Street signs: Nifty becomes bearish, Nykaa in demand in grey market, & more

Nifty becomes bearish on weekly charts

The market could extend last week’s correction as the benchmark Nifty has formed a bearish candle on the weekly charts, say analysts. The 50-share index finished at 18,115 on Friday, giving up 2 per cent in four straight days of losses. Shrikant Chouhan, head of equity research (retail), Kotak Securities, says the index could fall further if it fails to sustain above key support levels 18,050 or 17,950. On the upside, the index faced resistances at 18,300 and then 18,425. Some experts say the banking stocks, which have high weightage in Nifty, have formed a bullish pattern, which could offset any weakness.

Muthoot, Manappuram in focus 

Shares of gold financiers Muthoot Finance and Manappuram Finance have underperformed the market this year. However, analysts believe these two stocks could offer 20 per cent plus upside from current levels. “Muthoot Finance and Manappuram Finance, have historically generated return on asset (ROA) and return on equity (ROE) far superior to that of banks and other non-banking financial companies (NBFCs). Such high profitability with low balance-sheet risk justifies a high price-to-book multiple,” CLSA said in a note earlier this month. The brokerage has a target of Rs 1,900 on Muthoot and Rs 240 on Manappuram.

Nykaa in demand in grey market

Shares of FSN E-Commerce Ventures, company that operates Nykaa beauty stores, are trading at a premium of over 50 per cent in the grey market ahead of its Rs 5,352-crore IPO. The company on Friday announced a price band of Rs 1,085 -Rs 1,125. Nykaa is the second major start-up to come out with an IPO after Zomato. Its issue will open on Thursday. “After the success of Zomato. The Street is bullish on start-up IPOs. The grey market premium is reflective of that. However, one needs to see whether it holds up until November 1, when the IPO closes,” said an analyst. At the top-end, the beauty start-up will be valued at Rs 53,200 crore ($7 billion), much higher than earlier estimates.

Contributed by Sundar Sethuraman & Samie Modak