April 22nd 2024 Stock Market analysis

Market Rally Continues: Sensex Surges 560 Points, Nifty Tops 22,300 for Second Consecutive Session

Indian equity indices extended their gains for the second consecutive session on April 22, buoyed by positive global cues as concerns regarding tensions between Iran and Israel eased slightly. By the close of trading, the Sensex surged by 560.29 points, or 0.77 percent, reaching 73,648.62, while the Nifty climbed 189.40 points, or 0.86 percent, to reach 22,336.40.

The market opened with a gap-up and maintained a range bound yet positive bias throughout the session, ultimately closing near the day's high due to widespread buying across sectors. Top gainers on the Nifty included BPCL, Tata Consumer Products, Eicher Motors, L&T, and Shriram Finance, while NTPC, HDFC Bank, JSW Steel, IndusInd Bank, and Tata Steel were among the losers. All sectoral indices concluded in positive territory, with the auto, PSU bank, capital goods, oil & gas, FMCG, healthcare, and realty indices gaining up to 3 percent. Both the BSE midcap and smallcap indices closed one percent higher.

Significant volume spikes, exceeding 1,900 percent, were observed in Hindustan Copper, Nalco, and GNFC. Notable long build-up activities were noted in Voltas, Hindustan Copper, and Interglobe Aviation, while short build-up activities were seen in Persistent Systems, Birlasoft, and Coromandel International.

Technical Outlook on 23rd April

Nifty is likely to find immediate support levels near 22,248 followed by 22,160, with resistances anticipated at 22,424 and 22,512. Currently, Nifty appears poised for a short-covering rally.

For Bank Nifty, immediate support levels are expected near 47,666 and 47,408, while resistances are projected at 48,182 and 48,282. Bank Nifty also appears to be gearing up for a short-covering rally.

‍Derivative Outlook on 23rd April

PCR Analysis: Nifty PCR-OI has increased with nifty has positive which shows PUT WRITING.

Open Interest Analysis: Nifty future April contract OI has decreased with positive close which shows Short Covering.

Cost of Carry Analysis: Nifty April month contract has ended in high compare with MAY contract and high range compare with previous session which indicates a positive bias.

India VIX Analysis: India VIX has closed at 12.70 vs 13.46 (DoD) basis which shows decrease in volatility.

‍Tata Consumer Q4 Outlook: Leading Revenue Surge and Margin Expansion

Tata Consumer's Q4 FY24 earnings are poised to outshine the consumer sector's challenges, boasting industry-leading revenue growth in the mid-single digits and robust margin expansion, resulting in accelerated profit growth.

The Tata Group's consumer staples arm is scheduled to unveil its fiscal fourth-quarter and full-year earnings on April 23. Analysts anticipate the highest revenue growth among industry peers, fueled by beverage sales, rising volumes in salt, and the acquisition of Capital Foods, the owner of the Ching's Secret brand. Projections suggest Tata Consumer's revenue will surge by 4.8 percent year-on-year to Rs 3,989 crore, according to an average of six brokerage polls by Moneycontrol. Bottom-line growth is expected to soar approximately 13.4 percent higher year-on-year to Rs 329 crore. EBITDA margin expansion of 100 basis points year-on-year is anticipated, supported by favourable tea costs and stable salt prices. Over the past six months, Tata Consumer Products' stock has surged around 33 percent compared to a 15 percent rise in the benchmark Nifty during the same period. The Tata Group company is forecasted to deliver a superior 5-year volume CAGR compared to its peers. Analysts suggest that the firm's gross margins may steadily improve due to robust growth and market penetration in its international business. Nuvama Institutional Equities expects Tata Consumer's growth momentum to persist, noting that Capital Foods will contribute to the topline for approximately two months in Q4.

While the consumer staples sector is expected to witness subdued revenue growth in the March quarter due to a muted demand environment, including sluggish rural demand and increased competition from unorganized players, industry players, including Tata Consumer, are projected to maintain low to mid-single digit growth through strategic pricing adjustments and increases in product sizes.

Gross margins across the FMCG universe are anticipated to see a slight uptick as consumer companies continue to invest in advertising and promotional activities to strengthen brand equity and market share over recent quarters.