Nifty 17196.7 (-1.18%)
Sensex 57696.46 (-1.31%)
Nifty Bank 36197.15 (-0.85%)
Nifty IT 35848.05 (-0.86%)
Nifty Financial Services 17779.5 (-1.13%)
Adani Ports 737.45 (-0.22%)
Asian Paints 3110.45 (-2.21%)
Axis Bank 673.00 (-0.46%)
B P C L 385.90 (1.86%)
Bajaj Auto 3287.85 (-1.22%)
Bajaj Finance 7069.25 (-1.55%)
Bajaj Finserv 17488.70 (-1.52%)
Bharti Airtel 718.35 (-1.94%)
Britannia Inds. 3553.75 (-0.69%)
Cipla 912.05 (-1.00%)
Coal India 159.75 (0.28%)
Divis Lab. 4757.05 (-0.42%)
Dr Reddys Labs 4596.50 (-1.42%)
Eicher Motors 2455.55 (0.16%)
Grasim Inds 1703.90 (-1.16%)
H D F C 2771.65 (-1.29%)
HCL Technologies 1171.40 (-1.12%)
HDFC Bank 1513.55 (-0.80%)
HDFC Life Insur. 690.95 (-2.03%)
Hero Motocorp 2462.45 (-0.41%)
Hind. Unilever 2343.65 (-1.66%)
Hindalco Inds. 424.65 (-1.72%)
I O C L 122.20 (1.28%)
ICICI Bank 716.30 (-0.84%)
IndusInd Bank 951.15 (0.59%)
Infosys 1735.55 (-0.73%)
ITC 221.65 (-1.69%)
JSW Steel 644.55 (-0.34%)
Kotak Mah. Bank 1914.20 (-2.55%)
Larsen & Toubro 1801.25 (0.67%)
M & M 836.95 (-1.48%)
Maruti Suzuki 7208.70 (-1.59%)
Nestle India 19321.35 (-0.93%)
NTPC 127.00 (-1.32%)
O N G C 145.90 (1.32%)
Power Grid Corpn 206.10 (-3.92%)
Reliance Industr 2408.25 (-3.00%)
SBI Life Insuran 1165.95 (-1.86%)
Shree Cement 25914.05 (-1.43%)
St Bk of India 473.15 (-0.81%)
Sun Pharma.Inds. 751.80 (-1.89%)
Tata Consumer 774.30 (0.14%)
Tata Motors 480.10 (0.21%)
Tata Steel 1118.00 (0.50%)
TCS 3640.45 (-0.07%)
Tech Mahindra 1593.30 (-2.23%)
Titan Company 2369.25 (-0.72%)
UltraTech Cem. 7332.45 (0.13%)
UPL 712.75 (2.08%)
Wipro 640.75 (-0.94%)

5 Strategies on Share Market by Vikas Khemani

5 Strategies on Share Market by Vikas Khemani
by 5paisa Research Team 19/10/2021

Today, all we see are headline numbers. The Sensex is hitting 60k while investors are making 4x – 8x money. In the backdrop of such a landscape it is important to understand the factors that are fuelling the current rally and the triggers for market performance going forward.

Guest: Vikas Khemani, Founder Carnelian Asset Advisors Pvt Ltd.

1. What are the factors driving the markets up these days?

While liquidity is one major reason, there are several other factors at play:

a) The pandemic offered strong triggers to the Indian economy, in terms of acceleration of growth. Before the pandemic, we faced major setbacks every 4-5 years. But, those strenuous years were also building blocks and, right before the pandemic, the groundwork had already been laid for India to grow exponentially. After the pandemic, we received two big triggers which were not really prevalent previously. The IT services sector witnessed super growth, creating an array of job opportunities.

We currently export 165 bn dollars’ worth of IT services and this is set to grow to 300 bn dollars over the next 5 years. Similarly, the manufacturing sector is also a very big focus post the pandemic. Our government wants to reduce import dependence and propel AtmaNirbhar Bharat so this is a huge opportunity. Further, countries are moving away from manufacturing in China and India is a big beneficiary of this shift.

b) The Indian banking sector is now more consolidated and looking to grow and the real estate segment is also showing significant expansion. The Government is spending massively on infrastructure, across ports, railways, and urban infra, further propelling growth. There is sustainable growth in every sector, except travel and tourism, and this will pick up as unlock proceeds.

c) India’s mind-set and structure has changed, along with the growth drivers. Positive trends are likely to stay for the next 5-7 years. We are looking at a 5-7-tn-dollar market cap over the next 5-7 years. 

d)The future of Indian equity and economic recovery looks very bright given strong structural foundations. There is great confidence in corporate returns and earning recovery across broad based industries. The overarching positive outlook is driving markets and this is one of the best periods for the Indian economy.


2. What are the major triggers for the market, going ahead? If we want to start investing today, what should we watch out for and which are the best sectors?

For long-term investors, my advice is to keep investing your surplus. India will deliver and give strong returns. People have been waiting for corrections but it is a futile exercise. Maintain conviction over the longer term and only worry about market triggers if you are a short term investor. Keep investing in high quality companies and industries.

I am positive on most sectors and have been especially bullish on the tech and manufacturing sectors over the last one year. We are very positive on these sectors for the next 5-10 years. Banking is likely to do well over the next 18 months and, with salaries rising, consumer durables, consumer discretion, and real estate sectors also show great promise. 

3. There are a host of external factors at play. How are these affecting the market?

Considering the volatility in China, we have limited market links with the country as China is a largely closed economy. As a global lender, China poses low risk. In fact, the chaos in China will only help India as we are a good alternative base for manufacturing companies. Manufacturing shifts are decadal, so India will benefit greatly if this comes about.

Additionally, India is now less dependent on foreign capital. We are now a current account surplus country and with the growth in IT and manufacturing, this surplus is only set to rise. We are much better placed, than ever before, to limit the impact of foreign events originating from global economies like China or the US.

4. There are several upcoming IPOs. Should retail investors go the IPO route and which IPOs should we choose?

Please note that 80-90% of the present IPOs are expected to be below IPO price in the next six months as there is a lot of froth. Over subscription is hiking prices and the IPO frenzy is so high that the prices are too fine to offer any margin of safety. The companies are exceptionally good but I will advise investors to be very safe and careful. My caution stems from the pricing and not the quality. IPOs are a great way to access strong companies but you can gain better entry at later stages, when the frenzy goes down and prices settle.

Check - List of Upcoming IPOs in 2021

5. What is your advice to viewers on how to approach the market at this juncture and where do you expect the market to move in next year?

I am very bullish on the market in the medium to long term. In the shorter term, it is very easy to get carried away and rely on investment tricks and tips. This is the time to focus on risks, instead of returns as return traps are very dangerous and you might end up losing money. Invest only after doing strong research and invest only in good companies. In bull markets, the quality of the portfolio deteriorates, so think about whether you want to make more money or quick money. It is better to be patient and work towards making more money.

Take long-term structural bets and focus on the quality. When going for growth investment, study stocks deeply and figure out the possibilities. Investing is all about safety and returns. It is a detailed science and requires detailed study of the industry and the companies you wish to invest in. Going ahead, I am extremely bullish on India. With the mind-set change, India is poised to grow. The political leadership is pushing development and growth. Take advantage of the success story through long term investments and keep studying the inherent factors. Stay invested and stay safe.
 

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Interview with Meghmani Finechem Ltd.

Interview with Meghmani Finechem Ltd.
by 5paisa Research Team 19/10/2021

Meghmani Finechem: Serving growth with strategic capacity expansion plans and products.

"We are investing more to maintain the growth and create exceptional value for our shareholders," says Maulik Patel, Chairman and Managing Director of Meghmani Finechem Ltd.

What is your outlook on the chemicals sector?

Indian chemical sector has done well in the past few years and is further expected to improve its good momentum. Even if you see during the Covid-19 pandemic, sections like necessity products, agrochemicals and pharmaceuticals were not much impacted. As the Indian economy would grow in the upcoming years, the overall chemical sector is also expected to perform well. Multiple factors are expected to support this growth. Both the domestic and export demand for all types of chemicals is expected to witness a significant jump. Much talked about China plus one strategy is going to be a key growth driver in this area. With a recent initiative like PLI schemes to boost manufacturing, the chemical sector is also expected to benefit to a great extent because of feedstock demand from those industries. So overall, we are very optimistic about the growth of the chemical sector and we are also preparing to serve that growth well with strategic capacity expansion plans and the launch of new products.

Meghmani Finechem’s sales and net profit for Q1FY22 almost doubled as against Q1FY21. Which factors have contributed the most to help you outperform?

One obvious factor behind growth is the recovery from Covid-19 shock which is leading to recovery across sectors. But if I talk about Meghmani Finechem in particular, the most crucial factor behind the good growth in both the topline and bottomline is the capex we incurred last year and the improvement in realization. We have started to enjoy the fruits for which we invested last year in terms of capacity expansion of the caustic soda plant. In the second quarter of the last fiscal, we commissioned a Hydrogen Peroxide plant as well which significantly helped us improve our revenues and profits. In upcoming quarters too, we are expected to continue benefiting from the strategic investments we made in FY21. In the meantime, we are investing more to maintain this growth and create exceptional value for our shareholders.

China power shortage and the hurricane IDA strike in the US have resulted in a strained supply chain for caustic soda. How are these developments expected to help your revenues?

The Indian chemical industry faced impact due to China power shortage, as the facilities over there are not working on their full capacity and thereby entire chemical supply chain has been impacted. China has been the major supplier of all chemical products, and hence it will have an impact on global supply and price for all sorts of chemicals. Along with that, the Hurricane IDA strike in the US too had pressure on the supply of caustic soda and also drastic hike in logistic cost had an impact on the supply chain. The cost of various raw materials started moving up due to the supply issue and at the same time because of high demand globally and also in India, realization prices for various products have also moved up. In such a scenario, topline growth will be achievable for all the companies, but the challenge will be to pass on the hike in price to its customers. This can be a structural change and which might open avenues for chemical companies in India and we (India) can stand strong for the alternate hubs (other than China) for sourcing various materials. 

Can you shed some light on your capital expansion plans? What are your top strategic priorities? 

We are getting into Epichlorohydrin (ECH), CPVC Resin and increasing the capacity of Caustic Soda. Capex for the same has already started and all the projects are moving as per schedule.

We are quite optimistic about the ECH (Epichlorohydrin) production facility, as we will be the first in India to produce the same using raw material from 100% renewable resources. Demand for the same is expected to grow in double digits in the coming years. Currently, we are planning to set up a 50,000 tons per annum of ECH production facility at our existing factory in Dahej. It is expected to get commissioned in Q1FY23.

Apart from our investment in the ECH segment, we are also aligned to set up a chlorinated polyvinyl chloride (CPVC) facility with an estimated annual production capacity of 30,000 tons. Currently, 95% of India’s CPVC resin demand is fulfilled by importing and also demand of the same is expected to grow at 13% CAGR in India. Once we commission our plant, we will be the largest producer of CPVC resin in India. CPVC resin plant is expected to get commission in Q2FY23.

Also, we are expanding our caustic soda capacity from 2,94,000 TPA to 4,00,000 TPA. We will be benefited from it as the demand for caustic soda and realization of it has surged since last six months and it is expected to continue with the same momentum.

These investments will strengthen our fully integrated complex as part of raw material for ECH and CPVC will be coming from the plant itself. It is in line with the overall growth trajectory of the company of reaching Rs 2000 crore as topline by FY2024 from Rs 831 crore in FY2021.

What are your growth drivers? 

The company’s current growth driver is its product portfolio: Chlor-alkali, Chloromethanes and Hydrogen Peroxide. The demand for all these products is expected to surge in coming years and hence there will be growth led by these segments. Also, FY22 will be the year when our Hydrogen Peroxide plant will be utilized for an entire year.

Medium-term growth drivers are the new product segments we are entering, i.e. Epichlorohydrin and CPVC resin, and additional capacity expansion in Chlor-alkali production. The demand for ECH and CPVC that are currently imported in India is expected to grow at a CAGR of double-digit owing to which there is vast scope in these two products. Full utilization of existing capacity and new capacity additions will lead to further growth.

For long-term growth, the management is strategizing to get into more speciality chemicals, in which we will be the first in India to produce and it will be intermediate for the Pharmaceutical and Agrochemical industry. It will improve our margins and be based on our core strengths (fully forward and backward integrated plant) hence further improving our efficiency.

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5 Tips on How to Trade When Sensex is at 60k by C.K. Narayan

5 Tips on How to Trade When Sensex is at 60k by C.K. Narayan
by 5paisa Research Team 19/10/2021

Stock markets in India have been trading at a strong clip over the last 18 months. As a matter of fact, in this time period, both the Sensex and the Nifty have been hitting new highs and creating wealth for investors. However, now that the Sensex is at 60k, it has become important to review portfolio gains and create a strategy for the way forward. If you are muddled with questions like what to do now, should I book profits or continue the ride, should I invest more money or simply do nothing, then you should definitely read on. 

Guest:
Dr. C.K. Narayan, Founder of Growth Avenues, Chartadvise &  NeoTrader and Chief Investment Officer - Plus Delta Portfolios


1. Is the market overheated at present or do you see room for the market to move up further?

The market has been moving up since the last 18 months. It has been a relentless upside and this relentlessness is worrying people. The Sensex is at 60K. We usually expect a normal correction of 10-12% per year and frequent corrections of 4-5% in between but, over the last 18 months, we have only seen a correction of about 3%. People have been worried about a correction since April-May 2020 and the lack of correction is a huge source of concern. It is stopping seasoned people from committing completely to the market.

The share market started its ascent in the depths of the pandemic, when nobody knew what to expect with the lockdowns and other issues. Now the Sensex is at 60K. We could not understand why the markets were moving aggressively and therefore, nobody built major positions. In fact, positions are lower than normal because people are wary, ensuring that there is no position overhang. This indicates that the growth trend could continue further based on various factors of over heatedness.

Everybody is rightly sceptical and though there is a fear of missing out, nobody is willing to overcome it and come to the share market with high investments. People need a reason to flock to the market and there is no dearth of money. Nearly 30-40 billion dollars of money have come in and more is waiting. In this scenario, it is advisable to await the next quarter results and, if the upside trend continues, it is time for people to gradually enter the markets over the shorter term. Equities are holding strong across the globe, money flow is intact and liquidity is high, indicating this is a good time to build positions. 

2. With the Sensex at 60K, how can technical analysis barometers be used to identify stocks which can make good investments over the next 10-15 days?

It is best to take a structured way to understand the market. Technology has heightened volatility and reduced sustained directionality. Harness technical analysis and technology to identify stocks. Avoid information overload and use powerful software. For instance, if you consider Maruti stocks, the shares are facing a year to date decline. Recently Maruti has rallied in a short-term bounce but software indicates that it is currently within a cloud and therefore not a wise buy. 

3. What is your view on some of the recently listed IPO stocks and what sectors do you think will hold strong in the near future? Which are the best stocks to buy now?

I will treat the newly listed stocks as a single segment. Strong companies have come into the market and these IPOs have raised the market cap. These are clean stocks with no baggage so most definitely pay attention to new listings, especially those in niche segments. Pay particular attention to new IPO stocks which are making strong highs. If a month has passed, people who invested early have made profits and moved out.

If the stock is still moving up, it indicates that institutional investors are buying up the stocks. Big players are coming in, meaning the stocks are performing well. IndiaMart is a good example of an IPO making nice patterns and offering strong profits. People are holding such stocks for long-term gains. Focus on this segment and even if you go wrong in 2-3 out of the 10 new stocks, the money you make in the rest will help you gain back whatever you may lose.
  

4. How can we scan the best stocks to buy now and which stocks are making good movement in the first 15 minutes of the market?

Invest in a good scanner and have a strong understanding of technical analysis. If you do not know technical analysis, you can scan based on price action. If the price action is strong, check volume action. If there is large volume and good price action, there is strong potential for movement. Parameters of the scan should be built in well. Pick 4-5 good stocks to scan and you can make good returns.

5. What is your view on the short-term share market?

The market has recently fired some opening shorts. The Sensex is at 60K and Nifty reached an all-time high last week, at opening, and this was an artificial high. This is not a good sign. This week’s candle pattern indicated a dark cloud cover, which is a warning to be alert. This week, we almost hit the previous week’s low and this has not happened since July. There is a big dark cloud cover and this bearish candle was last seen in January 2021, so there are small warning signs which we should heed.

The second warning came when a short-term trend line was broken during the decline this week. The whole week has seen a decline. When you see a decline breaking a trend line, it is note-worthy. Recent short-term breaks have happened through consolidation and not declines, so that is another warning from the market.

Thirdly, throughout the upside trend, the momentum did not show any divergence pattern. The divergence indicates a lack of momentum which is not accompanied by nuance. This finally happened during this week’s trade.

These are all tell-tale warning signs in the short term so prepare for the next week with extra padding as the market could be fierce. In the short term, there is a small question mark and we have to see if there is a follow-up. However, in the longer term, as long as the market remains slightly south of 17000, there is no need to worry. If these lines are crossed, there should be caution and investors should ensure that accrued profits do not get negated.

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These stocks see huge volume burst in the last leg of the trading session.

These stocks see huge volume burst in the last leg of the trading session!
by 5paisa Research Team 19/10/2021

Manappuram Finance, AIA Engineering and JK Cement have witnessed volume burst in the last 75-minutes of the trade.

As the saying goes, the first and the last hour of each trading session is the most important and active in terms of price and volume. More so, the activity in the last hour is said to be of utmost importance because most of the pro traders and institutions are active at this time. Hence, when a stock sees a good spike in volume in the last leg of trade along with price rise it is said to be the pro and institutions have a keen interest in the stock. Market participants should keep a close watch on these stocks as they can witness good momentum in the short-medium term.

So, based on this principle we have shortlisted three stocks, which have witnessed volume burst in the last leg of trade along with price rise.  

Manappuram Finance: The stock of Manappuram Finance outperformed the broader as well as frontline indices as it ended the session with modest gains of 0.30% on Tuesday. Interestingly, over 50% of the total traded volume of the day was witnessed in the last 75-minutes. Hence, market participants can keep a close watch on this stock. In addition to this, the icing on the cake is that the stock closed near days high.

AIA Engineering: The stock managed to rebound from the lower levels, and it settled above the 1900 mark. The stock witnessed a massive jump in volumes in the last 75-minutes of the trade. Over 80% of the total traded volume of the session was seen in the last hour of the trading session. A bullish bias in the price was also witnessed in the last 75-minutes. Considering the robust volume move in the last leg of the session, traders can keep an eye on this stock.

JK Cement: Even though the stock ended in red on Tuesday with a drop of over 2%, it witnessed a good spike in volume in the last 75-minutes of the trade. Over 50% of the total traded volume of the day was witnessed an hour before the closing bell. Furthermore, the stock price rebounded from the lower levels with a surge in the volumes. Keep this stock on your radar.

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Trending stocks: Keep a close eye on these small-cap stocks for 20 October 2021.

Trending stocks: Keep a close eye on these small-cap stocks for 20 October 2021.
by 5paisa Research Team 19/10/2021

BSE Small-cap corrected by 1.79% and underperformed broader markets.

Headline indices Nifty 50 and Sensex recorded new highs during early market hours, but failed to hold the same and ended the session losing 58.03 points and 49.54 points respectively from yesterday’s closing. BSE Small-cap corrected by 1.79% and underperformed broader markets.

Keep a close eye on these trending small-cap stocks for Wednesday, 20 October 2021:

Saboo Sodium Chloro – The company has announced that its hospitality division is commencing development on a new property in Rajasthan. The company’s existing company property situated near Sambhar Lake, Rajasthan will be converted into a luxury short-stay accommodation. This is in line with successful strategies in North America and Europe where freestanding properties available for short-term rentals have found above-market rates and high occupancy levels.

The property currently features a swimming pool, tennis courts, sauna/spa facilities and multiple bedroom accommodations. In addition, the property is situated scenically amongst expansive acres of environment-conscious lawns and gardening. The new property will be developed fully out of internal accruals and no additional debt will be taken by the company for the project.

The Sambhar Resort and Salt Spa will be operational starting FY23. The project is expected to significantly add to both the top and bottom line of the company’s hospitality division.

Rane Brake Lining – The company has reported Q2FY22 results. Total revenue was Rs 126.2 crore as compared to Rs 107.7 crore in the Q2FY21 (an increase of 17.2%). EBITDA for Q2FY22 stood at Rs 14.1 crore relative to Rs 22.6 crore during Q2FY21. Net profit decreased by 53.1% from Rs 11.5 crore in Q2FY21 to Rs 5.4 crore in Q2FY22.

52-week High Stocks - The following small-cap stocks have made fresh 52-week high today – Pansari Developers, Sangam (India), Nahar Spinning Mills, Proseed India, Trident, Mastek, Sasken Technologies, Tata Communications and California Software Company. Keep a close eye on these counters on Wednesday, 20 October 2021.

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Hindustan Unilever Q2 earnings meet estimates but margin shrinks

by 5paisa Research Team 19/10/2021

Hindustan Unilever Ltd said Tuesday net profit for the second quarter of this fiscal year rose 8.86% from a year earlier as it increased prices of some products to offset a rise in input costs and controlled expenses.

Standalone net profit increased to Rs 2,187 crore for the quarter ended September 2021 from Rs 2,009 crore in the same period last year, India’s biggest fast-moving consumer goods company said. Profit grew 6.11% from the first quarter.

Operating revenue for the second quarter rose 11% to Rs 12,516 crore from Rs 11,276 crore a year earlier. On a quarter-on-quarter basis, the rise was a muted 6.7%. Total expenses grew 11.6% to Rs 9,883 crore.

HUL’s results matched analysts’ estimates of a 10-15% rise in revenue and 8-10% increase in net profit.

The company said its focused actions on net revenue management and savings enabled it to manage inflationary pressures and deliver a healthy bottom-line performance.

The markets were perhaps expecting a sharper spike in the top-line and bottom-line numbers, as the country’s economy has opened up and is looking to go full throttle ahead. But their disappointment showed in the company’s counter falling 2.67% to close the day at Rs 2,583 per share on the BSE. 

HUL Q2 other key details:

1) Revenue from the home care segment grew 15%, helped by price hikes to offset rising input costs.

2) Sales from the beauty and personal care segment rose 10%, thanks to price hikes and as mobility improved.

3) Revenue from the food segment increased 7% with health drinks volumes growing in double-digits.

4) EBITDA margins shrank by 40 basis points to 25%. EBITDA came in at Rs 3,132 crore versus Rs 2,869 crore.

5) The company declared an interim dividend of Rs 15 per share. 

Management Commentary:

Sanjiv Mehta, chairman and managing Director at HUL, said trading conditions improved sequentially in the September quarter but remained challenging with “unprecedented” levels of input cost inflation and “subdued” consumer sentiment.

“In this backdrop, we have delivered a strong performance growing top line in double digits and stepping up profitability sequentially,” he said.

Mehta said large parts of HUL’s business continue to gain market share. Calibrated price increases and a “laser sharp” focus on savings helped the company protect its business model, he said.

“Looking forward, we remain cautiously optimistic about demand recovery. In these times of uncertainty and unprecedented input cost inflation, we continue to firmly focus in delivering consistent, competitive, profitable and responsible growth,” he added.

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