Time to go for stock-specific trading

Spurred by stellar Q3 GDP numbers, healthy performance in the manufacturing sector, strong auto sales data for February and positive global cues; the benchmark indices closed in the green for third consecutive week. NSE Nifty gained 166 points to end at 22,378, and BSE Sensex climbed 663 points to close at 73,806. On the back of cautionary steps from the regulators to AMCs over exposure to Mid-caps and Small-caps, the broader market underperformed. The Nifty Mid-cap index was down 0.3 percent and the Small-cap 100 index was nearly flat during the week.

The market jumped to new highs on March 1, the first day of the new F&O series and helped the lifted the sentiment. It is pertinent to observe that in February, FIIs have net sold nearly Rs16,000 crore worth of shares on top of nearly Rs36,000 crore of selling in January, while DIIs have remained net buyers since August. The Indian economy’s sharp acceleration in the December quarter has been bolstered by equally impressive tax collections and growing momentum in manufacturing. The GST collection in February grew 12.5 per cent to over ₹1.68 lakh crore, buoyed by domestic transactions. The total gross GST collection for the current fiscal (April 2023-February 2024) stands at ₹18.40 lakh crore, 11.7 per cent higher than the mop-up for the same period last fiscal. India’s economic growth is increasingly being powered by domestic demand, while net exports face uncertainty due to geo-political reasons. The US stock market has been highly concentrated in a few giants- Magnificent Seven. Almost 28 per cent of the S&P-500’s gains so far in 2024 come from the astounding rise of that one company Nvidia at the forefront of the boom in artificial intelligence. Nvidia’s stock is up 59 per cent in nine weeks—after gaining 239 per cent last year. Since the launch of the first Bitcoin exchange-traded fund (ETF), the world’s largest cryptocurrency Bitcoin (in value terms) has surged 35 per cent. This uptrend has been fuelled by a combination of factors, primarily the increased accessibility and legitimacy provided by the ETFs. Bitcoin’s price surged from $46,106 on January 10, 2024, to $62,500 on March 1, 2024. This surge represents a 35 per cent increase in just under two months.

IPO Corner: After a small breather in last fortnight, the primary market is all set for a busy month ahead with several new public offerings scheduled to debut on the Street in the coming week. Next week, as many as seven companies will launch their issues — three of them will be from the mainboard segment. The mainboard IPOs of RK Swamy, JG Chemicals and Gopal Snacks will hit the street to raise a cumulative of Rs1,324 crore. RK Swamy has priced its IPO at Rs270-288 per share. RK Swamy is one of India’s largest integrated marketing services providers, offering a single-window solution for creative, media, data analytics and market research services. JG Chemicals has fixed a price band of Rs210-221 for its maiden public offer. JG Chemicals is India’s largest zinc oxide manufacturer in terms of production and revenue for zinc oxide manufacturing through French process, which is the dominant production technology for producing zinc oxide and has been adopted by all the major producers in Americas, Europe and Asia. Gopal Snacks has fixed a price band for its upcoming public offering at Rs381-401 per share. Gopal Snacks, a fast-moving consumer goods (FMCG) company in India with a major presence in Gujarat, offers a wide variety of savoury products under its brand ‘Gopal’, including ethnic snacks such as namkeen and gathiya, western snacks such as wafers, snack pellets and extruder snacks. The SME segment will see public offers of VR Infraspace, Sona Machinery, Shree Karni Fabcom and Pune E-Stock broking.

Quote of the week: An investment in knowledge pays the best interest

Benjamin Franklin

When it comes to investing, nothing will pay off more than educating yourself. Do the necessary research and analysis before making any investment decisions.

F&O/ SECTOR WATCH

The settlement week witnessed brisk trading in the derivatives segment. Nifty finally ended the February series with the gain of 2.98 per cent to close at 21,983 level. Bank Nifty gained 2.80 per cent in the Feb series to close at 46,121 levels. Rollovers in the Nifty Futures to the March series stood lower at 79 per cent in percentage terms (higher in number of shares at 1.41 Cr shares Vs 1.29 cr shares), while rollover in the Bank Nifty futures stood lower at 74% vs 77% (Lower in number of shares also at 25.71 Vs 36.86 lakh shares). FIIs’ Long to short ratio in index futures at the beginning of the March series stood at 0.54 as against 0.28 Last series. This indicates that FIIs have started covering shorts in the Index futures segment. Sectors that experienced declines in last week include Media and Healthcare, whereas Metal, Consumer Durables, and Auto emerged as the major gainers. Maximum Call Open Interest in Nifty seen at 23,000 and 23,500 strikes. Maximum Put Open Interest was seen at 22,000 and 22,000 strikes. In Bank Nifty, the highest Call Open Interest was observed at the 48,000 and 47,500 strikes, while on the Put side, it was concentrated at the 46,500 and 47,000 strikes. Implied Volatility (IV) for Nifty’s Call options settled at 14.25 per cent, while Put options concluded at 15.02 per cent. The India VIX, a key indicator of market volatility, concluded the week at 15.57 per cent. The Put-Call Ratio of Open Interest (PCR OI) stood at 1.36 for the week. Based on rollover analysis, stocks with positive bias are BEL, Indigo, MFSL, Tata Comm, Tata Motors and Torrent Pharma. Stocks with negative bias are Apollo Hospitals, Asian Paints, Ramco Cement and Titan. The current technical structure makes it mandatory to focus and pay attention highlighting the need to protect profits at higher levels. It would be important not to chase the rally blindly, but rather protect profits at higher levels and rotate the stocks and sectors appropriately. There are greater possibilities of the markets finding resistance at higher levels; it becomes important to lay equal or more emphasis on protecting profits at higher levels. It is strongly recommended that one stays focused on sectors like FMCG, Consumption, Pharma, etc., that are showing improvement in their relative strength against the broader markets. A cautious and selective approach is advised for the coming week.

Stockfutures looking good are Dixon, Havells, Maruti, Pidilite Inds, Tata Steel and Wipro. Stock futures looking weak are Divi’s Labs, GNFC, L&T Mindtree and Vedanta.