Tale of the Tape 

Hiya everyone. Markets killed it today!

Nifty and Sensex ended +0.8% higher after the US Federal Reserve signalled it was still on track for three rate cuts in 2024. Check out our top story below for the complete analysis. Midcaps (+2.4%) and Smallcaps (+2.5%) also had a phenomenal day. Fun fact: 432 stocks in the NSE 500 ended in the green.

It was a green wave across sectors. Real Estate (+3%), Metal (+2.4%), and PSU Banks (+2.1%) saw the most buying.

This defence + railway PSU stock could see +11% gains over the next year. More details below.

BPCL (+4%) was the top Nifty gainer after reports said it signed an oil purchase deal with BP.

Brokerage reaction. BSE jumped +11% after Investec upgraded the stock to a ‘buy’; it sees a +24% upside from current levels. IRB Infrastructure Developers (+10%) surged after Kotak Securities upgraded the stock; it sees a further +10% upside from Thursday’s close.

NMDC (+1%) was in focus after cutting iron prices for the first time in eight months. PS - Citi says it sees a -13% downside from current levels.

Bharat Dynamics (+2%) will consider a stock split and interim dividend payout today. TVS Motor Company (+1%) will issue preferential bonus shares in the ratio of 4:1.

Lloyd Metals and Energy (+2%) will raise Rs 5,000 cr via QIP.

Deepak Nitrite (+2%) kicked off operations at its new fluorination plant in Gujarat.

RVNL (+2%) bagged a Rs 167 contract for upgrading electrical systems on the South Central Railway line.

Here are the closing prints: 

Policy
The Fed’s Predicament (Dot Dot Dot)

The Federal Open Market Committee (FOMC) meeting is a global event. The decision taken by the US policymakers impacts the world of stocks and bonds worldwide. PS - stocks were up big time today not just in India but most global markets after the latest meet. Confused over how it affects us? Let us explain. 🤓

For starters, the US Fed kept interest rates unchanged for a 5th consecutive time while maintaining the policy outlook and guidance for 3 rate cuts by the end of the year. By now we all know that markets love lower interest rates and it's this optimism that’s driving the all-things-everything bull run. 🔥

Having said that, stickier-than-expected inflation and a robust US economy led many to believe that the Fed may keep rates higher for longer before cutting. Last night’s policy decision went pretty much as planned however there was a significant change in the “dots” (or economic projections) that had the market moving. 🚀

In the table below, we can see that the Fed’s expectations for growth and the median Fed Funds rate in 2025 and 2026 both ticked up. That signals they expect growth to hold up better than their December projections, and therefore, rates may have to be slightly higher than they anticipated. 🔺

That said, Powell's projections and commentary suggest that three rate cuts are still on the table for 2024. For now, given the strength of employment and earnings, this seems to be enough for markets to rally. 📈

Now, this isn’t exactly the reaction from markets the Fed would like to see, given that strong asset prices tend to place upward pressure on inflation. Yet that’s what’s happening, and only time will tell if the Fed or investors are wrong. 🤷

(PS - kudos to Tom Bruni from our US team for contributing to this piece)

Specials

Defense Stocks To Buy - By SEBI RAs

Defense stocks are never out of action. With the government increasing spending in the Defence sector, several stocks are poised to benefit. 🚀

Wondering which stocks to buy? Check out our latest video where we discuss 5 trade ideas on Defence stocks by SEBI RAs. 👇🏻

Stock

Defense + Railway = Multibagger!

BEML has been on a red, hot streak! The stock has more than DOUBLED in the last year despite the recent market cool-off. So, what’s going on here and how much more juice is left in this stock? Here’s what you need to know: 🔍

About company: BEML is a leading manufacturer of earth-moving heavy equipment. FYI - it’s also Asia’s second-biggest just by volume. In the last decade, it's become a key supplier of armoured recovery vehicles (ARVs) which help India’s armed forces transport equipment, missiles and battle tanks. 🪖

What’s popping? For starters, the company has order prospects of Rs 40,000 cr over the next 5 years, which is INSANE. Out of this, ~Rs 16,000 cr comes from supplying new ‘high mobility vehicles’ and ARVs and overhauling the Indian force’s existing fleet.  Another potential Rs 10,000 cr in orders comes from the rail & metro biz. Fun fact; BEML is also a leading maker of metro coaches. The Bangalore, Mumbai and Chennai projects have expressed interest. And beyond this, export markets such as Latin America and the Middle East await. 🌎

To keep up with this demand, BEML has a planned capex of Rs 8,000 cr over the next two years to beef up production. FYI - another key positive trigger is that ~25% of the company’s workforce is expected to retire in the next 2 years. PSUs are known for their inefficiencies, so this will help employee costs drop without affecting their overall productivity! 📊

Big Picture: The ‘Make-in-India’ investment theme has lost some steam in recent months. But experts say the long-term potential still holds up. A strong order book + a margin bump due to lower expenses could help power BEML’s next rally. FYI - Prabhudas Lilladher has a target price of Rs 3,345 p/sh: +11% from current levels! 🤑

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Stocktwits Spotlight

Target hit alert! Shreeram Raut aka FinTaxCoach’s buy on CG Power is +12% in just 4 days. Getting a bullish call right in this market deserves a huge round of applause! Follow Shreeram for more awesome trading insights and add $CGPOWER.NSE to your watchlist and track the latest from our community.

Links That Don’t Suck

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