Investors in wait n watch mode

Till date, the earnings for this quarter have been in-line with the expectations. True to predictions, IT sector posted weak results and banks posted good results with strong asset quality and good margins. FMCG underperformed due to slowdown in demand. Auto companies posted above expectation numbers due to improved margins

What’s Up

• Broader market outperformed the benchmarks
• BSE Mid-cap and Small-cap indices added 2%
• US Fed’s Dovish stand eases concerns over rate hike
• Divi’s Lab, Aurobindo Pharma results this week

Buoyed by the Dovish stand taken by the US Federal Reserve in keeping the policy rates unchanged, strong GST collections, no negative results surprises and stable macroeconomic data; the domestic stock market wriggled out of a two-week slump and closedhigher during the week ended. BSE Sensex rose 0.91 percent to close at 64,363.78, while NSE Nifty added 0.96 percent to end at 19,230.60. Broader market outperformed the benchmarks. The BSE Mid-cap and Small-cap indices added two per cent. FII selling trend witnessed in September and October has continued in early November, too. In the first three days of November, FIIs sold equity for Rs3,063 crore through the cash market. While there are still many ifs and buts, the statement of US Fed reassured the market that the probability of any sharp increase in interest rate in the US has come down. This will have impact on many things globally, the flow of capital from emerging markets to back to US is unlikely to see sharp increase from hereon. The market is interpreting this latest statement of US Fed as the end of the rate hiking cycle. Elections in five states namely Mizoram, Chhattisgarh, Madhya Pradesh, Rajasthan and Telangana, which account for 15 per cent of the total Lok Sabha and Rajya Sabha seats, would kick off next week on Tuesday (November 7). These elections are seen as the semi-finals to the upcoming Lok Sabha elections, which are likely to be held in April or May next year. Stock investors would keenly be following the election outcomes in these states, as they will provide a glimpse into how the Hindi-speaking heartland of India, which is a stronghold of the BJP party perceives the BJP and its policies. Prominent companies to announce their earnings in coming week include Divi Labs, Power Grid Corporation, Adani Ports, Coal India, Eicher Motors, Hindalco Industries, Mahindra & Mahindra, ONGC, Tata Power, LIC, Lupin, Aurobindo Pharma, Bosch, Shree Cement, Zee Entertainment Enterprises, Biocon, Bharat Forge, Apollo Tyres, IRCTC, Zydus Lifesciences, Bata India, Power Finance Corporation, United Spirits, Ashok Leyland, Glenmark Pharma, and Hindustan Aeronautics.

Till date, the earnings for this quarter have been in-line with the expectations. True to predictions, IT sector posted weak results and banks posted good results with strong asset quality and good margins. FMCG underperformed due to slowdown in demand. Auto companies posted above expectation numbers due to improved margins. IPO market continued to remain buoyant. The listing of Cello World is keenly awaited with the shares trading in grey market at premium of 22-25 per cent. Honasa Consumer also may list on bourses in coming week. IPOs of Protean eGov Technologies, ASK Automotive and ESAF Small Finance Bank IPOare open for subscription. In the SME space, IPOs of Vrundavan Plantation, KK Shah Hospitals, Baba Food Processing, Micropro Software, ROX Hi-Tech and Sunrest Lifescience are open for subscription.

ListeningPost: Don’t Let Other Investors Make Up Your Mind

Research shows that confidence of others can influence your decisions even more than your own experience can. Confidence is contagious. But acting on it can be dangerous.Although it has slipped a bit lately, the Nifty index is significantly up from Covid days, and surveys show that investors are feeling sharply more optimistic. It’s fine to bask in that good feeling if you wish, but new research shows that the confidence of others can influence your decisions even more than your own experience can. With markets still high, investors need to be even more vigilant than usual against the risk of getting stampeded by other people’s emotions. A study finds that a particular region in the human brain monitors how positive other people seem to be about their choices. We’re biologically equipped with the potential to allow more-confident people to have greater sway over our own beliefs.

Participants in one experiment guessed whether the next marble drawn from an urn would be red or green. They could rely on the colors of the last few marbles they had picked themselves. They were told they could also take account of what up to four other people were forecasting and how confident the strangers were in those predictions. Naturally, the participants were more likely to predict that the next marble would be red if most of their recent draws from an urn had also been that color.They were more prone to pick red, however, when they learned that other people had confidently chosen it. Confidence was represented by how fast the other people picked the color and whether they smiled as they did so.That sensitivity to cues about how sure other people are, can operate independently of learning from first-hand experience. And confident investors suddenly seem to be everywhere.

The rally has made everybody who’s invested in the market more optimistic. Confidence varies, often going up after the market rises and falling after it goes down. The confidence of individual investors rose four per cent in July/August, for instance, right before the market started correcting on the back of aggressive selling from FIIs. So you could visualize the stock market as a poltergeist or hobgoblin who takes a twisted delight in playing pranks on the expectations of the investing public. This bull market for stocks is nearly three years old, making it one of the longest in recent history. Now, more than ever, you should take extra risk only because your own rigorous analysis leads you to conclude that it’s a good idea, not because other folks think it is.

Quote of the week: ‘It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for — Robert Kiyosaki

If you’re a millionaire by the time you’re 30, but blow it all by age 40, you’ve gained nothing. Grow and protect your investment portfolio by carefully diversifying it, and you may find yourself funding many generations to come.

F&O / SECTOR WATCH

On the back of notable resilience in the cash market, the derivatives segment witnessed brisk trading. The positive momentum indicates mild bullish sentiment among investors. On the options front, maximum Call Open Interest was seen at 19,300 strike, followed by 19,500 & 19,400 strikes; while the maximum Put Open Interest was visible at 19,200 strike, followed by 19,000 strike. The weekly options data indicated that 19,200 on the lower side and 19,300 on the higher side are crucial to watch for bulls and bears action, respectively. In terms of Implied Volatility (IV), Call options for Nifty settled at 9.77 per cent, while Put options concluded at 10.09 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.17 for the week. In the Bank Nifty options, the highest Call OI is clustered at strikes 43,500 and 44,000. Conversely, the highest Put OI is concentrated at strikes 43,000 and 43,300, indicating support levels for Bank Nifty.VIX, which measures the expected volatility for next thirty days in the Nifty, remained within the previous week’s range and closed at 10.88 levels, down 0.21 percent for the week. The cooling down in volatility also made the trend favourable for bulls.

Stock futures looking good are Axis Bank, Apollo Hospitals, Granules, Dr Lal Path Labs, IOC, Godrej Consumer and MCX. Stock futures looking weak are Jindal Steel, Marico, Glenmark, SBI Cards, Petronet LNG and M&M Finance.

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

Torrent Power Ltd

Torrent Power Ltd is an integrated power utility and is one of the largest private sector players in India having interests in power generation, transmission, distribution and manufacturing and supply of power cables.Company operates in three segments: generation, transmission and distribution, and renewables. The Generation segment comprises of generation of power from thermal sources (gas and coal) and trading of Regasified Liqueified Natural Gas. The Transmission and Distribution comprises of transmission and distribution business (licensed and franchisee) and related ancillary services. The segment also comprises Power Cable business. The Renewables segment comprises of generation of power from renewable energy sources, which includes wind and solar. Torrent ranks amongst the best run power utilities in the country with highly efficient generation assets. It has a portfolio of coal based, gas based and renewable power plants with an aggregate generation capacity of 3879 MW. The gas based plants of the company possess greater environmental value with state of the art technology and in-built efficiency enhancing design features.

The company distributes power to over 3.8 million customers annually in its distribution areas of Ahmedabad, Gandhinagar, Surat and Dahej SEZ and Dholera SIR (Gujarat), in Bhiwandi, Shil, Mumbra and Kalwa (Maharashtra), Agra (Uttar Pradesh) and in Union Territory of Dadra & Nagar Haveli, Daman and Diu. The T&D loss in license areas of the Company is amongst the lowest in the country. The Company offers highly personalized and innovative customer services that incorporate various convenience features. The company has set up approximately 249 kilometers (km) and 105 km 400 kV double circuit transmission lines. Buy on declines for medium term target price of Rs1,250.