Month: June 2024

US stocks: Wall Street ends down sharply; investors fret over economy

Posted on by

Wall Street ended sharply lower on Thursday on worries that the Federal Reserve’s aggressive fight against inflation could hobble the U.S. economy, and as investors fretted about a rout in global currency and debt markets. With tech heavyweights Apple Inc and Nvidia Corp slumping more than 4%, the Nasdaq sank to near its lowest level of 2022, set in mid-June.

The S&P 500 touched lows last seen in November 2020. Down more than 8% in September, the benchmark is on track for its worst September since 2008. A sell-off in U.S. Treasuries resumed as Fed officials gave no indication the U.S. central bank would moderate or change its plans to aggressively raise interest rates to bring down high inflation.

Also read| Reliance, PNB, Hero MotoCorp, Adani Power, Lupin, Bajaj Electricals, Rail Vikas Nigam stocks in focus

“Good news is bad news in that today’s job number again reiterates that the Fed has a long way to go,” said Phil Blancato, head of Ladenburg Thalmann Asset Management in New York. “The fear in the marketplace is that the Fed is going to push us into a very deep recession, which will cause an earnings recession, which is why the market is selling off.”

The most traded stock in the S&P 500 was Tesla Inc, with $20.8 billion worth of shares exchanged during the session. The shares declined 6.8%.The yields on many Treasuries, which are considered virtually risk-free if held to maturity, now dwarf the S&P 500’s dividend yield, which recently stood at about 1.8%, according to Refinitiv Datastream.

Also read| Bears may drag Nifty to 16650 once 16700 support breached; 5 things to know before market opening bell

The S&P 500 dropped 2.11% to end the session at 3,640.47 points.The Nasdaq declined 2.84% to 10,737.51 points, while the Dow Jones Industrial Average declined 1.54% to 29,225.61 points.Volume on U.S. exchanges was relatively heavy, with 11.6 billion shares traded, compared with an average of 11.4 billion shares over the previous 20 sessions.

All 11 S&P 500 sector indexes declined, led lower by utilities, down 4.06%, followed by a 3.37% loss in consumer discretionary.Declining stocks outnumbered rising ones within the S&P 500 by an 11.6-to-1 ratio.Meta Platforms ended down 3.7% after Bloomberg reported the Facebook owner froze hiring and warned employees of more downsizing to come.

CarMax Inc slumped nearly 25% after the used-car retailer missed expectations for second-quarter results, hurt by consumers cutting spending amid inflation, rising interest rates and higher car prices. General Motors Co and Ford Motor Co fell more than 5% each. Airline carriers and cruise operators fell on canceled or delayed trips after Hurricane Ian hit Florida’s Gulf Coast with catastrophic force. American Airlines, United Airlines Holdings and Delta Air Lines each lost more than 2%.Cruise ship operators Norwegian Cruise Line Holdings Ltd dropped 5.3% and Carnival Corp fell 6.8%.The S&P 500 posted no new highs and 106 new lows; the Nasdaq recorded 14 new highs and 518 new lows.

Nifty support seen near 20 bar moving average; buy and sell these two stocks to pocket gains

Posted on by

By Vishal Wagh

The Nifty has seen a sharp sell-off from the levels of 17992. There were three days’ sell-off till 17345. Post that there was pullback till 17726 which also got sold off till 17166. It is the first indication of resistance in place near 18000 levels and any bounce below 18000 levels can be utilized to go short. On the last day of the week, the market witnessed a sell-off from the high of the day. It is a clear indication that the current bear market rally has come to halt. As far as RSI(14) and 9 EMA the same has started moving below 70 levels. Though the super trend (8,2.25) is also below the current bars thanks to pullback last week. As commonly used moving averages(20 Bar, 50 Bar, 100 Bar & 200 Bar) suggest, there is support near 20 bar MA.

The Nifty is sustaining above all MAs. The slope of 20 bar MA is flattening out and the differences between 20 and 50 bar started contracting. This is an additional signal that the Nifty may get some pressure on the higher side. 

Devyani International (Buy)

On a weekly chart, the stock has witnessed a sharp up move post 181 has been taken off on a closing basis. There is a throwback from highs of 215. Near 180 levels it has created a ‘Morning Star’ candlestick pattern. The RSI(14,9) has retraced to major levels of 55 and now quotes at 60.88 and above 9 EMA. As far as 20 Ema is concerned the slope is upwards. Super Trend(8,8.25) has moved upward suggesting a strong bullish trend is intact. On the higher side, 215 will work as resistance once it gets breached then it will come into uncharted territory. On the lower side, 176 should work as support levels. One can go long in the stock with a stop below 176.

Also read: CPI inflation may see marginal uptick to 6.75-6.9% on fall in crude oil prices, IIP may at come in at 5.7-5.9%

Balkrishna Industries (Sell)

Balkrishna Industries has given a breakdown from a symmetrical triangle. It is currently showing support around 100 EMA; once the support gets penetrated the next level of support is at 200 EMA. It is around 1661.80 at a given point in time. Balkrishind is on the verge of death cross as very short-term 20 EMA has got closer to short-term 50 EMA. Both of them have sloped downwards. RSI (14,9) is well below 45 and its EMA is also sloping downwards. All the above observations indicate bearishness in the counter. One can sell the future of Balkrishind with stop loss above 2167 levels for a target of 1661.

Note: All the levels are spot levels.

(Vishal Vasant Wagh, Research Head, Bonanza Portfolio. Views expressed are the author’s own.)

Sugar export quota for 2022-23 soon

Posted on by

The government will soon announce export quota of sugar for the next marketing year (2022-23) commencing on October 1, 2022, food secretary Sudhanshu Pandey said on Wednesday.

However, he did not disclose the volume of sugar to be allowed to be shipped. India exported a record 11.2 mt of the sweetener in the 2021-22 season while in the previous marketing year 7.1 mt of sugar was exported.

Meanwhile, Aditya Jhunjhunwala, president, Isma, urged the government to expedite the sugar export policy, stating that at least 8 mt of exports are necessary for the 2022-23 season, taking into consideration production estimates.

Isma has estimated that sugar production is expected to be 40 mt while around 4.5 mt would be diverted for ethanol production while domestic consumption would be around 27.5 mt.

Also Read: Sebi working on ASBA-like facility for secondary markets

Jhunjhunwala said that the government should allow any of the two prevalent systems followed in sugar exports in the last two years. The government had followed the minimum indicative export quota in 2020-21 and the open general license system in 2021-22.

“The exports of around 8 mt of surplus sugar after meeting domestic demand and diversion towards ethanol would help maintain domestic sugar prices which would boost the liquidity situation of mills and ensure farmers are paid for sugarcane on time,” he said.

Sugar production in 2021-22 is estimated to be more than 36 mt, against an earlier estimate of 35 mt.

Sugar industry has also asked for financial support for increasing ethanol production capacity in the next three years as the government has set a target of blending 20% of petrol with ethanol by 2025. Currently, 10% of the petrol is blended with ethanol.

The ethanol production sector will be requiring an investment of more than Rs 10,000 crore for creating an additional capacity of more than 400 crore litres for achieving 20% blending target.

Currently, out of 430 litres of ethanol produced in the country around 370 crore litres is contributed by the sugar industry.

ISMA also urged the government to increase the minimum support price (MSP) of sugar from the current level of Rs 31 per kg to at least Rs 36-37 per kg in commensurate with hike in fair and remunerative price (FRP) of cane. MSP of sugar was last announced in February, 2019.

Jhunjhunwala has said ‘the government had fixed MSP of sugar at Rs 31 per kg in February, 2019 when the FRP of sugarcane was Rs 275 per quintal. Since then, FRP of sugarcane has increased twice,’.

Since 85% of the sugar mills’ revenue comes from the sales of sugar, it is an important component to pay the cane price to farmers, he stated..

Unilever flags pricing pressure in India as inflation eases

Posted on by

Global consumer goods major Unilever says the India market, its second-largest in the world, may see a deflation in pricing within skincare and fabric cleansing, as commodity inflation moderates. The India unit of the London-headquartered company reported a flat price-led growth last week for the September quarter as it cut product prices within laundry and personal care to shore up sales growth. Volume growth at 2% for the period was the lowest in six quarters.

Addressing investors on Thursday, Unilever’s outgoing CFO Greame Pitkethly said that a few categories in India were dependent on commodity prices.

Unilever named a new chief financial officer Fernando Fernandez on Thursday and replaced division heads as new chief executive officer Hein Schumacher promised to revive a company whose ability to win market share dropped to a record low.

The Dutch executive said Unilever will focus investment on its top 30 brands, which represent around three-quarters of revenue, to drive growth, while paring back other parts of its portfolio.

Schumacher also ruled out any major acquisitions and maintained the company’s long-term sales guidance as he spends more on marketing to restore competitiveness. The new approach marks a departure from the strategy of previous CEO Alan Jope, who was criticised for a failed effort to buy GSK Plc’s former consumer health business. Jope also emphasised the social purpose of Unilever’s brands, which some investors said came at the expense of profitability.

As far as India goes, Pitkethly, who will step down from the CFO role on December 31, said that urban areas remained resilient, while rural areas continued to remain subdued. A gradual recovery in rural growth was likely in the Indian market, he said, even as media intensity had increased with the resurgence of small players.

According to Hindustan Unilver‘s (HUL’s) latest investor presentation, the market value growth of regional players over the last three months was 1.4 times that of large brands in tea, and within detergents, regional brands gained six times faster in the same period.

The growing pressure from small brands has prompted HUL to bring its focus on its ‘Winning in Many Indias’ strategy, which classifies India into 15 consumer clusters. The company is also focusing its attention on its 19 core brands to arrest market share loss notably at the mass end of its portfolio.

Electronics Mart India IPO opens on Tuesday, GMP rises; should you subscribe?

Posted on by

Electronics Mart India Ltd’s (EMIL) Rs 500 crore-IPO will open for public subscription on Tuesday (4 October) and will conclude on 7 October. The price band for the issue has been fixed at Rs 56-59 per share. The consumer durables retail chain’s IPO consists of a fresh issue of equity shares aggregating to Rs 500 crore, with no offer for sale (OFS) component. The company intends to utilise the net proceeds from the initial share sale to fund its capital expenditure, and support incremental working capital requirements. The proceeds will also go towards paying debt, and for general corporate purposes. Ahead of the IPO opening, Electronics Mart India shares were commanding a grey market premium (GMP) of Rs 33 per share.

Also Read: Nifty must hold above 17017 for upmove towards 17250; buy, sell these stocks to pocket gains

Angel One: Subscribe

“In terms of valuations, the post-issue P/E works out to 21.8x FY22 EPS (at the upper end of the issue price band) which is low compared to its peer Aditya Vision Ltd. Further, EMIL has better revenue growth (CAGR of 17%) over 2 years, better return on equity and an expansion plan on the cards. Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a SUBSCRIBE rating on the issue,” the brokerage said.

Nirmal Bang: Subscribe

“Being the 4th largest consumer durable and electronics retailer in India and the largest in South India, EMI enjoys favorable terms of pricing/margins from brands due to its scale – this is a key advantage. EMI has demonstrated superior performance among all major consumer durable and electronics retailers in India in terms of growth with revenue CAGR of 26% over FY15-20 (pre-covid) and also managed to deliver respectable ROE of 17.4% during the covid impacted year of FY22. We believe EMI is being offered at attractive valuations at PE of 21.8x FY22 & EV/EBITDA of 9.7x FY22. We recommend subscribing to the issue,” Nirmal Bang analysts said in a note.

Choice Broking: Subscribe

“Peer comparison and valuation: At the higher price band, EMIL is demanding an EV/Sales multiple of 0.7x, which is lower than the above peer average. Considering the expected growth in the business, we feel the IPO is attractively priced. Thus we assign a “SUBSCRIBE” rating for the issue,” Choice Broking said in a note.

Also Read: Rupee likely to consolidate in near-term, may fall to 83 level, if 82 breached amid global uncertainty

Hem Securities: Subscribe

“Company is bringing the issue at a price band of Rs 56-59 per share at p/e multiple of 17x on post issue FY22 PAT basis. The company is the 4th largest consumer durable and electronics retailer in India with a leadership position in South India. Company’s scale of operations along with its long-standing relationship with leading consumer brands enables it to procure products at competitive rates. The company being one of the fastest growing consumer durable and electronics retailers with a consistent track record of growth and industry-leading profitability has a business model that provides operational flexibility to create a long-term sustainable footprint. Hence, looking at all the above, we recommend “Subscribe” on the issue.” Hem Securities said in a note.

(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

Amid US Fed rate hike, government not averse to weaker rupee vs dollar, says source

Posted on by

The Indian government is not averse to a weaker rupee in line with global market fundamentals, a senior official told Reuters, at a time when the central bank’s intervention has tried to moderate the depreciation in the Indian currency. The comments come against the backdrop of aggressive rate hikes from the U.S. Federal Reserve, which raised rates by 75 basis points overnight, vowing to battle to beat down inflation.

The Fed’s decision sent the dollar to a new 20-year high and the rupee to a record low of 80.61. “A weaker rupee in line with market fundamentals is not a cause of concern to us,” the government official, who did not want to be named, told Reuters late on Wednesday before the Fed’s rate-hike announcement.

Also read| Rupee hits lifetime low, may fall to 81 on strong dollar, risk aversion in markets after Fed jumbo rate hike

The central bank sold a net of $19 billion from its reserves in July alone to prevent the rupee from falling much below 80. Alongside its intervention in the spot market, the RBI’s forward dollar holdings have fallen to $22 billion from $64 billion in April. “India’s current account deficit will hit 4% in the first quarter and remain elevated for the rest of the year. Given the Fed stance, flows will not be adequate for a couple of years. All this points to a structurally weaker rupee,” said Dhananjay Sinha, chief economist at Systematix Shares & Stocks. Sinha said the rupee is overvalued by about 5-5.5% on a real effective exchange rate (REER) basis.

Also read| Rupee likely to depreciate on strong dollar, risk aversion in equity markets; USDINR to trade in this range

India’s current account deficit likely widened to 3.6%, its highest in nine years, in the April-June quarter, driven by soaring global commodity prices and the biggest capital outflows since the 2008 global financial crisis, a Reuters poll found. RBI Governor Shaktikanta Das had said earlier this month that the central bank’s endeavour, amidst the extraordinary global events, has been to anchor expectations and allow the exchange rate to reflect the fundamentals rather than overshoot.