Tale of the Tape 

Good evening everyone. Happy Friday!

Nifty (+1.5%) and Sensex (+1.6%) hit record highs and capped off a second straight week of gains. PS - The Stocktwits India Momentum Index rallied +2.5%. Midcaps (+1.4%) and Smallcaps (+1%) also traded higher. The advance-decline ratio was in favour of the bulls (3:2). Check out the Stocktwits Sentiment Meter:

Except PSU Banks, all sectors ended in the green. Real Estate (+3.1%) was the top winner while Auto (+1.9%) and FMCG (+1.4%) also saw solid gains.

Will the Fed’s big rate cut trigger major FII inflows into the Indian market? Read our top market to find out more.

ITD Cementation was locked in a +20% upper circuit on buyout buzz. Cochin Shipyard also zoomed after being added to a new global index. More details below.

Brokerage reactions. Adani Energy Solutions gained +3% after Cantor Fitzgerald initiated coverage on the stock; the brokerage sees a whopping +123% upside from current levels.  Mankind Pharma was up +5% after Investec slapped a buy call; it sees a +38% potential upside.

IIFL Finance (+6%) gained after it clarified the RBI had lifted its six-month ban on gold loan operations.

Mahindra and Mahindra Financial Services (-1%) was in focus after 85.5 lakh shares (0.7% equity) changed hands in a big block deal; the buyers and sellers were not immediately known.

IndoStar Capital Finance (+5%) gained after selling its home finance arm for Rs 1,750 cr.

Phoenix Mills soared +9% after its real estate arm bagged two prime plots in Punjab for development. Interarch Building Products jumped +11% after bagging several new construction orders worth Rs 634 cr.

Here are the closing prints:

Market
Are Foreign Investors (Finally) Back?

With the US Federal Reserve kicking off what is hopefully a rate easing cycle, the spotlight turns to FII inflows! ICYMI - FII holding in Indian markets is at an 11-year low. Will things start to turn around now though? 

Generally speaking, there’s a strong correlation between the Fed cutting rates and foreign inflows into Indian stocks. When rates were cut in 2020, it resulted in inflows worth $23.4 billion! In fact, as our friends at CNBC point out, excluding 2008, every single easing cycle by the Fed has resulted in foreign money being pumped into India. The biggest influx was back in 2001-2003, when the Fed cut rates by 550 basis points, which resulted in FIIs buying Indian equities worth $5 billion!

Why does this happen? It's mostly because FIIs borrow cheaper money at home to invest in slightly riskier emerging markets for greater returns. FYI - some of the stocks with the largest FII holdings are private banks and NBFCs which are already undervalued. This means they could benefit big time if FII inflows start to rush back. Nifty stocks with the biggest FII holdings include: HDFC Bank (47.1% FII holding), ICICI Bank (45.4%),  Apollo Hospitals (43.9%) and ITC (40.4%). Keep an eye out on them.

What are the odds of FII inflows returning quickly this time? Well, India is already a top target for foreign investors. ICYMI - India became the largest emerging market in the MSCI EM Investable Market Index, beating China earlier this week. That said, everyone should temper their expectations. India’s valuations are already high and usually markets which are more sensitive to US rates like Philippines, South Korea, Japan and Indonesia get more money first.

As Jefferies’s Chris Wood notes: “India is not the obvious place to put your money in today because of the expensive valuation and the Reserve Bank of India (RBI) is in no hurry to slash rates."

Stocktwits Specials
3 Stocks Under Rs 300 - By SEBI RAs

In this week’s video, we will walk through the Top 3 stocks to buy under Rs 300 recommended SEBI RAs on Stocktwits. In the video, we’ll break down the recommendations by SEBI RAs, covering both fundamental and technical analysis.