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.
The views expressed are based solely on information available publicly available/internal data/ other reliable sources believed to be true.
SMC does not represent/ provide any warranty express or implied to the accuracy, contents or views expressed herein and investors are advised to independently evaluate the market conditions/risks involved before making any investment decision.
DISCLAIMER: This report is for informational purpose only and contains information, opinion, material obtained from reliable sources and every effort has been made to avoid errors and omissions and is not to be construed as an advice or an offer to act on views expressed therein or an offer to buy and/or sell any securities or related financial instruments, SMC, its employees and its group companies shall not be responsible and/or liable to anyone for any direct or consequential use of the contents thereof. Reproduction of the contents of this report in any form or by any means without prior written permission of the SMC is prohibited. Please note that we and our affiliates, officers, directors and employees, including person involved in the preparation or issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) may trade in this securities in ways different from those discussed in this report or (c) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instrument of the company (ies) discussed herein or may perform or seek to perform investment banking services for such Company (ies) or act as advisor or lender / borrower to such company (ies) or have other potential conflict of interest with respect of any recommendation and related information and opinions, All disputes shall be subject to the exclusive jurisdiction or Delhi High Court.
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.
Dear Readers,
I take this occasion to thank each of you for being an earnest part of Wise Money. Without the support of our excellent editorial team, it would never have been this big. It is for your enthusiasm, support and dedication that have brought us to this height. Wise Money shall ever remain indebted to the contributions of Insurance team, brand team and Mutual fund Distribution team. I am also grateful to our readers who have firm faith on us. Their feedbacks have pushed us to go ahead and improve vigorously. Our success lies in the admiration that we have received from our esteemed readers.
Over the years, our endeavour remained to guide our readers through different phases of the markets. Beginning from sub-prime real estate boom and bust, Lehman brothers collapse, Europe’s debt crisis, Brexit, Covid crash, Global fund flows – Stimulus packages and inflation and rise of U.S. yields to name a few.
Since last year, when U.S. Federal Reserve changed its policy stance citing inflation as a risk we have been guiding our readers to clearly steer away from growth stocks and realign their investments towards value. With steep rise in inflation globally together with Russia invasion in Ukraine, the year passed by saw steep rise in commodity prices and cost of money. Largely the recommendations were made from sectors like Industrials, Defence, Public Sector banks, Automobile & Ancillaries, utilities, etc. thereby guiding few of the pockets of the whole market where money was made thereby outperforming the miniscule return clocked in by broader indices.
In the current fiscal, it is expected that cost of money is likely to remain higher till late calendar year 2023 globally as central banks have raised interest rates to curb inflation that are on decadal highs and likely to weigh on global growth. The Consumer Price Index in U.S. climbed 0.1% last month aer advancing 0.4% in February, with a decline in gasoline prices but recently crude prices have sharply moved up aer sudden production cut announced by OPEC is likely to play a spoilsport. As of now the odds of another 25 bps hike are higher by U.S. Federal Reserve.
In the last few months, a lot of U.S. companies especially from technology sector have echoed that in order to restore their margins they would resort to layoffs together with cut in discretionary spending. Recent turmoil in the regional U.S. banks and lower bank deposit rates has led funds moving to treasuries. Tight liquidity conditions together with high interest rates and slowing growth means that loan growth is likely to be lower in the current year.
Indian stock markets have in the last few months have underperformed global and Asian markets leading to moderation in valuations. Though there is some more room for valuations to normalise because of the reasons discussed above but macros and structural story appears to be strong in comparison to other major economies. Higher tax collections, focus on infrastructure by the government, strong reforms and India being as one of the favored destination for China +1 theme is likely to place capital goods and infra stocks on a firmer footing. Themes that are closely related to Indian economy are expected to play out well in the current fiscal amid early signs of revival in the capex cycle led by higher public capital expenditure and the crowding in of private investments.
At the same time, it is also expected that large banks especially private ones are likely to post good growth on the back of lower cost of funds and competition. Another theme that is expected to do well looks to be utilities. As a maer of fact, industrial and commercial activity account for more than half of India's annual power use. Homes account for a fourth, while agriculture has accounted for over a sixth in the recent years. We expect power demand to rise by at least 6 percent compared to last fiscal as industries are working close to capacity utilisation and people are moving to bigger homes. Another catalyst that may ignite power demand is expectations of harsh summer this year. Additional beneficiary of investment in infrastructure is hotels and tourism sector. Sustained travel has surged post pandemic, bunched up weddings and normalisation of international travel and overall higher demand in contrast to supply continues to bode well for hoteliers in terms of continued surge in capacity utilisation and average room rent. Investment by foreign porolio investors (FPIs) and Domestic institutional investors (DIIs) will be monitored. Going forward, top-down macro factors would be one of the focus areas for investors. With global macro uncertainties pertaining to growth and inflation, it is expected that market will continue to remain volatile in the near term but in long term, market will move northwards riding on India’s strong macroeconomic variables.
On the commodity market front, notable price fluctuations have been observed in both the US Dollar Index and the CRB Index. The US Dollar Index has experienced a significant decline in value, dropping from a high of 114 to its current level of 101.50. Meanwhile, during the same time period, the CRB Index remained relatively stable, trading within the range of 278-308 levels. The current market conditions suggest a bullish trend for precious metals, with gold and silver prices showing significant gains. This trend can be aributed to factors such as global growth uncertainty, geopolitical tensions, inflation concerns and a weaker US dollar. However, it is worth noting that there is still a possibility of volatility in the metals market, as price movements may be influenced by a range of factors such as fluctuations in demand and supply, as well as the overall state of the global economy. Meanwhile, the crude oil market has been experiencing tight supply conditions due to continuous production cuts by OPEC+, which has led to an increase in crude oil prices. Economic factors and policy decisions are contributing to the upward trend in precious metals, while the recent unexpected action surprise move by the OPEC+ is expected to support crude prices and eye towards $90/$95 with support of $76. The current trend suggests that precious metals and crude oil may continue to perform well in the short term, with potential risks of volatility and correction in the long term. Investors need to stay well-informed of market developments and maintain a diversified porolio to mitigate risks.
I wish you all stay healthy and safe. Happy Invesing!!!
What is your outlook on Indian economy and Indian stock market?
IMF has rightly said India will continue to remain bright spot. At present situation India is better positioned to navigate global headwinds than other major emerging economies. Europe is facing problem and the US is grappling with decades-high inflation. Like many developing economies, India is also confronting inflation following a surge in global food and fuel prices after Russia's invasion of Ukraine earlier this year but Institutions like IMF have confidence that we are the bright spot in the world even at 6-7% growth. Actually, policy reforms and prudent regulatory measures have played an important role in developing resilience in the economy. It is expected that with GST & Direct Tax collection, ample forex reserves and available policy space, along with prudent macroeconomic management, India will continue to grow. At this Juncture, we need to understand that some of the initiatives are structural in nature, like land and labour reforms, and they may take some time to bear results. However other initiatives such as being competitive in tax rates and the Production Linked Incentive (PLI) Scheme rolled out to attract companies, have already started bearing results. The “China + 1” strategy, in which companies avoid investing solely in China and diversify their businesses towards other countries, is also helping India as the country offers cheap and skilled labour. In another development, it could be seen that India has been receiving healthy foreign direct investment (FDI) as well as Foreign Portfolio Investment. Going forward, India is hopeful of further increase in FDI and FPI inflows in the coming months despite global headwinds as the fundamentals of the Indian economy is strong as compared to other emerging economies. To note, India has overtaken the UK to become the fifth largest economy and there is also expectation that India will become the third largest in the next ten years if the policy stance and focus on growth stays on track. Thus, this is a long runway of growth and it provides healthy prospects for the Indian stock market.
Your advice to retail investors in the current market situation?
Persistent selling by Foreign Institutional Investors (FIIs) at home, fears of high inflation impacting profit margins of the companies across the globe and rich valuations at home that markets were commanding are some of the reasons that markets witnessed sharp volatility. Besides, markets across the globe are reeling under banking tensions. Actually, Investors’ fears over banking crisis increased after Credit Suisse’s biggest shareholder Saudi National Bank refused to raise stake beyond 10%, citing regulatory issues. So, at this juncture, I would like to advice retail investors to remain informed with each and every development in the markets. Trying to time the market is extremely difficult. One solution is to maintain a long-term horizon and ignore the short-term fluctuations. At the same time we need to understand that short term correction is a big time opportunity for long term investors because it helps positional investors to buy quality stocks at highly discounted levels. Also point to remember is that a long term investor should stick with its conviction and need not have to worry about short term sentiments like inflation, FII selling, geopolitical tension etc. Adopting an equal-weighted and cost-averaging method of investing in equities can not only protect your invested capital but also help in generating sizeable returns by taking advantage of periods when prices are depressed. A combination of both approaches can help build a portfolio that can weather all market scenarios with the potential for higher returns. Continue to do homework and invest in the market in a staggered manner.
SMC is visionary and always on expansion mode? Please walk through us.
Yes, you have rightly said SMC is visionary. Every successful company thrives on the power of teamwork. Teamwork is the ability to work together toward a common vision. We have expanded ourselves across Pan India and have opened new branches in Tier II and Tier III metropolises adding AP networks. Recently we have added new branches in Vizag, Guntur, Vijayawada, Karnal, Kota and Rohtak. In the South, we're driving active progress with the Kakinada branch. At
East, we've lately inaugurated Silchar, Assam and Asansol branches. SMC continues to focus on improving our technology by boosting our online strategy for a better digital marketing experience for daily needs including; our new website. We are about to launch our new mobile app and new EKYC to expand with the help of digitalization in next 3-4 months. Numerous banking tie-ups at Punjab National Bank, Union Bank of India, Indian Overseas Bank, Dhanlaxmi Bank and Karur Vysya Bank are done to offer discount broking. Among other initiatives, our tech initiatives include SMC Ace, SMC Easy Invest, SMC Algotrader, SMC Autotrending, Algo, and HFT trading.
Technology is a leading force in this modern era. How SMC is creating an edge?
With advancement of technology, SMC has recognized how technology transformation leads to significant competitive advantage. Accordingly SMC has built large tech and research teams of capable & highly qualified professionals that help us present tech-enabled research to our clients. These teams develop next-generation tools for trading such as SMC- ACE, Easy Invest, Algotrader, Autotrender, Algo, HFT Trading, and Zendesk. These tools support algorithmbased customized automated trading, Robo Advisory, and are also equipped with a chatbot feature to address clients’ issues in real-time. Our idea is to keep our trading tools & technologies simple and client-friendly to enable everyone to use them without hassle. Our mobile trading application called SMC Easy Trade which is available on Google Play store & iOS App Store (Apple). It is the upgraded version of SMC Mobitrade/SMC Tabtrade. We aim to make our trading apps & platforms multilingual for tapping the diverse market across the country. Very soon we are also going to launch new apps and currently we are doing tie ups with Fintech companies such as Narnolia, Marketmojo, Fox trader and Jarvis. We are getting tremendous response from the market.
Few words for Wise Money team
I would like to congratulate the Wise Money Team. The Newsletter has established itself as a reliable source of up-to-date information on the stock market for investors in a very short time. It just goes to show that hard work, passion, and a "never give up" attitude really go a long way. You have put your time, heart and soul into this, and your perseverance has paid off. Cheers to future successes and past triumphs.
What is your outlook on Global Economy and Stock market?
The global economy has faced its fair share of challenges over the last year or so with geopolitical tensions continuing, runaway inflation across most economies and central banks raising interest rates to tame it, lingering COVID related lockdowns in China and a surge in cases post its unlocking, and finally the banking crises toward the end of the year in the US spilling over to Europe as well.
Having said that, I am cautiously optimistic on the global economy despite these challenges as I feel that there is enough policy support from the governments of respective countries to navigate these headwinds. Global GDP has grown at a 3% CAGR over the last 10 years and I feel that this growth rate is likely to continue with certain emerging economies such as India growing at a higher rate. Private consumption will continue to drive demand across sectors and will aid in global growth.
The global as well as the local stock markets are likely to witness small to moderate gains over the coming year given that the challenges mentioned earlier are likely to remain front and center for the global economy.
Do you think the US Fed and RBI rate hike cycle is near its peak now? Any timeline for the reversal of rate hikes?
Yes, we might be close to the peak. Although, the US Fed has raised interest rates multiple times over the last couple of months leading to inflation coming down from a peak of 9.1% in June 2022 to 6% for February 2023, it is still far away from the Fed’s target of around 2% and hence I believe that there might be a couple of hikes, albeit smaller ones, to accommodate a weak banking sector.
On the domestic front as well, the picture remains more or less the same with the Indian Consumer Price Inflation (CPI) falling to 6.4% in February 2023 compared to 7.7% in April 2022 as a result of the hikes by the RBI. With the RBI’s inflation comfort zone at around 4%, I feel that there might be a couple of smaller hikes to go.
As far as a reversal of rate hikes is concerned, I feel that there is still some time to go for that, maybe a couple of months to a year. This, because the central banks have only just managed to bring down inflation which was at historical highs and I don’t see them suddenly doing an about turn.
Do you see any kind of slowdown in earnings growth for the coming quarters considering the current global and domestic environment?
Yes, a slowdown in earnings growth is possible given that there are global economic headwinds. Certain segments within sectors such as IT (exposed to US and European customers) and consumer discretionary are likely to face greater pressure than others as the clients they cater to would be the first to feel the effects of economic challenges.
Since the situation domestically doesn’t look as bad as that of the global one, there would be certain pockets such as FMCG, financials, consumer staples, building materials, autos, and domestic facing chemicals which would face less of an impact on earnings growth than export oriented/discretionary sectors.
How will the market look in the next financial year in terms of returns and what are the most expected challenges?
Returns for the stock market are expected to be in the mid-single to low double digits on account of the economic headwinds discussed earlier. If the geopolitical tensions ease and central banks are able to strike a balance between growth and keeping inflation low, then I believe that returns may go higher.
Any escalation of the Russia-Ukraine war and the spread of the banking crises in the US and Europe to other regions would be some of the major challenges which we might have to navigate in the coming year. Another major domestic factor would be that of the monsoon. There are predictions that possible El Nino weather patterns may lead to a deficit monsoon rainfall this year. If this turns out to be the case, then this would negatively impact yields and farm incomes leading to decreased domestic demand.
Few words for Wise Money team.
Congratulations to Wise-Money team for delivering quality product week after week for last 17 years. I know the hard work that the team has to put to meet the timelines every week. The magazine is one of the most awaited one by our customers and provides information and research across multiple asset classes.
What is the role of NBFCs in Financial Inclusion in India? Sir Please walk with us how SMC Finance is moving in this direction?
NBFCs complement the mainstream banking system. NBFCs do play a critical role in the development of an economy by providing a fillip to transportation, employment generation, wealth creation, bank credit in rural segments and to support financially weaker sections of the society. The role of NBFCs in financial Inclusion has been increasing over the last few years due to the government’s focus on financial Inclusion and the increasing demand for credit from various aspects. With digital solutions and nuanced underwriting models, the NBFC are bridging the gap.
SMC Finance is registered with Reserve Bank of India as Investment and Credit Company (ICC) NBFC category. The Company offers wide spectrum of financial products like SME- LAP (loan against property), SME-Onward-lending (to NBFC/MFI), SME Equipment Finance (Medical & Industrial Equipments), SMEWCTL (Unsecured Business Loans) and loan against securities. The Company has recently ventured into Gold loan business in January 2023 by opening its first ever dedicated Gold Loan Branch in Rohini, Delhi. The Company plans to expand Gold Loan business by opening Branches across different geographies in order to tap the huge potential it offers. The Company has also recently entered into its first Co-lending tie-up with a leading public sector bank. This unique model of lending is a win-win situation for both the banks as well as NBFCs as it enables the banks to lend to customers in wider geographies and gives NBFCs access to funds at a lower cost. The co-lending model is gaining traction across all the asset classes on the retail side.
The potential for growth in co-lending space in India is indeed promising. This is ably supported by the heightened demand for credit, the need for banks and NBFCs to boost their lending capacity by benefiting from the synergy created through respective strengths of the co-lending partners, streamline operational efficiency and comply with RBI’s priority sector lending regulations. The colending model is an immense resource to India’s credit system by affording the unbanked population, access to credit and thereby advancing initiative of financial inclusion being promoted by the Government. The Company is bullish about the prospects of Co-lending and is actively scouting for other Co-lending tie ups with public and private sector banks.
How important is the contribution of the NBFC sector for achieving India’s the USD 5 trillion milestones?
NBFCs have undergone noteworthy transformation over the past few years and played a major role in the growth of the Indian financial system. NBFCs have complemented banks in providing loans to underserved parts of the economy by offering diversified, tailor-made financial products through innovative delivery mechanisms and better service standards. It has to be noted that the role of NBFCs in financial inclusion has been increasing over the last many years due to rising demand for credit from several sections of the society and the government’s focus on financial inclusion. The sector contributes to nation building by efficient resource allocation, entrepreneurial boost, employment generation, specialised credit, increase market capitalisation and development of core sectors. The fundamental parts of their success have been a strong grasp of the customer, the local geography, and the current market dynamics across multiple areas, combined with operational flexibility based on the borrower’s needs. The role of the NBFC sector is equally important as other sectors for achieving the USD 5 trillion milestone. Thus, sustainability and high growth of NBFCs are Vital to achieve India’s target of USD 5 trillion.
Do you see the year 2023 to be a tough year on account of tight regulations from the RBI?
NBFCs are a significant part of the credit ecosystem of the country and are presently undergoing a change in their business model. NBFCs have navigated the
challenges in the past couple of years by focusing on higher liquidity, capital and provisioning buffers. These, combined with improving economic activity, have put the sector in a comfortable position to capitalise on growth opportunities. With the uptick in the economy, stronger balance sheet, higher provisions and improved capital positions of NBFCs, the sector is expected to see growth. However, tighter regulations from the Reserve Bank of India (RBI) and intense rivalry from competition, the sector may have a tough year ahead. Actually, RBI has been tightening rules for shadow banks in the aftermath of the collapse of erstwhile Dewan Housing and IL&FS focusing on capital requirement, and governance standards.
Which are all the sectors that will boost the loan book? Do you expect interest rate hikes to dampen sentiments?
Over the years NBFC has been great support to the India’s financial ecosystem by targeting segments like small and medium-sized businesses, entrepreneurs, farmers, and individuals who do not have access to traditional banking services. Recent, development in digitisation and government’s initiatives to promote financial inclusion has been the key driver for the NBFC`s loan growth. Digitisation has helped in reduce costs on the one hand and on the other hand it has helped to widen the customer base through enhanced customer services. On this backdrop, we expect MSMEs/Retail finance to be the key driving factor which would fuel the NBFC growth.
Sentiment gets dampen in both high inflationary condition and high interest rate regime. High inflation causes margin pressure due to the inability to pass on the input cost and high interest rate adversely affects the consumption demand. Generally the central banks raise the interest rate to curb inflation, which in turn slowdown the economic growth. Thus hike in interest rate may affect the sentiment in the medium term but considering the robust domestic economic growth opportunities, sentiment will get boosted.
Few words to Wise Money team on completion of 17 years.
Over the years, the Newsletter has taken a worthy place in the information space of the financial markets, having established itself as an authoritative source of timely and reliable information to the readers’ community. On this special occasion, I would like to congratulate the editorial team as their sheer hard work, perseverance and determination has helped the newsletter to reach this place.
Do you see any possibility of a spike in CPI inflation in India? Also, will it be sticky for the next year?
With inflation rate breaching the upper limit of the RBI’s tolerance band of 2-6%, it is expected that we may see rate hike in upcoming meetings. The RBI has been on an aggressive rate hike journey since May 2022 in order to combat inflation. There are several factors that may contribute to India’s persistent core inflation. One is the country’s high population growth, which puts pressure on resources and can lead to higher prices for goods and services. Another factor is the relatively high cost of credit in India, which can drive up the price of goods and services that are financed through borrowing. The RBI has attempted to address the issue of inflation through a variety of measures, including raising interest rates to curb credit demand and implementing measures to increase the supply of money in the economy. At present it could be seen that despite softening trend in the global inflation trend and with the help of lower oil prices, domestic CPI is still elevated. Unseasonal rains certainly damaged winter planted crops notably wheat faces the unfavorable weather risk which led to spike in food inflation. Going forward uptick in the domestic demand may add inflation sticky along with possible higher levels in core-CPI. We think this quarter we will be averaging out around 6.0% on a YoY basis against RBI projection of 5.7% while we are eyeing headline CPI to dip below 6.00% by the second half of this year towards 5.70% as well. Overall headline inflation is likely to stay between 4.75% to 5.25% by the end of this calendar year on the basis that the spike in food inflation may face a southward move from early September-October onwards.
Do you think the FII flow will continue to remain negative in the rest of the calendar year due to Fed risk?
Yes, during last year foreign institutional investors continued to remain on sell side but towards the end of the CY 22, Foreign Flows had improved. FIIs are moving out from India and are investing money to other cheaper markets including China, Hong Kong, and South Korea where valuations had turned attractive relative to India. Going forward, it is expected that as monetary policy risk looms, foreign investors will continue to remain in selling mood until they won’t get clarity from the Fed’s course of action. If Fed becomes less hawkish, we may see some revival of the foreign Institutional flows. Actually higher US inflation data and lower jobless claim data has had dented sentiments and led to the renewed fear of aggressive rate hikes in the subsequent meets to combat sticky inflation. At this juncture, the market and market participants are tracking inflation and its impact on monetary policy closely.
Do you really believe the monsoon will play a great role in rural recovery?
Yes, Monsoon is a crucial factor for the Indian economy. While a majority of the population of India depends on agriculture for their daily living expenses, the agricultural sector in turn depends on the monsoons. Not only agriculture, even industries and households significantly depend on the monsoon rains. So, a good monsoon will ensure high production in the agricultural sector, which in turn accelerates economic growth. The monsoon rains are the key to understanding how agricultural output, inflation, consumer behaviour and economic growth will change. Indian companies derive a significant portion of their earnings from rural areas in the country. While some companies are directly dealing in the agriculture market like seeds, agro-chemicals, fertilisers etc, certain other companies in the FMCG and auto space indirectly benefit from a robust rural economy. Other sectors affected by the health of the rural economy are banking, NBFCs and microfinance institutions. A healthy rural economy not only results in the expansion of credit. It also improves the consistency and reliability of repayments. Due to all these factors, the monsoon remains a major macroeconomic event that is widely tracked by investors, given its substantial impact on the economy and also its unpredictability.
Indian economy remains a 'bright spot', says IMF. Your opinion.
In the month of January 2023, International Monetary Fund (IMF) managing director Kristalina Georgieva has said that India continues to remain a relative
“bright spot” in the world economy, and will alone contribute 15 per cent of the global growth in 2023. She has rightly said this as prudent fiscal policy and significant financing for capital investments announced so far will continue to help sustain the growth momentum. India's strong "macroeconomic fundamentals” will continue to spur growth in the economy. India's fiscal policy has been responsive to economic conditions. The results of “growth-enhancing policies and schemes Namely Production Linked Incentives and government’s push towards self-reliance and increased infrastructure spending will start kicking in from 2023, leading to a stronger multiplier effect on jobs and income, higher productivity, and more efficiency — all leading to accelerated economic growth. India's modern and multi-model infrastructure is also giving a boost to investment possibilities. Besides, various government incentives such as lower taxes and rising service exports on the back of stronger digitization and technology transformation drive across the world would aid in growth. The International Monetary Fund (IMF) in its latest Economic Outlook Report has pegged India's growth for this fiscal at 6.8 percent, with a drop to 6.1 percent in FY24, and a rise again to 6.8 per cent in FY25. At present India is in a better position to deal with the global headwinds than many other countries.
Few words to Research team.
Wise Money, a publication with 17 years of tradition, has been serving its reader investors with a team of expert analysts and a focus on stock market research and recommendations. Its delivery of relevant content in a logical and accessible manner has created the most satisfying experience for its readers, complemented by an attractive page layout and font design. Congratulations to the Wise Money team on their accomplishment and best wishes for a bright and successful future.
With the advent of huge leaps in technology, where digital presence is an important factor, what kind of value would you be adding to the transformation?
Digitalization in business has proven to be almost essential for business success nowadays. Digital disruption has narrowed the gap between customers and financial services providers and improved the customer experience. Given the strong pedigree of SMC Group, which spans more than 25 years, there exists a strong understanding of evolving end-user needs in the financial markets. Besides, we have been hugely benefitted of strong corporate governance company which ensures the protection of the interests of the stakeholders. The rise in interest among the younger generation in trading and investing to have an additional income was propelled by the pandemic, and the number continues to increase. The needs of consumers, as well as the technology, are both everevolving, and a fintech platform requires continuous capital infusion and a solid understanding of the changing market dynamics. With Stoxkart, now a trader can now enjoy a seamless user-experience on his fingertips, a light-weight trading application to help to trade on the move. It is a new age browser trading platform with a user friendly User Interface (UI) having all the necessary market related information with a dashboard giving holistic view of the market and all your trades. We with smart screeners supported are integrated to enable investors to make informed decisions about investments.
What would be your best advice for a young person who aspires to become an entrepreneur?
Many people dream about starting their own company. After all, what could be better than being your own boss and bringing your passion project to the world. If you dream of being a successful entrepreneur, start preparing now. Becoming an entrepreneur can be daunting, but utilizing the right tactics to start off strong can boost your chances of success. The most successful startups are founded by people passionate about what they do. So what are your passions? If you want any chance of success, you must thoroughly research your target market before launching your business. There’s no such thing as an overnight success. Even the multimillion-dollar startups that seem to pop up out of nowhere were the result of countless hours of hard work before they started making headlines. As Steve Jobs said, “If you look closely, most overnight successes took a long time.” Becoming a successful entrepreneur requires an intense level of dedication to your dream, and this means sacrificing time and money to make it happen. Use your overarching goals to set realistic milestones for your company’s growth and development. Surround yourself with smart, curious and optimistic people, dream big and work hard.” From my experience, the people who make it as entrepreneurs are those who have a strong conviction in their idea. Sometimes things don’t work out quite as you expected, but they still work out. Have the flexibility to adjust to changes you see in the market to capitalize on opportunities. One of the important lessons I have learned in the business world is the ability to be flexible mentally but at the same time, be focused on your targets and goals.
What is unique about your business?
Today being unique is not an option but necessary for survival and we need to differentiate our service from our competitors. The answer to the question what differentiates us from others is our various innovative product offerings which are light on customer pocket and at the same time provide a world-class experience who are associated with us. One such offering is "NO PROFIT NO BROKERAGE" in which if any client doesn’t make profit in any trade then we do not charge a single penny. Traditional discount brokerage model does not have
any space for research advisory but in our case, we do provide the same at nominal cost. Apart from it, we do offer flexible partner programme, which not only benefits the associate partner but also the clients. At last what makes us unique is our manpower, who are more focused on service than merely bringing the clients on broad. Also we are shortly launching our new inhouse mobile app called Superr Evo which will be game changer.
What keeps you motivated?
Motivation comes in countless different forms, and in the entrepreneurial world, staying motivated is required to succeed. With the unbelievable range of cultures, values, and regions across the world, inspiration and new ideas are virtually limitless. Entrepreneurs should explore the world and take advantage of all it has to offer. There are endless ways to find motivation in the world, so don't hesitate to expand those horizons. My love and passion for capital markets along with enthusiastic team mates & fantastic work culture always keeps me motivated to achieve greater heights and my zeel for improvement never ends. I believe an entrepreneur must not only have a long-term strategy but also a short-term plan that takes into account any unexpected twists and turns.
What is your message for SMC Research Team?
It is indeed a matter of joy and success. SMC Research team is proof that determination and hard work make all the difference. Wise Money, which publishes weekly, is published with a focus on stock market research & recommendations and economic analysis & its impact on Indian stock market. If you wish to read the past issues of the publication, you can access them digitally also on SMC website. Congratulations to you and your team for this grand success and may your magazine reach great heights in the years to come.
In a major boost to the infrastructure sector, the government has emphasised development in both physical as well as digital avatars such as Gati Shakti initiative and Unified Logistics Interface Platform for data exchange. To note, Electricity & Power (thermal and renewable), roads, telecommunications, railroads, irrigation, water supply and sanitation, ports, airports, warehousing facilities, and oil and gas pipelines are the main components of the infrastructure sector. In the recent Union budget, Finance minister has increased infrastructure capex by 33% y-oy to Rs. 10 lakh crore. The highways sector is allocated Rs. 2.7 lakh crore, up 24% y-o-y from FY2023. NHAI allocation is increased to Rs. 1.62 lakh crore, up 14% y-o-y from FY2023. Jal Shakti Ministry allocation is increased by 41% y-o-y to Rs. 97,278 crores. Jal Jeevan Mission allocation is increased by 27% y-o-y to Rs. 69,684 crores. Moreover, Gati Shakti would be a National Infrastructure Master Plan (NIP) and help to raise the global profile of local manufacturers and help them to compete with their counterparts worldwide.
Roads to remain one of the key focus areas in the government’s infrastructure spending and the government’s infrastructure investment is pegged at Rs. 111 lakh crore over FY2020-FY2025. The road sector is expected to witness Rs. 20 lakh crore investments in the same period. Significant investments and favourable government policies are expected to provide substantial growth opportunities for industry players. The order books of the infrastructure companies are likely to get better with improved order inflow from road and port projects. The industry is seeing strong order inflows and an improvement in execution run-rate. Proactive payments from NHAI have handled the working
capital issues of the companies, which would boost the companies such as Brigade Enterprises, PNC infratech and KNR construction. Till Feb 2023, the NHAI constructing 600km during the month (504km in Jan- 23/278km in Dec-22). FY23 road construction stands at 3,458km (at a pace of 10.4km/day). The recently announced FY24 Union Budget allocated Rs.2.60 lakh crores towards building highways up 25% YoY, out of which INR1.60 lakh crores is allocated to NHAI (up 15% YoY). This would provide impetus to construction going ahead. Moreover, government announcement to set up airports in cities where currently there is no airport is likely to boost companies such as, GMR Infrastructure, KEI Industries, Larsen & Toubros, PNC infratech and Hindustan Aeronautics Ltd.
On top of the government’s efforts, several foreign and local private equity investment firms have also been pumping funds into the sector, especially in domains such as highways, power transmission and renewable energy to acquire Indian assets either via distress sales or at valuation sweet spots that make them attractive bets. According to the management of some larger participants, the government’s emphasis on infrastructure coupled with rural and rail electrification is boosting demand prospects. Power distribution-led capex and real estate construction are other key areas of opportunities.
These initiatives, if get executed, will surely boost investor’s confidence and would result in improved performance by the infrastructure companies in the long run. Investors are advised to invest in some of India’s leading infrastructure stocks, which have good long term prospects and will likely deliver handsome returns in long term. And the key beneficiaries would be companies like Larsen and Toubro, IRB Infrastructure Developers, Phoenix mills, Ashoka Buildcon, PNC infratech, H G infra etc. However, Infrastructure is a capex heavy sector, companies may sometimes get over-leveraged which need to keenly track. This has happened with several large infrastructure companies in India over the past couple of decades. This is one of the major risks associated with the infrastructure sector in India.
We all have studied compound interest in school time but how many of us have actually implemented it as an adult. Compounding is an important concept in investing; it is a mechanism in which we not only invest the principle but also the returns/interest we earn get reinvested. Today we have wide ranges of investment opportunities where we can invest and grow our wealth with the power of compounding. However, the element of time is the key factor, which determines the amount of benefit one derives from the compounding effect on the investment. Longer the holding period, higher is the return effect of the compounding because time factors matter. It is also worth noting that Albert Einstein referred to compounding as the 8th wonder of the world, he said: “The magic of compounding lies in the fact that it can help investors multiply their returns over the long-term”. Four keys to effective compounding arebudgeting, planning, investing, and diversifying your portfolio for the best compounding effect of your wealth.
Though this article we will try to understand the power of compounding. Let’s understand with Nippon India ETF Nifty 50 BeES, which represents India`s broader index Nifty 50. On 1st January 2010, Nippon India ETF Nifty 50 BeES was trading around Rs. 49.7 and by 1st January 2020 it moved up to Rs. 127. It was the time when the global economy was under pressure due to European debt crisis and then there came change in political power in India in 2010. The Nifty 50 BeES grew at an Average rate of 11.3% p.a over the ten years starting 1st January 2010. Had
someone invested Rs. 10,000 in Nifty 50 BeEs on 1st January 2010 and remained invested for next ten years, the wealth would have grown 2.56 times to Rs. 25560. This is because the return earned on the investments remained invested in the Nifty 50 BeES and thus the return in the subsequent periods would not only be on the investment amount but also on the profit earned in the prior periods.
It is rightly said that time rules all; even during the Covid when the stock market crashed across the globe including India and Nifty 50 BeES fell by 29% from its pre-covid high. The investment of Rs. 10000 still grew 1.85 times to Rs. 18480. For even longer time period, the invested wealth grew 3.77 times to RS. 37670 as on 1st March 2023.
No doubt, India has robust economic outlook going forward but it would not be smooth considering the global exposure of our economy and few domestic factors, which may be witnessed during the process and may also adversely affect the economic progress. Therefore, for any layman who finds it difficult to pick right companies at proper time and wants to participate in the India`s growth story can always opt to invest in the NIFTY 50 BeES and other ETFs, which are available in the market. At any time Nifty 50 includes 50 top rated companies in India, which would be directly involved in the growth of the economy. Therefore by investing in Nifty 50 BeES one is actually investing the growth story of India. By remaining invested in Nifty 50 BeES for the long term, the return on investment would have the benefit of compounding effect as well.
(Note: This is Just for illustration only and is not recommendatory").
To conclude, Compounding is a powerful investing concept that involves earning returns on both your original investment and on returns you received previously. Time remains a crucial component to harness the power of compounding. The critical factor is the starting point. As goes the Chinese proverb – “The best time to plant a tree was 20 years ago. The second-best time is now”. The compounding process works best if you start early and stay invested for the long term.
The company has robust business portfolio and possesses the necessary capability and flexibility to continuously rebalance its approach and strategy in order to benefit from the dynamic business environment. The company is focused on tapping emerging opportunities with its proven competence in the domains of engineering, design, manufacturing, construction, project management, IT and financial services including some of the newer businesses. Record order book and strong tendering momentum on the back of public CAPEX spends comprising of Centre, States and PSUs and improvement in capex auger well for the company going forward. Thus, it is expected that the stock will see a price target of Rs.2731 in 8 to 10 months’ time frame on current P/BVx of 3.88x and FY24 BVPS of Rs.704.23.
The company has witnessed tremendous growth both in the international and domestic market with highest ever market share of 8.1% in all motorcycles sold. The company is focusing on expanding its market in premium motorcycles; in this direction it has made two big launches. Moreover, its recent collaboration with Stark Future to step up work in the EV space indicates future growth visibility. Thus, it is expected that the stock will see a price target of Rs.3913 in 8 to 10 months’ time frame on target P/BV of 6.3x and FY24 BVPS of Rs.621.04.
Peter Lynch has rightly said, “If you are in the right sector at the right time, you can make a lot of money very fast.” It is usually said that a good stock in a good sector will always give a better return than a good stock in a bad sector. But the question is, how can one identify if it is a good sector or a bad sector? Yes, it is always important to closely watch in which sector money is coming.
When someone plans to start investing, the first question they ask is - "Koi badiya share hai to bata do?" And I always say - it is very important to be trained before entering the world of the stock market.
The Indian stock market presents a significant opportunity for investors looking to grow their wealth. With the Indian economy projected to grow at a robust pace in the coming years, the government can affect various sectors through its policies, regulations, and spending, and understanding these impacts can help investors identify the right sector and the right stock to invest in. In this article, we will discuss how to identify the right sector and the right stock for investment in the Indian stock market.
Investing in stocks is all about the future, so you must invest in stocks that have strong potential. The past rally does not matter much; at best, it is an indicator of how the future could reasonably look like. The idea is that the company must have the backing of key fundamental drivers that would sustain its valuations, even when the markets are not doing well. Those fundamental drivers will be more stock-specific in nature, and hence more focus should be towards specific selection.
The Indian stock market comprises various sectors, including IT, banking, pharma, infrastructure, consumer goods, and services, among others. Before investing in the stock market, it is essential to identify the sector that has the potential for growth and offers the best returns. There are several ways to identify the right sector, including:
Analyzing Macro Trends: Analyzing macroeconomic trends, such as GDP growth, inflation rate, interest rates, and government policies, can help investors identify the sectors that are likely to perform well in the future. For instance, sectors like infrastructure and construction are likely to benefit from the government's focus on building roads, highways, and other infrastructure projects.
Identifying Sector-Specific Drivers: Each sector has its own set of drivers that affect its growth prospects. For instance, the IT sector is driven by technological advancements, while the pharma sector is driven by research and development. Understanding these drivers can help investors identify the sectors that are likely to outperform in the future.
Analyzing Industry Performance: Analyzing the performance of individual companies within a sector can help investors understand the sector's potential. For instance, if a majority of companies in the banking sector are reporting robust growth and profitability, it is a good indication that the sector is likely to perform well in the future.
Once investors have identified the right sector, the next step is to identify the right stock to invest in. There are several factors that investors should consider when selecting a stock for investment, including:
Fundamental Analysis: Conducting a thorough fundamental analysis of a company is essential to understand its financial health and growth prospects. Fundamental analysis involves analyzing financial statements, such as balance sheets, income statements, and cash flow statements, to determine a company's profitability, debt levels, and cash flows. Companies with a strong financial position and robust growth prospects are likely to offer better returns to investors.
Valuation Analysis: Valuation analysis involves analyzing a company's current stock price in relation to its earnings, book value, and cash flow. Companies with low valuations, compared to their earnings or book value, are generally considered undervalued and have the potential to offer higher returns in the future.
Management Quality: A company's management quality plays a significant role in determining its growth prospects. Investors should look for companies with a strong and experienced management team that has a track record of delivering consistent growth.
Competitive Advantage: Companies that have a competitive advantage over their peers are likely to offer better returns to investors. Investors should look for companies with unique products, patents, or proprietary technology that can help them stay ahead of their competitors.
Dividend Yield: Companies that pay dividends to their shareholders are generally considered to be financially stable and have the potential to offer stable returns to investors. Investors should look for companies with a consistent track record of paying dividends and offering a high dividend yield.
Conclusion: Investing in the Indian stock market can be a lucrative opportunity for investors looking to grow their wealth. However, identifying the right sector and the right stock for investment requires careful analysis of macro trends, sector-specific drivers and individual company performance. Investors should conduct thorough fundamental and valuation analysis, evaluate management quality and competitive advantage, and consider dividend yield before selecting a stock for investment. By following these steps, investors can identify the right sector and the right stock for the investment. 21
Chart patterns are one of the most effective trading tools for a trader. They are based on pure price-action, and get forms amid buying and selling pressure during market hours on the underlying. Chart patterns have a proven track-record and traders often use them to identify continuation or reversal signals, to identify price trends & targets.
Chart patterns are specific price formations on a chart that predict future price movements. As technical analysis is based on the assumption that “History Repeats itself”, these chart patterns have shown that there is a high probability of a specific price movement to follow a particularformation on chart. Therefore, chart patterns are grouped into
Part 1 Reversal Chart Patterns
Head and Shoulders
Head and Shoulders is a reversal chart pattern, that indicates the underlying trend is about to change. It consists of three swing highs, with the middle swing high being the highest. After the middle swing high, a lower high occurs which signals that buyers didn’t have enough strength to pull the price higher. The pattern looks like a head with a left and right shoulder, and that’s how it got its name. The neckline is connecting the two shoulders, and a break-out below the neckline is considered a selling signal, with a price target being the distance from the top of the head to the neckline. If the Head and Shoulders pattern occurs during a downtrend, the same inverse pattern (with three swing lows) is called an Inverse Head and Shoulders pattern.
Double Top and Double Bottom
Double Top and Double Bottom are another reversal pattern, occurring during up- and downtrend, respectively. A double top, as the name suggests, has two swing highs at about the same, or slightly different price. It shows that buyers didn’t manage to push the price higher, and a trend reversal might be ahead. The trigger signal for opening a sell position is the break of the support line, with target price being the distance between the top and the support line of the formation. A double bottom pattern is the opposite, with two swing lows. The trigger signal is the break of the resistance line, with the target price being the distance between the bottom and the resistance line.
Part 2 Continuation Chart Patterns
Continuation patterns are as important as reversal patterns. While reversal patterns are good for contrarian traders and swing traders, continuation patterns are considered to be great for finding a good entry point to follow the trend.
Rectangles
A rectangle is a continuation pattern, which means it confirms that the underlying trend should continue. It is divided into bullish and bearish rectangles, depending on the underlying trend. A bullish rectangle appears during an uptrend, when the price enters a congestion phase, during a sideways trading. The price will likely break out in the direction of the preceding trend. The trigger signal is the break of the upper line of the rectangle, with the price target being the height of the rectangle. For the bearish rectangle, the opposite rules apply. It forms during a prevailing downtrend, when the price enters a congestion phase and trades sideways. This means the trend will most likely continue downwards, with the break of the lower rectangle line. The price target is again the height of the rectangle.
Triangles
Triangles can be ascending, descending and symmetrical. All three types of triangles look pretty much the same, with the difference that ascending triangles have a flat upper trend line, and descending triangles a flat lower trend line. A symmetrical trend line is the most common, and forms during both up- and downtrends. It has converging trend lines. The breakout point of the lower trend line during downtrends confirms that the downtrend is resuming, while a breakout of the upper trend line during uptrends confirm the underlying uptrend.
Conclusion: Chart patterns can sometimes be quite difficult to identify on trading charts when you’re a beginner and even when you’re a professional trader. Chart patterns often form shapes, which can help in pre-determining price action, such as stock breakouts and reversals as discussed above. Recognising chart patterns will helps you, to gain a competitive advantage in the market, and using them, will increase the value of your future technical analysis.
The stock closed at Rs 185.40 on 13th April, 2023. It made a 52-week low of Rs 130.25 on 20th June, 2022 and a 52-week high of Rs.194.20 on 09th December, 2022. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 173.65.
After testing its 52 week high of 194.20, the stock witnessed a correction phase, over the months and seen sliding back towards 175 levels. The correction in prices was observed with formation of lower top pattern on daily charts. However, the stock managed to take support at its 200 days exponential moving average on daily charts, and once again caught an upside momentum. Last week, the stock gave a breakout above the falling trend line of downward sloping channel. Additionally fresh breakout has also been observed above “Inverted Head & Shoulder” pattern, visible on shorter time frame. Therefore, one can buy the stock in the range of 183-185 levels for the upside target of 199-200 levels with SL below 174 levels.
The stock closed at Rs 2165.90 on 13th April, 2023. It made a 52-week low at Rs 1342.20 on 16th June, 2022 and a 52-week high of Rs.2207 on 13th April, 2023. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 1907.
From, nearly last four months, stock has been consolidating in broader range of 1930-2130 zone, as prices can be seen fluctuating above its 200 days exponential moving average on daily charts. Last week fresh breakout in prices, has been observed after a prolong consolidation phase. The sudden spike in average volumes along with positive divergences on secondary oscillators, with rise in price, points towards more upside in coming sessions. Therefore, one can buy the stock in the range of 2150-2165 levels for the upside target of 2400-2420 levels with SL below 2000 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
In the week gone by, bulls controlled domestic markets, as Nifty indices ended the week with gains of over a percent, thereby registering its third straight weekly advance. However, banking index outperformed over the week and ended with gains of more than 2.50%. Disappointing numbers from TCS put pressure on IT stocks; the IT index closed in red zone over the week. From the derivative front, call writers were seen shifting at higher bands after call unwinding observed at 17800 strike. On the contrarian side, put writers hold maximum open interest at 17800 strike. The Implied volatility (IV) of calls closed at 11.05% while that for put option, it closed at 12.03%. The Nifty VIX for the week closed at 12.27%. PCR OI for the week closed at 1.29 higher than the previous week, this indicates more put writing than call. Technically both the indices, can be seen rising with formation of higher bottom pattern and holding well above its 200 days exponential moving average on the daily charts. We expect the bullish momentum to continue in upcoming week as well, with Nifty likely to move towards 18000 levels. Bank Nifty has its next immediate hurdle at 42500-42700 zone while on downside, 41500-41000 zone is likely to act as a major support for the index.
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OPTIONS: If we talk about the literal meaning then it’s simply a choice, but when it’s said in relation to trading in derivatives, it looks easy but at the same time it is complex to make profits consistently. Quoting the recent SEBI’s study on derivative trading in India in 2022- 2023 and in particular options reveals that 89% of the trader have lost their capital in quest of taking out decent profit from the markets. In another study, it is revealed that 75% of the exchange revenue comes from option trading, so the big question is why traders are losing money in a financial product which is perceived as a medium risk/high return product owing to its nature of having limited losses if you are an option buyer? There could be number of reasons for traders to lose money while trading options; we will discuss few of them in detail in this article.
TRADING WITHOUT PROPER KNOWLEDGE OR INFORMATION: In the recent year, we have seen option trading gaining momentum, especially post lockdown but mostly traders come because of herd mentality or because of social media influencers and that to without proper knowledge. Many traders just think of option as CALL means TEJI (Bullish) and PUT means MANDI (Bearish). Some of them don’t even know basic options terminology, they are of the view that options are separate from derivative and we can only buy options (Shorting is not allowed). Often we have come across traders buying deep OTM strike price on expiry due to low premiums in hope that they will make money without even realising that they are putting their entire capital at risk. The current market situation is also not helping their cause due to unpredictable behaviour of the market, lack of knowledge act as a hindrance.
Another issue which traders face is focusing too much on one theory or aspect related to analysis or trading technic without thinking that markets movements are dynamic in nature and is depended on number of factors. This is mainly cause when participant is mostly depended on YOUTUBE for obtaining knowledge on the subject where at times meaningful discussion is non-existence or often certain key information is missing.
FAILING TO UNDERSTAND THE RISK INVOLVED IN OPTIONS TRADING: It’s a fact that any derivative product is more risker than the equity but often we have seen traders associating trading in option as trading in a limited loss asset class, which is true but not always. A trader is at a risk of losing 100% of its capital. A retail trader either has no stop loss in place or even if they have stop loss then also there is no relation to the percentage of capital been lost in a particular trade, i.e. lack of RISK MANAGEMENT resulting in huge losses. Another factor is not having proper risk/reward ratio before taking the trades, whenever in profit, traders look to exit out of the trade at a profit of 20 – 30 points (referring to index trade) , whereas we have seen traders sitting on loss trade in a hope of recovery. Position management is also a big issue, often trader are having view that if less capital is required for taking a single lot then why not take huge position in order to gain more for a small move, this also results in losses. In many instances, traders don’t think about proper capital allocation due to which major portion of their capital, i.e. more than 60% or in some cases 100% is gradually allocated to options, which is quite harmful in short and long term.
Vast majority of traders who are aware that shorting can been done in options are of the view that it’s far more risky than buying the options, so they refrain themselves from selling options.
Owing to its limited loss few traders resort to averaging thinking that a small change in movement can provide them good returns again resulting in huge lossesFALSE DESIRE OF ACHIEVING UNREALISTIC RETURNS: Another long standing issue with option trading is that it gives false sense of achieving higher return particularly when you are an option buyer. Typically in many cases we have seen a low premium option giving 2000% returns as well. For example Rs.10 option premium has risen to 250 or 500 or even higher. Therefore as a beginner (person waiting to enter) thinks that money can be made with low capital as well, without giving a single thought that such instances only constitute approx. 1 - 2% of the total trades. Traders do forget about that these situations are result of certain market conditions or extreme volatility and tend to apply the same in every situation, resulting in losing money.
Option buying is often considered as a gateway to low risk high return matrix because of which traders do not take hedge position when the markets are not conducive.
CONCLUSION: Option buying can be a wonderful tool to mitigate losses and aiming for higher returns but in the above mentioned points we have discussed as to how small mistakes and ignorance can lead to losses which can sometimes be disastrous. So what is the solution to achieve a balance between risk and rewards? The answer lies in the fact that every trader should have reasonable understanding of concept before placing option trades. Then traders should be flexible enough to have a proper balance with plain vanilla option buying and option hedging strategy. The traders should be aware of maintaining a proper risk and position management and above all should not trade without any stop loss mechanism.
Since it’s a high risk instrument, it’s always advised to keep a corpus of over 100K and should allocate not more than 30% of the fund in one single trade. Further trader should keep a stop loss of 20% of the total fund
As a trader, if one can look to avoid few mistakes and have a proper Risk/Reward ratio then OPTION TRADING can be one of the best options to trade apart from long term wealth creation through capital markets.
One instrument which measures the uncertainty in the market is volatility index, popularly known as VIX. More the market is uncertain about the future/event, more we see the rise in volatility in the market. Volatility is preferred by the stock day trader as well as derivative traders. Whenever there is volatility in the market, there is a great potential for the day trader to capture the wide range. On flipside, an option trader can use volatility, by deploying optimal strategy based on the direction of the volatility. It is very important for a derivative trader to understand the behaviour of implied volatility and VIX in the market. The main question that comes to our mind is how to identify the trend of the volatility or VIX then after the trend of the underlying.
There are various indicators to determine the direction of volatility such as Bollinger Band, Average True Range (ATR) and Relative Volatility Index. These indicators can help you in identifying the trend of volatility of the underlying asset and also helps in making better, as well as informed trading decisions.
Relative Volatility Index is an indicator, which is similar to RSI (Relative Strength index) except it considers the standard deviation and not the absolute price. RVI (Relative Volatility Index) can be developed to confirm the trading signals, and provide more confirmations in exiting trading system. Basically, it will filter out the noise in a trading system. The RVI (Relative Volatility Index) is used to identify the trend reversal where value crosses the 50 mark.
There are various trading setup for RVI but most popular is
Bullish if the value is more than 50.
Bearish if the value is less than 50.
In the below mention figure 1, we plotted the India VIX and Relative Volatility Index which indicates the bullish and bearish signals in India VIX.
There are three scenarios for an option trader in term of volatility. The volatility either rising, falling or sideways. One can use different strategies in different situation. If the RVI (Relative Volatility Index) crosses 50 level upwards in India VIX, it indicates that high chances of rise in volatility in upcoming sessions. We can initiate strategies like long straddle, long strangle, call ratio back spread and put ratio back spread. On the contrary, when RVI (Relative Volatility Index) crosses 50 level downwards in India VIX, it indicates that high chances of fall in volatility in upcoming sessions. In this case, we can initiate short straddle, short strangle, calendar spread and long butterfly spread kind of strategies. It's important to note that options trading can be complex and risky, and traders should fully understand the risks and potential rewards before entering into any trade.
However, RVI (Relative Volatility Index) can be used for finding reversal in underlying as well. In figure 2, we can see the diversion in nifty indicates a reversal as well as extreme value in indicator also suggests the possible zone for reversal. To note, the Relative Volatility Index should not be used in isolation. Traders should always use the RVI in combination with other technical indicators to make informed trading decisions.
**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
After two years northward journey, commodities got a dent on higher interest rate and slow down talk amid recent uncertainty over banking sectors. CRB made high near 360 levels, now trading near 280 levels; a fall of almost 20%. Seasonality is showing that prices will surge further after a brief correction.
Historical movements easily depict that why commodities are famous for their cyclicality. Prices go up, producers respond with higher rates of production and then prices go down and vice versa. In pre-covid era, the global economy was stable, relatively healthy and most importantly, the supply and demand for most commodities was largely in balance.
Things were little predictable and cheap money was available for the producers; supply was smooth and business was good. However, we couldn’t disagree with the fact that the heat of slow down started in 2019 but the pace was slower. As pandemic hit, it gave punches to both demand and supply, and disturbed the demand and supply equilibrium drastically. Producers had to restrict the production, global supply was on halt and there was problem to store the excess supply. On the flip side, on demand front,
in first reaction demand crashed historically and the demand for commodities surged when the COVID reopening combined with massive direct government stimulus created unprecedented spikes in demand for nearly all commodities. Demand couldn’t match the supply followed by Russia & Ukraine war, which sent many commodities in unchartered territory as these two countries were the supplier from grains to steel to too many industrial metals.
Then here comes the panic of massive inflation worldwide and the Central Bank started thinking to raise the interest rate and monetary tightening. With record interest rate hike by Fed, from .25 to 5 by Fed, commodities broke a significant level of support in 2023 as the market tries to quantify the economic ramifications of banking turmoil along with rate hike. Action in crude oil across the board recently reminded many how quickly the commodity can be decimated by macroeconomic events. US inflation, which hit the high of 9.1% in 2022, is now near 6.1% after a most speedy rate hike. At present, production is beginning to outpace demand in many areas, and prices of most commodities are still experiencing steady declines. It may continue to give relief to the inflation and slowing economy is likely to bring the yearly inflation rate down to around 4.0% by the end of 2023. Nevertheless, it will far higher than the target of 2% as this time inflation is because of supply side risk as well, which is unfortunately likely to remain there in 2023.
Commodities have entered into a brief period of consolidation where supply will outpace demand and Fed can take solace on the expected downside in inflation but resurgence in China demand amid ever increasing demand from India will check any downfall and lend the support to the commodities prices. Below are some triggers which we should watch for remaining 2023:
Economic slowdown: It means less oil consumption. Demand can be lower in US and Europe but China can play as swing factor. On net, the annual average demand estimates are unchanged for 2023, but lower (-0.6mb/d) for 2024. Slowing manufacturing activity amid softer consumer and B2B demand, as well as weaker capital investment due to high borrowing costs and lingering recession concerns, are expected to dent demand for metal commodities as well. Metals will see limited downside and on any recovery they will react faster on supply side tightness. Insufficient production volumes of metals are the biggest risk factor for price stability in 2023. Despite the recovering demand, investments into new mining projects remain subdued and could cause supply problems.
Banking sector crisis: The upheaval in the banking sector — marked by the swift collapse of several US lenders and subsequent crisis at Credit Suisse — then deepened the rout in industrial metals and energy, although bullion is a beneficiary. Concerns about the banking crisis continue and fear of an ongoing banking crisis does not look to dissipate fully, hence market can expect more jerk. Bullion is expected to make new highs in dollar terms too on deepening banking crisis amid chances of halt in interest rate hike.
China factor: Global economic outlook has benefitted from China's economic momentum, with rebounding February Purchasing Managers' Index data and robust air traffic demand. It will be interesting to see how rebounding Chinese demand compete with weaker economic outlook in the West.
El Niño effect: India had an above normal monsoon in the last 4 years. Climate phenomena predict an El Nino in 2023. As per the US government’s weather agency, the National Oceanic and Atmospheric Administration, it predicted that El Nino could return in early June. El Nino can also affect the Kharif production of FY24. A combination of weak rabi production in FY23 and kharif in 2024 can have a serious implication on food grain inflation, which is already in the elevated range. The silver lining is that the union government is expecting record output in rabi, despite predictions of cropdamage due to heat in March. The most affected sectors will be FMCG, fertilizer, sugar, dairy, rural consumptions like two wheelers.
In nutshell, despite macroeconomic headwinds, commodities markets may offer attractive return potential in 2023 too amid ongoing supply constraints. China's reopening amid an expected pause in a further rate hike by major Central Banks. Rally will take a breather for the next run.
Turmeric prices ruled sideways due to mixed cues in the market. Local demand has been subdued as millers are stockists are in wait and watch mood in wake of rising arrivals at major trading centers. Arrivals volume has surged up in Maharashtra and expected to pick up further that will cap the excessive gains in the prices. Market is running with huge stocks and stockists are trying to release their stocks on every rise in prices. Millers are offloading stocks by mixing old stocks with new one. In the wake of sluggish domestic buying, prices may fall further in coming week. However, improved export enquires and lower production estimates may cap the excessive downfall. Overall production is estimated to be down by 7%-10% Y-o-Y due to fall in area in Maharashtra. Turmeric May contract is expected to find support near 6600 and will honor the resistance of 7400 in near term.
Jeera prices witnessed huge volatility last week tracking uncertainty over the amount of crop damage in Gujarat and Rajasthan. There are reports of crop damage and delayed harvest in Gujarat due to unseasonal rainfall in March that has affected the arrivals volumes adversely. Tighter supply condition and expectation of fall in production Gujarat is prompting millers and stockists to cover their inventory. Overall production in Gujarat is likely to be down due to lower acreages and yield losses. Seasonal export demand of jeera is expected to pick up with increased supply of good quality of produce in the market. Federation of Indian Spices Stakeholder has projected total production is estimated to increase by 28% Y-o-Y in year 2023 but it may fall due to crop damage in major growing states. Jeera May futures are likely to trade in range of 38000 – 45000 in coming week.
Dhaniya NCDEX is expected to trade on a weaker note due to surging arrival pressure in the market. Stockist and millers are avoiding bulk buying in anticipation of further fall in prices. Higher production estimates and improving supplies in Rajasthan is likely to put pressure on prices. However, increased export enquires are likely to cap the excessive losses. Dhaniya NCDEX May futures are likely to trade in range of 6400- 7200 levels.
Gold prices posted positive move and continue the previous week trend as cooler than expected U.S. inflation data spurred bets that the Federal Reserve might raise rates once more next month before pausing hikes. Gold prices jumped after the U.S. CPI data showed that it rose 0.1% last month, compared with expectations of 0.2% increase, after advancing 0.4% in February. There is an expectation that the Fed’s hiking cycle may be nearing its end are wellanchored by the recent U.S. CPI data, with lower treasury yields and a weaker dollar being supportive of gold prices. The CME FedWatch tool shows markets are pricing in a 68.7% chance of a 25 basis-point hike in May, with rate cuts seen in the back half of the year. Gold is considered an inflation hedge, but rising interest rates reduce the appeal of non-yielding bullion. San Francisco Fed Bank President Mary Daly said that while the U.S. central bank had "more work to do" on rate hikes, tighter credit conditions could argue for a pause. Gold silver ratio reads below 80 which mean silver is undervalued relative to Gold. Most of the time, the Gold/Silver Ratio has been in a range between 45 and 85. Comex Gold is facing strong resistance near $2040 levels as long as prices sustain below it, there is a room for some correction. Silver on Comex trading above $25.50 and looks bullish any dip near $24.60 is considered as buying opportunity. Ahead in the week, Gold on MCX may witness some correction although the main trend is positive and the possible trading range would be 59000-62500 and for silver 72000-78500 levels.
Crude oil prices surged and posted positive returns throughout the week as weaker dollar and tightness in the global oil supplies supporting the prices. Natural gas prices also saw a pause in the bearish move. Ample U.S. nat-gas supplies are outweighing record U.S. LNG exports are weighing on prices. In addition, U.S. nat-gas inventories were 20% above their 5-year average. OPEC+ announced a surprise cut in oil production and as 400,000 bpd of Iraqi crude oil exports remain halted. Saudi Arabia said the cuts were a "precautionary measure aimed at supporting the stability of the oil market." OPEC Mar crude production fell by -80,000 bpd to 29.16 million bpd. The ongoing halt of Iraqi crude exports from the Turkish port of Ceyhan is tightening global oil supplies and is bullish for crude prices. The Turkish government said it wants to negotiate a $1.5 billion settlement that it has been ordered to pay before allowing Iraqi crude exports to resume through its pipeline. The outlook for stronger Chinese crude oil demand is bullish for prices. China National Petroleum Corp, the country's largest refiner, predicts that oil demand in China may expand this year by +5.1% to 756 MMT as the country emerges from the pandemic. However, oil demand in China has recently been weak. Rising crude demand in India is bullish for oil prices. Ahead in the week, Crude oil may continue to trade higher but the rally is overstretched, so some correction is expected from the higher levels. The possible trading range for crude oil would be 6500-7100 levels. Natural gas may continue to trade in the wider range of 160-185 levels.
Base metals may trade in mixed direction due to improvement in demand from top consumer China, although the gains may cap by global demand outlook stemming from fears of a recession. China's new bank lending hit an all-time high in the first quarter, while broad credit growth quickened as the central bank kept up policy support for the economy. Minutes from the Fed's last policy meeting showed officials forecasting that the banking sector stress would tip the economy into recession. Investors are cutting their bullish bets in major metals in the face of rising recession risks, analysts at ANZ said in a research note. The International Monetary Fund also warned that lurking financial system vulnerabilities could erupt into a new crisis. Copper may trade in the range of 765-800 levels. China's refined copper production in March jumped 14% from a year ago thanks to newly established capacity and sufficient raw materials supply, state-backed research house Antaike said. Globally, concerns over copper production have eased, after Peru said earlier this week it would hike its copper production by 15% this year to 2.8 million tonnes. Zinc may trade with bearish bias and fall to 240 with resistance of 260 level. Lead may move in the range of 178-187 levels. Aluminum may trade in the range of 197-212 levels with bearish bias The share of Russian aluminium stocks in warehouses registered with the LME climbed to 53% of the total in March, or 220,575 tonnes, from 41% in January, data on the exchange's website showed. Steel long (Apr) is likely to trade in the range of 46000-48500 levels on NCDEX with bearish bias.
Cotton prices are expected to trade down due to sluggish export. Farmers are offloading their stocks at every rise in prices that is restricting the major gains in cotton prices. Farmers and stockists have heavy stocks wherein millers are going for hand to mouth buying at prevailing rates. Overall production has been higher by 5%-8% Y-o-Y wherein total arrivals has been down by more than 40% Y-o-Y that indicates there is huge stocks left with farmers. Apart from that, better sowing prospects for upcoming season supported by forecast of normal monsoon rainfall will also weighed on market sentiments. MCX cotton Apr Cotton prices are likely to trade in range of 61000-65000.
Cotton seed oil cake NCDEX May futures are likely to trade down due to sluggish demand in cattle feed Industry. Seasonal demand of cotton seed oil cake is likely to remain poor in wake of forecast of normal monsoon rainfall. Moreover, increased availability of alternative feed meal will also put pressure on prices. Cotton seed oil cake prices are likely to trade in range of 2600- 3000.
Guar seed May futures are expected to trade on weaker note due to muted demand on domestic market. Heavy stocks with farmers and bleak export enquires of gum is likely to keep prices down in near term. Guar prices will also track the improved sowing prospects for upcoming season as IMD has predicted normal monsoon rainfall in year 2023. Demand of other by-products like churi and corma is also poor that will cap the major gains in prices. Guar seed prices will trade in range of 5450-6000 levels in near term wherein Guar gum prices are likely to trade in range of 10500-13500 levels.
Mentha oil Apr contract is likely to trade higher on weaker production outlook for upcoming season. Acreages has been down in Uttar Pradesh wherein sowing is yet to pick up in Bihar and other growing states. In the wake of heat waves and above normal temperature in April, overall sowing acreages is expected to fall that will support firmness in mentha oil prices. However, rising imports of menthol and limited buying by China can cap the gains. Prices are likely to hold support near 970 level and will honor the resistance of 1035 level.
Castor seed May prices are likely to trade higher due to increased buying activities in the market. Improved export enquires of castor oil and shrinking arrivals are likely to help prices to trade on positive note in coming days. Export enquires of castor oil has started increasing that will support firmness in prices. However, higher production of castor seed will restrict the major gains in prices. Going forward, castor seed prices are likely to trade in range of 5900-6600 levels.
It closed at Rs. 782.50 on 12th Apr 2023. The 18-day Exponential Moving Average of the commodity is currently at Rs 772.51. On the daily chart, the commodity has Relative Strength Index (14-day) value of 61.00. Based on both indicators, it is giving a buy signal.
One can buy near Rs.778 for a target of Rs. 810 with the stop loss of 768.
It closed at Rs. 6817.00 on 12th Apr 2023. The 18-day Exponential Moving Average of the commodity is currently at Rs 6437.13. On the daily chart, the commodity has Relative Strength Index (14-day) value of 68.186. Based on both indicators, it is giving a buy signal.
One can buy near Rs. 6670 for a target of Rs. 7100 with the stop loss of 6500.
It closed at Rs. 6826.00 on 12th Apr 2023. The 18-day Exponential Moving Average of the commodity is currently at Rs 6932.46 On the daily chart, the commodity has Relative Strength Index (14-day) value of 36.610. Based on both indicators, it is giving a sell signal.
One can sell near Rs. 6900 for a target of Rs. 6500 with the stop loss of 7060.
NOTE: *M.High / M.Low stands for Monthly High / Monthly Low
The CRB index has risen for the fourth week in a row due to the sustained decline of the dollar index. Gold prices continue the bull trend; however silver outperformed gold clearly. Gold prices sustained well above the key psychological levels of $2,000 after wild swings owing to safe haven demand in the wake of a potential banking crisis put the yellow metal on course for a sharp rise in the first quarter. Silver crossed the mark of 76000 levels on MCX and $25.50 on COMEX. In the energy counter, natural gas saw a pause in fall after many weeks. Crude oil prices surged to a 4.5 month high and gasoline climbed to a 5.5 month high. A weaker dollar is bullish for the energy prices. Also, tightness in global oil supplies is supporting crude prices after OPEC+ announced a surprise cut in oil production and 400,000 bpd of Iraqi crude oil exports remain halted. Utilities pulled 47 billion cubic of natural gas from storage for heating and electricity generation last week, lower than the 54 bcf anticipated by industry analysts. The current U.S. gas inventory was 31% higher from the balance at the same time a year ago and 21% up versus the five-year average for storage, as per EIA. Crude prices jumped as much as 5% Monday (10th April) as disruption of half a million barrels a day of Kurdish supply, nuclear war talk by Russia’s Vladmir Putin and assurances about the crisis-hit U.S. banking sector helped boost risk-on appetite in oil. Even with Monday’s gains, both WTI and Brent stand to lose almost 10% each at the close of the first quarter. Crude inventories rose by 597,000 barrels in the last week to 470.5 million barrels, compared with analysts' expectations in a Reuter’s poll for a 600,000 barrel drop. Gasoline and distillate inventories fell less-than-expected in week to April 7, the Energy Information Administration said. Base metals prices appreciated too; except lead. Uneven recovery in China halted the upside. While service sector activity surged more than expected to a 15-year high, softening growth in the manufacturing sector pointed to weaker demand for commodities.
In Agri, Castor had strong resistance near 6400 level but fell down to support. Cotton oil seeds cake saw paused in its fall and witnessed a moderate bounce from the support levels. Guar was in a range with downside bias because of higher availability and lower export demand. In spices, Jeera continued to move up for fifth week whereas turmeric and Dhaniya were down due to surging arrival pressure at major trading centers. Jeera prices surged due to reports of crop damage in Gujarat. Recent unseasonal rainfall in Gujarat has hampered the yield of jeera; harvesting is yet to pick up in Kutchh region of Gujarat. Overall production of turmeric is estimated be to fall by 5%-8% due to lower acreages in Maharashtra and AP. Mentha oil saw strong short covering.
Commodities are great investments for anyone interested in diversifying their portfolio to protect against inflation and reduce volatility. Investing in commodities means gaining exposure to the market forces of supply and demand.
Does dollar value spark you when the dollar rises substantially nearly 15% in a span of 8 months in 2022 or in any decline phase of the dollar globally when you can see piles of risk added in the riskier assets? Interestingly, we have seen how global equities tanked more than 20% in the first nine months of 2022 in the wake of rising interest rates globally. Before knowing more on the dollar impact, it is quite imperative to understand why dollars.
We have been taught and experienced so far that the US Dollar dominates the financial system and it will continue to do so looking at the global share of forex reserves currencies. As per IMF data Dollar holds 59.5% of global currency reserves till the end of second quarter of 2022 calendar year while euro holds roughly 20% in the same period. The questionable part is why other currencies are not ascending in parallel with the US Dollar. The whole argument lies here that the dollar is irreplaceable despite the fact that we have traveled many years after the Bretton Woods system – where the central bank can print money to the extent of some percentage of gold reserves they hold in their balance sheet.
After the collapse of the Bretton Wood central bankers introduced the fiat monetary system where they can print as much as they can subject to how they manage the inflation dynamics. For early beginners inflation is called price rise and the central bank cannot tap the money printing machine to infinite length. Then why did the dollar become the dominant currency instead of saying reserve currency? When we revisit the common factors available in the financial world that US Dollars are used in nearly 60% of the global trade invoices, why US Dollars are being used when non-US countries are going for bilateral trades. In various journals we can find highly quantitative figures of the bilateral trades between non US countries but we may not find why countries are going for dollar invoiced-link trades.
A simple two-sided theory says that if one country exchanges any goods or services to another nation, subsequently the invoice will be billed in the producer’s nation currency. While global trades do not move in such a manner as there are a lot of mechanisms involved from producers to end consumers and within the banking system only specific currencies are there where banks can initiate the transactions.
From India, if any exporters ship any products to let’s say to East Africa in Madagascar then either an exporter needs official bank confirmation from the buyer side and that too in US-Dollar which is called letter of credit in global trade finance otherwise the deal may not work. Indeed we cannot compare Madagascar economy with the western world or even the seven tigers in Asia and certainly not with India as India progressively marches to become leading economy in the world in coming years. Arguably it’s the banking system where scope of non-dollar trade settlement are less and eventually exporters and importers trade mostly in US Dollar and that is why it is liquid. The ironic part is that many of us may be aware of the term liquidity but how the funding liquidity market works which is an important phase to understand the capital flows across geographies, especially the differences between developed markets and emerging ones.
In general, highly liquid markets, such as the forex market or equities, have high trading volumes, narrow bid-ask spreads and low volatility, which makes it easy for investors to buy or sell assets without affecting the price. Less liquid markets, such as the real estate market, may have lower trading volumes, wider bid-ask spreads and higher volatility, which can make it more difficult for investors to buy or sell assets without affecting the price. The level of liquidity in a market can change over time and it is often affected by a variety of factors such as economic conditions, government policies, and investor sentiment. Funding liquidity refers to the ability of a financial institution or organization to meet its short-term obligations by having access to sufficient cash or other liquid assets. In other words, it is the ability to access cash or other assets that can be easily converted to cash in order to pay off debts or other liabilities as they come due. This is an important consideration for banks, corporations and other organizations, as a lack of funding liquidity can lead to financial distress or even bankruptcy. Apparently we have seen the recent banking stress in the US and the Eurozone where funding liquidity was the biggest need to warrant the fall but again we are still in a phase of too big to fail arena. It is inevitable to say that post covid the easy global credit has made a u-turn and very soon we may see a topple in the monetary tightening phase to pause and eventually rate cuts, which will turn new dimension for the US dollar in speculative world as well as in trade-weighted basis but the shine of the US dollar will remain for decades to come.
The Indian rupee hardly stayed in a narrow range to close below 82.00 to a dollar ending on Wednesday after the domestic unit was stuck in a range due to broad dollar weakness on one side and higher oil prices on the other. However, U.S. inflation softened more than expected in March, raising hopes that the Federal Reserve was near the end of its hiking cycle, which may provide a floor for further weakness in the rupee as well. Accordingly, the U.S. Consumer Price Index climbed 0.1% last month, below expectations of a 0.2% gain and down from a 0.4% increase in February. On a year-on-year basis, the CPI rose 5.0%, its smallest gain since May 2021. However, core CPI remained elevated, which analysts warned could be a cause for concern. Meanwhile, the dollar index traded below 102.00 consistently, lifting the euro and pound higher, while the rate-sensitive U.S. 2-year bond yield slipped below 4% as the inflation print was followed by minutes from the Fed's March meeting, which revealed concern among several members regarding the regional bank liquidity crisis. Next week, we have inflation data from the UK as well as ECB monetary meeting minutes, which will guide the euro and pound as well. However, the upshot for a weaker dollar trend against a basket of currencies will continue.
USDINR (APR)is trading below its major Exponential Moving Average indicating downwards trends for short term view. The Pair has major support placed around 81.50 levels while on higher side resistance is seen around 82.60 levels. The 21-day Exponential Moving Average of the USD/INR is currently around 82.30 Levels. On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 40.95.
One can sell near 82.20 for the target of 81.50 with the stop loss of 82.60.
GBPINR (APR)is trading above its major Exponential Moving Average indicating upwards trends for short term view. The pair has major support placed around 101.28 levels while on higher side resistance is seen around 103.20 levels. The 21-day Exponential Moving Average of the GBP/INR is currently around 101.28. On the daily chart, the GBP/INR has Relative Strength Index (14-day) value of 63.18.
One can buy near 102.20 for the target of 103.20 with the stop loss of 101.70.
EURINR (APR) is trading above its major Exponential Moving Average indicating upwards trends for short term view. The pair has major support placed around 89.14 levels while on higher side resistance is seen around 90.60 levels. The 21-day Exponential Moving Average of the EUR/INR is currently around 89.14. On the daily chart, the EUR/INR has Relative Strength Index (14-day) value of 64.20.
One can buy near 89.90 for the target of 90.90 with the stop loss of 89.40.
JPYINR (APR) is trading between its major Exponential Moving Average indicating sideways trends for short term view. The pair has major support placed around 61.05 levels while on higher side resistance is seen around 62.50 levels. The 21-day Exponential Moving Average of the JPY/INR is currently around 62.14. On the daily chart, the JPY/INR has Relative Strength Index (14-day) value of 44.69.
One can sell near 62.00 for the target of 61.00 with the stop loss of 62.50.
Fintech-SaaS firm, Zaggle Prepaid Ocean Services has received the final observations from the market regulator SEBI for its proposed initial public offering (IPO). Zaggle is a leading player in spend management with a differentiated value proposition and diversified user base. The company received its final observation letter from Sebi on March 29, 2023. ICICI Securities is the co-ordinating lead manager for the IPO. Zaggle filed its IPO draft on December 21 last year. The company plans to raise funds through the IPO which consists of a fresh issue worth ₹490 crore and an offer for sale (OFS) of 10,526,316 equity shares by selling shareholders. The equity shares offered under the IPO have a face value of Re 1 each. Among the selling shareholders for the IPO are -- - promoters Raj P Narayanam and Avinash Ramesh Godkhind, while other shareholders are VenturEast Proactive Fund LLC, GKFF Ventures, VenturEast SEDCO Proactive Fund LLC, Ventureast Trustee Company, Koteswara Rao Meduri, and Malvika Poddar. Of the total IPO, 75% of the portion will be kept for qualified institutional buyers (QIBs), while 15% will be allocated to non-institutional investors (NIIs) and the remaining 10% will be kept for retail individual investors (RIIs). Book Running Lead Managers (BLRM) to the IPO are -- ICICI Securities, Equirus Capital, IIFL Securities, and JM Financial. While KFin Technologies is the registrar of the IPO.
Cyient's subsidiary Cyient DLM received the go-ahead from the market regulator Securities and Exchange Board of India (SEBI) to launch its initial public offering (IPO). The public offering comprises a fresh issue aggregating up to Rs 740 crore. Cyient DLM may consider a further issue of specified securities, including by way of a private placement, rights issue, preferential offer worth Rs 148 crore in consultation with the book-running lead managers before the filing of the red herring prospectus (RHP) with the registrar of companies, the company said in its media release. But that will be subject to applicable laws. Axis Capital and JM Financial are the book-running lead managers to the issue. Cyient DLM focuses on highly complex, low-volume electronics manufacturing for safety-critical segments.
Mumbai-based Rashi Peripherals Ltd among the leading value-added national distribution partners for global technology brands in India for information and communications technology (“ICT”) products in terms of revenues and distribution network in Fiscal 2022 has received final observation from the capital markets regulator, Securities and Exchange Board of India (SEBI), to raise Rs 750 crore through an initial public offering (IPO). The company had filed preliminary IPO papers with Sebi on January 18, 2023. The public issue with a face value of Rs 5 per equity share is a complete fresh issue of shares of Rs 750 crore with no offer-for sale component. The Offer is being made through the Book Building Process, wherein not more than 50% of the Offer shall be available for allocation to Qualified Institutional Buyers, not less than 15% of the Offer shall be available for allocation to Non-Institutional Bidders and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders. The company, in consultation with the lead bankers to the issue, may consider a private placement of equity shares for cash consideration aggregating up to Rs 150 crore. If such placement is completed, the fresh issue size will be reduced. The proceeds from its fresh issuance, Rs. 400 crore will be utilised for prepayment or scheduled re-payment of all or a portion of certain outstanding borrowings availed by the Company, Rs 200 crore for funding working capital requirements and general corporate purposes.
Healthvista India, the parent company of the healthtech startup Portea Medical, has received approval from the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO), per a SEBI. Portea filed its draft papers with the market regulator in July 2022, along with an addendum to its draft red herring prospectus (DRHP) on March 10, 2023. The IPO comprises a fresh issue of equity shares worth INR 200 Cr and an offer for sale (OFS) of up to 56,252,654 shares worth INR 800 Cr. Portea plans to list on the BSE and NSE post the IPO. The OFS will see Accel sell up to 24,804,874 shares that it holds across Accel Growth III Holdings (Mauritius) Limited, Accel India III (Mauritius) Limited and Accel India V (Mauritius) Limited. Ventureast Life Fund III will sell up to 4,278,680 shares and MEMG CDC Ventures will sell up to 4,445,735 equity shares. Qualcomm Asia Pacific will be selling up to 4,256,924 equity shares and Sabre Partners Trust will offload up to 3,984,752 equity shares in the OFS.
The ambiguity of price discovery for IPO shares on the listing day is likely to be a thing of the past. SEBI has now asked the exchanges to compute an equilibrium price for the newly-listed stocks at the end of the day’s trading session on the first day of listing. The ongoing call auction system, where all the bids are collected first and then matched, will continue separately on the exchanges but the final closing price on the NSE and the BSE will be the same based on the equilibrium calculation, as per SEBI’s new circular. SEBI’s circular on the formulation of price bands for the first day of trading after IPO, re-listing, etc., in the normal trading sessions, has said call auction sessions will continue to be conducted separately on individual exchanges. After discussion with stock exchanges and Secondary Market Advisory Committee, SEBI has said orders will be matched by respective exchanges after the computation of the equilibrium price. SEBI has declared that if the difference in the equilibrium price between exchanges in percentage terms (i.e. absolute difference or a minimum of equilibrium prices, expressed as a percentage) is more than the applicable price band for the script, a common equilibrium price (CEP) will be computed by exchanges.
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ICICI Prudential Mutual Fund has announced the launch of ICICI Prudential Innovation Fund, an open-ended thematic equity scheme which will predominantly invest in equity, equity-related securities of companies and units of global mutual funds/ETFs that can benefit from innovation strategies and themes. The new fund offer or NFO Opens on April 10 and closes on April 24. The scheme will follow a bottom up approach and can take exposure to companies involved in product/services/solution related innovation. The scheme can invest across market cap, basis suitable opportunities. The scheme will be managed by Anish Tawakley and Vaibhav Dusad. Overseas investment will be managed by Sharmila D’Mello. The benchmark of the scheme is Nifty 500 TRI. The scheme will invest a minimum of 80% in companies adopting innovation strategies and themes & Overseas Securities adopting innovation strategies and themes. The scheme will be both sector and marketcap agnostic. The scheme may invest upto 20% of its net assets in ADR / GDR / Foreign securities / Mutual Funds / ETFs.
Bajaj Finserv Mutual Fund, the latest entrant to the mutual fund industry, has filed papers for launching seven schemes in equity, debt, and hybrid categories. Bajaj Finserv received the final approval from the Sebi in March this year to commence its mutual fund operations under the Bajaj Finserv Mutual Fund banner. Under the equity category, the fund house has filed papers for large & mid cap, and flexi cap funds. In the hybrid category, the fund house plans to launch an arbitrage fund and balanced advantage fund. In the debt category, the fund house plans to offer three schemes: a liquid fund, money market fund, and overnight fund. The schemes will be open-ended schemes. The scheme under the money market fund category will be named Bajaj Money Market Fund with an investment objective to generate regular income through investment in a portfolio comprising money market instruments. The scheme will be benchmarked against NIFTY Money Market Index B-I (a scheme with relatively low-interest rate risk and moderate credit risk). The scheme will be managed by Siddharth Chaudhary and Nimesh Chandan.
L&T Mutual Fund ceases to exist as a mutual fund, capital markets regulator Sebi said. This comes after L&T Mutual Fund Trustee Ltd had informed Sebi that it wanted to surrender the registration granted to L&T Mutual Fund (L&T MF) by the markets regulator pursuant to the approval of change in control of L&T Investment Management Ltd and merger of schemes of L&T MF with HSBC Mutual Fund. Following this, Sebi has accepted the request for surrender of L&T MF's certificate of registration. "Consequently, L&T MF ceases to exist as a mutual fund with effect from April 6, 2023," the Securities and Exchange Board of India (Sebi) said in a statement. Further, it said L&T MF will continue to be liable for all liabilities/ obligations, (including monetary penalties) for violations of the provisions of the Sebi Act and (Mutual Fund) regulations that have taken place before its surrender of certificate of registration.
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