October 11, 2021

Nifty Turns 18!

Tale of the Tape

Good evening everyone. Nifty hit the 18,000-mark for the first time! 🍾

Markets kicked off the new trading week in style. Both the Nifty and Sensex hit new all-time highs. But, weak global cues and a late bout of profit booking led to cool off from the highs. Midcaps (+0.6%) and Smallcaps (+1.2%) outperformed. 💪

Except for IT (-3.4%), all the other sectors ended in the green. Auto (+2.7%) stocks were the clear winners. Real Estate (+1.7%) and Metals (+1.5%) continued to do well. 📈

Tata Consultancy Services saw a nasty -6% cut. Its Q2 results were slightly below estimates. 📊 Read more below.

Reliance Industries (-0.7%) is on a Diwali shopping spree. The Mukesh Ambani-led oil-to-telecom giant announced two new acquisitions in the renewable energy space. More details are below. 💰

Quiet listing. Aditya Birla Sun Life AMC had an underwhelming start to life as a listed company. The stock closed at Rs 699 per share, down -2% from its issue price. 🥱

Sizzling hot. Auto ancillary companies were in high demand today. TVS Srichakra, Minda Corp, and Bharat Forge rose between 4-8%. Check out their charts below. 🤑

Route Mobile (+8.5%) will acquire cloud communications platform Masiv for $47.5 million. 💸

GMR Infra (+9.3%) said it aims to become debt-free. The company is also hopeful of completing the demerger of its airport business by December. ✅

Radico Khaitan launched two new premium products. The stock closed up +5%. 🥃

Alembic Pharma (+5.5%) received a clean chit from the US Food and Drug Administration (USFDA) for its injectable unit. 💉

Cryptos mostly trended down. Bitcoin was up +2%. Ethereum was flat. Solana dipped 3%. XRP, ADA, and Doge dropped between 2%-4%. 😑

Here are the closing prints:

Nifty	17,946	+0.3%
Sensex	60,136	+0.1%
Bank Nifty	38,294	+1.4%

Not So Good

Tata Consultancy Services’ Q2 results were slightly below Street expectations. Weakness in European business and higher costs hurt overall performance. The company’s order book also declined 6% over the previous quarter to $7.6 billion. Here are the key stats: 📊

Revenue: $6.3 billion; +2.9% QoQ (Est: $6.45 billion)
Net Profit: Rs 9,624 cr; +6.8% QoQ (Est: Rs 9,918 cr)

Samir Seksaria, Chief Financial Officer at TCS said:

Strong growth and disciplined execution helped us overcome headwinds from currency and supply-side inflation and deliver expanded margins. Our industry-leading profitability and strong cash conversion give us the wherewithal to make the right investments needed to build out the business of the future.

TCS maintained its guidance of double-digit revenue growth in FY22. However, a rise in employee and traveling expenses may hurt margins. 👎

TCS tanked 6% and closed near the day’s low. Overall, the results weren’t all that bad. But, investors are concerned about slowing growth and margin pressure. To be fair, the stock ran up considerably ahead of its earnings and was ripe for a correction. Also, there is limited room for error when valuations are sooo high. 😓

If you own TCS, don’t worry. It’s still up +26% YTD. 📈

On the topic of expectations, the latest episode of the #1 market show #StockRoomSunday dropped yesterday. And if I’m being totally honest, it was lit. 🔥 Both of Vishal Mehta’s trading calls, Tata Motors and MCX, rallied +8% today. Here’s a complete fundamental and technical view on these two stocks – http://youtu.be/qOVL2_5iXd4

Stock Room Sunday is a weekly show hosted by Saket Mehrotra, a professional portfolio manager, and Vishal Mehta, co-chair of India’s CMT Association. Join each weekend for an entertaining run-through of the markets and see what stocks are moving. You may find a few jokes and fundamental vs technical analysis debates along the way.

Setting the Stage

Reliance Industries (-0.7%) has acquired Norway-based REC Solar Holdings for $771 million! That’s a lot of money. 💰 But what does REC do? And why is RIL interested in it?

REC is one of the largest manufacturers of solar equipment in the world. According to estimates, REC had nearly 10% market share globally in 2019. The company has three plants – two in Norway and one in Singapore. It has an annual solar panel production capacity of 1.8GW. IKEA, Audi, Tiger Beer are some of its marquee customers. ✌

The latest move is in line with Reliance’s aim of becoming net carbon zero by 2035. Earlier this year, Mukesh Ambani laid the foundation for the conglomerate’s Green Energy business. Reliance will invest Rs 75,000 crore over the next 3 years to transition itself into a full-fledged green company. 💚

The acquisition will give Reliance a ready global platform and the opportunity to expand in key green markets, like the US and Europe. Reliance will also benefit from access to REC’s patented solar panel manufacturing technology. This will reduce costs and ramp up the production of solar panels domestically. Globally, solar installations are set for their fastest growth in five years in 2021, according to IHS Markit. 💸

But, RIL didn’t just stop there. They went and bought a 40% stake in Shapoorji Pallonji Group-led Sterling and Wilson Solar for Rs 2,845 cr. Here are the details about the deal. Sterling & Wilson Solar is among the world’s largest solar engineering solutions providers. The stock rallied +6%. 🤑

Overheard on Stocktwits

Here’s an interesting chart setup by Trader Harneet on Stocktwits that might interest you. Add $KAMATHOTEL.NSE to your watchlist and track its performance. Here’s the link: bit.ly/3Fl9Vcx

ChartBusters

Auto ancillary companies broke out in trade today. Strong festive demand, easing supply chain constraints drive hopes of improved earnings. TVS Srichakra, Minda Corp, and Bharat Forge surged between 4-8%. 📈 Check out their charts below: