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Weekly Reports

16-Dec-23 Technical & Fundamental Insight

Last week – review

Going into trade this week after sharp rally seen in previous week on back of state election result – we were cautiously optimistic.  We did not expect US Fed meeting outcome to trigger fresh round of rally as decision by US Fed to pivot was positive surprise.  IT, Banks / NBFC & Metals are clear winners of low interest rate globally.

Technical Insight

• Nifty recent run-up is vertical rally which warrants some cautious.  Nifty on upside is in unchartered territory could continue momentum & on lower side Nifty @ 20809 can be seen as key support level.
• Banknifty key retracement level at 38.2% comes at 46316 which is around 1800 points from this level.  

Approach on Technical: We will consider technical chart with a view that there was two back-to-back positive events / weeks, first was state election result and seconds was US Fed dovish commentary. 

Nifty rally from 19703 to 21492 is seen without any major correction / consolidation, retracement level on Nifty comes at 20809 (38.2%) & 20389 (61.8%) and retracement level on Banknifty comes at 46314 (38.2%) & 45136 (61.8%) of rally from 43231 to 48219.  We will not add fresh long at current level and wait for correction / consolidation.

Fundamental Insight

1) Net Direct Tax Collection At Rs 10.64 Lakh Crore In April-November
2) Trade Deficit Narrows In November As Imports Fall
3) Rupee Hits Three-Month High As RBI Eases Dollar Buying On Fed Signal, FII Flows

Equichain Wealth Advisors: Market View & Strategy

In a previous week, Indian market had rallied due to domestic reason – state election result declared on 3-Dec-23 which was seen as important ahead of general election next year.  Both this factor has turned positive and when we take Top-down approach, both the recent events can provide at least 5% to 10% premium which market has already rallied.

For next two weeks, we would continue to keep exposure around 80% level and deploy remaining fund only in case of there is 5% correction or stock specific approach with upper limit of 85% for next two weeks.   We will continue to sit tight with 80% allocation in positional portfolio and may reduce exposure by further 10% in trading portfolio bringing exposure in trading portfolio to around 70%.

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16-Dec-23 Fundamental & Technical Insight.pdf
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Global Market – U.S. Fed, ECB & BOE meeting outcome – Difference in policy rates

Global Market – U.S. Fed, ECB & BOE meeting outcome – Different interest rate policy

This week, we will discuss U.S Fed, ECB & BOE meeting outcome.  All 3 central banks have kept rate unchanged, but their commentary was different.  We will discuss what is decision by these central banks and how market has reacted to it.

US Fed meeting outcome on 13-Dec-23

• US Fed keeps rate unchanged at 5.25% to 5.50%.
• The Fed statement was extremely on the dovish side.  The U.S. central bank is unlikely to raise rates any further, bringing an end to its most aggressive tightening cycle in decades.
• FOMC members forecast THREE rate cuts in 2024 amounting to 75Bbps worst of policy easing.
• The Fed’s statement said it will assess the extent of ‘ANY’ additional policy firming, adding the word ‘any’.

ECB meeting outcome on 14-Dec-23

• ECB hold key interest rate at 4.50%
• ECB will step up to exit from € 1.7 billion of pandemic era stimulus package.  ECB will accelerate end of reinvestment under the PEPP bond buying program.
• ECB President Christine Lagarde “The risks to economic growth remain tilted to the downside,”.

BOE meeting outcome on 14-Dec-23

• BOE keep rate unchanged at 5.25%.  Interest rate is at 15-years high, borrowing cost to remain high.
• The BOE reiterated its policy will be “sufficiently restrictive for sufficiently long” to curb inflation.

Equichain Wealth Advisors: Market View & Opinion

We would like to highlight that U.S. Fed continues to enjoys the highest impact as far as global interest rate is concern.  ECB & BOE meeting outcome is in contrast with US Fed which has been surprisingly dovish against expectation seen in past few weeks.  We expect global asset class would continue to remain robust and expect year end rally on all major risk-on asset class.  

After underperforming in 2022 and first half of 2023, market are heading towards interesting time in 2024.  US Fed pivot will be “Big turning point” in global market as two major democracies will be going into election, India’s election in April – May 2024 & US election in November 2024.

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Global Market – US Fed meeting on 13-Dec-23 & US CPI & Core CPI Inflation in focus

Global Market – US Fed meeting on 13-Dec-23 & US CPI & Core CPI Inflation in focus

This week, we would focus on economic data CPI & Core CPI inflation data due to be released on 12-Dec-23 ahead of US Fed meeting.  We would focus on economic data released this week and whether this narrative of interest rate peaking will change or not

US Economic data in last week & Upcoming week

Global market continues to trade near its recent high as optimism on interest rate hike cycle may have ended and interest rate would remain at current level from some time and expectation of rate to come down is later in 2024.

Equichain Wealth Advisors: Market View & Opinion

Key data is yet to be released next week, a day ahead of US Fed meeting outcome, we assume that US Fed will be well aware about the trend which will be considered in the US Fed meeting outcome due on 13-Dec-23.  Currently Fed fund rate monitor tool indicate 94.3% probability of rate to remain unchanged on 13-Dec-23.

We remain cautiously optimistic and we are not expecting any surprise in US Fed decision or any big movement in any of the asset classes as reaction to US Fed meeting outcome.  We expect US Fed to keeps interest rate unchanged and commentary of US Fed chair Jerome Powell will be important

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Weekly Reports

9-Dec-23 Technical & Fundamental Insight

Last week – review

Going trade last week, we kept our focus on technical and market internal and we remain bullish.  But the biggest surprise came from state election result declared on 3-Dec-23 where BJP got massive mandate in 3 states, MP, Rajasthan & Chhattisgarh – Market took this election with big positive move on Monday and followed by weekly gains of above 3% on Nifty & SENSEX and Banknifty gained over 5% this week.  

Technical Insight

• Nifty likely to see sideways consolidation and 20698 & 20508 will act as important support level.  Nifty upward momentum continues to remain strong.

• Banknifty, consolidation from current level could be considered as healthy.  Banknifty key support level on downside comes at 45702 & upsides remains open.

Approach on Technical: Monday, 4-Dec-23 move was surprise and it has changed the narrative & chart pattern in near term.  Technical setup needs to adjust to new reality and premium after Monday’s move.

Our strategy for next would be to wait for confirm negative divergence or negative signal before we book further profit or hedge.  Nifty @ 20508 & Banknifty @ 45702 are two important level to watch incase of any correction.  These levels are current 2% to 2.5% from current level.  Any Fresh long position would be preferred around this level.  Momentum on indices remain strong and we would avoid fresh long as we see trend reversal from current level.

Fundamental Insight

RBI Monetary Policy Highlights: Repo Rate Unchanged At 6.5%, Raises GDP Growth Forecast To 7%

Following the review, the MPC decided:

• To keep the repo rate unchanged at 6.5% unanimously. 
• The standing deposit facility rate, pegged 25 basis points below the repo rate, is at 6.25%. 
• The marginal standing facility rate, which is 25 basis points above the repo rate, is at 6.75%. 

The committee had raised the benchmark repo rate by 250 basis points in the last cycle before opting for a pause starting in April’s meet this year.

Taking into account these factors, CPI inflation is projected at 5.4% for 2023-24, Q3 at 5.6% and Q4 at 5.2%, with risks evenly balanced. Assuming a normal monsoon next year, CPI inflation for Q1:2024-25 is projected at 5.2%; Q2 at 4.0%; and Q3 at 4.7%. The risks are evenly balanced. 

Shaktikanta Das, Governor, RBI

Equichain Wealth Advisors: Market View & Strategy

We would continue to remain bullish on market with a medium-term view, but in short term after recent run-up, we may utilize this rally to book part profit and reshuffle portfolio as we appropriate opportunity.  Momentum remains strong but technical indicates that market is in over-bought zone.  Market from current level would consolidate sideways or correct from current level.  We would wait for correction to initiate fresh buys.

This state election result was seen as semi-final ahead of general election.  Market reaction to this result was positive and market is now trading at premium as we see at least 5% premium is seen as far as overall market is concern.  

We have turned our view bullish on IT stocks ahead of US Fed meeting outcome on 13-Dec-23 and TCS buy-back acceptance announcement this week.  IT in recent times have underperformed and any positive trigger could trigger positive reaction in IT stocks.

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9-Dec-23 Fundamental & Technical Insight.pdf
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Weekly Reports

2-Dec-23 Technical & Fundamental Insight

Last week – review

Going into trade this week we did mention that positive break out could trigger rally of 2% on indices and all major indices are up by more than 2% and Nifty touched fresh life-time high once critical resistance level were crossed.  Rally this week was supported by India’s Q2 GDP numbers which came at 7.6% above estimate, led to rally in infra stocks.

Technical Insight

• Nifty in unchartered territory will further upside to 20525 & above on higher side and key support on nifty for next week could be 19948 & 19736.

• Banknifty upside target for next week could be 45410 & 46310 and support level comes at 43711 on weekly basis.  On Friday, 8-Dec-23 RBI MPC policy – we are expecting volatile session.

Approach on Technical: We consider this week’s closing as positive technical breakout received earlier this week and we see positive trend to continue in coming few weeks, consolidation in first few trading day could be healthy before next up move.

Nifty made fresh life-time high and is currently in unchartered territory, Nifty could test 20525 & 20689 & support level comes at 19948 & 19736.  Banknifty could attempt to outperform in coming weeks as RBI MPC Meeting on 8-Dec-23 could give decisive direction.  Banknifty @ 44207 & 43711 to act as support level while Banknifty could test 45410 & 46310 on upside.  

Fundamental Insight

1) India’s Q2 GDP Grows 7.6% Surpassing Estimates As Manufacturing Spikes
2) Core Industries Grow 12.1% In October Driven By Four Key Sectors
3) Bank Lending To Private Corporate Rises 14.9% In September: RBI Data
4) GST Collections Jump 15% To Rs 1.67 Lakh Crore In November

Equichain Wealth Advisors: Market View & Strategy

Market firing on all cylinders, we expect positive momentum to continue in coming weeks as market will test the sentiment of pause of interest rate hike.  Recent rally may be a good case of – rally on expectation and profit booking on actual news.  We do see further rally run-up to RBI MPC meeting on 8-Dec-23 and US Fed meeting on13-Dec-23 and market could then consolidate or witness profit booking.  

To conclude today’s report – Nifty around 20600 – 20800 & Banknifty around 46000 – 46500 would be good level to book profit around 2nd week of December if comes before the event or post event.  Any correction / consolidation in first few trading days of next week to be considered as buying opportunity ahead key event later this week and next week.

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Global Market – Trading at 2023 high & Economic data in focus

Global Market – Trading at 2023 high & Economic data in focus

This week we will discuss how global equity market which either have made fresh high for 2023 and trading near to highest level and market is now factoring in pause by all major central banks.  Today we will also focus on the economic data of U.S. which will be released ahead of U.S. Fed meeting outcome on 13-Dec-23.

U.S. Economic data

We would focus on jobs data which will be released in next week on 5th, 6th & 7th December 2023.  Jobs data have been robust and continue key factor for U.S. Fed to keep interest rate at elevated level.

Global Market – Rallied around 5% – 7% on major indices

Here we would like to highlight U.S. market which has rallied in range of 5% to 7% on major indices.  European stocks where DAX has rallied by around 7% & CAC by less than 4%.  Indian market in last 1 month has rallied by around 6%.

Equichain Wealth Advisors: Market View & Opinion

We have mentioned last week that we are optimistic and we maintain our positive view.  Market will now focus on upcoming economic data and central banks meeting starting from next week.  Any confirmation of pause by major central banks will be taken as positive.  After current rally, we see market evenly balance to react to any outcome, but in case of any disappointment correction in global market could be painful.  

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AXITA Cotton Ltd – Research Report

AXITA Cotton established in 2013 (ACL, The Company) is a manufacturer
and exporter of international quality Cotton Bales & Cotton Yarn. The
Company have its cotton, ginning and pressing plant at Kadi in Mahesana
district of Gujarat. The plant is close to rich cotton growing areas if
Saurashtra and other regions of Gujarat. The Company is also into sustainable
cotton farming and ginning of sustainable fibers. The Company a certified by
GOTS (Global organic Textile Standards) and OCS (Organic Content Standards)

On 25-Mar-22, AXITA migrated from BSE SME segment to main
board in NSE & BSE segment providing much need liquidity to small investor.

AXITA Cotton listed on BSE SME segment on
10-Jan-19 at Rs. 60/- per share and lot size of 2000 shares and investment
amount of 120,000/- would current be at 17,40,000/- at rate of Rs. 29/- per
shares.

Indian Textile Industry overview

The textiles and apparel industry contribute 2.3% to the country’s GDP, 13% to
industrial production and 12% to exports.

India’s textile and apparel exports (including handicrafts) stood at US$ 44.4 billion
in FY22, a 41% increase YoY.

Equichain Wealth Advisors: Short term investment target of 45 – 50.

Raw material prices are stable and current trading near to MSP (minimum support price set by Government of India).   This will provide stability for company as stable prices will help company to maintain its margin.  Any high volatility in raw material (KAPAS) price could have positive or negative depending on company’s inventory as AXITA is also engaged in trading activity of KAPAS, COTTON BALES, COTTON SEEDS & COTTON YARN.

We expect AXITA to perform consistently in coming quarters maintaining revenue growth and stable margin.  In current FY company has posted Net profit of 12.26 crores Vs 17 crores in last financial year.  If company manages to maintain the stable growth rate, we expect company to deliver net profit of 24 – 26 crores in FY24 which would be more than 40% growth in Net profit.

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AXITA Cotton Ltd – Reserach Report
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Weekly Reports

2-Sep-23 Technical & Fundamental Insight

Last week – review

If Friday’s up move is not considered, indices were flat for this week and continue to trade in narrow range, we expected decisive move but market continue to trade in range as market seen selling pressure on Wednesday & Thursday due to F&O expiry.  Friday’s move came on back of light position carry forward to September series in 2nd half.

Technical Insight

• Nifty range for this week seen as 19319 to 19674.  Nifty likely to cross 19478 and test 19674 on upside while Nifty below 19319 could be seen as weakness and further downside possible.

• Banknifty range for this week 44030 to 45219.  Banknifty above 44578 could see fresh round of up move which could test 45219.

Approach on Technical: Technical continue to remain in range with no clear break-out in either direction.  We continue to expect break-out in next week as F&O expiry for August series is over.

Nifty range for this week seen at 19319 to 19674 & Banknifty range for this week seen at 44030 to 45219.  Nifty above 19478 & Banknifty above 44578 could be seen as fresh round of up move which could test upper range on Nifty @ 19674 & Banknifty @ 45219.

Fundamental Insight

1) Manufacturing PMI Rises To Three-Month High Of 58.6 In August
2) India Sees Russian Oil Ebbing As Rival Suppliers Step Up
3) Economy & Finance El Nino, Food Inflation To Delay RBI’s Easing Of Monetary Policy: Moody’s 

Equichain Wealth Advisors: Market View & Strategy

F&O expiry for August series has flat to negative after 4 months gain from March 2023.  F&O position remain light going into September series as market has seen rally on 1st day of September month & F&O series.

Meanwhile India continues to remain in its own zone of high domestic consumption.  RBI continue to remain vigilant as El-Nino could impact food inflation in near term and RBI may keep interest rate high going into festive season.

We have turned bullish and kept our investment unchanged for this week, our view remains bullish and continue to focus on deployment of fund which is available.  We expect September month to remain positive after consolidation seen in current month.

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2-Sep-23 Fundamental & Technical Insight.pdf
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Global Market – U.S. & China’s economic – Mix picture

Global Market – U.S. & China’s economic data – Mix picture

This week we will discuss U.S. and China’s economic data which continue to give mix indication and two different strategies by world’s top two economy.  U.S. continue to witness robust growth and inflation is key concern and on the other hand for China – recession & slowdown remain key concern.

U.S Economic data & key takeaways

U.S. economic data released this week indicates mix set and which will influence decision making for interest rate in upcoming FOMC meeting on 20-Sep-23.  As guided by U.S. Fed chair Jerome Powell – Fed may pause at September meeting and wait for incoming data.

China’s Economic data & Steps

China’s Caixin manufacturing PMI came at 51 Vs expectation of 49 while PMI data released a day earlier came at 49.7 Vs estimate of 49.1.  

China last week reduced tax on stock trading to boost confidence for the first time since April 2008.  China’s central bank will trim the amount of foreign currency deposits banks are required to hold as deposits.

Equichain Wealth Advisors: Market View & Opinion

Recent steps by China could provide boost to consumption which will result in increase in commodity prices such as Crude oil & Metal.  In this week, crude oil and metal prices have been rising.  This increase in commodity prices will result in high inflation globally and increase worry for U.S. 

Global market continues to indicate mix picture whereas Indian story is getting strong day by day.  U.S. market continues to remain resilient where as China’s market is showing sign of stabilizing after measures of steps taken by Chinese government.  We expect some positive move for global market in the month of September 2023.

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Global Market – U.S. & China’s Economic data mix picture .pdf
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Weekly Reports

12-Aug-23 Technical & Fundamental Insight

Last week – review

Indices this week ended with cut of under 1% on major indices and Banknifty loss by 1.52%.  RBI MPC meeting outcome on 10-Aug-23 – RBI kept repo rate unchanged at 6.50% and continue its stance of “Withdrawal of Accommodation” with 5:1.  Indices seen consolidating for 2nd straight week.  

Technical Insight

• Nifty on daily chart indicate further weakness.  Nifty @ 19160 could act as key support level and Nifty below 19160 could test 18646.

• Banknifty RSI & RSI average indicate further weakness.  Banknifty could test 43541 and further downside possible.

Approach on Technical: Indices on daily chart are seeing some kind of weakness, further consolidation seems likely in the month of August 2023.

Nifty range of this week looks like 19160 to 19674, Nifty below 19160 could indicate further weakness towards 18646.  Nifty above 19674 could be considered as trend reversal as bullish.  Banknifty closed below 44578 could test 43541 level this week.

Fundamental Insight

1) Bank Credit Growth to MSMEs Decelerates in June Quarter: RBI Data
2) Cabinet Approves Rs 1.39-Lakh Crore Plan For Rural Broadband
3) SBI Seeks Buyers For Its Rs 96,000 Crore Bad Loans
4) Credit Card Default Rises To Rs 4,072 Crore In FY23

Equichain Wealth Advisors: Market View & Strategy

Global cues continue to remain mix as market consolidated this week.  With Q1FY24 result near to its end, we see further consolidation and correction from current level would be healthy after market rally seen since last April 2023.

We see current rally as opportunity to reduce exposure and keep exposure around 70% to 85%.  After recent run-up seen in pharma stocks, some sign of fatigue seen.

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12-Aug-23 Fundamental & Technical Insight.pdf
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