How Steady selling by fiis dampening mkt sentiment

Spooked by negative global cues like rising oil prices, US bond yields and increasing concerns over the Chinese economy; the stock market snapped five-week winning streak during the week ended. The BSE Sensex fell 1,282.89 points or 2.14 percent to close at 58,765.58, and the NSE Nifty declined 321.15 points or 1.80 percent to 17,532.05 points. However, broader markets outperformed, the BSE Midcap index rising 0.12 percent and Smallcap index up by 0.69 percent. Steady FII selling dampened the sentiment. FIIs have net sold Rs 6,092 crore worth of equity shares in India during the week. On the contrary, the support by DIIs with purchases of Rs 4,305 crore limited the correction to two odd percent in the benchmark indices.

'Mind set' of FIIs looks clouded by the fear of reduction in easy liquidity after the US Fed hint of rate hike sooner than expected and gradual tapering towards the end of 2021. Oil prices jumped to the highest level since October 2018. Analysts feel the prices could hit $90 a barrel in coming months as OPEC+ is unlikely to raise output in the upcoming meet.

On the back of the rising oil prices, buying demand for dollar and expected FII outflows; the Indian rupee weakened to 74.15 a dollar, from 73 levels in the last one month and experts expect the currency to depreciate further to 75-76 against the US dollar. The Reserve Bank of India (RBI) is scheduled to announce its bi-monthly monetary policy on Friday, October 8. Observers expect the RBI to maintain its accommodative stance to maintain adequate liquidity in the system and to support economic activity. It is more important to listen to the commentary of RBI Governor for hints over the direction of the economy. The Finance Ministry has notified rules to implement the new law burying retrospective taxation. These propose a framework to end past litigations and a mechanism to indemnify from any possible future litigations.

The gross GST revenue collected in the month of August 2021 is ₹1,12,020 crore. The revenues for the month of August 2021 are 30 per cent higher than the GST revenues in the same month last year. Q2 earning season will kick off with the results of the largest IT player Tata Consultancy Services (TCS) on Friday, October 8. It would be pertinent to concentrate on the management commentary on the outlook of the IT sector as most of the projections have already been priced in by the market. Infosys and Wipro will report the results on October 13. Near term direction of the markets will be dictated by the RBI policy, Q2 earnings, macroeconomic data, international crude oil prices, rupee-dollar movement and global cues.

IPO Corner: Paras Defence and Space Technologies became the first stock in the current decade to give a massive 185 percent returns to investors on its debut day. The investment of Rs 14,875 for 85 shares (one lot) is worth Rs42,393.75 now. Country's largest insurer LIC is likely to file draft papers with Sebi by November for the largest IPO in country's history say sources of Finance Ministry. The SME segments of the exchanges are also flooded by new IPOs. Ongoing new offerings on the NSE are Bombay Metrics Supply Chain, Destiny Logistics and Dynamic Services; and on the BSE are Adishakti Loha, CWD Innovation, Promax Power and Samor Realty.

Quote of the week: Big money is made in the stock market by being on the right side of the major moves. The idea is to get in harmony with the market. It's suicidal to fight trends. They have a higher probability of continuing than not Martin Zweig

F&O / SECTOR WATCH

Mirroring the volatility in the cash market, derivatives segment witnessed heightened volatility during the settlement week. Market-wide rollovers were flat at 92 per cent (last month's market wide 93%) in value terms Rs1,88,505 cr which is higher than last month 1,67,435 cr. In share terms it is flat / decline along with price effect as majority individual stocks moved up 10 per cent. Maximum Call Open Interest (OI) was seen at 18,000 strike, followed by 17,700 & 17,800 strikes. Call writing was seen at 18,000 strike followed by 17,500 & 17,600 strikes. Maximum Put OI was seen at 17,400 strike, followed by 17,500 & 17,000 strikes. Put writing was seen at 17,400 strike, then 17,000 & 17,500 strikes with Put unwinding at 17,600, 17,700 & 17,800 strikes. The maximum options pain point of the September series was at 17,600 level. Nifty should trade continuously above this level to maintain bullish stance say techies. The volatility index remained high and jumped up to 19.43 during the week, before ending at 17.2 against 16.92 on a week-on-week basis. The Implied Volatility (IV) of Calls closed at 16.84 per cent, while that for Put options closed at 17.54 per cent. The Nifty VIX for the week closed at 18.4 per cent and is expected to remain volatile.

PCR of OI for the week closed at 1.46. Overall options data indicates that the Nifty could see a broad range of 17,000-18,200 levels in the next few weeks. Sectors that can outperform in the Oct Series are Auto (CV &aTractor), Banking &Financials (Mid Cap NBFC and PSU Banks), Oil & Gas, Power, Realty and Textiles. Fresh hike of product prices may trigger renewed buying in Metal counters like JSW Steel, JSPL, Tata Steel and Nalco. In the pharma pack Sun Pharma and Alkem are looking good for further gains. Two auto stocks to watch out for are Ashok Leyland and Tata Motors. Ahead of festival season, capital goods counters like Voltas, Dixon and Havells are on radar of savvy punters. With hike of raw materials prices of Coal etc, Cement stocks are likely to underperform in near term.

New entrants to F&O segment which have rallied significantly in last few sessions may correct modestly on profit booking. Stock futures looking good are Astral, Cholamandalam Finance, JSW Steel, M&M, Sun Pharma and TVS Motors. Stock futures looking weak are Canfin Homes, IEX, Oberoi Realty, Tata Consumer and TechMahindra.

Shiva Texyarn Limited

Shiva Texyarn Limited is engaged in the business of manufacturing and marketing of cotton yarn and other textiles products, such as coated and laminated fabrics, home textiles and back bags. The company's products/services include Cotton Yarn and Grey Fabric; and is also into Technical Textile business of manufacturing of Coating & Laminated fabrics which serves the needs of the Sectors like Health-care, Armed Forces and Advertising among others. The Technical Textile Industry is still remaining an un-tapped area in India and the growth potential is promising and unlimited. The announcement of Production Linked Incentive (PLI) scheme for man-made fibres and technical textiles with a total outlay of Rs 10,683 crore is highly beneficial for the company. Its divisions include Spinning Mills, Knitting, Processing, Garments, Coating, Lamination, Bag Division and Windmill. Spinning division makes combed, carded, compact yarns, slub yarns and fancy yarns. The Processing unit is engaged in dyeing/printing activities and is also involved in the manufacturing of Pile fabrics. The Garment Division is equipped with state-of-the art technology to produce special outerwear garments, Load Carrying products like Ruck-Sacks and Back-Packs etc. Its Garments division offers products, such as work wear and military garments. Its coating product range includes artist canvas and digital canvas. Its Lamination division offers products, such as aero stat fabrics and decontamination. It has over 80 Windmills with an installed capacity of 28.795 megawatts. The entire power generated by Wind Mills is utilized for captive consumption at the spinning unit. Buy this hidden gem for long term target price of Rs500.

Alkali Metals Limited

Alkali Metals Limited is engaged in the business activities of manufacture of bulk drug, intermediaries, such as organic and inorganic chemical, and fine chemicals. The company's products include Sodium Derivatives, Pyridine Derivatives and Fine Chemicals. It manufactures a range of products, including Alkali Metal Derivatives, Tetrazoles and Cyclic Compounds. The company manufactures its products under three categories: Sodium derivatives Pyridine derivatives and Fine chemicals. Its products in these categories include amides, hydrides, alkoxides, azides, tetrazoles, pyridine compounds, cyclic compounds, drug and pharmaceutical intermediates, and specialty fine chemicals. The company manufactures its products on bulk and regular basis, on campaign basis and also on contract manufacturing basis. The Company has captured 60% of Global Demand of one of the Campaign product - 2 Nitro 5 Bromopyridine. This product had a Global demand of 11 MT and the Company had supplied 6.5 MTduring 2020 - 2021. Furthermore, 3 High value Campaign products were developed and commercialized namely; TA10, 2 6 Pyridine Di methanol and 5 Benzyl Thio Tetrazole. These products have huge potential and the company was successful in negotiating with new customers adding to the existing list. The company is recognised as an 'Export House' by DGFT and also recognised by Dept. of Science and Technology, New Delhi as an approved "In house R & D Facility". The company holds very valuable land parcels and has three manufacturing units, at Uppal, Dommara Pochampally and JNPC Visakhapatnam. Strong buying interest was seen in the counter in recent days. Buy for short term target of Rs175 and long term target of Rs300.

Genus Power Infrastructures Limited

Genus Power Infrastructures Limited is engaged in manufacturing/providing metering and metering solutions and undertaking engineering, construction and contracts on turnkey basis. The company operates through power segment. The company's metering solutions include a range of electricity meters, such as multi-functional single phase and three phase meters, current transformer (CT)-operated meters, availability based tariff (ABT) and grid meters, distribution transformer (DT) meters, pre-payment meters and smart meters, among others. The engineering construction and contracts business undertakes turnkey power projects, such as sub-station erection up to 420 kilovolts (kV), laying up of transmission and distribution lines, rural electrification, switchyards and network refurbishment. The company provides a range of services for projects, which include construction, setting up transmission towers, execution of civil work, laying of cables/conductor and installation of transformers. The most significant development for the Smart Metering Industry was the approval of the 3.03 trillion power distribution company reform scheme namely Reforms Based Result-Linked Power Distribution

Sector Scheme. In this revamped distribution sector about half of the total funds of the scheme, that is, about 1.5 trillion are to be deployed for installation of smart meters. Genus Power is the biggest beneficiary with first mover advantage and management has indicated that turnover could double from current levels in the next financial year. Buy for short term target of Rs150 and medium term target of Rs250.