Tale of the Tape 

Howdy folks. Markets fell again, capping their WORST week in over two years.

Nifty (-0.9%) and Sensex  (-0.1%) opened gap-down, recovered and then crashed in the afternoon. Global concerns + FII selling is a bad combo. Midcaps (-0.9%) and Smallcaps (-1%) had an equally bad day. The advance-decline ratio was in favour of the bears (4:1).

Except PSU Banks (+0.5%) and IT (+0.4%), all other sectors ended in the red. FMCG (-1.7%) and Real Estate (-1.6%) were the top losers.

DMart cracked -4% after a rough Q2 business update. Read our top story on whether quick commerce is killing the value retail giant.

M&M Financial Services was the top NSE 500 loser after a disappointing Q2 update. Meanwhile, this apparel maker could rally +45% in the next year. More details below.

Bajaj Finance (-3%) fell after reporting weak AUM growth in Q2, its slowest in six quarters!

Diffusion Engineers had a decent market debut, ending the day at +21% higher than its IPO price of Rs 168 p/sh. 

VIP Industries (+8%) was the top NSE 500 gainer after inking a deal with Unicommerce.

Oil India gained +5% as global crude prices continued their upswing on MiddleEast tensions.

Brokerage calls. Bajaj Housing Finance was in focus after HSBC said it sees a -27% downside from current levels. Meanwhile, Varun Beverages got a buy call from Citi, which sees a +38% upside.

Reliance Power was locked in a -5% lower circuit after announcing it would raise Rs 4,200 cr.

Here are the closing prints:

Stock
Is D-Mart In Trouble?

Is quick commerce starting to eat organized retail? Yes, if you go by initial signs from DMart’s disappointing Q2 biz update. There’s a lot going on behind the scenes, but at least five brokerages including Goldman Sachs believe competition from Blinkit and others is turning up the heat.

FYI - the company’s Q2 revenue came in at +14% YoY vs an estimated 19% YoY. The lower growth is partly due to heavy rainfall & flooding in the quarter, which likely affected consumption. Also, they added just 6 new stores, missing Street expectations. 

But the big news is that DMart’s ‘same store sales growth’ saw a sharp slowdown. Analyst estimates it somewhere around 2%-3% YoY, although we’ll have to wait for official figures.

A large part of this, experts say, is because affluent customers in key urban markets are moving towards quick commerce. ICYMI - Zomato’s Blinkit had a blockbuster Q1, with its gross order value more than DOUBLING to Rs 4,923 cr and the number of orders also jumping similarly. It has to be stealing market share from somewhere.

On paper, this is confusing. If you did a SWOT analysis, you’d say DMart is a value grocer where people buy cheap goods for a whole month. Blinkit and Instarmart are more expensive, typically involve small-ticket purchases and are for customers who don’t plan in advance. DMart’s slowdown is due to a lot of factors, but it’s probably true that there is a section of DMart customers who are slowly shifting their shopping behavior towards quick commerce apps, just the way die-hard Metro riders use Uber every now and then.

Big Picture: Let’s wait and see what DMart’s management says. In the past, they’ve put quick commerce’s impact between 1%-2%, although they’ve admitted digital channels are a challenge. We’ll leave you with Zepto CEO Aadit Palicha’s stinger: "DMart is a $30 billion company and they are only 4.5 times our size in sales. If we continue to execute well… we will continue to grow 2-3 times every year. And potentially surpass them in next 18-24 months”.

Stocktwits Specials
Stocktwits India Momentum Index! 🚀 

The Stocktwits India Momentum Index was down -0.7% today. 

Epigral was the biggest casualty after dropping nearly -4%. RVNL closed down on a weekly basis for the 5th straight week. Oil India’s MASSIVE +6% move may not be enough as it is very close to the drop zone along with PCBL which posted its first weekly loss in 3 weeks. 

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.