Bull run likely amid favourable Assembly poll results

Now, investors look to MPC meeting scheduled on Dec 8; A status quo on policy rates is likely to be maintained, given consistent easing in inflation

Positive Cues

• Better-than-expected GDP growth
• Stable growth in mfg activity
• Lower intl crude oil prices
• Return of foreign investors
• Assembly results outcome more or less favourable for ruling party

Buoyed by positive global cues like the perception that the US Federal Reserve was done with the rate hike cycle and a reversal was on the cards, renewed buying from FIIs and robust GDP data; the benchmark indices scaled fresh lifetime highs. NSE Nifty rallied 473 points or 2.4 per cent to 20,268, and BSE Sensex jumped 1,511 points or 2.3 per cent to 67,481. The broader markets outperformed the benchmarks with the Nifty Mid-cap and Small-cap indices gaining three per cent each as the benchmark indices kept up the rally for the fifth week in a row. FIIs have net bought Rs10,593 crore worth of shares in the cash segment in the passing week, and their net buying for November stood at Rs5,795 crore, while DIIs have seen net purchases of Rs4,354 crore during the week, and Rs12,762 crore for November. Observers expect the bull run to accelerate in coming months on the back of a better-than-expected quarterly GDP growth with consistent expansion in manufacturing activity, lower international crude oil prices, and return of foreign investors as net buyers and Assembly results outcome more or less perceived to be favourable for the ruling dispensation. All eyes will be on the MPC meeting scheduled on December 8. A status quo on the policy rates is likely to be maintained, given the consistent easing in inflation, but the commentary on any supply shocks, growth outlook and any hint about rate cut in the coming year will be watched. On Monday, the market will first react to the results of four States elections namely Madhya Pradesh, Chhattisgarh, Rajasthan and Telangana releasing on December 3.

Quote of the week: The individual investor should act consistently as an investor and not as a speculator — Ben Graham

You are an investor, not someone who can predict the future. Base your decisions on real facts and analysis rather than risky, speculative forecasts.

F&O / SECTOR WATCH

Mirroring the strong bullish undertone in cash market, the settlement week witnessed robust volumes in the derivatives segment. Both the Nifty and the Bank Nifty indices recorded gains of more than two per cent. The Nifty, in a significant move, breached the psychological level of 20,000. Rollovers in Nifty futures were at 73 per cent and the market wide rollovers stood at 91 per cent. It is pertinent to observe that the Nifty’s rollover rate has experienced a decrease as compared to the previous month. In the prior month, the rollover rate was at 83 per cent, whereas this month it has fallen to 73 per cent. The rollover rate for the December series is lower than the average of the past three months. Conversely, Bank Nifty has seen same rate of rollover to 80 per cent, aligning somewhat with the average of the last three months. Based on this rollover data, observers anticipate sluggish momentum in Nifty, while Bank Nifty’s behaviour remains consistent with that of the preceding months. The maximum Call Open Interest was seen at 21,000 strike, followed by 20,400 and 20,300 strikes. The maximum Put Open Interest was seen at 20,000 followed by 19,500 strike and 20,100 strike. In Bank Nifty, the highest Call Open Interest was observed at the 45,000 strike, while on the Put side, it was concentrated at the 44,500 strike. Implied Volatility (IV) for Nifty’s Call options settled at 10.79 per cent, while Put options concluded at 11.67 per ent. The India VIX, a key indicator of market volatility, concluded the week at 12.69 per cent. India VIX has seen some spike during the week, closing above 12 mark for the first time since May this year. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.37 for the week. The weekly options data indicated that 20,400-20,500 can be the resistance area for the Nifty, with support at 20,000-20,200 zone. The strategy of buy on dips is recommended as long as Nifty trades above the 20,000 mark.

Stock futures looking good are Adani Ports, Bajaj Finance, Bajaj Finserv, Jubilant Food, Siemens, ICICI Bank and PNB. Stock futures looking weak are Hero Motocorp, Navin Fluoro, ONGC, SBI Cards and Tata Chemicals.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)

Tata Coffee Ltd

Tata Coffee Ltd is an integrated coffee cultivation and processing company. The company’s 25 estates are spread across 8,000 hectares of lush, green forests situated among misty hills and picturesque valleys. The company is engaged in the production, trading and distribution of coffee, tea and allied products. Its business segments include Plantations and Value Added Products. The Plantations segment includes cultivation, manufacturing and sale of coffee and other plantation crops. The Value Added Products segment includes production and sale of roasted and ground and instant coffee products. Its instant coffee portfolio includes freeze dried coffees, spray dried coffees, agglomerated coffees and coffee mixes. Its green bean products include washed arabicas, washed robustas and monsooned. The company is the largest corporate producers of both black and white pepper in India. It produces both black and white peppers. Its tea products include orthodox tea and crush, tear, and curl (CTC) tea. It has an automated packing unit where bulk packaging along with glass, paper, kraft and tin SKU packaging is done. It also provides customized packaging and supply chain solutions to its customers. The company’s Instant Coffee plant at Toopran in Telangana, has an installed capacity of 2400 MT/annum and Instant Coffee plant at Theni in the state of Tamil Nadu, has an installed capacity of 6000 MT/annum which includes 2000MT/annum of state-of-the-art Freeze Dried Coffee unit. Vietnam plant started in the year 2019, the 5000 MT/annum freeze dried plant is based on eco-friendly technology and includes a pilot plant to efficiently co-create customised blends. Buy on declines for medium term target price of Rs500.