Tale of the Tape 

Good evening everyone!

Markets failed to hold onto their morning gains, with the Nifty (-0.2%) and Sensex (-0.3%) ending in the red. In case you were wondering, yes Tuesday is now a day of expiry volatility after the NSE changed it! Broader markets continued yesterday’s momentum as Midcaps (+0.3%) and Smallcaps (+0.5%) saw decent buying. The advance-decline ratio was 3:2 in favour of the bulls. 

Most sectors ended in the green. FMCG (+1.1%) and Energy (+1%) were the top gainers. Banks (-0.6%) and Auto (-0.3%) saw profit booking.

In today’s issue of the Daily Rip, we take a look at where to invest in this market, Is Asian Paints back for real, why sugar stocks were on fire today and more.

Honourable Mentions:

Mahindra & Mahindra (-2%) and Tata Motors (-1%) dipped after reports said the GST Council could raise rates on EVs costing more than Rs 20 lakh. Phoenix Mills (+3%) was up big after Motilal Oswal upgrade; they see a further +30% upside from current levels.

Check out the NSE 500 heatmap:

Market
Money Matters

Trump has set the global economy on fire, India’s corporate earnings are meh at best and the Nifty has underperformed every major Asian market in the last 12 months. These are rough times ngl. But it doesn’t mean it's all doom and gloom. In fact, there are some themes that hold up in times like this. 

The basic idea is that our domestic economy is being juiced up. We now have two major tax  cuts (income tax + GST), lower interest rates, ample rainfall and a big jump in GOI capex spending. Here’s what ICICI Securities's model portfolio looks like along with top picks:

1) Domestic cyclicals: Not complicated; look at companies that produce for India and will benefit from an uptick in local demand. The brokerage is overweight on Private Banks (28% weightage), Energy (9.4%), Auto (7.8%) and Consumer Discretionary (6.1%). Top picks include Karur Vysya Bank, Maruti Suzuki, IndiGo, Swiggy, HPCL and BPCL. Many of these stocks are already up +20% to +25% over the last 6 months, easily beating benchmark indices! 

2) Defensives (asset-heavy): There are stocks that hold up no matter how demand swings in the short-term. So even if global economic turmoil spills over to India, these are decent bets. ICICI has a ~8.5% weightage here with exposure to telecom & utility sectors. Their top stock picks include Bharti Airtel, Tata Communications, JSW Energy and NTPC.

3) Defensives (asset-light): The same story, but without the structural baggage. The brokerage has a ~18% exposure to this segment and divides weightage between FMCG staples, IT and Pharma. The first is a no-brainer; the sector is on the cusp of a revival and ICICI is betting on HUL, Godrej Consumer and Mamaearth. In IT, it’s skipping the usual suspects and instead focusing on Sagility and IKS Health. And as for pharma, it’s bullish on Alkem Laboratories which is heavily focused on the domestic market!