Category: Personal Finance

1. V-Guard Industries:

This is the Gladiator stock recommendation of ICICI Direct which is seen to hit the target in next 3 months. The current scrip price is Rs. 261.75, while the price target set out by the brokerage is Rs. 302, implying an upside of 15%.

About the company: The company is a leading electrical appliance company and largest indeed in Kerala. The company’s product line includes voltage stabilizers, electrical cable, electric pumps, electric motors, geysers, solar water heaters, electric fans and UPSs.

Technical observations: There is improved sentiment in the consumer discretionary space ahead of the festivities, with this scrip not being an exception. There is seen elevated high demand in the counter. Only in this week, the chart formation was of a falling channel breakout that provides for a primary uptrend.

“The stock has taken 10 weeks to retrace 80% of its preceding three weeks rally (Rs. 219-285) signalling slower pace of retracement and highlighting strength. The weekly 14 periods RSI has generated a buy signal moving above its nine period’s average, thus validating the positive bias”, said the report.

Fundamentals which support the set target price

Electronics contribute approximately 28% to their topline while electricals contribute 45% and consumer durables 27%. South contributes a major chunk of their revenue with 60% coming from that region.

Better Q1Fy22

The company reported better-than-expected numbers in Q1FY22 despite lockdown led restrictions in key selling markets. Net sales were up 39% YoY. Gross margins were up 408 bps due to a better product mix and passing on of price hikes.

Dealer inclusion, expanded product mix, technology leverage and healthy balance sheet will all come as help

“Going forward, dealer additions, new product launches and market share gains from unorganised/regional players will drive revenue growth. The management has also indicated distribution expansion in non-south regions to capture a wider market. V-Guard also plans to improve its product mix by launching premium products through in-house manufacturing. The company also has plans to leverage technology benefit from its recent investment in battery startup “Gegadyne Energy” to launch new products going forward. A healthy balance sheet with a strong brand recall will help”, said the report.

2. Jindal Stainless:

This is the Momentum stock recommendation of ICICI Direct wherein the brokerage firm has set out a target price of Rs. 168. The company has recommended the stop loss of Rs. 149. The target is to be realized in a short term of 7 days.

ICICI Direct lists down the technical observations for the scrip as follows:

The stock of Jindal Stainless has placed a strong demand from the support price of Rs. 130 and this coincides with the major breakout area, which provides for an indication of the uptrend and fresh opportunity to enter the scrip.

Breakout in the stock was seen that again points to strength going forward.

Now this upmove looks sustainable and we may see the scrip to again move to its July 2021 high of Rs. 168 in the coming weeks.

Other positive technical indicators

-Scrip held above its 50 day SMA since April 2021

– Good volume of 2.6 times its average 200 day

volume of 27 lacs share per day

-Positive bias indicated by the daily 14 periods RSI that has generated bullish crossover above its 9-periods average.

Disclaimer:

The above two stocks listed here are taken from ICICI Direct research report and should not be construed as investment advice. Please seek professional help before making any risky bets.

GoodReturns.in

Fixed Deposits (FDs) have always stood as a traditional financial instrument to invest money, be it a big amount or a small amount, to keep the money secure with an assured return. However, for the young population of India is not it is as lucrative as for the older demographics. The major reason behind this is sinking interest rates on FD, and the trend is likely to continue in the next few years. Coupled with this problem, there is also a challenge of a high inflation rate at 5.59%, which only worsened due to the pandemic. As the INR is losing its value, concerned citizens are not quite okay to put keep their money static for a long time, some investors with better risk appetites are also diversifying portfolios with investment in commodities. People, fall into the higher tax slab, some of them are also not comfortable with this taxable income.

Interest rates now

Major nationalized banks and private banks are having all-time low FD interest rates now, for example in SBI it’s 3.50% – 5.70%, in HDFC it’s 3.50% – 6.25%, in Axis bank it’s 3.50% – 6.50%. Here is a list of FD interest rates of top Indian banks. However, FD interest rates for senior citizens are marginally higher than other age groups.

It is important to remember that, in 2015, Indian nationalized banks used to give 8% to 9% per annum (PA), private banks 8% to 9.25% PA, and foreign banks 6.75% to 8.6% PA interest rates for FD, making public banks an obvious preference for FDs. However, these rates too were reduced at that time. Now, within 5-6 years the situation has changed largely and people are moving out from this traditional instrument.

Union government of India was already trying to keep the interest rates low for the last few years, and when the pandemic hit, RBI decided to push more liquidity in the economy. Eventually, the banks’ FD interest rates did not show any intention to get better. In October 2019 RBI’s repo rate was 5.15%, in March 2020 at the initial period of the Covid-19 pandemic it was 4.40%, and from May 2020 to date, it is at 4.00% making it an all-time low. Hence the FD interest rates too are very poor while the interest rates for loans are better affordable now.

Where else can you invest?

When someone is stepping out from the FDs, a better risk appetite should be grown. There are multiple mutual funds options with the Systematic Investment Plan (SIP) facility with good returns that will make you a disciplined and systematic investor. But with a lesser risk appetite and desire to get an assured return, there are other government financial instruments. RBI’s Sovereign Gold Bond has become quite a popular investment opportunity now that offers you a hedge against inflation, diversifies your portfolio, and assured income from the government of India, from any registered bank.

However, if you are a senior citizen, you can choose the senior citizens saving scheme (SCSS) by the RBI that will fix your money (up to Rs. 15 lakh) for five years, but will offer you quarterly interest at 7.4% PA. If you are not a senior citizen but have an amount that needs to be secured, you can also invest it under the name of your parent, who must be a senior citizen. On the other hand, you can also invest (up to Rs. 15 lakh) in the Pradhan Mantri Vay Vandana Yojana (PMVVY), administered by the Life Insurance Corporation of India (LIC), at a 7.4% interest rate PA. Another monthly income option is the Post Office Monthly Income Scheme (POMIS) that offers a 6.6% interest rate PA but the highest investment in the scheme is allowed only Rs. 4.5 lakh.

With the concern of an all-time low FD interest rate, these are some of the popular assured investment options. Even if the government increases the interest rates, the level is not anticipated to reach as high as 5 years back. Also, you cannot keep your money safe from inflation. So, before choosing an FD option, you must be concerned about the purpose of your investment, your risk appetite, taxation, and for what tenure you want to keep your money. The above investment options, rather than FDs, will be wise to explore.