Time To Go For Stock-Specific Trading

Buoyed by renewed buying from FIIs, sharp appreciation of rupee, sustained buying from domestic investors driven by attractive large-cap valuations and expectations over Q4 earnings; Indian market posted best weekly gain in more than four years with both the benchmark indices rising over four per cent during the week ended. BSE Sensex rose 3,076.6 points or 4.16 percent to end at 76,905.51, and NSE Nifty added 953.2 points or 4.25 per cent to finish at 23,350.40. Mild exuberance was visible in the broader market. The Small-cap index surged nearly eight percent and the Mid-cap index rose seven per cent. It can be observed that the market capitalization (mcap) of BSE-listed companies rose more than Rs22 lakh crore. It is interesting to note that Indian equity benchmarks topped the list of Asian indices in terms of weekly gains for the period ended March 22. The Nifty and Sensex recorded the strongest performance among regional markets. Indices from other Asian economies saw varied performance, with some posting solid gains and others ending the week in the red. FIIs turned net buyers after 13 weeks with purchasing equities worth Rs5,819.12 crore, while DIIs bought equities worth Rs4,337.83 crore. Indian rupee has registered a best week in over two years led by falling dollar index. During the week, the Indian rupee ended higher by 103 paise to close at 85.97 per dollar. Observers attribute RBI’s apt and timely liquidity and currency management in boosting investor confidence for the rupee’s relative outperformance. India’s trade deficit narrowed to $14.05 billion in February, resulting in a rare overall trade surplus of $4.5 billion. The deficit was nearly $23 billion in January. In the near term, with no major domestic economic events scheduled, the focus will remain on the expiry of March derivatives contracts. On the global front, Trump’s announcements on reciprocal tariffs starting from April 2 will be closely watched. While US markets also saw a temporary respite after a sharp decline, mixed signals suggest potential volatility in the upcoming sessions.

A swirl of consumer backlash, investor scrutiny, and vandalism continues to surround Tesla. As the brand becomes “increasingly politicized analysts warn of lower overseas demand and mixed consumer response .” As Chief Executive Elon Musk has become a powerful senior adviser to President Trump, political fallout on investor sentiment cannot be avoided. It is not surprising that to contain the ‘damage’ of politics on Tesla stock, Commerce Secretary Howard Lutnick told in a media chat to buy Tesla stock, saying: “It’ll never be this cheap again.” It is pertinent to recall how in India also “politicised” business groups like Adani and others get impacted now and then by political developments.

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

F&O/ SECTOR WATCH

Ahead of the settlement week, markets staged a sharp rebound from lower levels; the derivative segment witnessed huge surge in volumes on the back of both short covering and fresh longs. The Nifty closed with gains of more than four per cent and the Bank Nifty surged more than five per cent during the week. It is pertinent to observe that the Midcap index surged nearly eight per cent recording biggest weekly gains since April 2020. Coming to options, the Put Call Ratio (PCR) of both March and April expiry, at 1.1 and 1.4 respectively, indicates higher number of Put option writing (selling), a positive sign for bulls. Implied Volatility (IV) for Nifty’s Call options settled at 11.56 per cent, while Put options concluded at 12.10 per cent. The India VIX, a key market volatility indicator, closed the week at 12.60 per cent. A decisive breakout above 23,400 level could further fuel momentum, potentially driving the index towards the 23,800-24,100 range. On the downside, the 22,800-23,000 zone is expected to serve as crucial support. The banking and financial sectors have played a pivotal role in the rally, with the banking index reclaiming key moving averages. A breakout above 50,800 in the Bank Nifty could drive further gains toward the 51,700-52,800 range, while 49,900 remains a crucial support level. Given the recent surge, traders should focus on selective stock picking with a favourable risk-reward ratio rather than chasing momentum.

The latest change in F&O segment is the shifting of the contract expiry date on the NSE from Thursday to Monday with effect from April 4. The impact of the change in the contract expiry date is likely to be more on options than futures because usually futures price converges with the underlying price at expiry.Futures do not suffer from time decay. Volatility is an important factor is determining an option price. The weekly options on the Nifty Index trade for five days but are priced for seven days, including the weekends. Many traders choose an option based on its relative cheapness. It is preferable to buy an option based on its implied volatility, not on its absolute price. So, whether you calculate the implied volatility for five days or seven days for all theoptions, their relative cheapness will remain the same. It is possible that volatility on Friday is higher when contracts expire on Monday because of the weekend effect. Rather than take high risk because of political and other events that may unfold during the weekend when the markets are closed, many traders may decide to close their positions on Friday, leading to high volumes and higher volatility on Friday.

Stocks looking good are ACC, Ambuja Cement, Coal India, Jindal Steel & Power, PFC, NCC, Torrent Power and Tata Consumer.Stocks looking weak are Berger Paints, Dabur, JSL, KEI Inds, Havells, Trent and Voltas.

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

STOCK PICKS

PCBL Chemical Limited

PCBL Chemical Limited, formerly PCBL Limited, isIndia’s largest carbon black manufacturer. The company is primarily engaged in the business of manufacturing and sale of carbon black and sale of power. The company’s segment includes Carbon Black, Power and Chemicals. The Carbon Black segment is engaged in production of Carbon Black through its five manufacturing units located at Durgapur, Kochi, Palej, Mundra and Tiruvallur District. The Chemicals segment is engaged in the business of manufacturing, marketing and sale of water treatment chemicals and oil and gas chemicals. Its specialty chemicals segment with a production capacity of approximately 7,70,000 metric tons per annum and generating 122 megawatts per hour of green power. Its products include specialty chemicals, tires and performance chemicals, and others. Specialty chemicals are primarily used as a pigment in plastics, inks, coatings, and many other applications.One of the most notable achievements was the acquisition of Aquapharm Chemicals Private Limited. This strategic move has allowed company to diversify beyond the carbon molecule, marking a transformative entry into the global specialty segments of water treatment and oil & gas chemicals. This acquisition not only propels PCBL from a single chemistry platform to multiple chemistry platforms but also significantly enhances its offerings.A significant milestone achievement for the company is being recognised as the world’s first carbon black company awarded Carbon Credits under the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC).After the ongoing expansion PCBL’s total manufacturing capacity will increase to 790,000 MTPA, solidifying its industry position. Additionally, a 24 MW green power plant was commissioned at the Greenfield project through its wholly-owned subsidiary PCBL (TN) Limited, increasing the total green power capacity of the Company and its subsidiary to 122 MW. Buy on declines for medium term target price of Rs675.