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- Markets Hit New All-Time High!
Markets Hit New All-Time High!
Yash Upadhyaya
July 26, 2024
Tale of the Tape
Howdy folks. Happy Friday!
Nifty (+1.8%) and Sensex (+1.6%) hit a new all-time high! PS - the benchmark indices closed higher for an 8th consecutive week. That’s INSANE! Midcaps (+1.8%) and Smallcaps (+1%) were also up big time. 390 stocks in the NSE 500 closed in the green.
Not a single sector ended lower. Metals (+3%), Auto (+2.4%) and IT (+2.3%) gained the most.
RBI is hitting banks with its liquidity hammer again! Read our top story to understand what’s going on and what it means for their earnings.
Shriram Finance was the top Nifty gainer after its Q1 show outshined peers. Meanwhile, Cyient cracked -6% after rough Q1 numbers.
Tata Power was up +5% after UBS initiated coverage on the stock; the brokerage sees a +15% upside from current levels.
Sobha (-3%) fell after 47.4 lakh shares (5% equity) changed hands in a block deal; reports say the Godrej family may have been the likely seller.
Indus Towers (+5%) will consider a share buyback proposal at its board meeting on July 30.
Mankind Pharma (-4%) was in focus after it said it would acquire Bharat Serums for Rs 13,630 cr. Classic buy on rumor sell on confirmation trade.
Sanstar had a decent market debut, ending the day +21% over its IPO price of Rs 95 p/sh.
Order wins. Sterling & Wilson Renewable gained 5% after bagging Rs 328 cr in multiple orders for solar & battery contracts. SJVN rallied +13% intraday after winning a Rs 14,000 cr Mizoram hydropower project.
Here are the closing prints:
Nifty | 24,835 | +1.8% |
Sensex | 81,333 | +1.6% |
Bank Nifty | 51,296 | +0.8% |
Stock
Banks Continue To Face The Heat
Banking stocks opened in the red today after the RBI increased the liquidity requirements wef April 2025! The new rules are to specifically protect retail deposits in the case of a bank run. But it will also hurt bank margins and therefore earnings. PS - this is the last thing lenders need after a rough H1FY24, but what can you do? Here’s everything you need to know.
Rewind time: After the 2008 global financial crisis, the RBI introduced a new ‘liquidity coverage ratio’ (LCR) framework for Indian banks. Basically, lenders had to set aside some money in ‘high-quality liquid assets’ aka cash or GOI bonds in case customers yanked out their deposits.
What’s changed since then? For starters, with mobile banking apps and payment mechanisms like UPI, depositors can pull out money a LOT faster than regulators ever imagined. Case in point: see Silicon Valley Bank’s collapse back in 2023.
To take care of that, the RBI is doing a few things. The most important change is that all banks need to assign an EXTRA 5% ‘run-off factor’ for retail deposits that are enabled with Internet and Mobile Banking facilities.
FYI - IIFL Securities estimates that net cash outflow can increase by 7% to 16% for banks! This is a huge negative for Federal Bank (-3%) and IDFC First Bank, according to experts. The worst part is that this will further ramp up the deposit war. Lower margins and lower earnings will shortly follow. Rough stuff.
TL;DR: Higher liquidity norms will hurt banks. PSU lenders should weather the storm better than private rivals.
What’s your view on the sector? |
Spotlight
SEBI RA Spotlight
At Stocktwits, you don’t only get trade ideas from SEBI RAs but also get to learn a thing or two in the process. In today’s spotlight, Prosenjit Ghosh explains what an Ascending Broadening Wedge Pattern is with a practical example in the case of Cummins India. Additionally, he tells you how to execute the setup with an upside potential of ~10% from current levels.
About Prosenjit: He is an Independent SEBI Registered Research Analyst, Certified Algorithmic Trader, Price Action Trainer and Mentor at PG's Master Class. He is a former Banking Professional with more than +23 years of experience and he specializes in Short to Long Term recommendations in Equities and Derivatives. Follow him for more amazing insights and add $CUMMINSIND.NSE to your watchlist and track the latest from the community.
Earnings
Earnings Roundup
Shriram Finance Q1 results met Street expectations. Strong demand across key verticals helped boost its lending. FYI - its core CV loan segment was up +14% YoY to hit Rs 1.1 lakh cr. Overall Assets under Management grew +21% YoY to Rs 2.33 lakh cr.
That said, on the flip side, a couple of sour notes. The NBFC’s ‘gross stage 3 assets’, or loans overdue for more than 90 days, were up +8% YoY to hit Rs 12,408 cr. its provisions from the same were also up +5% YoY. Not super alarming just yet, but will be a key monitorable.
If the results were just okay-ish, why did the stock jump +10% and end up the top Nifty gainer? It’s mostly because the company is doing a LOT better than its peers. Bajaj Finance, its biggest NBFC rival, is stuck in a rut. And private banks aren’t too hot right now either. Leading the pack has its merits!
Here are its key stats:
Net Interest Income: Rs 5,354 cr; +21% YoY (vs Erst: Rs 5,297 cr)
PAT: Rs 1,981 cr; + 18% YoY (vs Est: Rs 2,018 cr)
Gross NPA: 5.39% vs 5.45% QoQ
Net NPA: 2.71% vs 2.70% QoQ
Shriram Finance is +43% YTD.
What’s your view on the stock? |
Cyient nosedived -9% intraday after reporting awful Q1 results! All verticals, including its core ‘digital, engineering & tech’ (DET) segment, shrank between 1.6% to 7.6% QoQ. Margins saw a drop as customers demanded cuts in a weak demand environment.
The management has blamed the topline decline on project delays, particularly from clients outside its ‘top 10 bucket’. While TCV wins came in at $52.4 million, up +7% YoY, it was a sharp -74% QoQ drop.
The cherry on top: Cyient SLASHED its FY25 revenue guidance for its DET segment, which accounts for over 80% of revenue, from ‘high single-digit CC growth’ to “flattish”. Yikes.
Here is its Q1 report card:
Revenue: $212 million; -1% YoY
EBIT: Rs 220 cr; -15% YoY
EBIT Margin: 12.4% vs 14.6% YoY
PAT:Rs 163 cr; -11% YoY
Cyient is -23% YTD.
Charts
Chartbusters
Here’s a look at this week’s NSE500 movers. MMTC took the pole position after rallying +24%. Quess Corp (+19%) hit the highest level since May 2022. IRCON International (-13%) closed down for a 2nd straight week. IRFC (-11%) hit a 1-month low. Check out their charts below:
Links That Don’t Suck
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