Tit - bits

It is a long time that I had updated this blog. The reasons are obvious. In between the Indian share markets corrected by more than 35% from the peak levels, due to coronavirus epidemic.  

The Nifty (8083.80) may test 2016 low of 7511 before moving up towards 8700. 

Meanwhile, the FIIs pulled out Rs.65,817 crore from Indian equities in March 2020 alone. On the  other hand the financial sector got hit the most due to lockdown which impacts collection efficiency of MFI, NBFC, HFC, SFB and Banks.

In another significant development the price of Natural Gas has been cut, benefiting the power and fertilizer companies. However since the demand from the power sector has reduced due the factories closing down, and hence the power sector will not be much benefited from this move.

Therefore the maximum Beneficiary would be fertilizer sector and we already saw the scrip of many fertiliser share moving up on last Friday.  Moreover, with many food processing companies getting closed down due to Lockdown, we might witness, the demand pull inflation getting more legs in the coming days. 

In such circumstances, you need to remain invested in Food,  Breweries, Fertilizer and Paper  sector. The logic is simple people can't go without food and education. 

Which sectors needs to  be avoided: Banks, Metals, Auto, Power, Hotels, Travel and Tourism, etc. 

I had already strongly recommended National Fertilisers Ltd (Rs.19.75). ts due to its mini-Ratna status and having a diversified product portfolio of Urea, Non Urea and Natural Fertilisers.

Its subsidiary, the gas  based Ramagundam Fertilisers Ltd will start production once the Lockdown has been eased. 

I'm expecting a price of Rs.32/37/42 for the scrip. I have also recommended DEEPAK Fertilizers (Rs.70.80). 

Today, I'm recommending the scrip of Chambal Fertilizers (Rs.104.65). 

Remember, the farmers have to sow the seeds and fertilizer demand will be there. While the government now has no option but to swiftly decontrol Urea,  because of the likelyhood price rise of raw materials needed to make fertilizers. The government I feel would not like to get bankrupt with fertiliser subsidy. 

Moreover, the price of non urea fertilisers, on which there is no price control are likely to shoot up, due to factories closing down and availability of limited  buffer stocks.

If you have an investment capacity of Rs.3/5 lakhs on profit sharing scheme, then we can make money jointly in the next few months. 

Anyway,  remain healthy and take precautions to guard against Coronavirus. Wish you all the best.