Today's Calls

India's retail inflation, though exceeded the central bank's target of 4%, has remained within the 2-6% tolerance range for nine consecutive months. Last week, the RBI maintained the policy rate at 6.5%, indicating that interest rate cuts may be delayed as the central bank waits for inflation to stabilize.

According to data from the statistics ministry, retail inflation based on the consumer price index (CPI) dropped to 4.75% in May from 4.83% in April, marking the lowest rate in a year. This moderation was driven by slower price rises in food items like meat, fish, dairy products, vegetables, and spices. Inflation has remained below 5% since March.

Food inflation, which constitutes nearly 40% of the overall consumer price basket, rose 8.69% year-on-year in May, slightly down from 8.70% in April. Food prices have remained high for over a year, largely due to last year's uneven and below-normal monsoon rains. Food inflation has consistently stayed above 8% since November.

Last week, the Reserve Bank of India (RBI) kept the benchmark repo rate unchanged at 6.5%, signaling that interest rate cuts might be delayed. However, Interstingly two monetary policy panel members advocated for a rate cut and a change in monetary stance. The RBI last raised the repo rate to 6.5% in February 2023 and has kept it unchanged since then.

Regulating interest rates is a crucial tool for the central bank to control inflation. Higher interest rates make borrowing more expensive, reducing demand among banks, financial institutions, and the general public, which can decrease consumer spending and inflation.

Meanwhile, the factory output rose 5% in April, up from 4.9% in March and 5.6% in February, following an eight-month low of 2.5% in November. For the April-March (FY24) period, factory output grew by 5.9%, slightly surpassing the previous year's 5.2% growth.

India's economy expanded by an impressive 8.2% in FY24, driven by a 7.8% increase in the January-March quarter, defying fears of a slowdown as manufacturing, electricity, and construction sectors thrived. This strong fourth-quarter growth meant that the actual GDP growth for FY24 exceeded the National Statistical Office's forecast of 7.6%. Fortunately, for FY25, the RBI estimates economic growth at 7.2%.

#Since retail inflation is more or less stable, so while buying stocks we need to focus on rate sensitive sectors like: Real Estate & Construction, Banks & NBFCs, Auto & Auto components, etc. I have already recommended one stock from the banking sector. 

#The stock of Vodafone Idea Ltd (Rs.16.50) is getting bounced from Rs.16.70. For the time being the short term traders can book some profits and re - enter when the scrip closes above that resistance levels. The long term investors can however, hold the stock with a SL at Rs.16.25.

#If food inflation is the problem then you need to buy the scrips from this sector.

#Indowind Energy Ltd (Rs.25.25) hit another Upper Circuit today, before cooling down a bit. The company should do well in the coming days in view of reduction of debt and capacity expansion. 

#There is an excellent news for the shareholders of Debock Industries Ltd (Rs.7.80). 

According to my close sources the company could start mining GRANITE tentatively from July, 2024.

Also, as per some highly placed sources who refused to be named, the shareholding pattern of the company is all set to improve through a REVERSE MERGER of a group company. This is a very encouraging news for the shareholders and could alone push the scrip above Rs.30.

#Those who are still holding or have taken fresh entry into the shares of my recently recommended Paytm Ltd (Rs.402), can hold the same with T: Rs.420 and SL: Rs.392.

#You can start accumulating the shares of Eros International Media Ltd (Rs.20.60), T: Rs.32, SL: Rs.17.

#But the shares of IDFC First Bank Ltd near the CMP of Rs.77.91, T: Rs.88, SL: Rs.76. 

#Buy the shares of Coffee Day Enterprises Ltd (Rs.59) near the CMP for targets of Rs.72/Rs.77, SL: Rs.56. 

In the middle of April, 2024, there was media report that Prashant Jain, the former MD and CEO of JSW Energy, had bought a stake in in Coffee Day Enterprises. Through his personal fund Tikri Investments, Jain picked up 40 lakh shares, translating to 1.89 percent stake in the company. The shares were bought at Rs.70.94 apiece.

#Those who are holding the shares of Rajesh Exports Ltd (Rs.285) can start averaging, as I feel the company in all likelihood, will start manufacturing Lithium-ion batteries from this fiscal. 

I feel the Bottomline fell more due to money being diverted to battery making plant. Once the Lithium Battery comes in the market the stock will cross Rs.1000, as it will be a huge business opportunity, apart from its current verticals. Photo: Swarajya