Blog posts of '2024' 'August'

Stock name: Tube Investments of India Ltd.

Pattern: Head and shoulders pattern

Time frame: Daily

Observation:

Since the post-COVID period, the stock has been on an upward trend. Recently, it has stabilized, forming a head and shoulders pattern on its daily chart. The stock hasn't yet broken out of this pattern, with the neckline currently serving as support. The RSI is below 50, indicating weaker momentum. If the stock breaches the neckline and breaks out, it may move further downward according to technical analysis.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Lemon Tree Hotels Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

The stock experienced a prolonged bullish run but stabilized between April and August 2024, forming a double top pattern on its daily chart. On August 8, 2024, it broke out of this pattern with significant trading volume. The MACD indicator also showed a bearish signal. The stock continues its downward movement, but the RSI has entered the oversold zone, which could lead to consolidation or a retest. According to technical analysis, if the current momentum persists, the stock may continue to decline further.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Indian banks are struggling as urban savers increasingly turn to higher-yield investments like stocks and mutual funds, leading to weaker deposit growth. Despite a brief uptick in deposits in mid-July 2024, concerns remain as credit growth outpaces deposits, raising liquidity risks. HDFC Bank's Managing Director and the RBI have flagged this issue, highlighting the need for banks to rethink strategies to attract deposits and manage the growing credit-deposit gap.
• India stands to gain $200-250 million in monthly readymade garment (RMG) export orders as Bangladesh, the world's second-largest exporter, faces economic challenges and political unrest, according to a CareEdge report. Historically, Bangladesh capitalized on China's declining market share, but India now has a chance to expand its presence in the global RMG market. The unrest in Bangladesh has already led to a 17% drop in its RMG exports, while India's exports grew by 4% in the same period. India's position may strengthen further with upcoming Free Trade Agreements and skilling programs.
  
  
• Jindal Steel and Power Ltd (JSPL) has reduced its dependence on Australian coking coal by over 50% through strategic diversification of its sourcing. This move is expected to lower manufacturing costs and improve supply chain efficiency. The shift aligns with government efforts to decrease reliance on specific countries for coking coal. JSPL plans to continue diversifying its coking coal sources in the coming months, enhancing availability and reducing logistics costs. The company operates two steel mills in Odisha and Chhattisgarh, with a combined capacity of 9.6 million tonnes.

Stock name: Redington Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

Since October 2023, the stock has been on an upward trend. It later stabilized, forming a double top pattern on the daily chart. On August 5, 2024, the stock broke out of this pattern, with the breakout supported by above-average trading volume and a bearish MACD indicator. Post-breakout, the stock is trading below the neckline of the pattern. Technical analysis suggests that if the breakout momentum continues, the stock may continue to decline.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: K.P.R. Mill Ltd.

Pattern: Cup and handle pattern and retest

Time frame: Daily

Observation:

The stock has generally trended upward. From November 2023 to August 2024, it formed a cup and handle pattern on its daily chart. On August 6, 2024, the stock broke out of this pattern, supported by high trading volume and a bullish MACD indicator. After the breakout, it saw an immediate retest, therefore some additional confirmations are pending to conclude the breakout. Currently the RSI is in a favourable zone. According to technical analysis, if the stock rebounds from the retest and gains momentum, it may continue to move upwards.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• The RBI's Monetary Policy Committee kept the repo rate unchanged at 6.5% for the ninth time, as announced by Governor Shaktikanta Das. The inflation forecast for FY25 remains at 4.5%, and GDP growth is projected at 7.2%. Market expectations align with these decisions, which continue to focus on controlling inflation despite food price and geopolitical concerns. The June meeting saw similar outcomes, with steady rates and an emphasis on economic stability.
  
  
• Torrent Pharma and Zydus Lifesciences are competing to acquire JB Chemicals and Pharmaceuticals, with KKR, the current owner, shortlisting both firms. Torrent has begun financing discussions, while private equity firm EQT is also expected to join the bid. Dr. Reddy's Laboratories has shown interest but hasn't submitted an offer. The acquisition, potentially costing up to $2.8 billion, includes a mandatory open offer for an additional 26% stake. The deal could significantly boost annual sales for Torrent or Zydus, though industry analysts note that payback may take several years due to already optimized costs by KKR.
  
  
• Bata India is in talks with quick commerce companies to offer 10-minute delivery for high-demand footwear items to boost sales. Despite recent sluggish sales and a slight revenue decline, the company is focusing on athleisure products, social media marketing, and store renovations to attract new consumers. Rising competition from D2C brands has kept Bata's market share steady. Bata aims to leverage its large scale and presence to enhance customer experience and meet the demand for quick fulfilment.

Stock name: Amara Raja Energy & Mobility Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

Since March 2024, the stock has seen significant upward movement. Recently, it stabilized and formed a double top pattern on its daily chart, breaking out from this pattern on August 5, 2024. Currently, the stock is moving downward, and its RSI level is low. According to technical analysis, if the breakout momentum continues, the stock may decline further.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Brigade Enterprises Ltd.

Pattern: Head and shoulders pattern

Time frame: Daily

Observation:

The stock has been trending upwards since March 2024. Recently, it formed a head and shoulders pattern on its daily chart and broke out from this pattern on August 5, 2024. Despite recovering at the opening on August 6, it still declined and closed below the breakout line of the pattern. The RSI level is currently low. According to technical analysis, if the breakout momentum continues, the stock may move further downwards.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Real estate leaders have praised Finance Minister Nirmala Sitharaman's proposed amendment to the Finance Bill, offering significant relief on capital gains tax for property transactions. The amendment allows taxpayers to choose between a 12.5% tax rate without indexation or a 20% rate with indexation for properties acquired before July 23, 2024. This move is expected to boost investment and sales in the real estate sector. Shares of real estate companies surged, with the Nifty Realty index rising around 1.5%. Similar provisions apply to unlisted equity transactions, now taxed at 10% long-term capital gains.
  
  
• Mahindra & Mahindra plans to boost its services business, focusing on Mahindra Finance and Tech Mahindra. Services currently contribute 30-40% to profits and could exceed 50% in the next 5-7 years. The company aims for aggressive growth in real estate, hospitality, and logistics, having already improved margins and diversified products. Mahindra Finance is enhancing asset quality, while Tech Mahindra focuses on operational execution. The group's portfolio value has grown from $800 million in FY20 to $4.2 billion in March 2024.
  
  
• Tata Power Company plans to acquire a 40% stake in Khorlochhu Hydro Power Limited for Rs 830 crore. This acquisition, done in tranches over six months, is part of a Share Purchase Agreement with the current shareholders. The aim is to develop the 600 MW Khorlochhu Hydropower Project in Bhutan with a total investment of Rs 6,900 crore. This move will support Tata Power's transition to clean energy, making KHPL an associate company and related party post-acquisition.

Stock name: Birlasoft Ltd.

Pattern: Double top pattern

Time frame: Weekly

Observation:

Since April 2023, the stock has been trending upward before stabilizing and forming a double top pattern on its weekly chart. Currently, it is close to the breakout line but hasn't yet registered a breakout. This breakout line could act as a support level before a potential breach. Recently, the stock has shown a bearish indicator on its weekly MACD and has a low RSI level. According to technical analysis, if the stock experiences significant downward movement and breaches the breakout line with momentum, it may face further decline.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: JSW Infrastructure Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

Since its market listing, the stock has trended upward. From June to August 2024, it formed a double top pattern on the daily chart. On August 5, 2024, amid a market downturn, the stock closed below the breakout line. However, it has since recovered and is moving above this line again, requiring further confirmation to determine a true breakout. Currently, the stock's RSI is low, and technical analysis suggests that a strong breakout from the pattern may lead to a further decline.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• State Bank of India (SBI) is enhancing its wealth management business by deploying 2,000 relationship managers to attract affluent clients and smaller companies. Chairman Dinesh Khara emphasized the bank's extensive product offerings and distribution network. Despite competition from global and domestic firms, SBI aims to capture a larger share of India's growing wealth market. For the quarter ending June 30, 2024, SBI reported a net profit of Rs 17,035 crore, slightly up from the previous year and exceeding market expectations.
• India has signed Bilateral Air Services Agreements (ASAs) with 116 countries to enhance global connectivity and promote economic and tourism growth. These agreements enable international flights between India and these nations. In a recent Rajya Sabha session, Minister of State Murlidhar Mohol clarified that the ASAs designate specific cities, not states, as points of call to facilitate better management and operational efficiency. Cities like Delhi, Mumbai, Bangalore, and others are included under these agreements, ensuring greater flexibility and coverage for airlines.
  
  
• State-owned telecom company MTNL has defaulted on bank loan payments totalling Rs 422.05 crore, comprising Rs 328.75 crore in principal and Rs 93.3 crore in interest for June and July. MTNL has sought Rs 1,151.65 crore from the government for interest on sovereign guarantee bonds and Rs 3,668.97 crore for principal repayment. The company raised Rs 5,573.52 crore in debt from various banks and has total borrowings of Rs 7,873.52 crore, with overall debt standing at Rs 31,944.51 crore.

Stock name: Vardhman Textiles Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

Since June 2022, the stock has been on an upward trend. In July 2024, a double top pattern formed on its daily chart. Today, the stock sharply declined and is now below the breakout line. The stock recently showed a bearish MACD indicator, and its RSI fell below 50. According to technical analysis, if the stock closes below the breakout line, it could signal a breakout from the pattern, and it may lead to further decline.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: IRB Infrastructure Developers Ltd.

Pattern: Head and shoulders pattern

Time frame: Daily

Observation:

The stock has been on a long-term upward trend but recently stabilized, forming a head and shoulders pattern from April to July 2024. On August 1, 2024, it broke out from this pattern. Currently, the stock is moving downward with low RSI levels. Technical analysis suggests that if this momentum continues, the stock may fall further.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Gautam Adani plans to retire at 70 and transfer control of Adani Group to his sons and their cousins by the early 2030s, he told Bloomberg News. His heirs—Karan, Jeet, Pranav, and Sagar—will equally benefit from the family trust. A confidential agreement will govern the transition. Adani emphasized the importance of a gradual and systematic succession. This news comes as Adani Enterprises' first-quarter profit more than doubled due to investments in renewable energy.
  
  
• Creditors have voted to liquidate Go First Airlines after failing to find a buyer over the past year. A liquidation plea was filed with the Delhi NCLT. Potential offers fell short of expectations. Creditors aim to recover funds through arbitration against Pratt & Whitney and a land auction in Thane. The airline owes around ₹6,200 crore. Led by the Central Bank of India, lenders are pursuing over $1 billion in claims against Pratt & Whitney for supplying faulty engines, which contributed to the airline's bankruptcy.
  
  
• The Delhi High Court has assigned a special CBI Court to expedite the trial of India's largest bank fraud case involving Dewan Housing Finance Ltd (DHFL). Promoters Dheeraj and Kapil Wadhawan are accused in the Rs 34,614 crore loan fraud. The CBI's chargesheet, containing over 330,000 pages, implicates 108 individuals and entities. Given the case's complexity and volume of documents, the special CBI Court requested exclusive handling. The trial is expected to take several years even with daily proceedings.

Mutual funds are popular investments. We all have invested in mutual funds in one way or another. They give investors exposure to a wide variety of assets by pooling together money from different investors and purchasing stocks, bonds, and other securities. Funds are managed by portfolio or money managers who try to generate gains or income for their investors. Fund portfolios are designed to match their goals and objectives.

You all must have question what is arbitrage funds? Is it a mutual fund? If yes... then how it works? So scroll, read and learn.

Arbitrage mutual funds are a type of investment fund that aims to make money by exploiting price differences of the same or similar securities in different markets. In simpler terms, these funds buy and sell the same assets in different markets or forms to take advantage of price differences and make a profit. Let’s say, a fund purchased stock in the cash market and sell that in the futures market with higher price in less time. It is appeal to investors who want to profit from volatile markets without taking on too much risk. Sounds good right?

Now, you all must wondering how does these funds works?

Let's look at the two possible scenarios where arbitrage opportunities exist:

Scenario 1: Price Difference between Exchanges

Let's say that the stock of XYZ Limited is selling at Rs. 1000 per share on the Bombay Stock Exchange (BSE) and at Rs. 1010 per share on the National Stock Exchange (NSE).

If the fund manager of an arbitrage fund spots this opportunity, then he buys shares from the BSE and simultaneously sells them on the NSE. This allows him to make a profit of Rs. 10 per share (less transaction costs) without any risks.

Scenario 2: The Price Difference between the Cash and Futures Markets

Let's say that the share of XYZ Limited trades at Rs. 1000 in the cash market and Rs. 1015 in the futures market. The fund manager of the arbitrage fund buys shares from the cash market and creates a futures contract to sell the shares at Rs. 1015. At the end of the month, he sells the shares in the futures market and books a profit of Rs. 15 per share (less transaction costs) without taking any risks.

While arbitrage mutual funds can offer profitable or higher returns, they are not without their challenges. Let us look into the benefits & risks of funds:

• Benefits:

1. Lower Risk:

Since arbitrage involves exploiting price inefficiencies rather than predicting market movements, these funds are generally considered lower risk compared to traditional equity or bond funds.

2. Steady Returns:

The goal of arbitrage mutual funds is to provide consistent, albeit modest, returns. This can be appealing for investors looking for stability rather than high volatility.

3. Diversification:

Arbitrage funds often employ various strategies and trades, which can provide diversification within the fund itself. This diversification can reduce the overall risk of the fund.

• Risks

1. Market Conditions:

Arbitrage opportunities can diminish in highly efficient markets where price discrepancies are quickly corrected.

2. Transaction Costs:

Frequent trading to exploit price differences can lead to higher transaction costs, which may affect the fund’s net returns.

3. Complex Strategies:

The strategies used by arbitrage funds can be complex and require sophisticated risk management. It’s important for investors to understand the specific strategies employed by the fund.

4. Potential for Lower Returns:

Given their lower risk profile, the returns on arbitrage mutual funds might be lower compared to more aggressive investment strategies.

There's probably a very good chance that you haven't heard of arbitrage funds. That's because they aren't like your typical mutual funds. Unlike other funds, arbitrage funds place large orders and capitalize on price differentials for the same security in different markets. This allows investors to profit from market volatility without taking on too much risk. This is only one of the many types of investing in arbitrage. However, like all investments, it’s crucial to understand the underlying strategies, risks, and costs associated with these funds.

Stock name: Jubilant Foodworks Ltd.

Pattern: Double bottom pattern

Time frame: Weekly

Observation:

Since October 2021, the stock has been in a downward trend. From November 2022 to July 2024, it formed a double bottom pattern on its weekly chart. This week, the stock registered a breakout from the pattern. If today's trading session ends with the weekly candle closing above the breakout line, it will be crucial. However, the RSI level is currently in the overbought zone. Technical analysis indicates that if the breakout gains momentum, the stock could move further upwards.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Shyam Metalics and Energy Ltd.

Pattern: Cup and handle pattern and retest

Time frame: Daily

Observation:

Since March 2023, the stock has surged significantly. From February to July 2024, it stabilized, forming a cup and handle pattern on its daily chart. A breakout occurred on July 31, 2024, supported by high trading volume and a positive MACD indicator. However, the stock has faced retest immediately so additional confirmation is required to check if the pattern is complete. Despite a retest of the breakout, the stock's RSI level remains favourable. Technical analysis suggests that if the stock rebounds from the retest, it may rise further.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• IRDAI has fined HDFC Life Rs 2 crore for regulatory violations during 2017-2020. The penalties include Rs 1 crore for issues affecting policyholders' interests and Rs 1 crore for outsourcing irregularities. Following an inspection in September 2020, IRDAI also issued directives for HDFC Life to ensure regulatory compliance within a specified timeframe.
  
  
• Tata Motors' CFO stated that Jaguar Land Rover (JLR) currently has no plans to utilize India's new EV policy, which offers import duty concessions for manufacturers. The policy is deemed unsuitable for JLR at this time, though the company is considering CKD manufacturing options. Announced in March, the policy aims to attract global EV manufacturers to India. JLR is focusing on localizing production for models like the Range Rover. The new EV policy requires significant investment and operational commitments within three years.
  
  
• Zomato shares jumped 10% to Rs 257.95 after reporting a PAT of Rs 253 crore for the June quarter, up from Rs 2 crore last year. Revenue grew 74% year-on-year to Rs 4,206 crore. Brokerages like CLSA raised their target price to Rs 350, with others like Motilal Oswal, Nomura, Bernstein, UBS, and Nuvama also increasing their targets, citing strong growth in food delivery and quick commerce.

Stock name: ICICI Securities Ltd.

Pattern: Double bottom pattern and retest

Time frame: Daily

Observation:

The stock experienced a sharp decline in March 2024 but later stabilized, forming a double bottom pattern on its daily chart. It broke out from this pattern on June 26, 2024. Following the breakout, there was some upward movement, though the stock has since undergone a retest. Currently, its RSI is above 50. According to technical analysis, a strong bounce back might drive further upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Page Industries Ltd.

Pattern: Inverse head and shoulders pattern

Time frame: Daily

Observation:

The stock has been declining since October 2022. Between October 2023 and July 2024, it formed an inverse head and shoulders pattern on its daily chart. A confirmed breakout from this pattern occurred on July 23, 2024, supported by a positive MACD indicator. Currently, the RSI level is high. Technical analysis suggests that if the stock sustains its current momentum, it could see further upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Infosys shares dropped 1% following news of an investigation by the Directorate General of GST Intelligence into an alleged Rs 32,000 crore GST evasion. The stock hit a low of Rs 1,845.40 on BSE. Infosys clarified that GST should not apply to services provided by overseas branches and asserted compliance with all GST obligations. The company addressed the matter through a filing to the exchanges.
  
  
• India's electric two-wheeler makers are preparing for a future without government subsidies amid uncertainty about their inclusion in the FAME III scheme. Executives stress the potential impact on demand and consumer adoption but are focusing on improving product quality. Despite reduced subsidies and falling sales, market penetration is expected to double by FY26. The government extended the Electric Mobility Promotion Scheme (EMPS) by two months. Commerce Minister Piyush Goyal stated that electric two-wheelers can compete without subsidies.
• India reduced the windfall tax on domestically produced petroleum crude to Rs 4,600 per tonne from Rs 7,000 per tonne due to lower crude prices. Export duties on petrol, diesel, and aviation turbine fuel remain nil. The new rates took effect on August 1, as announced by the CBIC. This tax, imposed in July 2022, is revised fortnightly and aims to curb refiners from selling fuel overseas to benefit from high margins.