1 month ago
The advances-to-decline ratio point to weakness in the broader market.
“Too many investors fail to follow some simple, time-tested tenets that improve the odds of achieving success and, at the same time, reduce the anxiety naturally associated with an uncertain undertaking.” - Arthur Zeikel
Wednesday’s rally was a lopsided one, with three Nifty stocks alone contributing 100 points to the 119-point rise in the index. The advances-to-decline ratio too pointed to weakness in the broader market. A couple of wealthy investors told Short Call that they were in no hurry to invest, considering that valuations across most pockets were still expensive.
Mutual funds and PMS fund managers, on the other hand, have no such luxury. Money is continuing to pour in and they have to deploy it. “Even if you sit on the cash for the time being, you will end up with more cash next month,” said one market observer.
One trend that could play out in the near term is the shift to largecaps, as fund managers try to avoid volatility to the extent possible. There has already been a shift to quality over the past few weeks. At the same time, this approach is pushing many of the largecaps too in the expensive territory.
Info Edge (Rs 5458, +4.6%)
The stock close to hitting its highest level in over two years.
Bull argument: Marked improvement in IT hiring since November 2023, as per JobSpeak data. This could be a lead indicator for the much-awaited recovery in IT sector hiring, says ICICI Securities, which has also flagged the strong hiring trends across infrastructure/ consumption/ services sectors. A common view among analysts is that the company’s property vertical 99acres should turn profitable soon. Also, the value of Info Edge’s holding in Zomato has risen sharply with promise of more.
Bear argument: Outlook on the IT sector has worsened after Accenture last week cut its fiscal 2024 revenue forecast, saying an uncertain economy was prompting its clients to curtail spending on its consulting services.
Gravita India (Rs 993, + 7.3%)
Kotak Institutional Equities has rated the stock as a 'buy' with a price target of Rs 993, calling it a leading play on the circular economy and decarbonisation.
Bull argument: The Battery Waste Management Rules, 2022, should benefit
organised lead recyclers such as Gravita, say Kotak analysts. The prospects for plastic and e-waste recycling also appears promising, and market share should gradually shift to organised players as regulations for recycling evolve. Consistent earnings performance.
Bear argument: Despite being a 10-bagger in the last three years, domestic institutions have still not shown interest in the stock. A lot will depend on government policy support, which can become a long-drawn process. Base effect catching up with earnings after strong growth in the last couple of years.
IDFC First Bank (Rs 77.9, +0.26%)
Cloverdell Investment, an affiliate of Warburg Pincus, is likely to sell its entire 2.25 percent stake through block deals on March 28, according to CNBC-TV18.
Bull argument: The stock is a member of global indices, and even after the block deal, there won’t be any global passive inflow impact as the stock's float is at 49 percent, according to Nuvama.
Bear argument: In Q3FY24, loans grew 25 percent YoY and 3 percent QoQ with the sequential growth slowest in the last seven quarters. PAT decreased by 5 percent QoQ due to higher operating expenses and credit costs. Since hitting a peak of Rs 101 in September, the stock has fallen nearly 25 percent.
CDSL (Rs 1,689, -5.6%)
The stock fell 5 percent after Standard Chartered offloaded their entire stake in CDSL.
Bear argument: Promoters have reduced stake from 20 percent to 15 percent over the last year.
Bull argument: According to Nuvama, CDSL has incremental demat account market share of 88.4 percent at end of Q3, an increase of 8 percent over the previous year. With the medium term outlook on the market bullish, new demat openings should continue at a steady pace.
Coal India (Rs 431.5, -1 %)
Shares weakened on concerns of delays in shipments after a large containership crashed into the Baltimore bridge. The incident has resulted in shutting down the Baltimore port which is the second largest port for coal exports from the US. India imports a good chunk of its coal requirements from the US.
Bull argument: Analysts at Emkay recently initiated coverage with a 'buy' call on the stock due to strong financials and a growing demand for coal-based energy. Q3FY24 results have been strong and most analysts are optimistic for the coming quarter as well.
Bear argument: Further delays could impact timelines as it is yet clear when the port will become functional.
