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Weekly Reports

9-Mar-24 Technical & Fundamental Insight

Last week – review

Technical trend turned positive and expected indices to test higher level in 4-day trading week.  Banknifty outperformed this week as ICICIBANK, AXISBANK & SBIN lead the Banknifty rally.  Mid-cap & Small-cap under performed as Small-cap index closed the week with cut of 2%.

Technical Insight

• Nifty range of this week seen at 22334 to 22627 and Nifty above 22627 could provide fresh upside triggers.

• Banknifty range seen at 47206 to 48535.  Banknifty has outperformed this week and outperformance likely to continue.

Approach on Technical: Going into trade next week, GIFT Nifty is indicating gap-up opening of more than 100 points on positive global cues.

Technical trend continues to remain positive and Nifty @ 22627 & Banknifty @ 48161 to act as resistance.  If Indices manage to move above these levels, it could further trigger short covering rally and indices could test higher level in this week on Nifty @ 22921 & Banknifty @ 48535.  

Fundamental Insight

1) Centre Hikes Dearness Allowance To 50% Of Basic Pay For Its Employees
2) Gold Rallies To Record High But May Have Overshot Its Near-Term Upside
3) How Discoms Will Be Hit If They’re To Meet Peak Demand Of 250 GW In April-June
4) Singtel Divests 0.8% Stake In Bharti Airtel For Rs 5,849 Crore

Equichain Wealth Advisors: Market View & Strategy

Global sentiment is turning positive ahead of next round of central banks meeting which starts with Bank of Japan on 19-Mar-24, U.S. Fed on 20-Mar-24 & Bank of England on 21-Mar-24.  Recent rally in Gold, US 10-year bond yield below 4.10% & Dollar index below 103 – market rally on hope of rate cut by US Fed by in May 2024.  ECB kept interest rate unchanged on 7-Mar-24 and guided for rate cut in June 2024 depending on incoming data.  BOJ is expected to hike rate on 19-Mar-24.

We have maintained our exposure around 65% – 75% and would prefer to increase deployment gradually with stock specific approach.  Market continues its uptrend and momentum could get strong if it is supported by action of central banks which could lead to short covering rally ahead of financial year end.

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2-Mar-24 Technical & Fundamental Insight

Last week – review

Indices closed mixed this week as Nifty 50, SENSEX & Banknifty ended with around 1% gain, while Mid-cap 100 & Small-cap 100 closed with loss of around 1%.  GDP data released on Thursday after market hours provided much needed rally from lows of the week to record high on major indices.  Mid-cap & Small-cap underperformed this week as SEBI asked for further disclosure and regulation from Mutual fund.

Technical Insight

• Nifty could see fresh upside above 22446.  Nifty range for this week could be 22297 to 22796.  Nifty above 22297 is seen as fresh break-out.

• Banknifty move on Friday can be seen as big positive and now immediate support @ 47052 and trend remains positive till it holds 47052.

Approach on Technical: Friday’s move after strong GDP data on Thursday after market closing has change direction in short term.  Last Wednesday & Thursday market remain under pressure.

Nifty @ 22096 & Banknifty @ 46562 to act as important and decisive support level.  Technical chart has turned positive and could test higher level.  Nifty is expected to test 22446 & 22796.  Banknifty likely to test 47748 & 48636.  We see Friday’s move as big trigger as Nifty 50 index made fresh high and could open further upside.  

Fundamental Insight

1) India’s GDP Grows 8.4% In Q3 Surpassing Estimates; Full-Year Growth Pegged At 7.6%

The gross domestic product grew 8.4% over a year earlier in the October-December quarter, according to the latest estimates released by the government’s statistical agency. Gross value added, which strips out indirect tax and subsidies, is estimated to have grown 6.5%.

2) Fiscal Deficit Widens To 64% Of Revised Estimates till January
3) India’s GST Collection Rises 12.5% To Rs 1.68 Lakh Crore in February
4) Cabinet Nod for Three Semiconductor Units Entailing Rs 1.26 Lakh Crore Investment

Equichain Wealth Advisors: Market View & Strategy

Nifty closed at fresh 52-week high lead by broad base rally from banking to infrastructure sector.  GST Collection for February came at 1.68 lakh crores, records 12.5% growth compared to previous year while decline compared to previous month’s collection of 1.74 lakh cores.

We see recent development as fresh positive triggers and we may find opportunity to deploy fund available.  In last few weeks, we have been underweighted as we were expecting correction, but market witness sideways correction / consolidation and Friday ‘s rally changed the sentiment.  Q3FY24 GDP number just ahead of election could limit the downside.  Any correction could be seen by market as buying opportunity as strong domestic inflows is now backed by strong economic data

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27-Jan-24 Technical & Fundamental Insight

Last week – review

Market going into 3-day trading week with F&O expiry and profit booking seen in previous week, we expected this week to resume uptrend as ICICIBANK result was in-line with market expectation.  Indices seen yet another week of profit booking as Banknifty continue to remain week as HDFCBANK remain weak closing at 1434.90 which is around 15% correction from 16-Jan-24 close.

Technical Insight

• Nifty expected to be in range of 20976 on lower end while fresh up move could be expected once Nifty crosses 21680.  
• Banknifty range for this week could be seen as 43230 on lower side while fresh up move could be expected once Banknifty sustains above 46571.

Approach on Technical: This week again news flow will drive the market as US FOMC meeting outcome on 31-Jan-24, Indian market will be reacting to it on 1-Feb-24 and Budget ahead of general election will be on 1-Feb-24.

Technical setup is weak and it indicates further downside.  Nifty @ 20976 & Banknifty @ 43230 on lower side could be tested this week.  Nifty @ 21680 & Banknifty @ 46571 could be tested on higher side.  VIX @ 13.86 will be important tool and need to turn cautious if VIX goes above 16.

Fundamental Insight

1) LIC Gets RBI Nod to Acquire 9.99% Stake in HDFC Bank
2) Cabinet Approves Rs 8,500 Crore Incentive Scheme For Coal Gasification Projects: Sources
3) Forex Reserves Fall By $2.8 Billion To $616.1 Billion, Says RBI
4) Budget 2024: Government Likely to Target 5.3% Fiscal Deficit Target for FY25, Say Economists

Equichain Wealth Advisors: Market View & Strategy

This week, US FED meeting outcome on 31-Jan-24, Indian market will react to it on 1-Feb-24 along with Union budget ahead of general election on same date 1-Feb-24.  So, we expect any major move is expected on 1-Feb-24.  

Our strategy would be to focus on keeping exposure around 70% and have balancing approach where we remain positive with medium to long term view and cautious in short term.  Technical setup looks bearish and any lack of positive trigger may lead to correction.  

When we see recent rally, which is seen from December 2023, state election result on 3-Dec-23 and US Fed guided that rate hike may done has triggered the ongoing rally.  We have mentioned earlier also that now focus will shift to earning season which has been mixed so far.  We believe post budget – market could see profit booking as run-up in PSU ‘s has been one of the best rallies seen in recent past.  

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Research Report

Global Market – Key events this week – 14 to 19 January 2024

Global Market – Key events this week – 14th to 19th January 2024

This week we will cover we will cover how China’s stock sell-off and oil squeeze at start of 2023 is seen at surplus.  Red sea crisis event could impact food supply and impact inflation.  U.S. economic data released this week came above market estimate as jobless claim declined.  How key risk indicator reacted this week.

China’s $6.3 Trillion Stock Selloff Is Getting Uglier by The Day

Chinese stocks just capped another dismal week, with a gauge of mainland firms listed in Hong Kong languishing at the bottom of global equity index rankings for the year so far.

Oil Squeeze Of 2023 Turns to Surplus In Warning For Market Bulls

A year ago, crude traders and forecasters anticipated that the fourth quarter would be the strongest point of 2023, with China’s post-pandemic demand recovery pushing prices up to $100 a barrel. More recently, the Organization of Petroleum Exporting Countries has been predicting a record deficit of 3 million barrels a day.

Red Sea Unrest Is Bad News for The World’s Fragile Food Supply

Chaos in the Red Sea is starting to disrupt shipments of produce from coffee to fruit — and threatening to halt a slowdown in food inflation that brought some relief to strained consumers.

U.S. Jobless Claims Plunge To 187,000, Lowest Since September 2022

Initial claims decreased by 16,000 to 187,000 in the week ending Jan. 13, according to Labor Department data released on Thursday. The figure was below all estimates in a Bloomberg survey of economists.

ECB To Pick Right Moment for First Rate Cut, Economists Say

Almost three-quarters of respondents in a Bloomberg survey are confident policymakers will neither wait too long nor act too early — after they were widely accused of tardiness in responding to the continent’s once-in-a-generation price shock.

US 10-year bond yield @ 4.16% & Dollar Index @ 103.10

Key risk indicator in last week has seen risk-off sentiment as US 10-year bond yield rises from 3.94% a week earlier to 4.16% this week, rise of more than 20-bps.  Dollar Index is currently trading above 103 level was trading around 102 level.

Equichain Wealth Advisors: Market View & Opinion

Global cues were positive till last week on December 2023 on optimism of interest to cool-off sooner than expected but global cues in first three weeks of January 2024 does not provide any support to this trend.

We see next two week will be important and as BOJ meeting outcome on 23-Jan-24, ECB meeting outcome on 25-Jan-24, US Fed meeting outcome on 31-Jan-24 & BOE meeting outcome on 1-Feb-24.  Commentary of all these central banks could provide further cues.

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21-Jan-24 Technical & Fundamental Insight

Last week – review

Nifty started this week’s trade with a bang as Nifty manage to cross 22100 level and close at 22097 on Monday.  Market seen major fall on Wednesday as reaction to HDFCBANK which disappointed market as HDFCBANK ADR was down by more than 15% in two trading session.  HDFCBANK seen cut of more than Rs 200 or 12% from 1679 closing ahead of result on 16-Jan-24.  

Technical Insight

• Nifty key support and resistance level this week could be 21411 to 21680.  Break-out on either direction to provide fresh move in a holiday shorten week.
• Banknifty expected to trade in range of 45295 to 46571.  Decisive move can be expected once this level is crossed on either side

Approach on Technical: Indices will be reacting to ICICIBANK ‘s result on Tuesday & holiday shorten week.  Banknifty monthly expiry on 24-Jan-24 & Nifty and stocks final F&O expiry on 25-Jan-24.

Indices after last week has seen sharp correction on back of HDFCBANK ‘s result on 16-Jan-24.  Nifty @ 21411 & Banknifty @ 45295 to act as important support level and indices to remain in uptrend till these levels are hold.  

Fundamental Insight

1) RBI Not Discussing Rate Cuts Yet, Governor Das Says
2) Retail Inflation For Farm Workers Rises To 7.71% In Dec
3) EPFO Adds 13.95 Lakh Net Members During November 2023
4) India’s Fiscal Deficit To Be Budgeted At 5.3% Of GDP In FY25: BofA Securities

Equichain Wealth Advisors: Market View & Strategy

F&O expiry for January series due this week in a holiday shorten week, Indian market will be trading for only 3 days this week as Friday will be holiday for Republic Day and soon after that focus will shift to Vote-On-Account, Mini-budget on 1-Feb-24.  ICICIBANK result is in-line with market estimate with NIM at 4.43% Vs 4.53% in previous quarter.  ICICBANK result is better than street estimate and no major concern seen as compared to HDFCBANK.

We remain cautious optimistic as we see many stocks are fairly valued and focus will clearly shift to budget due on 1-Feb-24.  Market will react positively to successful PRAN PARTHISTHA ceremony of RAM MANDIR as focus will now shift to budget and election.  

We would also be focusing on booking part profit and shifting to stocks which are valued attractively.   We remain open to review our allocation strategy based on incoming data and we do not rule out profit booking post budget on 1-Feb-24.

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13-Jan-24 Technical & Fundamental Insight

Last week – review

Going into trade last week, we expected Nifty range 21506 – 21834 & Banknifty range 47575 – 48636, Nifty tested both end of the range while Banknifty manage to hold lower end of the range.  Banknifty was showing weakness on chart and it has underperformed.  IT result was key highlight for this week as INFY narrowed guidance to 1.5% – 2% indicating worst may be behind as TCS report operating margin at 25%.  

Technical Insight

• Nifty range for this week could be seen as 21631 to 22306.  Nifty move above 21834 has opened further to 22306 level.
• Banknifty range for this week could be seen as 47575 – 48636.  Banknifty range for this week remains same as last week.

Approach on Technical: IT result provided trigger to Nifty this week and Banknifty could take cues from HDFCBANK result due on 16-Jan-24.  Banknifty to take move on either direction.

We will turn cautious or bearish if Banknifty breaks 47575 and fresh upside momentum can be seen on Banknifty above 47980 to 48636 level.  Banknifty could led the positive momentum as chart indicates positive from consolidation. 

Fundamental Insight

1) India’s CPI Inflation Rises to Four-Month High Of 5.69% In December
2) IIP: Growth In India’s Industrial Output Falls To Eight-Month Low At 2.4%
3) Parliament’s Budget Session Likely Between Jan. 31 And Feb. 9

Equichain Wealth Advisors: Market View & Strategy

HDFCBANK result could provide decisive direction to Banknifty and could led next round of rally.  IT stocks rallied this week helped Nifty cross its previous and closed at life time high.  HDFCBANK ‘s quarterly business updates were positive and no negative surprise could support to HDFCBANK stock prices which has seen correction in last two weeks after year end rally which on HDFCBANK which crossed 1700 level.  

We remain positive and would continue to maintain bullish stance unless we see negative cues dominating and market direction turns negative.   Our strategy would to remain long on Banks, Defense stocks and Infrastructure stocks going into Vote-on-account (mini-budget).

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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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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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Research Report

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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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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