October 4, 2022

Kangaroo Market

Tale of the Tape

Good evening everyone and a very happy Dussehra! 🙏

Markets were up big today. Nifty and Sensex jumped over 2% each. Rally in US stock overnight, FII buying and strength in heavyweight banks propelled markets higher. Midcaps (+2.4%) and Smallcaps (+1.8%) also moved in tandem. 📈

We had a green wave across the screen. Not a single sector closed lower. Metals and PSU Banks rallied +3% each. IT stocks (+2.9%) had the best day since July 20. Pharma (+1%) stocks closed up for a sixth straight day. 🔥

Q2 earnings update. IndusInd Bank (+5.5%) was the top gainer on Nifty while Avenue Supermarts (+1%) hit the highest point since the start of the year on hopes of strong Q2 results. More details are below. 📊

Will India’s largest airline company take off after falling 7% in 2022? Find out below. ✈️

Easy Trip Planners (+7%) will consider the proposal of a bonus issue and stock split on Oct 10. 💯

MGL (+3%) increased CNG prices in Mumbai by Rs 6 to Rs 86 p/kg. 🙈

M&M (+1%) increased tractor volume guidance to +5% vs 3%-5% earlier. 🚜

Electronics Mart India IPO got subscribed 75% on day 1. 💰

Cryptos were back in the green. Bitcoin and Ethereum bounced +4%. Matic jumped +7%. 🚀

Here are the closing prints:

Nifty	17,274	+2.3%
Sensex	58,065	+2.3%
Bank Nifty	39,110	+2.8%

Ready To Take Off?

InterGlobe Aviation, India’s largest airline company, is down over 7% since the start of the year. A combination of factors like Covid 3rd wave, soaring fuel prices and changing industry dynamics weighed on the stock. Nine months later, experts believe the skies are clear for IndiGo to take off. ✈️

What’s the deal bro? Travel demand has rebounded sharply after the 3rd wave and is expected to continue well beyond the holiday season. Higher ticket prices and strong pent-up demand is expected to boost topline growth. Fun Fact: In Q1, the airline reported its highest-ever quarterly revenue. Oil prices, too, have cooled off from the peak, which is a huge W. ✅

Analysts at Goldman Sachs believe InterGlobe Aviation will be able to defend its market share despite rising competition. They expect the industry to consolidate into a duopoly led by InterGlobe and a resurgent Air India under the leadership of Tata Group. This in turn would improve pricing power, which is a positive. ✌️

ICYMI, the aviation industry went through a reboot earlier this year. The Tata’s purchased Air India from the GOI, Jet Airways got the thumbs up to resume operations and Akasa Air was launched. 🤼

IndiGo’s leadership position, solid financial performance, and reasonable valuations make Goldman Sachs bullish on the stock. They see a +20% upside from current levels. Cannot ignore this one. 📈

Earnings Sneak Peak

It’s that time of the year again. Earnings season is just around the corner and companies are giving previews of what to expect. 📊

IndusInd Bank rallied +5% after posting record high growth in Q2. Loan growth stood at 18% YoY led by strong traction in the retail segment, which is a high-margin business. IndusInd Bank has been focused on scaling up its retail lending book and driving market share gains. 💰

Current Account Savings Account (CASA) ratio remained steady at 42.4%. FYI – a high CASA ratio means that a large portion of the deposits in the bank belongs to the current and savings deposit. Banks tend to pay low interest on these deposits (3%-4%). This results in better margins and overall efficiency. 💸

Avenue Supermarts (+1%) topline hit a new all-time high in Q2. Revenues rose 36% over the previous year to Rs 10,385 cr despite concerns over steep inflation. They opened 8 new stores and revenue per store rose 10% YoY! Expectations are high as this is the first full quarter without any Covid-related disruptions. 🛒

Management commentary on consumption trends plus outlook for e-commerce business will be key. The stock cooled off after rallying ~9% in the past three days. Meanwhile, old-school investors continue to hate on Dmart for its expensive valuations. 🧐

Stocktwits Spotlight

LT Foods hit a new all-time high! Thank you Chintan Jain aka Invest4futures for the superb call. Follow him for more amazing trade ideas and add $DAAWAT.NSE to your watchlist to track its performance. Here’s the link: https://bit.ly/3RuUKlH.