MC Inside Edge: Voltas bulls get cold burns, money managers queasy about Kalyan, operators serve BHEL, school reopening game in Camlin

Stock Market

Volte face

Some informed bulls appear to have jumped ship in Voltas just ahead of its disappointing fourth quarter numbers announced post-market hours on Tuesday. The stock had been riding high after a strong fourth quarter business update. But its quarterly numbers showed that Voltas’s efforts at increasing market share are coming at the expense of margins. Mutual funds and PMS funds had loaded up on the stock during the March quarter and even in April, betting that margins were set to improve. Looks like they will have to wait longer.

Futures open interest jumped nearly 7-fold indicating building up of short positions. Also, heavy call writing at 1500 strike and huge put buying at 1400 strike. Bulls holding on to their positions are staring down the barrel.

Losing glitter

Rising gold prices don’t bode well for jewellery chains as it hurts demand. Therefore, it is not surprising to see the Kalyan Jewellers stock struggle. Many PMS funds and mutual funds had piled on to the stock in February when a large investor sold its stake. Some large HNIs who had aggressively pitched the stock idea to mutual funds are sitting pretty, having bought the stock cheap last year. But newer buyers have little choice but to add more to their holdings, having bought at pricey valuations recently. The stock finds place in many exchange traded funds (ETF) as it is part of NSE’s midcap indices. In a rising market, this is a good thing. But when sentiment for midcaps changes for the worse, the sword can cut the other way too.

Volume spurt

It seems some operators are trying to put Kokuyo Camlin in play. A record 7.7 million shares were traded on the NSE on Tuesday, but no bulk deal disclosures were made on the exchanges. Previous attempts to create a narrative around the stock have fizzled out. A fundamentally sound company with a clean balance sheet, but is yet to catch the market’s fancy. Like Bata, operators are probably betting on the school reopening theme, considering that the June quarter is traditionally strongest for the company.

Chaat treat
Operators are said to be unloading BHEL shares over the last few trading sessions. The stock had been pumped up on the story about massive capex coming up in the power sector. Domestic mutual funds were bullish for a while but refused to bite beyond a certain price. In fact, they trimmed exposure during the March quarter. Now that institutional support is lacking, operators have decided to retreat for the time being.