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Nifty seen at 18600 in 3 months, Bank Nifty may add 1400 pts; these stocks look to rally

NSE Nifty 50 will likely add 800 points in the next three months to hit 18,600 by the end of the year 2021; while Bank Nifty may rise another 1,400 points to reach 39,400 by December end, analysts say. The structural uptrend of Nifty 50 looks intact, ICICI Direct said in a research note. The brokerage firm sees BFSI, IT, telecom, auto, capital goods, realty and infrastructure stocks contributing the most to the Nifty 50 gain. Nifty 50 is on a record setting spree, rising to just shy of 17,800 in morning deals on Friday. The 50-share Nifty has added nearly 600 points, or 3.4 per cent, so far in September.

NSE Nifty 50: Target 18,600 by December-end 2021
Indian equities are in the middle of a multi-year secular bull cycle, the note said. The technical setup suggests that Nifty may maintain the rhythm of rallying at least 32 per cent from April lows of 14,151 to 18,600 by December — like recent major rallies, it said. An intermediate correction of 5-6 per cent towards the 10-week average would offer incremental buying opportunities to the investors. Nifty rallied 32 per cent during March-April last year; 34 per cent during June-August; and 35 per cent during October 2020-February 2021. “The index followed a specific rhythm since April 2020 where the magnitude of each major rally has been at least 32%, containing in-between corrective phases of 5-6%. The current rally since April 2021 lows of 14,151, so far has gained 23%,” ICICI Direct said.

Bank Nifty: Target 39,400 by December-end 2021
Bank Nifty index has registered a breakout above the last three months broad range (34,000-36,300), indicating a resumption of up move. “Going ahead, we expect the index to accelerate its positive momentum and rally past its previous all-time high (37,708) and head towards 39,400 levels in CY21 as it is the 123.6% external retracement of the entire previous decline (37,708-30,406),” the note said. The ‘buying on declines’ strategy has worked well over the past 15 months; hence, any breather in the coming week would offer an incremental buying opportunity in quality banking stocks, it added.

These sectors, stocks may help pocket gains
BFSI: HDFC, Kotak Mahindra Bank, SBI, Canara Bank, Bajaj Finserv, M&M Finance
IT & Telecom: TCS, Tech Mahindra, Reliance Industries Ltd (RIL), Bharti Airtel, Mphasis, LTTS, Firstsource
Consumption: Asian Paints, Titan, Pidilite, Varun Beverages, Dixon Technologies, Havells, Trent
Auto: Tata Motors, Ashok Leyland, Escorts, Balkrishna Industries, Minda Industries
Capital goods: L&T, Siemens, HAL, BEL, Grindwell Norton
Metals: Tata Steel, Hindalco, SAIL, Tata Metaliks, Vardhman Speciality Steel
Infra and Realty: Concor, KNR Consts, Orient Cement, DLF, Brigade Enterprises, Godrej Properties
Healthcare: Divis Laboratories, Cipla, Sun Pharma, Laurus Labs, Abbott India, Fortis Healthcare
Chemicals: Navin Fluorine, Deepak Nitrite, Tata Chemicals, PI Industries, Nocil
Others: Gujarat Gas, Butterfly, Interglobe Aviation, Balrampur Chini, Indocount Industries, Gateway Distriparks

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T+1 settlement system is in the interest of market participants: Sebi chairman

Capital markets regulator Sebi chairman Ajay Tyagi on Thursday said the T+1 (trade plus one day) settlement cycle is in the interest of all market participants and the new system will not lead to fragmentation of liquidity. T+1 means that market trade-related settlements will need to be cleared within one day of the actual transactions taking place. Currently, trades on the Indian stock exchanges are settled in two working days after the transaction is done (T+2).

“Early settlement will be good for all market participants. It is in the interest of everyone and the new system will not lead to fragmentation of liquidity,” Tyagi said in an event organized by the Confederation of Indian Industry (CII). This comes amid brokers’ association raising concerns over the implementation of the shorter settlement system.The Securities and Exchange Board of India (Sebi), earlier this month, allowed exchanges to move to the T+1 settlement cycle on an optional basis.

As of now, Sebi has introduced this mechanism on an optional basis, so exchanges will decide whether to implement the T+1 settlement or continue with the T+2 old mechanism. The new mechanism will come into force on January 1, 2022. This is not the first time that Sebi has chosen to shorten the settlement cycle. Earlier in 2002, the capital markets regulator had cut the number of days in the settlement cycle from T+5 days to T+3 days, and then in 2003, it was reduced to T+2 days.

Tyagi said that the Indian markets have been witnessing a boom in fundraising through initial public offerings (IPOs). During the last 18 months, growth oriented technology companies have raised a sum of around Rs 15,000 crore through IPOs. Their filings with SEBI at present show a pipeline of around Rs 30,000 crore.

Funds raised through IPOs in the ongoing fiscal till-date are almost equal to what was raised in the entire financial year 2020-21, which was Rs 46,000 crore, he said. The Sebi chairman said that individual investor participation in the market has increased by “leaps and bounds”. On an average, about 4 lakh new demat accounts were opened per month in 2019-20, which increased to 12 lakh per month in the 2020-21, he said. The trend gets further accentuated during the current financial year 2021-22 — on an average 26 lakh demat accounts have been opened per month, he added.

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Rakesh Jhunjhunwala wins Rs 21 crore in a day on this stock in the news; Zee Ent stock hits again 52-wk top.

Rakesh Jhunjhunwala earned a mark-to-market profit of Rs 20.53 crore in just one day on his purchase of Zee Entertainment shares yesterday. Further, he is earning more from this stock with the uptrend continuing today. Rakesh Jhunjhunwala’s Rare Enterprises bought 50 lakh shares of Zee Entertainment Enterprises Ltd (ZEEL) at Rs 220.44 per share on Tuesday, 14 September in bulk deals. ZEEL stock ended at Rs 261.5 on Tuesday, earning a neat Rs 41 per share for Rakesh Jhunjhunwala, totalling to Rs 20.53 crore.

ZEEL share extended yesterday’s rally, jumping another 12 per cent today to a fresh 52-week high of Rs 295.15 intraday. The share has rallied 34 per cent from Rakesh Jhunjhunwala’s purchase price. Rakesh Jhunjhunwala or Rare Enterprises name does not figure in the shareholding pattern as names of only those entities are shown that own over 1 per cent stake in the company.

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India’s inclusion in global bond index to attract $170-250 bn inflows; stock markets may also benefit

India could be included in the global bond index in early 2022, a move that may attract $170-250 billion in bond inflows for the country in the next decade, said Morgan Stanley in a recent note. Investors have been staying away from the Indian bond market in the past few years given the widening fiscal deficit, above-target inflation and gradually weakening currency. However, recent macroeconomic stability could change this in early 2022. India’s inclusion in the global bond index is likely to have profound implications for the economy, FX, bond yields, and equity markets, according to analysts at Morgan Stanley.

Desire for growth
India has shown a significant improvement in macro stability and the government has indicated its desire to push for capex-driven growth which is expected to result in an inclusion in the global bond index, making it the last emerging market to join the group. Although India historically, has had a mixed response toward foreign bond inflows, the same has changed in 2020. “The push for capex-driven growth alongside an improvement in macro stability has set the stage for a calibrated opening up of India’s government debt market,” Morgan Stanley analysts said.

The opening up of bond inflows, in Morgan Stanley’s view, hints at policy-makers’ desire to push growth rates higher through investment. “It will push India’s balance of payments into a structural surplus zone, indirectly create an environment for a lower cost of capital and ultimately be positive for growth,” they said. The consensus expects India to join global bond indices but the timing and implementation remain uncertain. With the floodgates opening for bond inflows, equity market returns could be higher due to the positive impact on growth and interest rates, the global brokerage firm said.

Stock markets to benefit: Financial stocks in focus
“Obviously, equity performance is a function of the growth and interest rate outlook. Equity markets do well when the growth outlook is strong and the rate forecast is benign,” Morgan Stanley analysts wrote. Indian banks are seen to be among the beneficiaries of the expected inflows. “We believe that the opening up of the sovereign bond market and resultant inflows will have multiple implications for the banking sector,” they said. Morgan Stanley analysts believe that over time the inflows will add to the source of growth capital and help to manage interest rates.

Large private banks are expected to benefit the most. Meanwhile, multiples are also expected to benefit. “Lower interest rates coupled with better confidence in growth/profitability is a great outcome for stock multiples. Overall, such a macro backdrop is good for equity prices, as it implies a lower cost of equity and stronger sustainable RoEs,” Morgan Stanley said.

Apart from banks, non-bank lenders are also seen as beneficiaries over the longer run. The opening up of the sovereign bond market and the resultant potential implications like lower longer-term G-Sec yields could result in favourable structural implications for NBFCs and HFCs — namely, higher foreign investor interest in corporate bonds, including NBFCs and HFCs, lower cost of borrowing and higher access to bond funding,” the report highlighted. Key frontline beneficiaries in Morgan Stanley’s view are likely to be Housing Development Finance Corporation, Bajaj Finance, SBI Cards, Mahindra Finance, and Cholamandalam Finance.

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