Utha lo Tata ka koi bhi share

Tale of the Tape

Good evening y’all! Markets barely moved. 🐌

A mostly range-bound session left the Sensex and Nifty with minor gains. Midcaps (+0.7%) and Smallcaps (+1%) saw healthier movement. The advance decline ratio was split in favour of the bulls (4:1). 🎯

Most sectors ended in the green. Pharma (+1.5%) and Real Estate (+1.4%) were top winners today, with Oil & Gas (+0.7%) also seeing decent gains. PSU Banks (-1%) saw the most selling pressure. 📉

With Nifty reclaiming the 20k mark, where does the market go from here? Read our top story below. 🕵️

Tata Technologies had an INSANE market debut. Meanwhile, PVR Inox is set for a solid December. More details below. 💯

Ultratech Cement gained 3% after acquiring Burnpur Cement’s Jharkhand assets in a Rs 170 cr deal. 🏭

New India Assurance (+10%) was the top NSE 500 gainer today. The stock is up 47% over the past week. 🔥

Tata Power (-2%) fell after brokerage firm Citi slapped a ‘sell’ rating on the stock, citing delays in resolving its Mundra plant issues. 👎

The Enforcement Directorate raided Jammu and Kashmir Bank (-1%) over a Rs 250-cr money laundering case. 🚨

IPO updates. Gandhar Oil Refinery listed at a whopping 75% premium to its issue price. Fedbank Financial Services, however, debuted a 1.6% discount to its IPO price. 💸

Here are the closing prints:

Nifty	20,133	+0.2%
Sensex	66,988	+0.1%
Bank Nifty	44,481	-0.2%

Markets Kya Lagta Hai?

The October market correction wasn’t too bad. Also, while FIIs still haven’t fully returned, the Nifty did to reclimb Mount 20k. The way ahead should seem smooth but there are plenty of potential obstacles. Here’s what you need to know. 🤓

First, the positives. India is set to become the third-largest economy in the world by 2027, overtaking Japan. FYI – this assumes a 6% real GDP growth rate (completely doable) and a 5.5% inflation rate (also manageable). In the best case scenario, if the GOI’s reforms pay off, India could hit 8% GDP growth and overtake the US in the next 30 years. So, in the long-term, the picture is sound. ✅

In the short-term, depending on the global economy, a minor slowdown COULD take place until late 2024, according to foreign brokerage CLSA. But even this, most experts agree, should wear off by 2025. Overall, on the macro & fundamental economic front, India is well placed. ✌️

But that isn’t the whole story. Both Jefferies and Societe Generale have downgraded their India positions to ‘neutral’ from ‘overweight’. What explains the bearish case? Well, they believe valuations are too high at the moment. Some experts agree this is the case, especially looking at the meteoric rise in smallcaps this year. But others believe that in many cases, valuations are justified although they could use a little cooling-off. 😣

The second big worry is that we’re headed into a period of political uncertainty for the next 7-9 months. There are key state elections (where the uncertainty is greater) and then the general elections next year (where the uncertainty is less). It’s not really a big concern from a domestic perspective, but it’s easy to see why foreign investors are a little jittery. 📉

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Bullets For The Day

💰 Tata Tech IPO allottees made an absolute killing today. The company had a SPECTACULAR market debut, with the stock listing at 140% premium to the IPO price. The stock started trading at Rs 1,200, while its issue price was just Rs 500. It gained throughout the day, before ending at Rs 1,311 or up 161% from the IPO price.

Some quick numbers. This makes Tata Technologies the best IPO listing of 2023, and the 9th all-time best listing in Indian stock market history. Fun fact: the closest and most recent public issue that compares was Latent View Analytics (148% listing premium back in 2021).

This means that while the IPO was very reasonably priced, this also makes Tata Technologies now incredibly expensive from a valuation perspective. At 76x FY24 P/E, the company is now far ahead of its peers including Cyient (28x), L&T Tech (36x), Tata Elxsi (63x) and the market leader KPIT Tech (68x).

🍿 PVR Inox (+1%) is gearing up for a STRONG December after a muted start to Q3FY24. Box office collections in Oct-Nov were limited mostly due to a smaller content pipeline. Production houses didn’t want releases to clash with the Cricket World Cup as seen by the lower-than-expected performance of ‘Tiger 3’.

That said, most experts now project footballs to grow in December. Channel checks by Nuvama Institutional Equities show that Ranbir Kapoor’s ‘Animal’ is on track for a strong Day 1 opening of Rs 60 cr on December 1st. It could end up with the 3rd highest collections this year after Jawan and Pathaan. On top of this, a strong slate of over 35 Indian + Hollywood films will be released over Dec 2023-March 2024. These include Dunki, Aquaman 2, Salaar, Fighter and Yodha.

Nuvama is also bullish on PVR Inox’s weekday Rs 99 offer and a new pilot project called ‘Passport’ which allows viewers to watch 10 movies for just Rs 700. FYI – the brokerage firm has a new target price of Rs 2,210 p/sh; +28% from current levels!

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