October 4, 2021

Sweet Rally

Tale of the Tape

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

Markets snapped their four-day losing streak. Nifty and Sensex jumped 0.9% each. Midcaps and Smallcaps continued their outperformance. Both closed up +1.6% each. The advance-decline ratio (3:1) ratio remained firmly in favor of the bulls. 🐂

There was a green wave across the board. Metals (+3%) topped the list of gainers. Real Estate, and PSU Banks surged +2% each. 💪

Q2 earnings update. Avenue Supermarts’ earnings (+0.5%) and Federal Bank’s (+2%) business update lit up hopes of strong earnings growth. 📊 More details are below.

Right back at you. Zee Entertainment (+2%) filed a case against Invesco in the Bombay High Court. The company said that Invesco’s demand to hold an Extraordinary General Meeting (EGM) is “illegal and invalid”. 👩‍⚖️

Sugar stocks soared in trade. The Government doubled the incentive for ethanol production from October. Triveni Engineering, Dwarikesh Sugar, and Dalmia Bharat each gained between 6%-9%. Check out their charts below. 📈

NTPC (+4%) is in talks to raise Rs 15,000 cr via IPO of its three subsidiaries. 💸

Aurobindo Pharma’s (+2%) Managing Director N Govindarajan announced his resignation. 👋

Indus Towers dropped -3.5%. KKR plans to sell its entire 4.85% stake in the company, according to media reports. 💰

Man Infraconstruction (+3%) approved 1:2 bonus issue. ✌

Crypto’s crept lower. Bitcoin dipped 1%. Ethereum, Solana, and Ripple fell -3% each. 😵

Here are the closing prints:

Nifty	17,691	+0.9%
Sensex	59,299	+0.9%
Bank Nifty	37,580	+1.0%

This is Business

It’s that time of the year again. Earnings season is just around the corner (again) and companies are giving previews of what to expect. 📊

Federal Bank (+2%) posted steady growth in Q2. The private lender reported a 10% YoY growth in loans as businesses returned to normalcy. Federal Bank’s Current Account Savings Account (CASA) ratio hit a 25 quarter high of 18%. FYI – a high CASA ratio means that a large portion of the deposits in the bank belongs to the current and savings deposit. Banks tend to pay low interest on these deposits (3%-4%). This results in better margins and overall efficiency. 💸

Avenue Supermarts’ (+0.5%) Q2 update blew past expectations. Topline crossed the pre-pandemic mark in Q2. For all you nerds out there, revenue’s rose +47% YoY to Rs 7,650 cr. Strong pent-up demand and easing restrictions turbocharged growth. Moreover, they opened 8 new stores last quarter. 🛒 Despite the results, the stock faced profit booking after gaining +4% intraday.

Overall, Q2 updates have been fairly positive. ✅ Investors are expecting accelerating earnings growth as the 2nd Covid wave hangover eases off. Let’s see if this holds true. ✌

Chartbusters

Sugar stocks were on a tear today. The Government doubled the incentive for ethanol production starting October. India’s ethanol policy has been a game-changer for the sugar industry. Govt support and strong demand from oil companies have improved the sector’s outlook. 💯

All-time high exports and strong domestic demand from ice cream and cold drink manufacturers are additional positives. Triveni Engineering, Dwarikesh Sugar, and Dalmia Bharat each gained between 6%-9% today. Check out their charts below: 📈

Uptober Is Among Us

October has historically been a good month for the crypto market. So far this October, crypto markets remain on track with historical precedent.

Despite a quick sell-off when China banned crypto last month, crypto markets held up better than expected and actually rebounded. Cryptos likely benefitted from fears in equity world related to the US debt limit, US Federal Reserve Chair Jerome Powell announcing that the U.S. government had ‘‘no intention’’ to ban crypto, and El Salvador jumping into Bitcoin mining by using energy from its volcanoes.

The global crypto market climbed double-digits last week, boosted by $BTC.X and $ETH.X‘s 10% jumps. Other large-caps made big moves this week including $SOL.X (+23.8%), $BNB.X (+22.9%), and $LUNA.X (+19.9%).

The week’s biggest winners included super popular blockchain game Axie Infinity (+95.1%) and the OMG Network (+75.04%).

It seems that the September Curse has come to a close. Sentiment is looking up and crypto pundits are welcoming an “Uptober” on Twitter.

Retail Therapy

The festive season is just around the corner. This means heavy discounts and promotional offers from our favorite e-commerce sites are back! 😀

Amazon and Flipkart are locked in a neck-to-neck battle. But, the battleground itself has shifted base. Tier 2 and 3 cities in India drove a bulk of the demand during the initial holiday season sale. 👍

Flipkart said it saw 45% of customer demand from Tier 3 cities. For Myntra, 40% of orders on the first day of its “Big Fashion Festival” sale came from small towns and cities. Amazon saw a 21% growth in demand over the previous year from these regions. 💰

The Indian e-commerce market is estimated to jump seven-fold to $350 billion over the next 10 years, according to RedSeer Consulting. The Covid-19 pandemic has obviously played a huge part in the online shopping boom. Besides that, rising smartphone penetration and cheap data rates plus easy payment facilities like BNPL will further increase the customer base. 🤑

Stiff competition from established players like Amazon and newbies like JioMart is sure to keep the discounts flowing. Happy holiday shopping guys! 🛍