Tale of the Tape 

Howdy folks! Markets were volatile AF! 🎢

Nifty and Sensex cooled off sharply after hitting new record highs only to pull back and end the day in the green. Weekly Futures & Options expiry, mixed global cues and the RBI MPC meet kept investors on their toes. Midcaps were flat while Smallcaps rose +0.5%. The advance-decline ratio was split evenly. ✌️

Most sectors ended in the red but the losses were limited. PSU Banks (-0.7%) and Energy (-0.4%) saw the deepest cuts. IT (+1.1%) stocks were on top of everyone’s buying list. 📈

Does the India growth story justify our market’s valuations? Read our top story below to find out more. 🔍

Elon Musk’s Tesla is driving to India! Why is this a big deal and who are the potential winners/losers? Read more below. ⚔️

HDFC Bank was the top gainer on the Nifty after its Q4 biz update cheered up investors. Meanwhile, JP Morgan sees a +20% upside to Coforge. More details below. 💰

VI’s Board of Directors will meet on Tuesday to approve the Rs 2,075 cr fund raise by the company’s promoters. ✅

UPL jumped +4% intraday. The company’s seed business may launch an IPO, according to CNBCTV18. 👍

Q4 business update. Dabur cracked nearly -5% on weak management commentary. On the other hand, Ujjivan Small Finance Bank rallied +6%. 📊

Som Distilleries (+5%) approved a 1:1 stock split. ✂️

Results reaction. GM Breweries slipped -4% on operationally weak Q4 results. 🚨 

Order wins. KEC International won multiple new orders worth Rs 816 cr. GE Power received a Rs 775 cr from Jaiprakash Power. ⚡

Here are the closing prints: 

Market
Quality Comes At A Price

Are Indian markets overvalued? And if so, are those valuations justified or not? These are two BIG questions that will decide how well stocks will do. ICYMI - SEBI chief Madhabi Buch put in her two cents yesterday when she said our expensive markets are a reflection of the “trust and faith that the world has in India”. Yes, this is the same SEBI chief who warned of a bubble building up in smallcaps and midcaps just a month ago!! 👀

Jokes aside, it is an important debate. Take a look at the numbers. India overtook Hong Kong to become the world’s FOURTH-LARGEST stock market in Jan 2024. The Nifty’s P/E of 23 is slightly above its last two-year average. Also, as Buch noted: the forward P/E ratio of the large-cap focused MSCI India Index (22.2) is higher than the MSCI emerging markets index (11.8), China (8.9) and the US (21.1)! 🤑

It’s even starker when it comes to midcaps and smallcaps. FYI - The Nifty Midcap 100 index’s P/E ratio of 33.8 is well above its two-year average of 23. Ditto for the Smallcap 100 index. A month ago, over 65% of Nifty Midcap 100 stocks and 70% of Nifty Smallcap 100 firms traded at a solid premium to their historical valuations. There’s been some correction since then, BUT not much. 📉

This brings us to the billion-dollar question of whether these valuations are justified. There’s a bunch of arguments in favour of the bulls. There are structural tailwinds that everyone talks about: INSANE infra spending, visible jumps in manufacturing growth and the rise of a 100 million-strong affluent class by 2027 (more than most countries!). There are also cyclical tailwinds: China is faltering and a handful of other countries including India are eating its lunch. After decades, there is also political stability and business-friendly GOI policies; something India has long struggled with. 💯

As Mark Mobius put it recently: “While the current P/E ratios may seem high, they primarily reflect past performance and don’t fully capture the prospective rapid growth in earnings, potentially making Indian stocks more attractive in the long term.” 🚀

Specials

5 Stocks To Buy In April - By SEBI RAs

Markets are at their all-time highs but is it a good time to invest now? In this video, we cover 5 investment ideas by SEBI RAs which can deliver healthy returns even from current levels.

News

Its Happening!!!

Tesla is FINALLY coming to India! Reports say that Tesla is sending a team in late April to decide whether to set up a plant in Tamil Nadu or Gujarat. ICYMI - this comes after the GOI announced a massive cut in import duties to 15% vs 100% earlier. More importantly: Tesla isn’t just looking to make cars here and export them. The firm is reportedly developing a new, ‘cheaper’ car (~Rs 25 lakh) made for markets like India. 🚗

Why should we care? Well, for starters, this could be the tipping point India needs towards making electric cars mainstream. Companies have tried, but charging infrastructure still sucks and EVs are still expensive. Tesla’s entry could kick things into an overdrive. When it does come, there will be winners and losers. Here’s what you need to know. 😎

1) Winners: All of Tesla’s suppliers. For the unaware, Indian auto part firms have ALREADY been supplying Tesla for its global markets. This is because Musk has been looking to shift away from China. Listed companies like Sona Comstar (the largest Indian supplier) or Bharat Forge have been named as part of Tesla’s supply chain. Other large suppliers to Tesla include Sundaram Fasteners, Varroc Engineering, SKF India, Sandhar Technologies and Z F Steering Gear (India). 🔥

2) Losers: Tesla will likely pose stiff competition to car makers. Tata has seen phenomenal success so far and Maruti will launch its first EV in 2025. Of course, this market is super new so it’s too early to say who will come out on top. But if the Tata Nexon top model sells for around Rs 19.5 lakh, would you be willing to spend a little more to get a new Tesla? 🤼

Stock

Bullets From The Day

📊 HDFC Bank (+3%) was the top Nifty gainer after reporting a SOLID Q4 business update! Experts were worried about the recent merger and how it affected loans + deposits. But, both metrics posted decent growth. Domestic retail loans were up +3.7% QoQ, while deposits grew a healthy 7.5% QoQ. FYI - YoY numbers aren’t comparable because of the merger in July 2023.

CASA (current account, savings account) deposits stood at 38.2% vs 37.7% QoQ. This is a pretty crucial metric as CASA deposits are low-cost and lucrative, which is exactly what the lender needs right now. We’ll have to wait for the fine print when the rest of the Q4 numbers come out. But overall, this could be the first step in a long road to recovery!

🚀 Coforge rallied +4% intraday after JP Morgan slapped an ‘overweight’ call on the stock. FYI - this may seem a little surprising because the company has underperformed the Nifty IT Index this year so far (-5% vs +0.1%).

Why is JP Morgan bullish? Firstly, it believes consistent execution + operating leverage will help it grow the top line by 13% over FY24-FY26. As of Dec 2023, Coforge has an executable order book of $974 million, which gives decent revenue visibility. These are ‘executable’ orders FYI, and not deal announcements that could vanish. If it delivers, it could grow much faster than most large-cap IT peers.

While a potential extension of ESOP benefits could bring down margins, its current valuations make it an extremely attractive buy. FYI - JP Morgan has a target price of Rs 7,000 p/sh; +20% from current levels!

Stocktwits Spotlight

Demat account openings are hitting the roof which is a major positive for broking houses. With markets at all-time highs, the momentum is likely to continue, say experts. One such stock that gains big time from this is Geojit Financial Services! 📈

After a sharp correction last month, the stock has once again bounced back from the lows and recently crossed its key 50-day moving average. Prabhat Mittal recommends buying the stock for targets of Rs 100 in the medium term! PS - that’s +25% up from current levels. 💸

Follow Prabhat Mittal for more awesome trading insights and add $GEOJITFSL.NSE to your watchlist and track the latest from the community.

Links That Don’t Suck

💯 5 Stocks to Buy in April 2024 | 2024 Top Picks by SEBI RAs | Top SEBI RAs to Follow

💬 Stocktwits is hosting a free AMA with Sandeep Aggarwal. Click to ask 

🤖 Apple reportedly exploring personal home robots

😵‍💫 Lok Sabha polls: Maharashtra candidate promises whiskey, beer to poor if elected 

🏏 Sunil Narine Achieved The Peak In IPL With 12.5 Crores, Only To See A Decline Of 52% In His Salary!

🧳 Japan Launches e-Visa For Indian Tourists. Here's How To Apply

Get In Touch

Have feedback on The Daily Rip India? Let me know using the poll below or email me (Yash Upadhyaya) at [email protected]!

Want to sponsor this newsletter and reach hundreds of thousands of passionate investors and traders? Reach us here.

Disclaimer: Content, news, research, tools, and securities symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. Read the full terms & conditions here.