Tale of the Tape 

Hiya, ya’ll. Markets took a welcome breather! 😇

Nifty (+0.7%) and Sensex (+0.5%) rebounded after their worst fall in over a month. Midcaps (+2%) and Smallcaps (+3.4%) also gained as investors bought the dip. In a complete reversal from yesterday, 406 stocks out of the NSE 500 ended higher! 💪

Except for banks (-0.4%), all sectors ended in the green. Oil & Gas (+2.3%), IT (+2%), and Metal (+2%) saw the biggest gains. 📈

Temporary correction or a sign of bigger trouble? Read our top story below on how the midcap & smallcap situation may play out. 🤔

The EV sector may be driving into some serious blues. Can the GOI help pull it out? More details below. ⚡

Yes Bank jumped +12% after reports claimed the lender was looking to sell a 51% stake to a new promoter. 💯

Coal India (+3%) gained after Jefferies said it sees a +24% upside from current levels. 💰

Som Distilleries and Breweries gained +13% after it said it would consider a stock split plan on April 2. Mishra Dhatu Nigam (+3%) declared an interim dividend of Rs 1.41 p/sh for FY24. 🚀

Federal Bank and South Indian Bank were in focus after the Reserve Bank of India banned them from issuing co-branded credit cards. 🚨

Gopal Snacks had a weak market debut, ending -9% down from its IPO price. 👎

Indian Hume Pipe company surged 20% after its JV won a Rs 1,138 cr water supply contract from the Telangana government. BEL (+3%) new orders worth RS 1,940 cr. 💸

Here are the closing prints: 

Market
Fortune Favours The Brave

After every storm, comes a calm. Midcaps rallied +1.6% intraday and Smallcaps +3% after yesterday’s big BEATDOWN. But is this just a temporary pullback before more pain? Also, what’s the best way to make money in this crisis? Here’s all you need to know: 😎

1) Historical drawdowns: Take the Nifty Midcap 100 Index. In the last decade, it’s seen a monthly fall of -2% or more in 23 months out of 120 months. On average, the index took 1 to 3 months to recover to its previous levels. That said, this leaves out some pretty big periods in which the index went NOWHERE. The biggest stagnation was between 2017 and 2021. In Dec 2017, the index crossed the 21K-mark. But it fell after that and took until Feb 2021 to go past 21K again!  FYI - a similar trend holds for the Nifty Smallcap 100 index. 📈

2) What to buy: That said, there are at least some mutual funds that think midcaps will hold up well and this is a temporary correction. Here’s a quick list of ‘quality’ midcap stocks that were added by actively managed funds recently: Hindustan Petroleum Corporation, Oil India, Cummins India, Indus Towers, GMR Airports Infrastructure, PB Fintech and JSW Energy. 🔥

3) When to play safe: Look, nobody knows whether this is a brief correction or a prolonged period of midcaps falling and then going nowhere. There’s one group of experts who argue that the rally over the last year is firmly based on earnings growth and NOT rampant speculation. There’s another group that argues even if this is true, we don’t know how much of that is already priced in and whether that profit growth is sustainable over 2024 & 2025. ⚔️

Pro-tip: if you aren't a seasoned investor who has seen a bear market or two, best to wait it out and play the India story through mutual funds! 🤓

Specials

Vodafone Idea Multibagger Soon?

Vodafone Idea is off to a rocky start. From hitting fresh 52-week highs to falling -20% YTD the stock has seen it all. But, is this dip a buying opportunity or should you avoid it completely? 

We share major updates on the company's business, brokerage ratings and SEBI RAs' analysis on the stock. All this and more in this video. 👇🏻

Stock

State of EVs - Reality Check?

Electric Vehicle (EV) sales have hit a speedbump in recent months, according to latest sales data. FYI - EV car sales hit a 5-month LOW in February despite price cuts by Tata Motors, Mahindra & Mahindra and MG. 🚗

As for two-wheelers, H2-2023 was rough. Subsidies got slashed under the GOI’s FAME II scheme. Ola, Ather and TVS Motor had to hike EV 2-wheeler prices from June 2023. The festive season didn’t help sales either. That said, there has been a pick-up from Jan 2024 due to new model launches. Despite this, most experts agree that the industry’s target of 1 million EV two-wheeler sales for FY24 is unlikely. A more reasonable goal now, analysts say, is around 850k units. Not bad at all tbh, but perhaps a little weak for one of India’s big sunrise sectors. 👀

This brings us to the obvious question: what should GOI and companies be doing? For starters, many were expecting a new FAME scheme to be rolled out in the Union Budget. Experts had projected a Rs 10,000 -12,000 cr outlay for the scheme. But it looks like we’ll have to wait till the full Budget in July 2024 when the new GOI is sworn in! ⏳

As a stop-gap measure, the GOI has rolled out a new Rs 500 cr electric mobility promotion scheme. This is for two-wheelers and three-wheelers, but NOT cars. Tbh, the funding for this is pretty low and unlikely to turn things around. ❌

Big Picture: There are problems, but don’t let that cast too big of a shadow. Total EV sales rose +50% YoY to 15.26 lakh in 2023. That’s still pretty darn good. In 2024 & 2025, the GOI and industry need to build scale and ensure EV infra is in place. This will make sure customers don’t need to be bribed with subsidies! 📊

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Stocktwits Spotlight

One of the most important qualities of any successful trader is patience. You need to wait for the right price before entering a stock. Too early and you may end up holding the stock longer than you would’ve expected. A late entry would mean limited upside or even getting your SL hit if the trend reverses. 

Kirloskar Bros saw a massive breakout on high volumes last week. But buying at that level would’ve been risky. The recent correction in mid & smallcaps has seen the stock retest its breakout which is a good entry point, according to ThinkProfit. 

Follow ThinkProfit for more awesome trading insights and add $KIRLOSBROS.NSE to your watchlist and track the latest from the community.

Links That Don’t Suck

💯 Vodafone Idea: Multibagger Soon? | Vodafone Idea Latest News | Buy Vodafone Idea Shares 

💬 Stocktwits is hosting a free AMA with Ajay Krishnan. Click to Ask 

👍 Fitch revises India's FY25 GDP growth forecast to 7% from 6.5% 

👩‍❤️‍👨 Taarak Mehta actors Raj Anadkat, Munmun Dutta dismiss engagement rumours 

🏆 Mumbai win 42nd Ranji title to end eight-year wait

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