March 2021 was quite a volatile month for the stock market making a new high in the first half while it pared all its gains during the second half. Nifty made a high of 15336 and a low of 14264 during the month of March eventually closing at 14691 levels. The Indian stock market has been in a consolidation phase with the prime reasons being financial year ending profit booking and emergence of the second wave of the pandemic. The RBI Monetary Policy Committee meet held last week left the policy repo rate unchanged at 4% and continuing with the accommodative stance and ensuring that inflation remains within the target going forward. The marginal standing facility rate and the bank rate also remains the same at 4.25%, while the reverse repo rate stand unchanged at 3.35%. Analysts and fund managers expect volatility going ahead for the month of April with the markets expected to consolidate between Nifty 14800 and 15400 levels. With substantial money supply expansion throughout the world, this is significantly boosting inflation expectations. Commodity experts expect prices of agricultural commodities to climb higher during 2021 on the back of renewed Chinese demand and persistent notable supply challenges. Although grains, oil seeds, palm oil and sugar have achieved excellent gains last year, few agricultural commodities like coffee and cocoa underperformed significantly. Analysts at major international banks expect higher commodity prices due to complex weather patterns which can severely influence food production and create fresh challenges for farmers. Tata Coffee Ltd is one of the largest integrated coffee plantation companies in the world. It has tea estates in Karnataka and Andhra Pradesh and is also engaged in the production of pepper and cardamom. With large timber resources, Tata Coffee has entered into manufacturing of plywood and block boards under the brand name of Tata Conswood. The company posted Q3FY21 financial results with net sales at Rs 532 crore, up 6.25% from Rs 501 crore, while the net profit climbed to Rs 31 crore, up 26.59% from Rs 24 crore as of last fiscal of the same quarter. There is expectation in the market of the company buying out Coffee Cafe Day in the next few months, though not confirmed by the management or otherwise. Tata Coffee is poised to post good financial Q4FY21 results as per reports by market analysts. Hence, the Tata Coffee stock currently quoting at Rs 125 can easily appreciate to Rs 185 levels in the next one year time frame on a fundamental basis.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.