Mks likely to move under shadow of general elections

Ahead of the RBI Monetary Policy Committee meeting on April 5; All rate sensitive sectors and stocks are likely to trade on cautionary note

Supported by moderate institutional buying for propping NAVs, positive global cues and expectations over Q4 earnings, renewed buying in some pockets of Mid-cap & Small-cap segments; the domestic market had a strong close for the truncated last week of FY2024. The Nifty rallied 230 points to 22,327 points, and BSE Sensex jumped 819 points to 73,651 points. The broader markets had a better week than benchmarks as the Nifty Mid-cap and Small-cap indices gained 1.6 percent and 1.4 percent respectively. On a weekly basis, sectoral indices posted mixed performances with Realty, gaining the most followed by Auto and Infra, and the sector which fell the most was the IT sector. It is pertinent to observe that the market performance for the fiscal year 2023-24 was quite strong with the Nifty surging 28.6 percent, and the Nifty Mid-cap 100 index up 60 per cent & Small-cap up 70 per cent.

With international crude oil prices jumping to the highest closing level since October 2023 and the Indian rupee trading slightly weaker against dollar in recent times; RBI commentary on external account will be key indicator. During the first month of the new financial year FY25, market direction will be dictated by Q4 earnings, RBI Policy Meeting on interest rates, macroeconomic data like inflation and PMI numbers and global cues. Shadow of General Elections outcome will continue to linger till first week of June.

The performance of domestic and foreign investors will have an impact on the way movement happens in the domestic stock markets. The FY24 was a great year for IPOs with 75 issues launched in the year, the highest in two years. The strong demand for equities, propelled by the increasing number of domestic investors, laid the foundation for heightened activity in the primary market. Experts believe that the robust momentum witnessed in the primary market is expected to continue into the new financial year also. Even with the elections slated ahead, the strong IPO trend is likely to be maintained. Kicking off the IPO market in FY25 is the mega Bharti Hexacom IPO, which plans to raise around Rs4,275 crore. The issue opens for subscription on April 3 and closes on April 5. The price band for the issue has been set at Rs542-Rs570.

Quote of the week: The stock market is filled with individuals who know the price of everything, but the value of nothing — Phillip Fisher

That is another testament to the fact that investing without an education and research will ultimately lead to regrettable investment decisions. Research is much more than just listening to popular opinion.

F&O / SECTOR WATCH

The last week of FY2024 laced with only three trading days witnessed good index management and both the Nifty and the Bank Nifty closed in green zone. Nifty surged by over one per cent on a weekly basis, while Bank Nifty also experienced a gain of more than half a percent. Volumes in the derivatives segment were a tad low. Rollovers were in line with last three-month average volumes. On the Call side, the maximum Open Interest was visible at 22,600 strike, followed by 22,300 and 22,500 strikes. On the Put side, the 22,300 strike owned the maximum Open Interest, followed by 22,000 and 22,400 strikes. For Bank Nifty, the highest Call Open Interest was at the 47,500 strike, followed by 48,000 strike, with the highest Put Open Interest at the 47,000 strike. Implied Volatility (IV) for Nifty’s Call options settled at 12.14 per cent and Put options concluded at 12.73 per cent.

The India VIX, a crucial market volatility indicator, ended the week at 12.70 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.25 for the week. Overall options data suggests that the Nifty may face resistance at 22,500-22,600 levels in the new series, with support at 22,200 and 22,000 levels. The new financial year FY25 will start with the auto sales data for the month of March. Maruti Suzuki India, Tata Motors, Hero MotoCorp, Eicher Motors, Ashok Leyland, Bajaj Auto, Mahindra & Mahindra and TVS Motor Company will be in focus. Industry watchers expect double-digit on-year growth in the retail two-wheeler sales during March 2024 and single digit increase in passenger vehicles sales.

Ahead of the RBI Monetary Policy Committee meeting on April 5; all rate sensitive sectors and stocks are likely to trade on cautionary note. Observers are of the view that there will be no change in policy rates and any cut in interest rates going ahead will be majorly dependent on the US Federal Reserve action. However, the commentary will be closely tracked for ‘Hawkish’ or ‘Dovish’ nature.

Stock futures looking good are Biocon, Bajaj Finserv, Grasim, Godrej Consumer, IPCA Labs, Petronet LNG and Shriram Finance. Stock futures looking weak are Apollo Hosp, Coforge, Divi Labs, IDFC First, SBI Cards, Tata Consumer and PEL.

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

Gujarat Themis Biosyn Ltd

Gujarat Themis Biosyn Ltd is principally engaged in the manufacturing of pharmaceuticals and medicinal chemical products. It’s been incorporated in 1981 as a joint sector company with GIIC Ltd and Chemosyn (P) Ltd. Commenced production in August 1985, by producing Erythromycin and Erythromycin salts and formulations. The company was taken over during June 1991 by Pharmaceutical Business Group (India) Ltd. (PBG); a unique consortium of five competing drug Companies – Themis Medicare Ltd., Kopran Ltd, Anant & Co, Cadila Health Care Ltd (Zydus) and Lyka Labs Ltd.

The company entered into Technical & Financial collaboration with Yuhan Corporation, South Korea. With Yuhan’s know-how, GTBL became India’s first Company to start commercial production of Anti-tuberculosis drug Rifampicin. The company is focused on the business of manufacturing and sale of finished active pharmaceutical ingredients (API) products by fermentation process.

The company operates through manufacturing of the bulk drugs segment. Its product portfolio comprises Rifamycin-O and Rifamycin-S. The company is manufacturing Rifamycin S, which is an intermediate for manufacturing the drug Rifampicin (an Antibiotic used for the treatment of several types of bacterial infections, including tuberculosis, Mycobacterium avium complex, leprosy, and Legionnaires’ disease.) and Rifamycin O, which is an intermediate for manufacturing the drug Rifaximin (this is an Antibiotic used for treatment of traveller’s diarrhoea, irritable bowel syndrome, and hepatic encephalopathy). Its research and development division focuses on developing fermentation cultures. The company is debt-free on net debt basis. Buy on declines for target price of Rs750 in medium term.