stock market strategy: How higher GRMs helped MRPL rise over 30% in a week; Mohit Nigam explains

“MRPL has rallied greater than 30% within the final one week as it’s getting advantages from the upper GRMs or gross refining margins which is because of beneficial international refining state of affairs and the corporate is anticipated to report wholesome earnings within the close to time period,” says Mohit Nigam, Head – PMS, Hem Securities.

In an interview with ETMarkets, Nigam stated: “Indian markets are anticipated to face the brunt of weak US inflation information on Monday. We advise traders to stay gentle and will keep away from over-trading till the completion of the US Fed assembly.” Edited excerpts:


Nifty50 breached its essential psychological help degree of 16300-16400 within the week passed by – how are indices prone to commerce within the coming week?
The Nifty 50 on Friday breached 16,300 ranges which have been the main help ranges and closed at 16,200 ranges. It’s anticipated that there will probably be some extra promoting stress this week and the instant help ranges are 16000 and 15800.

Nonetheless, traders must keep watch over the US Fed assembly later this week.

Client sturdy in addition to FMCG sectors took some promoting stress – is inflation denting the attraction for shopper names? Do you see additional stress on the consumption theme?
Retail inflation in India surged to an eight-year excessive of seven.79% in April. Burdened by elevated price pressures, FMCG and Client durables corporations have taken a number of rounds of value hikes for his or her merchandise.

During the last quarter, costs of commodities akin to crude oil, crude-linked derivatives, packaging materials, spices, palm oil, and skimmed milk powder have surged immensely, whereas freight prices have shot up by three to 4 occasions.

The inflationary pressures and resultant value will increase have led to customers tightening their purse strings and relooking at discretionary purchases, whereas additionally downgrading to smaller packs.
In line with a current report, the FMCG trade witnessed unfavourable quantity progress regardless of recording a 6% progress on a yearly foundation led by double digit value progress.

Rural markets, which confronted larger value will increase than city markets, noticed a dip of 5.3% which is the best consumption slowdown within the final three quarters.

Larger costs are pushing up the price of residing and subsequently it has resulted in a decline in buying energy of customers. Apart from uncooked materials inflation, the continued Russia-Ukraine battle has additionally disrupted provide chains and oil shipments.

As per consensus, there could be softening of quantity progress attributable to inflation within the coming quarters. Nonetheless, the duty-free imports of crude soy and sunflower oil, limiting sugar exports, ban on the export of wheat, excise responsibility cuts on petrol and diesel, and doubling of fertilizer subsidy will assist in limiting the inflation blow.

Moreover, farm incomes are anticipated to extend with the onset of regular monsoon and subsequently we are able to witness respectable demand going forward

Amid volatility rallied practically 40% within the week passed by that are a part of S&P BSE 500 index. What’s fueling value motion in these shares?
Indian markets remained unstable previously few weeks. This volatility instantly comes from rising crude oil costs. Apart from the Petrochemical sector, all main sectors are buying and selling negatively.

has rallied greater than 30% within the final week as it’s getting advantages from the upper GRMs or gross refining margins which is because of favorable international refining state of affairs and the corporate is anticipated to report wholesome earnings within the close to time period.

The continuing considerations over the provision of refined merchandise and the swap from expensive fuel to grease led to an increase in Singapore’s advanced gross refining margin (GRM) to a multi-year excessive.

The Worldwide Vitality Company (IEA) expects the continued Russia-Ukraine struggle to cut back refining throughput by ~1.1mnbopd. This can end in a continued excessive refining margin until provide considerations abate.

We’ve an enormous US Fed assembly developing within the coming week. Ought to traders commerce cautiously or the volatility can be utilized to go lengthy?
The US Fed assembly is prone to happen on 14-Fifteenth June 2022 and the primary goal will probably be to announce additional charge hikes to be able to curb the scenario of rising inflation.

The US inflation information which was launched on Friday confirmed CPI rising to eight.6% in Might which is the best degree in 4 many years. Buyers are suggested to commerce cautiously because the Fed could make greater than anticipated charge hikes as such weak inflation information was not anticipated.

Indian markets are anticipated to face the brunt of weak US inflation information on Monday. We advise traders to stay gentle and will keep away from over buying and selling till the completion of the US Fed assembly.

(Disclaimer: Suggestions, options, views, and opinions given by the specialists are their very own. These don’t characterize the views of Financial Occasions)