Time For Investors To Stick To Fundamentally Strong Scrips

The first week of January is likely to see Banks, FMCG companies, Real Estate, Metals and other companies release their quarterly provisional business updates, which will give an indication of how the Q3 earnings season is going to be after downgrades were seen in Q2

Amidst heightened volatility sparked by both domestic and global factors like weak rupee, continued FII selling, potential adverse tariffs from Trump regime and reduced expectations for rate cuts in 2025; the domestic stock market witnessed range a range-bound activity during the week ended. BSE Sensex added 657.48 points or 0.84 percent to end at 78,699.07 points, while NSE Nifty rose 225.9 points or 0.95 percent to end at 23,813.40. FIIs extended their selling with sales worth Rs6,322.88 crore, while the DIIs continued to provide support with purchases worth Rs10,927.73 crore.

For the month till now, FIIs sold equities worth Rs10,444.10 crore, while DIIs purchased equities worth Rs27,474.14 crore. The rupee registered the steepest fall in almost two years to hit its lifetime low of 85.80 and ended at a record low of 85.48 against the US dollar. Near-term outlook for the market will be guided by the Q3 earnings season, the major domestic and global economic data. The first week of January is likely to see Banks, FMCG companies, Real Estate, Metals and other companies release their quarterly provisional business updates, which will give an indication of how the Q3 earnings season is going to be after downgrades were seen in Q2. With different sections of people voicing their expectations for Union Budget 2025, economists argue that reducing the tax burden would increase disposable income, enabling citizens to save more and spend on essentials.

This, in turn, could help revive demand in sectors impacted by weak consumption. To manage inflation, while sustaining growth, observers recommend measures such as direct benefit transfers, public expenditure in rural areas, and incentives for job creation outside the agricultural sector. Despite significant market volatility in 2024, the number of companies boasting a market capitalization (mcap) exceeding Rs1 trillion has surged to 95. This marks a substantial rise from 74 firms in 2023 and demonstrates a sharp recovery from the static trends observed in 2021 and 2022.

For investors, the expanding Rs1 trillion club underscores the importance of identifying high-quality, well-managed companies with strong fundamentals. While the number of firms achieving this milestone is likely to grow, periods of market correction should be anticipated as part of the natural market cycle.

When it comes to investing, nothing will pay off more than educating yourself. Do the necessary research and analysis before making any investment decisions.

F&O / SECTOR WATCH

On the back of modest consolidation in the cash market, the settlement week witnessed subdued rollover activity in the derivatives segment. Rollovers in Nifty futures were flat at 78 per cent (last month 79 per cent), above 3-month average of 77 per cent. It is important to observe that Nifty closed with loss of -1.5 per cent in the series; total loss in last 3 months is -11 per cent. On other hand, market wide rollovers stood at 90 per cent (last month’s market wide 91 per cent). Both the benchmark indices, Nifty and Bank Nifty, closed with an approximate one per cent gain on the weekly chart. Looking at Options data, the highest Call Open Interest was observed at the 24,000 and 24,200 strikes, while Put writers were at the 23,500 strike.

For the Bank Nifty, the highest Call Open Interest was at the 52,000 strike, while for Put Open Interest concentrated at the 51,000 strike. Implied Volatility (IV) for Nifty’s Call options settled at 13.58 per cent, while Put options concluded at 14.72 per cent. The India VIX, a key indicator of market volatility, concluded the week at 14.04 per cent. The Put-Call Ratio Open Interest (PCR OI) stood at 0.87 for the week. The rollover rate of Nifty has decreased to 77.66 per cent, which is lower than the previous month’s rate but aligns closely with the three-month average of 76.99 per cent.

This indicates that the momentum for the January series is likely to follow a similar pattern to that of the December series. However, Q3 earnings may trigger sharp stock specific moves in the “new” entrants in F&O segment.The rollover rate for Bank Nifty is 67.81 per cent, significantly lower than the previous month’s rate of 76.82 per cent and also below the three-month average of 71.02 per cent. This sharp decline suggests a weaker momentum for the Bank Nifty in the upcoming series. In near term, Nifty has support at 23,500 and may face resistance at 24,200.

Overall, it is important to observe that the markets are not totally out of the woods yet. So long as they are trading below the 200-DMA, they remain vulnerable to a retest of the 50-week MA. Auto and Pharma sectors were the major gainers, while profit booking was observed in the Media and Metal sectors last week. In the week ahead, the auto sector is likely to be in the limelight, aided by an expectation of a pickup in volumes in December and comfort in valuation. Stock-specific action would be seen when auto majors announce their December month sales figures on January 1.

Stocks looking good are Bharti Airtel, Cyient, HDFC Bank, L&T, IPCA Labs, M&M, Sun Pharma and United Spirits. Stocks looking weak are Coal India, Hindustan Copper, IGL, Nykaa, Tata Elexi and Siemens.

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

STOCK PICKS

Artemis Medicare Services Ltd

Artemis Medicare Services Ltd (belongs to promoters of Apollo Tyres), is a state-of-the-art multi-speciality hospital in Gurugram, India. It is the first hospital in Gurugram to be consecutively accredited with JCI, USA, for the fourth time. It is the first hospital in North India to be certified with the National Marrow Donor Program (NMDP), USA, and is equipped with North India’s first M6 Cyberknife, having successfully performed over 1000+ procedures.

It is also the first hospital to introduce Masimo technology based on a Clinical Surveillance System, introduce the Robotic Knee Replacement Surgery Program in addition to our existing robotic technology, including the Da Vinci Robot, and upgrade the MRI facility in the hospital. Designed as one of India’s most advanced hospitals, Artemis provides a depth of expertise in the spectrum of advanced medical & surgical interventions and a comprehensive mix of inpatient and outpatient services.

The company has opened a new unit under the ‘Artemis Lite’ brand in the fast-developing New Gurugram area in June, 2023. Further, the company has inaugurated the first of the two hospitals in Mauritius, a ~80-bed facility under the brand of ‘Artemis Curepipe Hospital’. This is the first of the two hospitals as part of the Operations and Management Agreement and will help strengthen Artemis brand in international healthcare industry.

This hospital has shown good progress already in its first year of operations. In the beginning of FY25, the company has signed definitive agreements with the International Finance Corporation to raise funds of Rs330 crore in the form of Compulsorily Convertible Debentures (CCDs) to explore growth opportunities in the quaternary care/super speciality hospital segment through brownfield/ greenfield expansion. Buy on declines for medium term target of Rs600.