Stock market watch: What to expect from the week ending September 10, 2021 (2024)

Financials could push up Nifty further: Nifty has broken out of its close range in August series itself. However, technical analysts were worried because the Bank Nifty was not supporting this Nifty upmove. That worry is over now and Bank Nifty has also gone well above its psychological resistance level of 36,000 during last week (see chart).

As predicted by technical analysts, this Bank Nifty breakout helped Nifty to gain further and cross its immediate target of 17,170. Nifty and Bank Nifty gained 618 and 1,133 points respectively during the last week. How are the Nifty and Bank Nifty expected to do in coming weeks? Bank Nifty is still short of its immediate target of 37,600 and therefore, further up move is expected there. Leading private sector banks like HDFC Bank, ICICI Bank, etc participated in the first leg of the rally and banking laggards are expected to come to the fore during Bank Nifty’s second leg towards 37,600.

Due to the strong momentum in the market now, technical analysts predict that the Nifty can also climb up to 17,600 levels in coming weeks. However, investors need to a bit careful at 17,600. “17,600is the upper end of the rising channel and Nifty may face some bouts of resistance there. Traders should evaluate their entire portfolio — whether to book profit or not, etc—at that time,” says Sacchidanand Uttekar, Deputy VP, Trade Bulls Securities.

Nifty may cool off a bit before heading towards 17,600. Since Nifty is well above its previous resistance level of 17,170, the same level should act as immediate support now. It already has acted as intra-day support during the last few days. “There is a huge concentration of put writing at 17,000 and this will act as a stronger support,” says Gaurav Bissa, AVP Derivatives & Technicals, LKP Securities. That means the traders can hold on to their long positions so long as the support band of 17,000-17,200 is not violated.

(Narendra Nathan/ET Bureau)

Sector update: Consumer electricals

Expect further price rise in consumer electricals space

While April–May 2021 sales were muted, consumer electrical companies posted healthy sales in June 2021. While the base year was modest, the two-year revenue CAGR for consumer electrical companies stood flat to -14%. For white goods, the two-year revenue CAGR range stood in the range of -10% to -30%, with Room Air Conditioner (RAC) companies affected the most due to the washout summer season.

Post June, demand has been robust for electricals, while the real test for white goods would be the upcoming festive season.

Cables and wires benefitting from copper price surge: The two-year revenue CAGR for cables and wires came in flat as ongoing construction activity despite the lockdowns aided demand. Also, the cables and wires business tends to benefit from rising copper prices owing to the quick passing on of inflation, coupled with inventory gains. We believe volume growth is scaling back to pre-covid levels for cables, while price hikes have been strong at 35–40%.

Electric consumer durables segment : As the lockdowns were intermittent across different states, the sale of appliances compensated for the shortfall in the fan offtake. Barring Havells, the two-year revenue CAGR for the Electric Consumer Durables (ECD) segment stood in the range of -9% to -13%. Market share gains for the top 3–4 players over the last couple of months in fans and appliances have aided growth in the ECD segment, despite disruption. The unorganised sector and weaker brands have struggled in the fans and lighting categories, among others, as they have struggled to manage the manufacturing process alongside supply chain constraints. With the BEE rating change scheduled to be implemented in fans next year, we see further market share consolidation in favor of the organized sector.

Commodity costs remain elevated: Copper, aluminum, and steel prices came in higher in Apr-June 2021-22, while plastic prices stood flat. However, the intensity of the increase in commodity prices moderated in July. This implies margins would continue to be under pressure in the second quarter for various players.

(Motilal Oswal)

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