Tale of the Tape 

Howdy folks. Happy Friday!

Nifty and Sensex climbed from the day’s low but still ended with minor cuts. This tracked with weakness across global markets as investors try to figure out what tepid US jobs data would mean for the prospects of another Fed rate cut. Midcaps (+0.6%) saw decent buying, but Smallcaps (-0.2%) finished lower. FYI - this caps off a rough few days and leaves markets in the red for the full week.

It was a mixed-bag kinda day for sectors. Metals (+1.4%) and PSU Banks (+0.9%) were the top gainers. IT (-0.6%) and FMCG (-0.5%) witnessed selling pressure.

In today’s issue of the Daily Rip, we cover the Anil Ambani stock debacle, Venky’s and Amber Enterprises’s Q2 results, the big Unacademy deal, Elon Musk’s $1 trillion payout and more.

Honourable Mentions:

Bharti Airtel (-4%) was the top Nifty loser after 5.1 cr shares were traded in a big block deal; reports say Singtel was the likely seller. Paradeep Phosphates was up +6% on a strong Q2 show + announcing a Rs 3,600 cr expansion plan.

Check out the NSE 500 heatmap:

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We Warned You!!!

Surprise, surprise! Anil Ambani is in yet ANOTHER scandal. ICYMI - the group’s stocks are down upto -16% over the last week after the Enforcement Directorate attached a whopping Rs 7,500-cr in assets. That’s a sh!tload of money. So here’s a quick breakdown of what went wrong. 

The OG sin, as always, lies in the past. The ED says Anil Ambani firms took loans starting in 2010-11, out of which Rs 19.6k cr is still outstanding. What happened to the money? Officially they became NPAs but investigators say they were diverted to other group firms. For example: the ED alleges RCom and other firms diverted Rs 13.6k cr into ‘evergreening loans’ -- aka using a bank loan to pay interest on another bank loan in a twisted ponzi scheme. In another wild scheme, Reliance Nippon Mutual Fund gave money to Yes Bank, which in turn then loaned that money to Anil Ambani firms.

We know what you’re thinking though: what does this have to do with the two listed companies -- Reliance Power and Reliance Infrastructure? The firms say the attachment of properties won’t affect their operations. But the ED claims RPower and RInfra also diverted money without offering further details. Does this mean the two firms will simply have to cough up any money that may have been diverted to them? Or will a full investigation cripple their business? Your guess is as good as ours, but this isn’t great news…

FWIW - RPower and RInfra have had solid turnarounds which led to stocks rallying in 2024.  Their fundamentals are getting better with a reduction in debt + new biz forays. But if all this was built on a house of cards, it doesn’t matter. This is something we’ve flagged consistently: Anil Ambani goes hand-in-hand with corporate governance risk. The actual court case may take a decade, but in the meanwhile this overhang could destroy the hope of any gains.

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Wondering what stocks the pros are tracking? In our latest video, we reveal three stocks that SEBI RAs have recently added to their Stocktwits watchlist!