Nifty Outlook: Support placed at 19,300; Aarti Drugs, Welspun among stocks to buy

By Nagaraj Shetti

After showing a sustainable up move with volatility on Tuesday, Nifty continued with choppymovement on Wednesday and slipped into decline by 55 points. Nifty opened with a positivenote, and started to show weakness from the day’s high in the early part of the session. Minor intraday upside recoveries in between have been used as sell on rise opportunity and Nifty closed near the lows.

Positive chart pattern like higher tops and bottoms is intact as per daily time frame chart andpresent weakness could be in line with new higher bottom formation at the highs. On a movebelow 19,300, the market is likely to find another important support of 19,100-19,000 levels. Fresh buying could only emerge on a decisive move above 19,550 levels.

Stock Picks

Buy Aarti Drugs Ltd- (CMP: Rs 490.50)

After shifting into a broader range bound movement in the last few weeks, the stock price(AARTIDRUGS) has shifted into a sustainable upside bounce so far this week. The stock pricehas witnessed an upside breakout of down sloping resistance line at Rs 485 levels and iscurrently trading higher. Volume and momentum oscillators are showing positive indications.Buying can be initiated in AARTIDRUGS at CMP (Rs 490.50), add more on dips down to Rs 470,wait for the upside targets of Rs 535 and Rs 575 in the next 3-5 weeks. Place a stoploss of Rs 455.

Buy Welspun India Ltd – (CMP: Rs 98.70)

The downward correction of June month seems to have completed in the stock price WELSPUNIND, as it witnessed a sharp upside bounce in the last couple of weeks. The stock priceis currently placed at the edge of breaking above the bullish flag pattern at Rs 100 levels, as per weekly time frame chart. Volume has started to rise and weekly RSI has turned up fromnear 65 levels.Buying can be initiated in WELSPUNIND at CMP (98.70), add more on dips down to Rs 95, waitfor the upside targets of Rs 107 and Rs 115 in the next 3-5 weeks. Place a stoploss of Rs 92.

(Nagaraj Shetti, Technical Research Analyst, HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Domestic Indices trading in the green; gains led by Realty stocks including Macrotech Developers, Indiabulls

The benchmark indices are trading in the green intra-day on Tuesday, with gains led by Realty and Metal. The NSE 50 gained 0.27% at 19,357.30, and the BSE Sensex rose 0.20% to 65,129.16. The top gainers include real estate stocks. The Nifty Realty Index is up 1.64% to 546.75 and BSE Realty too is seeing 1.66% gains.

The gains are led by Macrotech Developers, Indiabulls Real Estate, DLF, Sobha, and Oberoi Realty. The stock prices for Macrotech Developers surged a whopping 5.62%, Indiabulls Real Estate climbed 5.04%, DLF jumped 2.90%, Sobha rose 1.51%, Oberoi Realty gained 1.32% and Brigade Enterprises ascended 1.27%.

“We had begun this week on a positive stance having ruled out a full blown collapse, despite last week being on the slippery slope. While yesterday closed on a selling note, there was enough resilience on show to keep upside hopes alive. While downside markers will remain at either 19,250 or 19,170, we will look forward to a confirmation from a break of 19,370 to play a repeat swing to 19,540. Except for swings on either side of 19,311 before a directional play is attempted, which is likely to take a while to evolve again,” said Anand James, Chief Market Strategist at Geojit Financial Services.

Stocks To Watch: Reliance Industries, NHPC, Coforge, Torrent Pharma, P&G Health, Vascon Engineering

Stocks in focus: GIFT Nifty was flat during Thursday’s early trading session at 19,504.5, indicating a tepid opening for domestic indices NSE Nifty 50 and BSE Sensex. Domestic indices NSE Nifty and BSE Sensex closed in the green on Wednesday after a day of volatile trade. The blue-chip Nifty 50 index settled above 19,400, breaching a key resistance level while Sensex added 200 points after erasing losses from the morning trade.

“Global markets have restrained from making significant moves as they await the outcome of the central bankers’ gathering at Jackson Hole scheduled for Friday. With the earnings season nearing its end, the heightened possibility of another rate hike in the US, along with the resultant increase in bond yields, are expected to keep the global market’s volatility high. On the domestic front, sentiments remained positive, backed by strong demand in the banking sector, though IT and pharma limited the gains,” said Vinod Nair, Head of Research at Geojit Financial Services.

Procter and Gamble Health

The board of directors recommended a final dividend of Rs 50 per equity share, for the financial year ended June 30, 2023. The dividend shall be paid between November 28, 2023 to December 18, 2023.

NHPC

NHPC signed a Memorandum of Understanding with Andhra Pradesh Power Generation Corporation for the implementation of pumped storage hydro power projects and renewable energy projects in Andhra Pradesh. The MoU provides a framework under which parties may collaborate and cooperate to form a joint venture company under the Companies Act, 2013.

Vascon Engineering

Vascon Engineers received a Letter of Acceptance amounting to Rs 605.65 crore from Bihar Medical Services & Infrastructure Corporation Ltd for the construction of Lohia Medical College & Hospital including hospital and residential building, Supaul.

Coforge

Coforge’s promoter Hulst BV might offload its entire 26.63% stake in the IT firm via a block deal. The floor price has been fixed at Rs 4,550 per share, which is a 7.4% discount to Wednesday’s closing price of Rs 4,913. Hulst BV will sell 1.62 crore shares, taking the deal size to around Rs 7,400 crore, sources said.

Torrent Pharma

The US FDA has granted Voluntary Action Indicated classification to the drug makers manufacturing site in Dahej, Gujarat, which was earlier placed under ‘Official Action Indicated (OAI)’ classification based on a March 2019 inspection outcome. The site was re-inspected by the US FDA between May 17 and May 25, 2023 and the officials had issued Form 483 with two observations.

(With agency inputs.)

Govt says will procure onion at higher prices

The government on Tuesday promised to procure onion at Rs 2410/quintal, higher than the prevailing mandi price of Rs 2000/quintal, as it sought to help farmers hit by the prohibitive 40% export tax on the vegetable. However, onion farmers and traders felt the move would not make any significant difference in the market, as the government’s ability to procure and store the vegetable is “limited.”

Food and consumer affairs minister Piyush Goyal said that National Cooperative Consumers Federation of India (NCCF) and the farmers’ cooperative Nafed will purchase an additional 0.2 million tonne (MT) of onion from farmers in Maharashtra and Madhya Pradesh over the next few weeks as a part of creation of 0.5 MT of buffer stock.

Meanwhile mandis in Nasik district of Maharashtra, the hub of the country’s onion production and trade, were closed for the second day on Tuesday, as traders protested against the imposition of export duty.

“Our demand has been to revoke the export duty on onion as the government has limited capability to purchase onion at higher prices at present”, Jaydutt Holkar, director, APMC, Lasalgaon, Maharashtra, the hub of the onion trade in the country, told FE.

Onion exports rose by more than 26% to 0.63 MT during April-June (2023-24) compared to the same period previous fiscal prompting the government to impose export duty on Saturday till December 31, 2023.This is the first intervention in onion exports since January, 2021. The government has not imposed a ban on onion exports since 2021 which was the norm a few years back.

India exported a record 2.5 MT of onion 2022-23, which is an increase of 65% from the previous fiscal. Bangladesh, Malaysia, Sri Lanka and Nepal respectively had a major share in the onion exports in the last fiscal.

According to the department, the modal retail prices of onion rose from Rs 20/kg since the beginning of the year, to Rs 30/kg on Tuesday. Rating agency Crisil in a recent report said retail onion prices are expected to hit Rs 60-70/kg next month.Retail prices of onion have started to rise for the first time in the last couple of weeks after nearly two years due to reports of sluggish kharif sowing on delayed arrival of monsoon in the key producing states of Maharashtra and Karnataka.

High moisture content in the stored rabi crops because of unseasonal rains in Maharashtra and Karnataka in April has reduced the shelf-life of the staple, causing fears of supply constraints by September.

Inflation in onion, which had been in the negative zone since September, 2021, rose to 11.72% in July against 1.65% in June.NCCF and Nafed have started to sell onion from the buffer stock of 0.3 MT at highly subsidised rate of Rs 25/kg to consumers in various areas.

The estimated production of onion during the 2022-23 crop year (July-June) declined marginally 31.01 MT against 31.7 MT reported in the previous year. The output was 26.64 MT in 2020-21.

India is the biggest producer of onion and Maharashtra, Madhya Pradesh, Karnataka and Gujarat have more than 70% share in the country’s production.

Wall Street eyes muted open ahead of key economic data

Wall Street’s main indexes were set to open subdued on Tuesday as investors refrained from placing big bets ahead of key economic data this week, including job openings figures due later in the day that will provide further clues on the state of the economy.Multiple sets of economic data are scheduled to be released this week, including the personal consumption expenditures price index and non-farm payrolls.The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), due at 10 a.m. ET, is expected to show the number of job openings fell to 9.465 million from 9.582 million in July, signaling easing labor market pressures.

Lack of hawkish surprises in Federal Reserve Chair Jerome Powell’s comments at the Jackson Hole symposium last week had cushioned stocks on Monday, with the focus now on the economic data to gauge how long the central bank could keep interest rates elevated.”Investors are reserved and waiting for more details as to what the Fed would do,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

The yield on the 10-year Treasury note held steady at 4.215%. Most megacap growth stocks edged lower, with Tesla and Nvidia down 0.5% and 0.4%, respectively.Investors will also keep a close eye on the Conference Board’s consumer confidence report, due at 10 a.m. ET.

At 8:03 a.m. ET, Dow e-minis were down 26 points, or 0.08%, S&P 500 e-minis were down 3 points, or 0.07%, and Nasdaq 100 e-minis were down 14.5 points, or 0.10%.Shares of Salesforce slipped 1.8% before the bell after J.P.Morgan removed the business software maker from its U.S. analyst focus list.Verizon and AT&T rose more than 1% each after Citi upgraded the telecom companies to “buy” from “neutral”.PDD Holdings rose 12.7% after the e-commerce firm beat second-quarter revenue estimates.Catalent climbed 3.8% after the contract drugmaker reached a settlement with activist investor Elliott Investment Management to conduct a review.

Adani Enterprises shares climb over 3%

Shares of Adani Enterprises Ltd climbed over 3 per cent on Tuesday after billionaire Gautam Adani-led promoter group increased its stake in the flagship firm.

The stock gained 3.10 per cent to Rs 2,720.65 on the BSE. At the NSE, it climbed 3 per cent to Rs 2,721.

Gautam Adani-led promoter group has increased its stake in the group’s flagship firm as the ports-to-energy conglomerate continues to recover from the effects of a report by US short-seller Hindenburg Research.

Promoter group has increased stake in Adani Enterprises Ltd from 67.65 per cent to 69.87 per cent, according to a stock exchange filing.

Promoter group firm Kempas Trade and Investment Ltd, which had a minimal stake in the firm, acquired 2.22 per cent in the open market between August 7 and August 18, it said.

The stake increase comes at a time when US-based boutique investment firm GQG Partners has been buying shares in Adani group firms.

The Hindenburg report released on January 24 alleged accounting fraud, stock price manipulation and improper use of tax havens.

Adani Group has denied all allegations by Hindenburg and is plotting a comeback strategy that includes recasting its ambitions, scrapping acquisitions, pre-paying debt to address concerns about its cash flows and borrowings, and scaling back its pace of spending on new projects.

Nifty to reclaim 19300 or slip? See GIFT Nifty, FII data, Fed Chair speech, F&O ban, more before market opens

GIFT Nifty traded 0.22% higher during Monday’s early trading session at 19,279, indicating a positive opening for domestic indices NSE Nifty 50 and BSE Sensex. The equity benchmarks closed in the red on Friday. Sensex tanked over 350 points to close at 64,886.51, while Nifty 50 slipped 0.62% to end trade at 19,265.80.

“The domestic market experienced another week of losses as investor sentiment was influenced by the Jackson Hole meeting outcome. Investors are eagerly awaiting insights from Fed officials to gauge the future prospects of rate hikes. Despite a slight softening due to a weak US PMI, US bond yields remained elevated. The US Manufacturing PMI, registering at 47 against an expected 49.3, sparked hopes for an extended rate hike pause. Sectors closely tied to the Western economy, like IT and pharma, experienced increased volatility, while domestically-focused mid- and small-cap stocks demonstrated resilience and gained momentum,” said Vinod Nair, Head of Research at Geojit Financial Services.

Asian Markets

Stock markets across the Asia-Pacific region surged in trade on Monday as China announced new measures to support its ailing markets, though the mood was cautious ahead of readings on U.S. jobs and inflation could decide whether interest rates have to rise again.

Chinese indices Shanghai Composite and Shenzhen Component jumped 5% and 5.63% respectively. Japan’s Nikkei-225 added 1.5%, while Hong Kong’s Hang Seng index surged 3.16%. South Korea’s KOSPI added 0.85% while the Taiwan index rose by 0.34%.

Crude Oil

Oil prices ticked higher on Monday, along with equity markets, after China took steps to support its flagging economy, though investors remained worried about the pace of growth as well as further U.S. interest rate hikes that could dampen fuel demand.

FII/DII Data

Foreign institutional investors (FII) sold shares worth net Rs 4,638.21 crore, while domestic institutional investors (DII) bought shares worth net Rs 1,414.35 crore on 25 August, according to the provisional data available on the NSE.

F&O Ban

The National Stock Exchange has Escorts Kubota, SUN TV, GMR Airports Infrastructure, RBL Bank, Hindustan Copper, Manappuram Finance, India Cements and BHEL securities on its F&O ban list for 28 August. According to the NSE, stocks are prohibited in the F&O sector when they have exceeded 95% of the market-wide position limit (MWPL). During the F&O ban period, no new positions are permitted for F&O contracts in that stock.

Bank Nifty Outlook

“The pullback rally in Bank Nifty has fizzled out at the 44,900 – 45,000 zone where resistance in the form of the 50% Fibonacci retracement level was placed. The daily and the hourly momentum indicators provide divergent signal and hence a consolidation is likely. The range of consolidation is likely to be 44,800 – 43,900,” said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.

Technical View

“Nifty breached its 50 days SMA for the first time since April 2023. Nifty also breached the previous swing low support. Violation of 50 days SMA indicates higher probability of bearish trend to continue in the Index. Next support for the Nifty is seen in the zone of 19050-19100. On the upside 50 days SMA, placed at 19375 would act as a resistance now. Short term trend of the Nifty is likely to remain bearish till it closed above 19375,” said Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities.

Fed Chair Speech

Federal Reserve Chair Jerome Powell on Friday did little to dissuade markets from the “higher for longer” mantra for rates that has driven up Treasury yields in recent weeks, leaving some investors looking for more cautious bets in case the economy is unable to escape a downturn next year.

Speaking at the Kansas City Fed’s annual gathering in Jackson Hole, Wyoming, Powell left open the possibility of further rate increases and stressed the U.S. economy’s surprising strength, though he acknowledged declines in the pace of inflation over the past year.

(With agency inputs.)

Delhi simmers! Hot weather disrupts normal life in national capital – See in pics

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Delhi experienced a warm morning on Monday with the minimum temperature settling at 28.8 degrees Celsius, a notch above the season’s average. The relative humidity recorded at 8.30 am was 53 per cent. (PTI Photo)

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The India Meteorological Department has predicted strong surface winds during the day and the maximum temperature is expected to hover around 41 degrees Celsius. (PTI Photo)

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According to the Met office, the national capital is expected to witness hotter days ahead with clear skies and dry weather over the next few days. (PTI Photo)

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Though the Met office has not predicted a heatwave for at least a week, such conditions may occur at isolated places. (PTI Photo)

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On Sunday, the national capital witnessed a partly cloudy sky and the maximum temperature settled a notch below the season’s average at 38.5 degrees Celsius. (PTI Photo)

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A boy plays near water fountains at an India Gate lawn during a hot summer afternoon in New Delhi. (PTI Photo)

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A woman drinks water from a mug on a hot summer day in New Delhi. (Reuters Photo)

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On Saturday, the maximum temperature in Delhi settled at 41.8 degrees Celsius, two notches above the season’s average, while the minimum settled at 26.7 degrees Celsius, a notch below the season’s average. (Reuters Photo)

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A labourer washes his face with water leaking from a roadside pipe. (Reuters Photo)

IDFC gets approval from CCI for merger with IDFC First Bank

Infrastructure Development Finance Company (IDFC) on Tuesday said that it has received approval from the Competition Commission of India (CCI) for its merger with IDFC First Bank. “The CCI vide its letter dated today, i.e. October 17, 2023 has communicated that it has considered and approved the combination under Green Channel Route, pursuant to the notice jointly filed by IDFC FHCL, IDFC Limited, and IDFC FIRST Bank, in terms of Section 6(2) of the Competition Act, 2002 read with Regulations 5 and SA of the Competition Commission of India (Procedure in regard to the transactions of business relating to combinations) Regulations, 2011,” IDFC Limited said in a regulatory filing.

The scheme, it further added, remains subject to various statutory and regulatory approvals inter alia including from the Stock Exchanges, SEBI, RBI, National Company Law Tribunal, and other statutory and regulatory authorities, and the respective shareholders and creditors.

This follows just days after HDFC merged with HDFC Bank in a $40-billion deal. HDFC- HDFC Bank merger became effective from July 1, 2023 with all the entities filing the certified approval copy of the NCLT with the Registrar of Companies.

Rupee caught between further rise in US yields, yuan recovery

The Indian rupee is likely to open little changed on Tuesday on the back of a recovery in the Chinese yuan and other Asian currencies despite a further rise in U.S. yields.

Non-deliverable forwards indicate rupee will open near Monday’s level of 83.1075.

“The RBI (Reserve Bank of India) is averse to it (the USD/INR) making a new high, and on the other hand, you have the volatility in (US) Treasury yields.”

The yield on the U.S. 10-year Treasury hit the highest since 2007 on Monday on bets that a resilient U.S. economy will push the Federal Reserve to keep interest rates higher for longer.

At the Fed’s Jackson Hole Economic Symposium from Aug. 24 through 26, Chair Jerome Powell’s comments will be scrutinized for cues on interest rates.

The Treasury sell-off is less about the terminal rate for this tightening cycle and more about where the Fed Funds rate settles under normal conditions, ING Bank said in a note.

“Chair Powell could shed some light on this on Friday,” ING said.

Asian currencies managed a recovery on Tuesday, despite the U.S. Treasury yields. The offshore yuan was back below 7.30 to the dollar on bets of tightening up of offshore yuan liquidity. China’s major state-owned banks were seen actively mopping up the offshore yuan on Monday.