Tale of the Tape 

Hola Amigos! Markets were volatile AF.

Nifty and Sensex cooled off sharply in the final hours of trade to end near the day’s low. PS - this is the 6th time in the last 7 days that markets have ended in the red! On the other hand, Midcaps (+0.6%) and Smallcaps (+1.3%) bounced back after yesterday’s horror show. The advance-decline ratio was in favour of the bulls (3:2).

It was a mixed-bag kinda day for sectors. IT (+2.4%) and PSU Banks (+0.5%) were the top gainers. Pharma (-1.6%) and Auto (-0.7%) saw the most selling pressure.

Markets are down -7% from their highs. Read our top story to understand WTF is going and how best to play this chaos. 

Bajaj Finance was the top Nifty gainer after decent Q2 numbers and good guidance. Persistent Systems hit a record high after blockbuster Q2 results. More details below.

Paytm, Adani Energy Solutions and Chennai Petroleum Corporation saw big moves today. Check out their charts below to find out why.

Results reaction. Zomato was up +3% after inline results + fundraise plans. PS - CLSA upped its target price to Rs 370 p/sh vs Rs 353 earlier. Coforge zoomed +11% after its topline jumped +34% YoY.

GMR Airports (+2%) was in focus after reports claimed that the company had raised Rs 6,300 cr from Abu Dhabi Investment Authority.

Policybazaar (+1%) closed up after Citi said that they see a further +18% upside from current levels.

Sonata Software (+5%) gained after bagging a multi-year AI deal from a Fortune 500 firm.

BHEL fell -4% after 1.8 cr shares (0.5% equity) changed hands in a block deal; the buyers and sellers could not be immediately identified.

Triveni Engineering was up +4% after launching premium whisky brands in UP to enter the India-made foreign liquor market.

Here are the closing prints:

Market
Kya Lagta Hai Market?

The Nifty is down -7% from its all-time high, raising fears we’re FINALLY heading towards a big market correction. FYI - The truth is that there are a bunch of macro + micro factors causing nervousness. Let’s take a look.

The single biggest trigger has been FII selling. They’ve sold nearly $10 billion in October so far, which is higher than the $7.9 billion back during the Covid crash in March 2020. That said, overall FII investment is still much higher today vs back in 2020, which is why markets haven’t crashed.

Why are they selling? China is one factor. Its markets have seen record inflows in the last 8 weeks due to attractive valuations.  But that isn’t the full picture. For instance: China saw outflows of $4 billion just last week after its initial stimulus disappointed. So clearly, markets have other worries about India too.

The big concern is slowing economic growth. ICYMI - Q1 GDP grew at its slowest in five quarters. And what’s worse is that many experts thought it was a one-off due to lower GOI capex because of the elections. But a lot of other macro indicators are worsening including tax collections & auto sales. FYI - Goldman Sachs downgraded its exposure to India to neutral today, noting that this will impact corporate earnings. Doesn’t help that Q2 results season is also shaping up to be mostly bad.

Some experts argue we need a rate cut. The problem is that the RBI is laser-focused on inflation (which spiked again in September) and may not give one even in December.

Big Picture: Yes, India is slowing down. But there are also positive signs. Private capex is picking up. But as Nuvama points out, a growth push at a time of weak demand means India Inc profitability will take a hit. Most experts argue that the trick is to build up a safe defence (aka large caps) and look at short-term plays. PS - InCred Equities is bullish on telecom, capital goods, healthcare and IT sectors!