Macro cues to steer mkt direction

In near-term, market will react to GDP growth numbers for June 2024 quarter. Don’t despair amid the inevitable setbacks that all investors face, especially during a crisis in the market. If the reasoning behind the investment was sound, stick with it, and it should eventually turn around

Buoyed by positive global sentiments, including better-than-expected US economic numbers and increasing expectations for a September rate cut from the US Federal Reserve, stable oil prices, slowdown in FII selling and robust DIIs buying; the domestic stock markets continued their recovery towards record highs for another week. BSE Sensex gained 0.81 percent to close at 81,086 and NSE Nifty rallied 1.15 percent to 24,823. The Nifty Midcap-100 index was up 1.6 percent and Nifty Smallcap-100 jumped 3.5 per cent. FIIs have net sold Rs1,609 crore worth shares in the week gone by, taking the total monthly outflow to Rs30,586 crore in August, but DIIs continued to provide a solid support to the market on every dip. DIIs bought Rs13,020 crore worth shares for the week, and Rs47,080 crore for the month. It is interesting to observe that FIIs have been net buyers for Rs12,367 crore through the primary market so far in August. In the near-term market will react to the GDP growth numbers for the June 2024 quarter. Economists expect growth in the 6-7 per cent range for the first quarter of current financial year, against 7.8 per cent in March FY24 quarter.

Contraction in government capital expenditure and a dip in urban consumer confidence may impact the growth. The RBI already lowered its growth forecast for Q1FY25 to 7.1 per cent, from 7.3 per cent earlier. At the start of coming week, the market will first react to the Federal Reserve Chair Jerome Powell’s speech in the Jackson Hole Economic Symposium, wherein he clearly signalled the first rate cut in September policy meeting. The US dollar index fell to more than a year low (at 100.68), while the 10-year bond yield dropped to 3.804 per cent. India’s largest listed conglomerate Reliance Industries (RIL) will hold its AGM on August 29. The Ambanis have a history of making key announcements at the AGM.

IPO Corner: The primary market will see a lot of action in the coming week with nine IPOs and 8 companies making their debut on the bourses. Three IPOs will be from the mainboard segment with Premier Energies’ Rs2,830-crore public issue opening on August 27, ECOS India Mobility & Hospitality’s Rs601-crore issue on August 28, and Rekha Rakesh Jhunjhunwala-backed Baazar Style Retail IPO on August 30. Interarch Building Products IPO share will list on the BSE and NSE on August 26, and Orient Technologies shares on August 28.

Don’t despair amid the inevitable setbacks that all investors face, especially during a crisis in the market. If the reasoning behind the investment was sound, stick with it, and it should eventually turn around.

F&O / SECTOR WATCH

With market momentum propelling benchmark indices towards record highs; Nifty, Bank Nifty and Financial Nifty saw gains of around one per cent. In the options market, Nifty highest Call Open Interest is at 25,000 and 24,900 strikes, while for Put side highest Open Interest was observed at the 24,800 and 24,500 strikes. On the Call side, the maximum Call writing was at the 24,800 strike, and then the 24,900 and 25,400 strikes. On the Put side, the maximum Put writing was at the 24,800 strikes, and then the 25,000 and 24,900 strikes. For the Bank Nifty, notable Call and Put Open Interest was observed at the 51,000 strike, making it the crucial level to monitor for the upcoming week. Implied Volatility (IV) for Nifty’s Call options settled at 11.20 per cent, while Put options conclude at 12.07 per cent. The India VIX, a key market volatility indicator, closed the week at 13 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.17 for the week. Technically, the Nifty’s strong resistance zone is between 25,000 and 25,100, while support is seen around 24,700 to 24,600 zone. The key level to watch this week is 24,800-24,850 zone. Traders are advised to adopt a buy on dip strategy, provided the support level holds on downside. Most sectorial indices ended in the green, with the reality index being an exception. Over the coming weekend, automobile companies will start announcing their August sales numbers. Hence, auto stocks may be in focus on Friday ahead of the sales data. In July, total two-wheeler sales increased by 17.17 percent, and three-wheeler sales by 12.88 percent, while the passenger vehicle segment recorded 10.18 percent growth in sales and commercial vehicle sales grew by 5.93 percent, but tractors segment recorded nearly 12 per cent decline compared to same month previous year. Stock futures looking good are Asian Paints, Bajaj Auto, Bharti Airtel, Indigo, GMR Infra, Sun Pharma and Tata Motors. Stock futures looking weak are ACC, IGL, Deepak Nitrate, Sun TV, Powergrid, Oberoi Realty and Navin Flouro.

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

STOCK PICKS

Grauer and Weil (India) Limited

Grauer and Weil (India) Limited is engaged in the business of surface finishing, engineering and shopper entertainment malls. The company’s divisions include chemicals, engineering, paints, lubricants and real estate. Its chemical division offers various solutions, including electroplating & specialty chemicals, zinc flake coatings, and phosphating & anodizing chemicals. Its engineering division conceptualizes, designs, manufactures, and installs a range of surface finishing systems tailor-made to meet the specific surface finishing requirements of every industry. Its paint division offers a range of customized high-performance coating solutions ranging from simple applications to advanced painting systems, for industrial, marine, underwater, aerospace and original equipment manufacturer segments. It offers a wide range of specialized lubricants and oils in varied industrial applications. Surface Finishing Segment continues to be significant part of overall business operations of the company. The segment accounts for 84.73 per cent of total segment revenues. Its product portfolio includes General Metal Finishing (such as anodising, decorative coatings, phosphating, plating on plastics, anticorrosion treatments, etc), Paints & related Coatings (such as high-performance industrial coatings, marine coatings, aerospace and defence coatings, architectural coatings etc.) and Industrial Lubricants (such as Rust Preventives, Cutting oils, Deformation oils, etc). In metal finishing, the company continued to maintain its leadership position in metal finishing products and gross total revenue from this sub-segment crossed the Rs527-crore mark despite growing intensity of competition from domestic and international companies. Strong orders are there from marine and industrial plants segments. The engineering business for the first time in its history crossed Rs100 crore in revenue backed by strong order book from newer areas driven by the Government of India’s PLI schemes. Its mall is located at Kandivli, Mumbai. Food as a category had excellent performance as consumer behaviour has shifted towards increased out-of-home food consumption. Many other brands in this segment experienced excellent growths. Buy for medium term target of Rs165.