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Another Day of Superb Gains. Autos and Financials Push Nifty Up – Share Market Highlights Today

Today’s Market Summarised

The surprises with Nifty continues. With continued power from yesterday’s Union Budget, Nifty was powered up throughout the day and charged ahead. It has closed today with more than 1,000 points from Friday’s closing level.

As was expected, Nifty opened with a gap-up at 14,483 and went up flying. And it stopped and took resistance at nearly the same point as Nifty’s all-time high near 14,730-’750. That level is meant for another day I guess. After touching that level, Nifty quickly fell to take support at 14,500. Then, Nifty slowly moved up from this spot to close at 14,647, up 366 points or 2.57%.

Bank Nifty also followed a very similar pattern. It opened with a very significant gap-up at 33,637 and went up more than 1000 points in less than 20 minutes. After coming back down, the index consolidated in a very volatile range and closed at 34,267 up 1178 points or 3.56%.

Nifty Realty and Nifty Auto continued to fire till the end of day and overtook Bank Nifty as the top gaining sectors. Nifty Media also did well in the day. All indices closed in green today.

Asian markets have all closed in the green today just like yesterday. European markets are also in the green.

News Picks

Tata Motors shares rocked in the day to go up 15%. What less can be said about this. The share has broken many technical resistances and soared high in the day to close as Nifty 50’s top gainer. Surely the increase in Domestic Sales and exports of the company would have helped, as we talked in the pre-market report and scrappage policy announced yesterday. Ashok Leyland also went up more than 8.4%.

Cement stocks rocked throughout the day, as the market realised how beneficial the budget was for these stocks. ShreeCements gained 7.7% while UltraCements gained 6.6%. Grasim also followed UltraCemCo with 5.72% gains.

Shares of SBIN gained 7.2% as the government’s continued faith in PSU banks brought in positivity to the stock. It was one of the top performers in Bank Nifty followed by HDFC Bank gaining more than 5.6%.

After Customs duty on metals was reduced in the budget, metal stocks in the country got confidence from the promise that the price hike in steels won’t be looked at negatively. The customs duty decrease might help the steel prices to stabilise a bit, and remove negative eyes from the sector which has seen big price hikes in steel. Hindalco, JSW Steel gained, even when SAIL fell 5%(it has still gained 7% in the last 7-days).

Shares of Realty stocks went up with cement stocks and builders stocks going up. Godrej Properties, DLF and Pheonix Ltd posted good gains in the day.

L&T also gained 4.92% in the day, with infra stocks going up following the budget. You can read about stocks which will benefit from the budget here.

Shares of Power Grid went up 3% while Siemens went up 7.86% after positive declarations for power companies.

Media index rallied with ZEEL, SunTV and PVR giving good movements. Shares like ZEEL have bounced from a beautiful rebound from its 214-level. Check the charts, and maybe there are many many such rebounds waiting to happen.

Escorts reported a revenue increase of 24% YoY increase in net profit at Rs 2,042.2 crore. Net profit is up 85% YoY at Rs 286.4 crore.

Dixon reported a revenue up 120% YoY to Rs 2,182 crore, with an increase in net profit up 134% YoY at Rs 61.6 crore. The company has also approved a 1:5 stock split.

HDFC’s net interest income rose 26% year-on-year to Rs 4,608 crore in Q3. Net profit of the nation’s largest mortgage financier declined 65% YoY to Rs 2,926 crore in the quarter.

Indigo Paints listed with stellar gains, with over 100% profits being booked by the lucky ones allotted a lot in IPO.

Markets Ahead

Bank Nifty has again gained in the day posting stellar gains. But like was discussed in the pre-market report, it was time for other sectors to shine today. Autos flew sharply with the boost from Tata Motors who is on a stellar bull run.

Nifty has gone up and took resistance at its all-time high. This sudden reversal in sentiments may see a lot of index or stock futures shorters to book losses. This might be the reason for the wide gap between Nifty and Bank futures price vs spot yesterday, although it has stabilised a bit today.

Making it clear, rallies like this are amazing opportunities that the markets offer once in a while. Try to make use of it. Keep watching for Reliance, it has crossed and closed above 1900 with a lot of confidence after noon.

The global markets going green is also bringing in a lot of positivity to the index. This is one reason why I am once again bullish on the market. As long as global markets look good, our market being strong by itself will continue the rally. Even if Nifty does slow down, there will be a lot of stock opportunities. So as is always, the search for more and more ‘multi-bagger’ stocks for your portfolio should continue.

Hope you will all tune in to The Stock Market Show tonight. Keep watching this space for more.

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Unbelievable Rally Takes Up Nifty. Bank Nifty Up 2,500 Points – Share Market Highlights Today

Today’s Market Summarised

While Friday was dominated by bears, today was the day of bulls. And what a historic day for Indian financial markets. The Union Budget was well received by the market, and by well received I mean very well received. The highest gain during a budget session since 1997 where Nifty rose 6%, which was known as the ‘Dream Budget’.

After opening with a very small gap-up at 13,766, Nifty consolidated and fell till around 11 am. But once the budget presentation started in the parliament, there was no looking back for Nifty. There was so much much power that the rally went on to last even till the end of the day. Nifty crossed several key resistance zones including 14,000 and went up to close the day at 14,281, up 646 points or 4.74%. The unbelievable rally, what a day!

Bank Nifty was even more bullish in the day. With so many announcements for the benefits of banks, including divestment of SBI, the index rallied with so much power. Bank Nifty went up from 30,984 to 33,300 in the day. The index closed at 33,089, up 2,523 points or 8.26% for the day.

Bank Nifty was the best performing sector in the day. Metals gained more than 4.8% while Auto went up 4.2%. Pharma closed in the red, down 0.55%.

Asian markets have all closed in the green today. European markets are also in the green. Did our markets push up others today?

News Picks

Shares of IndusInd Bank stood as the top gainer in the Nifty 50 index. Shares of the company rose as the positivity in Bank Nifty took every banking stock up. ICICI Bank was up more than 12.44% at market close. The stock had also gained well on Friday.

PSU Banks including SBI(up 10.44%) rose after Finance Minister’s plans in the budget to divest stake and also pump in funds to the sector. Bank of Baroda and PNB also went up 8.60% and 7.2% respectively.

Auto stocks gained as the Finance Minister announced the scrappage policy. Ashok Leyland gained more than 10%, while Tata Motors gained more than 6.43% followed by M&M at 6%.

All shares in the Realty index gained as the Finance Minister announced many realty schemes, mainly affordable housing plans. DLF gained more than 10% followed by Indiabulls Real Estate going up by nearly 8%.

Pharma index fell mainly with Cipla and Dr Reddy falling in the day. The sector did not see any ‘special’ benefits in the budget. 

Shares of Titan, Manappuram and MuthootFin gained in the day as the proposal to decrease import duties on precious metals resonated well with market participants.

Markets Ahead

Bank Nifty has touched fresh all-time highs. And Nifty is still nearly 500 points away from its post-covid highs. Will be very interesting to see how this turns out in the coming days. Bank Nifty Feb futures was also just 300-400 points away from hitting Upper Circuit(10%) near the end of the day. The fact that many stocks were at key supports after Friday’s fall also made it a very technical rebound.

While I maintain my position of turning bullish once Nifty crosses 14,000, expecting a small correction after today’s freak show of a rally. 

Traders who kept stoplosses would have maybe been in trouble, as the volatility was huge in the day. Although scalping positions and well thought of SLs would have surely made this one of the best days in your trading career. 

Well, today was the day for option buyers with the markets trending into one direction. Sellers would have faced a huge loss today, while intelligent sellers would not have entered at all. Although, even here I would still say that market could have trapped you multiple times if profits were not booked. Scalpers paradise. All in all, a very satisfying day indeed. 

To be clear, Nifty is rallying like this for the first time since April last year just after the Covid crash. And this my friends is the second Nirmala Candle which you just witnessed today. Open the 1-Day charts to checkout how beautiful it looks. We will be covering all updates from this years budget in a separate article today. Stay tuned!

Hope you will all tune in to The Stock Market Show tonight. Keep watching this space for more.

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NIFTY Falls, Banks Stay Steady – Share Market Highlights Today

Today’s Market Summarised

The absolute slaughter of bulls in the market today. Each time Nifty tried to raise its head, got pushed down with more power. After opening with a huge gap-up at 13,954, Nifty quickly formed multiple red candles and started moving down. The index tried to take support at 13,800 but fell more. 

Then at 2 pm, something interesting happened. With banks suddenly skyrocketing, it was as if Nifty had gained some new life. It rallied more than 150 points in 30 minutes. The index then in the next 40 minutes fell 280 points. Can you imagine such high volatility! If you can’t then check out the chart below! Nifty regained some losses and closed the day at 13,634, down 182 points or 1.32%

Bank Nifty was the one who again closed above yesterday’s level. After opening with a gap-up at 30,700, the index fell a bit but then consolidated around 30,500 level. The index was relatively calm, just like the sea is before a storm. After 2 pm, Bank Nifty shot up nearly 600+ points then came down and by the market close, it was back at the same level. But unlike Nifty, the index of banks still closed in the green. Bank Nifty closed the day at 30,565, up 207 points or 0.68%.

Bank Nifty closed in the green today, along with Nifty Realty on the expectation of a good budget announcement. Every other sector fell with Metal, IT and Auto sectors falling more than 2%.

Asian markets closed in the red today. European markets are also in the red.

News Picks

Shares of IndusInd Bank closed as the top-gainer in Nifty 50, ahead of Q3 results announcement today. The market is eyeing for a positive result from the private banker and good commentary from management. The stock had also taken good support and closed above Rs 800 yesterday. Check weekly and daily charts to understand the importance of the level.

Shares of SunPharma jumped more than 7% intraday after 2 pm. The company announced a net profit of Rs 1,852.48 crore, up more than 100%. Other incomes of the company aided the jump beating market expectations. We had talked how results of Pharma companies related to COVID-19 medicines may be good, while that of others may be bad. Is this part of that? 

After ending COVID drug Avigan trials in Kuwait after poor results, and worse than expected Q3 results, Dr Reddy’s fell more than 5.52% today to become Nifty’s top loser. The company posted a Q3 consolidated net profit of Rs 19.8 crore as compared to losses last year but was still much below expectations. The stock has taken support at early August 2020 levels and can be watched for more movements.

Shares of Maruti continued to fall from yesterday, with all auto stocks generally coming under selling pressure. The company had announced a 24% YoY jump in net profits but a fall in margins.

Shares of Tata Steel fell more than 3.64% as the company’s talks for selling Dutch business to Swedish company SSAB failed. We had discussed this deal many weeks earlier, where Tata Steel was expected to reduce their debts with proceeds from the sale. Unfortunate. Weekly charts are not looking good with many temporary supports being broken. You can check out how perfect resistance at 730-740 region was taken before the stock started falling and now support at 595-600 is taken.

Havells India fell more than 11.6% today, as the stock rallied to fresh all-time highs in yesterday’s bear market. Today it was caught by the bears and pushed down. The stock had rallied 32% in a month.

Reliance showed signs of recovery by trading in green, but fell sharply after 2 pm.

Markets Ahead

Well, it was a tough day for traders with no stop losses. And it would have been an amazing day for traders who quickly understood the trend and booked profits without getting too greedy. 

As I do believe, trading is a lot about the emotions of an individual. We have a good weekend ahead of us, with lots of time to study charts and prepare good trading setups for ourselves. Well, investors, you know what to do. Buy the dips and HOLD(as they say in WallStreetBets). But do remember to make sure that your portfolio only has gems, absolute gems of their industries in it. I know, some stocks will keep giving quick and good returns even when the market falls. But trust me on this, in the case of a larger correction to 13,500 or even lower, you want to be holding good shares of good companies.

But do remember that Monday will be the Union Budget Presentation. Markets will be volatile, maybe much more than today. Also, option buyers do remember that since a lot of people are hoping for big movements after the budget to both sides, there will be high premiums in the market at every strike which can work against you. So even if you see market moving in your direction, premiums might fall. Please keep that in mind.

That being said, have a chill and amazing weekend. I know some of us would be closing the week with red portfolios, but do remember the end goal is to take intelligent decisions that will help us protect our capital. Study well, and sleep well. Share this article if you felt it was helpful! And leave a comment down below about any of your thoughts.

Hope you will all tune in to The Stock Market Show tonight. Keep watching this space for more.

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Editorial

Why is NIFTY Falling so Heavily? Find all the Reasons Here!

On 20th January, NIFTY closed at 14,644 points. The next day, it opened with a gap-up at 14,730 points. Just like us, you would have also expected NIFTY to cross the major mark of 15,000 points this week itself.

Startlingly, the next four trading sessions have been completely dominated by the bears. On 28th January, NIFTY closed at 13,819 points. Look at the chart below to understand how the trend has completely reversed in the last five candles. All of the last five candles have created lower lows (as shown by the yellow line). This tells us that the sentiments in the market are pretty bearish.

Within five trading days, NIFTY has lost more than 900 points! What is causing this amazing fall in the market? How have things changed suddenly in the market? When the market is falling so freely, you cannot attribute just one reason. There has to be a cumulative effect which is dragging down the market. Let’s dig deeper and understand why the markets are actually falling!

FIIs are Finally Selling!

(To know who FIIs are, click here.)

From 17th November 2020 to 21st January 2021, FIIs turned into a net seller for just two trading days. These days were 21st December 2020 and 6th January 2021. The net selling quantity in both of these days was pretty low as well (Rs 323 crore and Rs 483 crore respectively). 

All this while, FIIs were pumping a huge amount of money into the Indian equity market. Why? The interest rate in many markets is almost 0%. This means, even if you borrow the money, you don’t have to pay a lot of interest. The FIIs are borrowing money and investing in the equity market. When the market goes higher they will start booking their profits. They will pay their liabilities and enjoy the profits they have earned. Very simple, right? It is the retail investors who get trapped in this cycle. He is unaware of when to exit and in the bullish market, he expects his portfolio to turn even greener.

The tides have changed significantly now. In three continuous trading sessions, FIIs have pulled out a lot of money. On 22nd, 25th and 27th January, FIIs have been a net seller for Rs 635 crore, Rs 765 crore and Rs 1,688 crore respectively. This is still very less compared to how much they have been buying in the last many weeks. We have been saying that FIIs have been on an unimaginable buying spree over the last few months. Is that rally finally over now?

Retailers have also been part of the ride, and many booked profits in the peak.

Global Markets Running out of Steam?

Dow Jones reached 31,188 points on 20th January 2021. Since then, it has lost almost 1000 points in just one week. FTSE 100 is an index of England’s stock market. The index crossed 6,850 points on 8th January 2021 but has fallen to 6,550 points as of 28th January. A similar pattern can be observed with DAX, a German stock index. The index lost more than 500 points in the last 12 trading sessions. 

As explained above, the low-interest rates prevailing in a low economy helped institutions to borrow money and invest in the stock market. This high liquidity generated a lot of bullishness in the global market as they kept on rallying on. In the last few months, we also heard several vaccines coming out claiming that they are the effective cure of Covid-19. The vaccination program has also started on a large scale in many countries. Not much attention is given to that now. So, are the global markets falling just because they are out of all the good news?

We have institutions booking profits, and then panic selling in the markets by retailers.

Fun fact: The inauguration of Joe Biden as the 46th president of the United States of America took place on January 20, 2021. Markets falling steeply after that date is just a coincidence, right?

Farmers’ Protest

For more than 50 days, thousands of farmers are protesting on the outskirts of Delhi. On 26th January, when the nation was watching the famous parade on India Gate, we heard some really hurtful news. There was a large violent clash between the Delhi police and the farmers. The stills from Red Fort, one of the most prominent monuments of India, was highly embarrassing.

Many people even compared this to the agitation seen at the US Capitol a few days back. The violent and disturbing event which unfolded sent negative impressions to the investors. They try to stay away from the market which is facing unrest and invest in other markets. This is a common behaviour of all the investors. Will you invest in a country which is dealing with a lot of internal conflicts? No. We wonder if this is the reason why FIIs sold worth Rs 1,688 crore on 27th January.

The Upcoming Union Budget 

India’s Union Budget for 2021-22 is set to unveil on 1st February 2021. Many analysts claim that this is one of the most important budgets in recent times due to Covid-19’s financial impacts. All eyes will be on the Financial Minister, Nirmala Sithariman, as she delivers her all-important speech after two days. 

Big events like elections or budget announcements are quite unpredictable. These events can cause huge volatility in the market. Thus, many of the investors try to stay away from the market these days. With the market reaching its all-time high, many investors would have taken the safe route to book their profits and move out of the market. If the budget sounds positive to their ears, we can expect the market to make a come back.

Remember to hold only fundamentally strong stocks in your portfolio, companies which you understand well. Maintaining stop losses on stocks you hold is also not a bad idea. Book profits from the random stocks in your holdings and reinvest in good stocks a bit at a time, not altogether.

Do you think there is any more reason why NIFTY is falling? Let us know in the comments section of the marketfeed app.

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Nifty Falls Again Even as Banks Try to Save the Day – Share Market Highlights Today

Today’s Market Summarised

Nifty continued its fall today, with markets breaking key supports again. After opening the day at 13,836 with a gap-down, Nifty took support at 13,800 and bounced up to create a day high as seen in the chart below. It then went on to consolidate before falling again. The index recovered losses near the end to close at 13,817, down 150 points or 1.07%.

Bank Nifty surprisingly closed in the green today with Axis Bank posting some refreshing results that apparently excited the market. After opening at 29,931 with a big gap-down, the index traded with volatility in a 540 point range within ranges of day-low and yesterday’s low till 3 pm. The index respected 30,000 level for a while then broke out to close at 30,358, up 73 points or 0.24% for the day.

All major indices except Bank Nifty closed in the red today. Realty and IT fell more than 2.2%.

All global markets including European and Asian have closed in the red today. Even all US Markets closed in red yesterday.

News Picks

Shares of Axis Bank closed more than 6% up as markets welcomed the 36% YoY drop in profits. Net Interest Income(NII) however rose 14% and many analysts have seen this as a good indication for long term targets.

Other banking stocks, including SBIN and ICICI Bank, also closed in the green today. The stocks came back from greens after noon hours. However, HDFC Bank closed more than 2.7% down.

Energy stocks including IOC, BPCL, ONGC and GAIL featured in the top-gainers list ahead of rumours of more stake sales in the Union Budget. Reliance fell nearly 1% in the day even though it tried to move up in the morning.

FMCG stocks which jumped yesterday fell sharply today. Hindustan Unilever fell by 3.8%, along with ITC(down 1.92%), McDowells(down 7.83%), UBL(down 1.35%). Shares of Jubilant Foodworks went up 2.67%.

Similarly, IT stocks fell over the day after going up yesterday. Wipro, HCLTech and TCS featured in the top-losers.

Maruti reported a 24% year-on-year rise in net profit to Rs 1,941 crore, with revenue up 13%. The company sold more cars in India and also increased exports. Margins were reduced after an increase in raw material costs like steel. The stock came under heavy profit booking and closed 3.6% down in the day.

Shares of Laurus Labs spiked intraday as the company announced a net profit jump of 271% at Rs 272.8 crore from Rs 73.5 crore. Stock prices have nearly gone up by 4 times since last January.

Markets Ahead

With 5 days of losses in Nifty, Bank Nifty has stayed afloat above 30,000 for the day. And similarly, Nifty has closed above 13,800. This is giving me some hope to the fact that there might a slight confusion in the market if it actually needs to fall more. 

Again, let us watch out for how international markets are performing tonight. It is indeed not a happy sight when seeing every global market in the red. True recovery of smart money may only be seen when FIIs return into the market, and that will happen only when global markets stabilise. 

Again wondering, Domestic Institutional Investors are selling because of mass withdrawal from mutual fund schemes by retailers for pumping it into real estate and what not. So will DIIs start buying in large numbers anytime soon? Or is the market just going to keep on falling with DIIs keeping on ending up as net sellers?

Private Banks pulled back in the final hours of the day. We can discuss what a short squeeze is in the coming days, hopefully in the jargons section. Also hope you have seen what is happening in the Game Stop counter in the US. Nothing related to today’s market, but yea just a fun fact.

Hope you will all tune in to The Stock Market Show tonight. Keep watching this space for more.

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Can Nifty Be Saved? Tensions in Delhi, Fall in Global Markets and More – Share Market Highlights Today

Today’s Market Summarised

Who can save Nifty now? Just the day after Republic Day celebrations, India’s financial markets have taken a huge dip and fallen below multiple supports.

After opening with a gap-down at 14,201, the first candle in Nifty beautifully took resistance at yesterday’s low. It continued this fall across the whole day, making lower highs and lower lows. Nifty even fell below 14,000 level without much effort. The index closed the day at 13,967, down 271 points or 1.91%.

Bank Nifty was also bearish, but fell much much more. After opening flat near yesterday’s close, it tried to go up and touched a high of 31,280. From there, it was honestly surprising to see how easy the index fell more than 1100 points from the day high to the day low. Bank Nifty closed the day at 30,284, down 913 points or 2.93%.

All indices except NIFTY FMCG closed in the red today. Last day it was Pharma who was in the green, and today even it has closed more than 2% down. IT managed to close nearly only 0.6% down.

Asian markets traded mixed, but generally are looking very flat. European markets are all in the red at the time of our market close.

News Picks

IT companies who fell during the last Nifty fall managed to stay in the green today. While heavyweights TCS and Infosys fell(along with Naukri who is seeing a LARGE correction), TechM and Wipro managed to close more than 2% up.

Insurance companies’ share went up with SBI Life up 2.19% and HDFC Life marginally up in a bearish market.

ITC being ITC went against the market and closed more than 1.35% up in the day. FMCG stocks including beverages companies UBL(up 4.22%) and McDowell-N(up 1.55%) went up in the day while Jubilant Foodworks fell 3%. 

Shares of Marico who were trading in the green all day till 2 pm fell SHARPLY ahead of the results announcement and gained back almost all losses just as fast. You have to open the charts to believe the volatility. The company announced a 13% year-on-year rise in profits to Rs 312 crores.

Shares of Hindustan Unilever fell till noon before slowly closing back in green. After market hours, the company announced that net profit is up 18.9% YoY to Rs 1921 crores, for Q3.

Last weeks outperformers, including Tata Motors and Hero Moto Corp featured in the top-losers section in Nifty 50 today.

Shares of Nifty heavyweight Reliance, fell more than 2.37% today. The stock pulled the Nifty 50 index down 39 points. Global ratings agency Macquarie had announced 12-month target price of Rs 1,350 per share for the stock, which saw a lot of fear being spread in the market.

Shares of HDFC Bank fell more than 3.64% as sell-off in financial stocks got even stronger than last many days. The stocks together pulled Nifty 50 down 53 points while pulling Bank Nifty down 310 points. 

HDFC also fell 3.31%. That means Reliance, HDFC and HDFC Bank alone pulled Nifty down by 130+ points in today’s 270 point fall.

Markets Ahead

Over the last 4 days, Nifty has fallen more than 750 points while Bank Nifty has fallen more than 2500 points. 

Smallcap stocks performed better today in the entire market space. The index ended up by 0.1% midcap index fell 1.6%.

What is a bit interesting to me is the thought of if markets are just in a “correction” phase or a falling phase. With over 10 stocks from the Nifty 50 closing in the green, there is clearly some buying interest left in the market. But in the cases of all previous sharp corrections, very few stocks would have closed in the green. Global markets are falling too, with Europe also in red. Maybe this is the actual fall everyone has been waiting for? 

Meanwhile, India’s capital city is also under a lot of international investor’s eyes as clashes between protesting farmers and Police erupted. Keep a watch of this situation along with the Central Govt’s official stand on the issue, and maybe even for the Prime Minister’s announcement.

The US Federal Reserve meeting is expected to not have a very positive outlook on the economy. Along with this, our budget announcement is awaited by Monday. Markets will remain cautious and may trade sideways with a bearish view as profits/losses are booked. 

Hope you will all tune in to The Stock Market Show tonight. Keep watching this space for more.

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Bearish Phase Continues. Consolidation Ahead? – Share Market Highlights Today

Today’s Market Summarised

Another day, another fall. Nifty opened with a gap-up at 14,479 and started forming back to back red candles. What’s funny is that almost every stock, along with the indices had opened at their all-day highs and fell today. After trying to recover quite a few times, Nifty gave in and fell sharply after 1:30 pm and closed at 14,238, down 133 points or 1.33%.

Bank Nifty opened at 31,524 again with a gap-up and fell sharply to take support at 31,000. After flying back up 700 points, the index consolidated only to fall again after noon. Bank Nifty closed the day at 31,198, up 31 points or 0.1% today.

All indices except NIFTY PHARMA closed in the red. NIFTY PHARMA gained 1.7% whereas NIFTY ENERGY & NIFTY IT shed 2.8% and 1.7% respectively.

Asian markets mostly traded mixed. European markets are all in the red.

News Picks

GRASIM gained the most among NIFTY 50 after the company formally announced their entry to the paint sector. The stock was up by 6.55% at closing. On the contrary shares of a potential future competitor, Asian Paint fell by more than 3%.

Despite the index falling sharply, UPL continued its rally. UPL closed the day by gaining more than 3.7%. 

HDFC BANK is up by 1.3% and AXIS BANK is up by 2.1%. Both these stocks held up BANK NIFTY in the day. AXIS BANK rallied as the company is set to announce their Q3 results day after. HDFC Bank may soon see its ban on Digital 2.0 reversed. 

Kotak Bank witnessed a sharp fall with heavy volatility after the Q3 results were announced during market hours. Profit booking kicked in the stock even as the bank reported a 16% jump in net profit over a year earlier to Rs 1,853 crore. 

Shares of Reliance fell the most among Nifty 50 stocks, by falling over 5.3% just today. This was after the company announced its results on Friday after market hours. 

Apollo Tyres fell more than 8.8% as profit booking kicked into the stock.

Pharma stocks rallied on the expectation that the sector will benefit in the upcoming budget. Cipla gained mostly on the expectation of good results. I feel pharma companies with good exposure to Covid medicines would go up, while others might see corrections as results will disappoint.

Markets Ahead

With tomorrow being a holiday, markets were trading cautiously. The fall and consolidation were to be expected around the budget, after which it may be highly volatile. I do expect Nifty to give respect to 14,000 as key support and maybe bounce back up. But again, if this a global trend of falling markets, then we have to be prepared for further falls.

Are the bulls just waiting for their big move? Retailers selling and squaring off in the panic may result in greater fall, and this is when big players would come in and enjoy the discount sale. Keep watching for a stimulus from the US Government, which might push the market again into buying mode again. I would say, don’t keep a clear bearish view until the market falls below 14,000.

Hope you will all tune in to The Stock Market Show tonight. Keep watching this space for more.

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NIFTY Falls Along With Global Markets. What Can Investors and Traders Do Now? – Share Market Highlights Today

Today’s Market Summarised

A proper day of correction in Nifty. Markets falling calmly through the day with lower highs and lower lows. After opening at 14,590, Nifty tried to move up but could not. The trend was quite clear around 11 am, when Nifty broke its opening range. Nifty fell consistently to close near the day low at 14,371, down 218 points or 1.5%.

Bank Nifty who traded sideways yesterday, broke down in today’s market. After opening above 32,121, the index fell more than 1000 points over the day, and closed the day at 31,167, down 1,019 points, or 3.17%.

Even after Bank Nifty fell 3%, it was not the worst-performing sector of the day. Metals fell 3.89%, and Auto was up in the bear market 1.43%.

European markets fell today, with the Asian markets also in the red. It is definitely a global phenomenon. 

News Picks

Shares of Bajaj Auto jumped a further 10% today. They had announced a 23% Year-on-Year rise in net profits to Rs 1,560 crores last day. Shares of Eicher(manufacturer of Royal Enfield Bikes) also gained again. Hero MotoCorp gained 3.93%. 

Metals and Banks featured heavily among the top losers of the day. Asian Paints also fell after 3 days of rallies.

Shares of Biocon fell more than 10.9% over the day as net profits of the pharma company fell 19% YoY. Managing Director of the company stepped down following the results announcement. We had talked about Pharma companies maybe declaring disappointing results. Is this another indication?

Indigo Paints IPO is closing today with almost 100x subscription. Have you applied?

Shares of Bandhan Bank closed in the top-losers, down by 7% today, after results disappointed investors. 

Stocks which have over-rallied are the ones which have fell the most. Including SAIL, Bandhan Bank, RBL Bank and Asian Paints.

Markets Ahead

With global markets also correcting, is this the fall everyone has been waiting for? Or will Nifty shoot up like it did all the previous times! This is definitely a question that investors would be having in their head, as they decide on when to enter a stock and when to exit. 

One can never time the market, is what I believe. Even if it enters a sideways trend, or a bearish trend, or even jumps back up to new highs, there are only two things which can make you money. Either get into intelligent trades or invest with systematic investment plans(SIPs) where you keep on buying in dips. All traders need is a trending market, so enjoy it while it’s trending!

I have been buying a few units of Nifty BeEs every time the market falls. Even in intraday falls. Because I believe that the markets will go up in the long term. And you can never know for sure which stock would bounce back faster than others. So in the long term, I will be sitting on a LOT of Nifty BeEs, which would be averaged by every fall in the market. This is something which I follow and do, and might not work for you. But yes, long term and averaging in dips will save me that I am sure. Just food for thought.

Keep watching for global cues, and data and new policies from the US. This will greatly affect our markets in the week ahead. Have a chill weekend, and don’t forget to up your game in between.

Hope you will all tune in to The Stock Market Show tonight. Keep watching this space for more.

Categories
Editorial

Indigo Paints IPO: All You Need to Know

2021’s IPO series kicked off with IRFC becoming the first company in this year to take the public route. Indigo Paints, from the paints Industry, will be the second company to bring its IPO. The public offer will take place on 20th January 2021 till 22nd January 2021. What is this IPO is all about? Let’s find out.

About Indigo Paints

Before applying for a company’s IPO, it is very important to know what is the business of the company and how do they go about it. Indigo Paints is into the manufacturing of different types of decorative paints. Its product range includes Emulsions, Wood Coatings, Distempers, Enamels, Putties and Cement Paints. Indigo Paints is also the first company to manufacture differentiated products. The list of differentiated products comprises Floor Coat Emulsions, Dirtproof & Waterproof Exterior Laminate, PU Super Gloss Enamel and more.

Indigo Paints has three manufacturing facilities situated in Jodhpur (Rajasthan), Kochi (Kerala), and Pudukkottai (Tamil Nadu). The company find raw materials easily available in these locations. This helps them to decrease the cost of their operations and thus boosting their bottom line.

Based on the revenue generated in FY20, Indigo Paints ranks 5th in the industry. But when you compare companies in terms of growth, Indigo Paints is right at the top. Being a paint company, one thing they need the most is a very strong distribution network. And, this is what which has helped the company to grow massively in recent years. Indigo Paints has its reach into 27 states and 7 territories. In a way, you can say that they have their distribution network spread all over the country. They have 36 depots and over 4000 tinting machines.

About the IPO

The IPO of Indigo Paints will open on 20th January and will close on 22nd January. The total issue size of the IPO is Rs 1,176 crore. The fresh issue aggregates up to Rs 300 crore. The price band of the IPO is Rs1488-Rs 1490 per equity share. You have to apply for a minimum of 10 Shares (1 lot). The upper limit to the number of lots you can apply for is 13, that means, 130 shares. The minimum an investor has to pay for this IPO is Rs 14,900. Similarly, the maximum one can invest in is Rs 1,93,700. But once again, apply for a maximum of 1 lot, as the IPO will be oversubscribed for sure.

Currently, the promoters of the company have 60.05% of the total holdings. After the IPO, this will decrease to 54%. The allotment date and listing date for the IPO are 28th January 2021 and 2nd February 2021 respectively. 

The two investors, Sequoia Capital India Investments IV and SCI Investments V will be selling 20.05 lakh equity shares and 21.65 lakh shares respectively. Hemant Jalan, the promoter of the company, will be selling 16.70 lakh equity shares as part of this public issue.

Indigo Paints will use the net proceeds from the IPO in four ways. Firstly, a part of the sum will be used to meet the capital expenditure requirements for expansion. The company is planning to expand its manufacturing facility at Pudukkottai, Tamil Nadu. This will help them to produce more and at a lower cost. The second objective of the IPO is to purchase more tinting machines and gyro shakers. Indigo Paints has a very low amount of borrowings on their sheets yet their third objective is to repay all or certain borrowings. Lastly, the remaining sum will be used to meet general corporate purposes.

Financial Overview

30 September 202031 March 202031 March 201931 March 2018
Total Assets411.29421.95373.18297.39
Total Income260.24626.43537.26403.10
Profit after Tax27.2047.8126.8712.86
(Values in Rs Crore)

The table above shows how the revenue and profits of the company have increased over the last three years. Here, from FY19 to FY20, the revenue of the company has increased by more than 16%. And, when we look at profits, it has risen by a whopping 80% from Rs 26.87 crore to Rs 47.81 crore during the same period. 

In the past year, their long term debt has also decreased from Rs 26.91 crore to Rs 24.71 crore. This is another good sign because as the debt of a company falls, the risk associated with them also decreases. Till the first half of 2020-21, the revenue generated by the company is Rs 260 crore. But with this trend, Indigo Paints might not be able to generate more sales than FY20 but the slowdown is only because of lockdown induced in March due to Covid-19.

Risk Factors

  • The Indian paint industry already has some established players like Asian Paints, Berger Paints, Kansai Nerolac and AkzoNobel. As said before, Indigo Paints comes behind all of these companies when we talk about the sales number.
  • Brand loyalty is a very important factor in this business. People often rely on their favourite brand or the brand they have used earlier. Thus, it will be difficult for the company to make its space instantly in the heart of the customers.
  • Indigo Paints follow the strategy of making short-term agreements with their dealers. They renew their deals regularly but any failure to do so can affect their business severely.
  • The company imports a few of their products from outside. Any restriction on imports will increase their cost of operations thus decreasing their bottom line.

IPO Details in a Nutshell

IPO DateJan 20, 2021 – Jan 22, 2021
Issue TypeBook Built Issue IPO
Face ValueRs 10 per equity share
IPO PriceRs 1488 to Rs 1490 per equity share
Lot Size10 Shares
Offer for Sale (goes to promoters)58,40,000 Equity Shares 
Fresh Issue (goes to the company)Rs 300 crore
Issue SizeRs 1,176 Crore
Listing AtBSE, NSE

Kotak Mahindra Capital Co. Ltd., Edelweiss Financial Services Ltd. and ICICI Securities Ltd. are the books running lead managers of this IPO.

Conclusion

When it comes to business, Indigo Paints looks to be a very sound company. They have done well in the last few years and are growing at a very high pace. They are fundamentally strong with an ROE (return-on-equity) of 24% and ROCE (return-on-capital-employed) of 27.5%. The company offers a wide variety of products. This extensive portfolio helps them to cover the needs of different customers. Thus, generating more sales for them. The valuations also look very interesting.

One thing which you have to be mindful is of the intense competition in the industry. Indigo Paints have some good competitors which can hurt their business. Thus, the company will be required to continuously strategize their operations and find new ways to stay ahead. Indigo Paints filed its draft papers last November. You can find it here. What are your opinions on Indigo Paints? Will you be applying for it? Let us know in the comments section below!

Categories
Editorial

Dabba Trading, Another Stock Market Scam

Since the stock market’s inception, traders and investors have found various different ways to profit out of deficiencies. Some have been beneficial to the public, whereas others have cost people their life savings. For example, the ‘Free Stock Tips’ Scam, The Harshad Mehta Scam, and many more. Out of the pool of illegal activities, one such scam has been going on for over two decades, It’s called Dabba Trading. 

Small-time operators/bookies have reported a market of Rs 6,000 crores per day in Dabba Trading. On the other hand, some operators/bookies have reported a market of up to Rs 1 lakh crores per day. Nobody knows how big the sea of Dabba Trading is. Dabba Trading is an illegal activity and can get you in trouble with the authorities. First, let us understand what it is.

What is Dabba Trading?

In a normal trade, where one has to buy shares, the trader places a buy order with a broker (Zerodha, Upstox, etc.). The broker, on its client’s behalf, executes the order in the stock exchange. Once the broker finds a seller in the stock exchange, it buys and deposits the shares into the client’s Demat account. Once the trader sells the shares, the broker takes back the shares from its client and deposits money into its client’s accounts. This is a legal transaction that is approved by the regulatory authorities. 

In Dabba Trading, the trader places an order with a bookie. A bookie in our case is an unethical middleman who ‘writes down’ trades in a record and executes them ‘off the market’ or ‘outside of the trading system’. The bookie uses real-time stock market prices as a benchmark to execute trades. In case a trader makes a profit, the bookie has to pay the trader from his own pockets and in case a trader makes a loss, the trader gets the differential amount as profit. Since this market is unregulated, the bookie accepts or operates order in a way that benefits the bookie. Oftentimes, when the market turns against odds, bookies tend to abscond, causing the trader or client to lose money. 

Many people fall for the ‘Dabba Trading’ trap out of greed to make easy money and then find out that their ‘bookie’ is absconding. This kind of trading takes place across all segments like Futures And Options, Commodities, and even Bitcoins.

More About Dabba Trading

Dabba traders are often SEBI-Registered companies that give out advertisements that promise ‘multi-bagger’ returns in a short period of time. These ‘agencies’ are often small-time places that get clients registered on their platform and generally accept cash or UPI payments. Sometimes traders don’t even realize that they are a part of an illegal trading ring. It is after they lose their money that they realize that they were a part of a fraudulent scheme.

Why do people indulge in Dabba trading though? It is not just the people with less knowledge about the markets who participate in Dabba trading, sometimes professionals or full-time traders indulge in Dabba trading as well. Whenever someone buys or sells shares, there is a certain tax charged called the Securities Transaction Tax or STT. When you trade off the market, this STT essentially gets waived off. 

Another reason why professional traders sometimes tend to participate in Dabba trading is, margin requirements. Margin trading is when individual investors buy more stocks than they can afford to buy – by borrowing money from the broker. This allows traders to assume higher risks and make bigger bets. Traders need to have a basic minimum amount of money in their trading accounts to be able to execute certain trades, mostly futures and options. However, when this amount is large, certain participants are left out of the market as they do not have such kind of money. This is when some traders resort to Dabba Operators since they offer lower margin requirements and therefore can easily make trades. 

On December 1, 2020, SEBI’s new ‘peak margin rules’ kicked in, this keeps certain traders from making big bets, and therefore there is speculation that Dabba Trading might go up after this.

Scammers evolve with time. Scammers have now started developing their own trading apps and websites. This is a shift from trading over phone calls to trading over apps. This increases the number of clients that a dabba tarder can have.

Can I Get Into Trouble For Dabba Trading?

The forgery of the electronic records avoiding Securities Transaction Tax attracts section 467/471 of IPC or Forgery. Moreover, you can be tried under Section 420(Fraud), Section 477-A of IPC(Falsification of Accounts), and Section 120 B or criminal conspiracy. You can also be tried under various different codes of the IT Act 2000. All of this can amount to the imprisonment of up to 10 years in jail. 

It is advised that market participants avoid unethical ways of making money in the market and stick to well known and registered brokers when trading. Be aware and stay safe from these types of scams!

Check out our article on how amateur investors lose money in the ‘Free SMS/Telegram Stock Tips’ Scandal.

Categories
Editorial

What is the Karvy Stock Scandal all about? Explained.

On 22nd November 2019, SEBI announced that it had prohibited Karvy Stock Broking Limited (KSBL) to add any more clients after NSE found some irregularities. This order meant, no new trader can open his/her account with Karvy Stock Broking.

After a year-long investigation, on 23rd November 2020, National Stock Exchange (NSE) declared Karvy stock broking limited as a defaulter. They also expelled the broking firm from its membership. NSE also stated that it has settled the claims of more than 2 lakh investors whose funds worth Rs 2,300 crore. Bombay Stock Exchange (BSE) followed NSE’s path and expelled Karvy stock broking limited from its membership. They asked the investors to file for their outstanding claims against Karvy before 22nd February 2021. These claims will be considered for compensation of up to Rs 15 lakh. KSBL in the response have decided to accept their wrongdoings and do not wish to present their case. 

What exactly happened with this very successful brokerage firm? Let’s find the whole story here.

The Process of Karvy Scam

To take loans from banks, people are required to submit some type of collateral. Higher the amount of loan demanded, more valuable the collateral required by the banks. This collateral can be the portfolio of stocks you hold as an investor or a trader. Just like an individual has a Demat account, the broker has a pool account. This pool account is nothing but the broker’s Demat account.

Whenever you buy or sell a share, that share comes from the opposite seller or buyer. It first goes into the broker’s pool account and from there it comes to your Demat account. Now, suppose that you want to get a loan against your shares. Then, those shares are transferred into the broker’s pool account, who gives it to the banks. Banks issue loans to the broker against the shares submitted to them as collateral. The broker increases the interest rate and passes the money borrowed to the individual whose stocks are submitted. The difference between the two interest rates is the brokers’ profit. 

How Karvy Scam Worked

There would be a doubt in your mind that how the stocks owned by the investors can suddenly be pledged by the broker. Here comes the entry of POA or Power Of Attorney. This Power of Attorney gives the authority to the brokers to take shares out of the individual’s Demat account. Shares are stored with NSDL and CDSL, who are the only two depositories in India. Their work is to keep the shares safe in an electronic form in the customer’s Demat account. Both NSDL and CDSL give weekly or monthly reports to the account holders about all the transactions done. Thus, brokerage companies have to be honest in their practices because any variation can be caught by the account holders. 

But, Karvy found a loophole here. They identify those accounts in which the holder is not very active. For example, some of the investors do not trade very often. Some of them buy shares and keep them in their account for 1-2 years doing no further activity. Karvy transferred some of the shares to their pool account from these dormant accounts with the help of PoA. They approached different banks and took loans against these loans. Imagine you are taking a loan by giving someone’s house as collateral just because they don’t live there for the previous 2-3 years. Is that legal? NO. To whom these loans were issued? No one, Karvy kept it with themselves.

Misuse of funds by Karvy

The loans taken from the banks were transferred to one of their subsidiaries, Karvy’s Realty private limited. This subsidiary is engaged in real estate and property services. They offer investments, financing and advisory services to the customers related to the realty sector. So the loans were taken against the shares of the individuals without their consent. Then, the sums acquired were transferred to their own business in another sector. When this scam came into notice for the first time in 2019, it was rumoured that Rs 1,100 crore has been transferred till then. This is when SEBI banned Karvy Stock Broking company to add any more clients. Later, the amount misused in the scam was calculated to be much more than Rs 2,000 crore.

What Now for Karvy?

A major chunk of the clients has received their funds back as they were not the one who defaulted. But that does not cover the system failure which happened just a year back. There are still plenty of unanswered questions.

How did NSDL/ CDSL fail to find an anomaly in the Demat accounts if Karvy was putting these stocks in their pool account? How did NSE, who keeps an eye on all the brokerage firms, not find any wrongdoings for four years? Did they do any checks? How did banks not do any background checks before taking the shares of a third-party as collateral? Shouldn’t they have cross-checked with the owner of those shares? For now, it is difficult to answer any of these questions. As an investor, your responsibility is to maintain regular checks of your Demat account. If there is something odd happening in your account, you should straightaway call your brokerage firm and ask for a reason. Until, next time.

Categories
Jargons

Term Plan vs Endowment Plan vs ULIPs

What are Term Plans?

This is one of the oldest plans in the insurance industry. Term Plans only offer death benefits and no maturity benefits. If the policy expires and the insuree is still alive, then no benefits would be received by him/her. This plan provides pure financial protection to the family members of the policyholder. Premiums demanded in term plans are generally lesser than endowment plans or ULIP-linked plans.

What are Endowment Plans?

Just like a term plan, endowment plans offer a death benefit. But unlike term plans, these plans also offer some maturity benefits if the person insured is alive after the expiry date of the policy. These plans do not offer any investment portfolio but guarantee returns to the insured person or his family. The premium that is to be paid to the company is higher than what is paid in a term plan. A person can avail loans against his/her endowment plan. So, an endowment plan offers both ‘life + investment’ protection.

What are ULIPs?

Unit linked Insurance plans or ULIPs are a combination of insurance + investment. It is a perfect example of a hybrid model that offers both, life protection and the option to earn money via a good investment strategy. An individual insured under this policy will pay the premium which will be bifurcated into two parts.

One part of the premium is set aside for the insured person’s life insurance, while the other part is invested in the stock market. ULIPs are very flexible because they allow you to alter the proportional allocation of your investment and life insurance as per your wish.