Indian Stock Market February - 2023

on Fundamental & Technical Parameter

From Prudent Research Desk


 Company Profile
Prudent Broking Services Pvt. Ltd. is a SEBI Registered Research Analyst, Stock Broking, Commodity Broking and
Depository Participant service provider. Company is a member with Bombay Stock Exchange (BSE), National Stock
Exchange (NSE), & Central Depository Services (India) Limited (CDSL), Multi Commodity Exchange of India Ltd.
(MCX).

17
The Company provides cutting edge Stock, Derivatives, Commodity and Currency trading through a wide
spectrum of products on both App & Desktop. Company believes that market research and insights plays key role
years of in right investment decision making. The company provides powerful and secure technology products across
mobile, tablet, desktop and website.

Our Research team provides Research Offerings like WiseBasket, PruIdea, PruGrow, PruAlpha, Prudent Trade etc
2005 - 2022
and popular Research tools like Morning Mantra, Evening Edition, Derivative Diary, Weekly Wisdom which helps
the clients to achieve their investing and trading goals. The company provides powerful and secure technology.
We help our clients to reach their financial goals and often exceed it. We apply creative techniques & best research
methodologies to provide cost effective, profit maximizing & risk minimizing solutions for all our clients. Our All
operations are under one roof have helped us to deliver value to our clients and Partners.

FULL SERVICE WEALTH CREATION RESEARCH DRIVEN VALUE ADDED

Our
BROKING HOUSE FOR CLIENTS APPROACH SERVICES

Vision
TO SERVE OUR PHYSICAL FULLY
TECHNOLOGY
PARTNERS PRESENCE COMPLIED
Our Directors

Mr. Sanjay Shah

Founder and Managing Director
A Chartered Accountant by qualification, Mr. Sanjay Shah is the Founder of the Prudent Group & Managing Director
of Prudent Corporate Advisory Services Ltd. He previously worked with various Industries before laying foundation
of Prudent in 2000.
He has spearheaded various initiatives of the group and established various verticals over the past two decades.
Under his leadership Prudent has emerged as leading integrated financial services group in India.

Mr. Ankush Chaudhary

Director
Mr. Ankush Choudhary is the Director of Prudent Broking Services Pvt. Ltd., He has over 15 years of experience in
Financial Service Industry. Strategic Partnerships, Business Development, distribution, Investment Advisory
Products, Research and Client relationship are his core strength. He always believes in Trust and Transperancy. By
Qualification, he is an MBA in Finance and Marketing.
His goal is to create Wealth for the Clients and provide value added services. He believes in accepting changes and
want to provide technological support to Partners for the ease of doing business.

Mrs. Hetal Patel

Director
Hetal Patel is the Director of Prudent Broking Services Private Limited. She is a Chartered Accountant by
qualification and is having experience of over 12 years in areas of Accounts and Finance related matter in capital
market.
Her goal is to ensure smooth backend services related to accounts to clients and partners and improve customer
satisfaction.

3.
Our Research Team
Mr. Pradip Hotchandani (Research Head)
Mr. Pradip Hotchandani is Head of Equity Research at Prudent Broking Services Pvt. Ltd. He has a rich experience of 20 years
encompassing Technical Analysis, Derivatives and Fundamental Analysis. Prior to joining Prudent in 2011, he was with Edelweiss
Stockbroking Ltd. He is a familiar face on CNBC Bajar, the Gujarati Channel of CNBC-TV18. He frequently participates in Khiladi No. 1 game
show on CNBC-Awaaz and has won the same several times. He also writes a weekly article for SANDESH - a Gujarati newspaper. Under
his leadership, Prudent Broking was adjudged runner-up in the Equity-Technical category at the Market Analyst Award organised by ZEE
Business in 2014.

Mr. Parth Parekh (Sr. Research Analyst)

Mr Parth Parekh is a Fundamental Analyst. As an avid follower of Mr Peter Lynch since the very beginning of his investment journey, he
has derived his investment style from his philosophies. He has an experience of over seven years & has been associated with Prudent for
more than three years. He played a lead role in inception of WiseBasket & is actively involved in managing all the advisory portfolios under
this product. In his previous role at Equitymaster, he was a key team member of the products Hidden Treasure & The India Letter which
recommended smallcap’s & megatrend stocks to its subscribers.

Mr. Virendra Singh Rathore (Sr. Research Analyst)

Mr. Virendra Singh Rathore is Technical & Derivative Analyst at Prudent Broking Services Pvt. Ltd. He holds an MS Finance (CFA) & MCom
degree. He has a rich experience of almost 14 years encompassing Technical analysis, Derivatives and Fundamental analysis. He has been
with Prudent Broking since 2010 and tracks equity and currency markets closely from a trading perspective.

Mr. Chintan Mehta (Research Analyst)

Mr. Chintan Mehta is a Fundamental Analyst and an MBA finance graduate of IFMR GSB, one of the country's top business schools & He
has a vast amount of experience finding compounding stories that, over time, can produce several beggar returns. His experience in
engineering allows him a specialization to thoroughly cover the stock in-depth. He is one of the top financial influencers on Instagram,
posting frequently on finance at Dalal's Report, which has 1.8 lakh followers.

4.
 UNION BUDGET 2023

Change in Taxation Norms for Life Insurance Policies to Impact Life Insurance Players
This tax rule is applicable to life insurance policies excluding unit linked insurance policies (ULIPs). Earlier the corpus which is received on maturity was tax free.
However, from 01 April 2023 onwards any life insurance policies excluding ULIPs which is bought wherein cumulative premium’s paid in any financial year exceeds Rs
5 lakhs, the amount which is received on maturity will be subject to tax as per individual tax slab under the head Income from other Sources.
Stock Impact: All life insurance companies having high share of guaranteed plans in their books will get impacted. This news is negative for HDFC Life, SBI Life,
ICICI Prudential Life & Max Financial Services.

Change in Taxation on Market Linked Debentures (MLDs) to Hit MLD Players

Earlier Market Linked Debentures (MLDs) used to be taxed at 10% & was a darling product for HNIs due to taxation arbitrage when compared to debt products which
got taxed at marginal tax rates. But, now MLDs will be taxed as Short Term Capital Gain (STCG) & will be taxed as per slab rates. This will lead to huge turbulence in the
MLD industry from FY25 onwards.
Stock Impact: Anand Rathi derives 62% of its overall revenues in Q3FY23 & the long term fundamental can deteriorate on account of this taxation change.

Change in Taxation in REITs & InVITs can Lower Post Tax Distribution Yields Reducing their Attractivness
Earlier distribution made to unitholders through repayment of debt were exempt in the hands of unitholders. However, this budget specifically states that such
distributions made which are tagged as repayment of debt will be taxable in the hands of unitholders.
Stock Impact: This news is mildly negative for Embassy Office Parks REIT, Brookfield India Real Estate Trust REIT, India Grid Trust & PowerGrid Infrastructure
Investment Trust.

Lower than Expected Duty Hike on Cigarette Positive for Industry

Budget hiked National Calamity Contingent Duty (NCCD) on cigarettes by 16%. NCCD comprise approx 10% of the overall cigarette taxes. As per reports, the hike in
taxes is not very high and would be easily passed on by a small increase (1-3 percent) in prices.

Another Year of Robust Capital Expenditure

FY24 will be a third straight year of higher capital expenditure. This has a multiplier impact on growth & employment. The government capex has been increased by 33%
YoY to Rs 10 trillion in FY24. This can induce credit growth which will be positive for banks.
Stock Impact: Banks will be the biggest beneficiary of a higher capital expenditure. Axis & HDFC Bank are our top picks. Stocks in capital goods, commercial
vehicles, metals & infrastructure space is also expected to do well.

5.
 UNION BUDGET 2023

Customs duty Reduction to Benefit Some Stocks

Parts for manufacture of open cells of TV panels has been reduced to 2.5% from 5%. Duties on camera lens and of mobile phone has been reduced from 2.5% to zero.
Stock Impact: This news is positive for contract manufacturer company such as Dixon Technologies Ltd.

Custom duty reduction on seed used in manufacturing lab-grown Diamond (LGD) reduced to Zero.
Stock Impact: Reduction on duty will benefit the companies like Goldiam international who manufacture lab-grown diamonds. Lab grown diamond industry was
mentioned many times in the budget.

Government has reduced custom duty on basic acid based fluorspar from 5% to 2.5%.
Stock Impact: This news is beneficial for fluorine chemistry players like Gujarat Fluorochemicals, SRF, Navin Fluorine International as fluorspar is a key raw material.

2023

16.
 India- Immune from Global Uncertainties

January GST Collection Stands at Rs 1.56 lakh crore In a Positive, Indian Rupee has Depreciated Lower than Other Emerging
Markets

1.80 GST Collections on a Rising Trend (Rs in trillion)

Indonesian South
1.56
1.60 1.49 1.48
1.52 1.50 India Rupiah Malaysian Thailand Affrica China Turkey Argen�na
1.45 1.44 1.46
1.41 0%
1.40 1.30 1.32 1.30
1.17 1.20
1.20 1.16
1.12 1.15 -5%
1.05 1.05 -6%
0.95 -8%
1.00 0.910.93 0.87 -10% -8%
0.86
-10%
0.80 -11%
-15% -13%
0.60
-20%
0.40

0.20 -25%

0.00 -30% US dollar vs other Currency - -27%

June July Aug Sept Oct Nov Dec Jan -30%
Year Till Date (Jan ‘22 - Sep ’22)
GST Collec�ons in FY21 GST Collec�ons in FY22 GST Collec�ons in FY23 -35%

Source: GSTCOUNCIL.GOV.IN Source: Index Daily

Pick-Up in Credit Growth Showing Good Signs of Economic Revival Consumer Confidence Index is on a Strong Footing

20.0%
Credit Growth Picking Up 18.30%
95.0
India Consumer Confidence Index
17.60%
18.0% 16.9% 85.0 83.5
16.0% 80.6
15.3% 77.3
16.0% 15.1% 75.9
13.7% 75.0 71.7
14.0% 12.6%
12.0% 11.3% 65.0

9.3% 9.7% 55.5

10.0% 55.0
8.3% 8.0%
8.0% 6.7% 6.8% 6.9% 7.1%
6.2% 45.0
5.7% 5.9% 5.9%
6.0%
35.0
4.0%
Nov-21

Nov-22
Oct-21

Oct-22
May-21

May-22
Mar-22
Feb-22
Jul-21

Jan-22

Jul-22
Aug-21

Aug-22
Apr-21

Apr-22
Sep-21

Sep-22
Jun-21

Jun-22
Dec-21

Dec-22

25.0
Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Dec-22

Source: Reserve Bank of India Source: Reserve Bank of India

7.
View on Economy by Research Team
GST collections which is a proxy indication of the health of economy is on a strong trajectory. Since the past eleven months, GST collections has
consistently surpassed Rs 1.4 trillion. GST collection stands at Rs 1.56 lakh crore in Jan 2023.
Indian rupee has depreciated less backed by strong economic credentials coupled with timely interventions of RBI in the forex market.
Credit growth of scheduled commercial banks has started picking up indicating that economy is recovering well from the helm of the
pandemic. Credit growth which hovered around 6-7% around in April-October 2021 has now surpassed levels of 15.3%.
Since July 2021, consumer confidence index has steadily risen indicating the resilience of the economy.
All these factors suggest that India will do well from a longer-term view & the current correction is a good opportunity to buy the dip or
re-balance your portfolio.

VIEW ON ECONOMY BY
RESEARCH TEAM

8.
 Indian Markets are Attractive from Longer Term Outlook

Nifty 500 Trailing 50.0

Ni�y 500 P/E Average 45.8

Price/Earnings is
45.0

40.0

Trading at below Long 35.0 33.8

Term Average of 23
30.0

25.0 23.1

Times Indicating that 20.0

19.5
21.76

Indian Markets are

15.0

10.0

Reasonably Valued at 5.0

Current Juncture 0.0

Source: NSE

Indian Market Capitalization to Gross Domestic Product (GDP) Ratio at Nifty Movement Has Mirrored Nifty EPS Growth in the Past Twenty-Two
87.41% is Near within 1 Standard Deviation of Mean Indicating Markets to be Years. If Nifty EPS Keeps on Growing, Barring Short Term Volatility, Nifty
Reasonably Priced at Current Levels will Move Higher in the Longer Run

180
Indian Market Capitaliza�on to Gross Domes�c Product (GDP) Ra�o Strong Co-Rela�onship Between Ni�y Earnings
160
Growth & Movement in Ni�y
154
140

120
94.1
100
80.0
80
87.41
60
54
55.19
40

20

0
31-Jan-23
31-Jan-21

31-Jan-22
31-Jan-18

31-Jan-19

31-Jan-20
31-Jan-16

31-Jan-17
31-Jan-13

31-Jan-14

31-Jan-15
31-Jan-11

31-Jan-12
31-Jan-08

31-Jan-09

31-Jan-10
31-Jan-06

31-Jan-07
31-Jan-03

31-Jan-04

31-Jan-05
31-Jan-00

31-Jan-01

31-Jan-02

Indian Market Capitaliza�on to Gross Domes�c Product (GDP) Ra�o

Source: GuruFocus Source: NSE, Prudent Broking

9
View on Valuations by Research Team
Price/Earnings of Nifty 500 index as on Jan 2023 at 21.76 times, below the long-term averages of 23.1 times. This suggests markets are at
reasonable territory & fresh money can also be deployed at current levels if view is longer term.

The market capitalization to gross-domestic-product (GDP) ratio of Indian stock market is at 87.41% at the beginning of February 2023 when
compared to the long-term average of 80%. The current Mkt cap/GDP ratio is within 1 standard deviation of the longer-term average suggesting
Indian markets are reasonably valued & fresh money can also be deployed at current levels if view is longer term.
As shown in last chart, average growth in Nifty EPS over the past twenty-two years is a CAGR of 14%. And the movement in Nifty has mirrored
the EPS growth & during the same period Nifty has grown at CAGR of 16%. So, if we assume in next five years Nifty to grow at EPS growth rate
of 12%, we expect Nifty to be at 32000 levels by March 2027. Hence, it’s a great time to dive into stock markets if the outlook is for longer term.
In the uncertain global backdrop, Indian economy is shining & thriving. Given the strong fundamentals, any correction in Indian stock markets
can get strongly bought into given the huge quantum of flows accruing to the domestic institution investors (DIIs).

VIEW ON VALUATIONS BY
RESEARCH TEAM

10
 Lending Financials 28% Alcoholic Beverages & TOBACCO Products 9%
Sector Alloca�on
Axis Bank 12% VST Industries 5%
with Weightage
HDFC Bank Ltd 9% United Spirits Ltd. 4%

SBI 4% Auto & Auto Ancillary 7%

Federal Bank 3% Tata Motors DVR 4%

Real Estate & Building Material 28% Sandhar Technologies Ltd 3%

Prestige Estates 5% City Gas & Capital Goods 4%

Puravankara Ltd 5% Indraprastha Gas 4%

Birla Corporation Ltd 5%
Consumer Discretionary 3%
Cera Sanitaryware 5%
28% 4% Goldiam International Ltd 3%
Lending-Financials City Gas L&T 3%
Distribu�on Entertainment 3%
28% 3% PSP Projects 5%
Real Estate & Building Delta Corp 3%
Material Consumer
Financial Services 18%
Discre�onary
18% 3% Nippon Life AMC 4%
Total 100%
Financial Services
Entertainment
9% UTI AMC 4%
Alcoholic Beverages
ICICI Lombard General 6%
& TOBACCO Products
Insurance Co.Ltd
7% MOSL Financial 4%
Auto & Auto Ancillary Services Ltd

11.
 NIFTY HOLDS CRUCIAL SUPPORTS
THE MONTH GONE BY
In last month’s report we had said that 18400, around
which 34-DMA was placed, was the immediate hurdle to
eye. We had also said that 17774, the low made during the
month, which roughly coincided with 20-week moving
average as well as the 50% retracement level of the
16747-18887 upmove, was the immediate support, below
which, 34-week moving average, placed around 17250,
which also coincided with 200-DMA, would be crucial
support to eye.
After consolidating between 18250 and 17770, the
benchmark broke this range in late January and plunged
all the way to 17405 before ending the month at 17662. For
the month, Nifty lost 2.4%, extending the losing streak to
second straight month. On 1st February, after making a low
of 17353, the index has rebounded and is currently placed
around 17850.
DAILY CHART OF NIFTY
16747
OUTLOOK
The index has failed to cross 34-DMA hurdle after slipping
below it in Mid-December. Hence 34-DMA, placed around
18000, which roughly coincides with the 17972 top made on
budget day, is the immediate hurdle to eye. Once this hurdle
is taken out, 18200-18250 would be next target area. If the
benchmark is able to trade above this area as well, 18560, the
78.6% retracement level of the recent 18887-17353 fall, would
be next target/resistance to eye.
On the way down, 17350-17200 is the important support area
as 17353 is the bottom made on the budget day, 17300 is
where 200-DMA is placed and 17200 is the 78.6%
retracement level of the entire 16747-18887 upmove. If this
support area breaks, Nifty might revisit 16747 bottom made
in September, 2022.
18887
18201
17972
34 DMA
17774
17353
200 DMA
12.
 Research Offerings

1 2 3
Fundamental Recommendation Techno-Funda Recommendation Technical Recommendation
with Time Horizon of more than with Time Horizon of with Time Horizon of 1-2
one year. 3-4 Quarters. months.

4 5
PRUDENT TRADE DERIVATIVE STRATEGIES
Technical Recommendation Technical Recommendation
with Time Horizon of 2-4 for Day Trading, Option
trading sessions. Strategy, Expiry Trade.

Earnings

Sector

StockScreener Get Your Stocks Holding Analysis on

Debt
Report the Basis of,

Earnings Wise | Debt Wise | Liquidity Wise | Allocation Wise | Sector Wise

13.
 Key Features

A THEMATIC PRE-RESEARCHED
BASKET OF STOCKS

Pre-Researched Basket of Stocks No Entry & Exit Restriction

Each wise basket product comes with stocks that are well Extremely liquid product. Once invested in wise Basket you
researched and hand picked by our research team to bring can exit at your will.
an ease of investment for you.

Buy or Sell Multiple Stocks in a Single Click Zero Management Fees

Each wise basket product is a combination of 15-20 stocks. Exclusive of brokerage, we do not charge any management
You can buy & sell all of them in a single click. fees.

14.
 WiseBasket Returns

Growth Basket (Inception Date : 15-Aug-2019) Mini Ratna Basket (Inception Date : 13-Jan-2020)

(%) 6 Months 1 Year 2 Year Since Inception (%) 6 Months 1 Year 2 Year Since Inception

Returns 6.81 0.47 19.57 19.17 Returns 13.97 5.13 41.60 35.20

S&P BSE 250

Nifty 500 1.84 0.09 14.95 16.13 5.36 -5.62 22.82 21.81
Small cap

Alpha 4.97 0.38 4.62 3.04 Alpha 8.61 10.75 18.78 13.38

<1 Year : Absolute returns ; >=1 Year : Compounded Annualised Returns,

Contra Basket (Inception Date : 15-Aug-2019)
Report as on 31 January 2023
(%) 6 Months 1 Year 2 Year Since Inception

Returns 11.87 15.81 20.88 22.52

OUR PREFERED BASKET

Nifty 500 1.84 0.09 14.95 16.13

Alpha 10.03 15.71 5.93 6.39

AT THIS STAGE
Modi 2.0 Basket (Inception Date : 25-Oct-2019)

(%) 6 Months 1 Year 2 Year Since Inception

Returns 9.28 5.90 16.91 16.70

Nifty 500 1.84 0.09 14.95 15.06

Alpha 7.44 5.80 1.95 1.64

Bank Basket (Inception Date : 15-Aug-2019)

(%) 6 Months 1 Year 2 Year Since Inception

Returns 10.01 9.87 14.46 4.73 Modi 2.0 Contra Bets Bank Basket
Nifty Bank 8.65 7.93 16.01 12.04

Alpha 1.37 1.95 -1.55 -7.31

15.
 PRUGROW works on a unique strategy which combines both fundamental and technical
analysis to generate superior return compared to index.
The idea is to select a “fundamentally sound stock” which is also technically bullish i.e.
Looking strong on chart.
Better known as TECHNO FUNDA calls.

FUNDAMENTAL ASPECTS
Investment in Good Corporate Governed companies Decent Return Ratios (ROCE, RONW)
(Avoiding companies having questionable management)
Positive operating cash flow & Good earnings growth
No OR Minimal pledge shares

TECHNICAL ASPECTS - WHY USE CHART

To Avoid a stock when it is in a consolidation mode
or downtrend so that price/time loss can be
minimised
Works on the principle of “Right Stock at Right
Time”
To Catch a stock when it is has just broken out rather
than after it has run up a lot, so that risk-reward is
better
Helps choose among many stocks where all the
companies might be good but not all the stocks

PRUGROW RECOMMENDATIONS

Date Stock Reco. Accumulation Target SL Review % Return

Price Range

31-03-22 RATNAMANI METAL 1725 1726-1666 2242 1386 TARGET 30.0%

23-01-23 PERSISTENT SYSTEMS 4425 4425-4000 5750 3615 Open -

16.
It’s a long only strategy.
Stocks is selected based on predefined technical
indicators. Typically, stock which are in overall
uptrend and breaking out after a consolidation are
considered.
Holding period – around 1 - 2 months.
Risk Reward – stop loss is in the range of 5-10% and
is considered on closing basis; Targets range is
around 7-15%.
UNIVERSE – NIFTY 500

PRUALPHA RECOMMENDATIONS

Date Stock Reco. Price Target SL Review % Return

20-10-2022 NESTLE 19880 21150-21600 18990 SL -4.5

16-12-2022 MAHINDCIE 317 346.1-358 290.6 Both Target Achieved 12.9

19-12-2022 VGUARD 273 291.7-300 256 SL -6.2

05-01-2023 RATNAMANI METAL 2038.4 2135-2170 1951 SL -4.3

12-01-2023 TATAINVESTMENT 2335 2495-2555 2190 SL -6.2

18-01-2023 LT 2228 2354-2400 2114 SL -5.1

20-01-2023 PERSISTENT 4279 4644-4780 3947 Both Target Achieved 11.7

27-01-2023 MARUTI 8870 9349-9525 8442 Open -

30-01-2023 POLYCAB 2850 3010-3075 2693 Both Target Achieved 7.9

31-01-2023 RATNAMANI METAL 2119 2286-2350 1967 Both Target Achieved 10.9

31-01-2023 M&M 1351 1441-1475 1270 Open -

17.
 RATIONALE / METHODOLOGY

PRUDENT TRADE
These are recommendations from 2-4 days The stock which is breaking out of a consolidation
perspective. on its hourly chart and whose primary trend (daily
chart) is positive qualifies for prudent trade.
They are based purely on charts/technical analysis.
34-hour moving average is taken as the stop-loss;
Nifty 500 is the universe for Prudent Trade
the stop-loss should be less than 5%.
recommendations.

Option Strategy call - Equity & Currency segment

The stock should have a strong OI build-up along
with good market-depth (liquidity) i.e., bid-ask
spread difference to be less than 0.2%.
The stocks / currency should have given breakout
(for buy call) or break down (for sell call) on technical
indicators (RSI, Moving average crossover etc) with
good volume or some break out or break down from
technical pattern i.e. (Head & Shoulder, Cup and
Handle, Inverse Head & Shoulder, Wedge or Triangle
formation etc).

Intraday Calls - Equity & Currency segment

The stocks should be highly liquid and most good volume or some break out or break down from
probably from the NSE 500 list (in case of equity technical pattern, i.e. (Head & Shoulder, Cup and
segment calls). Handle, Inverse Head & Shoulder etc).

The stocks / currency should have given breakout

(for buy call) or break down (for sell call) on technical
indicators (RSI, Moving average crossover etc) with

18.
 Products We Offer

Equity NSE/BSE Mutual Fund Liquiloans

Equity Derivatives Insurance LAS

Currency Bonds Smallcase

IPO PMS/AIF

Stock SIP NPS

Note: Some of the Products are offered by Our Group Companies. 19.
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