Tale of the Tape 

Hola Amigos. Happy Friday!

Markets closed down for a second straight week, with the Nifty (-0.1%) and Sensex (-0.3%) ending the red today. Midcaps (+0.5%) and Smallcaps (+0.6%) continued to outperform. The advance-decline ratio was evenly split. Check out the Stocktwits Sentiment Meter:

It was a mixed-bag kinda day for sectors. Pharma (+1.2%) and Metals (+0.9%) were the top winners. Real Estate (-0.7%) and NBFCs (-0.6%) saw the most selling pressure.

TCS kicked off Q2 earnings season on a disappointing note. Read our top story below on what it means for the IT sector.

Bandhan Bank zoomed +12% after appointing a new CEO. Meanwhile, CreditAccess Grameen fell after its Q2 NPAs shot up. More details below.

Results reaction. Just Dial was up +3% after its net profit doubled. Tata Elxsi was up +3% intraday before giving up gains after its bottomline was up nearly +25% QoQ.

Sudarshan Chemicals jumped +15% after acquiring Heubach’s global pigment biz for Rs 1,180 cr

Oberoi Realty (+2%) will raise Rs 6,000 cr.

Chennai Petroleum Corporation was in focus after reports said it would invest Rs 28,000 cr to build an oil refinery in southern India.

Vishnu Prakash R Punglia rallied +5% intraday after bagging a Rs 161-cr order from Indian Railways.

Here are the closing prints:

Earnings
TCS Q2 Review

TCS was the top Nifty loser after its Q2 results missed Street estimates. Let’s get into it.

First, the big negatives. The North America market shrank -2.1% YoY, its fourth straight quarter of decline. This region accounts for more than half of TCS’s sales, so yeah it's concerning. Secondly, the firm’s margins declined -60 bps QoQ and missed estimates. TCS said the big BSNL deal required higher third-party expenses and that there were greater investments in talent & infra. Finally, its deal booking came in at $8.6 billion for Q2 vs $11.2 billion in Q2FY24. A big drop, which hints that we’re still a far ways off from the golden days.

Management commentary wasn’t great either. CEO K Krithivasan said: “We saw the cautious trends of the last few quarters continue to play out in this quarter as well.”

Then there’s the okay-ish stuff. TCS’s topline YoY growth came in slightly above estimates, which means some of the big deals signed a long time ago are starting to bear fruit. Also, it continued to add employees (net addition came in at 5,726), implying that utilization levels are probably inching up too. 

Here are its Q2 stats:

• Revenue: $7.67 billion; +0.9% QoQ in CC terms

• Net Profit: Rs 11,909 cr; +5% YoY (vs Est: Rs 12,422 cr)

Big Picture: The key question here is whether this is just a temporary speed-bump or a sign that FY25 won’t be better as forecast? FWIW - most brokerages are cautiously optimistic. JP Morgan lowered its target price to Rs 5,100 p/sh vs Rs 5,200 earlier. It says there were several “knotty” one-offs this Q2. Jefferies points to steady hiring and BFSI recovery as key positives.

Stocktwits Specials
Stocktwits India Momentum Index!

The Stocktwits India Momentum Index had a perfect week after ending in the green on all five days! 

Motilal Oswal was the star of the day gaining +5%. Trent (+3%) broke into the top 3. Cochin Shipyard ended the week higher despite a -2% drop on Friday. On the flip side, Century Textiles is on the verge of dropping out. 

PS - The Stocktwits India Momentum Index highlights the top 10 performing companies based on their weekly returns. Plus, we bring you tons of exclusive content on the featured stocks including SEBI RA trade ideas, latest news & earnings updates, fundamental and technical insights.