Markets End Volatile Week At Record Highs

Tale of the Tape 

Hola Amigos. What a happy Friday! 🍻

Nifty and Sensex were up +2% each, recovering completely from the election day fall to hit new all-time highs. Midcaps (+1.5%) and Smallcaps (+2.3%) had a great day too. Only 67 stocks in the NSE 500 ended in the red! 🚀

It was a green wave across sectors. IT (+3.4%), Auto (+2.6%) and Oil & Gas (+2.1%) were the top winners today. ⭐

Why are investors rushing to IT stocks suddenly? Read our top story to figure out how to play this ‘defensive’ theme. 💪

RBI has decided to keep interest rates steady yet again. More details below on how it sees inflation-growth dynamics in India. 📈

Wipro was up +5% after bagging a massive Rs 4,173 cr contract from a US communication service firm. Meanwhile, Mastek was up +8% after partnering with Nvidia AI enterprise. 🤖

Bajaj Finance (+4%) gained after its housing finance arm approved a Rs 4,000-cr IPO. 💸

Dixon Technologies (+2%) hit a record high after announcing a JV with HKC Corp for digital screen components. 🤝

IRB Infrastructure Developers was up +11% after its May toll collections jumped +30% YoY. 💰

Indigo (+2%) gained after Kotak raised its target price on the stock to Rs 5,700 p/sh; +31% from current levels! ✈️

HDFC AMC announced an interim dividend of Rs 70 p/sh for FY24. 🤑

Here are the closing prints: 







Bank Nifty



Opportunity In Adversity - Part 3

Another day, another sector! Yesterday, we took a look at how consumption stocks are being snapped up due to the uncertain political scene. Today, we’re looking at the BIG pivot to IT stocks. 🔥

ICYMI - the Nifty IT index is up +8% over the last week, with Tech Mahindra (+10%), Mphasis (+9%) Infosys (+8%) and TCS (+5%) posting solid gains! We don’t blame you for being puzzled because Q4FY24 earnings weren’t great, with most firms signaling a muted FY25 outlook. 🤔

So what’s changed? A large part of it is investors rushing away from overvalued & overbought stocks (read: infra, PSU and capex-centric firms) towards beaten down, ‘safer’ options that don’t depend on the Indian economy. And there’s no better option than IT firms which mostly missed out on the 2023-24 bull rally.

But there’s more. Deal wins in Q4 were pretty strong. And several Western central banks are starting to cut interest rates including the EU and Canada. EU markets are pretty big for some IT firms btw. Of course, the US Federal Reserve is the big one to watch out for but these are positive signs. FYI - Emkay Global expects IT firm earnings to bottom out at the end of H1FY25. This broadly lines up with when the Fed is expected to carry out its first rate cut. So if you want to get ahead of the curve… 👍

Finally, even in the dull IT atmosphere, there are pockets of opportunities. CLSA is bullish on HCL Tech, which was one of the only big companies to still add to their headcount in FY24. And then there are good midcaps which have bucked the trend including Persistent Systems which is up +22% over the last six months! 📈

Are you bullish on IT stocks?

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Election Special: 5 Stocks To Buy - By SEBI RAs 🚀 

Post-election results, markets have shown tremendous volatility. But there's still room to buy stocks at the current dips. Check out our latest video where we share 5 election special picks by SEBI RAs!


RBI Monetary Policy: Key Takeaways

The Reserve Bank of India kept interest rates unchanged at 6.5% for the EIGHTH time in a row. Yawn. FYI - this was widely expected. For the unaware, retail inflation eased to 4.8% in April. While this is within the central bank’s 2%-6% comfort band, governor Shaktikanta Das has made it clear that he’s aiming for 4%. 📊

Canada and the EU have started cutting rates, but of course, everyone’s waiting to see what the Fed Reserve does. Das, perhaps upset by everyone saying the RBI was waiting for the Fed, went on to note: “While we do keep a watch on whether clouds are building up or clearing out in the distant horizon, we play the game according to the local weather and pitch conditions… While we do consider the impact of monetary policy in advanced economies on Indian markets, our actions are primarily determined by domestic growth-inflation conditions and the outlook. 😎

So yes, we continue to wait. FYI - the MPC’s decision this time was a 4-2 vote vs 6-0 in Dec 2023. If the new GOI doesn’t go full populist, inflation should come down <4% by Q2FY25, allowing the RBI to finally cut rates. 🙌

As far as growth is concerned RBI has upped its GDP forecast to 7.2% for FY25 vs 7% earlier. This is a lot higher than the IMF’s estimate of 6.8%. Das cites a strong agri sector, higher services growth + a resumption of global trade as key factors in this forecast. Bottomline: The RBI isn’t taking the ball off the inflation front. Its FY25 inflation prediction is 4.5% and the governor has made it clear he wants to see the last mile of disinflation through. 😇


Movers and Shakers

Here’s a look at this week’s top NSE500 movers. Avanti Feeds took the pole position after rallying +20%. 🥇 Amara Raja Energy (+19%) hit a new all-time high. Titagarh Rail Systems (-15%). Titagarh Rail Systems (-15%) fell the most in a week in over 4 years. Data Patterns (-11%) closed down for a 3rd straight week. 📉 Check out their charts below:

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