Mkts take a breather as Omicron fears fade out

The IPO market will continue to be busy as four IPOs - Medplus Health Services, Data Patterns, HP Adhesives and Supriya Lifescience - will open for subscription. Apart from these, two IPOs - CE Info Systems (MapmyIndia) and Metro Brands that already open for subscription will close on December 13& 14 respectively

The US Federal Reserve commentary, November inflation and the data on Omicron will influence near term direction of the markets

Amidst heightened volatility, enthused by reports that the new Covid variant Omicron is being less impactful, more Dovish than expected RBI monetary policy, good macroeconomic data and positive global cues; markets managed to extend the gains for the second consecutive week. The BSE Sensex rallied 1,090.21 points or 1.89 percent to 58,786.67, and the NSE Nifty jumped 314.60 points or 1.83 percent to 17,511.30 points. The broader markets also joined the bulls' party with the BSE Midcap and Smallcap indices rising two percent and 3 percent respectively. FIIs continued to be net sellers to the tune of Rs16,235 crore in the current month while DIIs made Rs 13,700 crore of net buying in December. It is pertinent to observe that while DIIs have been net purchasers for last ten months, FIIs have been net sellers for the last three months. on Covid-19 front. India has reported very few Omicron variant cases (only 30 till date), and all of them are mild. However, the market will react to any sharp increase in the number negatively. Extremely Dovish commentary from RBI Governor clearly showcases willingness to sustain the ongoing economic recovery without any hiccups. With buoyant tax collections and steady economic recovery, expectations over forthcoming Union Budget are already floating. Post reappointment of Powell as US Fed Chairman, US market movements during last week suggest that "the market is now comfortable with this idea that the Fed is going to have a more accelerated path to tapering and other forms of policy normalization. Near term direction of the markets will be dictated majorly by the US Federal Reserve commentary, November inflation and the data on Omicron." The IPO market will continue to be busy as four IPOs - Medplus Health Services, Data Patterns, HP Adhesives and Supriya Lifescience - will open for subscription. Apart from these, two IPOs - CE Info Systems (MapmyIndia) and Metro Brands that already open for subscription will close on December 13 and December 14 respectively. Tega Industries is poised for a strong listing of above Rs750.

Market Musings: Actions speak louder than words. Business leaders are often happy to tell you all the reasons why their stock is a buy. But the actions of company insiders can tell a different story. Amid soaring market valuations, company founders and leaders across the world are unloading their stock at historic levels, with some selling shares in their businesses for the first time in years. In the US itself, 48 top executives have collected more than $200 million each from stock sales, nearly four times the average number of insiders from 2016 through 2020. Led by Elon Musk who has sold stock close to $10 billion, sellers include Google founders Larry Page and Sergey Brin, heirs to the Walmart, Mark Zuckerberg, chief executive of Facebook and Microsoft Corp. CEO Satya Nadella. In India flurry of IPO's from several Start Ups have seen 'Offer for Sale' from the promoters. Old timers of markets say it is a signal that "These guys have been telling you all year that the market is overheated."

People are clearly being opportunistic. If you see a pattern of leaders getting stock option grants and then selling a portion, it is not a major concern. But if you see a pattern of selling across the board without a cause, it may be a good time to take note. Some investment researchers look for this type of pattern. It's more notable when it is not offset by a similar level of buying. Looking at insider buying and selling can be a helpful sign that may help you predict future swings in stock prices. But it shouldn't be your only source of information.

Quote of the week: It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong — George Soros

Too many investors become obsessed with being right, even when the gains are small. Winning big and cutting your losses when you're wrong are more important than being right.

F&O / SECTOR WATCH

Mirroring the renewed optimism in the cash markets, derivatives segment witnessed robust trading. On option front, Maximum Call Open Interest (OI) was seen at 18000 strike followed by 17500 &17600 strikes, and Call writing was seen at 18000 then 18300 & 18100 strikes. Maximum Put OI was seen at 17400 followed by 17200 & 17500 strikes, and Put writing was seen at 17400 then 17200 &17000 strikes. Implied volatility (IV) of Calls closed at 14.26 per cent, while that for Put options closed at 14.96. The Nifty VIX was down by 13 percent for the week and closed at 16.6 level. PCR of OI for the week closed at 1.45. On the technical front, the Nifty has managed to close above its 100-day exponential moving average. Option data largely indicates that the Nifty could see a trading range of 17200 to 17800 levels in coming sessions. If the Nifty crosses and sustains above 17600 level, short covering may propel the Nifty towards 17750 level. Capital Adequacy Ratio (CAR) of PSBs increased to 14.3 per cent at the end of June, 2021 while the provision coverage ratio of public sector banks rose to an 8-year high of 84 per cent.

The government is unlikely to announce capital infusion for public-sector banks (PSBs) in the upcoming Budget. Post monetary policy, bank stocks were back in the shopping list of funds. SBI, ICICI Bank and Federal Bank look good for further gains. Punters tip IDFC First for target price of Rs75 in next few weeks. Ahead of its first-ever analyst and institutional investor meeting scheduled on coming Tuesday, ITC witnessed good buying interest. ESG concerns of tobacco companies have been said to be one of the reasons why ITC's share price has been under-performing. Apart from addressing investor concerns on this front, analysts expect management

may share detailed plans on newer focus areas such as category expansion in FMCG, investment into direct to consumer start-ups and & asset-right strategy in hotels.

"Elephants can move and dance", buy ITC for target price of Rs325 in next few months. Stock futures looking good. Adani Enterprises, Atul, Godrej Consumer, Laurus Labs, Polycab, Syngene and TCS. Stock futures looking weak are Divi Labs, Indus Towers, IGL, Powergrid, Star, Sun Pharma and Naukri.

HPL Electric and Power Limited

HPL Electric and Power Limited is an electric equipment manufacturing company engaged in the manufacturing of a range of electronic energy static meters, circuit protection switchgears, modular switches, wires and cables, compact fluorescent lamp (CFL) and light emitting diode (LED) Lamps, LED street lightings and luminaries for domestic, commercial and industrial applications. The company operates in five key verticals: Metering Solutions (Conventional & Smart Meters), Switchgears, LED Lighting, Wires &Cables, and Solar Solutions. The company is market leader in Electric Meters and On-load Change-over Switches with 50 per cent market share in the on-load change-over switches market, 20 per cent market share in electric meters market five per cent market share in low-voltage switchgear market and 5th largest LED lighting manufacturer. The company manufactures and sells its products under the umbrella brand, HPL. The company also manufactures range of telephone cables, co-axial cables, data networking cables, instrumentation cables and control cables. The company exports its products across south-east Asia, the Middle East, Europe and Africa. Himachal Energy Private Limited is the subsidiary of the Company. The company has established itself as a one-stop shop offering a wide spectrum of low-voltage electric products– metering solutions, modular switches, switchgears, LED lighting, and wires and cables to diverse customer segments. Strong order book of Rs704 crore ensures revenue visibility for the short and medium term. Buy on declines for medium term target of Rs125.

Thermax Limited

Thermax Limited is an engineering and capital goods major. Its three key business segments are Energy, Environment and Chemical. The company is in the business of manufacture and sale of boilers, heating and cooling equipment, industrial chemicals, and water and waste management

equipment. The company also undertakes turnkey contracts for power plants, and provides operation and maintenance services for the same. The energy segment includes products, such as boilers and heaters, absorption chillers/heat pumps, power plants, solar equipment, and related

services. The Environment segment includes products, such as air pollution control equipment/systems, water and waste recycle pant, ion exchange resins and performance chemicals, and related services. Its products include air pollution control products; chemicals; steam accessories; engineering, procurement and construction (EPC) power plants, and absorption cooling products. Through its Chemical business, the company manufactures and markets a wide range of specialty chemicals and is the leading manufacturer and exporter of ion exchange resins, and is a pioneer in water and wastewater treatment chemicals. The Water and Waste Solutions division developed and launched atoM, a compact membrane based sewage recycling system and also won major orders from steel and refinery conglomerates for water treatment chemicals. The company caters to both domestic and international markets. Buy for target price of Rs3250 in medium term.