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Tale of the Tape

Good evening, ladies and gentlemen. Welcome to the new trading week. 🎲

Markets record the worst single-day fall in 2 months. Concerns over Chinese property giant, Evergrande, defaulting and its impact on the global financial markets spooked investors. Midcaps (-2.2%) and Smallcaps (-1.7%) saw deep cuts. 😥

Except for FMCG (+0.9%), all other sectors ended in the red. Metals (-6.6%) topped the list of losers. 📉

Hotel stocks were the only silver lining today. Indian Hotels and Royal Orchid Hotels rallied +9%. Taj GVK Hotels jumped +5%. Check out their charts below. 💸

ITC rallied +3% to hit a new 52-week high. The stock is up ~10% in the last 5 days. ITC to the moon. 🚀

Nazara Technologies cooled off after surging +4%. The company acquired the gaming and adjacent IP business of OML Entertainment for Rs 73 cr. This is the third acquisition by Nazara this year. 💰

NDTV hit a 10% upper circuit amidst rumors of Adani group acquisition. 📺

Cadila Healthcare (-2.4%) received US Food and Drug Administration (USFDA) approval for its depression treatment drug. On the other hand, the USFDA issued 7 negative observations to Lupin (-2.1%) for its Goa facility. 👎

Rail Vikas Nigam (+1.3%) received Rs 1035 cr for the Indore Metro Rail project. 💸

Paras Defence and Space Technologies IPO will open on Sept 21. Here’s all you need to know about the company. 📊

Global crypto market sank 7%. Bitcoin (-6.5%) slipped below the $45K mark. Ethereum shed ~8%. Ripple and Cardano were down 10% each. Solana crashed 13%. 💔

Here are the closing prints:

Nifty 17,397 -1.1%
Sensex 58,491 -0.9%
Bank Nifty 37,146 -1.8%

Evergrande’s Moment of Truth

The cash crunch at Evergrande, a Chinese property giant, is spooking investors worldwide. Some are even calling it China’s Lehman Brothers moment. So what’s the deal here and why should you care? Let’s get to it. 🧐

Evergrande, a Fortune 500 company, is the biggest residential developer in China. It owns over 1,300 projects, or 2% of China’s real estate market. Last year, the company recorded sales of $110 billion and has ~2 lakh employees. ✅ For comparison, India’s most valuable company, Reliance Industries reported sales of $68 billion and has +2.4 lakh employees as of March 2021. 

Evergrande’s problems started in 2020. China’s real estate slowdown, plus a regulatory cap on borrowing, hurt the company’s finances. Last week, the company threw in the towel and hinted that it may not be able to pay $80 million in interest payments due on September 23. Experts fear this could trigger a fire sale in the Chinese property market as Evergrande liquidates assets to repay loans. 🤯

I know what you’re thinking: How does any of this impact India? A crash in the Chinese real estate market would hurt the demand for commodities like steel, iron ore, and more. No wonder the Metals Index was down 5% today. But that’s just one example. 😓

Evergrande’s collapse risks slowing the Chinese economy and companies that do business with them. Some are likening this to the 2007–2008 global financial crisis which rattled economies the world over. Others say the comparisons are overblown and that the Chinese government will step in to save it. These are indeed interesting times that we’re living in. Let’s see how this goes. 👀


Chartbusters

Markets were deep in the red zone today. Four stocks declined for each gainer. But, the Hospitality sector bucked the trend. Hotel stocks were on cloud 9 today on reports of the Government reopening foreign tourism for the first time since the Covid outbreak. 🥳

Indian Hotels and Royal Orchid Hotels rallied +9%. Taj GVK Hotels jumped +5%. Check out their charts below: 📈


Zooming Ahead

Cars24 brought in $450 million in its latest funding round. DST Global, Falcon Edge, and SoftBank led the massive Series F round. This deal values the company at $1.8 billion. 🤑

Vikram Chopra, Co-founder, and CEO at CARS24 said: 

Traditionally, car selling or buying has been a tiresome process, and only 2 of 100 people own cars in India. However, over the last six years, we have been working continuously towards fulfilling the dreams of many Indians to own a car by transforming the customer’s journey- ‘the CARS24 way’ that is hassle-free, safe, and transparent.

Cars24 aims to use its big fat wallet to scale up its existing car, bikes, and financing business at home in India. Besides that, the startup has eyes set on global dominance. It sold over 1,000 cars in the UAE since its April launch, and formally entered the Australian market last week. 🌍

Founded in 2015, Cars24 is the largest platform to buy and sell pre-owned cars and bikes in India. The company operates across 200 cities and has +13 million monthly visitors on its site. The long wait for its IPO begins now. 📅