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Stock in Focus: Can TCS spring back from current levels?

Stock in Focus: Can TCS spring back from current levels?
by 5paisa Research Team 26/10/2021

Since mid-September, TCS has been rolling down by almost 14%. However, it is presently trading near its support. So, can TCS bounce back from here? Let’s find out.

The Q2 FY22 earnings reported by Tata Consultancy Services Ltd (TCS) is quite encouraging. On October 8, 2021, TCS reported a net profit of Rs 9,624 crore for the quarter ended September 30, 2021, on a consolidated basis as compared to Rs 7,475 crore in the same quarter year ago. This is an increase of near about 29%.

In Q1 FY22, this IT heavyweight posted a net profit of Rs 9,008 crore. This means that on a sequential basis, the net profit jumped almost 7%. The revenue from operations of TCS boosted to Rs 46,867 crore in the recent quarter as against Rs 40,135 crore in Q2 FY21. This shows 17% growth, while the revenue growth in constant currency was around 15% over the same quarter last year. Moreover, the board has also approved a second interim dividend of Rs 7.

That being said, the market felt nothing exciting about it as it failed to close above the resistance level of 3,990 and continued moving downward. There is good support placed at 3,403 levels as it also acts as an important Fibonacci level of 23.6%. However, the stock fails to hold on to this level, the further fall can be expected around 3,130 to 3,050 levels. However, in the upward direction, two major resistances would be placed at 3,707, 3,945 and 3,990 levels.

Let’s understand how technical indicators look for this stock.

Starting off with Relative Strength Index (RSI), on weekly basis, it is taking support at current levels of 51. However, it is trading almost 10 points below its 20-Week Exponential Moving Average (EMA). Moving Average Convergence Divergence (MACD) though in positive territory, is showing negative crossover on weekly basis.

Hence, as of now, it would make sense to stay put and watch out for important support and resistance levels to take appropriate decisions. At the time of writing, TCS was trading at 3,480 levels.

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Despite solid Q2 revenue growth Asian Paints fails to make profit

Despite solid Q2 revenue growth Asian Paints fails to make profit
by 5paisa Research Team 26/10/2021

Strong top line is driven by higher sales volume as well as higher value but profitability is significantly impacted due to an increase in input prices.

Margin Pressure

Revenue from operations stood at Rs 6,151 crore with a YoY increase of 36% and a QoQ increase of 28.5%. EBIT stood at Rs 845 crore with a YoY decrease of 22% and a QoQ increase of 4.4%. EBIT margin has affected very badly in Q2 which stood at 13.5%, a decline of 1000bps on a YoY basis.

This happened due to a 6% material inflation, and a 4% additional price inflation increase in Q2. Net profit stood at Rs 618 crore with a YoY decrease of 22% and a QoQ increase of 3.8%. Net profit margin also declined 700 bps on a YoY basis, standing at 17.4%.

Q2 Growth in business segments

“The domestic decorative business continued to move ahead on its high growth trajectory with an unprecedented 34% volume growth in the quarter and a strong compounded growth rate over the last two years. The industrial coatings business also registered a strong double-digit revenue growth led by robust demand for protective coatings and an uptick in the automotive sector," said Amit Syngle, Managing Director and CEO.

Growth drivers of Asian Paints

  1. Supported by strong consumer sentiments coupled with festive season demand.

  1. A good monsoon is a signal for rural demand.

  1. An upturn in housing construction as well as industrial demand.

Asian Paints is India’s leading paint company and ranked among the top ten Decorative coatings companies in the world. Asian Paints along with its subsidiaries have operations in 15 countries across the world with 26 paint manufacturing facilities, servicing consumers in over 60 countries through Asian Paints, Apco Coatings, Asian Paints Berger, Asian Paints Causeway, SCIB Paints, Taubmans and Kadisco Asian Paints. Asian Paints is also present in the Home Improvement and Décor space in India.

At 3.30 pm, the stock was trading at Rs 3,005.00, up Rs 86.95, or 2.98% on NSE.

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Kotak Mahindra Bank Q2 profit falls but ahead of street estimates, NPA shrinks

by 5paisa Research Team 26/10/2021

Billionaire Uday Kotak-led Kotak Mahindra Bank reported better-than-expected results for the quarter ended September 30 while its asset quality also improved.

The private-sector lender reported a standalone net profit of Rs 2,032 crore for the second quarter, down from Rs 2,184 crore in the year-ago period even through earnings grew 24% from the first quarter.

Analysts had expected a double-digit decline in net profit due to higher provisions.

Standalone Net Interest Income (NII) for the second quarter increased to Rs 4,021 crore from Rs 3,897 crore a year earlier.

On a consolidated basis, profit after tax for the July-September was Rs 2,989 crore, a jump of 65% from Rs 1,806 crore for the first quarter and marginally up from Rs 2,947 crore for the corresponding period last year.

The company’s stock price rose nearly 2% after the results were declared.

Kotak Mahindra Bank Q2: Other highlights

1) Gross non-performing assets (GNPA) declined to 3.19% from 3.56% at the end of the first quarter. Analysts had expected GNPA to be closer to 3.5%.

2) Net NPAs declined to 1.06% as against 1.28% as of June 30.

3) COVID-19 provision was maintained at Rs 1,279 crore with no utilization during the first half of the fiscal year.

4) Total provisions (including specific, standard and COVID-19 related) stood at Rs 7,637 crore, or about 100% of GNPA with provision coverage ratio at 67%.

5) Customer assets, which include advances and credit substitutes, increased 17% year-on-year to Rs 256,353 crore.

6) Advances increased 15% to Rs 234,965 crore year-on-year and up from Rs 217,465 crore as of June 30, 2021.

7) Car finance unit Kotak Mahindra Prime’s profit tripled on a sequential basis and almost doubled year-on-year.

8) Life insurance arm contributed to consolidated profit as against a loss in the preceding three months even though it was lower compared to same quarter last year

9) Kotak Securities profit grew over 20% year on year.

Kotak Mahindra Bank commentary

The bank said the pandemic has impacted the lending business, distribution of third-party products, fee income from services or usage of debit and credit cards, and collection efficiency. It has also resulted in an increase in customer defaults and, consequently, an increase in provisions along with decrease of economic activity.

However, it added that the bank didn’t experience any significant disruptions during the pandemic and has considered the impact on carrying value of assets based on the external or internal information available up to the date of approval of the standalone financial results.

The future direct and indirect impact of COVID-19 on the bank, its operations, financial position and cash flows remains uncertain, the lender said, adding that its latest financial results do not include any adjustments that might result from the outcome of this uncertainty.

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RSI: Stocks in overbought and oversold zones

RSI: Stocks in overbought and oversold zones
by 5paisa Research Team 26/10/2021

Relative Strength Index (RSI) is one of the most-used technical indicators. Here we would be listing stocks having RSI in overbought and oversold zones.

Nifty 50 today had a rough start. In fact, in the first half, it shed almost 166 points or 0.91%. However, in the second half, it seems to have recovered and is trading above its todays open. It is facing resistance at the 18,237 level.

That said, in the current market situation it makes more sense to have a stock-specific view. To screen one, there are various factors that you can take into consideration such as market cap, volumes, etc. However, checking the momentum indicator would definitely help you screen stocks. One of the most popular momentum indicators is the Relative Strength Index (RSI).

RSI is an indicator that helps you measure the magnitude of recent price changes to evaluate overbought or oversold situations. RSI is usually displayed as a line graph on a scale of 0 to 100 which moves between two extremes. It is believed that stocks with an RSI of 70 or above suggest overbought or overvalued conditions and probably signal for a trend reversal or correction. On the flip side, an RSI of 30 or below suggests an oversold or undervalued situation.


Here is the list of the top 10 stocks with RSI in overbought and oversold zones. 

Top 10 Stocks with RSI in overbought zone  

Name  

Last Traded Price  

Per cent Change  

RSI  

ICICI Bank Ltd.  

827.4  

-1.7%  

84.09  

Tanla Platforms Ltd.  

1,172.2  

-5.0%  

82.43  

CG Power and Industrial Solutions Ltd.  

148.5  

3.4%  

78.33  

KEC International Ltd.  

522.7  

-0.7%  

78.05  

Indian Bank  

190.0  

1.2%  

77.63  

IRB Infrastructure Developers Ltd.  

270.0  

-3.0%  

77.47  

Federal Bank Ltd.  

102.3  

-0.2%  

75.18  

Century Plyboards (India) Ltd.  

540.1  

-0.7%  

74.61  

IFB Industries Ltd.  

1,278.9  

-1.6%  

73.43  

Shriram Transport Finance Company Ltd.  

1,505.0  

-0.8%  

73.40  

  

Top 10 Stocks with RSI in oversold zone  

Name  

Last Traded Price  

Per cent Change  

RSI  

Just Dial Ltd.  

838.5  

4.40%  

13.41  

Pfizer Ltd.  

4,986.9  

0.20%  

15.25  

Bharat Rasayan Ltd.  

10,284.1  

0.70%  

16.86  

Colgate-Palmolive (India) Ltd.  

1,538.1  

0.40%  

18.2  

Berger Paints (India) Ltd.  

724.2  

0.90%  

20.76  

Mahanagar Gas Ltd.  

990.8  

1.00%  

20.94  

Spandana Sphoorty Financial Ltd.  

518.0  

0.20%  

20.94  

Kaveri Seed Company Ltd.  

523.7  

0.90%  

21.14  

Indraprastha Gas Ltd.  

470.9  

0.50%  

21.36  

Star Cement Ltd.  

99.9  

2.30%  

21.54  

 

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These stocks are likely to be in focus on October 27

These stocks are likely to be in focus on October 27
by 5paisa Research Team 26/10/2021

The equity markets witnessed a strong opening backed by positive gains in global markets following which the domestic indices juggled between gains and losses in Tuesday’s volatile trade.

At the closing bell, the Sensex was up 383.21 points or 0.63% at the 61350.26 level, and the Nifty was up 143 points or 0.79% at the 18268.40 level.

On the sectoral front, all the sectoral indices ended in green with auto, realty, metal, oil & gas indices up 1-3%. BSE Realty Index outperformed the markets by rising 3.4% on an intraday basis. The indices in broader markets, BSE Smallcap index and BSE Midcap index, outperformed the benchmark indices by rising 2.2% and 1.75% each.

Watch out for these stocks on Wednesday, October 27.

Infosys - The company announced that it has been selected by Posten Norge as a strategic partner to digitally transform its IT Service Management function. Through this collaboration, Infosys will establish a best-in-class IT Service Desk and adapt Posten Norge’s IT processes for new-age software delivery methods. The transformation will also involve the implementation of ServiceNow, an industry-leading, next-generation IT Service Management platform.

Kotak Mahindra Bank – The bank announced its quarterly results for Q2FY22 has posted a 7% fall in its standalone net profit at Rs 2,032 crore versus Rs 2,184.5 crore and net interest income (NII) was up 3.2% at Rs 4,020.6 crore versus Rs 3,897.5 crore, YoY. Other income was at Rs 1,812.6 crore versus Rs 1,432.4 crore, YoY. The share of Kotak Mahindra Bank touched a 52-week high of Rs 2,235.50 per share in Tuesday’s trading session.

Stocks locked in the upper circuit – From the BSE 500 index, the stocks of Gujarat Alkalies, IIFL Finance, Tanla Platforms and HFCL have outperformed the benchmark indices. They have gained up to 9.99% and locked in the upper circuit on Tuesday. Keep a watch on these stocks on Wednesday.

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How to save and secure: Insurance-based investments

How to save and secure: Insurance-based investments
by 5paisa Research Team 26/10/2021

There are insurance policies which offer life protection along with the benefit of investments. Here's a look at popular insurance-based investments.

In India, life insurance is a misunderstood concept. Primarily, life insurance plans are designed to secure and protect the dependents life in case of the death of the breadwinner. However, traditionally life insurance policies have been sold as investment products where the life assured gets the lump sum at the end of the fixed term or periodic returns on specified intervals during the term. The prominence has been more on the investment rather than insurance as these investments offer tax benefits u/s80C. The private players in the life insurance sector in India have not only brought in newer concepts like adding riders to the life insurance policies but they also continue to sell insurance with more prominence on investment features.

Let’s look at popular insurance-based investments:

  1. Endowment policy: An endowment policy covers risk for a specified period, at the end of which the sum assured is paid back to the policy-holder, along with the accumulated bonus during the term of the policy. The quantum of bonus is not assured and it is based on the investment outcome of life insurance companies. This is a insurance-cum-investment product. Endowment life insurance pays the sum assured in the policy either at the insured’s death or at a certain age or after a number of years of premium payment.

  1. Whole Insurance Policy: A whole life insurance policy is in force as long as the policyholder is alive. As risk is covered for the entire life of the policyholder, such policies are known as whole life policies. A simple whole insurance policy requires the insurer to pay regular premiums throughout his/her lifetime. Whole life insurance plans with limited payment options are also available where the insured is required to pay premiums for a specified period of the term after which premium payments will stop but life cover will continue.

  1. Money back Policy: Money back policy provides for periodic payments of partial survival benefits during the term of the policy. They differ from endowment policy, in the sense that in endowment policy survival benefits are not payable and only paid at the end of the endowment period. A chief feature of the money-back policies is that in the event of death at any time within the policy term, the death claim comprises full sum assured without deducting any survival benefit amounts, which may have already been paid as money back components.

  1. Unit-Linked Insurance Plans (ULIP): ULIPs are market-linked insurance plans with life cover. The ULIP give more emphasis on investment as a substantial part of the premium goes towards investments in market-linked instruments such as stocks, corporate bonds and government securities. On death, sum assured together market-related returns on the investment are paid – in other words, the death benefit could be more than the sum assured. Generally, the choice of extent of life cover is left to the policy-holder.

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