Investors looking to major triggers

Mkt Movers

• Interim Budget was devoid of any policy announcements
• However, it indicated the govt’s policy intentions
• Nifty Mid-cap and Small-cap indices outperformed benchmark indices

NSE Nifty jumped 501 points or 2.35 per cent to 21,854, and BSE Sensex rallied 1,385 points or 1.96 per cent to 72,086 during the week ended. The Nifty Mid-cap and Small-cap indices outperformed benchmark indices, rising 2.7 percent and 5.6 percent respectively. FIIs remained net sellers due to a spike in US bond yields to over four per cent, and expensive equity market valuations. They net sold around Rs2,000 crore worth of shares in the cash segment last week, but DIIs continued to provide strong support by compensating the FII outflow by a wide margin as they bought more than Rs10,000 crore worth of shares during the week.

In near term, FII inflows into the equity market will depend on the trends in the US bond yields and the equity market trends globally as well as in India. As was expected, the Interim Vote-On-Account Budget was devoid of any policy announcements. However, it indicated the policy intentions of the government in coming days and has also taken consolidation seriously by targeting for a 5.1 percent GFD/GDP in FY25. This is just an interim step towards the 4.5 per cent FD/GDP for FY26. The present government’s fundamental goal of policy making – to achieve inclusive growth and development remains intact. The government indicated that the focus is on the outcomes and not on outlays with an aspiration towards achieving socio-economic transformation. No tinkering with tax structure was seen and observers expect that in the full Budget that will be announced around June 2024, the government would not want to tinker with the tax structure further and continue to focus on compliance for generation of resources.

The Monetary Policy Committee (MPC) is expected to keep the Repo rate unchanged at 6.5 percent with a less Hawkish tone, but the commentary will be keenly watched in terms of hints about the beginning of the rate cut cycle and growth-inflation trajectory.

In the coming week, Bharti Airtel, Britannia, Nestle India, Power Grid Corporation, Tata Consumer Products, Grasim Industries, Hero Motocorp, Divi Laboratories, ONGC, Life Insurance Corporation, Lupin, FSN E-Commerce Ventures (Nykaa), Zomato, Tata Power, Ashok Leyland, Apollo Tyres, Manappuram Finance, Apollo Hospitals Enterprise, Biocon, Escorts Kubota, PFC, Aurobindo Pharma and MCX India will be among others to announce Q3 numbers.

Market Musings: Over-reacting to the news can poison your portfolio and sour your life. When you don’t watch the market every day, you can finally see with unquestionable clarity that what you would have expected to happen didn’t. The unexpected did. Several PSU or Railway stocks already up by 50 per cent to 400 per cent in 2023. They have been at the forefront of the first month of 2024 and have since gained by another 25 per cent. I’m not saying that the news doesn’t matter or—heaven forbid—you should stop reading the investment magazines or watch business channels. I am saying that reacting to the news—or even feeling you’re supposed to—can poison your portfolio and sour your life. If you’re tempted to make drastic changes to your portfolio in response to the headlines, then you could benefit from simulating by taking a market sabbatical. How you will feel about your actions tomorrow can help prevent you from overreacting today. One tool of mental time travel is to write a letter to—and from—your future self.

Let’s say you can’t stop reading about PSU or Defence or Railway stocks, believe they have even greater potential than most investors think, and want to go from having 10 per cent of your money in them to 50 per cent. Conversely, let’s say the headlines have you so worried about coming general elections that you want to move all your money to cash. In the letter to your future self, detail what you’re planning to do, why you think it makes sense and what results you foresee.

In the letter from your future self, imagine its one year from now and you’re living with the consequences of the decision. Have PSU or Defence or Railway stocks prices taken your happiness hostage? Do you face a capital gains tax bill from shifting your portfolio into cash? Are you concerned about running out of money for retirement? How would your life be different if your earlier self hadn’t reacted—or overreacted—to the news? Research suggests this technique can help you avoid making decisions you might later regret—and can reduce the anxiety stirred up by negative news. I’ve long thought financial advisers should encourage this approach to help clients make deliberate and durable decisions. Now, I think it’s worth trying on yourself too.

Quote of the week: The four most dangerous words in investing are, it’s different this time — Sir John Templeton

Follow market trends and history. Don’t speculate that this particular time will be any different. For example, a major key to investing in a specific stock or mutual fund is its performance over five years.

F&O / SECTOR WATCH

Derivatives segment witnessed brisk volumes during the Union Budget week. Weekly options data indicates that the maximum Call Open Interest is at 23,000 strike, followed by 22,700 and 22,200 strikes. On the Put front, the 21,000 strike owned the maximum Open Interest, followed by 21,600 and 21,500 strikes. Overall Nifty options data suggests that 22,100-22,100 area is expected to be a key resistance; while the 21,600-21,500 may act as a support in the coming sessions. Bank Nifty is facing resistance at the 47,000 mark after a meaningful bounce back from the 200-DMA. 45,700–45,400 is an immediate support zone, while 45,000 is a key support level. Only cross of the 47,000 mark with volumes will trigger a move towards the 48,000 level.

Surprising analysts and industry observers, the State Bank of India (SBI) reported a net profit of Rs9,163 crore for the October-December quarter of the financial year 2023-24, marking a 35 per cent fall as compared to Rs14,205 crore clocked in the year-ago period. The net profit missed an average of estimate of Rs13,525 crore. However, it has to be understood that this decrease is due to an one-time exceptional item of Rs7,100 crore.

Net interest margin stood at 3.22 per cent. The bank’s gross non-performing asset (NPA) stood at 2.42 percent, down from 3.14 per cent recorded in the corresponding quarter last year. Use correction to accumulate for long term. Hinduja Group flagship company Ashok Leyland has commenced delivery of its intermediate and heavy duty electric trucks to its customers. Monthly numbers indicate sharp growth in bus segment. Stay invested for target price of Rs200 plus in next few weeks. Companies holding strong brands are getting higher valuations across the world. Aditya Birla Fashion and Retail (ABFRL) is expected to report turnaround performance. Rerating on cards. Punters indicate quick climb from current levels. Stock futures looking good are Ashok Leyland, ABFRL, Coal India, GMR Infra, NMDC, NTPC and Ultratech. Stock futures looking weak are ABB, Britannia, CUB, HUL, Jubilant Food, Lal Pathlabs, SBI Cards and Oberoi Realty.

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

All eyes are on public-sector units. Two stocks back on radar of investors are NBCC and Balmer Lawrie.

NBCC (India) Ltd

NBCC (India) Ltd operates through three segments: Project Management Consultancy (PMC), Real Estate Development, and Engineering Procurement and Construction (EPC). PMC segment is engaged in civil construction projects, infrastructure works for the national security, infrastructure projects for the civil sector, and project implementation for Pradhan Mantri Gram Sadak Yojna (PMGSY) and developmental work in Northeastern Region. Real Estate Development segment includes residential projects, such as apartments and townships and commercial projects such as corporate office buildings and shopping malls. EPC offers services, such as projects conceptualizations, feasibility studies, detailed project reports, basic and detailed engineering, procurement, construction, commissioning, and testing and handing it over to clients in ready to use and functional conditions.

Balmer Lawrie and Company Ltd

Balmer Lawrie and Company Ltd is engaged in steel barrels, industrial greases and specialty lubricants, corporate travel, and logistics services. It is also engaged in the business of industrial packaging, greases and lubricants, chemicals and logistic. The company’s segments include Industrial Packaging, Logistics Services, Logistics Infrastructure, Travel & Vacations, Greases & Lubricants and Others. The Greases & Lubricants business is divided into three categories: channel sales (automotive and industrial), direct business-to-business (B2B) sales and contract manufacturing. Travel & Vacations provides end-to-end domestic and international travel services, including ticketing, tourism, and meetings, incentives, conferences and exhibition-related services to its clients. Industrial Packaging unit manufactures MS plain drums, internally coated drums, composite drums, tall drums, necked-in drums, conical drums, GI drums and open-headed drums.