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- Shift To Large Caps?
Shift To Large Caps?
Yash Upadhyaya
March 20, 2024
Tale of the Tape
Hola Amigos! Markets were pretty boring today.
Nifty and Sensex see-sawed in a range before ending the day flat. Midcaps and smallcaps were equally volatile. The advance-decline ratio was evenly split.
It was an even mix of red and green across sectors. Oil & Gas (+1.3%) and Real Estate (+0.6%) saw decent gains. Metals (-0.8%) witnessed some profit booking.
Healthy correction or the start of a meltdown? Read our top story on what lies ahead for smallcap & midcap stocks.
Eicher Motors (+4%) was the top Nifty gainer after a DOUBLE upgrade from UBS. Meanwhile, Zomato’s veg delivery fiasco is both an opportunity and a lesson. More details below.
Maruti Suzuki (+3%) hit the Rs 12,000 p/sh-mark for the first time ever! PS - the stock is up +20% in the last two months alone.
Syrma SGS Technology was up +2% after Jefferies initiated coverage on the stock; it sees a +32% upside from current levels. Hindustan Petroleum Corp (+2%) was in focus after a double upgrade from Nomura; it sees a +26% upside.
Route Mobile closed higher after Proximus announced an open offer to acquire a 26% stake in the company
Shakti Pumps cracked 4% after launching its QIP issue to raise Rs 200 cr; the floor price was set at a -7% discount to Tuesday’s close.
Anup Engineering cracked 8% after it approved a 1:1 bonus issue of shares.
Here are the closing prints:
Nifty | 21,839 | +0.1% |
Sensex | 72,102 | +0.1% |
Bank Nifty | 46,311 | -0.2% |
Market
Expert View On Mid & Smallcap Fall
After an AMAZING bull run in 2023, the smallcap & midcap selloff has been rough. The Nifty Smallcap 100 index is down -12% from Feb highs, while the Nifty Midcap 100 is down -7%. We know what you’re thinking: how much more pain are we looking at? Tbh, experts themselves are divided. Here’s a breakdown of what both sides are saying: 🤼
First up are the bulls. The narrative here is that we’re going through a healthy correction, NOT a meltdown. FYI - the last major selloff we saw was back in 2017-18 when smallcaps & midcaps rallied +60%, only to fall by -46% and -30% each. Jefferies, however, believes that we won’t see a repeat of 2018. Ace investor Ramesh Damani also is positive right now: “All bull markets end, even this one will end, but for now, it’s a green signal ahead. I feel the market is in a reasonably good state.” 👍
Experts are bullish because mutual fund inflows haven’t nosedived and volumes are still relatively high. The GOI’s capex cycle is also a big positive trigger for future rallies. FYI - Jefferies’s top sectoral picks are real estate, industrial & power and PSUs. 🚀
At the other end, we have the bears. The argument here is that smallcaps & midcaps can start rallying again only if they become an ‘attractive buy’. FYI - after the recent sell-off, both segments are currently around December 2023 levels, which is still pretty high. Experts say that you’re better off betting on largecaps at this point as it could take the rest of the year for broader markets to cool down. 🌡️
Here's what Julius Baer’s Nitin Raheja says: “It is time to have a largecap bias in the portfolio because there were telltale signs of euphoria that we were seeing clearly in the mid and smallcaps… while there has been a correction, I do not think the correction has brought valuations to attractive levels. We have a very large tilt towards the largecap space today” 😎
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
Bullets For The Day
🥑 Zomato (+1%) kicked up a social media storm yesterday after rolling out a ‘pure vegetarian’ delivery fleet. ICYMI - the idea was to create a separate system so people who ordered ‘pure veg’ food wouldn’t get their orders mixed up with non-veg items!
On the face of it, not a bad business idea. GOI data shows vegetarian households generally have higher income & consume more. If some of them aren’t ordering because they don't want cross-contamination in the delivery bag, then this could open up a new market for Zomato. Brokerage Bernstein even gave a thumbs up and upped its target price to Rs 200 p/sh; +25% from current levels!
The only problem? The absolute social CHAOS this caused. Food is a politically sensitive subject. CEO Deepinder Goyal was quickly reminded how it could cause problems for non-veg food delivery persons and even customers who secretly order non-veg in an otherwise ‘veg’ housing society! Under fire, Zomato quickly did a U-turn. While delivery boys will still have two separate boxes for the food, they won’t wear a different uniform and have separate branding. We hope Zomato didn’t waste a lot of money ordering green t-shirts!
What’s your take on the “pure” veg fleet idea? |
🏍️ Eicher Motors (+5%) was the top Nifty gainer after a DOUBLE UPGRADE by UBS! The global brokerage is bullish for two big reasons. Firstly, the aggressive expansion by Harley Davidson and Triumph hasn’t even made Royal Enfield sweat. ICYMI - they came in with great models and low pricing. But, latest estimates say both companies have together sold ~4k units of their three new models as of Feb 2024.
Secondly, Royal Enfield’s launch of a new 450-cc roadster in Q2FY24 could shake things up. FYI - with competitive pricing (Rs 2.5 lakh), this could help customers who mainly shop at the 350-cc segment upgrade as well. It will also directly take on the KTM 390 Duke and Triumph Speed 400.
Overall, a pretty sunny picture for Eicher Motors. FYI - UBS has a target price of Rs 5,000 p/sh; +29% from current levels!
Looks like retail bros are also digging the stock with the Stocktwits Sentiment Meter in the “extremely bullish” territory.
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