Range-Bound Trading In Positive Bias Likely

An analysis by market observers suggests that a victory for Kamala Harris could lead to a more accommodative stance from the US Federal Reserve, potentially prompting RBI to ease rates domestically. In contrast, a win for Trump may keep US interest rates elevated, pressuring the RBI to maintain higher rates and delaying any potential rate cuts

Quote of the week

You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets — Peter Lynch

Under the shadow of the impending US Presidential election and possible consequential global market dynamics, final leg of Q2 earnings and continued FII selling; the domestic stock markets ended modestly higher for the week ended. Factoring the closings on the Muhurat day (November 1), both the benchmark indices NSE Nifty and BSE Sensex closed positively higher by one per cent at 24,304 and 79,724 respectively. On the back of resilience in several frontline counters, the broader markets also remained stable with positive bias. Buoyed by festival demand, Goods and Services Tax (GST) collection of the Union and State governments shot up to ₹1.87 trillion in October, the second highest reported so far since the new indirect tax regime was introduced in 2017. The improvement in GST collection due to festival demand was expected by policy makers, who are optimistic about continued improvements in rural consumption.

Automobile sales had seen an overall 9.3 per cent sales contraction in September. The US Federal Reserve’s policy meeting on November 7, following the November 5 presidential election, is expected to impact global equity markets significantly. A Fed rate cut could influence the Reserve Bank of India (RBI) to consider easing rates, boosting sentiment in Indian equities. Analysts predict that if the Fed opts for a quarter-percentage-point rate reduction, FII selling will abate enhancing equity market performance. An analysis by market observers suggests that a victory for Kamala Harris could lead to a more accommodative stance from the US Federal Reserve, potentially prompting the Reserve Bank of India (RBI) to ease rates domestically. In contrast, a win for Trump may keep US interest rates elevated, pressuring the RBI to maintain higher rates and delaying any potential rate cuts.

IPO Corner: After a small lull in the previous fortnight, the primary market will see a lot of action next week starting from November 4 as four big IPOs will hit market, including the much-awaited Swiggy IPO from the mainboard segment. Healthcare-focused services provider Sagility India will be the first amongst four companies to open its Rs2,107-crore initial share sale next week, on November 5. In addition to the IPO, the promoter already raised Rs366 crore by selling its Rs2.61 percent stake in Sagility India to nine institutional investors on October 30-31. The next will be Swiggy, the country’s second-largest food delivery giant, which is scheduled to open for subscription on November 6. The price band for Rs11,327-crore initial share sale has been set at Rs371-390 per share. Post issue, this will be the second listed company in the food delivery space after Zomato. Gurugram-based ACME Solar Holdings, one of the largest producers of electricity from wind and solar energy in India, will also launch its Rs2,900-crore initial public offering on November 6, with a price band at Rs275-289 per share. The subscription to the offer will be closing on November 8. Niva Bupa Health Insurance Company will be the fourth IPO from the mainboard segment, opening on November 7 and closing on November 11. Post issue, this will be the fourth health insurer getting listed on the bourses after Star Health and Allied Insurance Company, ICICI Lombard General Insurance Company, and The New India Assurance Company.

When hit with recessions or declines, you must stay the course. Economies are cyclical, and the markets have shown that they will recover. Make sure you are a part of those recoveries.

F&O/ SECTOR WATCH

Mirroring the volatility in cash market, derivatives segment witnessed a brisk trading during the settlement week. The IT and Auto sectors were the biggest losers, whereas PSU banks and Media stocks saw a rebound, emerging as the major gainers for the week. In the options market, the highest Call Open Interest for the Nifty was seen at the 24,500 and 24,300 strikes, while the highest Put Open Interest was at the 24,200 and 24,000 strikes. For Bank Nifty, the prominent Call Open Interest was seen at the 52,000 strike, whereas notable Put Open Interest at the 51,500 strike. More option writing was seen in Call options compared to Put options indicating selling pressure on every bounce. Implied Volatility (IV) for Nifty’s Call options settled at 14.72 per cent, while Put options conclude at 15.22 per cent. The India VIX, a key market volatility indicator, closed the week at 15.51 per cent. The Put-Call Ratio of Open Interest (PCR OI) for the week was 1.34. Chartists indicate Nifty’s major support levels are at 24,000 and 23,800, with key resistance at 24,500. Currently, Nifty is trading below its 100-day exponential moving average, and the next support at the 200 EMA stands at 23,500. The market is viewed as a ‘sell on rise’ scenario as long as it remains below the 24,500 level. Leading FMCG companies reported a decline in margins in the September quarter on account of higher input costs and food inflation, which ultimately slowed down the pace of urban consumption. Rising prices of commodity inputs such as palm oil, coffee and cocoa were also accentuated and some FMCG firms have hinted at a price hike.

A data centre boom globally, in addition to rapid 5G rollouts, is silently propelling the growth of another ancillary industry: Optic fibre cables (OFCs). The festive season brought much relief to automakers who had been struggling with high inventory, with consumers lapping up cars and SUVs across categories. Stock futures looking good Bharat Forge, Coromandel International, Federal Bank, Oberoi Realty, Ramco Cements and Marico. Stock futures looking weak are Ashok Leyland, Alkem, Birla Soft, Balakrishna Inds, Torrent Pharma and Petronet.

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

STOCK PICKS

Fortis Healthcare Ltd

Fortis Healthcare Ltd is an integrated healthcare service provider. The company is primarily engaged in the business of healthcare services. Its segment includes the Healthcare business and the Diagnostics business. The healthcare business includes inpatient and outpatient services, sale of medical and nonmedical items and management fees from hospitals. The diagnostic business includes pathology and radiology services. Its specialties include cardiac sciences, cosmetology, dental sciences, dermatology, general surgery, oncology, urology, neurosurgery, radiology, orthopaedics, and organ transplant, among others. The healthcare verticals of the company primarily consist of day care specialty, diagnostics and tertiary and quaternary care. The company has approximately 28 healthcare facilities, including projects under development, 4500 operational beds and over 400 diagnostics centers. It operates in India, the United Arab Emirates (UAE), Nepal, and Sri Lanka. Buy for four figure target in medium term.