Sugar, Real Estate May See Bottom Up Movers | Trade Setup: September 26
Trade Setup | Market may not be ripe for a sharp pullback, but difficult to advocate leverage shorts for day weekly traders. #BQLive
Transcript
00:00 Good morning and thanks so much for tuning into The Trade Setup. I am Neeraj Shah. Let's
00:03 take stock off the global news flow before we get to the market action.
00:08 Treasuries extended the sell-off, pushing the 10-year yield to 16-year highs. Yen slid
00:13 to the lowest level since October as these yields inched higher. Evergrande unit missed
00:20 payments on a 48.4 billion yuan onshore bond and the stock has cracked. Oil is headed for
00:37 $150 without the US government action as per a Shell CEO.
00:45 The US markets ended in a green, which is a bit of a respite for anyone watching the
00:50 US markets for the last few days. The yields have inched up higher, 4.56 was the yield
01:02 the last time I checked as of 7.30am, about 16.17. The dollar index gained 1.05, 1.70
01:10 in light of all this, the rupee is relatively well behaved. The GIF nifty indicates a flat
01:22 start and when doesn't it do that? For now, maybe 0.4% lower as well. But let's wait
01:29 and watch how the beginning is. Remember, Asia is actually not trading as the US markets
01:37 indicated. What happened in trade yesterday is interesting. The index went down and then
01:42 came up. So the nifty 50 actually had a volatile day but ended flat at 19.674 and reclaimed
01:50 more importantly, rather the most important pieces, it reclaimed the 50-day moving average.
01:55 The bank nifty was higher by 0.35% with PNB being the top gainer. Broader indices ended
02:03 positive, yet again nifty mid-cap 100 was up about 0.66%, small caps flattish in trade
02:09 and courtesy real estate and sugar which were the top performing sectors in trade yesterday
02:14 with nifty IT being the top loser. Frankly, banks did not play a spoiled sport yesterday,
02:20 it was IT which was the bugbear for markets and I think in a couple of weeks' time or
02:25 three weeks' time, we'll start seeing the commentary from the IT majors for what happens
02:29 in the second half and therefore it will be interesting. Remember, we will now be facing
02:34 a quarter of furloughs and presumably lower execution for the IT majors and therefore
02:39 Q3 commentary may not necessarily be the strongest relative to what would have happened in Q2.
02:45 I don't know what's happening in Q2 but I'm presuming that Q3 will still be weaker as
02:49 compared to Q2 by virtue of the fact that the furloughs come into play. So what's the
02:53 trade setup? The index reclaimed the 50-day moving average which is a marginal positive.
02:58 But while the markets may be ripe for a sharp or rather may not be ripe for a sharp pullback,
03:03 and which is true, but it's very difficult to advocate leverage shorts as well. Remember,
03:08 at about 20,250 or thereabouts, I mean nearly, slightly above 20,000, the indicators, both
03:15 technical indicators, quant indicators, derivative indicators were all saying that it was not
03:19 a good time to do leverage longs. If at all, maybe the highest traders could have taken
03:23 leverage shorts but certainly not a good time to do leverage longs then. I think we are
03:28 getting closer to levels. If not now, then 100, 200 points. But it might not be, and
03:33 some positions thereof, but it might not be great to do leverage shorts. So that's the
03:38 point. I still believe even now, unless you are completely sure of the cycles, be mindful
03:43 that you don't do very large leverage shorts on the index per se. Specific pockets are
03:50 separate. So for example, yesterday we saw strength in sugar and real estate and we continue
03:55 to see some bottom-up movers yet again. There is a large real estate stock which is in news
03:59 today which could also have some move. So we'll talk about some of those. But yeah,
04:03 as per specific pockets go, it's difficult to quite figure out what could happen in a
04:08 given day. For now, it seems that sugar might continue a little bit of that momentum on
04:15 specific pockets and as would real estate. So that's the trade setup for the day. FIs
04:22 were large sellers, 2300 odd crores if I'm not wrong. So be mindful of that as well.
04:28 But some stocks which did some very strong price volume action, they remain in focus
04:33 today. So MCX 6.7% higher on volleys, which are 5.4 times the two-week average. Well,
04:40 Rampuccini, similarly, I was talking about sugar, right up there. Ramco Cements, strong
04:44 move there. But as finance, and I think it's a fundraising specific move, so don't think
04:50 of it as an NBFC move. And Trent, never mind what people say about how expensive it may
04:55 be. I mean, that stock continues to inch higher. Zudio doing the trick for Trent. I wonder
05:02 if the Q2/Q3 volumes and the numbers will actually surprise the street on the upside.
05:07 Let's wait and watch. Then some newsmakers, all-time transformers, as per media reports,
05:12 promoters plan to sell about 12 lakh shares via a block deal, which is about over a 10%
05:17 discount. Floor price is at 4,600 per share, which is a 7% discount with the current market
05:22 price. We do not have independent confirmation of the same, but media reports do suggest
05:26 this is happening. The stock may react. Be mindful of this stock today. Century Textiles
05:32 could react positively because the company's unit has launched a Bengaluru residential
05:37 project. The unit sees about 3000 crores of revenues from new projects. So watch out for
05:42 Century Textiles today. InSwift Labs and InSwift, both of these, but InSwift Labs has approved
05:49 the merger of InSwift with itself. And InSwift Labs will give about 100 shares of the company
05:54 for every 655 held in InSwift after the merger. Now, as per my math, the ratio is heavily
06:02 skewed in favour of InSwift Labs shareholders. I would suspect that you would see a bit of
06:07 a downtick on InSwift and an uptick on InSwift Labs. So do watch out for these two stocks
06:13 in the session today. Not very large stocks, micro caps or small caps, if you will. But
06:18 important to highlight that there is a sharp skew in the allotment ratio for both the stocks.
06:25 So watch out for InSwift Labs on the upside, InSwift on the downside. I think both will
06:29 happen. Stripes Pharma's board has approved the merger of the CDMO and the soft gelatin
06:34 business into Stellis Bio Pharma. The merger will be completed by April 1st. This was known
06:39 in market circles yesterday. I think the official announcement came in post market hours. Shareholders
06:43 will get about one share of Stellis Bio Pharma for every two shares held in the company.
06:47 So do watch out for Stripes as well in trade. What else? There is GR Infra Projects, wherein
06:55 the bids for two projects worth 3600 crores, which were won by the company, have been annulled.
07:02 I would suspect there will be a bit of a slam dunk or a corrective move in GR Infra. So
07:06 watch out for that one. Vishnuprakash Arpung Liya, it's a new IPO, new kid on the block.
07:11 They released some numbers and the numbers look OK. Maybe the stock reacts. Some other
07:16 stocks in focus include Salasar Techno has commenced operations of new zinc galvanization
07:21 plant. Maybe that stock remains in focus. We'll try and touch base with the management
07:25 to see how big a difference could this make. But watch out for this one if it reacts at
07:29 9.15. You should know why so. Mankind Pharma has commenced commercial ops at Udaipur plant.
07:34 Watch out for that one. And Tata Steel has raised, the business has been raised to investment
07:40 grade by Moody's. So that's an upgrade there. Tata Steel had a negative news yesterday,
07:44 has a positive news today. Let's see if the stock reacts. And very interestingly, Mahindra
07:49 and Mahindra, Canada's Ontario, Ontario Pension will buy about 20% stake in the company Mahindra
07:56 Techno for 35 crores. The amount is not significant. It's hardly anything for M&M, but the fact
08:01 that it's a Canadian fund which is buying, it's a pension fund which is buying some stake
08:07 in an Indian company, which is interesting. Some, some brokerage calls, which I thought
08:16 were interesting, included a call from Jeffries on iShare. They are saying it's a time to
08:24 buy iShare. So they prefer iShare and TVS over Hero and Bajaj Auto. Could we see a bit
08:30 of a reversal because in the last few months, iShare has been, I mean, the relative trade
08:36 in favour of Bajaj Auto, maybe Hero and against iShare has worked beautifully. Is this the
08:41 time to turn it around? So Jeffries believes that it's time to buy iShare. So watch out
08:46 for that. HSBC has raised the target price on both Maruti as well as Bajaj Finance. For
08:53 Bajaj Finance, the logic is clear, the fund raise and therefore the addition to book value.
08:56 For Maruti, they're saying that there's a relevance of capacity expansion plans and
09:00 market should take notice of that. So do watch out for that as well. Do watch out for Scient.
09:08 A leading business person has joined the board of Scient. So be mindful of that. That stock
09:15 could have some bit of moves there. And very interestingly for everybody who's worried
09:21 on those agri stocks because of El Nino, I think Sajid Jinnah's conversation with us
09:27 yesterday at the JPMorgan India Investor Summit gives some hope about some bit of resurrection,
09:34 if you will, in that prospect, in those prospects. So be mindful of the agri related stocks.
09:39 By the way, speaking of JPMorgan Summit, conversations today on BQ Prime with a clutch of names,
09:46 Jihangir Aziz at 10 a.m. There is Saurabh Kumar, India Banking and Financials Research
09:52 from JPMorgan at 12.45, Louis Organis at 1 p.m. So that's an interesting conversation
09:59 too. Natika Chopra of FMCG who tracks FMCG at JPMorgan at 11.15 and at 12 p.m. Ankur
10:06 Rudra, India Telecom and IT Research. Actually, he's not just India, he's Asia Pacific. So
10:11 has a great grip on multiple things around this. So would be interesting to hear from
10:17 the two of them on the sidelines of the JPMorgan India Investor Summit as well. Thanks so much
10:22 for tuning in today, viewers. Have a great day ahead.
10:32 Thank you.
10:33 Thank you.
10:33 Thank you.