Portfolio Updates for the week of 20th December 2021
Indian equities posted gains in the second last week of 2021, led by IT and pharma stocks. The week started with a sharp decline, but the indices managed to recover as they logged gains for three consecutive sessions.
In Friday’s trading session, the S&P BSE Sensex was down marginally 0.33% to close at 57,124.31 points. The NSE Nifty 50 also ended in a similar magnitude and closed above 17,000 points. For the week, the indices were up close to 0.20%. The broader markets, however, remained flat and were marginally down as compared to their larger peers.
Overall our view on the market remains very positive. After almost 10% correction from the peak, nifty valuations are now in a comfortable zone compared to what they were in October and are no longer expensive. Hence, one should follow the buy on dips strategy because the economic growth recovery will only improve from here on.
There are certain issues in the short term like the Omicron variant impact, global inflation, increase in interest rates and decline in easy liquidity in the market. We believe these are temporary speed breakers to the overall bull run that we might see over the next couple of years.
With no key domestic event, things to look for next week are global cues as they will provide direction to our markets. Also, there is a positive sentiment after preliminary research showed that the Omicron variant of COVID-19 is mild and will not impact the economic recovery. Investors are likely to react positively as we head to the final week of 2021.
We believe that the Indian stock market is on the cusp of a huge upcycle. As we continue to remain invested in quality companies, we have made no changes in our portfolio.
Note: If you have joined us this week, please note that the last rebalance of stocks was done on 17th December 2021.
Updates That Kept Our Portfolio Stocks in the News During the Week
Ashok Leyland – Launches New Truck
The company has launched a dual tyre lift axle truck (DTLA) called AVTR 3120. This makes Ashok Leyland the first and the only player in the country to have a full DTLA truck range. Last year, Ashok Leyland launched the AVTR range of trucks and Bada Dost in the LCV segment. These are delivering excellent performance and have been very well received by customers.
The company has a track record of catering to customers’ needs. With world-class products, Ashok Leyland delivers better profitability. This new launch will help realise their vision of being amongst the top 10 CV manufacturers in the world.
Birla Corporation – India Ratings and Research (Ind-Ra) Affirms Existing Ratings
India Ratings assigns Birla Corporation’s Additional NCDs to ‘IND AA’/Stable. The ratings continue to factor in the company’s strong market position. Further, its well-diversified presence and robust operating performance also support the rating.
With strong cement demand and expansion of its production capacity, the future outlook appears robust for the company.
HCL Tech – To Support CEMEX in its Digital Transformation
HCL has signed a five-year agreement with CEMEX, a global construction materials company. Under this, HCL will deliver the next generation of employee services enabled by digital transformation, increased automation, and near real-time analytics. This is a part of the CEMEX ‘Working Smarter Program’.
HCL will leverage its industry-leading DryICE® and software suite of products. Along with this, it will leverage various other market-leading orchestration/automation solutions and AI/ML-based services. Thus helping to drive CEMEX’s global market imperatives.
We remain very positive of HCL’s near term growth, confidence generated by its bookings and pipeline numbers across every segment.
Larsen & Toubro – Secures Significant Order & Enters into Share Purchase Agreement
The construction arm of L&T has secured a significant order for its buildings and factories business from a reputed developer. The order is scheduled to be completed in 42 months.
Apart from this, L&T has entered into a share purchase agreement. It will buy a stake in Intelliflux Controls INC., a Delaware Corporation.
Intelliflux Controls INC.s into analytics for the water effluent treatment industry. The goal behind this acquisition is to improve the analytics and design capabilities.
As infrastructure sector is set to gain high attention, L&T is set to play a huge role in this process. Hence, we continue to remain positive about the stock.
State Bank of India – Acquires Stake in JSW Cement
SBI has acquired a minority stake in JSW Cement, India’s leading Green Cement Company. JSW Cement is a part of the US$ 13 billion JSW Group. The bank has invested Rs 100 crore in JSW Cement via compulsorily convertible preference shares (CCPS). This capital infusion will support JSW Cement’s capacity expansion from the current 14 MTPA to 25 MTPA.
The government’s infrastructure push combined with housing, smart cities, and Swachh Bharat Abhiyan will further boost cement demand in the country. It will benefit companies like JSW Cement, as well as SBI who have acquired a minority stake in the company.