Nifty may hold 14,200, Bank Nifty could head towards 34,900 soon; Axis Bank, Mindtree likely to outperform

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By Dharmesh Shah

Nifty Outlook

The week that was…

Technical Outlook

The weekly price action formed a high wave candle, indicating elevated volatility as profit booking emerged after approaching the psychological mark 15000The rejuvenation of upward momentum backed by improving market breadth makes us confident to believe the index would maintain the rhythm of price and time wise maturity of correction and eventually retest life-time high of 15400 in the month of May 2021. In the process, we expect index to hold the key support threshold of 14200. Therefore, any cool off towards 14600-14500 range would attract elevated buying demand which should be capitalised as an incremental buying opportunity in quality large and midcaps amid progression of Q4FY21 result seasonKey point to highlight is that, the current up move (~900 points) is larger in magnitude compared to early March rally of 868 points. The elongated up move signifies rejuvenation of upward momentum that augurs well for next leg of up move. Going forward we expect corrections to be shallower in nature leading to a higher bottom formation.Sectorally, we believe outperformance in midcap to continue. Meanwhile, BFSI, Pharma, Metal and Consumption to remain in focus.On the stock front, Axis Bank, Cipla, Ambuja Cements, Concor, L&T Infotech, SAIL are preferred large caps while in midcaps, Balkrishna Industries, Carborandum Universal, BEL, Mindtree, Radico Khaitan, Bata India, Tata Chemicals, Jindal Stainless are expected to outperformThe Nifty small cap index resolved out of past two months consolidation and clocked a fresh 52 weeks high, highlighting inherent strength. We expect, broader market indices to endure their relative outperformance wherein small cap would witness catch up activity as Nifty midcap index is hovering at its all-time high whereas small cap index is still 11% away from its life highsStructurally, we believe index has formed a higher base at key support threshold of 14200, which we do not expect to breach. Hence dips should be capitalised as buying opportunity as level of 14200 is confluence of a) Lower band of past two months falling channel placed at 14200, (b) 100 days EMA placed at 14200, (c) Last week’s panic low is placed at 14151

NSE NIFTYBank Nifty OutlookBank Nifty in line with our expectation witnessed a strong rebound during previous week. Despite Friday’s profit booking the index closed higher by more than 3% on weekly basisGoing ahead, we expect the index to maintain the Price and Time wise rhythm and gradually head towards 34900 levels in the coming weeks, as it is the 61.8% retracement of the entire decline (37708-30405). Hence, one should accumulate quality banking stocks in the range of 32000-31500 to ride next expected up moveKey point to highlight is that, the recent up move (3880 points) is larger in magnitude compared to late February up move of 2256 points. The elongation of up move signifies rejuvenation of upward momentum that augurs well for next leg of up move. Therefore, any temporary cool off should not be seen as negative instead it should be capitalised to accumulate quality banking stocksThe index maintained the rhythm of not correcting more than 20% as witnessed since March 2020. In the current scenario it rebounded after correcting 19% from the all-time high (37708). Hence it provides favourable risk-reward setup for the next leg of up moveThe weekly stochastic is seen rebounding from the oversold territory and is placed at a reading of 40 thus validates positive bias in the indexBank Nifty

(Dharmesh Shah is the Head – Technical at ICICI Direct. Please consult your financial advisor before investing.)

ICICI Securities Limited is a SEBI registered Research Analyst having registration no. INH000000990. It is confirmed that the Research Analyst or his relatives or I-Sec do not have actual/beneficial ownership of 1% or more securities of the subject company, at the end of 22/04/2021 or have no other financial interest and do not have any material conflict of interest. I-Sec or its associates might have received any compensation towards merchant banking/ broking services from the subject companies mentioned as clients in preceding 12 months

Tamilnad Mercantile Bank, Tata Steel, Paytm, IDBI Bank, HFCL, GR Infra stocks in focus on weekly F&O expiry

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Bulls may attempt a comeback on Dalal Street on weekly F&O expiry day, suggested early trends on SGX Nifty. Ahead of Thursday’s session, Nifty futures were trading 18 pts or 0.1% up on the Singapore Exchange, signalling a flat to positive start for NSE Nifty 50 and BSE Sensex. “Markets are in strong hands and such a strong recovery amid the global mayhem has further strengthened our belief. We thus reiterate our view to maintain a positive bias however pick the sectors wisely. The IT pack is most vulnerable to the global decline while banking is just inches away from its record high. In short, use dips to buy strength and avoid weak pockets,” said Ajit Mishra, VP – Research, Religare Broking.

Stocks in focus on 15 September, Thursday

Tamilnad Mercantile Bank: Tamilnad Mercantile Bank shares will debut on stock exchanges BSE, NSE today. According to market experts, the stock may get listed flat or at moderate premium over the final issue price of Rs 525 given the lower-than-expected investors’ response to the IPO. The Rs 831.6 crore public issue was entirely a fresh issue by the company, and was subscribed 2.86 times during September 5-7, with retail investors buying shares 6.48 times the allotted quota, non-institutional investors 2.94 times and qualified institutional investors 1.62 times.

Tata Steel: Tata Steel will raise Rs 2,000 crore through the issuance of non-convertible debentures (NCDs) on a private placement basis. The issue is divided into two series. In series one, 5,000 NCDs of face value Rs 10 lakh each will be issued to raise an amount aggregating Rs 500 crore. The date of allotment for the first series is September 20, 2022, and its date of maturity is September 20, 2027. While, under the second series, 15,000 NCDs of face value Rs 10 lakh each will be issued to raise another Rs 1,500 crore. Its allotment date is also September 20, 2022, maturity date is September 20, 2032.

Paytm: The Enforcement Directorate (ED) on Wednesday carried out fresh raids on Paytm and some other agencies in connection with an ongoing money laundering probe linked to alleged financial irregularities by instant app-based loan companies “controlled” by Chinese persons, agencies reported, quoting official sources. They said premises linked to certain payment gateway operators, some companies engaged in these loan app transactions and operators in around three states are being searched. A spokesperson for Paytm said the action was linked to the same matter where the agency had undertaken searches earlier this month.

IDBI Bank: The Centre will soon float an expression of interest (EoI) for strategic disinvestment of IDBI Bank and the transaction may provide a template for privatisation of public sector banks as per the new public sector enterprises policy, department of investment and public asset management (Dipam) secretary Tuhin Kanta Pandey said on Wednesday. IDBI Bank will be the first of its kind transaction where a bank will be privatised in the real sense even though it is even now perceived as a private bank from the regulatory point of view as the government holds 45.48%, below the 51% threshold. State-run LIC holds 49.24% of the lender.

HFCL: The company received advance purchase orders aggregating to Rs 447.81 crore from BSNL and RailTel. The company plans to execute the orders in less than a year. Of the total Rs 447.81 crore, the order from BSNL amounted to Rs 341.26 crore for the supply installation, commissioning, operation, and maintenance of CUPS BNG (Control Plane User Plane Separation Broadband Network Gateway) and associated subscriber Policy Manager & Authentication platform on turnkey basis. The remaining Rs 106.55 crore was for the supply, installation, testing, commissioning, integration with existing infra, operation, and maintenance of IP-based video surveillance system at 180 railway stations under the western region of RailTel for and on behalf of Indian Railways.

Also Read: Paytm share price tanks 45% so far in 2022, but Citi remains bullish on fintech stock, sees this much upside

Balaji Amines: The company that Phase 1 of its 90-acre Greenfield Project (Unit IV) has been completed and the DMC/PC and PG Plant will be ready to commence commercial production by the end of September 2022. This is estimated to result in annual production capacity of 15,000 tons of Di-methyl Carbonate (DMC)/Propylene Carbonate (PC) and 15,000 tons Propylene Glycol (PG). The company has also started construction in Phase 2 of Greenfield Project (Unit IV) for below 2 plants.

G R Infraprojects: Promoters Laxmi Devi Agarwal, Suman Agarwal, Ritu Agarwal, Lalita Agarwal, Sangeeta Agarwal, Kiran Agarwal and Manish Gupta will be selling up to 57,04,652 equity shares or 5.9% stake in the company via offer for sale on September 15-16. In addition, they are also intended to sell additional 8,70,202 shares in an oversubscription option. The floor price has been fixed at Rs 1,260 per share.

Nifty Bank at new high; helps indices recover on volatile day

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The 12-share Nifty Bank index gained 1.3% on Wednesday to end at a record closing high of 41,405. The index is up 13.1% in the last one year.

The gains in banking scrips helped the market in recovering the lost ground, with Sensex rebounding more than 1,200 points from the early lows to settle at 60,346.97 points. The recovery in the benchmarks was led by IndusInd Bank, SBI, Kotak Mahindra Bank, ICICI Bank and HDFC Bank.

Over the past two years, Indian bank stocks have returned to average valuations as the economy improved. Stocks that were not pricing in credit cost normalisation did well and drove the first leg of re-rating. This was helped by strong improvement in India banks’ balance sheets over the past five years despite the Covid crisis. The next leg of re-rating should be driven by loan growth acceleration.

“Strong balance sheets, lessening macro concerns, and improving capacity utilisation set the stage for a capex up-cycle in FY24-25, which we think could drive a second leg of re-rating at Indian banks,” said Morgan Stanley in a recent report.

The foreign brokerage has raised its estimates and price targets for banks, and prefers banks with liquidity/liability franchises that appear best placed to deliver profitable revenue growth.

Also Read: Sensex, Nifty snap 4-day gaining streak, Bank Nifty hits record closing high; check support for F&O expiry day

“Unlike in past cycles, we believe retail deposit competitive intensity will be high, and ability to gain deposit market share will be key. Large banks with higher liquidity and ability to gain deposit market share are best placed to capitalise,” the brokerage said.

According to Deepak Jasani, head of retail research at HDFC Securities, banks are on a good wicket on the back of good credit growth, stronger balance sheets and abating macro-economic concerns.

“If India sovereign bonds get included in global bond indices, then foreigners will come here to buy government securities driving down yields and pushing up prices. Banks are holding a large portfolio of G-secs and they can book mark-to-market (MTM) gains on them.

Credit Suisse expects Indian banks to see strong NIM (net interest margin) improvement over the coming quarters, on the large share of floating-rate loans and an increasing share of loans linked to external benchmarks, which have increased 140-190 bps over the past six months, even as retail deposit costs have increased by 40-90 bps.

“We increase our NIM estimates for FY23E by 20-30 bps for the larger banks. While a large part of the increase in NIMs is driven by the benefit of rising rates and shift to external benchmarks, banks are also benefiting from the mix change, as loan growth has been led by retail and SME segments versus lower-yielding corporate loans. Also, within retail, unsecured loans have seen strong growth trends,” the brokerage said.

Net interest margin is a measure of the difference between the interest income generated by banks and the amount of interest paid out to their lenders, relative to the amount of their assets.

The Nifty IT index, meanwhile, continued to remain under pressure and corrected another 3.4% on Wednesday. With geopolitical uncertainties, and recession fear, Indian IT stocks have corrected by 20-40% in H1CY22. Despite correction, companies are still trading at a premium to long-term average multiple, according to experts.

“Spending on IT may take a back seat in developed economies particularly in Europe where the current energy crisis and inflation may tip several economies into recession,” said Jasani.

Wall Street week ahead: Investors expect no peace in US stocks until bond gyrations subside

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Investors believe the feedback loop between U.S. stocks and bonds will likely be a key factor in determining whether the gyrations that have rocked markets this year continue into the last months of 2022.

With the third quarter over, both assets have seen painful sell-offs – the S&P 500 is down nearly 25% year-to-date and the ICE BofA Treasury Index has fallen by around 13%. The twin declines are the worst since 1938, according to BoFA Global Research.

The S&P 500’s forward price-to-earnings ratio fell from 20 in April to its current level of 16.1, a move that came alongside a 140 basis point surge in the yield on the benchmark U.S. 10-year Treasury, which moves inversely to prices.

“Interest rates are at the core of every asset in the universe, and we won’t have a positive repricing in equities until the uncertainty of where the terminal rate will settle is clear,” said Charlie McElligott, managing director of cross-asset strategy at Nomura.

Volatility in U.S. bonds has erupted in 2022, with this week’s Treasury yield gyrations taking the ICE BofAML U.S. Bond Market Option Volatility Estimate Index to its highest level since March 2020. By contrast, the Cboe Volatility Index – the so-called Wall Street “fear gauge” – has failed to scale its peak from earlier this year.

Also Read: Wall Street nosedives on mounting economic growth concerns

“We have emphasized … that interest rate volatility has been (and continues to be) the main driver of cross-asset volatility. Nevertheless, even we continue to watch the rates volatility complex with incredulity,” analysts at Soc Gen wrote.

Many investors believe the wild moves will continue until there is evidence that the Fed is winning its battle against inflation, allowing policymakers to eventually end monetary tightening. For now, more hawkishness is on the menu.

Investors on Friday afternoon were pricing in a 57% chance that the U.S. central bank hikes rates by 75 basis point rates at its Nov. 2 meeting, up from a 0% chance one month ago, according to CME’s FedWatch tool. Markets see rates hitting a peak of 4.5% in July 2023, up from 4% a month ago.

Next week’s U.S. employment data will give investors a snapshot of whether the Fed’s rate hikes are starting to dent growth. Investors are also looking to earnings season, which starts in October, as they gauge to what degree a strong dollar and supply chain snafus will affect companies’ profits.

For now, investor sentiment is largely negative, with cash levels among fund managers near historic highs as many increasingly choose to sit out the market swings. Retail investors sold a net $2.9 billion of equities in the past week, the second largest outflow since March 2020, data from JPMorgan showed on Wednesday.

Still, some investors believe a turnaround in stocks and bonds may soon come into view.

The deep declines in both asset classes make either an attractive investment given the likelihood of longer-term returns, said Adam Hetts, global head of portfolio construction and strategy at Janus Henderson Investors.

“We’ve been in a world where nothing was working. Most of that agony is over, we think,” he said.

JPMorgan’s analysts, meanwhile, said high cash allocations may provide a backstop for both equities and bonds, likely limiting future downside.

At the same time, the fourth quarter is historically the best period for returns for major U.S. stock indexes, with the S&P 500 averaging a 4.2% gain since 1949, according to the Stock Trader’s Almanac.

Of course, dip buying has fared poorly this year. The S&P 500 has mounted four rallies of 6% or more this year, with each rebound sputtering out to be followed by fresh bear market lows.

Wei Li, Chief Investment Strategist at BlackRock Investment Institute, believes more jumbo rate hikes from the Fed may dent growth, while a slower pace of tightening could hurt bonds by making inflation more entrenched.

She is underweight developed market equities and fixed income, believing that “difficult choices” faced by central banks will spur more market ructions.

Equities may have further to fall than bonds given the high likelihood of a recession in 2023, said Keith Lerner, co-chief investment officer and chief market strategist at Truist Advisory Services.

“We think the upside for equities will be capped because there will be more earnings pain and more central bank tightening,” he said.

Petrol, Diesel Price Today, 24 Sep 2022: Fuel cost steady; check rates in Delhi, Mumbai, Noida, other cities

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Petrol and Diesel Rate Today in Delhi, Bangalore, Chennai, Mumbai, Lucknow: The price of petrol and diesel has been kept steady on 24 September 2022 (Saturday), keeping costs steady for more than three months now. The petrol rate and diesel rates in Delhi are at Rs 96.72 and Rs 89.62 a litre, respectively. In Mumbai, petrol is retailing at Rs 106.31 per litre and diesel at Rs 94.27 per litre. The last country-wide change in price came on 21 May 2022, when Finance Minister Nirmala Sitharaman announced a cut in excise duty on petrol by Rs 8 per litre and Rs 6 per litre on diesel. Since then, Maharashtra is the only state to have cut rates. The Maharashtra government had announced a cut in value-added tax (VAT) on petrol by Rs 5 a litre and by Rs 3 a litre for diesel in July.

Also read:ADB cuts Developing Asia growth view on slowing China expansion

Petrol, diesel prices in Chennai, Kolkata, Bengaluru, Lucknow, Noida, Gurugram

Mumbai: Petrol price: Rs 106.31 per litre, Diesel price: 94.27 per litre

Delhi: Petrol price: Rs 96.72 per litre, Diesel price: Rs 89.62 per litre

Chennai: Petrol price: Rs 102.63 per litre, Diesel price: Rs 94.24 per litre

Kolkata: Petrol price: Rs 106.03 per litre, Diesel price: Rs 92.76 per litre

Bengaluru: Petrol: Rs 101.94 per litre, Diesel: Rs 87.89 per litre

Lucknow: Petrol: Rs 96.57 per litre, Diesel: Rs 89.76 per litre

Noida: Petrol: Rs 96.79 per litre, Diesel: Rs 89.96 per litre

Gurugram: Petrol: Rs 97.18 per litre, Diesel: Rs 90.05 per litre

Chandigarh: Petrol: Rs 96.20 per litre, Diesel: Rs 84.26 per litre

Also read:Indians very quick in picking up on new technology: Sony | Exclusive

Public sector OMCs includingBharat Petroleum CorporationLtd (BPCL), Indian Oil Corporation Ltd (IOCL) and Hindustan Petroleum Corporation Ltd (HPCL) revise the fuel prices daily in line with international benchmark prices and foreign exchange rates. Any changes in petrol and diesel prices are implemented from 6 am every day. Retail petrol and diesel prices differ from state to state because of local taxes like VAT or freight charges.

Ashoka University claims to achieve 100% campus placement in 2022-23; highest salary offered at Rs 35 lakh

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Ashoka University claims to achieve 100% on-campus placement for the academic year 2022-2023. University claimed that the latest placement cycle witnessed the highest salary offered at Rs 35 lakh per annum, a 17% rise from the previous year’s highest, according to the press release.

As per the release, the average salary offer stood at Rs 11.40 lakh per annum. In the given cycle, a total of 355 students were successfully placed, including students from the Undergraduate Programme, Master’s Programme, Ashoka Scholars Programme (ASP) and Young India Fellowship (YIF).

The academic year 2022-23 also witnessed participation of 76 new organisations in the placement process, taking the total number to 271 organisations. This includes global organisations such as Google, The Tata Group, Hindustan Unilever Limited, McKinsey and Company, Deloitte USI, Ernst and Young, Microsoft, Conde Nast, Gen Pact, among others, as mentioned in the release.

“Ashoka University places a strong emphasis on imparting liberal arts and science education in a manner that fosters intellectual curiosity, an interdisciplinary approach to problem solving and broadening the understanding of the human experience among learners. This comprehensively equips our students with the right aptitude and adaptability to navigate the ever-evolving modern job market,” Somak Raychaudhury, vice chancellor, Ashoka University, said.

University further claimed that its Career Development Office currently runs the ‘Career Preparatory Programme’, aiming to empower freshers entering the professional world. It further claims to equip students with skills and knowledge that are highly sought after in the job market. The programme includes masterclasses and talks by industry experts, alumni mentorship programmes, business communication workshops, resume reviews, group discussions, sector and role-wise mock interviews, sector-specific insights, practical problem-solving skills, among other activities, as per the release.

“Through our university’s comprehensive Career Preparatory Programme, we empower our students with the knowledge, experience and expertise needed to excel in their upcoming university placements. As the university continues to grow rapidly, we are confident in our ability to deliver exceptional talent to meet the evolving needs of the industry,” Priyanka Chandhok, vice president, Career Development Office, said.

Harsha Engineers IPO opens today, GMP strong; anchor investors put in Rs 225 crore, should you subscribe?

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The initial public offering (IPO) of Harsha Engineers International Ltd (HEIL) opened on Wednesday for subscription. The precision bearing cages manufacturer has set a price band of Rs 314-330 per share for the initial stake sale which will remain open for subscription till Friday, 16 September. Ahead of the IPO, the company raised Rs 225.7 crore through its anchor book. Harsha Engineers plans to raise Rs 755 crore through this IPO which consists of a fresh issue of Rs 455 crore and an offer for sale (OFS) of up to Rs 300 crore by shareholders and promoters. As part of the OFS, Rajendra Shah is looking to offload shares worth up to Rs 66.75 crore, Harish Rangwala up to Rs 75 crore, Pilak Shah up to Rs 16.50 crore, Charusheela Rangwala up to Rs 75 crore and Nirmala Shah up to Rs 66.75 crore. Harsha Engineers shares were commanding a grey market premium (GMP) of Rs 220 today, according to people who deal in unlisted stocks.

Also Read: Petrol, diesel price today, 14 Sep 2022: Fuel cost steady; Check fuel rates in Delhi, Mumbai, other cities

Harsha Engineers International garnered Rs 225.7 crore from 23 anchor investors and 17 domestic mutual funds ahead of the IPO. The company informed the bourses that it allocated 68,40,855 shares at Rs 330 per share on Tuesday, September 13, 2022, to anchor investors. American Funds Insurance Series Global Small Capitalization Fund, Goldman Sachs Funds – Goldman Sachs India Equity Portfolio, PineBridge Global Funds – PineBridge India Equity Fund, Abu Dhabi Investment Authority-Monsoon are among the investors that participated in the anchor book.

In addition, shares have been allocated to domestic funds Whiteoak Capital, HDFC Mutual Fund, SBI Mutual Fund, Franklin Templeton India MF, UTI MF, SBI Life, Nippon India Mutual Fund, ICICI Prudential Mutual Fund, DSP Mutual Fund, ICICI Prudential Life Insurance & L&T Investment Management are among the investors that participated in the anchor book. Out of the total allocation of 68,40,855 equity shares to the anchor investors, 38,90,610 equity shares were allocated to 9 mutual funds through 17 schemes amounting to Rs 128.4 crore i.e. 56.9% of the Total Anchor Book Size.

Should you subscribe?

“Harsha Engineers with its dominant position is well placed to capture the growing bearing cage demand across industries. We like its increasing focus on other specialized precision components and on the growing EV segment which could boost its EBITDA margins. It is valued at 32.7x FY22 P/E which is at par with its listed peers. Given growth recovery in auto/auto ancillary and strong momentum in the midcaps, we expect the IPO to do well. We suggest investors to Subscribe for listing gains,” said Motilal Oswal in an IPO note.

Harsha Engineers International Ltd is the largest manufacturer of precision bearing cages, with 50-60% market share in the organized market. It offers a diversified suite of precision engineering products across geographies and end-user industries. It operates under 2 business divisions – engineering business and solar EPC business.

“In terms of valuations, the post-issue P/E works out to 32.7x FY22 EPS (at the upper end of the issue price band). Company’s consolidated PAT has grown at a CAGR of ~105% over FY20-22 on back of margin expansion. HEIL has a diverse product portfolio and strong expertise; we believe that these positives are yet to be factored in the valuations commanded by the company. Thus, we have a SUBSCRIBE rating on the issue,” said brokerage Angel One in its note.

Also Read: Rupee may fall on strong dollar, elevated oil prices, risk aversion in markets; USDINR to trade in this range

“At a higher price band, Harsha Engineers is demanding EV/Sales multiple of 2.2x, which is discounted to peer average of 5.6x. Above peer list includes large well established bearing manufacturers, which are trading at higher valuations thereby distorting the peer average. Excluding these highly valued manufacturers, still the demanded valuation by Harsha Engineers is discounted to the peer average. Thus the issue is attractively priced. Considering the future growth outlook of the bearing market; HEIL’s dominant position in the bearing cage market and the demanded attractive valuations, we assign a “SUBSCRIBE” rating for the issue,” said Choice Broking.

(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.)

KEC International order book robust, net working capital to improve

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Supported by a strong order backlog, pick-up in execution and softening commodity prices, earnings of KEC International are likely to grow at a CAGR of 47% over FY22-FY24E. However, any further increase in commodity prices and incremental challenges at SAE Towers are among risks. We maintain ‘buy’ rating on the stock, assigning a multiple of 18x on FY24E EPS and arrive at a target price of Rs 566.

There are are important takeaways from our interaction with the senior management – contribution of transmission and distribution (T&D) business is likely to reduce to 20-25% in the long term from 50% in FY22;  profitability of SAE Towers is likely to return from Q1FY24 onwards with Rs 1,000 crore in revenue and 7-8% EBITDA margin in FY24; and net working capital days are likely to improve Q4FY23 onwards.

The management reiterated a strong order pipeline at Rs 1.1 trillion across the businesses, of which the company has already participated in tenders worth Rs 35,000 crore. FY23-YTD order inflow stands at Rs 6,000 crore with major orders coming from PGCIL. The current consolidated order book stands at Rs 30,000 crore.

T&D contribution may reduce to 20-25% in the long term: Over the past six years (FY16-FY22), revenue contribution of KEC’s non-T&D business increased from 17% in FY16 to 50% in FY22. This was led by a strong revenue growth in the non-T&D business, mainly civil and railways, which grew at 63% and 62% CAGRs respectively, over FY16-FY22.

SAE Towers profitability to improve from Q1FY24: The execution of legacy orders is likely to be completed by October-November 2022. The company said it will focus on execution of tower supply orders and would be selective in taking up EPC orders.

Strong order pipeline: For FY23, the management guided for an order inflow growth of 15%. On the FY23-YTD basis, the company has received Rs 6,000 crore worth of orders across businesses.

Gold prices to trade sideways this week, support at Rs 48500; all eyes on US Fed meet, 75bps rate hike likely

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By Tapan Patel

Commodity prices traded lower with most of the commodities in the non-agro segment witnessed decline during last week except silver which rallied on higher demand. Crude oil prices fell by nearly 2% on demand growth concerns over slowdown fears. Base metals ended in red on China demand worries as COVID worries continued to haunt the investment sentiments.

Also read: Indian economy to grow at 6.8% this fiscal, CAD may widen to 5.5% of GDP in Q2 FY23

Silver prices traded higher with spot silver prices at COMEX surged by 3.88% to $19.59 per ounce for the week. MCX Silver December futures rose by 3.03% to Rs. 56720 per KG for the week. Silver prices extended rally over higher demand prospects and lower supply worries despite weakness in base metals and gold. The CFTC data showed that Money managers have decreased their bearish silver bets by 17173 lots in the last week.

Bullion prices traded under pressure as prices struggled to hold strength ahead of the US FED rate decision and stronger dollar. Gold prices fell below the crucial support range $1680 per ounce while silver prices pared gains following weak cues after disappointing US CPI data. Last week’s hot inflation data, combined with a strong labor market and retail sales numbers, prompted some to forecast a full percentage point hike. The dollar index traded higher as two days ago the US FOMC meet from Tuesday to set interest rates expectations for a super- sized rate increase of 75 basis points. The Fed is committed to tackle inflation reaching 40-year highs on rising energy and food costs. The dollar index ended 0.70% up at 109.76 for the week. 

Also Read:Nifty likely to head towards 18300 in October, Bank Nifty looks to hit 41800; buy SBI, Bharti Airtel for gains

We expect gold prices to trade sideways to down in this week with COMEX spot gold resistance at $1700 per ounce and support at $1640 per ounce. At MCX, Gold October prices have near term resistance at Rs. 49800 per 10 grams and support at Rs. 48500 per 10 gram. COMEX Spot silver has near term resistance at $20.10 per ounce with support at $18.90 per ounce. MCX Silver December has important resistance at Rs. 58500 per KG and support at Rs. 54000 per KG.

(Tapan Patel, Senior Analyst (Commodities), HDFC Securities. Views expressed are the author’s own.)

MCX Crude oil September futures: Go long for expected target of Rs 7000/bbl; MCX prices may see correction

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By Bhavik Patel

Brent crude has breached $90 on the downside for the first time in eight months after Russia invaded Ukraine. In February when Russia invaded Ukraine, Brent was trading around $90 and then prices skyrocketed when fighting intensified. With recession fears growing and OPEC+ eager to keep prices high, the group may well be forced to make another production cut. This week OPEC+ cut its production target by 100,000 bpd, a move that was largely symbolic due to the group’s underproduction. Market took in stride the cut where prices briefly rallied but weak demand sentiment again came to the forefront as prices took a dive and Brent traded below $90.

China’s zero covid policy is one of the reasons why demand has been weak. Chinese oil import has been declining and they are putting cities under lockdown thus weakening demand from Asia’s largest crude oil buyer. Add to this the expected imminent recession in major European economies, triggered by the energy crisis and sky-high prices and the aggressive interest rate hikes from central banks, including the Fed, and the economic prospects for the world don’t look great for crude right now and that is what is being reflected in the prices. However there is hope for bulls. It’s currently anyone’s guess how the planned price cap on Russian oil will impact markets, especially if Russia follows through on its threat to stop exporting its oil to importers that will have joined that cap mechanism.

Also read: MCX Gold outguns Comex on weak Indian Rupee, yellow metal may trade sideways; buy on dips for gains

In MCX, prices still have room for further correction. Momentum oscillator RSI_14 is at 38 and historically in the last 2 years, it has bounced from levels of 33-31. So one can expect any short covering from levels of 6400-6300 levels in Sept contract. On the downside, support is around 6400-6300 levels while resistance is at 7200 levels. For next week we would recommend to wait around levels of 6400-6300 where one can go long for expected target of 6800-7000 and keep stoploss around 6200. The reason behind this is prices have already corrected but not to the point of oversold region and so once price comes around the oversold region, one can take a long position as risk/reward will be favourable. In the current scenario, further shorts will not be favourable for the risk/reward position as we have already seen steep corrections and there is room for downside. So wait for prices to come into the support zone for taking further fresh positions.

(Bhavik Patel is a commodity and currency analyst at Tradebulls Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)