y/y at 3320 tonnes compared to 3150 tonnes last year.
Gold rose as worrying U.S. economic data rekindled some interest in the safehaven metal, but bullion was likely to log its first monthly drop since January on bets for aggressive interest rate hikes by the Federal Reserve. The disappointing U.S. GDP number could take some pressure off the Fed to tighten quite as aggressively as it has hinted, a rhetoric that has pressured gold in recent weeks. That has given gold a bit of a lifeline, and knocked the dollar back just a bit. Fed officials have aligned around plans to accelerate the pace of interest rate hikes this year, but remain split over what could be the make-or-break decision of where to stop to avoid dragging the economy into recession. Higher short-term U.S. interest rates and bond yields increase the opportunity cost of holding zero-yield bullion. Gold prices were headed for their first monthly percentage drop since January, with the dollar and U.S. 10- year Treasury yields strengthening this month. A stronger dollar makes greenback-priced gold less attractive for other currency holders. The dollar edged off a 20-year high it reached against rivals. The freight train, otherwise known as the U.S. dollar, will have to slow down at some point. And that could bode well for gold. On the technical front, gold on Comex is taking bounce from the support and may eye towards 1940 levels and could take support near 1890 levels. Ahead on MCX, gold may trade with sideways to positive bias and could take support near 50800 levels and face resistance near 52300 levels. Silver may trade within the range of 63500 - 67800 levels with higher volatility.
Crude oil prices traded higher following the prospects of the entire European Union banning the Russian crude import. Though the global crude oil market is facing a tight supply, the decision of China to conduct mass Covid testing in some regions also created worries about the demand prospects. Germany has entered into a deal with Poland to secure oil imports from non-Russian exporters via the Baltic Sea port of Gdansk. Some European countries, including Germany, had not imposed a ban on importing Russian crude oil till now. The reported move by it to import from non-Russian exporters will lead to a complete ban on Russian oil imports by European Union. It may be mentioned here that the US, UK and some other European countries have banned the import of Russian crude oil following the war between Russia and Ukraine. Authorities in Beijing are continuing to crack down on COVID-19 outbreaks and trying to avert the city-wide lockdown that has shrouded Shanghai for a month. Ahead in the week prices may continue to trade in wide range where it may take support near 7600 and resistance near 8250. Natural gas markets have rallied, as temperatures in the United States have been a little cooler than typical. Because of this, the market is going to continue to see a lot of noisy behavior as there are a lot of moving pieces when it comes to the European Union buying LNG from the United States, and natural gas from Russia. Ahead in the week, prices may continue to witness both side movements and the range would be 495-570 levels where buying near support and sell near resistance would be the strategy.
Base metals may trade in range with negative bias as COVID-19 lockdowns in China and prospects of aggressive U.S. rate hikes fuelled recession fears may weigh on sentiment. U.S. Federal Reserve officials have aligned around plans to accelerate the pace of interest rate hikes this year. Data showed that the U.S. economy unexpectedly contracted in the first quarter amid resurgence in COVID-19 cases and drop in pandemic relief money from the government. The dollar held at a 20-year high making metals more expensive for buyers using other currencies. A weakening yuan is bearish for base metals and there's expectation that the yuan can weaken a bit more, so that will continue to pressure base metals. Meanwhile, hopes that China will step up its metalintensive infrastructure construction to counter the impact of COVID-19 lockdowns limited losses. Copper may trade in the range 775-810 levels. COVID-19-led demand worries in top metals consumer China and rising inventories outweighed concerns over supply disruptions in key producer Peru. Aluminum may trade in the range of 245-262 levels. Increasing tension over the energy sector after the termination of gas supplies to two European countries will continue to offer long-term support to aluminium. Nickel may trade of 2400-2650 levels. Global demand for nickel is expected to increase to 3.02 million tonnes in 2022 from 2.78 million tonnes in 2021, the International Nickel Study Group said. Zinc can trade in the range of340-365 with negative bias. Swiss zinc smelter Nyrstar said it would invest $284 million to build an electrolysis plant in Hobart as it looks to bolster the metal's production in Australia. Lead can move in the range of 182-192 levels.
Cotton MAY touched fresh all time high of 45900 levels as bullish trend is also witnessed in International prices due to unfavorable weather conditions in US for cotton planting. We expect the prices to trade higher towards 47000 levels, if it sustains above 45600 levels while the support is seen at 43490 levels. Meanwhile, removal of customs duty is failing to control cotton prices as higher international prices keep supporting the cotton prices in the country. Moreover, the government may impose a temporary ban on cotton exports, if cotton prices continue to surge. Currently, the domestic prices are higher by 111.2% y/y and jumped about 33.7% in 2022 due to concerns over production, slow arrivals, better domestic and exports demand. At record high prices, mills continued their purchases of its requirements as imports are also expensive. The arrival of the new crop will start only at the end of Sep and the beginning of Oct. As per CAI, domestic cotton arrivals down 25% or 88.95 lakh bales to 238 lakh bales compared to last year and also cut cotton production forecast by 8 lakh bales in Apr to 335.18 lakh bales compared to 343 lakh bales.
Guar seed MAY slipped to 5-week low last week but recovered due to improving demand at lower levels. Moreover, forecast of normal monsoon also kept the prices under control while export demand for guar gum is supporting prices. We expect the pries to trade between its support of 6100 and resistance of 6610 levels. Currently, prices are up 57% y/y on reports of lowest production last year in last 5 years, multi-year lower stocks and improving export demand due to higher crude oil prices. The US oil rig count is also higher at 549 up by about 205 compared to last year. In Feb 2022, Guar gum exports are higher by 55.6% y/y at 31000 tonnes while exports in 2021/22 (Apr- Feb) are up by 40% y/y at 2.95 lakh tonnes. Currently Castor seed May traded positively last week as it breaks resistance of 7300 levels. We expect prices to trade higher towards 7700 levels if the price sustains above 7400 levels. Support is seen at 7200 levels. Castor seed prices have jumped 23% this year due to lower production estimates and higher by 39% y/y. The demand-supply balance sheet remains bullish for castor seed as estimated consumption for 2021-2022 is around 19-20 lakh tonnes against production and carry stocks at 20-21 lt, meaning a tight supply situation. Mentha Oil May have recovered from 5- week low levels due to lower level buying. We see immediate resistance at 1120 levels and support at 1050. The trend looks positive and is likely to trade higher towards 1150 levels in coming weeks.
GOLD MCX (JUN)contract closed at Rs. 51262.00 on 28th Apr 2022. The contract made its high of Rs. 56163.00 on 08th Mar’2022 and a low of Rs. 47534.00 on 28th Jan’2022. The 18-day Exponential Moving Average of the commodity is currently at Rs 51981.22. On the daily chart, the commodity has Relative Strength Index (14-day) value of 47.452.
One can buy near Rs. 50900 for a target of Rs. 52000 with the stop loss of 50400.
NATURAL GAS MCX (MAY)contract was closed at Rs. 536.40 on 28th Apr’2022. The contract made its high of Rs. 626.40 on 18th Apr’2022 and a low of Rs. 338.60 on 28th Feb’2022. The 18-day Exponential Moving Average of the commodity is currently at Rs. 518.15. On the daily chart, the commodity has Relative Strength Index (14-day) value of 57.162.
One can sell below Rs. 520 for a target of Rs. 490 with the stop loss of Rs 535.
CASTOR SEED NCDEX (MAY)contract closed at Rs. 7248.00 on 28th Apr’2022. The contract made its high of Rs. 7642.00 on 01st Apr’2022 and a low of Rs. 7050.00 on 08th Apr’2022. The 18-day Exponential Moving Average of the commodity is currently at Rs. 7224.48. On the daily chart, the commodity has Relative Strength Index (14-day) value of 60.886.
One can buy near Rs. 7290 for a target of Rs. 7650 with the stop loss of Rs. 7100.
In the week gone by, CRB saw recovery from the lower side despite terrific rally in dollar index. In the first half of the week, commodities saw sharp fall and in the second half, it recovered to some extent from the low. The dollar shot to two-decade high on the yen after the Bank of Japan (BOJ) doubled-down on its super-low yield policy by offering to buy endless amounts of bonds every session as needed. Dollar index breached March, 2020 high of 102.99. Energy complex was action packed. Crude oil prices slipped whereas natural gas touched 570 levels. Oil was down on Thursday morning in Asia as the latest COVID-19 outbreaks and fears of more lockdowns in China drove fuel demand fears. Meanwhile, Wednesday’s U.S. crude oil supply data from the U.S. Energy Information Administration showed a build of 692,000 barrels for the week to Apr. 22. Natural gas prices jumped on supply fear. Russian energy giant Gazprom also followed through on its threat to halt gas supplies to Bulgaria and Poland on Wednesday. US natural gas in storage likely expanded at a below-average pace in the third week of April with cool spring weather helping to grow the inventory deficit and sustain the rally in the NYMEX gas futures. Safe haven buying eroded in bullion counter on a very sharp rally in dollar index amid the higher indication of sharp rise in interest rate in the month of May. A stronger dollar hurt demand for the yellow metal, and an imminent U.S. interest rate hike also dampened the sentiment for the safe-have asset. Benchmark 10-year U.S. Treasury yields also firmed, with investors awaiting more clarity on the "restrictive" policy the Fed plans to pursue to combat inflation. On MCX, gold and silver breached the mark of 51000 and 64000 respectively. Global demand for gold surged in the first quarter of 2022 to the highest in over three years, driven by investors worried about the war in Ukraine and inflationary pressures, according to WGC. The Bank of Japan kept its interest rate steady at -0.10% as it handed down its policy decision in its policy meeting. Base metals prices fell as worries about demand due to COVID-19 lockdowns in top metals consumer China and waning risk appetite among investors weighed on.
Agri saw some recovery from the lower levels. Guar counter hold the support on some improved physical demand. Currently, prices are up by 55.5% y/y on reports of lowest production last year in last 5 years; multi-year lower stocks and improving export demand due to higher crude oil prices. Recent fall in castor stimulated value buying and it saw rebound in the prices, the arrivals have been good in physical market but the support is coming from the exports demand. The demandsupply balance sheet remains bullish for castor seed as estimated consumption for 2021-2022 is around 19-20 lakh tonnes as against production and carry stocks at 20-21 lt, meaning a tight supply situation. Cotton prices rose despite negative news. To control cotton prices in the country, Govt has removed customs duty and now planning to restrict cotton exports from the country.
There is a famous saying: ‘A friend in need is friend indeed’. Yellow metal is always the prominent choice among the investors to park their money and diversifying their portfolio in troubled times such as geopolitical uncertainty, pandemic related environment and global economic slowdown concerns. Geopolitical crises, supply chain difficulties and surging inflation weighed heavily on the global economy and reinvigorated investor interest, pushing the gold price briefly to USD 2,070 an ounce in March, just shy of its all-time high.
Gold demand in India
Considering the current market conditions, investment demand is expected to remain strong as the combination of high inflation and heightened geopolitical tensions will likely to push demand for gold amongst investors.
The Indian Rupee remained the outperformer in a strong dollar environment after expectations build-up for offshore dollar flows in an upcoming LIC IPO. LIC plans to raise $2.74 billion out of which markets are expecting at least $1bn flows from the offshore participants. The firm will open for anchor investors on May 2, which may help rupee on that day as far as flows are concerned. Technically around 75.80 we may find some bid for dollar while 76.75 where exporters may step-in for dollar sales on a weekly basis. Admittedly the greenback strengthened against its peers hitting multi-year highs versus the EUR and JPY. The demand for the US dollar remains high as investors focus on interest-rate differentials between the US and other countries alongside global recession risks and the war in Ukraine. On the majors, EURUSD traded below 1.06 handle for the first time in five years while EURINR plunged below 82.00 this week after Russia announced to stop gas supplies to two European NATO allies which triggered euro to fall further. Sterling is trading below 1.25 at levels not seen since July 2020. GBP is under pressure amidst broad USD strength. While GBPINR too slide below 96.00 as well. We will remain bearish in both euro and pound as well in coming days.
USD/INR (MAY)contract closed at 76.8375 on 28-April-22. The contract made its high of 77.0900 on 26-April-22 and a low of 76.6625 on 28-April -22 (Weekly Basis). The 21-day Exponential Moving Average of the USD/INR is currently at 76.3815.
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 53.93.One can buy at 76.25 for the target of 77.25 with the stop loss of 75.75.
GBP/INR (MAY) contract closed at 95.8425 on 28- April -22. The contract made its high of 98.9800 on 25-April-22 and a low of 95.7500 on 28-April-22 (Weekly Basis). The 21-day Exponential Moving Average of the GBP/INR is currently at 98.5304.
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 20.18. One can sell at 96.50 for a target of 95.50 with the stop loss of 97.00.
| 29th APR | Euro zone Preliminary Inflation rises 7.5% YoY in April vs. 7.5% expected |
| 28th APR | US economy shrinks by 1.4% annualized in Q1 versus 1.1% expected growth |
| 28th APR | UK to delay full post-Brexit border checks on EU imports for fourth time |
| 28th APR | Russian gas payment demands ‘in clear breach’ of sanctions, EU officials warn |
| 28th APR | Yen slides to ¥130 against the dollar after BoJ vows to keep bond yields at zero |
| 26th APR | New home sales in the United States dropped 8.6% from a month earlier |
| 26th APR | US durable goods orders rose 0.8% mom in Mar, ex-transport orders up 1.1% mom |
| 25th APR | Japan unemployment rate dropped to 2.6% in Mar, lowest in 2 years |
| 25th APR | ECB Kazaks: Rate hike in July is possible and reasonable |
EUR/INR (MAY) contract closed at 80.8300 on 28- April -22. The contract made its high of 83.1350 on 25- April -22 and a low of 80.7575 on 28- April -22 (Weekly Basis). The 21-day Exponential Moving Average of the EUR/INR is currently at 82.5854.
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 25.17. One can sell at 81.25 for a target of 80.25 with the stop loss of 81.75.
JPY/INR (MAY)contract closed at 58.9475 on 28-April-22. The contract made its high of 60.4825 on 27- April -22 and a low of 58.7150 on 28- April -22 (Weekly Basis). The 21-day Exponential Moving Average of the JPY/INR is currently at 60.70007.
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 23.93. One can buy at 58.50 for a target of 60.00 with the stop loss of 58.00.
(2.5/5)
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LIC is the largest insurance provider company in India. It has a market share of above 66.2% in new business premium. The company offers participating insurance products and non-participating products like unit-linked insurance products, saving insurance products, term insurance products, health insurance, and annuity & pension products. The Corporation is the largest asset manager in India as at December 31, 2021, with AUM (comprising policyholders’ investment, shareholders’ investment and assets held to cover linked liabilities) of Rs. 40.1 trillion on a standalone basis. LIC operates through 2048 branches, 113 divisional offices, and 1,554 Satellite Offices. It operates globally in Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, UAE, Bahrain, Qatar, Kuwait, and the United Kingdom.
Fifth largest life insurer globally by GWP: LIC is ranked 5th globally in terms of life insurance Gross Written Premium (GWP) (comparing LIC’s life insurance premium for Fiscal 2021 to its global peers’ life insurance premium for 2020), and 10th globally in terms of total assets (comparing LIC’s assets as at March 31, 2021 with assets of other life insurers as at December 31, 2020). LIC is the largest life insurer in India in terms of GWP, NBP, number of individual policies issued and number of group policies issued for Fiscal 2021 and the 9 months ended December 31, 2021.
Trusted brand and a customer-centric business model: The brand ‘LIC’ was recognised as the third strongest and 10th most valuable global insurance brand in 2021, as per the “Insurance 100 2021” report released by Brand Finance. The trust in the brand ‘LIC’ is evidenced by the 279.11 million in force policies under individual business being serviced in India as at December 31, 2021. The trust in the brand ‘LIC’ is further evidenced by the fact that approximately 75% of individual policies sold by the Corporation in India in the nine months ended December 31, 2021 were to sold to customers who had not purchased any life insurance policies from the Corporation prior to April 1, 2021.
Cross-cyclical product mix: The Corporation has a broad, diversified product portfolio covering various segments across individual products and group products. The Corporation’s individual product portfolio in India comprises 32 individual products (16 participating products and 16 non-participating products) and seven individual optional rider benefits. The Corporation’s group product portfolio in India comprises 11 group products. The Corporation is well placed to serve customers across age brackets with a comprehensive product portfolio, while maintaining a strong connect across age groups.
Omni-channel distribution network with an unparalleled agency force: The Corporation’s omni-channel distribution platform for individual products currently comprises (i) individual agents, (ii) bancassurance partners, (iii) alternate channels (corporate agents, brokers and insurance marketing firms), (iv) digital sales (through a portal on Corporation’s website), (v) Micro Insurance agents and (vi) Point of Sales Persons-Life Insurance scheme. As at December 31, 2021, the Corporation had the following distribution network for individual products in India:
Harnessing technology capabilities: The Corporation has developed technological capabilities that help it to provide a great customer experience and drive operating efficiencies. It has added technological capabilities across the customer journey from purchase to payments to claims processing. As at December 31, 2021, its portal had 1.86 Crore registered users and its mobile app for policyholders, available on both Android and iOS platforms had 0.51 crore registered users. It spent Rs. 177.44 crore, Rs. 424.40 crore, Rs. 361.42 crore and Rs.137.34 crore on information technology, on a consolidated basis, in Fiscal 2019, Fiscal 2020, Fiscal 2021 and the 9 months ended December 31, 2021, respectively. It has two apps for intermediaries to use at the pre-purchase stage: Sales App & LIC Quick Quotes App. It has 3 online on-boarding digital platforms through which their intermediaries can register new proposals for insurance and issue new policies such as e2e, i-proposals and AtmaNirbhar Agents New Business Digital App (“ANANDA”).
Largest asset manager in India: The Corporation is the largest asset manager in India as at December 31, 2021, with AUM (comprising policyholders’ investment, shareholders’ investment and assets held to cover linked liabilities) of Rs.40.1 trillion on a standalone basis, which was (i) more than 3.2 times the total AUM of all private life insurers in India, (ii) approximately 15.6 times more than the AUM of the secondlargest player in the Indian life insurance industry in terms of AUM, (iii) more than 1.1 times the entire Indian mutual fund industry’s AUM and (iv) 17.0% of India’s estimated GDP for Fiscal 2022. As per the CRISIL Report, as at December 31, 2021, the Corporation’s investments in listed equity represented around 4% of the total market capitalisation of NSE. As at December 31, 2021, on a standalone basis, LIC’s Investment portfolio included 38.09% central government securities, 24.56% equity securities, 24.25% state government securities and 8.35% corporate bonds. As at December 31, 2021, 95.90% of LIC’s debt AUM on a standalone basis was invested in sovereign and AAA-rated securities.
Robust risk management framework: The Corporation has a risk management framework where risk identification; risk measurement and risk mitigation are undertaken through structured procedures and various Board-approved policies and controls. The Corporation has an enterprise risk management (“ERM”) cell with the Chief Risk Officer heading the cell and a team of officers supporting him at different levels. Its ERM cell provides a framework for evaluating and managing risks inherent in its Corporation through risk and control self-assessment, incident management and top risk-key risk indicator analysis. The ERM cell is working on the implementation of the IT solution package for monitoring various risks its Corporation encounters in its business processes.
Capitalize on the growth opportunities in the Indian life insurance sector: The GWP for life insurers in India is forecasted to grow at 14-15% CAGR from Fiscal 2021 to Fiscal 2026 to reach Rs.12,400 billion. At this level of premium, life insurance as a proportion of GDP is projected to reach 3.8% by Fiscal 2026, up from 3.2% in Fiscal 2021. With the kind of scale, size, reach and scalability the Corporation has achieved over the years, it is well-positioned to capitalize on the expected growth of the Indian life insurance sector.
Reinforce the omni-channel distribution network and increase its productivity: LIC plans to increase the number of Point of Sales Persons- Life Insurance scheme to better meet the needs of potential customers. It intends to find additional partners in the bancassurance (bank) channel and alternate channel (brokers, insurance marketing firms and other corporate agents) and improve its productivity by providing with digital solutions for on-boarding customers for their policies. Besides, LIC plans to increase direct sales of its individual products on its website by increasing the marketing of its website and adding more products that are available for purchase on its website. As at September 30, 2021, LIC had 11 individual products available for purchase on its website. The NBP from sales of its products on LIC’s website increased from Rs.274.89 crore for Fiscal 2019 to Rs.611.67 crore for Fiscal 2021, representing a CAGR of 49.17%. The NBP from sales of their products on LIC’s website was Rs.145.44 crore for the 9 months ended December 31, 2021.
Continue leveraging technology to aid growth, drive operating efficiencies and provide digital support: Inorder to improve cost efficiencies, provide better customer experience, provide a seamless customer on-boarding process and enhance the digital channels for payments. LIC plans to continue to implement various technological and digital initiatives to increase productivity, train its agents and employees, It plans to make greater use of analytics to further drive productivity of its agency channel, deliver enhanced service levels, support customer connection with services and drive operating efficiencies. LIC’s pension and group schemes vertical is in the process of rolling out a new multi-tiered IT application which provides self-servicing capabilities for customers, increased operational efficiency, improved service delivery, better risk management capabilities, an improved claims management system and a robust management information system.
LIC is the largest insurance company in India and 5th largest insurer globally by Gross Written Premium (GWP). The Corporation enjoys a decent traction given its dominant market share in the insurance space. Besides its brand name, years of experience in risk underwriting and managing a large AUM and unique business model supported by phygital strategies indicate that it would see a good growth going forward. It is valued reasonably as compared to its peers. An investor can opt the issue for medium to long term perspective.
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