Yesterday’s Market Performance

Nifty 50: 17,416.55 | -348.25 (-1.98%)
FII Buy Sold: INR 3438.76 crore

Sensex:  58,465.89 | -1,170.12 (-1.96%)
DII Net Bought: INR 2051.18 crore

Howdy Toasters!

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

• Ashoka Buildcon primed for breakout?
• Wipro continues growth theme
• An education concept to keep you chugging along

Ashoka Buildcon primed for breakout? 😮

• Analysing Ashoka Buildcon on a weekly time-frame (over 60 weeks), indicates that the stock has been in a constant uptrend (see image below)

• The stock has been breaking earlier highs and making new ones (HH) over 2020 & 2021, while taking support at a rising trending (thus making higher lows)

• The script has been facing resistance constantly around 120 resulting in small corrections, weakening the resistance level and increasing the likelihood of a breakout in the future more probable

• Looking at the chart on a daily time frame indicates that prices have been consolidating in a tight range (see image below)

• Given that this consolidation is taking place between the falling Trendline & the all-important Support Line at 100, the stock has created a descending triangle pattern

• This makes chances for a reversal at these levels more probable, although if prices breach level 100, the stock may show weakness and might experience a short decline

Interesting! Final thoughts? 🧐

• The consistent higher high higher low (HH HL) patterns indicate that the stock has been in a steady uptrend

• On a daily time-frame, making a descending triangle pattern increase the chances of reversals at the current price

• We started on a weekly time-frame with overall price action and trend analysis and took second confirmation on a daily time-frame, safeguarding us against possible traps

Keep a track?

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• Wipro has delivered consistent growth in the last 4 quarters, on the back of a concerted effort to build out their cloud offerings, recording revenue growth of 4.6% over a 4 quarter CQGR

• Cloud Services now comprise ~30% of overall topline, and are 1/3rd of the overall deal pipeline, with Wipro likely to invest USD 1 Bn over the next three years to accelerate growth

• At its recent analyst meet, the company reiterated its strategy focused on five strategic priorities (more on this below), and highlighted the results achieved by following a simplified operating model & a deeper focus on specialised markets

• The company plans to build on work done across cloud, Domain & Consulting (6.5% 4 quarter CQGR) and Next-Gen services (~20% of Topline) to drive next leg of revenue growth

Interesting! Tell me more? 🧐

• Wipro had initially listed the following 5 principles as core to achieving their strategic objectives, with each now leading industry defining results –

  • Accelerate growth focus & scale – 4 of 7 sectors in Americas growing at CQGR of 5% and 4 of 6 countries in Europe surpassing company %

  • Strengthen clients & relationships – building out the strategic alliance with major cloud service providers like AWS, Google, Microsoft, SAP

  • Lead with business solutions-

  • Build talent at scale – made ~50 senior leadership hires in market facing roles, has ~79k cloud professionals & 10,000 certified specialists with 100+ IPs

  • Simplified Operating Model – Large deal teams has led to 80% growth in Total Cumulative Value (of deals won), in high value markets of US & Europe

• Recent acquisition Capco has already added value, with Wipro winning 20+ deals jointly, and a further 45+ strategic deals in pipeline across 20+ clients

• Cybersecurity is another focus area for the company, with the management highlighting a buoyant demand environment across cyber, Engineering, Data & AI & of-course Cloud

Nice! Final thoughts? Margins, valuations, stock price et al.?  😋

• Margins have been under pressure (for a variety of reasons), with the management now highlighting a stabilisation of current levels, led by greater offshoring, improving economies of scale & uptick in core business offerings

• Wipro highlighted the significance of a cogent M&A strategy, with the company open to Capco type acquisitions in the future

• The company is presently trading at 2yr FWD PE ~26x, which when taking into consideration competition & return profile is a tad bit expensive (leaving little room for disappointment)

Keep a track?

What else caught our eye? 👀

Bharti Airtel raises tariffs, stock price follows 

• Bharti Airtel will be raising prepaid tariff rates by up to 25% with effect from November 26
• Main reason cited is “to provide a reasonable return on capital for a financially healthy business model.
• Shares surged > 5% (and touched a 52-week high of Rs. 756) after the announcement

FIIs believe in Indian equities 

• FIIs have bought more than $3 billion in trading equities in the last five trading sessions
• Indian and global equities have been falling amidst inflationary pressure – which might lead to the Fed tightening policy rates
• Flows in the primary market have been large owing to the many IPOs including Paytm’s

LIC unlocks value 

• An actuarial valuation exercise has quoted LIC’s embedded value at $150 bn
• Concerns have been made over the size and restructuring which could deter investors
• The GoI is looking to raise between Rs 40,000 crore and Rs 1 trillion from the issue

Timeframes

A time frame is the amount of time that a trend lasts for in a market, which can be identified and used by traders.

• Intra-day traders favor analyzing price movement on shorter time frame charts, such as the 5-minute or 15-minute charts

• Long-term traders who hold market positions overnight and for long periods of time are more inclined to analyze markets using hourly, 4-hour, daily, or even weekly charts.