Tale of the Tape 

Hiya everyone. Happy Friday!

Nifty (-0.2%) and Sensex (-0.1%) ended lower after an action-packed week. PS - on a weekly basis, this is the 5th time we’ve closed in the red in the past 6 weeks. Midcaps (-1.3%) and Smallcaps (-1.7%) got KO-ed. 407 stocks in the NSE 500 ended in the red.

Most sectors closed down. Real Estate (-2.9%), PSU Banks (-2%) and Oil & Gas (-2%) witnessed the highest selling pressure. IT (+0.7%) and FMCG (+0.3%) saw some buying.

Reliance Industries is down -20% from its all-time high; giving up all of its gains this year. Read our top story on what’s plaguing Mukesh Ambani’s empire and find out if it’s a value buy now!

Indian Hotels (+7%) had a blockbuster Q2. Meanwhile, SBI fell -2% despite decent Q2 results. More details below.

TBO Tek rallied +5% intraday. Jefferies sees +17% upside from current levels. 

Zomato fell -3% after reports said the CCI found it and other companies breached antitrust laws by favouring some restaurant chains.

Results reaction. Cochin Shipyard was locked in a -5% lower circuit after higher costs hit its Q2 margins. SAIL fell -4% after reporting a -31% YoY decline in net profit.

Swiggy IPO sailed through on Day 3 of bidding.

Reliance Power hit a -5% lower circuit after being blacklisted by the GOI from participating in tenders over allegedly submitting ‘fake’ documents.

ITI (+11%) was the top NSE 500 gainer after emerging as the lowest bidder for a Rs 3,022 cr BharatNet project.

Here are the closing prints:

Stock
Down But Not-Out

Reliance Industries is officially in the red for 2024. The stock has dropped over -20% from its July highs, erasing a whopping $50 billion in market cap. Fun fact: RIL is now trailing the Nifty by the WIDEST margin in nearly a decade. The big question here: is it a value buy now or is there more pain in store? Let’s take a look.

What went wrong? The biggest problem is weak earnings; RIL’s profit has dropped for the last three consecutive quarters. Oil-to-chemicals (O2C), is suffering from low margins + slumping global demand. The retail division reported its first quarterly decline in at least 3 years in Q2. Some of this is due to muted demand. But it’s also clear Reliance Retail’s store strategy hasn’t worked out: it reported 110 net store additions in H1FY25 despite opening 795 stores. This means store closures exceeded openings by over six times! Finally, Jio’s tariff hikes helped boost EBITDA, but also made it lose ~11 million subscribers in Q2!

What will change? For the O2C segment, China’s stimulus + Trump’s victory should hopefully boost global oil demand & reduce price volatility once global conflicts are resolved. For Reliance Retail, demand might not change too much, but it’s started to get into quick commerce which should start seeing results from 2026. 

What are future triggers? Reliance Retail and Jio’s IPO should unlock major value. They’ve been delayed a lot, but Reuters says the Jio IPO should come by mid-2025. Also, ICYMI - Reliance’s free cash flow was mostly negative for the last decade. This will turn positive this year as its capex cycle gets over. This should boost earnings & hopefully the stock price!

Big Picture: Mukesh Ambani is trying to turn the ship around. It’s taking time and it’s natural for investors to get nervous when they don’t see new IPOs or signs of its big green hydrogen bet paying off. Most experts agree that existing businesses should stop seeing pain in the next few quarters though.

Stocktwits Specials
Tata Motors In Trouble?

Tata Motors is down -13% in the last 1 month. Huge shoutout to Navodit Tiwari aka Stockvaani for catching the bearish move well in advance. At current levels, Navodit believes the stock has entered into an accumulation zone. Long term investors may add the stock in the range of 720-790. 

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