Four In A Row

Tale of the Tape

Hey everyone. The weekend is here! 😄

Markets closed up for a fourth straight week. Strong economic data coupled with hopes of a kick-ass budget boosted sentiment. Midcaps (-0.1%) and Smallcaps (+0.8%) traded mixed. The advance-decline ratio was split evenly. ✌️

Most sectors ended in the red, but losses were minor. FMCG (-0.7%) and Pharma (-0.4%) were the top losers. Real Estate (+1.2%) stocks rose for a fourth time in the last five days. 📈

Motherson Sumi started trading ex-domestic wiring harness business. More details below. 📊

Mindtree slipped 4% post strong earnings as investors booked profits. 🤑

Big bull Rakesh Jhunjhunwala increased his holding in Titan (-0.8%). What’s fuelling the optimism? Read more below. 💯

Paytm snapped its 8-day losing streak. The stock rallied +8%, its highest single-day gain since Nov 24. 👍

Aurobindo Pharma (-3%) received a warning letter from the US Food and Drug Administration (USFDA) for its Hyderabad unit. ⚠️

Jubilant Foodworks will consider the proposal of a stock split on Feb 2. The stock closed flat. 🍕

Dhampur Sugar (+5%) increased its total ethanol production capacity to 500 KLPD. 🏭

Shalimar Paints (+3%) will consider raising funds on Jan 18. 💰

Cryptos remained under pressure. Bitcoin and Ethereum slipped 3% each. Dogecoin soared 15% after Tesla allowed customers to buy its merch with it. 🥰

Here are the closing prints:

Nifty	18,255	-0.1%
Sensex	61,223	-0.1%
Bank Nifty	38,370	-0.3%

Split Up

Motherson Sumi sank over 20% as it started trading ex-domestic wiring harness business. But, what the heck does it mean? 🤔

Motherson Sumi announced that it will split its business into two separate entities. The new company will house the domestic wiring harness business and will be listed separately by March. All current shareholders will receive 1 new share of the demerged business for every one share held. ✅

Still confused? Every company has multiple divisions and each division is valued separately. When a company chooses to demerge any of the businesses the total valuation also changes. Post split, analysts value Motherson’s current business between Rs 180-200 p/sh. On the other hand, the wiring business is estimated to be worth Rs 60-70 p/sh. 📈

In short, don’t worry about the price fall, it’s just a corporate adjustment. Your investment value will be split across two companies. 😇

RJ Loves Titan

Billionaire investor Rakesh Jhunjhunwala is once again bullish on Titan. The Big Bull increased his stake in the company by 0.2% in Q3, most in four years! His total stake in the Tata Group company now stands at 5.1%. 🔥

What’s driving the optimism? Wedding budgets have turned jewelry and apparel heavy due to lack of travel spending and restricted guests lists. Despite being the #1 organized player, the company controls <10% of the total jewelry market. Reason: 75%+ of the market is in the unorganized sector. But, recent struggles due to Covid and its aggressive expansion plans have helped Titan increase its overall share. Also, robust growth in other segments like Eyewear and Watches & Wearables is a positive. ✨

FWIW, Titan is +11% in the past month and is hovering near its all-time highs. But, concerns over business outlook due to Omicron and steep valuations may limit further upside. Let’s see how this goes. 😎

Retail Therapy

Nazara Technologies will buy merchandise brand Planet Superheroes for Rs 5 cr. 💸

Big Picture: For years, gaming companies have ignored merchandise sales in favor of in-game purchases like skins or weapons. Maybe it made more sense as it helped keep costs lower. But, the blockbuster success of Rovio Entertainment, developers of the famous Angry Birds games, may have sparked a change. 🎮

Nazara can leverage Planet Superheros retail stores to sell merchandise of its popular gaming titles like PUBG and Asphalt. It may also tie-up with large brands like Gameloft and Riot Games for merchandise deals, opening a whole new revenue stream. 💰

India is currently home to +43 cr mobile gamers and the number is estimated to reach 65 cr by 2025. Video game players and communities are some of the most passionate and engaged fans in the world. Offering something that’s real in a world that is quickly going meta is not only niche but can be highly profitable. 💪

Movers and Shakers

Here’s a look at this week’s top Nifty 500 movers. Greaves Cotton rallied ~31% last week to hit a new all-time high. 📈 Trident (+22%) posted its best weekly gain in over a month. Vodafone Idea crashed 16% after the company opted to convert its interest payments into equity. Hikal Ltd (-11%) fell the most in a single week since the start of the pandemic. 🔻 Check out their charts below: