Market

Newsletter

September 2024

Monthly

Thought for

themonth

“Successful investing is

anticipating the

anticipations

www.motilaloswal.com

of others”

John Maynard Keynes

Market Setup

-

-

-

Market Outlook

Equity Investment Ideas

Technical & Derivatives Outlook

-

-

Commodities Market Outlook

Advisory Products

Benchmark Indices

Index

Sensex

Nifty

Aug 24

82,366

25,236

MoM(%)

0.80%

1.10%

YoY(%)

27.00%

31.10%

Economic Pulse

Key Indicators Curr. Month

IIP

CPI

4.20%

3.50%

Prev. Month

5.90%

5.08%

Page 01

Private Client Group

Key Highlights

•

Nifty scales a record high; closes

above 25k

•

Retail inflation drops to 3.5% in July, a

near 5-year low

•

India overtakes China to become

largest weight in MSCI EM Index

Siddhartha

Khemka

Sr. Group Vice President

Head - Retail Research

Equity markets continued to scale new highs with Nifty crossing yet another milestone level

of 25k despite volatility. The index ended with gains of 1.1% at 25,236 in Aug’24, its third

consecutive month of closing at an all-time high zone. Uptrend in broader markets

continued with Nifty Midcap 100 gaining +0.5% while Smallcap 100 was up +0.9%.

FIIs were net sellers in the secondary market in Aug’24 having sold over ₹21,000 crore while

DIIs inflows remained strong at above ₹48,000 crore.

India’s CPI inflation fell sharply in July’24 to 3.5%. With this, the retail inflation has declined

below the RBI’s medium-term target of 4%. Data suggested that this is almost the lowest

level in last 5 years (59-month low).

Moody's upgraded India’s GDP forecast to 7.2% for 2024 and to 6.6% for 2025 (earlier

estimates of 6.8% and 6.4%) on the back of strong broad-based growth and strong private

consumption. Even Fitch Ratings affirmed India's 'BBB-' rating with a stable outlook, citing

strong medium-term growth prospects and improving fiscal credibility.

Further, India’s weight in the MSCI Emerging Market (EM) Investable Market Index (IMI) crossed

China and become the top weight nation for the first time. India’s weight stood at 22.3% in

the index, ahead of China’s 21.6%.

Globally, the US Fed rate cut is becoming imminent in September, following Jerome Powell's

supportive comments at the Jackson Hole symposium last month and the Federal Reserve’s

confidence in achieving its 2% inflation target.

Over the past five years, the Nifty-50 has delivered stellar returns at 17% CAGR, supported by

equally impressive corporate earnings CAGR of 18%, resulting in an increase in Nifty profits to

₹7.9 lakh core in FY24 from ₹3.5 lakh crore in FY19. We expect earnings momentum to sustain;

with growth expected to be steady at ~15% over FY24-26.

Page 02

Private Client Group

Equity

Investment

Ideas

•

Kaynes

CMP:

4,700

TARGET:

6,000

•

•

•

BUY

Kaynes has setup new manufacturing facility in Hyderabad dedicated to

smart meters to meet near-term demand. This facility is expected to

generate ₹8bn p.a. by FY26. Recent three partnerships will further

strengthen its footprint in the semiconductor.

Diversification of product portfolio into high-growth segments, along with

strategic partnerships, positions Kaynes well within India's decade-long

growth story in the EMS sector.

•

We expect PAT CAGR of 67% over FY24-FY27.

LTF has transformed itself into a retail franchise and would continue to

deliver a sustained improvement in profitability and RoA expansion.

Management anticipates further improvement in the rural business

trajectory, supported by positive monsoon trends and improvements

in rural cashflows.

We expect total loan CAGR of ~25% and PAT CAGR of 28% over FY24-

FY26E, with consolidated RoA/RoE of 2.7%/~14% in FY26E.

L&TFH

CMP:

165

TARGET:

230

BUY

•

360 One

CMP:

1,090

TARGET:

1,300

•

BUY

Wealth management in India is rapidly emerging as one of the

fastest-growing segments within the financial services industry, with

AUM expanding by 15-20%. Industry AUM is expected to reach $1.8t

over the next 4-5 years.

360ONE is looking to diversify its presence in the mass-affluent client

seg. & geography (lower tier cities + international regions). Given the

growth opportunities & diversification we expect PAT CAGR of 26%

over FY24-26.

•

•

•

•

CAMS reported strong Q1FY25 results with Revenue/Net profit up 27%/41%

YoY respectively. Growth was driven by increase in the share of non-MF

business and an improved mix of equity AUM in total MF AUM.

Management expects 20%+ growth in revenues from non-MF

businesses. It expects ~15-20% YoY growth in the AIF segment.

We believe CAMs deserve a premium given the duopoly nature of the

industry and high-entry barriers, relatively low risk of a market share

loss, and higher customer ownership compared to AMCs.

Godrej Consumer

CMP:

1,443

TARGET:

1,700

BUY

Page 03

Technical &

Derivatives

Outlook

•

Nifty index started August on a positive

note above 25k marks and after the slip in

the first week, it took support at 23900

zones and witnessed a comeback of the

bulls in the rest of the month. The last week

saw a decisive breakout on the weekly

basis and the index went on to touch a

fresh all time high of 25268 marks. It gave

the highest ever closing and closed near

its higher band above 25200 zones. On the

sectoral front we have witnessed buying

interest in most of the sectorial indices

mainly in IT, Pharma, FMCG, Auto, and

Energy sector.

•

Technically, index has been making higher

highs from the last nine months. Nifty has

formed a strong Bullish candle on monthly

scale and respecting its trend line. Even

after the short term profit booking, major

trend of the market remains intact to

positive and minor dips have been quickly

absorbed in. Now till Nifty holds above

25000 zones, we are expecting the bullish

trend to extend the move towards 25600

and 26000 zones with immediate support

near 24850 and 24600 zones.

Page 04

Derivative

Strategy

NIFTY: Bull Call Butterfly Spread: Sep Series

BUY 1 LOT OF 25200 CALL

SELL 1 LOT OF 25600 CALL

SELL 1 LOT OF 25600 CALL

BUY 1 LOT OF 26000 CALL

Margin Required :

Rs.50,000

Net Premium Paid

: 85 Points (Rs.2125)

Max Risk :

85 Points (Rs.2125)

Max Profit :

315 Points ( Rs.7875)

Lot size

: 25

Profit if it remains in between 25285 to 25915 zones

Rationale

•

•

•

•

Nifty index is trading at life time high and likely to scale new record high in coming sessions

On weekly scale structure of higher highs – higher lows is intact which suggests overall

strength

Call OI is at 26000 then 25500 strike while Put OI is seen at 25000 strike.

Thus suggesting Bull Call Butterfly Spread to play the upside momentum

Page 05

Commodities

& CurrencyOutlook

•

•

•

•

•

•

•

•

•

•

•

•

•

In August, Gold rose over 2%, while Silver traded volatile in a broad range

Major factors triggering volatility last month : Jackson Hole Symposium, Fed Rate cut

expectations, Escalating geopolitical tensions and economic data points

Governor Powell hinted at a possible rate cut in September, noting that while inflation is

approaching 2% target, focus now is also on the labor market

Bets for 25bps and 50bps rate cut in September is at ~70% and ~30% respectively

Economic data was mixed : Jobs, inflation and housing number were weaker but, GDP and

consumer spending showed strength

Domestic prices did see some recovery post 9% duty cut, momentum is still lacking

Renewed Russia-Ukraine and Israel-Hezbollah tensions are driving safe haven buying in Gold

and Silver

Industrial metals saw sharp recovery, supporting silver prices

Dollar index hit a 13-month low but, recovered by month end

Gold/Silver ratio is trading in a range of, 80-90, trying to find a direction

SPDR and iShares reported inflows over the last two months

July India imports: Gold: 43.59 tn v/s 62.74 y/y; Silver: 179.49 tn/ 52.74 tn y/y

Possible demand spike during festive and wedding season could boost sentiment.

•

•

Historically, the heat map shows that Gold and Silver have generally experienced declines in

September.

Looking at current factors, both metals have formed some strong base, however, it could

trade in a broad range till we don’t get clarity on US interest rates cuts and Geo-political

tensions

Page 06

Commodities

& CurrencyOutlook

Page 07

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•

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Page 08

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