Month: September 2023

ONGC, Nestle among top stocks to buy, charts show strength; check Nifty’s support, resistance levels

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By Shrikant Chouhan

Indian stock market closed at the lowest point of the day on Tuesday. The market is not stabilizing at any specific level, which is an indication of some more uncertainties in the near term. The Nifty/Sensex closed below the level of 14500/48300 that would keep open the possibilities of hitting 14400/14370 (48000/47900) levels, however, it is crucial for the market to close above the levels of 14450/48100 to maintain the upward bias. On the higher side, 14600/48500 and 14750/48900 would be the main obstacles. Today, although there was some profit-taking seen in the PSU stocks on Tuesday, we feel they can easily attract follow up buying in the next couple of sessions.

On the monthly chart, it is observed that post its drop from the highs of 180 the stock went into a correction phase, however, the stock reversed after forming the strong base at its demand zone and started trading in an upward channel. Additionally current range breakout with incremental volume activity on the daily chart indicates the stock has good potential for further upside.

Canara Bank BUY, CMP: Rs 141.35, TARGET: Rs 150, SL: Rs 136

For the last two months, the stock has been in a downward channel after hitting the double top chart pattern at around 172, and thereafter it found support at its previous lows and reversed sharply by forming a hammer candlestick pattern. Moreover the recent formation of the Cup and Handle chart pattern on the daily time frame with rising volumes indicates bullish movement in the near term is very likely to persist.

Nestle India BUY, CMP: Rs 16,546.6, TARGET: Rs 17,400, SL: Rs 16,200

For the last few days the stock was trading in a lower top and lower bottom series chart formation and eventually the downward move took a pause at the rising trend line and it seems that the bulls got into action, further the technical oscillator stochastic indicates trend reversal as it is signaling the oversold condition of the counter.

Cummins IndiaBUY, CMP: Rs 845.3, TARGET: Rs 890, SL: Rs 825

Strong reversal formation is evident from the multiple support area of 820, inverted hammer candlestick formation followed by star pattern on the weekly scale hints at bullish momentum in the counter incoming horizon.

(Shrikant Chouhan is Executive Vice President (Equity Technical Research), Kotak Securities. Views expressed are the author’s own.)

Ontario fund buys 30% in Mahindra arm for Rs 711 cr

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Canada-based Ontario Teachers’ Pension Plan Board (OTPP) will buy a 30% stake in Mahindra Group’s renewable energy platform – Mahindra Susten – for `711 crore.

The parties have signed binding agreements pursuant to which Ontario Teachers’ will buy the Mahindra Susten stake at an equity value of Rs 2,371 crore.

The platform – Mahindra Susten – includes renewable engineering, procurement and construction businesses with capacity constructed of over 4 GWp and an independent power producer business with about 1.54 GWp of operational solar plants. OTPP is a global investor with net assets of C$242.5 billion.

Also Read: US Stock Market Investment from India: How to start, which funds to buy – All your questions answered

The companies will also set up an Infrastructure Investment Trust (InvIT), including renewable power assets seeded by MSPL with operational capacities of about 1.54 GWp, by FY24, Mahindra said in a regulatory update.

“This transaction will enable Mahindra Susten to build a strong renewable energy business focused on solar energy, hybrid energy, integrated energy storage and round-the-clock green energy plants,” it said.

Consequent to the stake sale, Mahindra Susten would cease to be a wholly-owned subsidiary of Mahindra Holdings. However, with the latter holding more than 50% of equity share capital, the platform would continue to be a subsidiary.

As part of the transaction, shareholder loans of Rs 575 crore advanced by Mahindra Group to the platform would also be repaid. Following the deal, Mahindra Group will receive about Rs 1,300 crore (sale of 30% stake and repayment of loans).

Mahindra will deploy Rs 3,050 crore (Rs 1,300 crore from the stake sale and an additional Rs 1,750 crore) into the business and InvIT over the next seven years. On its part, Ontario Teachers will infuse an additional amount of up to Rs 3,550 crore during the same period.

Mahindra will also sell an additional 9.99% stake in Mahindra Susten to any investor, or 2OL, by May 31, 2023, based on mutually agreed considerations, the statement added.

“The partnership with Ontario Teachers’ will enable the Mahindra Group to unlock value in the renewable energy sector with continued joint investments towards accelerated growth. Mahindra Group aims to be Planet Positive by 2040 and the continued inflow of patient, long-term capital in our climate positive businesses is validation of our commitment to be a global Environmental, Social and Governance leader,” Puneet Renjhen, member of Group Executive Board and executive vice president, EVP, Partnerships & Alliances at the Mahindra Group, said.

Avendus Capital was the financial advisor and Khaitan & Co the legal advisor to the Mahindra Group, while Ambit was the financial advisor and Cyril Amarchand Mangaldas the legal advisor to Ontario Teachers’ for the transaction.

“As part of our climate change strategy, we have committed to continue growing our portfolio of green assets around the globe with investments like Mahindra Susten. This strategic partnership marks the beginning of what we hope will be a long-term and mutually beneficial relationship with the Mahindra Group,” Bruce Crane, senior managing director, Asia Pacific, Infrastructure & Natural Resources at Ontario Teachers, said.

As per the updated Nationally Determined Contributions of the United Nations Framework Convention on Climate Change, India has committed to reduce emissions intensity of its GDP by 45% by 2030 from its 2005 levels, and achieve about 50% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. These are steps towards achieving India’s long-term goal of reaching net-zero by 2070, which will give a fillip to the renewable industry in the country.

Torrent Pharmaceuticals Rating: Buy | Deal could be marginally value accretive

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Torrent Pharma LAST week announced that it has entered into a definitive agreement with shareholders of Curatio to acquire a 100% stake in the company for an EV of Rs 18.85 bn. Curatio, primarily a cosmetic derma company established in 2005, achieved turnover of Rs 2.24 bn in FY22. The acquisition valuation of 8.4x EV/sales and 30.5x EV/Ebitda (FY22) is higher than for most recent acquisitions in the domestic pharma market (typically 3-4x EV/sales). The company expects to extract sales and cost synergies from the acquisition like it did in earlier deals with Unichem and Elder pharma.

Curatio recorded revenue CAGR of 16.9% over FY16-22, with consistent improvement in Ebitda margin. Management commentary suggests that it expects healthy double-digit revenue growth to sustain in the near term and Ebitda margin to reach the ~40% level in the medium term. Strategically, the acquisition expands TRP’s presence in derma (particularly cosmo derma segment) and provides a platform to build an OTC business over time.

The acquisition will be EPS dilutive by 5-10% over the next three years, as per our estimates. On valuation upside we are neutral here. Given high valuation paid, it is difficult to expect significant value accretion from the deal at this stage, particularly on TRP’s high market cap compared to when it did its earlier acquisitions. The deal could still be marginally value-accretive. We don’t expect any material value destruction as the branded business presents scope for steady growth with price increases and the acquisition is debt funded without causing any balance sheet stress.

Our current estimate for TRP don’t factor in contribution from the Curatio acquisition.

The acquisition may be completed in a month. We have a Buy rating on the stock with a target price of Rs 1,782 based on 17.5x one-year-forward Ebitda (Sep-24 Ebitda). At the current price the stock is trading at 19.1x and 15.8x FY23F/24F Ebitda and 35.3x/ 29.1x/24.4x FY23F/24F/ 25F EPS of Rs 43.4/Rs 52.7/Rs 62.3.

Curatio: Player in cosmetic derma segmentCuratio was established in 2005 by executives of American Remedies, which was merged with Dr Reddy’s in 2001. Curatio primarily focuses on derma segment, particularly in cosmo derma segments. The company clocked revenues of Rs 2.24 bn in FY22. Derma and cosmetic derma in particular contributed 95% and 80% of the sales, respectively. The cosmetic derma market is at Rs 36 bn (MAT Aug 2022) and recorded a CAGR of 16% over the past 10 years, according to the company. This compares to an IPM CAGR of 10% over the period.

Pediatric products (products for babies and children) accounted for ~60% of the sales in FY22. The other key segments are Acne/Face care and Hair/Scalp care, which accounted for ~20% and ~12% of FY22 sales, respectively. The company has a portfolio of ~50 brands, with the top five and ten brands accounting for ~Rs 60% and ~75% of sales, respectively.

Acquisition valuationTorrent will acquire Curatio for Rs 18.85 bn, thus valuing the company at 8.4x EV/sales and 30.5x EV/Ebitda on FY22 sales and Ebitda of Rs 2.24 bn and Rs 600mn, respectively.

Sanjiv Bhasin’s top trading ideas for next quarter: Bet on select IT, bank stocks as yields rise | INTERVIEW

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Indian share market benchmarks BSE Sensex and Nifty 50 have tumbled over 7 per cent from the all-time highs touched in mid-February 2021. Markets have been reeling under pressure due to rising US 10-year bond yields. Sanjiv Bhasin, Director, IIFL Securities Ltd, told Surbhi Jain of Financial Express Online in an interview that higher yields will help banks to lead the gainers pack, while technology stocks on Nasdaq will witness profit booking. He said that the Nifty 50 index may find support around 14,300-14,350 amid volatility, while it will face resistance at the 15,200 level. Sanjiv Bhasin shared a few trading ideas for the coming first quarter of the next financial year. Here are edited excerpts from the interview:

1. Amid current market scenario, what are your support and resistance levels for Nifty 50 and Bank Nifty in the near to medium term?

2. Spike in US bond yields spooked investor sentiment. What should be investors’ strategy? Should they use it as an opportunity, be cautious or wait for the further downside?

There are inflationary expectations that have seen bond yields spiked in the US. Also, the large US$1.9 trillion stimulus will see huge borrowing by the Federal Reserve. This is to be taken with a pinch of salt as short term there can be the repatriation of risk on money back in the US. But in the medium-term, it indicates the growth momentum is very strong which shows US banks come out of 3 years of low yields and now will reap the benefits of higher yields which will see banks lead the gainers while technology stocks on the Nasdaq see profit booking. Emerging markets have already seen profit booking but financials will see huge outperformance as higher yields will see more margins with this being a great opportunity to diversify into banks and NBFCs from select IT and digital plays.

3. What are your top trading ideas for the April-June quarter of new fiscal?

The top trading ideas for the first quarter of the new fiscal year are State Bank of India (SBI), ICICI Bank, Godrej Properties Ltd, HCL Technologies, Sun Pharmaceutical Industries and Bandhan Bank.

4. What should investors do with PSU stocks on divestment hope?

PSU stocks are a great play, as after four years of non-performance now look set to outperform in 2021. The top PSU stock picks are BHEL (Bharat Heavy Electricals Ltd), BEML Ltd, Container Corporation of India Ltd (CONCOR), NBCC (India) Ltd and Hindustan Petroleum Corporation Ltd (HPCL).

5. Besides, grey market premium, people look at IPO subscription status, is it enough to ascertain listing gains?

This has been the recent elephant in the room with a beeline to buy on listing for quick returns, with most having burnt their fingers. Returns disappear as fast as they came with select new listings seeing too much froth–Be watchful.

Rupee likely to trade with negative bias next week amid continued FII outflow from domestic equity markets

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By Raj Deepak Singh

The Indian rupee depreciated this week to a new all-time low and touched 82.2875 level amid continued FII outflow from domestic equity markets. However, rupee found some support after the Reserve Bank of India raised its key repo rate by 50 basis points to 5.90% and appreciated towards 81.50. The dollar index also dropped by almost 1.00% after touching a fresh two-decade high at 114.77 last week after the Bank of England conducted bond buying to stabilize financial markets, which triggered profit booking in the US dollar after the recent rally. Further, dollar was pressurised after German Chancellor Olaf Scholz set out a 200 billion euro ($194 billion) package to protect companies and households from the impact of soaring energy prices.

We expect the US dollar to depreciate further in the coming week and break the level of 111.00 to touch 110.40 level amid expectations of a drop in US 10-year treasury yields. We expect rupee to trade with a negative bias next week amid continued FII outflow from the domestic equity markets. Further, rupee may be pressurised by rise in crude oil prices. Moreover, Investors will keep an eye on ISM manufacturing PMI, services PMI, nonfarm payrolls, and unemployment rate data from the US. US unemployment data is expected to remain unchanged at 3.7%

USDINR traded in upward resistance and support wedges and broke resistance wedge to start a new upward trend towards the all-time high of 82.2875. The pair is expected to continue trading in upward trend towards the level of 82.50 after breaking the key resistance level of 82.22 in the coming week. It may consolidate between 82.00 to 82.22 levels before breaking 82.22 level to touch 82.50 level.

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Also Read: Sensex, Nifty snap 7-day losing streak after RBI hikes repo rate; Nifty eyes 17700 with support at 16850

For Monday Rupee may appreciate amid weakness in us dollar index. Further, rupee may be supported by rise in interest rate by RBI from 5.40% to 5.90%. Moreover, investors will focus on ISM manufacturing data from the US, which is expected to remain unchanged at 52.8. USDINR (Sep) is likely to trade towards the level of 81.35.

(Raj Deepak Singh is an Analyst – F&O, Currency, and Commodities at ICICIdirect. The views expressed are the author’s own. Please consult your financial advisor before investing)

Dhouhani Madhya Pradesh Assembly Constituency Election 2023: Date of Result, Voting, Counting; Candidates

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Dhouhani MP Assembly Election 2023 Details: The election for Dhouhani Assembly Constituency in Madhya Pradesh will be held on November 17 this year. The final date of voting and result were known after the formal announcement by the Election Commission of India. Here are the important details of the Dhouhani Constituency Assembly Election 2023 that you should know.

Dhouhani Constituency Madhya Pradesh Assembly Election 2023: Voting Date

November 17 is the date of voting for the Dhouhani Assembly Constituency Election 2023 as announced by the Election Commission of India.

Dhouhani Constituency Madhya Pradesh Election 2023: Candidates List

Bharatiya Janta Party (BJP), Congress and other political parties in the state will announce their candidates for the Dhouhani Assembly Constituency Election 2023 after the announcement of voting dates by the Election Commission of India.

Why Dhouhani Constituency Assembly Election 2023 is Important

Dhouhani is a state Assembly/Vidhan Sabha constituency in the state of Madhya Pradesh and is part of the Dhouhani Lok Sabha/Parliamentary constituency. Dhouhani falls in the Dhouhani district of Madhya Pradesh and is categorised as an urban seat.

Dhouhani Constituency MP Election Result: What happened in 2018

Kunwar Singh Tekam of the Bharatiya Janata Party was the winning candidate from the Dhouhani constituency in the MP Assembly elections 2018, securing 57995 votes while 54202 votes were polled in favour of Kamlesh Singh of the Indian National Congress. The margin of victory was 3793 votes.

2018 Dhouhani Assembly Constituency Election Result

Winning Candidate NameParty NameTotal VotesKunwar Singh TekamBharatiya Janata Party57995

Candidate List Party Name Votes Gained (Vote %) Kunwar Singh Tekam Bharatiya Janata Party 57995 (35.85%) Kamlesh Singh Indian National Congress 54202 (33.5%) Rupnarayan Singh Poya Gondvana Gantantra Party 19457 (12.03%) Awadh Pratap Singh Bahujan Samaj Party 9062 (5.6%) None Of The Above None Of The Above 2810 (1.74%) Rajendra Kol Independent 2485 (1.54%) Mahipal Singh Independent 2440 (1.51%) Comread Balraj Singh Communist Party Of India (marxist) 2224 (1.37%) Revti Singh “maravi” Independent 1974 (1.22%) Dharvend Baiga Shiv Sena 1871 (1.16%) Girdhari Baiga Aam Aadmi Party 1747 (1.08%) Kamalsay Panika Bhartiya Shakti Chetna Party 1589 (0.98%) Anurag Singh Peoples Party Of India (democratic) 1116 (0.69%) Deepak Kumar Panika (bhaiyaji) Independent 1003 (0.62%) Dr Ajay Pratap Mauriya Sanjay Sapaks Party 918 (0.57%) Gulbasiya Devi W/o Late Rangdev Singh Independent 893 (0.55%)

Dhouhani Constituency MP Election Result: What happened in 2013

Kunwar Singh Tekam of the Bharatiya Janata Party was the winning candidate from the Dhouhani constituency in the MP Assembly elections 2013, securing 60130 votes while 41129 votes were polled in favour of Tilakraj Singh Uike of the Indian National Congress. The margin of victory was 19001 votes.

2013 Dhouhani Assembly Constituency Election Result

Winning Candidate NameParty NameTotal VotesKunwar Singh TekamBharatiya Janata Party60130

Candidate List Party Name Votes Gained (Vote %) Kunwar Singh Tekam Bharatiya Janata Party 60130 (42.45%) Tilakraj Singh Uike Indian National Congress 41129 (29.04%) Dr Raj Bahadur Singh Markam Bahujan Samaj Party 16220 (11.45%) Rudra Pratap Singh Markam Gondvana Gantantra Party 8127 (5.74%) None Of The Above None Of The Above 3929 (2.77%) Shripal Singh Independent 2358 (1.66%) Comred Balraj Singh Communist Party Of India (marxist) 2232 (1.58%) Dr Ajay Pratap Mauria Sanjay Independent 1844 (1.3%) Heeralal Singh Gond Bhartiya Shakti Chetna Party 1265 (0.89%) Heera Singh Poya National People’s Party 1053 (0.74%) Puspraj Singh Shyam Independent 959 (0.68%) Brij Lal Baiga Lok Jan Shakti Party 879 (0.62%) Revti Singh Akhil Bhartiya Gondwana Party 770 (0.54%) Manohar Singh 756 (0.53%)

Gold Price Today, 21 Sep 2022: Gold rate flat on muted global cues, investors await US Fed meet decision

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Gold Price Today, Gold Price Outlook, Gold Price Forecast: Gold rate and silver rate were trading flat in India on Wednesday, as prices remained steady in global markets. On Multi Commodity Exchange, gold October futures were ruling at Rs 49,216 per 10 gram, up Rs 41. Silver December futures were trading at Rs 56,684 per kg, up Rs 341 or 0.6 per cent. Globally, yellow metal lingered near recent lows as investors prepared for the likelihood of another super-sized interest rate hike from the U.S. Federal Reserve in its effort to tame soaring inflation, according to Reuters. Spot gold was flat at $1,663.73 per ounce. Bullion hovered close to $1,653.10, its lowest level in more than two years marked last week. U.S. gold futures edged 0.1% higher at $1,686.70.

Ravindra Rao, CMT, EPAT, VP- Head Commodity Research, Kotak Securities

Bhavik Patel, Commodity & Currency analyst, Tradebulls Securities

Gold and Silver might see some volatile action late in the day prior to the FOMC statement post 11:30 IST. We have seen historically volatility but the market has already discounted 75bps rate hikes in Sept and Nov. In the unlikely event that the Federal Reserve raises its benchmark interest rate by 1%, it would most certainly pressure gold to lower pricing. 2 Yr US Treasury yield hit nearly 4% which is keeping gold prices under check. Any relief rally is only expected tomorrow as historically this year after every rate hike, we have seen gold climbing. Despite US Treasury yield and dollar moving higher, we have not seen the same selling pressure in gold on the downside indicating that sellers have exhausted and are waiting for fresh triggers. Any breakthrough below $1650 will give bears fresh ammunition for taking gold lower till $1620 but breach above $1700 will take gold till $1725-30. Avoid carrying any overnight position and gold is expected to trade steady in the first half in range of 48900-49250.

Tapan Patel, Senior Analyst — Commodities, HDFC Securities

Gold prices traded steady on Wednesday with spot gold prices at COMEX were trading near $1664 per ounce in the morning trade. MCX Gold October futures opened marginal down near Rs. 49178 per 10 gram following global cues. Gold prices kept range bound trading as market is awaiting the US FED decision over interest rate. A rate hike of 75 bps is already discounted in the market while a larger rate hike will be a surprise. We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1640 and resistance at $1680 per ounce. MCX Gold October support lies at Rs. 48800 and resistance at Rs. 49700 per 10 gram.

Navneet Damani, Sr. Vice President – Commodity & Currency Research, Motilal Oswal Financial Services

Gold prices inched lower as the dollar and Treasury yields firmed, and investors remained cautious ahead of a widely expected large interest rate hike by the U.S. Federal Reserve this week. Last week U.S. inflation data was reported better than expected, which raised the probability of even a 100bps rate hike, increasing the pressure on metal prices. There is 80% probability of a 75bps rate hike according to CME fed watch tool, which the market seems to have discounted for in the prices. Dollar and Yields have been witnessing significant gains since amidst this rate hike expectation, as the dollar continues to hover around its two decade high, while U.S. 10Y yields are steady near ~3.4% levels. Apart from the Fed, this week other central banks like BOE are also expected to keep tightening monetary policy in the face of surging inflation. Indicative of sentiment, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, have dropped to their lowest since March 2020. Apart from the interest rate, focus will also be on the comments from Governor Powell and inflation & growth forecasts. Broader trend on COMEX could be in the range of $1635-1690 and on domestic front prices could hover in the range of Rs 48,850-49,500.

(The views in this story are expressed by the respective experts of the research and brokerage firm. Financial Express Online does not bear any responsibility for their advice. Please consult your investment advisor before investing.)

Gold price today, 13 Sep 2022: MCX gold gets cheaper, down over Rs 250, US CPI inflation to guide yellow metal

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Gold Price Today, Gold Price Outlook, Gold Price Forecast: Gold prices in India were trading lower on Tuesday, yellow metal firmed up globally. On Multi Commodity Exchange, gold October futures were ruling Rs 276 or 0.6 per cent down at Rs 50,355 per 10 gram, as against the previous close of Rs 50,631. Silver December futures were trading Rs 463 or 0.8 per cent down at Rs 57,028 per kg. Globally, yellow metal prices held firm near a two-week high hit in the previous session, helped by a subdued dollar, while investors awaited U.S. inflation data that could provide cues on the Federal Reserve’s interest rate hike path, according to Reuters. Spot gold rose 0.1% to $1,725.70 per ounce, and US gold futures were down 0.2% at $1,736.80.

Also read: Inflation likely to stay 6.5 -6.7% range in coming months; Industrial growth to remain robust

Gold prices held firm after a rally witnessed in the past few sessions, hovering near two-week high, helped by a subdued dollar, while investors awaited U.S. inflation data that could provide cues on the Federal Reserve’s interest rate hike path. As the Dollar index and U.S. Yields witnessed pressure in the earlier session and a rally was witnessed in the both gold and silver prices. Although some profit booking could be on cards after a much awaited upside by market participants. According to the CME fed watch tool there is a 90% probability for one more 75bps rate hike to combat inflation. Germany’s economy, Europe’s largest, will contract next year as a dramatic rise in energy costs due to the war in Ukraine extinguishes the chances of recovery after pandemic-related lockdowns, the Ifo institute said. Focus today will be on U.S. consumer price data, where the expectation is that headline inflation could rise by 8.1% YoY in August versus 8.5% in July. Broader trend on COMEX could be in the range of $1700-1750 and on domestic front prices could hover in the range of Rs. 50,150- 50,870.

Also read: Inflation may cool off in next 2 quarters, another 50 bps RBI repo rate hike likely in September

Bhavik Patel, Commodity & Currency analyst, Tradebulls Securities

Gold had recovered somewhat after both US Treasury securities and the Dollar index softened from $110.23 to $108.18 in a couple of trading sessions. Today’s US CPI will guide gold movement further although 75bps rate hike on 21st sept is already factored in by the market. Until now hedge funds had increased their long positions in USD and profit taking was due which would short squeeze precious metals and that is what is happening right now where silver market rallied 6% at the start of the week as there were heavy shorts in that counter (bearish bets was at 3 year high). Nothing has changed fundamentally and the global backdrop continues to favor the dollar and U.S. assets in general. We believe any confirmed trend will only emerge after the US Fed meet where the Fed will give further ideas about raising interest rates. In MCX 50780 is proving to be strong resistance as since past three trading sessions, gold has reversed from that zone. So go long only above that level.

Tapan Patel, Senior Analyst – Commodities, HDFC Securities

Gold prices held steady on Tuesday with spot gold prices at COMEX were trading near $1722 per ounce in the morning trade. MCX Gold October futures opened lower near Rs. 50424 following stronger rupee. Gold prices are trading firm supported by a weaker dollar as market players are awaiting key US CPI data. We expect gold prices to trade sideways to up for the day with COMEX Spot gold support at $1710 and resistance at $1740 per ounce. MCX Gold October support lies at Rs. 50200 and resistance at Rs. 50800 per 10 gram.

(The views in this story are expressed by the respective experts of the research and brokerage firm. Financial Express Online does not bear any responsibility for their advice. Please consult your investment advisor before investing.)

Will bears drag Nifty to 17150 or bulls stage a comeback? 5 things to know before market opening bell

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Indian equity markets are likely to extend losses on Monday as SGX Nifty was in red ahead of the session, hinting at a negative start for domestic benchmark indices NSE Nifty 50, and BSE Sensex. Global cues are expected to dominate this week, but RBI policy and September F&O expiry will lead to volatility in markets, according to analysts. “Nifty fell sharply for the second consecutive week (down 1.16%), breaking some key technical levels on the way. 17166 is the next support for the Nifty, post which a sharper fall could ensue. 17490 could be the resistance for the Nifty in the near term,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

Also Read: Harsha Engineers, Britannia, Embassy REIT, Coal India, BPCL, State Bank of India stocks in focus

Nifty technical view: “On the technical front, the Nifty formed a bearish candle on a daily chart as well as trading below 21 DMA which adds bearishness to the prices. Nifty has given a breakdown of the horizontal line and given closing below the same which adds bearishness to the prices. On the OI Data, On the call side, the highest was witnessed at 17600 while on the put side was at 17000 level. The daily momentum indicator MACD was trading with a negative crossover which points out the weakness in the counter,” said Palak Kothari, Senior Technical Analyst, Choice Broking.

Nifty, Bank Nifty levels to watch for: “The support for nifty has shifted around 17150 levels while on the upside 17700 may act as an immediate hurdle. On the other hand, Bank nifty has support at 39000 levels while resistance at 40800 levels. Overall, the Nifty is looking weak on charts that can test the 17150 level in the upcoming week closing above 17700 can show an upside rally. Selling on rising is advisable for the upcoming session,” Kothari added.

IPO Watch: Harsha Engineers shares will debut on stock exchanges on Monday. Ahead of the listing, Harsha Engineers shares commanded a grey market premium of Rs 170. The Rs 755-crore IPO was bought 74.7 times by participants. Meanwhile, Isolation Energy, and Concord Control Systems companies set to launch their initial public offering IPO this week. Post IPO issue, the company’s equity shares are proposed to list on BSE’s SME platform. The public offer will be available only on BSE for subscription.

Also Read: Rupee to depreciate on strong dollar; falling crude prices may cap downside, USDINR to trade in this range

Stocks under F&O ban on NSE: The National Stock Exchange has added Vodafone Idea and Zee Entertainment Enterprises to its F&O ban list, taking the total stocks in the F&O ban list to six for September 26 (Monday). Ambuja Cements, Can Fin Homes, Delta Corp, and Punjab National Bank remained under the ban list. Securities thus banned under the F&O segment include companies where derivative contracts have crossed 95 per cent of the market-wide position limit.

AIA Engineering Rating: ADD; Stable performance set to continue

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AIA Engineering (AIAE) is on track to deliver ~30,000te incremental volumes (in line with management guidance) each year in FY23 and FY24, led by steady demand, likely gradual easing of logistics issues and capacity expansion. Company has recently entered into a non-exclusive agreement with SAL Steel Ltd for supply of key raw material ferro-chrome for three years. The deal is likely to result in increased supply of ferro-chrome from the domestic market (currently ~15% of the requirement is imported). As per our channel checks, volumes from Canada and South Africa are also likely to show improvement in FY23. Company is endeavouring to increase its market share on the back of its capability to offer customised solutions, improved product basket and easing of logistics issues. With the recent decline in commodity prices, we expect blended realisations to moderate though Ebitda margin is likely to remain intact. Strong business moat, credible management and robust balance sheet give us comfort on AIAE. Maintain ADD with the TP unchanged at Rs 2,720.

Also read: JSW Paints says reviewing CCI order in complaint against Asian Paints

In FY22, outward freight expenses grew 84% to Rs 4.2bn. Its proportion in export revenues rose to 15.2% vs 10.2% in FY21.

Maintain ADD: The strong upswing in commodity cycle since the onset of pandemic is expected to drive capex from major mining players. AIAE is therefore beefing up its capacity to meet the anticipated increase in grinding media demand. Given easing global supply-chains, we expect new markets in Australia, Africa and the Americas to start contributing to volume growth.

As per the FY22 annual report, grinding media consumption in the mining segment is estimated at 2.5mtpa with less than 20% of it converted to high chrome. Thus, the company has strong headroom for growth by tapping the unaddressed market even if capacity expansion in the mining sector is delayed.

Also read: Paytm share price rises 7% in 6 months, may rally this much more; JP Morgan bullish, should you buy?

Outlook and valuation

The mining sector is expected to undergo capacity expansion given the recent strong upswing in the commodity cycle . For its non-mining segment, AIAE witnessed a demand rebound during H2FY22 led by strong revival in construction and real estate activity.