Winning Strokes

Dow Jones rose by 1.02% or 349.44 points to 34,707.94 while Nasdaq rose by 1.93% or 269.23 points to 14,191.84. The 10-year Treasury yield rose 5 basis points to 2.37%. Photo: DailyFx

Back home, according to a report published in The Hindu on 24 March:

"In the COVID-19 year of 2020-21, both real GDP and GVA contracted by minus 6.6% and minus 4.8%, respectively. The NSO’s SAE show that real GDP and GVA growth are estimated to recover to 8.9% and 8.3%, respectively, in 2021-22. Despite this improvement, the magnitude of real GDP at ₹147.7 lakh crore in 2021-22 is only marginally higher than the corresponding level of ₹145.2 lakh crore in 2019-20. The NSO’s GDP data highlights that in 2021-22, the nominal GDP growth at 19.4% is significantly higher than the real GDP growth due to an inordinately high implicit price deflator (IPD)-based inflation rate of 9.6%. Monetary policy authorities need to take note of this.

However, the growth of consumption and investment demand — as measured by private final consumption expenditure (PFCE) and gross fixed capital formation (GFCF) in 2021-22 over 2019-20 is only 1.2% and 2.6%, respectively, suggesting sluggish revival in domestic demand".

Moreover, the report says: "Real GDP growth moderated from 20.3% in Q1 to 5.4% in Q3 of 2021-22. Similarly, real GVA growth also fell from 18.4% to 4.7% over this period. The implied Q4 GDP and GVA growth rates are estimated to be even lower at 4.8% and 4.1%, respectively. Thus, without a base effect, quarterly growth performance appears to be averaging at less than 5%".

This suggests that the RBI is likely to go slow on its expected rate hikes. In the US front too, fed could delay its future rate hikes, as high crude oil price may slow it GDP growth too.

#The stock of Global Vectra Helicorp Ltd (Rs.47.95) has been kept in the T - group since months, though there is hardly any trading activity or volume in the counter. This shows the dismal condition of the surveillance mechanism of Indian stock exchanges. 

Though I have been writing about this aberrations since the last few weeks, hereto, it has fallen on the deaf ears of the stock exchange regulator. Hope, the Finance Ministry will look into the matter and take appropriate steps to bring the stock out of the T - group. 

However, with the price of Crude hitting glass ceiling, we can expect the future of Helicopter 🚁 companies catering exclusively to the oil and gas sector, apart from Heli - tourism (Heli - pilgrimage) to fare well in the coming days. Stay invested and don't get purturbed by short term price volatilities, as future of the overall Airlines market looks bright, post government of India lifting up curbs, following the reduction of cases related to Covid - 19 pandemic.

#With the buoyancy in the commodity prices Continuing post Ukraine - Russian border conflicts, the future of Steel, Aluminium, Nickel, Oil Exploration companies looks excellent. The stock of, my recently recommended SAIL had already touched Rs.104.95 yesterday. The share will become ex - divided on 28 March, 2022.

#The shares of Oil Exploration companies or those into Crude Oil Drilling or into seismic surveys, could continue to show upward bias in the coming days, akin to what happened post Gulf War in early 2000 A.D.  

When cruede oil price is booming in the international markets, it is natural that the valuation of Oil Exploration counters will rise, like any other Commodity player. I'm expecting the stock of Selan Exploration Technology Ltd (Rs.197.20) to touch Rs.221/232 in the coming weeks. Similarly, ONGC (Rs.177.50) could be heading towards Rs.200 - plus. I'm having a target of Rs.2700 for RIL. Jindal Drilling (Rs.253.25) on the other hand could cross Rs.300, as per day charges for works related to Drilling and Maintenance of Crude Oil rigs are set to move up further.

Also, at the moment the share of Aban Offshore Ltd (Rs.49.25) looks poised for a rally, as the company is in the process of reducing debts by selling its assets. The company came out with excellent December, 2022 quarter result, when there was addition in both its top and Bottomlines on Q - o - Q basis. Moreover, Aban Offshore Ltd (Rs.49.25) has now ventured into international waters and is doing work for an Iranian oil company. The sale of Jack - up Rig deep driller 1 owned by its step down subsidiary Deep Drilling 1 Pte Ltd was completed on 17 March, 2022, which will further reduce its debt. High debt has been plaguing its financials since some time, which got accumulated due to lower crude prices for few years, earlier. Now with some research houses predicting the Brent Crude Price to touch $200, we can expect the overall buoyancy in the oil and gas sector to continue for a prolonged period. Also, all the data starting from its current book value, as mentioned on Moneycontrol.com is probably wrong. Take the help of BSE website, to study its financials. I'm expecting a target of Rs.71/77/82 for Aban Offshore, in the coming days. Accumulate!

#The stock of Shriram EPC Ltd (SEPC) jumped up yesterday by more than 5% to Rs.7.95 following a news in one of the group companies. However, till the QIP is announced, the share could consolidate around the current levels. Accumulate if the share closes above Rs.8.30, with good volumes.

#The stock of the diversified company A2Z Infra Engineering Ltd (Rs.9.80) could turnaround in this quarter. The company has been reducing its debt continuously and had an OTS with a lender. According to my close sources, the company has started work in 2/3 places in Delhi (NCR), after its business got severely affected due to prolonged bouts of Covid - 19 pandemic. It now has a healthy order book. Accumulate!