Tale of the Tape 

Hola Amigos! 👋

New day, a new all-time high. Nifty and Sensex closed up for a third straight day. Midcaps (+0.8%) and Smallcaps (+0.7%) posted solid gains. The advance-decline ratio was in favour of the bulls (3:2) 📈

Most sectors ended in the green. Real Estate (+2.2%) and IT (+1%) saw the most buying. FMCG (-0.7%) continued to drag behind. 💸

Insurance stocks perked up today after the regulator’s new rules. Read our top story below to find out how this is going to play out. 🔍

This smallcap chemicals stock could see a +30% upside over the next year. More details below. 🧪

Shree Renuka Sugar, Paytm and Sobha saw big movements today. Check out their charts below to find out why. 🚀

Shriram Finance (+5%), the newest Nifty entrant, crossed the Rs 1 lakh cr market cap mark. 🙏

L&T Finance rallied +5% intraday after 8.8 cr shares (3.5% equity) changed hands in a block deal; reports say PE firm Bain Capital may have been the seller. 🤨

360 One WAM was in focus after acquiring ET Money for Rs 360 cr. 💰

Torrent Pharma fell -3% intraday after the USFDA issued five observations for its Indrad unit in Gujarat. 🚨

Gensol Engineering was locked in a +5% upper circuit after it bagged a Rs 1,340-cr battery energy storage project. ⚡

KIOCL gained +12% after getting GOI clearance for its Karnataka iron ore mine. ✅

Here are the closing prints: 

Market
What’s Happening To Insurance Stocks?

Insurance stocks were buzzing today after the IRDAI passed a new set of rules on “surrender values''. The fine print is unclear but there will be winners and losers in this whole mess. Here’s what you need to know: 🤓 

Firstly, WTF is ‘surrender value’. Well, until now, when policyholders wanted to exit after buying an insurance policy, they would lose their entire premium paid if they left after just one year. The new rules say this is anti-consumer, which is why now they must get a part of their premium (or surrender value) back! 🙌

Naturally, this sucks for the bottom line of life insurance companies. The only silver lining here is that the new rules are a little better than what the IRDAI initially proposed. Experts say surrender income may decline by only 55%-70% vs the earlier estimated 70%-80%. Whew. 😇

Now, there are two things that insurers can do. They can take the hit themselves or pass it on to their distributors & agents. Specifically: they can claw back commissions from agents or work to change their selling model. FYI - ICICI Prudential launched an annuity product last quarter that defers commission payouts. This is ideally the best solution, where money is only made if the customer continues past a year; very useful to prevent mis-selling of insurance products. 👍

When it comes to winners and losers, it’s all still in the air. Kotak estimates that surrender income will decline the least for ICICI (~57% hit) and most for Max Life (~73%), with HDFC and the others somewhere in the middle. On the other hand, Antique Stock Broking says its top picks are SBI Life and Max Financial! 📈

Specials

Election Stocks Picks By Brokerages 🚀 

Modi 3.0 begins is off to a bang with markets hitting new all-time highs. Which stocks should find a seat in your portfolio? Check out our recent video where we cover brokerage picks post-election results.

Stocks

Chemistry For Success

Hey guys. Today we’re taking a look at Archean Chemical. This smallcap chemical maker hit a new all-time high in February before correcting sharply over the last three months. Should you buy the dip or steer clear? Here’s what experts say. 🔍

For the unaware: Archean is one of the largest exporters of bromine and industrial salts used in agrochemical, pharma and water treatment sectors. FYI - bromine extraction is REALLY hard and the industry has HUGE entry barriers. Luckily for Archean, its production facilities sit right next to the Rann of Kutch in Gujarat, one of the world’s largest salt marshes! 🧪

What’s popping? Well, with global supply chain issues, business is booming for Archean. The company is on track to generate free cash flows of Rs 840 cr in FY25 vs just Rs 160 cr in FY24. A key part of this is due to its foray into high-margin bromine derivatives. This vertical kicked off production in March. While it will take some time to scale up production, current estimates say derivative products will give it a Rs 100 cr sales boost in FY25. 🤑

A second growth trigger is its recent acquisition of Oren Hydrocarbons, a leading drilling fluids maker. This further diversifies Archean’s product range and is expected to give a Rs 450 cr revenue bump in the next 2 years. 📊

Finally, on key investing metrics, Archean is far ahead of other chemical stocks. Its return ratios (RoCE: 24.7% in FY24) easily beat the competition. Its recent correction also provides an attractive entry point in terms of valuations. 👌

TL;DR: Archean’s investments are starting to pay off. It has key positive triggers in two high-growth verticals that provide revenue visibility for FY25 and FY26. It may take a little time to fully realize this potential, but experts say it's cheap to pick up right now. FYI - B&K Securities has a target price of Rs 864 p/sh; +30% potential upside after today’s rally! 🚀

Charts

Chartbusters

Here are three companies that saw BIG movements today:

1) Shree Renuka Sugars jumped +13% intraday. FYI - this comes after reports say the GOI will hike the minimum sale price for sugar. Currently, the MSP stands at Rs 31 p/kg, which has remained unchanged since 2019. So any hike is a major positive trigger. ✅

2) Paytm rallied +7% intraday after announcing a partnership with Samsung. All Samsung Wallet and Galaxy smartphone users will be able to use Paytm’s booking services for flight, movie and event tickets. Tbh, this isn’t a game-changer, but investors are looking for any good news at this point. PS - Paytm is up +19% over the last week. 🔥

3) Sobha hit a record high after announcing a Rs 2,000 cr rights issue! The price is set at Rs 1,651 p/sh; a 20% discount to Wednesday’s close. FYI - existing Sobha shareholders will receive six rights equity shares for every 47 shares they hold as of June 19, which is the record date. 😎

Check out their charts below:

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