Hey guys,
Markets were back in the red. Nifty and Sensex tumbled nearly 4% each.
Fears of sharp rate hikes, weak rupee and increased geopolitical tensions left investors edgy. Most sectors ended lower. Energy and Real Estate stocks got beat up the most; both fell ~9%. IT (-5%) stocks closed down for the fifth time in the last six months. Pharma (+2%) and FMCG (+1%) bucked the trend.
It was all about the macros. Hotter-than-expected US inflation, 75 basis point rate hike by the US Federal Reserve and an all-time low of Rs 81.97 against the US Dollar made all the headlines. Russia’s announcement of partial military mobilization in Easter Ukraine and the volatility in commodity prices added fuel to the fire.
Ambuja Cements rallied +25% to hit a new all-time high after the Adani Group took over the cement giant and its sibling ACC. Markets love when promoters are pro-growth and willing to invest thousands of crores. Rumours of further consolidation in the sector have also boosted the positive sentiment. Separately, the Adani Group overtook Tata to become India’s most valuable business house. 💯
Speaking of Tata, they continued their efforts to simplify their corporate structure by merging 7 of its metal companies with Tata Steel. The merger will help streamline operations, improve profitability and reduce risks. Tata Steel would save Rs 1,500 cr per year in costs like raw material procurement, inventory management and logistics. The move will be EPS accretive and unlock value for all stakeholders, the company said. 💰
Byju’s finally reported its FY21 results, and we can safely say they were a disaster. India’s most valuable startup pulled in a surprisingly low Rs 2,280 cr in sales, down 4% YoY. PS – Byju’s had guided for Rs 4,400 cr sales. Meanwhile, losses swelled 18x to nearly Rs 4,600 cr. Byju’s blamed the change in accounting policies for the lower topline, but private investors remain unimpressed.
Cryptos continued to grind lower. Bitcoin hit a 20- month low before recovering to end 3% down. The Ethereum “Merge” went live earlier this month. FYI – the Merge is basically a switch to a “proof-of-stake” system for validating transactions on the Ethereum blockchain. South Korean authorities issued an arrest warrant for Do ‘The Con’ Kwon. Ripple (+45%) had the best month since August 2021 after a positive outcome in its legal battle with the US Securities and Exchange Commission (SEC). 💯
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Vishal Mehta is a well-renowned guru in the stock market community. He is a Chartered Market Technician (CMT) and Co-Chair for India Chapter at CMT Association, Inc. He has expertise in systematic trading rules and does swing trading discretionally.
Vishal is a big believer in CANSLIM Methodology and Price Volume Action.
For the month of October, he is bullish on the Pharmaceutical and FMCG sectors. The stocks within these sectors are Cipla and ITC respectively.
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Top Trade Ideas in September that had double-digit returns 💰
