Stock Market: Bulls shun holidays to turn street hot with chemicals

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The Indian chemical sector historically performs when there is disruption in the Chinese supply in the global supply chains.

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By S Jha

New Delhi, December 27: After a record number of the initial public offers closed this week, the indices are set to spurt to new strength on the basis of the robust global cues. The bullishness of the equity markets globally is so strong that even the disruptions in the Red Sea on account of the Houthi rebels firing missiles on cargo ships fail to deter the bulls to take indices to new highs.

The US equity indices closed to new highs in the Tuesday session of trades. The US equity markets are trending higher in anticipation of the US Federal Reserve embarking on rate cuts. The Indian markets are also trending higher as a follow up. Also, The Central banks worldwide will have to adjust their rates according to the moves of the US Federal Reserve.

After the IT sector gave a fresh leg up to the Indian indices to push them out of the congestion zones, the specialty chemical sector is back in action. The ‘China Plus’ factor appears catching up in the sector as the shares of the Indian firms rallied strongly in the Tuesday session. It may be noted that the Indian chemical sector historically performs when there is disruption in the Chinese supply in the global supply chains. China has a dominating position in the global supply chains in the chemical sector.

The market participants are digging out chemical sector scrips to ride the turnaround in the story. The likes of Balaji Amines, Alkyl Amines, Aarti Industries, Yasho Chemicals, Deepak Nitrite, and others were higher between five to 11 per cent in the Tuesday session. The market participants also claim that historically the chemical sector is in the habit of rising fast on the Dalal Street.

It may be noted that after ‘China Reopening’ following two years of national lockdown in the Communist country in the wake of Covid-19 the chemical sector in India had lost the sheen on the bourses. They had almost given up half of the gains subsequently. In fact, two years ago a large number of chemical sector companies had come out with IPOs to ride the buzz around the industry while China was under lockdown.

There are several chemical sector companies listed on the bourses which also includes the likes of Laxmi Organics, Jubilant Ingrevia, Tatva Chintan, and others. The market participants caution the investors to study the financial performances of the companies before making investment decisions, and a few parameters such as RoE (Return on Equity), ROCE (Return on Capital Employed), as well as quarter-after-quarter revenue and profit growth may guide the investors in making prudent decisions.

(Disclaimer: This articles doesn’t recommend buy or sell of any share and investors should consult SEBI-resgisterd advisors befor making investment decisions)   





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