Happy Holi!

Author

Yash Upadhyaya
March 22, 2024

Tale of the Tape 

Happy Holi everyone! 🥳

Nifty (+0.4%) and Sensex (+0.3%) ended in the green for a third straight day. Midcaps and Smallcaps also joined the fun; up +0.6% each. The advance-decline ratio was in favour of the bulls (3:2). 📈

All but one sector ended in the green. Real Estate (+1.8%), Auto (-1.7%) and Pharma (+1.2%) saw the most buying. BTW - read our top story below on why IT (-2.3%) stocks got crushed today. 🧐

Why is Goldman Sachs bullish on these two footwear stocks? More details below. 🚀

Reliance Industries got its biggest price target yet from UBS, which sees a +17% upside from current levels. 🔥

Neuland Labs jumped +6% intraday after receiving the USFDA clean chit for its Hyderabad unit. ✅

Bharat Dynamics approved a Rs 8.85 p/sh interim dividend and 1:2 stock split. 💸

Order wins. Welspun Corp (+2%) gained after bagging pipe orders worth Rs 2,039 cr from US and Indian customers. Man Infra will develop a luxury residential project in Mumbai with a sales potential of Rs 2,100 cr. 🏗️

Karnataka Bank (-1%) was in focus after reports said it would raise Rs 600 cr via the QIP route. 🤑

Here are the closing prints: 

Nifty

22,097

+0.4%

Sensex

72,832

+0.3%

Bank Nifty

46,864

+0.4%

Markets
IT Ko Kyu Toda?

IT stocks took a hit today, falling up to -5% intraday, after Accenture cut its revenue guidance for the rest of the year! Experts say this means the IT sector isn’t close to bottoming out and will likely see pain extending into H1 FY25. 😣

For the unaware: Accenture is the IT industry’s oracle because it follows a September-August financial year. The company’s forecast offers a look at what Indian IT firms can expect in the next couple of quarters. 📊

So what happened? Well, Accenture cut its revenue growth projection to 1%-3% (vs 2%-5% earlier). It also warned of weakness in the financial services sector and said its new bookings dropped -2% YoY. Fun fact: Accenture will book $450 million in severance-related costs ALONE this year after cutting 19,000 jobs. Yikes! 👀

It’s no secret that Indian IT firms have been taking a beating since 2023. High interest rates take a toll on discretionary spending, which in turn means less business given to IT companies. Beyond that, the global economy has been slowing down for the last year too. But here’s the thing, a lot of experts thought the worst was already priced in. A steady announcement of deal wins by top IT companies also smoothed over investor worries. All of this led to the Nifty IT index gaining an okay-ish +8% over the last six months. 📈

Most analysts say that Accenture’s projections hint at a gloomier outlook and that more caution is warranted. FYI - the lone contrarian voice is Nuvama, who thinks it's not such a big deal. They also believe a strong demand environment will drive profitable growth in the next three years. Make of that what you will! 🤷

Specials

Defense Stocks To Buy - By SEBI RAs

Defense stocks are never out of action. With the government increasing spending in the Defence sector, several stocks are poised to benefit. 🚀

Wondering which stocks to buy? Check out our latest video where we discuss 5 trade ideas on Defence stocks by SEBI RAs. 👇🏻

Stock

Footwear: Multi-Decade Opportunity

Will sports and athleisure footwear be India’s next big sunrise sector? Yes, according to Goldman Sachs, which says it’s a MULTI-DECADE growth opportunity! 💯

For the unaware: the broader shoe industry is going through a small down cycle. Sales boomed after Covid-19 but then slowed down in 2023. Two big factors are shaking things up. The first is that branded footwear is on the rise. FYI - the unorganised sector’s market share dropped from 85% to 75% over the last decade. This also coincides with the rise in premium sports and athleisure brands. The catch though? Top premium brands don’t stay on the top for too long in this industry. 👟

Here’s a look at two footwear stocks that Goldman recommends.

The first company is Metro Brands. They are a multi-brand retailer that’s working towards a premium identity. This neatly avoids the trap the rest of the sector is playing into. Key positive triggers include Metro’s recent agreement with Fila over its sports & athleisure line. It will start scaling up this business in FY25 both through its own store network and exclusive Fila brand outlets. Goldman Sachs projects Metro’s stores will grow up to 2x from its current levels in the next few years. FYI - the brokerage has a target price of Rs 1,450 p/sh; +28% from current levels! 🚀

The second company is Bata, which sits at the opposite end of the spectrum. The company has been historically known for  its mass-market & economical footwear. So what’s so interesting here? Well for starters, the company has started to beef up its premium product portfolio. While it’s always been strong in men’s formal wear shoes, it quickly entered ‘casual wear’, with brands like Comfit or Floatz.  It’s also upped its marketing spend and is looking to invest in better merchandising. FYI - Goldman Sachs has a target price of Rs 1,470 p/s; +6% from current levels! 👍

Charts

Movers and Shakers

Here’s a look at this week’s top NSE500 movers. Sobha took the pole position after rallying ~19% 🥇 Swan Energy (+17%) snapped its three-week losing streak. Tata Investment (-21%) was locked in a 5% lower circuit all five days of the week. Brightcom Group (-11%) hit the lowest level since Oct 2023. 📉 Check out their charts below:

Get In Touch

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