Tale of the Tape 

Good evening everyone!

Markets were super choppy but the Nifty and Sensex ended with minor gains, extending their rally to a sixth straight day! Broader markets saw selling pressure though, with Midcaps (-0.4%) seeing cuts and Smallcaps ending flat. The advance-decline ratio was evenly split.

Most sectors ended in the red but the losses were muted. FMCG (-0.6%) and Energy (-0.5%) stocks took a hit. Meanwhile, Pharma (+1%) and Real Estate (+0.4%) saw buying.

In today’s issue of the Daily Rip, we look at why telecom stocks are buzzing again, Ola Electric’s misfortunes, Clean Science’s big trading error, top newsmakers and more.

Honourable mentions: 

Nazara Technologies fell -12% intraday as the GOI’s online money gaming bill passed in the Rajya Sabha. IDBI jumped +9% after the GOI said that all paperwork related to its stake sale was ready.

Check out the NSE 500 heatmap:

Sector
Pay Up!

Telecom stocks are back in focus after market leader Reliance Jio indirectly raised tariff plans. This is expected to have huge ramifications for the sector. Here’s everything you need to know! 

A few days back, Jio announced it was killing its entry-level 1GB/day plan, which was priced at Rs 249 for 28 days (or Rs 209 for 22 days). This means the company’s cheapest plan is now worth Rs 299 which gives users 1.5 GB/day for 28 days. Analysts say roughly 20%-25% of Jio’s subscribers are on the current entry level plan. If they all switched to the Rs 299 plan, that could increase Jio’s ARPU by a solid 6%-7%, which is HUGE! 

Now, it’s possible that some customers stop subscribing (because it’s too expensive) or shift to other telecom players. While the former is a real issue and we’ll have to see how it plays out, it’s clear the rest of the industry will follow Jio’s footsteps. Airtel has already discontinued its own Rs 249 plan and reports say VI will follow. Airtel may see a +5% ARPU bump as a result; it’s also introduced newer 1.5 GB packs which should encourage even more data consumption. 

ICYMI - this is just the icing on the cake for the sector. After a 3-4 year’s gap, they hiked tariffs in 2024 and plan to keep doing so every 15 months for the next few years, with the next round probably coming by end-2025. This is naturally GREAT for profitability.

Big Picture: While the actual bottomline bump of Jio’s move will be small, the objective here is to get more users hooked on more data. It’s also something that can only be done in a duopoly, which is what India’s telecom industry is now. Good for shareholders, but sucks for the average consumer. FYI - Jefferies top pick here is Airtel; it sees a +29% upside from current levels.