Tech Downgrade!

Tale of the Tape

Hey, ya’ll! Happy hump day! 😇

Markets closed down for a third straight day. Midcap (-2.5%) and Smallcaps (-3.4%) continued to bleed. 🔻

Except for Financials (+0.6%), all sectors ended lower. Real Estate and IT stocks fell the most; -3% each. 📉

Nomura downgraded the entire IT pack on slowdown fears. Read more below. 👎

Paint stocks got dumped. Asian Paints and Berger Paints tumbled over 8% each. Know why below. 🤕

Minda Industries (+7%) approved a 1:1 bonus issue. ✌️

NMDC (-4%) cuts iron ore prices by 10% amidst weaker demand. 💸

Sugar stocks slipped for the second day in a row. Balrampur Chini tanked 9%. Dhampur Sugar was locked in a 5% lower circuit. 😶

Hindustan Zinc jumped 7% intraday on privatization buzz. 🚀

Aether Industries IPO was subscribed 50% on day 2. 😐

Cryptos traded mixed. Bitcoin gained ~2%. Ethereum traded flat. 💀

Here are the closing prints:

Nifty	16,025	-0.6%
Sensex	53,749	-0.6%
Bank Nifty	34,339	+0.1%

Dark Clouds Gathering

The sell-off in IT stocks may be far from over after Nomura downgraded the entire sector! 🤯

What’s the deal bro? Inflation, like the latest Dr. Strange movie, is breaking records globally. To control this, central banks have been forced to increase interest rates. Higher interest rates raise borrowing costs, disincentivize hiring, and generally slow down the economy. Since companies expect profits to dry up (at least, temporarily), their willingness to spend goes down. Make sense? 🙈

To be clear, Nomura does not expect IT spends to turn negative. They just don’t believe companies would continue to spend at the same (or higher) pace as they were in the past two years. The slowdown in startup funding and widespread lay-offs are also key concerns. On the flip side, this may lower attrition, which is a positive. 🚨

Having said that, Nomura continues to prefer large-cap IT names. They remain positive on Infosys and Tech Mahindra but have lowered their target price by ~20%. Yikes! 👀

Chartbusters

Paint stocks were covered in red after Grasim said that it will +2x its investment for the paints business. Here’s a quick recap: Grasim, an Aditya Birla Group company, announced its entry into the paints business last year. The company initially planned to invest Rs 5,000 cr to set up new factories and ramp up distribution as it targets to become the #2 player. Grasim’s aggressive expansion plans may increase competition, which is a big negative. 🚫

Asian Paints and Berger Paints tumbled over 8%. Indigo Paints slipped 3%. Check out their charts below: 📉

Earnings Highlights

Minda Industries: Revenue: Rs 2,438 cr; (+8% YoY) | Net Profit: Rs 144 cr; (+3% YoY)
Aster DM Healthcare: Revenue: Rs 2,727 cr; (+14% YoY) | Net Profit: Rs 226 cr; (+1.1x YoY)
Bayer CropScience: Revenue: Rs 963 cr; (+31% YoY) | Net Profit: Rs 153 cr; (+1.4x YoY)
Deepak Fertilisers: Revenue: Rs 2,013; (+27% YoY) | Net Profit: Rs 280 cr; (+1.4x YoY)

Stocktwits Spotlight

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