Q) What are the important levels which for the June contract expiry week?
A) Since this is an expiry week, the market can be volatile. The Nifty50 may face resistance near 10,325-10,410 levels on the upside.
Once it is able to move above 10,400, the next resistance zone would be 10,530-10,650. The Nifty can still face resistance near 200-EMA.
However, below 10,070, the index can turn weak and move southwards till 9,950-9,840. On the downside, the 9,725-9,700 zone is an important support for the index.
Q) RIL on June 19 announced it has debt-free and proposed to list Jio and Retail business in the next 5 years. What is your view and do you think it warrants for a rerating of the stock?
A) Reliance Industries Ltd (RIL) has announced that it has become net-debt free after it managed to raise Rs 1,68,818 crore in just 58 days. At the last count, Ambani-led telecom venture Jio Platforms had raised Rs 1,15,693 crore through 11 back-to-back deals within a span of eight weeks.
While the fundraising spree was unprecedented, the fact remains that about three-fourths of the proceeds from the rights issue will be received only in the next financial year.
So it may be more appropriate to say that RIL’s reported net debt is on its way to being zero. Perhaps, one could say RIL has become virtually debt-free, although no such term exists in an accounting sense.
In any case, it is important to remember that there already exists a wide gap between RIL’s reported net debt and estimates of its debt by credit rating agencies and brokerage analysts.
Q) Small & midcaps outperform benchmark indices in the week gone by. Is it the valuation that is fueling optimism in the small & midcaps space?
A) Investors not only look for stocks that could only generate wealth in the bull-run but also that can safeguard capital when the market is lower.
Although Nifty50 and Sensex slipped into a bear phase in 2020, most of the small & midcaps were already bleeding since 2018.
The Indian market has recovered a bit since it had made a bottom in March 2020. The Nifty, midcap and smallcap indices are all up 30 percent from the March lows.
With this recovery rally, we believe the valuation trade is certainly behind it –as compared to January 2020 of the top 350 stocks, almost 70 percent are back to nearly the same or higher valuations.
Q) What is your call on the telecom space post the SC AGR hearing? Banking and financial stocks saw a big boost on Thursday. What are your views?
A) The apex court had asked telecom operators earlier to file replies with roadmaps and timelines for the payment of their AGR dues to the government and the security they seek to provide against it.
Vodafone Idea owes to the government Rs 58,254 crore in AGR dues. It has only paid Rs 6,854 crore so far. Airtel owes Rs 25,976 crore after paying Rs 18,004 crore.
Analysts expect the possibility of the apex court asking for personal guarantees in the next hearing, which the telecom companies are unlikely to accept.
As such, uncertainty looms large, especially for Vodafone Idea, because it has a relatively weaker balance sheet than Bharti Airtel.
If we look at the whole telecom sector, the probability of Vodafone getting back on track in terms of the debt and balance sheet in business is very low despite the sector doing so well.
Q) The high volatility of the market can sometimes be too much to handle. Recently a 20-year-old Robinhood trader died by suicide on losing $730,000. What should traders do to avoid such massive losses?
A) The stock market is a land of opportunities. Every trader trades with the hope of making good returns. However, not everyone is successful. It takes time, effort, and patience to figure out market trends and not everyone is able to make the most of them.
To make trading safer, the traders should follow these things:
Take calculated risk
The most common reason for the failure in the stock market is bad management skills. The traders often put all their money in one stock and end up making losses. Therefore, traders must always take calculated risks.
Understand the market
It is important to understand the market. Though no one can predict the stock market accurately but failing to understand the market can lead to big losses.
Put stop loss
Traders should always use a stop loss. Otherwise, the risk in one stock increases which can lead to heavy losses if the share price does not move in traders' favor.
Emotions have no place in the stock market. Riding high on emotions often forces the trader to take the wrong trade that leads to loss of capital.
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