Samco Newsletter


Market Mode & Mood: Wait & Watch

The Indian equity market displayed a mixed performance in the past week🫨, with the benchmark indices, Sensex and Nifty 50, closing flat due to profit-booking in blue-chip stocks and significant Foreign Institutional Investor (FII) outflows😵. The Nifty 50 experienced a 0.8% decline, closing at 24,205.35, though down from the previous week. However, sustained inflows from Domestic Institutional Investors (DIIs) and decreased oil prices🛢️helped mitigate losses in key indices. The week’s performance paused the four-week downward trend for the Sensex and Nifty.

Overall, the Indian equity market exhibited a cautious and volatile trend during the Diwali week, with investors closely monitoring global economic conditions and domestic factors. While the benchmark indices remained relatively stable, the divergent performance of mid-cap and small-cap stocks highlighted the sector-specific dynamics at play.


Market swings on earnings downgrade

The Nifty 50 index has experienced a significant decline of 6% since October 1st, driven by a sharp downward revision in FY2025 Earnings Per Share (EPS) estimates. As per media reports, Bloomberg’s consensus Nifty EPS for this fiscal year was slashed by 13% in October, a substantial downgrade from the 2% reduction in September. This divergence between Bloomberg’s estimates and the Nifty bottom-up estimate highlights analysts’ waning confidence in an imminent earnings recovery📈.

Nearly half of the Nifty companies have faced EPS cuts exceeding 1% in October, according to a report from Emkay Global Financial Services. The Bloomberg FY2025 EPS estimate plummeted by 40% from its April 1st level, underscoring the severity of the downward revision.

A key concern is the sluggishness🐌in broad-based consumption, particularly urban consumption, despite a gradual improvement in rural consumption. The banking and non-banking finance sectors also exhibit areas of concern.

Bloomberg’s aggressive earnings downgrade likely triggered significant selling by foreign portfolio investors in the cash market during October, exacerbating the downward pressure on indices, even as domestic institutional investors partially offset this selling.


The week ahead for India

The upcoming US election🗳️, a closely contested race between Democrats and Republicans, is set to dominate the week. With both sides neck-and-neck, particularly in swing states, the outcome remains uncertain. The implications for India, especially its equity markets, are significant.

Market sentiment has been dampened by a combination of factors: high valuations, geopolitical tensions, and China’s new stimulus package. Corporate earnings are also under pressure due to rising costs and supply chain disruptions caused by the ongoing conflicts in Ukraine and the Middle East. Oil prices, though currently stable, could escalate if geopolitical tensions worsen. Foreign institutional investors (FIIs) are pulling out, signalling underlying concerns about growth. While rural demand has shown resilience, urban consumption is weakening. The auto sector🚗, though positive, still has pockets of concern. With many big companies yet to announce their quarterly earnings, uncertainty persists.

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All eyes on Fundamentals now!

A major event, the US election, is out of the way, and the focus would move to the economy and fundamentals📑.

The recent US election results sparked a brief market rally, but the week concluded with minor losses for Nifty and Sensex, down 0.69% and 0.28%, respectively🐻. The Federal Reserve cut its benchmark lending rate by 0.25% to a range of 4.5-4.75%, aiming to sustain the US economic expansion. This follows a 0.5% cut in September. Despite a positive global sentiment due to the US Fed’s rate cut, the Indian equity market witnessed a decline in three out of five trading sessions.


Trump’s win: A mixed bag for India

While some Indian analysts are optimistic about a second Trump term due to his relationship with the Indian Prime Minister and proposed tariffs on Chinese goods, there could also be potential drawbacks😬. Trump has criticised Indian protectionism and advocated for improved treatment of American companies in India.

Additionally, India’s manufacturing sector faces structural inefficiencies, relying heavily on Chinese inputs and lacking the value-add seen in competing Southeast Asian nations. Further concerns include the potential tightening of H1B visa regulations and the impact of Trump’s stance on birthright citizenship on Indian families in the US📕.

However, a second Trump term could bring benefits such as a resolution to the Ukraine war, reduced sanctions on Russia, and increased hydrocarbon production, leading to lower fuel prices. While lower fuel prices would provide short-term benefits to India, the environmental consequences of increased hydrocarbon production could have detrimental long-term effects on the Indian economy.


Indian Service Sector Experiences Growth in October

India’s service sector saw significant expansion in October, with the HSBC India Services Business Activity Index rising to 58.5 from a ten-month low of 57.7 in September. This growth was fuelled by robust demand and strong sales pipelines, leading to increased business activity📈.

The service sector also saw a surge in new export sales, attributed to increased demand from clients in Africa, Asia, the Americas, the Middle East, and the UK🌎. Employment in the sector experienced its most rapid growth in 26 months, with approximately 13% of surveyed companies reporting job creation. While input price inflation rose to a three-month high📅due to higher food and wage costs, the overall inflation rate remained below the long-term average.

The HSBC India Composite Output Index, which combines data from the manufacturing and service sectors, also rose to 59.1 from 58.3 in September, indicating growth in both sectors🏭. The growth in new business inflows in both sectors contributed to increased sales and employment overall. A PMI reading above 50 indicates expansion, while a score below 50 denotes contraction.


So, what awaits next week?

The upcoming weeks are crucial for the market, with many companies set to announce Q2FY25 results. Macroeconomic indicators like India’s industrial and manufacturing production, inflation, and US inflation will be closely watched by analysts to gauge the market’s future trajectory.

To stay updated on actionable insights, visit :point_right::-: https://tinyurl.com/2yuwjf5t


The market hits a speed bump

The Indian equity market experienced a significant downturn📉, primarily driven by concerns about subdued second-quarter earnings and domestic challenges. The benchmark NIFTY 50 index plummeted by 2.55% during the week, while the BSE mid-cap and BSE small-cap indices suffered even steeper declines of 3.89% and 4.61%, respectively. Foreign Institutional Investors (FIIs) continued their selling spree, withdrawing $2.5 billion in November🗓️so far.

Sectorally, the IT index bucked the trend, rising 1.5% on the back of expectations for robust external demand💪fuelled by a weak rupee and potential US tax benefits. However, all other sectors witnessed declines😩.


India’s inflationary woes

India’s economic landscape is grappling with the persistent threat of inflation💸. Retail inflation, as measured by the Consumer Price Index (CPI), is edging closer to the Reserve Bank of India’s (RBI) upper tolerance limit of 6%. A significant contributor to this trend is the surge in food prices triggered by heavy rainfall that disrupted crop production🌾.

While some experts anticipate a decline in inflation to the RBI’s 4% target in FY26 as weather-related factors stabilise, the recent spike to 6.2% in October, primarily driven by soaring vegetable prices🫛, has raised concerns. As such, this development diminishes the likelihood of a rate cut in the upcoming December meeting. The weakening rupee further exacerbates the situation, potentially leading to higher oil import costs and subsequent fuel price increases⛽.

Despite these challenges, the RBI’s optimistic GDP growth forecast of 7.2% for 2024-25 suggests confidence in economic resilience. However, a significant slowdown in growth could prompt a shift in policy priorities.


India’s IPO market in a slow lane

The year 2024 has been a record year for IPOs in India🔔, both in terms of total issue size and number of offerings. The total issue size has surpassed the previous decade’s high of Rs 1.31 trillion in 2021, reaching a staggering Rs 1.38 trillion.

But that said, recent months have seen a decline in IPO activity and subscription numbers. Global economic uncertainties, rising interest rates, and tighter liquidity have made investors cautious.

While larger IPOs like Hyundai Motor India and Swiggy garnered mixed responses from investors and tepid listings, smaller IPOs from companies like Arkade Developers and BLS E-services witnessed strong demand and significant listing gains.

However, experts remain optimistic about the long-term prospects of the Indian IPO market, though the current slowdown raises concerns about its immediate future😟.


Adani Group likely to expand into the metals sector

Adani Group is gearing up to disrupt India’s metals sector with a planned $5 billion investment over the next 3-5 years, as per media reports🔭. This ambitious move, following their successful entry into the cement industry, aims to challenge established players like Vedanta, Hindalco, and Tata. The focus will be on mining, refining, and producing copper, iron, steel, and aluminium, leveraging synergies with existing businesses in renewable energy, transmission, logistics, ports, and infrastructure.

While their copper plant, Kutch Copper, is already operational, they plan to invest an additional $1 billion to double its capacity. This initial $5 billion investment is separate from the funds already allocated to Kutch Copper, signalling a significant commitment to the metals sector🏭.


Week ahead

The market’s weakness🐻was attributed to a combination of factors, including disappointing earnings, FII outflows, and uncertainties surrounding global and domestic economic growth. Despite this, domestic investor confidence remained strong, with monthly Systematic Investment Plan inflows reaching a record high of over 25,300 crores in October 2024. A few things to watch out for next week are the last leg of the Q2FY25 earnings season, the long-awaited NTPC Green Energy IPO listing and manufacturing, and Services PMI data.

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Indian market: push and pull to continue

Indian equity benchmarks capped a shortened week with moderate gains, following a significant rally on Friday spurred by robust US job market data. The Nifty 500 index surged 1.37% for the week. The Sensex also climbed 1.91%:rocket:.

While concerns over the Adani Group’s legal troubles in the US and potential trade tensions with the US persisted🌎, investors remained optimistic about future corporate earnings. This positive sentiment propelled the market upward.


Adani Group of Companies in trouble once again?

The Adani Group is facing legal challenges in the US related to bribery allegations. The US Securities and Exchange Commission (SEC) has issued a summons to Gautam Adani, the founder and chairman of the Adani Group, and Sagar Adani, the executive director of Adani Green Energy. The charges allege that they, along with other senior business executives, bribed Indian officials to secure solar energy contracts amounting to Rs 2,000 crore (or $250 million). The Adani Group denies these allegations.

These legal troubles led to a significant decline of 23% in the Adani Group’s stock prices on November 23, raising concerns about the Adani Group’s governance standards😨.

Trouble further escalated to the group with Kenyan President William Ruto announcing the cancellation of two major projects involving Adani Group Companies. As per reports, these include contracts for expanding Nairobi’s main airport and a $700 million project for constructing power transmission lines⚡.

Experts suggest caution to investors, recommending close monitoring of legal proceedings and a thorough evaluation of the group’s financial health before making investment decisions.


Indian Corporate Earnings Report Disappoints

The September quarter (Q2FY25) earnings report for Indian companies reveals a weaker-than-expected performance, leading to a significant sell-off in the equity markets and raising concerns about a potential economic slowdown📉. This underwhelming performance has negatively impacted investor sentiment, particularly among overseas investors steadily withdrawing funds in recent months.

A closer look at the data reveals a mixed picture. While the Nifty showed a 4% year-on-year growth in profit after tax, this growth represents a second consecutive quarter of single-digit growth since the pandemic (June 2020):ox:.

Excluding commodity-related companies, the earnings growth is considered in line with expectations. However, the consumption sector🛍️has emerged as a weak spot due to sluggish government spending, which remained flat in the first half of FY25 compared to the previous year, and excess rainfall impacting demand.

A recent report highlights a concerning trend in earnings estimates. The beat-miss ratio, which compares the number of companies exceeding or falling short of earnings projections, was unfavourable. The earnings upgrade-to-downgrade ratio for FY25E has weakened considerably, with 121 companies experiencing earnings downgrades of over 3% compared to only 43 companies receiving upgrades exceeding 3%:bar_chart:. This ratio of 0.4x marks the worst performance since the first quarter of FY21.

Despite the current challenges, corporate earnings recovery is expected in the second half of FY25 and continued favourable macro support💪. However, analysts caution that market volatility is likely to continue as global economic uncertainties and geopolitical risks remain.

To stay updated on actionable insights, visit :_https://tinyurl.com/2yuwjf5t

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Indian benchmark indices had a mixed week, with the Nifty 50 closing flat. While it was better than the previous week, concerns over a slower pace of domestic rate cuts due to lingering inflationary worries and uncertainty surrounding the U.S. rate cut✂️trajectory dampened investor sentiment. Additionally, concerns over the policy stance of the incoming U.S. president further weighed on the market.

In contrast, the BSE small-cap and mid-cap indices fared better, gaining 3.16% and 0.77%, respectively🐂. The BSE large-cap index, while lagging behind, still managed a 0.17% gain.


India’s Economic Growth Falters in Q2 FY25
India’s economic growth slowed down to 5.4% in the second quarter of the current fiscal year (Q2FY25), marking a significant deceleration😩. Weak industrial performance, particularly in mining, manufacturing, and utilities, coupled with low capital investment and bleak exports, contributed to this slowdown.

However, the agricultural sector remained resilient, registering healthy growth, and the services sector, excluding utilities, continued its steady expansion🌽.

Economists expect a revival in the second half of the year, driven by increased government capital expenditure, especially in infrastructure projects. Healthy agricultural output is likely to boost rural consumption, and moderating food inflation is expected to stimulate consumer spending.

As such, the pressure to cut the rate mounts for RBI. While challenges persist, the government remains optimistic about achieving its GDP growth target of 6.5-7% for FY25🏦.


Telecom Firms Target Defence Contracts

India’s defence forces are increasingly sourcing telecom equipment from domestic companies, creating a significant new market for these firms. This shift away from traditional foreign suppliers like Huawei, Nokia, and Ericsson is fuelled by geopolitical tensions, particularly with China, and the refusal of some foreign companies to provide sensitive technologies.

Indian companies like HFCL, STL, and Tejas Networks are capitalising on this opportunity to develop advanced telecom infrastructure tailored for defence applications.

With a projected global market value of $138 billion for defence communications infrastructure in the next decade🗓️, Indian companies are poised to play a key role in this sector.


Value creation strategy for investors

Indian conglomerates increasingly embrace the strategy of demerging their distinct business divisions and listing them as independent entities. This approach aims to unlock shareholder value, streamline operations, and facilitate focused growth📈.

Companies like Hindustan Unilever and NTPC are following global trends by demerging their ice cream and renewable energy businesses, respectively. This allows for better capital allocation, specialised management, and potentially higher valuations in the market💸. Similarly, Tata Motors seeks to simplify its operations by separating its passenger and commercial vehicle divisions.

The history of the Nifty 50 is replete with successful demergers that have created shareholders’ value. Companies like SBI Life Insurance and HDFC Life Insurance, once part of larger financial conglomerates, have thrived as independent entities.


Conclusion

Investors remain cautious, though easing geopolitical tensions🌍might offer some relief. Experts believe that the absence of positive catalysts in the market will likely prevent aggressive buying by foreign institutions in the final month of the year, suggesting a potential period of market consolidation.

To stay updated on actionable insights, visit :_https://tinyurl.com/2yuwjf5t

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Awaiting cues

Indian equities kicked off the week with a strong surge, hitting a one-month high🚀. This rally was fuelled by expectations of an interest rate cut, prompted by weaker-than-anticipated GDP data. The Nifty 50 and BSE 500 indices gained 2.3% and 2.7%, respectively, buoyed by positive sentiment from a robust services PMI reading of 58.4 in November.

However, the market’s momentum slowed down towards the end of the week🐌. The RBI opted to keep interest rates unchanged but reduced the cash reserve ratio (CRR). This marked the first CRR cut since March 2020. While the move aimed to stimulate the economy, the RBI also downgraded its GDP growth forecast for 2024-25 and raised its inflation projection, dampening investor optimism.


RBI balances inflation and growth

The RBI chose to keep the policy repo rate steady at 6.5% during its bi-monthly Monetary Policy Committee meeting held from December 4th to 6th, 2024. This decision was made to address both inflationary risks and concerns about economic growth.

Despite a slowdown in economic growth, the RBI remains committed to controlling inflation, which surpassed its acceptable limit in October 2024. To balance this, the RBI opted to reduce CRR by 50 basis points in two stages, aiming to inject liquidity into the banking system. This move is intended to encourage credit growth and support economic activity🪜.

The central bank also revised its forecasts for the fiscal year 2025, lowering growth estimates to 6.6% and increasing inflation estimates to 4.8%.

The decision to hold the repo rate came amidst a complex macroeconomic environment, with challenges including a drop in GDP growth in the second quarter of fiscal year 2025, elevated inflation, and global economic uncertainties.


In a slow lane

The Indian automobile industry is experiencing a slowdown in sales, particularly in the passenger vehicle and two-wheeler segments🛵. While wholesale dispatches saw a slight year-on-year increase in November, this growth was primarily driven by commercial vehicles and exports. The slowdown in the PV segment is attributed to several factors, including moderation in demand for utility vehicles, which were previously a major driver of growth, rising cost of ownership, including vehicle prices, fuel costs⛽, and higher interest rates, and declining footfalls and retail sales.

To manage the slowdown, car manufacturers have reduced dispatches to prevent dealers from incurring financial losses. However, it remains to be seen if this will be sufficient. There are also concerns about a potential slowdown in financing, which could further impact sales.

Despite this, the premium segment, including luxury cars, is performing well, suggesting that high-end buyers remain unaffected. The 2W segment presents a more optimistic picture, with overall industry wholesales up 15%. As for CVs, the industry anticipates flat sales growth or a marginal decline in the current fiscal year💸.


Conclusion

Global markets are currently exhibiting a cautious outlook, primarily due to geopolitical events. In India, the equity market is also expected to remain range-bound in the near term. Investors are awaiting improved corporate earnings and clearer visibility on potential rate cuts to drive upward momentum.

To stay updated on actionable insights, visit :_https://tinyurl.com/2yuwjf5t

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Awaiting Christmas cheer!

The week began with some selling pressure in the Indian equity market due to ongoing global tensions in the Middle East. However, this was balanced by expectations of a potential Fed rate cut and the easing of inflation💸. Despite this, cautious investor sentiment led to a narrow trading range for Indian shares. The week concluded with a slight uptick, with the Nifty 50 index gaining ~0.5% and the Nifty 500 index rising ~0.3%.


New RBI Governor sparks hope for Growth-Focused monetary policy

The recent appointment of Sanjay Malhotra as the new Governor of the Reserve Bank of India (RBI) has generated significant buzz in the financial markets🏦. This unexpected change, replacing Shaktikanta Das, who served two terms, has raised expectations of a shift towards a more growth-oriented monetary policy. Economists are increasingly predicting a potential rate cut in the upcoming February policy review🔭.

Malhotra’s immediate task will be tackling inflation.

However, policymakers face a complex challenge in balancing growth and inflation. Incoming inflation data over the next three months will be critical in determining the MPC’s course of action. Any unforeseen spikes in retail inflation could disrupt the committee’s calculations and plans🌋.

While the new Governor’s arrival brings hope for a more growth-focused approach, the MPC’s decisions will ultimately be driven by evolving economic data and the need to balance growth and inflation objectives⚖️.


Easing inflation fuels hopes for a rate cut

India’s economy received a boost in November📅 as retail inflation fell back within the central bank’s target range, paving the way for a potential interest rate cut in early 2025. The Consumer Price Index (CPI) eased to 5.48%, down from a 14-month high of 6.21% in October. A seasonal drop in vegetable prices primarily drove this decline🍆.

Economists are optimistic that the downward trend in inflation will continue, allowing the RBI to shift its focus towards supporting economic growth. The RBI has projected CPI inflation at 4.8% for the fiscal year 2025. However, experts caution that the timing of a rate cut will depend on several factors, including global economic conditions and the volatility of food prices. Food inflation, in particular, has remained a concern. Despite the positive inflation data, the RBI remains vigilant about potential price pressures.


Oil impact

The end of the Syrian Civil War has had a surprisingly muted impact on global oil markets⛽. While Syria is strategically located in the Eastern Mediterranean, it is not a major oil producer, so its return to peace has not significantly affected prices. Instead, oil prices have faced downward pressure due to Saudi Arabia’s decision to cut prices for Asian buyers. Saudi Aramco reduced its premium for Arab Light crude, signalling a potential oversupply in the market. OPEC+, the oil cartel led by Saudi Arabia and Russia, has also decided to maintain current production levels, further contributing to the oversupply🛢️. Analysts predict this trend could continue into 2025 due to a slowing Chinese economy and increased US oil production.

The Indian equity market is anticipated to remain range-bound in the near term. China’s stimulus measures have added pressure to the market. While domestic IIP and retail inflation figures were in line with expectations, they remain elevated, casting uncertainty over potential rate cut cycles in 2025, given the strong US economy. However, the upcoming Christmas season could bring some much-needed positivity to the market🎄.

To stay updated on actionable insights, visit :_https://tinyurl.com/2yuwjf5t

Disclaimer: This content is for educational purpose only. https://sam-co.in/6j


Cautiously optimistic
Indian equity markets witnessed significant losses last week, with the Nifty 50 falling ~4.7% and the broader Nifty 500 down ~4.5%, marking the worst weekly performance📉.

This downturn was triggered by several factors, including a hawkish US Federal Reserve despite rate cuts, a record low for the Indian rupee, and substantial FII selling. Concerns over Eurozone inflation, India’s widening trade deficit, and declining foreign reserves further exacerbated market anxieties😟.


SEBI Tightens Regulations for SME IPOs
The SEBI has introduced stricter regulations for SME IPOs🔔. To be eligible for an IPO, companies must demonstrate an operating profit of at least Rs 1 crore in two of the previous three financial years. The regulations also prohibit SMEs from using IPO funds to repay loans to promoters or related entities. The offer for sale (OFS) portion of an IPO cannot exceed 20% of the total issue size, and selling shareholders cannot sell more than 50% of their holdings. Additionally, the amount allocated for General Corporate Purposes is capped at 15% of the IPO size or Rs 10 crore, whichever is lower.

SEBI has also mandated a phased release of promoters’ holdings beyond the minimum promoter contribution💸. These changes aim to protect investors and ensure that only SMEs with soundtrack records raise funds. These new measures follow a record year for SME IPOs, with over 225 companies raising more than Rs 8,200 crore. Also, the National Stock Exchange brought into effect stricter eligibility norms for listing SMEs.

Fed cut disappoints markets

The Federal Reserve implemented a third consecutive 25 basis point interest rate cut✂️, but the global markets declined sharply due to the Fed’s forward guidance. Investors had anticipated three or four more rate cuts, but the Fed’s projections indicated only two additional quarter-point cuts by the end of 2025. This seems to have triggered the sell-off.

The December cut brought the total rate reduction for 2024 to a full percentage point, setting the target range for short-term borrowing rates at 4.25% to 4.50%. The revised projections suggest a further decrease to 3.75% to 4% by the end of 2025🏦.

This less dovish-than-expected stance disappointed stock markets worldwide. In the US, the S&P 500 and Nasdaq both fell by ~3%. Indian benchmarks, the Sensex and Nifty 50, saw losses of ~1%, while European markets also experienced significant declines📊.

India’s trade picture mixed

India’s November goods trade deficit increased to US$37.8 billion from US$27.1 billion in October, driven by higher gold imports and a drop in exports to their lowest level since November 2022💰. A record high services trade surplus provided some offset. India’s external balance will remain sensitive to economic policy uncertainties in the US and China🌎.

Markets show cautious optimism despite volatility from global inflation and geopolitical tensions. Key data to watch next week includes US consumer confidence and weekly jobless claims.

To stay updated on actionable insights, visit :_https://tinyurl.com/2yuwjf5t

Disclaimer: This content is for educational purpose only. https://sam-co.in/6j


Moving into a new year

The Indian market experienced modest gains, ending a five-day losing streak during the holiday week📆. But it remained largely range-bound due to profit booking and the shortened trading week. The Nifty 50 index ended flat, while the broader market underperformed.

On the other hand, the IPO market has seen unprecedented growth, raising Rs 1.8 trillion in 2024, significantly higher than Rs 576 billion in 2023, and is expected to surpass Rs 2 trillion in 2025🚀. Meanwhile, the Indian Rupee has hit record lows every trading session this week, influenced by a strong USD, a widening trade deficit, and concerns over slowing economic growth. Additionally, India’s gold imports surged to $14.8 billion in November 2024, tripling the previous year’s amount, though there are indications of possible double counting being investigated by GoI🪙.


** GST: Tax rate adjustments and clarifications**

Recently, the GST Council made several key decisions that impact tax rates and exemptions. A significant change involves the taxation of used electric vehicles (EVs) and old vehicles; on all used EV sales just as non-electric vehicles, it will be taxed at 18% from 12%. The GST will apply to the margin value between the purchase price and the selling price of the used EV🔌.

Additionally, the council addressed the taxation of popcorn, clarifying that caramel popcorn will be taxed at 18%, pre-packaged and spiced popcorn at 12%, and unpackaged popcorn at 5%. The tax on fortified rice kernels used for public distribution has been reduced to 5%, down from 18%:popcorn:.

Furthermore, the GST Council has provided exemptions for certain items, such as black pepper and raisins, supplied directly by farmers. Also, penal charges imposed by banks and NBFCs, as well as gene therapy, are all exempt from GST. Payment aggregators that handle payments below Rs 2,000 will also be exempt.

In contrast,:airplane:aviation turbine fuel will remain outside the GST framework due to concerns raised by states. The council is also working on easing registration processes for small companies.


India’s IPO Boom

India has become Asia’s top market for company listings, surpassing China, due to a surge in initial public offerings (IPOs) driven by strong stock prices🔔. India is set to be the world’s second-largest equity fundraising market in 2024, with India’s National Stock Exchange leading in primary listing. This shift is partly due to China’s regulatory tightening and a rush by companies to capitalise on high valuations in India. While the value of listings in China has decreased significantly, India has experienced a boom, with many companies seeking to raise funds, although deal sizes are smaller. Despite a pullout of $11 billion by foreign portfolio investments in October, the outlook for Indian IPOs remains positive into the new year.


Wrapping it up

The absence of major market-moving events, with most🗝️key events either concluded or scheduled for January, is most likely expected to keep investor participation muted next week.

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Disclaimer: This content is for educational purpose only. https://sam-co.in/6j


Caution As We Move Towards the Results Season

2024 seemed a bit overwhelming towards its end😨with record FII selling. However, 2025 seems to have kicked off on a positive note🧘.

While the benchmarks are in the green, the broader indices seem to outshine them. The smaller indices are soaring even more considerably🐂.

The global indices too seem full of hope as we enter 2025 with policy uncertainty around taxes, tariffs and interest rates🌐.

With that, let’s get to the main stories of the week.


HUL in talks to acquire Minimalist

It has been ~3 years since Minimalist raised ₹110 Cr ($15 mn) from the venture investing arm of Unilever (Unilever Ventures). Minimalist is backed by Peak XV Partners and is a Jaipur-based skincare start-up📦. Now, Hindustan Unilever Ltd is in talks to (mostly or fully) acquire Minimalist in a ₹3000 Cr ($350 mn) deal🤝.

This is one of the largest D2C deals in recent years, especially in the skincare domain.

Minimalist’s valuations have seen a splendid rise over the past 3-yrs. This is largely backed by stable profits and increasing revenues. Its revenue jumped 89% in FY24 from FY23⛰️.

A Notable Note: The emerging trend of FMCG majors acquiring young brands hints at their approach to target GenZ and younger consumers, going beyond their grasp, might add shine to their investors’ smile😁.


Trump’s Return

As the US markets cheered Trump’s victory, under the backdrop of reigniting economic growth, tax cuts and deregulations, the investors seemed pumped up on the belief that he would Make America Great Again🌎. However, the debt markets seemed not in line with the ideology. Now, there is more of a ‘Wait and Watch’ approach to whether his new regime turns out to be more rabid or more mellow.

A Notable Note: Inflation is anticipated to be reduced globally by certain policymakers–likely to spark a new wave of deals, which might be bringing cautious optimism to Indian markets🔭.


Wrapping It Up

As we enter 2025, we enter the results season with the hope of growth and green line charts over a longer period📈. However, with a slowing economy due to sluggish consumer demand momentum, even during festive seasons, it is rather a cautious wait-and-watch approach😟.

To stay updated on actionable insights, visit :_https://tinyurl.com/2yuwjf5t

Disclaimer: This content is for educational purpose only. https://sam-co.in/6j


A Rollercoaster of Rising Rates & Falling Stocks
With persistently elevated bond yields and stubborn inflation in the US, market experienced heightened anxiety😨. Other triggers were anticipation of unchanged Fed interest rates, multi-year high yields in Japan and UK🌐.

The other end of the roller coaster was the market closing in red, four out of five days, last week, with the middle bump of IT stocks marking their territory green, patiently waiting for Q3 results🎢.

With that, let’s get to the main stories of the week.


It’s A Lifetime Low For Rupee

On 10 Jan, the Indian Rupee reached its lifetime low of ₹85.97/US$🤑. The reason for this was rising crude oil prices, leading to strong dollar demand from oil importers and persistent FII (Foreign Institutional Investors) outflows. On the other hand, the positive US labour market data kept the US$ firmly afloat🛟.

The US$ and JPY were getting highly bought💹. However, the other currencies as well as the equities were getting highly sold. This posed pressure on the local currency, leading to its lifetime low.

A Notable Note: Much might be expected to change considering the January effect and the rate cut expectations that could be disappointing investors.


Desire To Secure Commercial Finance

Fintech businesses in India seem to be hoping for a budget that could extend an early-stage financial support💸. An ongoing credit crunch has stifled their growth, grippling the start-ups with fund squeeze. The main reason for this could be tightened credit norms by the RBI, over the past two years🏦.

An access to cheaper credit through budgetary measures might once again spur growth among rising fintech businesses. There are also talks of a ‘India Fintech Fund’ in the industry as they await 1 Feb with hopes pinned📅.

A Notable Note: Fintech businesses struggling to secure commercial credit in early-stages are hoping for a wholesale funding facility. This might help them lower product/service pricing benefitting the end-users too.

Wrapping It Up

We have already had a rough start to 2025😫with major Indian stocks marked in red. Most of this is due to the market’s over-depandancy on FIIs. Until we dominate and become the pullers of our domestic markets, Indian retail investors, a very long-term, sturdy growth that could last, might remain a distant dream🔭.

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Wait For It! Results, Cuts & Splits
With the staggering Kumbh Mela scale and the rising emotional bass of Coldplay concerts, we are moving towards the closing of the first month of 2025​:guitar::ocean:. These events could be a ray of hope for FMCG companies.

Let’s get started with our week’s stories:


The Splits Around Us
Two major stories of splits popped up in 2025–one from ITC (that started its demerger timeline earlier in 2025) and another from Bajaj Allianz🪢.

After the ITC hotels demerger, during the earlier week, the Bajaj Allianz split is the second biggest separation story of 2025📆.

The splitting of the joint venture between Bajaj Finserv and Allianz SE for life and general insurance business might be underway. The 25-year-old partnership’s separation might be terminated by March 2025 due to differences in aligning to the business’s future direction🛣️.

A Notable Note: It would be interesting to see how these businesses perform once they break their alliance. Would it be a boon or a bane?


The Results Are Out!
Major results last week were of Reliance Industries Ltd (RIL)., Infosys, Indian Hotels, Kotak Mahindra bank, and Tech Mahindra.

Driven by its digital services, RIL’s net profit for Q3 increased by 12%. Its revenue rose 7.7% backed by an increase in average revenue per user. Mainly, the digital and retail businesses of RIL pushed its profit to a new ceiling💸.

In the tech sector, Infosys results were able to beat the market expectations. Its Q3 net profit could beat estimates with an 11% YoY zoom on the back of differentiated digital offerings, major strategic initiatives and market positioning🚀.

A Notable Note: It would be interesting to wait for the results as they unfold for different companies and different sectors📊. These results along with the economic survey and budget announcements might drive the markets to either direction.


Wrapping It Up
Looks like the bump on the road is passing and a straight or flat territory is about to set-in. There are many things to look forward to as the month ends–like the Union Budget by the new government in India and the endless wait for the FIIs to be back☀️.

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Disclaimer: This content is for educational purpose only. https://sam-co.in/6j


It’s The Announcements Season

The season of announcements has started with companies presenting Q3 returns, Trump’s Presidential Actions and the upcoming Union Budget expectations.

The actions, the expectations and the market implications are going to be nail-biting indeed😧!

With all these announcements running in the background, you might have not noticed the FIIs making a choice between the small-cap and large-cap companies. They seem to be heavily offloading large-cap stocks as their attention diverts towards the small-caps, where the retail investors champion🔭.

With this, let’s get to our pre-budget stories for the week.


Hoping For Easier Tax & Compliance
In a recent survey of 45 CEOs across Indian businesses, ~91% voted for easing tax and compliance as a necessary pre-condition for business. With the upcoming Union Budget, businesses seem to be hopeful of the government taking steps towards this to amplify their efforts towards building the India Story.

Other suggestions on India’s economic development included energy reforms, boosting the manufacturing sector, growth in jobs, infrastructure development and more🛣️.

As per the survey, over 55% CEOs were optimistic about India becoming the economic growth outlier. They anticipated India growing between 6.5% to 7% in FY26📆.

A Notable Note: It would be interesting to see how many of these corporate wishes the Union budget fulfils. Will the budget be more ‘people centric’ or ‘corporate centric’?


Budget Expectations Wishlist - Jobs & EV
Looking at the major retail investor base which are mostly the salaried class, the budget expectations are bundled around employment generation. However, this is indirectly connected to growth of industry, technology advancement and ease of developing skills🏭. This wish is also directly linked to the capital expenditure to realise the Viksit Bharat vision🌏.

Another wish comes from the EV sector, where companies are looking forward to financial support mechanisms like Viability Gap Funding (VGF) to encourage the adoption of EVs in India​:red_car::electric_plug:.

A Notable Note: Investors can closely look for stock price changes of related companies in sectors such as auto, infra, PSUs, FMCG and more🔎.


Wrapping It Up
It would be interesting to see the announcements unfold and the met and unmet expectations. As far as the stock market is concerned, it is always the gap between the met and the unmet investor expectations that can drag the stock prices in either direction🧭. We will be back next week with our post-budget newsletter🗞️

To stay updated on actionable insights, visit :_https://tinyurl.com/2yuwjf5t

Disclaimer: This content is for educational purpose only. https://sam-co.in/6j


All’s Well That’s Ends Well
The week ended with reasons to smile, particularly for the Indian salaried middle-class💸. The much-awaited change in income tax in Union Budget 2025 brought cheer to investors, in general and realty stocks in particular.

Other noteworthy news was on the weekly deck were :fist_right::fist_left:Chinese vs American supremacy in AI and RBI’s liquidity injection​:syringe:measures.

With this, let’s get to our budget stories for the week.


12 Lacs, No Tax

The highlight of the Union Budget 2025 was the income tax slab change in the New Tax Regime, changing the tax-free limit from ₹7 lacs to ₹12 lacs.

:hourglass:Stock and commodity exchanges conducted a special trading session on the day of the Budget (1 Feb) where major sectors like real estate, FMCG, railway, defence and power were in focus. Nifty Realty, Nifty FMCG, Nifty Media and Nifty PSU gained the most during the session.

A Notable Note: Investors with higher disposable income might benefit the FMCG and Realty sector in particular, which made the stocks zoom post-Budget☺️.


Consumption Over CAPEX
It is said that the Union Budget 2025 favours consumption more than CAPEX. This seems mainly because the Budget focussed on tax breaks and only a modest rise in CAPEX. This is mainly said to boost consumption, which might benefit stocks in consumer durables, auto, travel, tourism, ecommerce and more🛒.

Wrapping It Up
With the steeply falling volatility and the hope for FIIs’ comeback, the upcoming weeks might seem like a roller-coaster. The sharp tumble in Nifty VIX last week might be a sign for a steady market period coming in. Let’s surf the market untill we are back next week with new stories🌊.

To stay updated on actionable insights, visit :_https://tinyurl.com/2yuwjf5t

Disclaimer: This content is for educational purpose only. https://sam-co.in/6j


Code Red! Investors’ Caution!!
With the week previous to this ending on a good note, clouds of tension😨seem to have arrived again hovering the Indian stock market⛈️.

Though the gap between the FIIs and DIIs ownership of Indian equities have stood at just 0.3% (at the end of December quarter), the benchmarks seem to be on a decline📉.

The week had much action that led the market to a depressing spirit. Let us look at all that the week had to offer.


The Rate Cut Wait Has Finally Ended
The recent rate cut✂️was the most awaited one! Since May 2022, RBI has been hiking rates, reaching ~250 basis points so far. The current MPC along with a 25 bps rate cut, maintained a ‘neutral’ stance and indicated caution.

However, the news of draft LCR (Liquidity Coverage Ratio) and the project financial norms introduction getting a year delayed⌛might have impacted investors’ sentiment, leading to a downward spiral of indices.

Specially, the bank stocks tumbled after the further liquidity easing measures weren’t found in the recent MPC (Feb 7).

A Notable Note: The recent MPC might seem to have failed to cheer the equity investors. However, analysts are expecting unconventional policy measures in regulation to be in the offing.


Trouble In Paradise for IT

There was news of Infosys firing ~400 trainees from their Mysuru campus–a half of those onboarded in October 2024. These trainees were onboarded after waiting for two-and-a-half-years, as macroeconomic slowdown had pressured companies to halt project spending🏢.

Another news was from TCS, where senior employees’ variable pay were slashed for the second consecutive quarter🗓️.

A Notable Note: With the new Trump regime, further changes in IT company revenues might be in the offing.


Are Swiggy, Zomato Delivering less?
Seems like food delivery giants (Swiggy and Zomato) are facing challenges to keep up the food delivery momentum🍜. There seems to be a slowdown in the food delivery business backed by lesser new customer onboarding and scaling-up in new cities.

Overall, the slowdown in consumption seems to be adversely affecting the food delivery duopoly business and is visible in their quarterly results too.

A Notable Note: As mentioned earlier, these business plunges can be closely associated with the fall in the overall consumption in our economy.

Wrapping It Up
Equity markets seem to become more volatile than ever🌋. Amid market corrections, big FIIs have pared stakes in companies, instigating plunges to record levels😟. As we read this newsletter, India VIX has zoomed by ~6% (10 Feb) hinting at turbulent times🌪️for stock market investors.

To stay updated on actionable insights, visit :_https://tinyurl.com/2yuwjf5t

Disclaimer: This content is for educational purpose only. https://sam-co.in/6j