Good Morning Toasters!

In today’s issue of the Morning Toast, we discuss:

• Bajaj Finance is on the move
• Jio leads VLR subscriber additions in a traditionally weak month
• News around the world
• An educational concept to keep you learning every day 🙂

Market Watch

Nifty: 17,670.45 | +205.70 (+1.18%)
FII Net Bought: INR 1,909.78 crore

Sensex: 59,276.69 | +708.18 (+1.21%)
DII Net Sold: INR 183.79 crore

Technical Setup

Bajaj Finance is on the move 🚀

• Analysing Bajaj Finance on a 5-minute time frame indicates that the stock is facing stiff resistance along with the resistance band (7365-7375)
• Lately, prices kept on getting pushed down after coming close to these levels, making this level weaker
• On 31st March, the stock finally managed to give a breakout above the resistance band

Awesome! Tell me more? Any other breakouts?

• Looking at the chart on a daily time frame shows that the prices were consolidating in a tight range between 2 converging trendlines making a symmetrical triangle pattern (see image below). This consolidation gave traders an opportunity to accumulate the share.
• The surge in volumes resulted in a breakout above the pattern which led to a good up move 🤓

That’s Great! How do I enter / exit such a setup? 

• In this case of a breakout, going long would be the ideal choice
• A stop-loss can be placed just below the resistance band to limit your losses and the target can be calculated as per your risk to reward ratio

Final thoughts?

• On a daily time frame, breakouts above the resistance band and symmetrical triangle pattern were positive signs which resulted in a good upward momentum

Keep a track?

Around the World 🌎

• H&M not having the best of times – Popular clothing brand H & M Hennes & Mauritz AB may have to reconsider the expansion plans it had made after sales had touched pre-covid levels last year. Store closures in Russia (~ 185 stores, their 6th largest market), new Covid restrictions especially in China, and an overall surge in expenses have resulted in weaker-than-expected first-quarter earnings and slower growth. Markets reflected the same falling 11% – the lowest in nearly two years
• Labour market exerting its power – The Fed will take the health of the labour market into consideration when deciding how fast to raise interest rates which are good news as employers added 490,000 jobs in March. The unemployment rate is approaching the pre-pandemic rate of 3.5% –  a 50-year low. Futures for the S&P 500 edged up 0.4% Friday while the yield on the benchmark 10-year Treasury notes rose to 2.424% from 2.324% Thursday. Major concerns that still remain are the rising commodity prices and other geopolitical issues

Industry News

Jio leads VLR subscriber additions in a traditionally weak month; what’s up and what do you need to know?

Industry Update

• In what is typically a weak month (seasonality), India’s telecom industry Visitor Location Register (VLR) subscriber base grew by 5.9 Mn in Jan’22, with Jio Platforms leading the pack (4.2 Mn), followed by Bharti Airtel (1.3 Mn); in classic fashion (😒), VIL lost 0.7 Mn subscribers
• On an overall basis (considering VLR + more), the telecom industry subscriber base declined for the second month in a row, down 9.4 Mn in Jan’22, led by Jio (~90%); Airtel recorded a slight uptick of 0.7 Mn, while VIL saw a decline of another 0.4 Mn
• To clarify, VLR (defined as the server in a cellular network that supports roaming functions for users outside their coverage area) which has grown vs overall subscriber count dipping is on account of a strong cleanup of inactive subscribers undertaken by Jio Platforms
• A similar trend was noticed in the wireless broadband space, with Bharti adding 0.5 Mn subscribers, while Jio + VIL recording subscriber losses; MoM numbers for the rural: urban mix did not change meaningfully, with Jio maintaining its strong presence in urban India, followed by Bharti & VIL

Player Wise Analysis

Bharti Airtel

• For a third consecutive month, Airtel recorded both a VLR and overall subscriber addition, with positive headway mainly recorded in Northern India (Uttar Pradesh)
• The company’s urban subscribers count did take a hit, falling by 0.6 Mn during the month of Jan’22, which could partly be attributed to consistent tariff hikes being undertaken, starting Nov’21, leading to SIM consolidation
• The company still maintains a best in class VLR % of ~98%, indicating strong quality/activeness of customer/subscriber base

Jio Platforms 

• With another 9.3 Mn subscriber loss in Jan’22, Jio Platforms & India’s Goliath has now lost ~37.5 Mn subscribers in the last 5 months; on the positive side, the company began weeding out inactive customers during this period, resulting in a strong uptick in VLR % to 91% (from <75%)
• Uttar Pradesh (like Bharti), Tamil Nadu, and AP saw the highest additions in VLR subscribers; the company continues to maintain its strengths in the wired broadband space, adding 0.3 Mn subscribers, capturing share from state owned BSNL

Vodafone Idea

• In a silver lining (we guess), VIL subscriber loss slowed, with the company losing 0.4 Mn in Jan’22, its lowest count since April’22; Kerala, Maharashtra, and Mumbai saw the highest MoM growth in VLR subscribers
• With limited information forthcoming in terms of a successful fund-raise, coupled with no inclination for the parent company to inject much needed cash, Vodafone is at present being saved by market maker Bharti initiating tariff hikes
• Without a sizeable investment in upgrading data architecture and network, and competitors successfully executing strategy, VIL is ripe for subscriber loss, unless something drastically changes

Final thoughts?

• Bharti Airtel is leading the pack, initially at a corporate level (early repayment of debt, increased foresight in 5G et al.), and subsequently via consistent tariff hikes (proving to be a market maker)
• The likelihood of this continuing, unless some drastic strategic change takes place, with Bharti maintaining its strength in the market
• Likewise, Jio Platforms by weeding out inactive customer base, and building on initial investment is likely to compete and acquire users consistently from weaker players (think: VIL)
• The market will continue to evolve, albeit with extremely cheap data likely to be a rare phenomenon (we believe)

What else caught our eye? 👀

Maruti Suzuki is on a roll

• Maruti Suzuki India has reported its highest ever exports in FY22 at 2,38,376 units with the highest ever monthly number in March’22 at 26,496 units
• The top five export models for the company in 2021-22 were Baleno, Dzire, Swift, S-Presso and Brezza while the top export markets included Latin America, ASEAN, Africa, and the Middle East
• The new CEO Hisashi Takeuchi called it a ‘reflection of India’s manufacturing potential and the acceptance of India-manufactured vehicles all over the world’

Some crypto updates for you

• The GoI is not looking to plan laws to regulate or tighten the crypto industry and will wait till a global consensus emerges on regulating such assets
• A 30% tax on income from digital assets has been put into effect from April 1 however which will make it significantly costlier to trade
• The Indian market apparently grew 641% from July 2020 through June 2021 in spite of the RBI clearly voicing their opposition

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Educational Topic of the day

Oscillator

An oscillator is a technical indicator that gravitates between two levels on a price chart. Oscillators measure momentum. and are designed to show when an asset is potentially overbought or oversold.

Oscillators can help distinguish between reversals and fluctuations.