June 21, 2022

Bulls Are Back

Tale of the Tape

Good evening, guys. Markets had the best day in over a month. 😇

Nifty and Sensex jumped ~2% each on strong global cues. Midcaps and Smallcaps saw healthy gains, +3.5% each. 💪🏻

It was a completely opposite picture from yesterday. Not a single sector closed in the red. Beaten down sectors like PSU Banks and Metals rallied the most, +4 each. Real Estate and IT stocks gained over 3%. 📈

RBI’s clarification on prepaid cards and mobile wallets will benefit this stock big time!!! Read more below. ⛔

Hindalco may give up to 52% returns from current levels. More details below. 🚀

Suven Life (+11%) aims to raise funds by issuing fresh shares to existing shareholders. 💰

Gland Pharma rose over 5% intraday. Global brokerage firm CLSA sees a huge 30% upside from current levels! 🔥

BHEL (+5%) won a Rs 1,300 cr order to supply nuclear steam turbines. ✌️

Cryptos continued to inch higher. Bitcoin jumped +5%. Ethereum rallied ~7%. ❣️

Here are the closing prints:

Nifty	15,638	+1.9%
Sensex	52,532	+1.8%
Bank Nifty	33,191	+1.6%

One Man’s Loss Is Another Man’s Gain

The Reserve Bank of India clarified that prepaid cards and mobile wallets cannot be used for microlending purposes. This is a big blow to several fintech startups like Slice, Uni, and Paytm. 👀

What’s the deal bro? Fintech startups used the ambiguity in the law to extend micro loans or provide services like Buy Now Pay Later (BNPL) to their customers. These credit services took off big time as people lost their jobs or faced salary cuts post-Covid. Ease of repayment, cashback on online shopping, and attractive marketing boosted growth manifold for these startups. 📊

Who gains? Fintech startups’ growth came at the expense of old-school banks with a large credit card base. Morgan Stanley believes the RBI’s latest move is a big positive for SBI Cards. FYI – SBI Card is the second-largest credit card player with ~20% market share. 🏆

Ready To Rumble?

Hindalco (+5.5%) has been in a free-fall recently. A sharp drop in global aluminum prices, volatility in equity markets, and valuation concerns fuelled the negative sentiment. But, after 3 months and a ~50% correction, the stock seems to be bottoming out, according to JM Financial. 📈

For starters, they estimate aluminum demand will be greater than its supply for multiple years. They say global inventory continues to remain at multi-year lows despite improving supplies from China. This in turn may prevent prices from going down further which is a big positive. ✅

The mega $3.4 billion capex plan by its US-subsidiary Novelis is expected to give a big boost to earnings. PS – Novelis maintained its FY23 EBITDA guidance of $500 per ton. Also, Hindalco recently acquired 2 new coal mines. Having captive coal mines would help reduce their power & fuel costs. Lastly, valuations have also turned attractive after the recent correction. FYI – JM Financial has a target price of Rs 515 p/sh; +52% from Tuesday’s closing price! 🚀

Stocktwits Spotlight

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