Market Capsule 4th May'24 | Election Fever Boosts Public Sector

samarwealth
May 4, 2024
6 min read

Public Enterprises Shine as Elections Heat Up

During these ongoing Lok Sabha elections, the Indian stock markets are trading near life highs , despite prevailing volatility. Barring the fierce downfall seen this Friday, markets showed a stable move towards its resistance Zone of 22700-22750. However things worsened on Friday's session when the Big Bears showed their strength and closed Nifty50 170 points down. Sector wise noteworthy performance was shown by Public Sector Enterprises (PSE) index, which saw a substantial increase of 4.32% over four trading sessions. The robust performance of PSEs suggests they are prime candidates for leveraging election-related momentum.Looking ahead, the sector presents substantial opportunities, making it an essential focus for investors aiming for short-term gains.

Companies like Coal India exemplify the potential within this sector, having reported remarkable financial results—profits surged by 26% while revenues held steady. Following this announcement, the stock experienced a 5% uplift in last trading session. REC has emerged as a standout performer, with its stock price skyrocketing by 22% within the week. As the market continues to navigate through these turbulent times, other notable names like NHPC, NBCC, and NLC India are also poised to attract investor attention, potentially replicating similar successes. This shift in focus could unlock new growth avenues as we move closer to the elections.

Nifty 50 and Bank Nifty both indices are trading near life highs and are expected to continue the upside momentum untill 22,200 and 48300 is breached on downside respectively. The bias remains positive for the coming week. Focus Sectors for next week: Power, PSE & Banking

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Charting the Pulse of Indices: A) Sector Wise Performance

This week, almost all Indian sectoral indices showed Stagnant Movement lead primarily by PSE and Autos. Nifty IT index Underperformed the other indices considerably. Nifty Energy and PSU Banks index however stood strong and is likely to extend the gains and showing relative strength.

B) Heatmap

Heatmap helps investors quickly understand the performance of multiple stocks or sectors in a single view. Color coding, with varying shades indicating the degree of movement - red for declines, green for gains, and sometimes grey or other colors for little or no change. Heatmaps are effective for spotting market patterns and can be a time-saving resource in investment analysis.

C) Market Breadth

A) Nifty 500

Source: Stockedge

Analyzing market breadth is important as it provides insight into the underlying strength or weakness of the market, beyond just looking at benchmark indices. Breadth measures the percentage of securities in NIFTY 500 surpassing specified moving averages over the specified period. Comparing the market breadth of nifty 500 during the previous week's trading sessions, we can analyze that number of stocks above key moving average support areas are reducing by the end of week. This can be considered as a sign of weakness if change is seen to be significant.

Fairchem Organics Ltd.

Fairchem Organics Limited is a leading player in India's Oleo Chemical Market, renowned for its production of Linoleic Acid and Dimer Acid. With a strong market presence and enduring customer relationships, the company serves key industries such as Paints, Inks, and FMCG. Led by Mr. Nahoosh Jariwala, with over 25 years of industry experience, Fairchem specializes in Oleo Chemicals and Nutraceuticals, catering to esteemed clients like Asian Paints and ADM.

Utilizing renewable resources and efficient manufacturing processes, Fairchem maintains a cost-competitive edge in the market. With strategic investments in capacity expansion and forward integration, the company continuously enhances its product portfolio and strengthens its position as a market leader. Operating from its manufacturing unit in Sanand, Ahmedabad, Fairchem remains committed to sustainable growth and development in the chemical industry.

In the fiscal year 2023, significant clients such as Asian Paints Limited, Uniform Synthetics, Resins & Plastics Limited, Astral Limited, Archer Daniels Midland Company (USA), Arkema Chemicals India Private Limited, among others, collectively accounted for approximately 66% of sales. This represents a slight decrease from the previous fiscal year, where the top 10 customers contributed 71% of sales. Notably, the top customer in FY23 accounted for approximately 37% of total sales, down from 40% in FY22.

As of June 30, 2023, FIH Mauritius Investment Limited (FMIL), based in Canada, possessed a 52.83% equity stake in FOL. FMIL operates as an investment arm of Fairfax India Holdings Corporation (Fairfax India), established in 2014 by V. Prem Watsa. Fairfax India holds a varied investment portfolio in India across different sectors and industries.

Financial Highlights:

Concall Updates:

Seven good-looking charts for next week 1. Sterling & Wilson Renewable Energy Ltd.

2. Solara Active Pharma Sciences Ltd.

3. Puravankara Ltd

4. Indo Count Industries Ltd

5. Centum Electronics Ltd

6. Container Corporation Of India Ltd

7. Jubilant Pharmova Ltd

Order Wins:

Ircon International, in collaboration with Dineshchandra R Agrawal Infracon Pvt Ltd, secures an Engineering, Procurement, and Construction (EPC) contract worth Rs 1,198 crore from the East Coast Railway. Link
KEC International has secured new orders totaling Rs 1,036 crores across its diverse business verticals. Link
Dronacharya Aerial Innovations: The company announces the procurement of a work order worth AED 239,819 || The acquisition of a work order from ALTER Dynamics & Artificial Intelligence. Link
Gokul Agro Resources: The company receives an order worth 500 million rupees for the grid connectivity and evacuation of a 10.00 MW solar power project at the 66kV Gorad Substation of GETCO, situated in Banaskantha, Gujarat. Link
Happy Forgings: The company secures an order valued at 350 crore rupees for the supply of E-Axle components destined for electric SUVs in the US market. Link
Mishra Dhatu Nigam: The company has secured an order worth 1.39 billion rupees. Link

Bonus Share Issue & Share Splits:

Sonam has planned a stock split to be executed on May 10, 2024, which involves reducing the face value of its shares from ₹10 to ₹5. Link

Appointments & Resignations:

IDFC First Bank: The Board has endorsed the plan to extend Mr. V. Vaidyanathan's tenure as the MD & CEO of the Bank for an additional three years beyond his current term, which concludes on December 18, 2024.
NIIT: Mr. Bimaljeet Singh Bhasin, President - Enterprise Business India and a Senior Management Personnel of the Company, has resigned from his position to pursue a new opportunity. Link
JIO Financial Services: The Ministry of Corporate Affairs has granted approval for the appointment of Shri Hitesh Kumar Sethia as Managing Director and Chief Executive Officer, effective November 15, 2023, for a term of three years. Link
Kotak Mahindra Bank Limited: KVS Manian has resigned from his position as Joint Managing Director of Kotak Mahindra Bank with immediate effect. Link
Jubilant Pharmova has appointed Harsher Singh as the CEO of its Radiopharma business. Link

Agreement:

Cipla has finalized the acquisition of the distribution and marketing business operations of cosmetics and personal care products from Ivia Beaute Private Limited via a slump sale arrangement. Link
BHEL has entered into a Strategic Partnership Agreement with HIMA for its Railway Signalling Business. Link
Coforge Limited has agreed to enter into a share purchase agreement with the promoters and select public shareholders of Cigniti Technologies Limited, aiming to acquire approximately 54% of the share capital of Cigniti Technologies Limited. Link
Tata Power: Tata Power Renewable Energy Ltd has entered into a Power Purchase Agreement (PPA) with SJVN Ltd for a 460 MW Firm and Dispatchable Renewable Energy (FDRE) Project. Link
Gujarat Industries Power Company has entered into a Loan Agreement of Rs 2,832 crore with the National Bank for Financing Infrastructure and Development. Link

Other Important News:

Indian Renewable Energy Development Agency has been conferred the 'Navratna status' by the Department of Public Enterprises. Link
Shriram Properties: The company has acquired a 4-acre land parcel near Electronic City, Bengaluru, boasting 4 lakh square feet of saleable area. This acquisition presents an aggregate revenue potential of Rs. 250 crores. Link
DCM Shriram: The company has successfully commissioned its caustic soda expansion project of 850 TPD at its chemical complex in Jhagadia, Gujarat. This development increases the total installed capacity to 2,225 TPD at Bharuch and elevates the overall annual caustic soda capacity at both Bharuch and Kota locations to 1 million metric tonnes. Link
Reliance Industries: Abu Dhabi Investment Authority and KKR are reported to have potentially invested in Reliance Retail Ventures' warehousing assets in a deal estimated at 128.64 billion. Link

That's all for now! I hope you enjoyed the content. Do share your comments below! Disclaimer: Any stock or company discussed above should not be considered as a Buy/Sell recommendation. We personally or our clients might or might not have a position in any of the stocks discussed. This newsletter is purely is for educational purposes only.