Market Focus Now On Q2 Earnings

However, net direct tax collection this financial year, after adjusting for refunds, grew 18.35% to Rs11.3 trn between Apr-Oct 10

Nervousness over rising geopolitical tensions, weak quarterly earnings projections and continued selling by FIIs resulted in stock market ending lower for the second consecutive week. BSE Sensex fell by 307.09 points or 0.37 percent, to close at 81,381.36 points, while NSE Nifty slipped 50.3 pointsor 0.20 per cent, ending at 24,964.30 points. However, the broader market indices continued to outperform their main counterparts for the second consecutive week, even as benchmark indices faced pressure. Both the Small-cap and Mid-cap indices gained one per cent each. FIIs extended their selling streak, offloading equities worth Rs27,674.99 crore during the week. However, DIIs remained net buyers, purchasing equities worth Rs31,363.61 crore. China’s monetary stimulus has triggered a wave of tactical foreign institutional investor outflows from India. The Indian rupee extended the losses and weakened past 84 mark for the first time. For the week, it ended 10 paise lower at 84.07 on October 11 against its October 4 closing of 83.97.There is a downward bias for the rupee in the near term, but the market doesn’t expect a sharp decline due to the RBI’s healthy forex reserves. Ratan Tata, who was the chairperson of Tata Trusts, passed away on late Wednesday. N Chandrasekaran is the chairman of Tata Sons and promoter of all the Tata Group companies. Shares of Noel Tata-led companies like Trent, Tata Investment Corp and Voltas on Friday rose 0.6-2.6 per cent after he has been appointed chairman of Tata Trusts. Noel Tata is currently serving as chairman of Trent, Tata Investment Corp, Voltas, and as vice-chairman of Tata Steel, Titan Company. The RBI decided to maintain the Repo rate unchanged and shifted its monetary policy stance from withdrawal of accommodation to ‘neutral’. A unfavourable base effect and a slowdown in economic activities led to a year-on-year (Y-o-Y) contraction in the Index of Industrial Production (IIP) in August for the first time in 22 months. However, net direct tax collection this financial year, after adjusting for refunds, grew 18.35 per cent to Rs11.3 trillion between April1 and October 10. The market focus is now on Q2 earnings. Investors will closely examine corporate performance to assess the health of Indian businesses and the impact of a slowing global economy.

IPO Corner: The primary market will see its biggest offering till date from Hyundai Motor India next week as the automaker is planning to raise over Rs27,000 crore through its IPO. The company has fixed a price band at Rs1,865-1,960 per share for the same. The IPO will open for public subscription on October 15 and conclude on October 17. Anchor investors will bid on October 14. Hyundai India registered a total income of Rs71,302 crore for the fiscal year ended March 2024 and a profit of Rs6,060 crore as against a total income of Rs61,436 crore and profit of Rs4,709 crore in FY2023, as per the prospectus. The Indian arm of the South Korean carmaker will be making investments towards capacity expansion, product and platform development, and new launches. The company is also gearing up to widen its footprint in the Battery Electric Vehicle (BEV) market.

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

Mirroring the consolidation in the underlying cash market, in the derivatives segment, the week that went by was in complete contrast to the week before as the markets heavily consolidated in a tight range. NSE Nifty had seen a significant retracement of over 1,167 points; However, over the past five trading days, the index stayed totally devoid of any directional bias. In the options market, the highest Call Open Interest for the Nifty was seen at the 25,000 and 25,200 strikes, while the highest Put Open Interest was at the 25,000 and 24,900 strikes. For Bank Nifty, the highest Call Open Interest was seen at the 51,500 and 52,000 strikes, with the highest Put Open Interest at the 51,000 strike. Implied Volatility (IV) for Nifty’s Call options settled at 12.31 per cent, while Put options conclude at 13.05 per cent. The India VIX, a key market volatility indicator, closed the week at 13.50 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 0.98 for the week. Technically, the Nifty has next support at 24,800, while the 25,200-25,400 zone will serve as a key resistance area. The coming weeks are crucial for the markets from a short-term perspective. The Bank Nifty and Fin Nifty will cease to have weekly contracts beginning November 20 following the Sebi’s recent directives. It will be only the Nifty that shall have weekly contracts. This may keep the indices a bit volatile over the coming days. The Pharma, Healthcare, and Auto sectors showed notable outperformance, whereas profit-taking was evident in the metal, FMCG, and PSU bank sectors. Tata Consultancy Services reported a five per cent year-on-year rise in Q2 net profit, with an eight per cent revenue increase. Operating margin slightly contracted as cautious trends persisted amid geopolitical uncertainty. According to the company’s commentary, cyber security, AI. Cloud and TCS Interactive led the growth in the September quarter. Investors should watch out for companies in these segments of technology.

Stock futures looking good are Crompton, Divi’s Labs, Polycab India, HCL Tech, Oberoi Realty, MCX and Kotak Bank. Stock futures looking weak are ACC, Aarti Inds, Godrej Consumer, ITC, Sun TV and Shree Cement.

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

STOCK PICKS

Shetron Ltd

Shetron Ltd is a metal packaging company. The company is focused on creating packaging solutions for the food industry. Rapid urbanization, changing food habits, increased income levels, and increased consumption of ready-to-eat food are fuelling the demand for canned food cans across the world. Its products include food cans, beverage cans, round components, penny levers/TRF/RLT assemblies, twist off caps (lug caps), conipails, decorative cans, metal battery jackets round, and printed or coated tinplate metal sheets. The company is a manufacturer of metal packaging, printed metal sheets, and dry-cell battery jackets and components. The company is a supplier of products for many multinational industries. Client list includes Nestle, Marico, ITC, Eveready, HUL, National Panasonic in India. The company’s products are exported to Canada, Australia, Mexico, South Africa, Gulf Cooperation Council (GCC), Sri Lanka, Europe, North America, Russia, other African countries, and Far-East countries. The company’s factories are located at Bommasandra Industrial Area, Hosur Road, Bengaluru, and Mumbai-Nasik Highway, Thane, Maharashtra. Buy on declines for medium term target of Rs250.