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The Fast and The Furious: Dalal Street

Tale of the Tape 

Good evening everyone and Happy Friday Jr. 🤗 

Nifty and Sensex gained +1% each. Sharp fall in oil prices overnight and weekly futures & options expiry pushed markets higher. Midcaps and Smallcaps were equally enthusiastic, +1.3%. The advance-decline ratio stood at 2:1. ✌️

Except for Energy (-0.5%), all other sectors ended in the green. Auto (+4.4%) rallied the most in ~10 months. Check out their charts below. 📈

IT stocks are on track for their best weekly gains in over two years. Know what’s fuelling the optimism below. 🔥

Bajaj Auto (+4%) will consider the proposal of a share buyback on June 27 after deferring it last week. 💰

Glenmark Pharma (+2%) received 6 negative observations from the US Food and Drug Administration (USFDA) for its Baddi unit. 🚨  

IRB Infra (+7%) gets Rs 310 cr as settlement in a dispute with the National Highway Authority of India (NHAI). 💸

Vinati Organics (+3%) will invest Rs 580 cr to expand its manufacturing capacity! 🏭

Jio-BP, Reliance‘s JV arm with British Petroleum, will set up EV charging stations across 13 cities. 🔌

Cryptos pulled back after yesterday’s ugly cut. Bitcoin and Ethereum rose ~2% each. Solana rallied +6%. 🚀

Here are the closing prints:

Nifty 15,556 +0.9%
Sensex 52,265 +0.9%
Bank Nifty 33,135 +0.9%

IT’s Homecoming?

IT stocks are down big since the turn of the year. The Nifty IT Index is the worst performer on a year-to-date basis, down ~28%. 🤕

First it was the sell off in highly valued US tech stocks that turned sentiment negative. More recently, fears of slowing demand amidst predictions of a global recession added pressure. 👊

But, it seems like these fears may be overdone. Accenture, the world’s largest IT services company, raised its Q2 revenue growth guidance to 24%-26% vs 19%-22% earlier. FYI – investors look up to Accenture’s guidance and commentary on demand outlook for signs of the industry’s health. The hike in revenue guidance indicates that there’s been no material impact from soaring inflation and demand remains robust. At least so far! 📊

Markets are always forward looking and analysts argue that steep interest rate hikes plus FED’s balance sheet tightening may drive the US economy into a recession. Only time will tell whether they are right or wrong. But, as things stand the market’s appear to be overly pessimistic. As a result of this, valuations are back to their long term averages which is a positive, according to experts. 💯

Apart from this, a weaker rupee also is a positive for IT companies. The Indian Rupee hit an all-time low of Rs 78.40 against the US Dollar. Fun fact: every 1% depreciation in the rupee boosts earnings of IT companies by 2%. 🤑

Vroom Vroom!! 

Auto stocks were in high demand today. Oil prices dropped over 10% in the past week amidst fears of waning demand. This is positive for automobile manufacturers. Fuel prices and auto demand have an inverse correlation. This means if oil prices rise, demand for cars and especially two-wheelers goes down as it increases their running cost. 🛵 

Maruti Suzuki (+5%) was the top gainer on the Nifty. Hero MotoCorp and Eicher Motors jumped +4.5% each. Check out their charts below: 📈

Stocktwits Spotlight

Mastek hit a fresh 52-week low of Rs 1,851 p/sh earlier this week. Super call by our May 2022 Community Star of the Month Kartikey Gupta! Follow him now for awesome trade ideas and add $MASTEK.NSE to your watchlist to track its performance. Here’s the link: