In the week gone by, markets across the globe continued to remain volatile on factors such as Russia-Ukraine tensions, fears of worse-than-expected tightening by the Fed and sharp rise in Brent crude prices. The number of Americans filing new claims for unemployment benefits fell more than expected last week as COVID-19 infections subsided, suggesting that an anticipated slowdown in job growth in January was likely temporary. Meanwhile, the Federal Reserve has been sending hawkish signals in response to spiralling inflation. Last week Jay Powell, chair, indicated that a first rate rise in March would be all but certain, and he refused to rule out an aggressive sequence of increases to follow. The growth cycle in Europe looks particularly vulnerable because energy prices have gone up so much, which is set to weigh on industrial activity. The Bank of England raised interest rates to 0.5 percent on Thursday and nearly half its policymakers wanted a bigger increase to contain rampant price pressures, which the British central bank warned would push inflation above 7 percent.
Back at home, domestic markets continued to move up as the Union Budget which was announced on 1st Feb is perceived as a booster to the fragile economy, given the lack of populist measures and greater push on infrastructure. Retail investor optimism and DIIs active participation in the market and positive earnings also supported the bulls. In the recent budget a large increase in allocation to roads and bridges from Rs 11,3875 crore in FY22 (revised estimates) to Rs 18,0301 crore in FY23 is a big jump and can have a trickle-down effect on input industries, such as steel and cement, and improve road infrastructure. A higher outlay under the PM Avas Yojana will be beneficial to real estate and related ancillary industries. The announcement of Green bonds will be of great help for PSUs in the shift to sustainability. Higher level of economic activity will enhance the credit growth of the bank. The MSME sector which was the worst hit in the pandemic saw an increased allocation FY23. The focus on boosting manufacturing as well as an underlined emphasis on areas such as startups, modern mobility and clean energy shows the FM has prioritized long-term growth. Global and domestic macro-economic data, trend in global stock markets, the movement of rupee against the dollar and crude oil prices will dictate trend on the bourses in the trading week ahead. Investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) will also be watched.
On the commodity market front, it was a volatile week for commodities in which different counters moved in different direction on different triggers. Bullion is holding above $1,800 an ounce as central banks globally attempt to rein in persistently high inflation, while volatility in equities and simmering geopolitical tensions between Russia and Ukraine are providing support for the haven asset. On MCX, gold and silver are likely to trade in a range of 46800-49200 and 59000- 63000 respectively. Crude and natural gas are already on boil but major fall is expected in near term as supply crunch is on alarming levels. Base metals are likely to see a sideways trend on mix triggers. Balance of Trade of Canada, Westpac Consumer Confidence Index of Australia, RBI Interest Rate Decision, Inflation Rate of Mexico, New Yuan Loans, Core Inflation Rate, Michigan Consumer Sentiment Prel and Inflation Rate of US, Inflation Rate of Germany, GDP of UK etc are some important triggers this week for commodities.
SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and its associate is member of MCX stock Exchange Limited. It is also registered as a Depository Participant with CDSL and NSDL. Its associates merchant banker and Portfolio Manager are registered with SEBI and NBFC registered with RBI. It also has registration with AMFI as a Mutual Fund Distributor.
SMC is a SEBIregistered Research Analyst having registration number INH100001849. SMC or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities market.
SMC or its associates including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company covered by Analyst. SMC or its associates and relatives does not have any material conflict of interest. SMC or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. The subject company has not been a client of SMC during the past twelve months. SMC or its associates has not received any compensation or other benefits from the company covered by analyst or third party in connection with the research report. The Analyst has not served as an officer, director or employee of company covered by Analyst and SMC has not been engaged in market making activity of the company covered by Analyst.
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SAFE HARBOR STATEMENT: Some forward statements on projections, estimates, expectations, outlook etc are included in this update to help investors / analysts get a better comprehension of the Company's prospects and make informed investment decisions. Actual results may, however, differ materially form those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, Impact of competing products and their pricing, product demand and supply constraints. Investors are advised to consult their certified financial advisors before making any investments to meet their financial goals.
Progressive recovery in the cigarettes volume growth and improvement in the hotel occupancy and ARR auger well for the company. Premium product launch and leveraging of technology would drive future revenue growth and higher realization. Thus, it is expected that the stock will see a price target of Rs.282 in 8 to 10 months’ time frame on current P/Exof 20.49x and FY23 EPS of Rs.13.78.
The company is doing well and has stong balance sheet. According to the management of the company, it has taken initiatives to streamline the processes by adopting new technologies in the areas of engineering for its sustainable growth. It is also looking forward for remote operation of some of its power stations. The company continued to remain comfortable by low overall gearing and stable debt coverage metrics. Thus, it is expected that the stock will see a price target of Rs.37 in 8 to 10 months time frame on a one year average P/BVx of 1x and FY23 BVPS of Rs.37.
The stock closed at Rs 893.95 on 04th February, 2022. It made a 52-week low at Rs 562.10 on 19th March, 2021 and a 52-week high of Rs. 902.85 on 04th February, 2022. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 752.84.
Short term, medium term and long term bias are looking positive for the stock as it is trading in higher highs and higher lows on charts. Apart from this, the stock has formed a “Cup and Handel” pattern on weekly charts and has given the breakout of same along with high volumes, has managed to close above the same so follow up buying may continue for coming days. Therefore, one can buy in the range of 885-890 levels for the upside target of 860-980 levels with SL below 840 levels.
The stock closed at Rs 1659.55 on 04th February, 2022. It made a 52-week low of Rs 1051.40 on 12th April, 2021 and a 52-week high of Rs. 1785.80 on 09th November, 2021. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 1495.05.
As we can see on charts that the stock witnessed a healthy correction from all time high levels and 1450 in short span of time. Then after stock has consolidated in narrow range and formed a double bottom on weekly charts with positive bias. Last week, stock has gained by over 7% and conclusively given the consolidation breakout with high volumes so buying momentum may continue for coming days. Therefore, one can buy in the range of 1630-1640 levels for the upside targets 1830-1860 levels with SL below 1530 levels.
Disclaimer : The analyst and its affiliates companies make no representation or warranty in relation to the accuracy, completeness or reliability of the information contained in its research. The analysis contained in the analyst research is based on numerous assumptions. Different assumptions could result in materially different results.
The analyst not any of its affiliated companies not any of their, members, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of the analysis research.
SOURCE: RELIABLE SOFTWARE
Charts by Reliable software
Indian markets ended the week on a positive note as Nifty closed just above 17500 mark after a volatile session throughout the week. The tug of war among bulls and bears kept markets volatile. Bank Nifty however outperformed Nifty and ended the week with gains of more than 2.5%. From the derivative front, call writers were seen adding hefty open interest at 17600 & 17700 mark while marginal put writing was observed at 17500 & 17400 strikes. Implied volatility (IV) of calls closed at 17.78 % while that for put options closed at 18.56. The Nifty VIX for the week closed at 19.16%. PCR OI for the week closed at 1.48. From the technical front, both Nifty & Bank Nifty is still holding well above its long term moving averages on daily charts. However, Bank Nifty charts are looking much promising comparatively as it can be seen trading in a rising channel with formation of higher bottom pattern. For upcoming week, we expect markets to trade in a volatile manner and may consolidate in broader range. Nifty could find support at 17400 - 17250 zone while 17700 & 17800 levels would act as strong hurdle for upcoming week.
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**The highest call open interest acts as resistance and highest put open interest acts as support.
# Price rise with rise in open interest suggests long buildup | Price fall with rise in open interest suggests short buildup
# Price fall with fall in open interest suggests long unwinding | Price rise with fall in open interest suggests short covering
Turmeric futures (Apr) witnessed corrections last week but seen some recovery in the last two session. It is likely to trade higher towards 10500 with support at 9540 levels. The prices are up about 46% y/y on expectation of lower production and good demand. With turmeric harvesting commencing, new turmeric has started to arrive at the regulated markets in the South India. As per market sources, arrivals mostly consisted of the new crop, which was of inferior quality due to high moisture content and demand for turmeric is expected to be muted until the quality of arrivals improves. In the first 8-months (Apr-Nov) of FY 2021/22, exports down 22% to 1,02,126 tonnes Vs last year but higher by 7.2% compared with 5-year average. Jeera futures (Mar) closing higher for the 5th consecutive week to trade at 3-year high levels. It is likely to trade towards 21000 levels on reports of crop damage due to excessive dews in the state of Gujarat and Rajasthan. Unjha market received new arrivals in small quantity and fresh arrivals are expected to increase in coming days. Arrivals at spot markets of Unjha were about 9000 to 10000 bags, and 1000-1200 at Rajkot market. However, export demand little less due to higher price. Currently prices are higher by 46% y/y on reports of drop in area and improving domestic demand. In 2021/22, area under Jeera in Gujarat is only 3.07 lakh ha Vs 4.69 lakh hac last year and according to 2nd advance estimates production expected to fall by 41% to 2.37 lakh tonnes Vs 4.0 lt last year. As per Govt. data, exports of jeera for Apr- Nov down by 20% Y/Y at 1.61 lakh tonnes compared to 2.02 lt last year. Dhaniya futures (Apr) closed higher last week tracking good demand at the physical market. We expect the prices to target higher towards new high of 11000 levels if it breaks 10550 with support at 9980. There are reports that the production may be affected due to unfavorable weather condition coupled with 10-15% lower sowing areas as farmers have shifted to Oilseeds and pulses crop. The harvesting of coriander is about to start in Rajasthan and Madhya Pradesh where there is forecast of wet weather which may affect production and quality of the crop. Currently prices are higher by 58.3% y/y and up 13.4% in Jan 2022 due to lower area and expecting lesser production while the exports are normal due to higher prices. As per govt. data, exports have been down 13% during Apr-Nov period to 32,900 tonnes Vs 37,765 tonnes last year but 10% higher compared to 5-year average.
Gold prices have more or less consolidated around the $1,800 an ounce level since slipping to a 1-1/2-month low last week after the Fed signaled a March interest rate hike to fight inflationary risks. Gold has gained about 0.8% so far this week as a pullback in the dollar lifted the appeal of the greenback-denominated bullion. Benchmark 10-year note yields jumped to 1.838%, its highest in nearly a week after a hawkish rate hike by the Bank of England boosted investors’ expectations towards similar moves by the U.S. central bank. Despite a rebound in a lot of Fed-impacted assets that weakened because of its hawkish stance and the dollar pulling back, gold has not been able to mount a rally, which indicates significant underlying weakness. Gold is once again being hit by the fact that central banks are gradually coming around to the idea that tightening is going to be warranted to get inflation under control. It's clear the central bank is the latest to accept it underestimated inflation problem and markets are now pricing in multiple hikes. Gold is highly sensitive to rising U.S. interest rates, as these increases the opportunity cost of holding non-yielding bullion. Lingering concerns over Russia's invasion of Ukraine have also kept demand for the safehaven metal intact. Signs of more sustained inflation, due to continued supply chain issues, higher commodity prices, or continued upside pressure on wages, could also act as a tailwind for gold this year. Ahead in the week prices likely to witness both side movements where it may take support near 46500 and resistance near 48900. On the other hand silver may trade within the range of 58000-63000.
Oil prices climbed, extending sharp gains in the previous session as frigid weather swept across large swathes of the United States, threatening to further disrupt oil supplies. U.S. West Texas Intermediate crude rose to $90.73 a barrel, having gained to settle above $90 for the first time since Oct. 6, 2014. Both benchmarks are headed for their seventh straight weekly gain. A massive winter storm swept across the central and Northeast United States where it was delivering heavy snow and ice, making travel treacherous if not impossible, knocking out power to thousands and closing schools in several states. Tight oil supplies pushed the six-month market structure for WTI into steep backwardation of $8.08 a barrel on Friday, 7 cents shy of an eight-year high of $8.15 on Nov. 29. Geopolitical tensions in Eastern Europe and the Middle East have also fuelled oil's sharp gains which have pushed Brent futures up by 17% and WTI by 20% so far this year. Ahead in the week prices may continue to trade higher, any dip near support of 6550 may considered as buying opportunity, short term resistance is seen near 7090. Natural gas futures soared as much as 17% in the U.S. as forecasts showed a deep freeze returning in mid-February after this week’s cold blast, intensifying concerns about tight supplies of the heating and power-plant fuel. An arctic blast is making its way through the Plains into Texas this week brining snow, ice, and temperatures as low as -20 Fahrenheit, with the coldest weather expected over the Midwest, according to NatGasWeather.com. Ahead in the week we may continue to witness higher volatility in the counter where it may take support near 350 and resistance near 390.
Base metals may trade with positive as buying appetite may spurt due to opening of Chinese market this week after week-long Lunar new year holiday. Rising geopolitical tensions surrounding Ukraine have fuelled market anxiety about metals supply, driving a market rally recently, as the United States has threatened to hit commodities powerhouse Russia with economic sanctions. Copper may trade in the range 745-770. Copper inventories in LME-approved warehouses at 82,400 tonnes have fallen more than 60% from the 2021 peak scaled in August, with further declines likely. Global copper smelting activity powered to a 13-month peak in January as operations in China ramped up ahead of seasonal construction demand, data from satellite surveillance of copper plants showed. Zinc can move in the range of 290-310. The London-Shanghai arbitrage is moving in favour of exports from China as smelter closures in Europe open up supply-chain gaps and send premiums soaring. Lead can move in the range of 178-188. China exported 95,000 tonnes of refined lead last year, the highest annual total since 2007. There is the potential for more export flows, given continued low LME stocks and persistent high physical premiums. Nickel may trade in the range of 1700-1800. China's imports of refined nickel doubled to 261,000 tonnes with a marked acceleration over the second half of last year. The strengthening demand pull from the electric vehicle sector is also evident from fast-growing imports of nickel sulphate. Aluminum may move towards 252 with support of 238 on persisting supply concern. China's net imports of unwrought primary aluminium reached 1.57 million tonnes and those of unwrought alloy 1.00 million tonnes last year.
Cotton futures (Feb) closed higher for the third consecutive week as demand is outpaced by the supplies. We have witnessed some corrections last week but the prices have recovered well on strong fundamentals. It is likely to trade higher towards 38500 with support at 36950 levels. Current domestic prices are high 75% y/y and jumped about 10% in last one month due to concerns over production, slow arrivals, better domestic and exports demand. Currently, daily cotton arrivals across the country are 1.5 lakh bales compared with two lakh bales during this time of the year. The cotton production estimate reduced by 12.00 lakh bales to 348.13 lakh bales Vs 360.13 lakh bales earlier while domestic consumption increased by 10 lakh bales by CAI. USDA also cut production in India to 27.5 million bales from 28 million bales while in the US - largest exporter, production was cut by 3.61% to 17.6 million bales. Guar seed futures (Mar) is seen consolidating in the range of 6200-6600. Last week we have seen good recovery due to improving physical demand. It is expected to trade higher towards 6700 levels with support at 6225. Higher crude oil prices and increase in rig count in the US is good news for the guargum demand and the prices may support in coming weeks. Currently, prices are up 58% y/y on expectation of weakest production in last 5 years, multi-year lower stocks and improving export demand. In Nov, Guar gum exports are higher by 33% y/y at 24,150 tonnes while exports in 2021/22 (Apr-Nov) are up by 44.4% y/y at 2.09 lakh tonnes. Castor Seed (Mar) closed higher for the second consecutive week and likely to trade higher towards 6750 with support at 6400. Currently castor see higher by 47-48% y/y, as production of castor expected to be lowest in last three years. Gujarat agriculture department’s second advance estimate cut castor seed production by 1 lakh tonnes to 13.02 lt compared 14 lt in the first estimate. Last year production was 13.45 lt. Prices were down in Dec as Castor oil exports during Sep-Nov down by 16% at 1.39 lakh tonnes compared to 1.65 lt last year. Similarly, castor meal exports fall by 16.5% y/y during (Aug-Dec).
GOLD MCX (APR) contract closed at Rs. 47917.00 on 03rd Feb 2022. The contract made its high of Rs. 49790.00 on 16th Nov’2021 and a low of Rs. 45919.00 on 30th Sep’2021. The 18-day Exponential Moving Average of the commodity is currently at Rs 48052.73. On the daily chart, the commodity has Relative Strength Index (14-day) value of 49.768.
One can sell near Rs. 48300 for a target of Rs. 47300 with the stop loss of 48900.
NICKEL MCX (FEB) contract was closed at Rs. 1730.70 on 03rd Feb’2022. The contract made its high of Rs. 1803.00 on 20th Jan’2022 and a low of Rs. 1525.20 on 29th Dec’2021. The 18-day Exponential Moving Average of the commodity is currently at Rs. 1681.87. On the daily chart, the commodity has Relative Strength Index (14-day) value of 65.613.
One can buy near Rs. 1700 for a target of Rs. 1770 with the stop loss of Rs 1665.
CASTOR SEED NCDEX (MAR)contract closed at Rs. 6404.00 on 03rd Feb’2022. The contract made its high of Rs. 6528.00 on 04th Feb’2022 and a low of Rs. 5636.00 on 30th Dec’2021. The 18-day Exponential Moving Average of the commodity is currently at Rs. 6289.66. On the daily chart, the commodity has Relative Strength Index (14-day) value of 66.219.
One can buy near Rs. 6500 for a target of Rs. 6900 with the stop loss of Rs. 6300.
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It was a volatile week for commodities in which different counters moved in different directions on different triggers. On MCX, bullion counter saw minor correction despite fall in dollar index, however the fall was limited. Gold headed for a weekly advance as U.S. equities fell after Meta Platforms Inc. suffered a historic share-price rout, while investors awaited a key jobs report for more clues on the Federal Reserve’s monetary policy path. The Facebook parent plunged 26% Thursday on the back of woeful earnings results, erasing about $251 billion in market value in the biggest one-day wipeout for any U.S. company. Concerns over tightening monetary policy also contributed to the worst slide for American technology shares since 2020. Reflecting investor appetite, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , rose to the highest level since mid-August on Tuesday. WTI crude surged over the $90 level after an Arctic blast made its way to Texas and disrupted some oil production in the Permian Basin. After a month in which oil prices surged 15% and geopolitical tensions seethed around the world, OPEC and its allies took a record-quick 16 minutes to decide that they would stick to their previously planned output increase. Russian energy giant Gazprom said on Tuesday that natural gas exports outside ex-Soviet Union countries, including to China, fell by 41.3% year-on-year in January to 11.4 billion cubic metres (bcm). Natural gas increased 5.16% to 4.996 USD/MMBtu, amid reports that the next couple of weeks could see milder temperatures across most of the US. Meanwhile, news of a cold blast heading to Texas fueled concerns over output, as natural gas wells could freeze again. Copper ticked up on Wednesday as the dollar remained restrained after recently tumbling from a 19-month peak, but the absence of Chinese onshore traders due to the week-long Lunar New Year holiday kept Asian trading range-bound and volumes thin. Chile's constituent assembly approved an early stage proposal that could lead to the nationalization of the country's copper industry, sparking an angry response from mining firms in the world's top producer of the red metal.
Cotton domestic prices are high 75% y/y and jumped about 10% in last one month due to concerns over production, slow arrivals, better domestic and exports demand. Castor was in a range. The prices have recovered in 2022 and currently higher by 47% y/y, as production of castor expected to be lowest in last three years. Guar was marginally down on profit booking from higher levels despite rise in crude prices. Jeera futures (Mar) jumped 4.8% and touched 4- year high on reports of crop damage due to excessive dews in the state of Gujarat and Rajasthan.
Yellow metal is always the prominent choice among the investors to park their money and diversifying their portfolio in troubled times of geopolitical uncertainty, pandemic related environment and global economic slowdown concerns.
Gold demand in India
India's gold consumption is expected to rise further in 2022 after jumping 79% last year as pent-up demand and an improvement in consumer confidence are seen boosting retail jewellery sales, the World Gold Council (WGC) said. Gold consumption in 2022 will likely be 800-850 tonnes versus 797.3 tonnes last year, the highest in six years. In December quarter, gold consumption nearly doubled from a year ago to a record 343.9 tonnes. Indian demand has averaged 769.7 tonnes over the last 10 years.
With the easing of lockdown restrictions from June onwards and continued successful roll out of the vaccination program, India’s economy recovered in H2 2021. This boosted consumer sentiment – particularly in urban India – as reflected in an increase in the Reserve Bank of India’s Consumer Confidence Index, which rose to 62.3 in November 2021. Rural demand was supported by normal monsoon rainfall, although crop loss due to floods in the Southern states of Kerala and Tamil Nadu impacted rural demand to a degree.
The WGC forecast that demand for jewellery, small bars and coins would remain strong in 2022 could limit bullion's decline. WGC also expects central banks to continue buying gold but at a slower pace. Demand in China for the beginning of 2022 could be restrained by increasing COVID-related restrictions and the current economic slowdown. For the rest of the year, slower growth could hamper demand.
Indian Rupee snapped its two weeks losses after dollar globally decline to its lowest level in more than two weeks. The dollar’s fall recorded amid surge in the euro after European Central Bank President Christine Laggard acknowledged that euro zone inflation was higher than expectations, with risks tilted to the upside. However oil prices notably Brent above $90 likely to cap major upside in rupee in coming days. Next week rupee move will be highly driven by RBI policy outcome. Apparently RBI will face a difficult challenge to maintain rate guidance accommodative despite global central bankers are aggressively hiking rates. We think after RBI policy outcome, USDINR may lift higher above 75.00. From the majors, euro shot higher after the hawkish comments in the press conference by ECB President Lagarde, the euro has appreciated to levels above $1.14 and EURINR hit high of 85.70 in this week. Further, Lagarde stated that the ECB came to a unanimous decision about the Euro zone inflation and they will look to reassess rates as new data comes out in March. European bonds yields are all in positive territory for the first time since 2018. While pound reversed its recent losses after Bank of England raised bank rate by 25 bps to 0.50%. Further four BoE members voted for 50 bps rate hike which pushed more positive sentiments in sterling as well as well BoE plans to fully unwind stock of corporate bond purchases gave positive outlook in GBPINR in coming days.
USD/INR (FEB) contract closed at 75.0650 on 03-Feb-21. The contract made its high of 75.2875 on 31-Jan-21 and a low of 74.6200 on 01-Feb-21 (Weekly Basis). The 21-day Exponential Moving Average of the USD/INR is currently at 74.8290.
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 50.42.One can buy at 74.60 for the target of 75.60 with the stop loss of 74.10.
GBP/INR (FEB) contract closed at 101.7050 on 03-Feb-21. The contract made its high of 101.7500 on 03-Feb-21 and a low of 100.4175 on 01-Feb-21 (Weekly Basis). The 21-day Exponential Moving Average of the GBP/INR is currently at 101.1880.
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 61.20. One can sell at 102.00 for a target of 101.00 with the stop loss of 102.50.
| 03rd FEB | European Central Bank keeps interest rates unchanged despite record inflation |
| 03rd FEB | Bank of England hikes rates to fight inflation, but not by enough for 4 officials |
| 03rd FEB | Fed faces choices as challenging as any since the 1970s |
| 02nd FEB | Euro zone inflation hits record 5.1% in January |
| 02nd FEB | Indian stocks suffer worst foreign outflows since global financial crisis |
| 01st FEB | India ramps up spending to reclaim place as fastest-growing economy |
| 01st FEB | UK house prices show strongest start to year since 2005 |
| 01st FEB | WTO chief warns of continued bottlenecks in global supply chains |
| 31th JAN | German and Spanish inflation stays high to increase pressure on ECB |
EUR/INR (FEB) contract closed at 84.6875 on 03-Feb-21. The contract made its high of 84.8625 on 02-Feb-21 and a low of 83.7100 on 31-Jan-21 (Weekly Basis). The 21-day Exponential Moving Average of the EUR/INR is currently at 84.6620.
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 64.04. One can buy at 85.50 for a target of 86.50 with the stop loss of 85.00.
JPY/INR (FEB) contract closed at 65.3825 on 03-Feb-21. The contract made its high of 65.6100 on 02-Feb-21 and a low of 64.8600 on 31-Jan-21 (Weekly Basis). The 21-day Exponential Moving Average of the JPY/INR is currently at 65.2425.
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 48.38. One can sell at 65.50 for a target of 64.50 with the stop loss of 66.00.
(2/5)
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About the Company: Vedant Fashions Limited caters to the Indian celebration wear market with a diverse portfolio of brands. The company offers a one-stop destination with a wide-spectrum of product offerings for every celebratory occasion to its customers. The company's brands include (i) Manyavar, (ii) Mohey, (iii) Mebaz, (iv) Manthan, and (v) Twamev. The company operates its business through franchise-owned exclusive brand outlets (EBOs), with the remaining by multi-brand outlets (MBOs), large format stores (LFSs), and online platforms, including its website (www.manyavar.com) and mobile application. As of September 30, 2021, the company had a retail footprint of 1.2 Mn sq. ft covering 535 EBOs (including 55 shop-in-shops) spanning 212 cities and towns in India, and 11 EBOs overseas across the United States, Canada, and the UAE.
Market leader in the Indian celebration wear market with a diverse portfolio of brands catering to the aspirations of the entire family: According to Crisil Vedant Fashions was the largest company in India in men’s Indian wedding and celebration wear in terms of revenue, EBITDA and PAT in FY20. Its brand Manyavar is a category leader in branded Indian wedding and celebration wear, with all- India operations. It has established a multi-channel network and introduced brands by identifying gaps in the under-served and high-growth Indian wedding and celebration wear category. Its products are at various price points, enabling it to be aspirational and value-for-money to Indian consumers. Its brands comprise a range of attires and accessories, with creations for members of the wedding entourage, besides bride and groom personalisations. The company has a hybrid model of home-grown and acquired brands. It has three distinctive brands in men’s Indian wedding and celebration wear, Manyavar, Twamev and Manthan, each catering to a different segment. It caters to women’s and regional Indian wedding and celebration wear through Mohey and Mebaz respectively.
Large and growing Indian wedding and celebration wear market driven by increased spending: urban agglomerations, there has been an increasing trend of elaborate multi-day and multi-event wedding celebrations. According to CRISIL, the men’s Indian wedding and celebration wear market was estimated to be worth approximately Rs. 133 billion as of Financial Year 2020, and is projected to increase to Rs. 170 billion – Rs. 180 billion by Financial Year 2025. In comparison, the women’s Indian wedding and celebration wear market is significantly larger, estimated to be worth approximately Rs. 735 billion as of Financial Year 2020, and is projected to increase to Rs. 950 billion – to Rs. 1,000 billion by Financial Year 2025.
Differentiated business model, combining strengths of retailing with branded consumer play: The company has an asset-light model. Its EBOs are predominantly operated by franchisees across India. In H1 FY22, ~88% of its sales to customers was generated by EBOs, +7% by MBOs and shop-inshops, ~1% by LFS and ~4% by e-commerce. In H1 FY22 it had over 300 franchisees. In H1 FY22, ~45% of its sales to customers was generated by its franchisee-owned EBOs in tier-1 cities, ~39% from tier-2, ~13% from tier-3 cities and the balance ~3% from its franchisee-owned EBOs internationally. In FY21, over 60% of its franchisee-owned EBOs were flagship stores (based on retail-space size). In H1 FY22, it had 132 flagship stores in 22 states and 53 cities in India and three overseas.
Omni-channel network with the seamless integration of its offline and online channels: The company operates an omni-channel network and engage with its customers through an integrated platform serviced by its online and offline channels. This enables the company to deliver a deeper connect with its customers and deliver a superior customer experience. As of September 30, 2021, it
had a total retail space (across EBOs and shop-in-shops) aggregating to over 1.2 million square feet across 212 cities and towns in India and 8 cities internationally, and a retail footprint of 535 EBOs in India (including 58 shop-in-shops) and 11 EBOs overseas across the United States, Canada and the UAE, which are countries with a large Indian diaspora.
Expansion of footprint within and outside India: It focuses on expanding where demand for its products is increasing, and where it can lever its operations to increase market share. Via its cluster-based expansion strategy, it identified several cities and towns in areas where it already operates and new ones where it plans to establish its first EBOs. It aims to double its national footprint in the next few years to ~2.2m sq ft. It has developed independent growth strategies for each of its brands, and intends to expand the footprint of its Mohey brand (along with its Manyavar brand) by establishing exclusive Mohey brand stores in clusters where it has an established dominant position, increasing the presence of its Twamev brand products through cross-selling at its Manyavar stores, and increasing the penetration of its Manthan and Manyavar brands by increasing sales volumes through the wholesale channel, MBOs, LFSs and online channel. It also intends to further expand the footprint of its Manyavar brand by continuing to open new EBOs in new areas, cities and markets, and expand its international presence in markets with a large Indian diaspora, strong-rooted Indian traditions and high spending power such as the United States, Canada, United Kingdom, the Middle East, South East Asia and Australia.
Enhancement of brand appeal through targeted marketing initiatives: The Company intends to continue to enhance the brand recall of its products through the expansion of its footprint of EBOs as well as the use of targeted marketing initiatives including digital marketing campaigns, email communications, television and social media advertisements, event sponsorships, brand ambassador content, multiplex cinemas and outdoor advertising. It also uses in-store communications and visuals, store facades and store shutters for advertising its brands. For the Financial Years 2019, 2020 and 2021 and the six months ended September 30, 2020 and 2021, its advertisement, publicity and sales promotion expenses were Rs. 66.66 crore, Rs. 69.35 Crore, Rs. 27.21 Crore, Rs. 7.61 Crore and Rs. 11.30 Crore, respectively, or 8.33%, 7.57%, 4.82%, 10.62% and 3.15% of its revenue from operations, respectively.
Significant potential, space for growth of emerging brands: It intends to continue to leverage its in-depth market research, robust technology platform and data analytics to introduce a wider range of products in the market, thereby consolidating its leading position. It has independent growth strategies for its growing brands.
Disciplined approach toward acquisitions: In addition to strengthening and expanding the reach of its existing brands, it aims to acquire other brands opportunistically. It has adopted a strategic approach towards potential acquisitions with the goal to increase customer base, market share and/or product offering as seen from its acquisition of ‘Mebaz’ in financial year 2018, a onestop heritage brand catering to the entire family, with an established presence in the states of Andhra Pradesh and Telangana. The company’s motive behind the acquisition of ‘Mebaz’ in FY18 was to strengthen its leading position in South India (particularly Andhra Pradesh and Telangana) and complement its omni-channel network. Through these acquisitions, it aims to leverage its strong cash position for synergic opportunities and seamlessly integrating acquired brands with its existing brand ecosystems, facilitating an increase in profitability margins and achieving economies of scale.
Risk factor
Risk factor
Considering the P/E valuation on the upper price band of Rs.866, EPS and P/E of estimated annualised FY2022 are Rs.8.11 and 106.79 multiple respectively and at a lower price band of Rs. 824, P/E multiple is 101.61. Looking at the P/B ratio on the upper price band of Rs.866, book value and P/B of estimated annualised FY22 are Rs. 39.46 and 21.94 multiple respectively and at a lower price band of Rs. 824 P/B multiple is 20.88 . No change in pre and post issue EPS and Book Value as the company is not making fresh issue of capital.
Risk factor
Vedant Fashions is leader in Indian celebration wear market. It has key brands like Manyavar, Mebaz, Mohey etc. however the company revenues and margins are on declining mode due to covid pandemic. Moreover, it looks pricey. A long risk taker long term investor may opt the issue.
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Axis Mutual Fund is targeting to collect Rs 100 crore from its new Axis equity ETFs Fund of Fund during the primary subscription period, which opens on February 4 and closes on 18. The open-ended fund of fund scheme will predominantly invest in units of domestic equity ETFs and is looking to collect Rs 100 crore during the subscription period, Raghav Iyengar, chief business officer at the fund house. The fund will track the Nifty 500 stocks and will be managed by Shreyash Devalkar. ETFs are one of the most popular vehicles of investing in passive strategies as they replicate the portfolio of the underlying index while trading in bite-sized units on an exchange at market prices. In the past three years, equity ETFs AUM has increased more than three times.
Navi Mutual Fund has launched the Navi US Total Stock Market Fund of Fund. The fund will invest in Vanguard Total Stock Market ETF, which is one of the largest passively managed US-based ETFs. The Fund’s Expense Ratio will be 0.06% per annum. However, the fund house has said that the expense ratio is not permanent and is subject to change from time to time within the overall permissible expense ratio of 1.00%. The NFO will open for subscription on February 4 and will close on Feb 18. This is the third passively-managed scheme launched by Navi Mutual Fund this year. It launched the Navi Nifty Next 50 Index Fund and Navi Nifty Bank Index Fund in January, both of which are low cost index funds. The fund house plans to launch three more funds by the end of March.
Shriram Asset Management Company (AMC) announced that it has approved a strategic investment by Mission1 Investments which, upon completion of the transaction, will hold a 23% stake in the company. Shriram AMC, which is part of the Shriram group, said that the move to bring in Mission1 as an investor is part of the Group’s strategy to energize all the businesses in its portfolio. The company said the partnership sharpens Shriram Group’s focus and attention towards building an investment solutions platform that empowers both retail and institutional customers.
DSP Mutual Fund said it has stopped accepting inflows into its six schemes with international mandate. The six schemes are -- DSP US Flexible Equity Fund, DSP Global Allocation Fund, DSP World Gold Fund, DSP World Mining Fund, DSP World Agriculture Fund and DSP World Energy Fund. The move comes after markets regulator Sebi directed mutual fund houses to stop taking fresh subscriptions in schemes investing in overseas stocks. The directive to stop subscription is mainly on account of the mutual fund industry crossing the mandated limit of USD 7 billion for overseas investments. Accordingly, temporarily, all purchase, switch-in, new SIP/ STP/ DTP registration requests in the six schemes of DSP Mutual Fund will not be accepted effective February 2, 2022, (post-cut-off on February 1, 2022), it added.
BSE StAR MF, a regulated Exchange-based online Mutual Funds Distribution platform, has processed a record 1.87 crore transaction worth Rs. 37,397 crore on January 22. The former highest monthly transaction was 1.73 crore was achieved in December 2021. On 10 January 2022, BSE StAR MF processed 26.65 lakh transactions outdoing its previous best single-day record of 26.52 lakh transactions (on 8th November 2021). The platform also achieved its highest ever new SIPs of 13.19 lakh registered in a month in Jan’22 as compared to previous highest of 9.71 lakh in Sep’21. Overall, the platform achieved 157% of the transaction within 10 months which is 14.69 crore. during FY 21-22(Apr – Jan) as compared to 9.38 crore. transactions during FY 20-21. The new SIP registrations for the month of January stood at Rs 13.19 lakh new SIPs amounting to Rs. 307 crore. The platform had registered 9.17 lakh new SIPs amounting to Rs. 212 crore in December, 2021.
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