Investors looking to global cues

After US Federal Reserve Chair Jerome Powell indicated that the central bank was still on pace to trim interest rates three times this year, markets across the globe breathed easy and rose sharply. Shrugging away initial weakness, Indian market ended with moderate gains during the week ended. Factors that have dictated the direction of the market include unabated FII selling, subdued guidance of global IT player Accenture, weak rupee and volatility in international crude oil prices. BSE Sensex gained 0.3 percent to close at 72,832 and the Nifty rose 0.3 percent to 22,097 points. Broader markets witnessed mild rebound. Nifty Midcap-100 index was up 1.3 percent and Smallcap-100 index climbed 1.4 percent. FIIs have net sold Rs8,365.53 crore worth of equity shares during the week ended, but DIIs significantly compensated for the FII outflow, buying 19,351.62 crore worth of shares. DIIs monthly buying in March at Rs47,398 crore was highest since May 2022, while FIIs net inflow in current month stood at Rs946 crore. It was a volatile week for the global currency market. The major currencies made some wild swings after the US Federal Reserve meeting. Rupee weakened significantly to Rs83.43 and is poised to make or break level. Surprising fall to Rs84 is not ruled out say observers. Stock exchanges will introduce the T+0 trade settlement for a limited set of securities from March 28, and the market timing will be one continuous session between 9:15 AM and 1:30 PM.

Shriram Finance is replacing UPL in the Nifty. The primary market will end the fiscal 2024 with a bang with as many as 13 IPOs scheduled to be launched next week. Of these, 12 will be in the SME segment, along with a sole mainboard issue of SRM Contractors. The factors expected to sustain the buoyancy of the IPO market in FY2025 include increased domestic capital, improved governance, thriving Indian entrepreneurship, favourable government policies with FDI support, and diligent institutional investors.

Near-term direction of the market will be dictated by expectations over Q4 results, macroeconomic data, Poll predictions of media over General Elections outcome and global cues. Trading will take place for only three days in the week ahead, as stock markets are closed on Monday for Holi and on Friday for Good Friday.

Quote of the week: It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong — George Soros

Too many investors become obsessed with being right, even when the gains are small. Winning big and cutting your losses when you’re wrong are more important than being right.

F&O/ SECTOR WATCH

Ahead of successive truncated weeks and F&O monthly expiry, the derivatives segment displayed heightened volatility. Both Nifty and Bank Nifty closed nearly unchanged, registering marginal gains. The market is likely to consolidate at higher levels in the coming fortnight. The monthly options data indicates that 21,800-21,700 zone to be support area for the Nifty, with strong resistance on the higher side at 22,200-22,300 zone. On the Call side, the maximum Open Interest was seen at 23,000 strike, followed by 22,500, 22,700 and 22,000 strikes. On the Put side, 22,000 strike owned the maximum Open Interest, followed by 22,100 & 21,500 strikes. For Bank Nifty, the highest Call Open Interest was at the 47,000 strike, with the highest Put Open Interest at the 46,500 strike. Implied Volatility (IV) for Nifty’s Call options settled at 11.90 per cent, and Put options concluded at 12.57 per cent.

The India VIX, a crucial market volatility indicator, ended the week at 12.51 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.12 for the week. The volatility index (India VIX) might play a significant role in the upcoming sessions; as a decrease in the India VIX could signal increased buying interest.

On the back of weak outlook given by global major Accenture and ahead of Q4 earnings; notable profit-taking was seen in the IT sector. It is pertinent to observe that LTIMindtree shares hit a two-month low, while Infosys stock falls the most in eight-months. HCL Tech clocks the highest decline in 15 months, as trading volumes for all IT counters surged. Shares of Tech Mahindra slipped to an eight-week low. Several broking houses saythat the sharp downward revision in Accenture’s guidance implied that there will be no major pick-up in the second half of FY24 for Indian IT sector. However, contrarians believe FY25 Street estimates for Indian IT companies have been adequately rationalised, and have little downgrade risk, from current levels. Sectors like Realty and Auto remained among the outperformers over the week.

Stock futures looking good are Bajaj Auto, that the sharp downward revision in Accenture’s guidance implied that there will be no major pick-up in the second half of FY24.Hero Motocorp, PI Inds, Pidilite, Sun Pharma, SRF and Muthoot Fin. Stock futures looking weak areABFRL, Asian Paints, HUL, HCL Tech, Infosys and Tata Consumer.

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

STOCK PICKS

Sudarshan Chemical Industries Ltd

Sudarshan Chemical Industries Ltd is world’s third largest color and pigment manufacturer. The company is engaged in supplying pigments and solvent dyes for coatings, plastics, printing and digital printing, cosmetics, and special applications. The company has a wide portfolio of organic and inorganic product offerings, including azos, high-performance pigments, phthalocyanines (blue and green) and pearlescent pigments, among others, which are utilised in a range of finished products and end applications. The company operates through two segments: Pigments, and Others. The Pigments segment produces and sells a range of organic, inorganic, effect pigments, and dispersions primarily for paints, plastics, inks, and cosmetics industries. The others segment comprises of project engineering and manufacturing business of grinding solutions, clean air solutions, power handling solutions. It offers a complete palette of colors for everyday use, durable colors, and special effects. Its coatings applications include decorative, industrial, and automotive paints.

The company’s brands include Sudaperm, Sudafast, Sudacolor, Sudajet, Sudatherm, Sudasol, Sudanyl, Sumica, Sumicos, Prestige, and Sudacos. New launches under Sudanyl are a range of aqueous, binder free color concentrates free from APEO based additives. The main application of Sudanyl pigment dispersions is in plant tinting of water based decorative paints. The company launched 11 products under Sudanyl, premium pigment dispersions for In-plant tinting application. The company launched New Pigment Violet 23 for Coatings, Plastics and Inks application and also launched 3 more products under Sudatherm which is used for high heat resistance and high weather fastness for plastics and coatings. Withan extensive global footprint in over 85+ countries, the company has good visibility of earnings growth. Buy on declines for target price of Rs1,000 in medium term.