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Stocks For Short Term Trading November 17, 2021: Technical Analysis of BreakOut Stocks

Stocks to Buy for Short Term
by Ruchit Jain 17/11/2021

Breakout Stocks: What are the positive breakout stocks for today?

A breakout is a phase where stock price moves outside a consolidation with increased volumes. Such breakouts generally lead to good price movement in short term. In this column, we inform our readers the stocks which have given a breakout from the resistance as per technical analysis and can be good stocks to buy for short term. However, traders are advised to follow the given levels and trade with proper money management.

Today, we have picked two stocks which have given a breakout as per technical analysis

Best Stocks to Buy for Short Term

1. Welcorp

 

Welcorp

Image Source: Falcon


The stock price has been going through a consolidation phase since the month of June 2021 and it has formed an “Inverted Head and Shoulders” pattern on the daily chart. This pattern signals a bullish trade set up and traders should enter into a long position when the prices rise above the resistance of the neckline. As seen in the graph, the stock has given a breakout from the neckline in today’s session and volumes on breakout are also good compared to its daily average volumes. Hence, we are expecting an upmove in the stock in the short term.


Traders can look to buy this stock in the range of Rs. 152-150 with a stop loss placed below Rs. 144 for potential targets of Rs. 160 and Rs. 165 in the short term. 
 

Welspun Corp Ltd. (WELCORP) Share Price Target

- Buy Range: Rs.152-150

- Stop Loss: Rs.144

- Target 1: Rs.160

- Target 2: Rs.165

- Holding Period: 2 weeks

 

2. Mahindra & Mahindra (M&M)

mnm

 

Image Source: Falcon

The Nifty Auto index has given a breakout from a consolidation phase and hence, stocks from the Auto sector could outperform in the short term. Within this sector, Mahindra & Mahindra has witnessed good buying interest recently and seen in the given chart, prices have given a breakout from its previous high. IT has also been forming a ‘Higher Top Higher Bottom’ structure which indicates an uptrend and hence, short term traders should look to buy this stock on any declines. The support for the stock is now placed in the range of Rs. 950-940 and any dips in this range should be considered as buying opportunity.
 

Traders can look to buy this stock in the range of Rs. 950-940 with a stop loss below Rs.920 for a potential target of Rs.1000-1020 in the short term

Mahindra & Mahindra Ltd. (M&M) Share Price Target

- Buy Range: Rs.950-940

- Stop Loss: Rs.920

- Target 1: Rs.1000-Rs.1020

- Holding Period: 2 weeks

 

Disclaimer:The investments discussed or recommended may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and only after consulting such independent advisors as may be necessary.

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RBI Bulletin Raises Questions on Indian Equity Valuations

RBI Bulletin Raises Questions on Indian Equity Valuations
17/11/2021

On 16-November, the sharp correction in the stock market was triggered by the concerns over factors like inflation, bond yields etc raising the spectre of the Fed front-ending rate hikes. It was also feared that if the Fed opted to front-end rate hikes, the RBI may be inclined to follow suit.

At Mint Street, the RBI has been expressing concerns about too much liquidity in the system. Its recent measures were aimed at absorbing Rs.50,000 crore liquidity from the bond markets.

It is in this light that the latest salvo came from the RBI bulletin, a monthly publication by the central bank. The November issue of the bulletin raised concerns over equity valuations.

The statement in the bulletin was quite clear. It said, “Reserve Bank of India remains concerned about India’s steep valuations.” Talking of the RBI concern, the statement added, ”The spectacular gains have raised concerns over overstretched valuations with a number of global financial service firms turning cautious on Indian equities".

RBI was obviously referring to international brokers who had downgraded Indian equities.

Over the last couple of months, a number of global banks like Morgan Stanley, Nomura and Citibank have raised concerns over Indian equity valuations. Recently, Goldman Sachs and CLSA also expressed concerns and downgraded Indian equities from “Overweight” to “Neutral”.

Their concern was that the rise in the MSCI India index was exponentially higher than the minor rise in the global indices or even the Asia indices.

RBI’s concern over equity valuations should be seen in the context of its recent measures to soak excess liquidity out of the system. One of the major concerns of the RBI was that the relentless global liquidity had led to most equity markets getting priced upwards.

India had got an inordinate share of the rally, raising real questions about whether the liquidity was really being channelled in the right direction.

The liquidity was an outcome of the measures taken by the RBI and the government to overcome the COVID-19 crisis. That was inevitable.

According to the RBI, the stretched equity valuations did raise questions over whether continued liquidity infusion was really justified or it was only stoking speculative spirits in the Indian market.

The other downside of liquidity that the RBI is worried about is inflation and that is evident in the core inflation figure at above 6% in October.

Equity valuations for the RBI were just an external symptom. The real issue was that the Indian economy was perhaps having to contend with more liquidity that it could really handle.

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Grey Market Premium of Tarsons Products Ltd IPO

Grey Market Premium of Tarsons Products Ltd IPO
by 5paisa Research Team 17/11/2021

The Rs.1,023.47 crore IPO of Tarsons Products Ltd consists of an offer for sale of Rs.873.47 crore and a fresh issue of Rs.150 crore. The issue had been priced in the band of Rs.635 to Rs.662 per share and the price discovery will depend on the IPO response. The issue opened for subscription on 15-Nov and closed for subscription on 17-Nov.

Most of the shares start trading in the grey market well ahead of the IPO opening, which offers important indicators. Ahead of the issue and ahead of listing, one of the key parameters for evaluating the potential IPO is the GMP or the grey market price.

A word of caution here. The GMP is not an official price point, just a popular informal price point. However, in most cases, it has proved to be a good informal gauge of demand and supply for the IPO. Hence it does give a broad idea of how the listing is likely to be and how the post-listing performance would be.

Check - Tarsons Products IPO - Subscription Day 3

While the GMP is just an informal approximation, it has been generally seen to be a good mirror of the real story. More than the actual price, it is the GMP trend over time that really gives the insights about the stock being upgraded or downgraded over a period of time and which direction the wind is blowing.

One of the key factors that impacts the GMP in most cases, is the extent of oversubscription, which is above 77 times in case of Tarsons. The GMP premiums will largely predicate on the extent of oversubscription in each of the categories. That would make the GMP premiums robust in the informal trading market.

As per updates coming in on Tuesday, 17-Nov, the Tarsons Products Ltd IPO is commanding a premium of Rs.200 over the issue price in the grey market. The GMP has spiked sharply in the last 5 days from Rs.150 levels to Rs.200 levels. Of course, this GMP will keep changing even after the issue closes on 17-Nov and till the date of listing.

The current GMP of Rs.200 for Tarsons Products Ltd IPO translates into a 30.21% premium over the upper price band of Rs.662. It also hints at an indicative listing price of approximately Rs.862 when the stock lists on 26th November, but this is subject to real time change.

GMP is an important informal indicator of likely listing price. However, investors must keep in mind that this is just an informal indication and has no official sanction.

Also Read:-

Tarsons Products IPO - 7 Things to Know

Upcoming IPOs in 2021

Upcoming IPOs in November 2021

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Tarsons Products IPO - Subscription Day 3

Tarsons Products IPO - Subscription Day 3
by 5paisa Research Team 17/11/2021

The Rs.1,023.47 crore IPO of Tarsons Products, consisting of a fresh issue of Rs.150 crore and an offer for sale (OFS) of Rs.873.47 crore, saw decent response on Day-1 and Day-2 of the IPO.

As per the combined bid details put out by the BSE at the close of Day-3, Tarsons Products IPO was subscribed 77.49X overall, with good demand coming from the HNI segment followed by the QIB segment and the retail segment with all the segment getting more than fully subscribed. The issue has closed on 17th November.

As of close of 17th November, out of the 108.44 lakh shares on offer in the IPO, Tarsons Products saw bids for 8,402.82 lakh shares. This implies an overall subscription of 77.49X.

The granular break-up of subscriptions was dominated by the HNI/NII segment followed by QIBs and retail in that order. However, the QIB bids and NII bids gathered momentum only on the last day, as is the general trend in the IPO market.
 

Tarsons Products IPO Subscription Day-3
 

Category

Subscription Status

Qualified Institutional Buyers (QIB)

115.77 Times

Non Institutional Investors (NII)

184.58 Times

Retail Individuals

10.56 Times

Employees

1.83 Times

Overall

77.49 times

 

QIB Portion

Let us first talk about the pre-IPO anchor placement. On 12th November, Tarsons Products did an anchor placement of 46,21,757 shares at the upper end of the price band of Rs.662 to 32 anchor investors raising Rs.305.96 crore.

Check - Tarsons Products IPO - Subscription Day 2

The list of QIB investors included a number of marquee global names like GIC Singapore, Monetary Authority of Singapore, First Sentier Investors, Theleme India Fund, Macquarie and Abu Dhabi Investment Authority (ADIA). Domestic anchor investors included Birla Mutual Fund, Sundaram MF, ICICI Pru MF, Kotak MF, L&T MF, Mirae MF, Reliance General Insurance; among others.

The QIB portion (net of anchor allocation as explained above) has a quota of 30.81 lakh shares of which it has got bids for 3,567.11 lakh shares on Day-3, implying a subscription ratio of 115.77X for QIBs at the close of Day-3.

QIB bids typically get bunched on the last day but the heavy demand for the anchor placement had indicated at a strong response for the Tarsons Products IPO subscription overall.

HNI / NII Portion

The HNI portion got subscribed 184.58X (getting applications for 4,265.48 lakh shares against the quota of 23.11 lakh shares). This is a relatively good response on Day-3 because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, came in on the last day of the IPO.

Retail Individuals

The retail portion was subscribed an impressive 10.56X at the end of Day-3, showing decent retail appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 53.92 lakh shares on offer, valid bids were received for 569.13 lakh shares, which included bids for 431.37 lakh shares at the cut-off price.

The IPO is priced in the band of (Rs.635-Rs.662) and has closed for subscription on 17th November 2021.

Also Read:-

Tarsons Products IPO - 7 Things to Know

Upcoming IPOs in 2021

Upcoming IPOs in November 2021

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Go Fashion IPO - Subscription Day 1

Go Fashion IPO - Subscription Day 1
by 5paisa Research Team 17/11/2021

The Rs.1,014 crore IPO of Go Fashion India, consisting of a fresh issue of Rs.125 crore and an offer for sale (OFS) of Rs.889 crore, saw decent response on Day-1 of the IPO.

As per the combined bid details put out by the BSE at the close of Day-1, Go Fashion India IPO was subscribed 2.46X overall, with good demand coming from the retail segment but rather tepid demand from the HNI segment and the QIB segment. The issue closes on 22nd November.

As of close of 17th November, out of the 80.79 lakh shares on offer in the IPO, Go Fashion India saw bids for 199.03 lakh shares.

This implies an overall subscription of 2.46X. The granular break-up of subscriptions was dominated by the retail investors while the HNIs and QIB response were tepid. However, the QIB bids and NII bids are expected to gather momentum on the last day, as is the general trend in the IPO market.
 

Go Fashion India IPO Subscription Day-1
 

Category

Subscription Status

Qualified Institutional Buyers (QIB)

1.25 Times

Non Institutional Investors (NII)

0.44 Times

Retail Individuals

12.14 Times

Employees

N.A.

Overall

2.46 times

 

QIB Portion

Let us first talk about the pre-IPO anchor placement. On 16th November, Go Fashion India did an anchor placement of 66,10,492 shares at the upper end of the price band of Rs.690 to 33 anchor investors raising Rs.456.12 crore.

The list of QIB investors included a number of marquee global names like Government of Singapore, Monetary Authority of Singapore, Nomura, Fidelity, Neuberger Berman, Volrado Venture, University of Notre Dame and Abu Dhabi Investment Authority (ADIA). Domestic anchor investors included SBI MF, HDFC MF, ICICI Pru MF, Axis MF, Birla MF, SBI Life, Mirae MF; among others.

The QIB portion (net of anchor allocation as explained above) has a quota of 44.07 lakh shares of which it has got bids for 11.02 lakh shares on Day-1, implying a subscription ratio of 0.25X for QIBs at the close of Day-1. QIB bids typically get bunched on the last day but the heavy demand for the anchor placement forebodes well for the Go Fashion India IPO subscription overall.

HNI / NII Portion

The HNI portion got subscribed 0.44X (getting applications for 9.70 lakh shares against the quota of 22.03 lakh shares). This is a relatively tepid response on Day-1 but of course this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO.

Retail Individuals

The retail portion was subscribed an impressive 12.14X at the end of Day-1, showing strong retail appetite. It must be noted that retail allocation is only 10% in this IPO. For retail investors; out of the 14.69 lakh shares on offer, valid bids were received for 178.31 lakh shares, which included bids for 141.76 lakh shares at the cut-off price.

The IPO is priced in the band of (Rs.655-Rs.690) and will close for subscription on 22nd November 2021.

Also Read:-

Go Fashion (India) IPO - 7 Things to Know

Upcoming IPOs in 2021

Upcoming IPOs in November 2021

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Akasa Air Places Order for $9 Billion Worth of Boeing Planes

by 5paisa Research Team 17/11/2021

Akasa Air, the ultra-low-cost airline backed by Rakesh Jhunjhunwala, has placed orders for a total of 72 Boeing 737 Max airplanes in an order worth $9 billion. This is the largest order that Boeing has received from India and gives them the much needed foothold in the Indian aviation markets.

It may be recollected that the Max-737 had been under regulatory ban and only recently the DGCA had allowed the 737-Max to fly again in India.

The order was finalized and announced at the Dubai Air Show. It is estimated that this price was after a large bulk discount but the exact details of the pricing were not available.

Akasa Air plans to tap the rapid growth in the Indian aviation market by offering an ultra-low-cost offering that would encourage almost every person to fly. It is not yet clear what would be the profitability trajectory or unique positioning of the model.

Check - Akasa Air Gets Approval to Launch Operations

Akasa Air is expected to have its base in Delhi and Bengaluru and will commence operations around June 2022. It is expected to induct 20 aircraft into its fleet in the first year of operation and then gradually add to its fleet.

Most low-cost airlines make money when they are able to fly at full capacity and also churn their flights quickly. In addition, the absence of frills gives them a huge cost advantage.

Akasa Air will look to design a sale and lease back arrangement with a large lessor wherein it would buy the planes from Boeing and then sell the same to an aircraft leasing company and lease it back. This allows them to reduce the capital locked into the business and improve the ROI.

The only catch is that most of these aircraft lease contracts are covered by the “Hell or High Water” clause wherein there is no provision for “Force Majeure”.

For Boeing, this order is a ticket to the lucrative and fast growing Indian aviation market. India’s largest airline, Indigo Airlines with 55% market share, has opted to stick with Airbus aircraft all through. Once the 72 aircraft are procured by Akasa, it will have the fourth largest fleet in India after Indigo, Air India and Spice Jet.

Boeing 737 Max is reputed to deliver the lowest seat mile cost and that would be a big edge in the competitive Indian market.

Also Read - Big Bull Rakesh Jhunjhunwala's Portfolio 2021

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