Short Call | Nifty aims for Mt 20,000, Tata Steel, IRCTC in focus, Balrampur Chini gets sweeter, and China market booster

The stock is not too far from the record high of Rs 153 seen in August 2021, thanks to rising interest from high net-worth individuals as well as institutional investors of late. There is, however, a contrarian view from Investec. It feels onetime subsidy from the UK government will not help the company’s European operations, and that it may need subsidies on a sustained basis. Investec also sees the huge debt on the company’s book as a cause for concern and expects it to halt its capex programmes to reduce the pressure on balance sheet. Investec has a reduce rating on the stock with a target price of Rs 82.

Chennai Petroleum

There was a 9 percent rally in the stock on Friday as investors’ fondness for refining stocks persisted. Globally, the refining capacity is stretched due to under-investment, and shutdowns happening more frequently. The previous rally in Indian refining stocks last year ended abruptly when the government imposed windfall tax on oil explorers and refiners. Valuation is not so much the risk when it comes to refining stocks, as much as policy changes are.

Balrampur Chini

The stock is on the NSE F&O ban list, after seeing heavy volumes over the past few weeks. Sugar stocks across the board have had a good run lately on reports of a deficit in global markets. Like oil companies, sugar is highly vulnerable to sudden policy changes. Two key triggers for the sector will be the government’s stance on exports and the changes to State Advised Prices for sugarcane in an election year. In June, the Haryana government announced a Rs 10 per quintal hike in SAP of sugarcane to Rs 372 for the 2022-23 season, giving in to pressure from the farmer lobby.

IRCTC

IRCTC chugged on steadily to a 10-month high without attracting too much attention. Friday recorded massive volumes as investors lapped up anything

and everything railway. Unlikely that it may see anything like the frenzy in 2021 when the market was willing to pay 125 times one year forward earning. Till recently, the widely held view was that its internet ticketing revenues was unlikely to grow much faster than what it is right now. As veteran investors say, when a company is a monopoly, the downside risk increases. IRCTC’s profits have been rangebound for the last five quarters now. Further gains will depend on the market’s willingness to pay a higher multiple for the same rate of earnings growth.

China diary

China will make it easier for insurance companies to invest in domestic stocks, the latest in a series of measures aimed at shoring up market sentiment, reports Bloomberg. A lower risk weighting frees up more capital for insurers to invest. Risk weighting have also been cut for investments in Real Estate Investment Trusts (REITs), which in China channel money mainly into infrastructure projects. It also set a relatively low risk weighting for private equity investments in China's strategic and emerging sectors.

Some respite

China’s consumer prices returned to positive territory in August, rising 0.1 percent, while factory-gate price declines slowed, as deflation pressures ease amid signs of stabilization in the economy, reports Reuters. But analysts say more policy support is needed to shore up consumer demand in the world’s second-biggest economy, with a labor market recovery slowing and household income expectations uncertain.

Austerity over stimulus

Despite advice from leading Chinese economists to take bolder action, senior Chinese officials have been unable to roll out major stimulus or make significant policy changes because they don’t have the green signal from President Xi Jinping, reports WSJ.

The top leader has shown few signs of worry over the outlook despite the gathering gloom and hasn’t seemed interested in backing more stimulus, according to the people and publicized remarks by Xi, the report said. The top leader’s apparent reluctance to embrace such moves, which people familiar with the matter say is partly rooted in his ideological preference for austerity.

Rising star

Guyana is expected to pump 1.2 million barrels of crude oil per day by 2027, surpassing many OPEC members, driven by Exxon's development of the Stabroek Block, writes Mathew Smith in oilprice.com. The high-quality light sweet crude oil, low breakeven prices, and successful exploration campaigns are attracting immense international interest in Guyana's oil sector. The country’s burgeoning oil production may not exactly be music to the ears of the OPEC Plus cartel, which is said to be wooing Guyana to join its club.

Beer trivia

China was the largest beer-consuming country for the 19th consecutive year in 2021, according to data collated by Japanese beverage company Kirin Holdings. China was also the leading producer of beer in 2022, followed by the United States. But when it comes to per capita consumption of beer, Europe is miles ahead with nine of the top 10 consumers being European nations. The Czech Republic remained the leader in per capita beer drinking for the 29th year in 2021, with the average Czech downing more than 184 liters of beer. The Czech Republic is known for its affordable beer and in some parts of the country, beer can even cost less than bottled water.

One (wo)man army

The already thriving hospitality sector in the US is getting an added boost from Taylor Swift’s high-flying stadium tour, says a CNBC report, quoting data by Bernstein. Average revenue generated per room in the cities Taylor passed through, was more than 4 percentage points above the national benchmark in US states during the months of Swift’s visits, according to Bernstein data. These states saw revenue per room up about 7 percent on average in the months of her stops compared with the same periods a year prior.