Yesterday’s Market Performance
Nifty: 17,812.70 | +66.80 (+0.38%)
FII Net Bought: INR 496.27 crore
Sensex: 59,744.65 | +142.81 (+0.24%)
DII Net Sold: INR 115.66 crore
In today’s issue of the Morning Toast, we discuss:
- Titan stays true to its name?
- Fed’s hawkish stance is facing some resistance
- Grasim primed for a breakout?
- An education concept to keep you chugging along
Titan stays true to its name? What’s up and what do you need to know! 🤩
- Titan has seen strong demand in Q3FY22 across its businesses with a growth momentum of 36%
Segment wise – the jewellery division reported strong growth at 37% and 2 year CAGR of 26% (excluding bullion sales)
It also saw some major expansion in FY22 so far with the Eyewear, Tanishq, and Watches units adding 83, 29 and 27 stores respectively
Details please! 😏
- Sales in the jewellery segment driven by a ~15% jump in ticket size vs. pre-pandemic levels, higher footfalls/conversions and a ~9% CAGR in the store count
Strong demand trends during the festive season + new customer acquisitions from its regionalisation strategy seem to have given the necessary push
Tanishq’s network of stores increased by 14 in the last quarter with two of them opening up in Dubai
What about the other segments? 🙄
- Watches and Eyewear too posted growth of 27% & 28% respectively (2 year CAGR of 6 and 9%) with both online and offline channels contributing
53 stores were added in the eyewear segment (Titan has been hinting at aggressive expansion in this category) while watches saw an addition of 20 stores
Other businesses (Taneira, Fragrances and Accessories) grew 44%, aided by high operational stores and new launches
Caratlane also did not let down with 64% growth in Q3 and a 2-year CAGR of ~50%
Store count saw a ~30% increase in CAGR as well as the launch of the new Dunes collection; TEAL however reported a 9% decline
Interesting! Final thoughts on the quarter? Stock Performance, Valuations et al. 😁
- Based on the business update provided by the company (& including Street reports), Titan is expected to report a solid 30% revenue growth for the quarter, with a slight improvement expected in the operating leverage, which will likely result in ~1.5% improvement in EBITDA %
The stocks been in a strong uptrend, and is expensive (relatively), however with consecutive quarters of growth, coupled with improving return profiles and strong management pedigree, the Street seems to continue ascribing high valuations
Keep a track?
Fed’s hawkish stance is facing some resistance; what’s up and what do you need to know? 🙁
- The US Federal Reserve is expected to be more hawkish as we enter 2022 due to worries of rising inflation amid the low-interest rates
Post its December meeting, the premise of a “very tight” job market and rising inflation might lead the Fed to not only raise rates sooner but also reduce its overall asset holdings
Tapers are now expected to start by June if not sooner provided conditions warrant.
Tell us more! 😏
- Statements that the Fed could hike “sooner or at a faster pace than participants had earlier anticipated,” and begin shrinking its balance sheet “relatively soon after beginning to raise the rate” have made the markets wobbly to say the least
There is also a chance the hike might start in March itself as Fed acknowledges inflation criteria to start raising rates “had been more than met.”
Sharp Quantitative tightening amid a bloated balance sheet (currently at $8.8tn, up from $4.2tn Pre Covid), and existence of the standing repo facility should not be ruled out either
How is this going to affect the market? 🙄
- To clear a longstanding myth – no, rate hikes do not necessarily end bull markets but they have done so in the past
A liquidity reversal will most likely lead to less speculative action but possibly more volatility, rotation towards value over growth equities, and a skew towards equities over fixed income.
Adding to these woes is the fast spread of covid cases and stricter restrictions being imposed which would likely keep the market highly volatile
Can we get some numbers? 🧐
- Both Asia and Europe’s markets fell heavily after Nasdaq (USA) plunged more than 3% on Wednesday with the Nikkei (Japan) declining 2.88% & the Kospi (S Korea) falling 1.13%.
The BSE Sensex was down 621.31 points or 1.03% ending at 59,601.84; while the Nifty slipped 179.35 points or 1% at 17,745.90, and has remained relatively range-bound since then (not indicative of longer term trends however)
Keep a track for signs from RBI’s MPC
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- Analysing Grasim on a weekly time-frame, indicates that the stock had been in a good upward momentum in the last 5-6 weeks (see image below)
This up move in prices has been taking support along a rising trendline.
The overall structure of the chart is bullish as prices have been making continuous higher highs and higher lows as shown in the image
Great! Tell me more? Any other tools? 🤩
- Looking at the chart on a daily time frame, prices have been facing stiff resistance around 1800 and taking support along 1595 (see image below)
Stock is currently trading above the 50-DMA which is a positive sign.
There already has been a fake breakout (marked in image below). To avoid such traps waiting for a retests post breakouts hold key
That’s Great! How do I enter / exit such a setup? 🧐
- You should wait for prices to give a breakout above 1800 and retest the resistance level, and going long post breakout would make most sense; stop-loss can be placed just below the 50-DMA, which will help limit your losses.
- On a weekly time-frame, prices taking continuous support along a rising trendline making higher highs and higher lows, shows positive bias
On a daily time-frame, prices reversing near crucial support adds strength and increases chances for a breakout considerably
Keep a track?
What else caught our eye? 👀
Yes Bank vs Dish TV sees no declared winner yet
Yes Bank has moved the HC to instruct Dish TV to disclose publicly the results of its Dec 30th AGM
The main agendas included (1) Adoption of audited financial statement for financial year 2020-2021 (2) Re-appointment of Ashok Mathai Kurien as director (3) Ratification of remuneration to cost auditors for FY22.
Dish TV said the AGM outcome will be handed to the Bombay High Court in a sealed cover while Yes Bank’s case is that the high court order does not in any way prohibit the publication of the AGM results.
Some good news for Telecos (finally!)
Prepaid tariff hikes instituted in November are likely to benefit all 3 major Telecom players by pushing up ARPU (Avg Revenue Per User)
Airtel’s mobile revenue will likely see an increase of 5% with Jio and Vi following close behind at 4.5% and 3.5% respectively in the Dec quarter
Full impact however will be seen in this next quarter as the tariff was carried out at the end of November
Momentum trading is an investing strategy that seeks to capitalize on directional trends in a stock price. These trends can be caused by tangible events or catalysts (such as earnings reports, analyst or expert upgrades, etc.), or they can be more technical in nature.
In fact, one of the core principles of technical analysis is to use patterns and indicators to detect trends other investors can’t see.
Momentum trading can refer to either long-term or short-term types of stock trading.