Nifty 17424.9 (0.13%)
Sensex 58548.06 (0.15%)
Nifty Bank 36497.3 (-0.03%)
Nifty IT 36157.85 (2.06%)
Nifty Financial Services 17982.9 (1.26%)
Adani Ports 740.00 (0.12%)
Asian Paints 3185.00 (0.14%)
Axis Bank 676.45 (0.05%)
B P C L 379.75 (0.24%)
Bajaj Auto 3328.00 (-0.01%)
Bajaj Finance 7190.00 (0.13%)
Bajaj Finserv 17800.00 (0.24%)
Bharti Airtel 732.00 (-0.08%)
Britannia Inds. 3578.25 (-0.01%)
Cipla 920.80 (-0.05%)
Coal India 159.25 (-0.03%)
Divis Lab. 4780.50 (0.07%)
Dr Reddys Labs 4652.70 (-0.22%)
Eicher Motors 2450.00 (-0.06%)
Grasim Inds 1733.15 (0.54%)
H D F C 2805.00 (-0.10%)
HCL Technologies 1183.00 (-0.14%)
HDFC Bank 1526.00 (0.02%)
HDFC Life Insur. 704.05 (-0.18%)
Hero Motocorp 2481.00 (0.34%)
Hind. Unilever 2388.00 (0.20%)
Hindalco Inds. 432.80 (0.16%)
I O C L 120.90 (0.21%)
ICICI Bank 723.50 (0.15%)
IndusInd Bank 947.00 (0.15%)
Infosys 1748.00 (-0.01%)
ITC 225.40 (-0.02%)
JSW Steel 646.25 (-0.08%)
Kotak Mah. Bank 1966.30 (0.10%)
Larsen & Toubro 1793.00 (0.21%)
M & M 849.40 (-0.02%)
Maruti Suzuki 7306.45 (-0.25%)
Nestle India 19485.20 (-0.09%)
NTPC 128.60 (-0.08%)
O N G C 144.00 (0.00%)
Power Grid Corpn 215.00 (0.23%)
Reliance Industr 2481.95 (-0.04%)
SBI Life Insuran 1184.00 (-0.34%)
Shree Cement 26280.55 (-0.04%)
St Bk of India 477.60 (0.13%)
Sun Pharma.Inds. 770.20 (0.52%)
Tata Consumer 773.75 (0.06%)
Tata Motors 478.50 (-0.13%)
Tata Steel 1112.95 (0.05%)
TCS 3637.00 (-0.16%)
Tech Mahindra 1627.75 (-0.12%)
Titan Company 2384.00 (-0.10%)
UltraTech Cem. 7332.80 (0.13%)
UPL 698.00 (-0.03%)
Wipro 646.50 (-0.05%)

Chart Busters: Top trading set-ups to watch out for Tuesday

Chart Busters: Top trading set-ups to watch out for Tuesday
by 5paisa Research Team 09/11/2021

On Monday, the benchmark index Nifty has marked the low of 17836.10 and thereafter recovered nearly 250 points. The index settled above the 18000 mark. The price action has formed a bullish candle with a long lower shadow. The long lower shadow indicates buying interest at lower levels. The leading indicator, 14-period daily RSI has given a positive crossover, which is a bullish sign.

Here are the top trading set-ups to watch out for Tuesday.

J.K. Cement: Majorly, the stock is displaying a bullish trend as it is marking the sequence of higher tops and higher bottoms. Further, it is trading above its short and long-term moving averages. These averages are in ascending order, which suggests the trend is strong.

On Monday, the stock has given downward sloping trendline breakout on the daily chart. This breakout is confirmed by robust volume. Additionally, the stock has formed a sizeable bullish candle on breakout day, which adds strength to the breakout. The momentum indicators and oscillators are also suggesting bullish momentum. The leading indicator, 14-period daily RSI has also given a downward sloping trendline breakout, which is a bullish sign.

On the daily timeframe, ADX is quoting at 16.41 which suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI. Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 3930 followed by Rs 4000 in the short term.

Muthoot Finance: The stock is oscillating in the range of Rs 1638.85- Rs 1402.40 for the last 63 trading sessions. On Monday, the stock has given a 63-days consolidation breakout on the daily chart. Further, on breakout day the volume was expanded by nearly 8 times of 50-days average volume, which indicates important buying interest. The 50-days average volume was 9.02 lakh while on Monday the stock has registered a total volume of 71.64 lakh.

Currently, the stock is trading above its short and long-term moving averages. These averages are in a rising trajectory. Interestingly, the daily RSI is oscillating in a sideways range, i.e. 40-60 zone since the last 52 trading sessions. On Monday, RSI has given consolidation breakout and surged above the 60 mark. The RSI is trading above its 9-day average and both are in a rising trajectory. The fast stochastic is trading above its slow stochastic.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 1770 followed by Rs 1850 in the short term.

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F&O Cues: Key support & resistance levels for Nifty 50

F&O Cues: Key support & resistance levels for Nifty 50
by 5paisa Research Team 09/11/2021

Nifty F&O action for November 11 expiry shows 17,900 will act as key support now.

Nifty 50 re-claimed the 18,000 mark on Monday after a gap of 12 days. On November 08 Nifty 50 saw a gap up opening, however, it soon fell into negative territory. Nevertheless, after 1130 hours it started to gain steadily and closed near the intra-day high by the end of the day. At close, Nifty was up 0.85% or 151.7 points to 18068.5. This is the second day in a row when Nifty 50 gained, despite Nifty Bank closing in the red.

Activity on the F&O market for the weekly expiry on November 11, 2021, now clearly shows that 18,500 will act as a strong resistance for this week. The highest call option open interest (91,666) for Nifty 50 stood at a strike price of 18,500. In terms of the highest addition of open interest in the call options front was at 18,500 in the last trading session. A total of 44,489 open interest was added at this strike price. The next highest call option open interest stands at 20,000 where total open interest stood at 71,651.

In terms of put activity, the highest put writing was seen at strike price of 17900 (74,231 open interest added on November 08), followed by 18,000 (45,686 open interest added on November 08), while there was put unwinding at strike price 17,000, followed by 16,700.

Highest total put open interest (104,498) stood at a strike price of 17,900. This is followed by a strike price of 17,800, which saw a total put option open interest of 71,606 contracts.

Following table shows the difference between call and put option at strike price near to max pain of 18000. Max pain has moved up from 17,900 to 18,000 mark in yesterday’s trade.

Strike Price  

Open Interest (Call option)  

Open Interest (Put option)  

Diff(Put – Call)  

17,800.00  

16567  

71606  

55039  

17,900.00  

54010  

104498  

50488  

18,000.00  

51312  

66593  

15281  

18100  

67921  

28899  

-39022  

18,200.00  

69126  

7096  

-62030  

18,300.00  

67932  

8428  

-59504  

18,400.00  

69394  

896  

-68498  

The Nifty 50 put call ratio (PCR) closed at 0.92 better than 0.72 in the previous trading session. A PCR above 1 is considered bullish while a PCR below 1 is considered bearish.

Following table shows the participant wise action of key players on the index options front.

   

Index Put Options  

Client Type  

Change of OI*  

% Change of OI*  

Nov 08 2021  

Nov 03 2021  

Nov 02 2021  

Client  

2822  

0.88%  

-317435  

-320257  

-318531  

Pro  

3500  

7.03%  

53255  

49755  

53952  

DII  

0  

0.00%  

43014  

43014  

41014  

FII  

2843  

1.30%  

221165  

218322  

225761  

*Change from Previous Day  

   

   

   

   

   

  

   

Index Call Options  

Client Type  

Change of OI*  

% Change of OI*  

Nov 08 2021  

Nov 03 2021  

Nov 02 2021  

Client  

-68154  

-183.51%  

-31015  

37139  

148897  

Pro  

43204  

46.04%  

-50631  

-93835  

-195673  

DII  

0  

0.00%  

401  

401  

401  

FII  

24950  

44.32%  

81245  

56295  

46376  

*Change from Previous Day  

   

   

   

   

   

  

   

Net Change in Open Interest  

Client Type  

Change of OI*  

% Change of OI*  

Nov 08 2021  

Nov 03 2021  

Nov 02 2021  

Client  

-70976  

-19.86%  

286420  

357396  

467428  

Pro  

48870  

31.99%  

-103886  

-152756  

-245428  

DII  

0  

0.00%  

-42613  

-42613  

-42613  

FII  

22107  

13.64%  

-139920  

-162027  

-179385  

*Change from Previous Day  

   

   

   

   

   

  

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Divis Lab’s H2FY22 earnings grew 40% YoY to Rs. 40bn, driven by Custom synthesis and Nutraceuticals segments

by 5paisa Research Team 09/11/2021

Divis Lab’s Q2FY22 growth was majorly driven by Custom synthesis segment and Nutraceuticals segment. The overall revenue growth was a robust 40% YoY to Rs. 20bn in 1HFY22, while for the same time period, Generic API segment suffered by declining to 6.3% YOY to Rs. 16.6bn. Gross margin remained flat at 67.1% YoY, EBITDA margin declined by 180bp to 41.5% YoY, EBITDA rose by 9% YoY to Rs. 8.3bn, PAT grew at 15% YoY to Rs. 6.1bn. 

Exports stood at 88% of sales, of which 72% came from export sales in the US and Europe. Inventory levels are high for both CS and Generics to ensure a seamless supply chain and it has enough capacity to meet the demands of Molnupiravir. 

The backward integration in products for which Divis Lab holds 70% market share has been completed while It is yet to achieve backward integration on new introductions which will be done once they reach a considerable market share. 

In the API segment, no impurities were found in DIVI’s Sartan APIs, Nitrosamine or Azido, hence this should help drive up sales and gain market share. Even though the Generic API segment declined by 6.3% YoY 1HFY22, it is estimated that the revival of the segment will be supported by increase in market share of existing molecules by backward integration and addition of 16 new molecules that are under various development stages. Its strength and scale is estimated to increase 15% revenue CAGR in the Generic API segment to Rs. 47bn over FY21-23E.

On the contrary, which Divis has the one of the best recovery in iodine recovery rates, the pricing is key to remain competitive in media products. The commercialization of these products is expected in the next 1-2 years as it is already working on validation batches.

Divis has successfully built long-lasting relationships with its innovators on the basis of its chemistry and process skills, manufacturing scale from clinical to commercial qualities, and project execution. The supply contract for Molnupiravir API with Merck/MSD proves that DIVI is a favourite of global innovators for critical projects. It also has the requisite chemistry skills to work on any further Antiviral drug, including, the treatment of COVID-19. 

Divis is estimated to achieve 41% CAGR in CS to Rs. 56bn over FY21-23E given its technical leadership and large scale facilities. The company expects the construction of Kakinada to begin as soon as the land is handed over since the legal hurdles are settled. The estimated capex is ~Rs. 10-20bn and will be spread over the next 2-3 years. DIVI has already incurred capex worth ~Rs. 25bn since FY18. At present, the WIP capex stands at Rs. 4.3bn, which will be completed in FY22 and in the second half, an additional INR3b expected to be spent.
 

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IndusInd Bank shares tank on whistleblower complaint, the bank clarifies the allegations and justifies strong governance structure.

by 5paisa Research Team 09/11/2021

In the concall hosted by Mr Sumant Kathpalia, MD & CEO of IndusInd Bank, stated that the recent allegations against the bank regarding the evergreening of loans in its MFI subsidiary (Bharat Financial Inclusion Limited – BFIL) and the disbursements of loans without customer consent were baseless and inaccurate. He further clarified that chaos of the disbursements to ~84k accounts without customer consent happened due to a technical glitch. However, only 26k clients (of the total) were active, with a loan outstanding of Rs. 340m which is 0.12% of MFI loans. He also clarified that the company has provisions against the portfolio.

He also disposed of media articles circulating other allegations of top-level executives resigning from their posts. Mr. Rao, Non-Executive Chairman of BFIL who resigned in September this year, continues to work as an advisor with the IIB. The company supported their argument by mentioning their strong governance structure and risk framework remain strong; it has strengthened these over the years through strict supervision.

The management has maintained its loan growth and credit cost guidance as given during the 2QFY22 results. It expects loan growth to be 16–18%, and CASA ratio in excess of 40% by FY23E. CASA deposits (of the total deposits) is estimated to grow at 14.6% to Rs. 1227.4bn for FY22E. The credit cost of 160–190bp with an additional 50bp for Vodafone, the total credit cost guidance stands at 240bp. 

In Q2FY22, the MFI book for IIB stood at Rs. 281bn, which is, ~12.7% of loans, CAGR for past two years stood at 22%, NPAs in the MFI book stood at Rs. 9.05bn, which is, 3% of MFI loans, while the restructured book stood at Rs. 9.07bn, which is, 3.2% of MFI loans, with ~55% of customers completing at least three loan cycles. The PAT is estimated to grow to 69.5% to Rs. 48.1bn, NII to grow to 13.4% to Rs. 153.3bn and deposits to grow at 16% to Rs. 2972bn for FY22E.

Overall, the bank expects credit costs to range at 6–8% in the MFI business, with growth likely to remain strong. The total SMA book within MFI stood at Rs 50.5bn as of 31st Oct’21. SMA 0-30 dpd stood at INR26b, 30-60 dpd at Rs. 10.6bn, with the balance in 60+ dpd (including NPAs). ECLGS disbursements in MFI loans stood at Rs. 6bn.
The company stated that the business continues to do well with collection efficiency improving to 94.6%, surpassing pre-COVID levels in Oct’21. However, MFI, in Kerala and West Bengal remain lower, while other states are showing healthy trends. 
 

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These mutual fund schemes got the most investor money in Q2. Do you own any?

by 5paisa Research Team 09/11/2021

The Indian mutual fund industry has recorded strong growth in the recent past as stock markets recovered rapidly since the crash in March 2020 and as more and more investors sought to deploy their money in equities instead of relying only on fixed-income products.

In fact, latest data from the industry group Association of Mutual Funds in India (AMFI) show that the value of assets managed by the MF industry has increased almost 35% to Rs 37.41 trillion in September 2021 from Rs 27.74 trillion in September 2020.

Within this, the share of equity-oriented MF schemes has risen to 47.2% of the total industry assets in September 2021 from 40% in September 2020. This indicates an increase in the number of investors in such schemes as also growth in the value of assets held by these schemes.

However, there is a clear divergence in the MF schemes that have grown their assets under management (AUM) and those with smaller AUMs than before. So, which are these schemes?

Mutual funds launched 32 open-ended and 11 close-ended schemes during the three months through September. These include 13 equity schemes, 18 debt schemes, six exchange-traded funds (ETFs) and one hybrid scheme. These schemes mobilised a total of Rs 49,283 crore, AMFI data show.

Overall, equity schemes garnered a total of Rs 39,927 crore during the second quarter of the ongoing fiscal year on a net basis while hybrid schemes mopped up a net amount of Rs 41,774 crore.

A closer look at the data shows the schemes that received the highest inflows. Here are those schemes:

Highest recipient

The rapid rise in the stock markets has prompted some investors to exercise caution. This was evident from the tilt towards hybrid schemes, which invest in both equity and debt.

And it was a fund in this category that received the highest inflows during the quarter. The scheme was SBI Balanced Advantage Fund, which mopped up Rs 14,500 crore during its NFO in August. In fact, the scheme’s AUM crossed Rs 20,000 crore last month as it attracted more investors even after the NFO.

Large-cap funds

The total assets in this category rose to Rs 2.18 lakh crore as of September 30, 2021, from about Rs 1.95 lakh crore three months before, AMFI data show. This segment accounts for nearly 17% of the open-ended equity fund assets.

In this category, Axis Bluechip received the most net inflows—Rs 1,518 crore—in the July-September period. It was followed by Canara Robeco Bluechip Equity and Mirae Asset Large Cap with Rs 1,019 crore and Rs 631 crore, respectively, according to Morningstar data. All three funds are among the top performers in the category.

Flexi-cap funds

This is the second-largest segment among open-ended equity funds, barring ETFs. The total assets in this category rose to Rs 2.15 lakh crore as of September 30, 2021, from about Rs 1.76 lakh crore three months before.

ICICI Prudential Flexi Cap topped the charts in this category by garnering Rs 10,520 crore in its new fund offering.

Nippon India Flexi Cap collected Rs 2,860 crore in its NFO while existing star performer Parag Parikh Flexi Cap mopped up Rs 2,873 crore.

Mid-cap funds

The total AUM of mid-cap schemes climbed to Rs 1.53 lakh crore as of September 2021 from Rs 1.35 lakh crore at the end of June. This is 12% of the open-ended equity MFs.

Kotak Emerging Equity led the segment with net inflows of Rs 922 crore, according to Morningstar data.

Axis Midcap Fund, a favourite of investors, mopped up Rs 879 crore, while star performer PGIM India Midcap Opportunities Fund received Rs 775 crore.

Small-cap funds

The total AUM of this category increased to Rs 98,014 crore at the end of September 2021 from Rs 85,957 crore three months before.

PGIM India Small Cap was the top recipient in this category as it mobilised Rs 910 crore in its NFO.

Axis Small Cap came second with net inflows of Rs 541 crore, followed closely by Kotak Small Cap with net inflows of Rs 513 crore.

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Why do you make irrational financial decisions?

Heading: Why do you make irrational financial decisions?
by 5paisa Research Team 09/11/2021

Behavioral finance is the study of the effects of psychology on investors while taking financial decisions.

There are many instances where emotion and psychology influence our decisions, causing us to behave in unpredictable ways or contrary to conventional finance theories.

Our day to day lives are full of such behaviours. A common example of such decision making is credit cards vs paper money. For the same amount of payment, more pain is experienced when one has to shell out cash. Another example of irrational financial behaviour is buying lottery tickets with a one in a million chance of winning. Behavioural finance seeks to combine behavioural and cognitive psychological theories with conventional economics and finance to provide explanations as to why people make irrational financial decisions.

Following are the finance behavioural concepts:

Herd behaviour: When sheep herd, they move together at the same time. Usually, one or two leaders start, then momentum builds as more and more join until a large group is formed, all heading in the same direction. A similar idea holds true when investors follow the herd. The investors follow others rushing to buy or sell shares, debts, or any other investment. However, simply going with the herd is not likely to be a well-thought investment strategy as the followers can end up paying the price.

Anchoring: When formulating a financial decision or prediction, you have to start somewhere. The initial price or the number you pick turns out to have an enormous influence on your financial conclusion. For example, we walk into a car lot and note the sticker price, and we use that number as our starting point for negotiations. We know that we can buy the car for that amount, and we start the process of seeking a better price.

Mental accounting: Mental accounting refers to the tendency for people to separate accounts based on a variety of subjective criteria, like the source of the money and intent for each account. According to the theory, individuals assign different functions to each asset group, which has an often irrational effect on their consumption decisions and other behaviours.

Gambler’s fallacy: In the gambler’s fallacy, an individual erroneously believes that the onset of certain random events is less likely to happen, following an event or a series of events. This line of thinking is incorrect because past events do not change the probability that certain events will occur in the future. For instance, consider a series of coin flips that have landed with the ‘heads’ side up. Under the gambler’s fallacy, a person might predict that the next coin flip is more likely to land with the ‘tails’ side up.

Prospect theory: According to the theory, an average individual is more loss-sensitive. Losses have more emotional impact than an equivalent amount of gains. For instance, if you are gaining Rs 50 or Rs 100 and losing Rs 50, then both should have the same utility as in both cases, the net gain is Rs 50. However, despite the fact that you still end up with Rs 50 gain, in either case, most people view a single gain of Rs 50 as more favourable than gaining Rs 100 and losing Rs 50.

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