Focus more on stock-specific trading

Enthused by lack of negative factors in the Union Budget 2022 and a policy of continuity from the Union Budget of 2021 with growth initiatives and support from global cues; the markets snapped two-week losing streak to post nearly 2.5 percent gains during the week ended February 4, 2022. The BSE Sensex surged 1,444.59 points to 58,644.82, and the NSE Nifty jumped 414.35 points to 17,516.30. Moving in tandem with the benchmark indices, the broader markets also joined the rally. Both the Nifty Midcap 100 and Smallcap 100 indices rose 2.14 percent and 1.87 percent respectively. Mirroring the global markets and keeping eye on global cues like geo political tensions between Russia-Ukraine and elevated oil prices, markets have been witnessing volatile swings.

With the Union Budget maintaining continuity in policy, stability in taxation, and consistency in the strategic direction of the economy, nearly all sectors participated in the budget-driven rally with the Metal, Pharma, FMCG, IT and Banking being prominent gainers rising 3-6.6 percent. There could be some thematic changes that could be seen from here on. Hence, it is advised to focus more on the stock-specific front rather than broader indices. The coming week would also be a crucial one as the RBI reviews its policy, especially in the backdrop of oil prices topping $90 a barrel mark and Central Banks across the globe waging a war on inflation with rate hikes.

Though the Bill on Cryptocurrencies has not been passed by the Parliament till date, cryptocurrencies will now finally be taxed in India. In her Budget speech, FM said the transfer of digital assets - and these includes cryptocurrencies and non-fungible tokens- will attract a 30 percent tax. Additionally, all transfers of such assets will attract one percent tax deducted at source (TDS).

Even gifting such assets will attract the 30 percent tax. Near-term direction of the markets will be dictated by RBI policy meeting outcome, domestic macro-economic data, trends in global stock markets, the movement of rupee against the dollar and international crude oil prices. The FIIs have been relentless sellers in Indian equities for fifth consecutive month now, restricting the market upside. In fact since October 2021, FIIs have net sold Rs 1.46 lakh crore. It is pertinent to note that despite continuous selling by FIIs, the market has been gyrating in a range of 1,500-2,000 points on the Nifty since October 2021. With the earnings season in full swing, as many as 1,625 companies will report their quarterly earnings this week. Key ones to watch out for would be Bharti Airtel, ACC, Bosch, Power Grid Corporation of India, Hero Motocorp, Hindalco, Mahindra &Mahindra, Divi Labs and ONGC.

Market Musings: It isn't investments that get tested in turbulent markets; it's investors. Individual investors should tune out the futile efforts by commentators and strategists to extrapolate the market's latest swings into a prediction of what will happen next. Instead, use the recent volatility to make an honest reassessment of what kind of investor you are and how much risk you can stomach. If you have been glued to financial television or websites, fixated on the sight of falling arrows and reddening charts, then this year's short-term turbulence already has told you something about yourself that has enormous long-term importance: You probably have too much in stocks.

Whether you cut back on stocks or not, the more frequently you check how your portfolio is doing, the more volatile it will feel. Try turning off your phone, putting it in another room, taking trading apps off your home screen—anything to form positive habits and improve your investing hygiene. On the other hand, if you can control it, fear is "the best fertilizer for future bull markets". Market panics are the indispensable hygiene of markets, the natural way overvalued assets come back into line, making future returns more attractive.

F&O / sector watch

Despite spirited profit booking at higher levels during the later part of the week ended, derivatives segment witnessed brisk trading. In the option segment, maximum Call Open Interest was seen at 17800 strike, followed by 18500 &18000 strikes; and maximum Put Open Interest at 17500 strike, followed by 17000, 17400 & 17200 strikes. Call options concentration is much higher than the Put for the coming week suggesting limited upsides.

Option data indicates that 17,200 could be crucial support while the 17,800 could be a major hurdle for the Nifty in next few trading sessions. Bank Nifty continued to outperform the Nifty and ended the week with gains of more than 2.5 per cent. Avoid aggressive shorts and use this consolidation phase to pick the right stocks with strong relative strength. Sector-specific outperformance will continue.

Banks, financials, oil &gas, infrastructure and automobile sectors are likely to put up a resilient show over the coming weeks. Guidelines issued last month by the IRDAI said insurance companies can offer six types of sureties namely, advance payment bond, bid bond, contract bond, customs and court bond, performance bond and retention money. Stock futures looking good ITC, IDFC First Bank, Sun Pharma, Maruti, Torrent Power, United Breweries and Voltas. Stock futures looking weak Atul, ICICI Prudential, Jubilant Foods, M&M Financials, Shriram Transport and Ultratech Cement.

(The author is a stock market expert. He is former vice chairman of AP Planning Board)

Stock Picks

Container Corporation of India Limited (CONCOR), a PSU enterprise is an undisputed market leader having the largest network of 60 ICDs/CFSs in India (58 terminals and 3 strategic tie-ups). In addition to providing inland transport by rail for containers, it has also expanded to cover management of Ports, air cargo complexes and establishing cold-chain. It has and will continue to play the role of promoting containerisation in India by virtue of its modern rail wagon fleet, customer friendly commercial practices and extensively used Information Technology. The company developed multimodal logistics support for India's International and domestic containerization and trade.

Both EXIM and Domestic divisions of the company are engaged in handling, transportation and warehousing activities. Its International services include train services, road services, air cargo movements, reefer services, and block booking on round trip basis. Its domestic services include train services, volume discount scheme, door delivery/pickups and terminal handling charges. Its E-Filing software is a Web-based application for Exim locations being operational at Terminal/Inland Container Depot of CONCOR. Through its software, any importer/exporter/shipping agent can file his documents, including billing and take printouts. Use declines to buy for target price of Rs1100.

TANFAC Industries Limited offers aluminium fluoride, AHF Acid and Sulphuric Acid, and Speciality Chemicals. The company operates through Fluro-Chemicals in India segment. Its product range includes Boron Trifluoride Complexes, Diluted Hydrofluoric Acid, Iso Butyl Acetophenone, Acetic Acid, Peracetic Acid, Oleum, Gymsum (Anhydride), Potassium Bifluoride, Potassium Fluoride and Sodium Silico Fluoride. Anupam Rasayan India Ltd, one of India's leading custom synthesis and speciality chemical players, announced the acquisition of 24.96 per cent of the total equity shareholding of and joint control of Tanfac Industries Limited (TIL) from Birla Group Holdings Private Limited (BGH), (a promoter

company which is part of Aditya Birla Group) and few other promoter group of TIL (Sellers) and the launching of an open offer under the Securities Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 2011 to acquire a further 26 per cent shareholding from the public shareholders of TIL. TIL posted revenues of Rs253 crores, EBITDA of Rs65 crores and PAT of Rs46 crores till Q3 of FY2022. The deal is taking place at P/E multiple of 13 times considering PAT of trailing four quarters. Buy for post open offer target price of Rs1,100 in medium term.