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Technical analysis: BSE Limited gives an ascending triangle breakout

Technical analysis: BSE Limited gives an ascending triangle breakout
by 5paisa Research Team 22/11/2021

BSE Limited on weekly charts gave ascending triangle breakout. Read on to find out more.

Post its listing in the last week of January 2017, BSE limited was in a bear run for almost three years. It was in the month of March 2020, when it made its all-time low of 256.45. In July 2020, the stock gave a long-term trendline breakout and also pulled back to take support on its long-term trendline in August 2020. This was followed by a good rally of higher tops and higher bottoms. During this rally, BSE Limited gave a lot of opportunities for market participants to make an entry.

Having said that, those who have missed all the previous opportunities to enter the stock can cheer now. This is because the stock is showing signs of one more such opportunity. On the weekly charts, the stock is depicting ascending triangle chart pattern. Moreover, the stock has already completed its pullback journey on lower timeframes such as 5-minutes and 15-minutes. However, is presently moving in a range-bound fashion between 1,575 to 1,640 levels on lower time frames.

An ascending triangle is a continuation bullish chart pattern. It is formed when the price moves in a somewhat horizontal line by connecting with the swing highs, and an ascending trendline connecting the swing lows. These two lines form a triangle like pattern, which is rising in nature. Breakout from this chart pattern, suggests the continuation of the bullish move.

The Relative Strength Index (RSI) witnessed a divergence when compared with the price action. Moreover, it is presently trading in an overbought region. The RSI on weekly charts is presently trading at 77.26 which is above its 9-Day Exponential Moving Average (EMA) of 74.44. MACD (Moving Average Convergence Divergence) is still trading above its signal line in positive territory. Bollinger Bands, on the other hand, is signalling a minor pullback that already has been initiated. To give you an idea, on weekly basis, the price is still trading above the upper band of the Bollinger band.

At the time of writing the price was trading at 1,543.65.

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Paytm gets big bear hug again. What are brokerages saying?

by 5paisa Research Team 22/11/2021

Paytm chief Vijay Shekhar Sharma might have envisioned a dream debut at the bourses, as his digital payments and financial services company listed on India’s stock exchanges on Friday. 

But what followed was a horrific anti-climax, at least from Sharma’s and Paytm’s standpoint. The stock plunged 27% on Friday from its issue price of Rs 2,150 per share, and closed the first day of trade at Rs 1,564 apiece.

In the wake, it wiped Rs 35,000 crore off investor wealth in the space of a few hours. 

Paytm's big bust?

Paytm had mopped up Rs 18,300 crore in India’s biggest initial public offering (IPO) till date. But the bears, it appears, are not yet done hammering the stock down. 

On Monday, its second day of trading, the bludgeoned scrip fell another 18.7% in intra-day trading to Rs 1,271 apiece before paring the losses to climb above Rs 1,300.

What went so horribly wrong?

If news reports and the general commentary around the listing are anything to go by, Paytm’s was a classic case of valuation over-reach. Essentially, Sharma and Paytm wanted a blockbuster listing that would surpass that of the state-owned Coal India Ltd, which was India’s single-biggest IPO earlier. 

But while Paytm and its bankers, the likes of Morgan Stanley and Goldman Sachs, talked up the IPO and sought to build a sense of euphoria around it, brokerages and analysts were not convinced about a loss-making company, which is unlikely to turn the corner for several more years, commanding such steep premiums. 

Macquarie

International brokerage house Macquarie, for instance, gave an underperform rating, and said that Paytm’s parent One97 was a cash guzzler, and lacked focus. Macquarie gave its investors a target price of Rs 1,200 a share. 

“Dabbling in multiple business lines inhibits Paytm from being a category leader in any business except wallets, which are becoming inconsequential with the meteoric rise in UPI payments. Competition and regulation will drive down unit economics and/or growth prospects in the medium term in our view,” Macquarie said in a note.

“Therefore, [we] question its ability to achieve scale with profitability. We value the stock using a 0.5 times PSG multiple on December 2023 annualised sales to arrive at our target price of Rs 1,200, implying 44% downside. The key game changer could be an ability to monetise UPI, which could completely swing the investment case. A 10bp fee on UPI provides a fair value of Rs 2,900-3,300 based on PSG/DCF,” it added.

Prabhudas Lilladher

Macquarie isn’t the only brokerage to talk the newly listed stock down. “Paytm share prices will remain subdued in the short to medium term as IPO investors will try to exit the stock at every possible rise, and new investors won't touch it till sentiment changes,” said Piyush Nagda, head of investment product at Prabhudas Lilladher.

“It's difficult to give a fair value for any loss-making company, but at around Rs 1,250-1,300 levels, Paytm could witness some buying interest from institutions and family offices in their long-only portfolios as an allocation towards digital and fintech theme in a fast-growing market like India.”

Ansid Capital

“I would not even be comfortable at less than 50% discount to the current price because I do not see a path to Paytm's market domination and the kind of dreams that are being propelled,” Anurag Singh, managing partner at Ansid Capital, told ET Now. “History tells us that at 45 times sales, it is very hard to make money from this point."

Corporate governance issues?

A report in The Economic Times said that some analysts had raised questions on a host of resignations at Paytm, leading up to the IPO. 

“Paytm does not have a single mature segment (with leadership having a stable revenue model),” the report cited a leading wealth management firm, as saying in a note to clients.

“Vijay Shekhar Sharma has seeded too many business segments chasing the chimera of the walled garden without building a capable team to scale up anyone into a stable revenue model," the report added. 

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Bharti Airtel surges after announcing tariff rate hike

Bharti Airtel surges after announcing tariff rate hike
by 5paisa Research Team 22/11/2021

The revised tariffs shall enable the company to provide a reasonable return on capital, and enable it to procure investments required in networks and spectrum.

Bharti Airtel Ltd, an Indian multinational telecom service provider, announced a revision in its prepaid tariffs today. The revised tariffs, which shall come into effect from 26 November, would provide customers with additional benefits, albeit with a price increase.

While providing an explanation for this increase, the company said that it has always maintained its stance that the mobile Average Revenue Per User (ARPU) needs to be at Rs 200 and ultimately at Rs 300. The reason is that at this ARPU, the company can generate a reasonable return on capital, and subsequently lead to a financially healthy business model.

Moreover, the company believes that this level of ARPU will enable the substantial investments required in networks and spectrum. Most importantly, it will provide the company with the elbow room to roll out 5G in India.

Earlier this month, the company had announced a collaboration with Oracle to cater to the rising demand for cloud services in India. As a part of this collaboration, Airtel announced to offer Oracle Cloud solution to its customers.

Let’s take a look at the company’s performance in Q2FY22:

In the recent quarter Q2FY22, on a consolidated basis, Bharti Airtel’s net revenue went up by 13% YoY to Rs 28,326.4 crore. The PBIDT (ex OI) grew 24.76% YoY to Rs 13,810.5 crore, while its corresponding margin expanded by 458 bps to 48.75%. The net profit came in at Rs 1399.3 crore, as against a net loss of Rs 367.6 crore in the corresponding quarter last year. The PAT margin during the quarter stood at 4.94%. 

Reacting to the revised tariffs announcement, at 1.16 pm, the share price of Bharti Airtel Ltd stood at Rs 735.65, which was an increase of 3% from the previous week’s closing price of Rs 714.2 on BSE.

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Manish Chokhani – An expert who sees young India driving the growth

Manish Chokhani – An expert who sees young India driving the growth
by 5paisa Research Team 22/11/2021

Chokhani is one of India’s most respected financial advisors.

Manish Chokhani was the CEO of Enam Securities, India’s leading investment bank that was the trusted “house banker” to several leading corporates. In 2011 he led the merger of Enam Securities with Axis Bank to create Axis Capital, which continues to lead the league tables in India. He has also helped to devise and implement the India investment strategies of several funds including the India Capital Fund, ZA Capital Fund and TPG Growth India (as Chairman).  

Chokhani is currently a Senior Advisor to TPG Capital. He also serves on the boards of the publicly listed Zee Entertainment, Westlife Developers (McDonald's) and Shoppers Stop as well as on the Governing body of Flame University. He is one of the youngest MBAs to have graduated from the London Business School and a Chartered Accountant.

A seasoned finance professional, Chokhani saw a travesty in March 2020 meltdown. He was encouraging investors to grab the A-listers, at discounted prices. Chokhani maintained that trustworthy and good companies would stand to gain as the economic cycle recovers. And as foreseen by him and many other market pundits, the economic cycle did pick up, in a way that defied all expectations and assumptions. And today look at the recent corrections.

Words of wisdom from the expert Manish Chokhani?

He feels that India is in unprecedented times where drivers for growth are coming from all corners - the new age young retail investor’s enthusiastic participation, the disinvestment by the Government and the Birth of Unicorns (in the likes of NYKAA, PAYTM, ZOMATO), and the traction in the corporates. He is optimistic about India’s Growth story going forward. According to him, the markets have paused for a breath and would continue their onward journey to a full economic cycle. Multibaggers are there to stay and there to evolve.

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Sankaran Naren - Torchbearer of successful mutual fund schemes

Sankaran Naren - Torchbearer of successful mutual fund schemes
by 5paisa Research Team 22/11/2021

Sankaran Naren is India’s leading Mutual Fund and Capital Market Investment Guru, is an advocate of Value Investing and Contrarian Style.

The rich experience of Sankaran Naren in the industry and his reputation precedes him. Sankaran Naren is the executive director and chief investment officer at ICICI Prudential Mutual Fund. He has a diverse set of experience in all spectrums of the financial service industry ranging from investment banking, fund management, equity research and stock broking operations.

Naren oversees investment functions across ICICI Prudential Mutual Fund and International Advisory Business. He has been instrumental in the overall investment strategy development and execution at the company. With an experience of 26 years and currently managing an AUM of Rs 1,09,099 crore across 38 schemes, he has been a pillar of strength for ICICI Prudential Mutual Fund. His views on macro and markets feature prominently across media, both locally and globally.

An alumnus of IIT Madras and IIM Kolkata, he has served various roles in the financial services industry and investment management. Through the course of a long career, he has worked with organizations such as Refco Sify Securities India Pvt Ltd, HDFC Securities Ltd, and Yoha Securities. He is also a member of the Committee on Equity Matter at AMFI.

Sankaran has to his credit some of the most successful flagship schemes at ICIC Prudential Mutual Fund which has compounded investors wealth over years. ICICI Prudential Multi Asset Fund, ICICI Prudential Small Cap Fund, ICICI Prudential Large & Mid Cap Fund, ICICI Prudential Value Discovery Fund are a few of the top-rated funds under Naren.

“We believe, by and large, in reversion to mean. We believe, over a period of time, a sector doing very badly will do better and a sector doing very well will do very badly, ” says Naren.

Naren self professes to be wary of the bull market where market frenzy is fuelled by greed and irrationality. His advice is to watch out for the neglected sectors, stocks that have escaped the eyes of the market participants, to invest well in time only to cash out once the sector catches the market frenzy.

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Meet the experienced stock market guru - Prashant Khemka

Meet the experienced stock market guru - Prashant Khemka
by 5paisa Research Team 22/11/2021

25 years of experience and a strong fundamental screening has made this portfolio manager outperform the market.

Investment Philosophy of Prakash Khemka

Prashant Khemka’s screening process steers clear of businesses with weak characteristics such as poor corporate governance, weak incremental returns on capital and those that face obsolescence risk arising out of technological developments.

Prashant founded White Oak Capital Management in June 2017. He is the former CIO and lead portfolio manager of GS India Equity at Goldman Sachs Asset Management (GSAM) from March 2007 to March 2017, and also for the Global Emerging Markets (GEM) Equity from June 2013 to March 2017. As lead PM, he managed all mutual funds and separate accounts under these strategies.

Currently, under his leadership, two portfolios are managed in White Oak Capital Management PMS.

1. White Oak India Top 200 PMS

The objective of the strategy is to achieve long term capital appreciation by primarily investing in top 200 ‘listed securities’ by market capitalization in India.

The 6-month return is 22.8% which has outperformed the index (S&P BSE 200 TR) with 83bps.

The top 3 Contributors to alpha are Coforge, Persistent systems, Bajaj Finserv and the top 3 detractors are Indigo paints, Nestle India, HDFC Bank between January 22, 2021, to September 30, 2021.

2. White Oak India Pioneers Equity Portfolio

The objective of the strategy is to achieve long term capital appreciation by primarily investing in top 200 ‘listed securities’ by market capitalization in India.

The 2-year CAGR return is 36.1% which has outperformed the index (S&P BSE 500 TR) with 746bps.

The top 3 Contributors to alpha are Coforge, Navin Fluorine International, Abbott India and the top 3 detractors are Delta Corp, Infosys, Axis Bank between April 9, 2019to September 30, 2021.

The alpha skills of the celebrated Fund manager are as under - Two crucial steps in stock selection

1. Disciplined Research Process

Intensive fundamental research to assess business attributes, and valuation derived from proprietary OpcoFinco™ framework. The structured screening process to assess the governance-DNA of a company is a starting point of the research process. Build a 360-degree perspective on any business through an extensive schedule of plant visits, meetings with company management, competitors, suppliers, customers and other trade participants.   

2. Balanced Portfolio Construction

Ensure alpha generation is a function of stock selection through a balanced portfolio of companies. Invest in businesses and consciously avoid market timing, sector rotation or other top-down macro bets. Understand, monitor, and aim to contain residual factor risks that are the by-product of stock selection.

  

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