India: Blooming Garden Of Opportunities!
India is currently one of the most alluring emerging markets for investment. Our country has shown significant developments in terms of key macro-parameters. The rebound in GDP for FY22 has been remarkable, making it one of the fastest-growing countries globally. Indian economy made a rapid stride in FY22 by climbing 8.7% YoY -- the highest in a decade! Going forward, an increase in private consumption is likely to boost GDP.
As per data issued by the Department of Economic Affairs, the capital expenditure of India Inc. during April-August 2022 is 46.8% higher than the same period of the previous year. The growth engine was fuelled by roads, railroads, and defence accounting for the majority of these expenditures.
Soaring inflation has also been the buzz of the town, which fortunately in India, does not seem as ugly. The gap between the Wholesale Price Index and Consumer Price Index has narrowed. The impact of declining wholesale inflation is expected to reflect on retail inflation with a lag in the coming months.
Moreover, Inflation in our country is better controlled than that of the world at large. To illustrate, retail inflation for India over Apr-Sept’22 stood at 7.2%. It was lower than the median inflation of major economies, which measures inflation globally at 8%.
Crude Oil prices have recently fallen substantially from their peak which will help to reduce the current fiscal deficit. The easing commodity prices bode well for the nation as it will help to lower inflation and assist corporations to reduce their input costs, thereby improving their margins and earnings profitability. Further, the supply side challenges are gradually resolving and the worst seems to be behind for the India Inc. margins trajectory.
Even on fundamental grounds, our economy has multiple tailwinds…To start with, one of the early indicators of the country’s health is its bank credit growth. RBI’s recent data revealed that the Bank credit sectoral deployment figures suggest a YoY increase across all verticals. For the past five consecutive months, the non-food credit growth has been growing in double digits.
India is in a better position now given the underlying stellar corporate earnings momentum, the cleansed balance sheets & the improving asset quality of the banks. Additionally, there are levers in place for Capex cycle revival, credit off-take, and the likelihood of a manufacturing resurgence due to PLI and other government reforms.
Domestic-oriented themes are now dominating market dynamics. For instance, a recovery in auto sales, an uptick in consumer goods, a strong rebound in the hotels & tourism industry, and robust momentum in the housing market point towards a brighter side. This coupled with increasing DII participation and the expected comeback of FIIs inflows has the potential to drive the markets to new heights once prevailing clouds of global uncertainty disappear.
From a long-term perspective, the structural large bull cycle in India remains intact. Investors must therefore continue to remain invested in financially resilient and quality stocks.
Technical Outlook
The Benchmark index couldn’t hold on to its opening gains on a couple of occasions in this truncated week and traded within the range of 17650 to 17800 levels for the week.
On the daily chart, Nifty50 has formed a spinning top candle stick pattern. A spinning top is a candlestick pattern that has a short real body that's vertically centered between long upper and lower shadows which normally indicates volatility and indecision among the traders.
The technical structure on the broader time frames still looks impressive and any dip toward the support level should be utilized as a buying opportunity.
The 21 EMA which is placed at 17470 may act as a support for the index. The immediate resistance for the index is near 17935 – 18100 levels where the call writers have been active. Nifty50 closed the week at 17786.80, up 1.20%.
Expectations for the Week
The main headliner globally would be the FOMC meeting and press conference. As Fed has aggressively hiked interest rates this year, market participants would be interested to know whether the pace now slows down. Meanwhile, investors would also closely monitor the US Initial Jobless Claims, Unemployment rate, and ISM Non-Manufacturing PMI that are slated to release next week. Back home, the monthly auto sales numbers are bound to pique the interest of investors attempting to forecast future trends in auto stocks.

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India: Blooming Garden Of Opportunities!
India is currently one of the most alluring emerging markets for investment. Our country has shown significant developments in terms of key macro-parameters. The rebound in GDP for FY22 has been remarkable, making it one of the fastest-growing countries globally. Indian economy made a rapid stride in FY22 by climbing 8.7% YoY -- the highest in a decade! Going forward, an increase in private consumption is likely to boost GDP.
As per data issued by the Department of Economic Affairs, the capital expenditure of India Inc. during April-August 2022 is 46.8% higher than the same period of the previous year. The growth engine was fuelled by roads, railroads, and defence accounting for the majority of these expenditures.
Soaring inflation has also been the buzz of the town, which fortunately in India, does not seem as ugly. The gap between the Wholesale Price Index and Consumer Price Index has narrowed. The impact of declining wholesale inflation is expected to reflect on retail inflation with a lag in the coming months.
Moreover, Inflation in our country is better controlled than that of the world at large. To illustrate, retail inflation for India over Apr-Sept’22 stood at 7.2%. It was lower than the median inflation of major economies, which measures inflation globally at 8%.
Crude Oil prices have recently fallen substantially from their peak which will help to reduce the current fiscal deficit. The easing commodity prices bode well for the nation as it will help to lower inflation and assist corporations to reduce their input costs, thereby improving their margins and earnings profitability. Further, the supply side challenges are gradually resolving and the worst seems to be behind for the India Inc. margins trajectory.
Even on fundamental grounds, our economy has multiple tailwinds…To start with, one of the early indicators of the country’s health is its bank credit growth. RBI’s recent data revealed that the Bank credit sectoral deployment figures suggest a YoY increase across all verticals. For the past five consecutive months, the non-food credit growth has been growing in double digits.
India is in a better position now given the underlying stellar corporate earnings momentum, the cleansed balance sheets & the improving asset quality of the banks. Additionally, there are levers in place for Capex cycle revival, credit off-take, and the likelihood of a manufacturing resurgence due to PLI and other government reforms.
Domestic-oriented themes are now dominating market dynamics. For instance, a recovery in auto sales, an uptick in consumer goods, a strong rebound in the hotels & tourism industry, and robust momentum in the housing market point towards a brighter side. This coupled with increasing DII participation and the expected comeback of FIIs inflows has the potential to drive the markets to new heights once prevailing clouds of global uncertainty disappear.
From a long-term perspective, the structural large bull cycle in India remains intact. Investors must therefore continue to remain invested in financially resilient and quality stocks.
Technical Outlook
The Benchmark index couldn’t hold on to its opening gains on a couple of occasions in this truncated week and traded within the range of 17650 to 17800 levels for the week.
On the daily chart, Nifty50 has formed a spinning top candle stick pattern. A spinning top is a candlestick pattern that has a short real body that's vertically centered between long upper and lower shadows which normally indicates volatility and indecision among the traders.
The technical structure on the broader time frames still looks impressive and any dip toward the support level should be utilized as a buying opportunity.
The 21 EMA which is placed at 17470 may act as a support for the index. The immediate resistance for the index is near 17935 – 18100 levels where the call writers have been active. Nifty50 closed the week at 17786.80, up 1.20%.
Expectations for the Week
The main headliner globally would be the FOMC meeting and press conference. As Fed has aggressively hiked interest rates this year, market participants would be interested to know whether the pace now slows down. Meanwhile, investors would also closely monitor the US Initial Jobless Claims, Unemployment rate, and ISM Non-Manufacturing PMI that are slated to release next week. Back home, the monthly auto sales numbers are bound to pique the interest of investors attempting to forecast future trends in auto stocks.

Ride the CapEx Trend for Mega Profits
The past two years have seen subdued capital spending by the private as well as the government owing to the pandemic and lockdowns.
This is now expected to change. Even the RBI is expecting a revival in the capacity expansion (CapEx) cycle. Lately, we have witnessed major CapEx announcements across sectors. Private CapEx is now witnessing a boom as the demand revives.
Let us first understand how a CapEx Cycle will favour investors
As shown above, if there is an increase in the demand for a product then companies are unable to match the supply. This leads to companies increasing their capacities to expand production. An increased supply then leads to increased sales which in turn creates value for its shareholders.
In the short term horizon, a company might see margin compression due to investments in CapEx. The same starts easing as soon as a company starts production from new factories. This makes that company value accretive for its shareholders in the medium to long term.
The Indian CapEx cycle currently is driven by a couple of reasons. First, globally the focus has now turned from China to India for their manufacturing needs. This has been favourable for domestic companies.
As the world eyes India for its next order, domestic businesses are ramping up their manufacturing and CapEx to meet the global supply.
In budget FY23, the government stepped up the capital expenditure by 35.4% to Rs. 7.50 lakh crore in 2022-23 from the previous Rs. 5.54 lakh crore. This makes it 2.9% of the GDP. This measure was taken to support the development for which heavy capital expenditure is required.
More companies are qualifying for the Government’s Product Linked Incentive push for domestic manufacturing. It varies across fields from electronics to defence to electric vehicles.
Deleveraged balance sheets of companies coupled with healthy profits are key growth factors for CapEx to increase. Auto, Consumer durables, and Infra are among those sectors which have announced major expansions. As this is the beginning of the cycle, it is the right time to invest in these companies.
An investor needs to remain mindful and analyse where the company is investing. An important question to ask yourself is whether the company is generating incrementally higher returns on CapEx investments. If yes, then you have a stock that can be a big compounder.
Technical Outlook
After three weeks of consolidation, the benchmark index witnessed a range breakout and prices are trading above its 21-day exponential moving average which is placed at 17,320 levels.
The overall range for the NIFTY in the broader time frame is still showing a sideways trend as prices are trading within the range of 16,800 to 17900 levels from the past more than 2 months.
The momentum oscillator RSI (14) is hovering near the 50 level and indicating a flat trend without any jerks. The immediate support for the NIFTY is at 17,330 and below the 17,250 level. The resistance for the NIFTY stands at 17,800 levels followed by 17,900 levels.
Expectations for the Week
Globally, investors will be closely watching China’s GDP numbers which are slated to release early next week.  The series of economic indicators also include industrial production, quarterly retail sales, and monthly unemployment rates. Further, market participants will also observe US GDP Growth Rate QoQ Advance data. Back home, movements in INR/USD will be closely monitored as Indian Rupee depreciated to a record low. In addition, quarterly results will drive market sentiment as they gather pace. Any management insights that might help predict the future outlook of the earnings trajectory would be much appreciated by D-Street.
Samco family wishes you a Happy Diwali!

Investment themes for Muhurat Trading!
Diwali – the festival of lights is an auspicious time according to the Hindu Calendar. It stands for the triumph of virtue over evil, knowledge over ignorance, and light over darkness.
There are several traditions, practices, and beliefs associated with the Diwali celebration. One such tradition is Muhurat Trading. It is being passionately followed by the trading community for ages.
On Diwali, both the stock exchanges permit trading for a limited time. The stock markets will be open for an hour on 24th October 2022.
Diwali is considered to be a period that brings in Wealth and Prosperity. Thus, it is considered a good time to invest in quality stocks or to begin your investing journey.
The following are some of the Investment themes investors can look into which has tailwinds attached to them ~
Riding the Banking Momentum
The banking sector is standing at the cusp of a broad-based credit up-cycle. The tailwinds are coming in from all directions.
Gross Non-Performing Assets (GNPA) which is an indicator to gauge asset quality is at a decade low.
Further, the banks are sitting on comfortable capital as indicated by their CET1 ratio. The CET1 ratio of banks currently stands at an average of 13.6% vs 10.6% in FY2014.
Moreover, the overall credit growth trend has been buoyant and the growth rate has been in double-digit since June 2022.
All these indicators and more suggest a happening time for the banking sector.
Time to benefit from the Lethargic IT
IT companies witnessed a significant boom during the pandemic. Post two years of massive profits and salary increases, the IT index collapsed.
The Nifty IT index fell nearly 30% from its peak in 2022. It corrected sharply due to the high valuations it was trading at.
From where we stand now, the sector appears in a reversal trend. The conditions especially of the quality IT companies as witnessed in their latest Q2 results are improving.
The slowdown in hiring and peaking of attrition coupled with a strong USD will aid the sector.
Re-opening the doors of Nifty Auto
The demand outlook for the Automobile sector appears positive now. The Two-wheeler segment is expected to make a comeback driven by positive rural sentiments, new launches, and the festive season. The recovery in auto sales is already visible in the latest monthly sales numbers.
The improvement in chip supply & capacity enhancement by OEMs will aid production.
The momentum in Medium and Heavy commercial vehicles (MHCV) is expected to continue aided by the Government Capex and increasing infrastructure activity.
The schools, colleges, and offices have reopened. This will support the demand for Buses and three-wheelers.
The comeback of demand, easing commodity costs, and lower supply constraints make the route appear less bumpy for the Auto OEMs and Auto Ancillaries.
Putting Capital in Capital Goods
The Government has been continuously focusing on infrastructure development. The finance minister has urged the central ministers and departments to frontload capital expenditure.
Most companies have witnessed good growth in their order book. The prices of key raw materials such as steel, copper, ferrochrome, and aluminum have witnessed a significant decline. The falling commodity costs and the price hikes would aid the margins of the companies.
The companies which are focused on Indian operations are in a better position. They benefit from the increasing demand back home and get to take advantage of the lower commodity costs due to uncertain global macros.
The above are some of the sectorial themes which appear attractive from where we stand now. I hope the festival of Diwali brings Wealth, Prosperity, and more importantly good health into our lives.
Technical Outlook:
For the last three weeks, the Benchmark Index is trading in a range of 16800 to 17350 levels amid volatility. The candles for the last three weeks are having tall wicks on both ends which indicates indecision among the traders due to volatility. On 30th September, Nifty50 formed a bullish hammer candlestick pattern on the weekly chart at 16800 levels and will act as an anchor point in further trading sessions. The Benchmark has closed above its 21 & 50 EMA which is placed at around 17100 & 16820 levels.
Follow-up buying is expected as we have sustained above 17100 levels today which could take us towards 17500 levels soon. On the lower side, 16800 will act as an important support in the coming trading sessions.
Expectations of the Week:
Globally the markets will be reacting to the Industrial Production output of the USA. In August, this figure dropped 0.2% against an expectation of a rise. Whether the Factory activity has improved or declined further will be keenly observed. The Chinese economy has significantly slowed down, it contracted 2.6% in Q2FY22. The Q3FY22 GDP numbers that are slated to release would help investors gauge the course of the Chinese economy better. Back home, the quarterly results of the companies will occupy the center stage.  D-street will be interested to hear the management commentary about future earnings growth trajectory. Amid a host of important events coming up, investors are advised to remain cautious and prudent with their investing picks. Nifty50 closed the week at 17,185.7, down 0.75%.

Kill the Ravana Within You to Become a Successful Investor!
This week, we celebrated Vijayadashmi or Dussehra, one of the most popular Hindu festivals. The true spirit of the festival is the victory of good over evil. Moreover, the focus of this celebration is on battling evils within us rather than outside of us.
As per Hindu mythology, the word Dussehra derives its significance from two words, where “Duss” means the ten heads of Ravana, and “Hara” means to defeat.
Ravana’s ten heads represent his ten different qualities. Today, we will concentrate on those qualities that might be inside ourselves, causing us to lose capital. Each quality has a role to play and provides us with many invaluable financial lessons in life.
The key to successful investing is to avoid these qualities…
Let’s take a look!
1. Kama (Lust):
Excessive obsession with “money” is not healthy. It blinds your cognitive ability and makes you maniacally run behind one objective. Investors tend to forget the basics and blind their logical reasoning. They make grave mistakes to earn that Alpha. For example, investing in penny stocks with no fundamental research because they appear to be cheap. Eventually, they end up losing all the money.
2. Mada (Pride):
Overconfidence bias often leads to investors believing they can make money in the market. They believe they possess the ability to time the market. Moreover, beginners who got lucky once, think they will be successful in the future. However, markets do not care about your view or your efforts. It has a mind of its own and it will do what it wants to do. The sooner you accept this fact, the better.
3. Ahamkara (Ego):
When you invest, you take a position based on your perception of the market and the stock. Along with the money, your pride is at stake when you invest. The problem arises when you are more concerned about your ego than the money on the table. Therefore, we should not be in denial. Accept the mistakes and learn from them.
4. Moha: (Attachment to possessions):
Investors often commit sunk cost fallacy. It is the phenomena in which a person is hesitant to exit a stock because they have invested substantially in it. They are so emotionally attached to a particular stock that they hold it forever.
5. Lobha (Greed):
The abduction of Sita cost Ravana his life. In investing, greed drives investors to seek unprecedented gains. During market booms, investors buy stocks beyond their limits…and sometimes even use leverage. However, they don't know where to stop. The unrealistic expectations are largely disappointing when greed takes over emotions.
6. Krodh (Anger):
When an investor doesn’t get the desired returns even after thorough research, it makes him angry. Nobody wants to see their stock prices going down. During such times, he will act out with anger and take impulsive decisions which are not right in his investment journey.
7. Maatsarya (Envy):
We should not compare our investment returns with peers. One strategy that worked for one individual may not work for another. Your friend would have different goals, and risk tolerance levels than you. Copying others without knowing yourself could lead to poor investing results.
8. Jaddata (Insensitive):
8.Often people ignore their own health while investing in markets. Regrets, stress, fear, and reaction to every gain and loss can cause damage to mental health. Their lust for money makes them insensitive to their family and friends.
9. Ghrina (Hatred):
Hatred or dislike is another emotion that is common between Ravana and investors. It was said that Ravana used to dislike people who did not work according to him. Similarly, investor sentiment becomes pessimistic about the company when it doesn’t give the desired returns. Or even when it reports one bad quarter. Short-term hiccups are common, but what is more important is the long-term view of the company.
10. Bhaya (Fear):
Fear of Missing Out (FOMO) influences investment decisions to capitalize on each and every opportunity. Investors often take irrational and hasty decisions simply because of FOMO.
Therefore, we should remember Lord Rama’s life which teaches us many aspects of life. One of the most important ones is being disciplined for successful investment. It was due to Lord Rama’s patience and planned-out strategy that Goddess Sita was saved from Raavana. Likewise, we should have patience and stay invested to endure attractive profits in the long run. We should also understand our risk-taking capacity and plan our investments accordingly without taking impulsive decisions.
Technical Outlook:
Nifty ended the week with gains of slightly more than a percent. It seems that the bulls are finally making a comeback after a solid pounding from 18,100 levels a few weeks ago. It is likely that the bulls might hold the levels of 17,000 for the month of October and make an attempt to retest 18,100 once again. Short-term resistance is placed around 17,500 levels. Nifty50 closed the week at 17314.65, up 1.29 percent.

Right Time to Invest in IT Sector
The IT industry witnessed a significant boom during the pandemic as the demand for digitalisation increased. As a result of the elevated demand, the IT industry had seen a significant rally in stock prices.
In IT, industry growth and a high attrition rate are two sides of the same coin. The demand prompted aggressive hiring, talent retention and salary hikes which caused severe margin shocks in the preceding quarters.
Post two years of massive profits and salary increases, the stock prices plummeted. Nifty IT index fell nearly 30% from its peak in 2022 and corrected the high valuations that it was trading at.
From where we stand now, the sector is in a reversal trend. The conditions are improving given the slowdown of hiring and attrition rate normalising. This will improve their margins in the coming quarters. It will be fuelled by the Indian IT sector's strong sales, as well as healthy deal wins.
Another factor that favours export-oriented IT services is the strengthening of the dollar against the rupee. America is the biggest consumer of Indian IT companies. They contribute over 60% of the revenue. Therefore, the revenue in dollars generates a higher value when converted to Indian Rupee enhancing the top line of the companies.
On technical grounds, the Nifty IT index is forming lower lows while the relative strength index is forming higher lows. This is known as a bullish divergence. This suggests that the bearish momentum is slowing down in the index. It is usually a precursor to a bullish reversal.
Further, the ratio chart of Nifty IT to Nifty 50 index has dropped to 1.50 levels. This level acted as a resistance for several years before the pandemic. The same level will now act as a support now. This means that the Nifty IT index will outperform the Nifty 50 from here.
Overall, the next few quarterly results could see margin surprises as cost-cutting measures and order-book execution begin to take effect. The sector is well poised for growth in the long run and it seems now is the right time to invest in IT companies.
Technical Outlook:
Nifty ended the week with cuts of more than a percent. It has ended the week with a hammer candle which suggests that the short-term correction could probably be over. The daily RSI is also bouncing back from 40 levels which suggest the upward momentum could resume soon. Call writing near 17,000 strikes in monthly expiry indicates that this level is likely to act as major support. From a seasonality perspective, October is a bullish month for the markets. 8 out of the last 10 times markets have ended on a positive note in October. Thus, all of this suggests traders must look for buying opportunities.
Expectations for the Week:
Markets may be dominated by global news flows in the coming week, as no major events are expected. Investor sentiment may be influenced by US unemployment and domestic data such as manufacturing, deposits, and loan growth numbers next week. Other essential factors that may affect the market include the fluctuation of crude prices and the strengthening of the US dollar against other currencies. Investors should pay attention to stock-specific news. Nifty50 closed the week at 17,094.35, down 1.34%.