Rate hike blues

Nifty50: 18,642 ▼ 58 (-0.3%)
Sensex: 62,626 ▼ 208 (-0.3%)

Namaste, friends!

‘Goblin mode’ has been  voted the Oxford word of the year for 2022 by an overwhelming majority. The term refers to ‘a type of behaviour which is unapologetically self-indulgent, lazy, slovenly, or greedy.’ It pretty much sums up the prevailing post-pandemic mood across the world. But when it comes to investment, it would bode well for you to avoid Goblin Mode. If you wish to make gains in the market, then adopt analytical thinking and avoid greed.

• After a subdued opening, markets closed in the red.
• In the Nifty50 universe, 30 stocks declined.
• Investors looked cautious ahead of the RBI rate hike decision on Wednesday.

Among the Nifty sectoral indices, PSU Bank (+1.2%) and FMCG (+0.3%) were the top gainers, while IT (-1.4%) and Media (-1.0%) were the top losers.

What’s trending

⭐ Alert: RBI rate decision on Wednesday

The wise ones on Mint Street aka RBI’s monetary policy committee will conclude their 3-day policy meeting on Wednesday. The markets are estimating the RBI to up rates only by 0.35% - meaning they expect the central bank to go slow on rate hikes. 

This expectation is based on these reasons: 

• Inflation has started to decrease, slowly. Retail inflation grew 6.7% in October v/s 7.4% in September. Upbeat manufacturing PMI data (at 3-month high of 55.7) - this points to improving factory activity.        
• The US Federal Reserve signalling it will hike rates at a slower pace. 

ICYDK, RBI has announced four consecutive rate hikes so far this year The effective repo rate is now at 5.9%. 

Why should you care? The repo rate is the rate at which RBI lends to banks. RBI hiking the repo makes money costlier for banks and means higher EMIs for all of us. 

Follow Upstox for all updates tomorrow!

⭐ Adani Green adds third hybrid plant

ADANIGREEN (NSE): 2,055  ▲ 12 (+0.6%)

Adani Green Energy, a renewable arm of the Adani Group has commissioned its third wind-solar hybrid power plant in Rajasthan. The plant has an operational generation capacity of 450 MW. The company has also signed power purchase agreements (PPA) for the plant at ₹2.67/kwh for the next 25 years. 

The addition of this plant takes the company’s total operational generation capacity to 7.1 GW, making it the largest wind-solar hybrid power farm developer globally.

⭐ Not-so-sweet rally 

LODHA (NSE): 1,000 ▲ 14 (+1.4%), GODREJPROP (NSE): 1,330 ▲ 25 (+1.9%)

Shares of key sugar producing companies rose sharply after reports of a 7% YoY fall in sugar output (recorded in an October to September cycle). The output fall is mainly due to low cane yield in Maharashtra. 

Farmers in the state are staring at an average 15% decline in crop yield due to adverse weather conditions. Maharashtra is one of largest sugar producing states in India. A sharp drop in yield is likely to weigh on sugar exports and can push up global prices. India is the second largest exporter globally. 

The rise in sugar prices may not be good news for household budget, but for  investors, it is a sweet deal for now. 

⭐  Big Mac’s Maha-expansion

WESTLIFE (NSE): 782 ▲ 42 (+5.6%) 

Shares of Westlife Foodworld which owns the master franchisee of McDonald's restaurants rose by over 10% intraday after the company announced its vision 2027 growth plan. The company aims to nearly double its sales to ₹4,000-4,500 crore in the next five years backed by network expansion, and an omni channel approach. As per management, the company will open 300 stores in the next five years, out of which nearly 50-55% stores will be in the southern market. For the financial year 2022, the company had reported a total revenue of ₹1,576 crore (FYI).

In Focus

Rail stocks take the superfast track

 Indian Railways-linked stocks could well be the ‘sleeper’ hit of 2022. Since April 2022, shares of Rail Vikas Nigam, IRFC, Ircon International and Titagarh Wagon have witnessed an upsurge of 54-120%. What’s powering this momentum? Let’s check it out:  

The primary engine behind this surge has to be the government’s increased focus on rail infrastructure. In the first half of FY23, the government invested about ₹88,548 crore so far on railway projects,  a rise of 91% year-on-year. 

Besides this, the union cabinet also approved a ₹10,000 crore proposal for the redevelopment of three major stations- Mumbai's CSMT, New Delhi, Ahmedabad.

The second engine is what the government is already calling a game changer - the Vande Bharat express trains. Confident of its success, the government recently rolled out tenders worth ₹26,000 crore for 200 new Vande Bharat trains. These are semi-high speed trains equipped with modern facilities. At present, 6 Vande Bharat Trains run to different locations. The tenders could boost order inflow for different companies. Several companies have already lined-up for this mega contract, including BHEL–Titagarh Wagons consortium, French railway major Alstom and others are in the race for this contract. 

The third big growth engine is the government’s focus on the logistics sector. Earlier this year, the Indian Railways had floated a tender worth ₹35,000 crore to procure 90,000 wagons in next three years in order to boost freight transport through trains. Indian Railways handled 1418 million tonnes (MT) of freight in FY22, 15% higher compared to previous year. 

While these factors have powered rail stocks through 2022 the end-of-year momentum could also be attributed to the annual pre-budget rally. 

Powerful buying made simple!

Markets often see sharp price movements triggered by positive news or technical patterns. In such situations, you may want to double down on certain high-conviction trades. However, having limited capital could be an obstacle in leveraging such opportunities. With Margin Trading Facility (MTF) on Upstox, you can increase your trading capacity instantly. Click here to know more about MTF.

Benefits of MTF:

🔹Get 2X leverage on equity delivery orders 

🔹Applicable 375+ NSE stocks

🔹Borrow up to ₹25,00,000 at a time 

🔹Hold stocks bought via MTF for up to 365 days.

Good to know

What is the repo rate?

Repo rate is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks in the event of a shortfall in funds. It is a tool used by the RBI to control inflation. For example, in the event of high inflation, the RBI may raise this rate. This would make it costlier for banks to borrow money from the RBI, and in turn reduce supply of money in the economy. The current repo rate stands at 5.9%. 

Click here to join us on Telegram for trading and investment-related videos, daily market updates, details on upcoming IPOs and more.