Negative Start To The Week

Author

Yash Upadhyaya
March 11, 2024

Tale of the Tape 

Hey guys. Welcome back to the Daily Rip. 👋 

Markets were back in the red. Nifty and Sensex dropped nearly -0.8% each dragged by the weakness in heavyweight banks. Midcaps (-0.4%) also struggled, while Smallcaps (-2%) saw a broad based sell-off. The market breadth was extremely negative with 4 stocks falling for every gainer. 🚨 

Except for Pharma which closed flat all the other sectors ended lower. PSU Banks (-1.6%), Metals (-1.4%) and Oil & Gas (-1%) saw the biggest cuts. ✂️ 

Tata Group stocks fell across the board today. What explains the group’s recent volatility? Read our top story below to find out. 📉 

What next for HDFC Bank after its latest downgrade? Also, should Indigo’s promoter sale be seen as bad or good news? More details below. 🤑 

JM Financial cracked 10% after SEBI banned it from managing new debt public issues. ❌ 

Zomato fell 3% after recent news of Flipkart foraying into the quick commerce biz. 🛒 

TVS Motor Company announced an interim dividend of Rs 8 p/sh for FY24. 💸 

Dwarikesh Sugar (+1%) will buy back 30 lakh shares at Rs 105 p/sh; 28% from current levels. 💯 

NLC India was up +6% after inking a Rs 7,000 cr JV plan with the Rajasthan govt; proposals include a new thermal & solar power plant. ⚡️ 

Order wins. RVNL was up 3% after bagging four contracts worth Rs 2,093 cr. HAL gained 2% after saying it would produce 34 helicopters for the GOI. 🚁 

Gopal Snacks IPO got oversubscribed 10x on the final day. 😎 

Here are the closing prints: 

Nifty

22,333

-0.7%

Sensex

73,503

-0.8%

Bank Nifty

47,328

-1.1%

Stocktwits Alert 🚨🚨🚨

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Stocks
Top Headline Makers

Its tough being an HDFC Bank shareholder and it only gets worse with every passing day. CLSA is the latest brokerage house to downgrade the stock and cut their target price estimate. FYI - the foreign brokerage is a little late to the party but its bear case is a good summary of what’s been going on. 🤓 

HDFC faces a twin challenge on deposits: a high ask rate and a tough environment. Also, its decision not to chase after higher-cost deposits will hurt in the short-term. FYI - CLSA projects a ‘U-shaped’ recovery for the lender’s margins rather than a ‘V-shaped’ rebound. 📊 

HDFC Bank has been hit by a double whammy. It has company-specific problems (merger with the housing loan parent HDFC) and it also has industry-specific problems (liquidity issues, which have triggered a war for deposits). FYI - HDFC’s credit-deposit ratio is at a sector-high level of 110%! That means even if it wants to lend more, it can’t due to a lack of deposits. 😵‍💫 

Finally, HDFC has already waved a red flag over all of this. At its recent analyst meet, it admitted there will be short-term pain. But, as it prioritizes profit growth over loan growth, margins will eventually improve. However, retail investors are not buying into the “hope” story with the Stocktwits Sentiment meter dropping into the “bearish” zone vs “neutral” last week. 📉 

Interglobe Aviation was up +5% after 2.6 cr shares, or a 6.7% stake, changed hands in a block deal. FYI - most reports say promoter Rakesh Gangwal sold another big stake. 💰️ 

ICYMI - Gangwal and his fellow co-founder Rahul Bhatia have disagreed over how the company has been run for YEARS now. At one point, Gangwal lashed out saying even a “paan ki dukaan” would have had better governance. Long story, short: he stepped down from the board in February 2022 and said he will reduce his stake over a 5-year-period. ✂️ 

Since then, Gangwal or his family have sold in three block deals: in September 2022, February 2023 and August 2023. In case you were wondering, in the run-up and aftermath of each stake sale, the stock usually falls. But, three months after the sale, the stock is usually up. 🤑 

One quick example: On August 16, Gangwal’s wife sold her 3% stake. If you had bought shortly after that, the stock would've been up +22% in 3 months! Bottomline? Behind every adversity is an opportunity.  ✌️ 

Specials

Why Is IREDA Crashing?

IREDA is down 17% from its all-time high. Should you buy the dip? 😉

Check out our recent stock analysis video where we cover all the major updates around IREDA. Along with this, we also breakdown the fundamentals of the company & discuss SEBI RAs' views on the stock. 👇🏻

Charts

Tata Sons IPO Canceled?  

Tata Group stocks have been on a roller-coaster ride! Reports of Tata Sons’ IPO sent most group soaring last week. However, the rally was short lived as most of them ended up falling upto -10% today! 👍️ 

What’s the deal bro? The story starts back in 2022 when the RBI declared Tata Sons (the group’s holding firm) as an ‘upper-layer’ NBFC. There’s a lot of jargon around this, but basically, any NBFC of that kind had to be listed within 3 years of being put on the RBI’s list. 🧐 

We know what you’re thinking: Tata Sons listing? That’s HUGE. FYI - two stocks that saw the biggest movement were Tata Chemicals and Rallis India. As Spark Capital noted in its recent report, Tata Chemicals owns one of the biggest stakes (3%) in Tata Sons. Rallis India also benefited because it is a Tata Chemical subsidiary. Anyway, the general IPO rumour helped all stocks a little bit. 🚀 

The only problem? Turns out, the Tata Group doesn’t want to list its holding firm. Latest reports say that Tata Sons is now working to restructure its balance sheet. If it moves around some of its debt, it can avoid some of the RBI’s rules. Another workaround is to transfer its holding in Tata Capital to another company. This would stop it from being classified as a NBFC. And that explains the crash today. Moral of the story: don’t get carried away with speculation. Take a look at the INSANE movement in the charts below: 🤯 

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