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Virus Worries

Tale of the Tape

Greetings, everyone! The weekend is upon us. ๐ŸŽ‰

Nifty and Sensex ended lower for a 2nd straight week. Concerns over the new Covid variant and its impact on the global economy dented investor sentiment. Midcaps (-3.3%) and Smallcaps (-2.9%) also saw deep cuts. ๐Ÿ”ป

Except for Pharma (+1.7%), all the other sectors ended in the red. Real Estate (-6.3%) and Metal stocks (-5.3%) dropped the most. Autos (-4%) hit a two-month low. ๐Ÿ“‰

Re-opening stocks were hammered in trade. Indian Hotels and PVR slipped 10% each. InterGlobe Aviation (-9%) fell most since March 2020. ๐Ÿ˜ข

Tarsons Products rebounded after a lukewarm listing to close +24% on its Dalal Street debut. ๐Ÿ‘

Indiabulls Housing Finance jumped 10%. Buzz of promoter Sameer Gehlaut selling his stake in the company triggered the rally. โœ…

Greenlam Industries (+6.5%) will consider the proposal of stock split on Dec 13. โœŒ

ITC will buy a 16% stake in D2C brand Mother Sparsh for Rs 20 cr. Hereโ€™s more details. ๐Ÿ’ธ

Sanofi India (+0.7%) will sell Soframycin and Sofradex brands to Encube Ethicals for Rs 125 cr. ๐Ÿ’Š

Amazon to partner with Apollo Hospitals for its pharmacy business, according to media reports. ๐Ÿค

Covid fears also took the shine away from Cryptos. Bitcoin (-6%) slipped below $55K. Ethereum was down 7%. Solana, Doge, and Polkadot tanked ~10%. ๐Ÿ’”

Here are the closing prints:ย 

Nifty 17,027 -2.9%
Sensex 57,107 -2.9%
Bank Nifty 36,026 -3.6%ย 

Why So Serious?

Indian markets posted their worst weekly fall in 10 months. Fears over a new Covid variant spooked investors. Both Nifty and Sensex are now down 9% from their all-time highs. ๐Ÿ˜“

The new variant with several mutations was first detected in South Africa. The World Health Organization (WHO) is monitoring the variant even as cases surge globally. Much of western Europe is seeing record daily cases. Countries like Austria & Slovakia have already announced a two-week lockdown. ๐Ÿ”’

The revival of Covid threat comes at one of the worst possible times. Rising inflation, a faster-than-expected rollback of easy money policies, and steep valuations make matters more complicated.ย 

Experts are warning of a deeper correction to follow. So donโ€™t be adventurous and blow your hard-earned money. This too shall pass. ๐Ÿ™

Keep โ€˜Em Coming

Star Health and Allied Insurance Company IPO will open on Nov 30. The price band is fixed at Rs 870-900 per share. The company plans to raise over Rs 7,000 cr from the markets. ๐Ÿ’ฐ

Star Health is one of the largest private health insurers in India with a ~16% market share. It has a wide pan-India presence with 779 branches across 25 states and 5 union territories. It also has tie-ups with nearly 12,000 hospitals in India. Star Health has a diversified product portfolio with offerings in group health, personal accident, and overseas travel. Star Health will use the IPO money to boost its financials. ๐Ÿ“Š

Financial Snapshot:

  • FY21 Gross Written Premium: Rs 9,349 cr; +35% YoYย 
  • FY21 Net Loss: Rs 825 cr; (vs Net Profit: Rs 268 cr YoY)

Post COVID, the retail health market has emerged as a key growth driver for the health insurance industry. Low insurance penetration and an expensive healthcare system are the driving factors. Only 10% of the Indian population has a private insurance plan. Retail health insurance is expected to grow 23% by FY25. This huge market opportunity promises higher returns for Star Health. But, its eye-watering valuations and weak market sentiment may restrict any big gains on listing. ๐Ÿ˜ฌ

Jackpot Trade

Upstox has reportedly joined the unicorn party after its latest fundraise. ๐Ÿฆ„

The new round led by Tiger Global, which invested Rs 185 cr, is estimated to value Upstox at a whopping $3 billion. Notably, Tiger Global also led Upstoxโ€™s last funding round back in 2019. ๐Ÿ˜Ž

Founded in 2009 as RKSV Securities, the company entered retail broking in 2011. It was rebranded to Upstox in 2016. Millions of Indians have entered the equity markets in the last 12-18 months. Rising financial awareness and an explosion of cheap brokers has fuelled the participation. PS. Upstox says its user base grew 3x in FY21 to 4 million. 80% of its user base lives in small towns and cities and 70% are first-time investors. ๐Ÿš€

Despite the retail investing boom, only 5% of Indiaโ€™s population invests in financial markets. This offers a huge runway for growth. Super helpful to attract fresh funding and accelerate user acquisition. Fun fact: Tiger Global is super bullish on retail investing not just in India with its investments in Upstox, Groww, INDMoney, but also globally with Tradingview. Watch out for this space and Stocktwits ๐Ÿ˜‰

Crypto Conundrum

The uncertainty around crypto regulation in India is making a lot of people nervous. ๐Ÿ˜ถ

$hit just got real after the Government in its summary for the Crypto Bill said it seeks to prohibit all private cryptocurrencies in India with few exceptions. Conflicting media reports and wild speculation on social media led to mass panic. Investors rushed to liquidate their holdings causing exchanges to crash. All this happened without anyone ever seeing the Bill for real! ๐Ÿคฏ

Industry experts believe that the Government may choose a middle path. But, without certainty, large private equity firms have stopped all investments in crypto projects in India. FYI, over $500 million have flown into crypto and blockchain space in 2021 vs just $40 million in 2020. The confidence and backing of large VC money saw both CoinDCX and CoinSwitch Kuber hit unicorn status. ๐Ÿ’ช

And, thereโ€™s more bad news. BCCI has asked IPL franchises to not sign sponsorship agreements with crypto exchanges. Notably, crypto exchanges spent over Rs 50 cr on sponsorship deals during the T20 World Cup. ๐Ÿค‘

The crypto industry employs over 50,000 people and is expected to rise to 8 lakhs by 2030. A hard ban on cryptos may have an adverse impact on the economy. For now, crypto enthusiasts should wait until more clarity emerges over the bill. Hoping for the best. ๐Ÿคž

Movers and Shakers

Hereโ€™s a look at this weekโ€™s top movers from the Nifty 500. Tata Teleservices took the pole position after rallying ~28%. ๐Ÿฅ‡ Trident (+27%) posted its best weekly gain since Jan 2021. PVR (-18%) closed down for a third straight week. ๐Ÿ“‰ InterGlobe Aviation posted its worst weekly fall since April 2018. Check out their charts below:ย