Investor and trader WhatsApp groups are flush with doomsday predictions. And amid all of this, large blocks of shares are getting absorbed without a hitch. A 7 percent intra-day fall has been reversed in three trading sessions and retail investors simply can’t seem to have enough. A section of the market is wondering if this could be India’s version of the GameStop moment in the US, where institutional investors lost their shirts to rampaging retail investors. Look at the bulk deal disclosures: you regularly see the names of sellers (promoters/fund houses/PE funds), but not always the names of buyers. This indicates that large deals can easily be sold in the open market, reflecting the strong demand among high-networth individuals and even small investors.
SEBI’s warning in March about a froth in midcaps and repeated losses suffered by retail traders in derivatives are no deterrents to the scores of hopefuls looking for a piece of the stock market action. Local research analysts see the possibility of more earnings downgrades than earnings upgrades, and India is trading at a significant premium to other emerging markets. Seasoned investors say the day of reckoning is not too far, and that buying at current levels is akin to picking up pennies in front of an oncoming road roller.
Iron ore puzzle
China imported 102.3 million metric tons of iron ore in May, the third straight month of arrivals of more than 100 million tons. For the first five months of 2024, iron ore imports were up 7 percent over the same period last year. Surprisingly, steel production for the period January-April is down 3 percent over last year.
Tata Consumer Products (Rs 1,135.60, 0.23%)
Released its annual report for FY24.
Bull case: Core businesses salt and tea are market leaders, with room for growth in high single to low double digits, says Nuvama. Pulses and spices are large categories with huge room for growth.
Bear case: Increased competition, especially from unorganized players could pressure margins. Recovery in rural demand could take longer.
Honasa Consumer (Rs 435.60, -4.9%)
Fireside Ventures and Sofina Ventures sold 6.4 million shares between them
Bull case: Offline distribution channels expanding. The ability to devise new consumption trends and address nascent consumer needs should help in fast scale-up across brands, according to broking firm Emkay Global.
Bear case: The Indian BPC segment remains quite competitive. Fears of more block deals by large investors in the days ahead could be an overhang
Hindustan Construction Company (Rs 47.60, 18.24%)
Elara has initiated coverage with a 'buy' call
Bull case: Net debt has reduced sharply in the last couple of years. Improving financial health and opportunities in nuclear power plants can drive a turnaround, Elara Capital says
Bear case: Slowdown in order wins, delayed recovery of arbitration awards and claims could hit repayment obligations and thereby debt reduction plans, says Elara
Suzlon Energy (Rs 48.26, 1.92%)
Bagged a significant order
Bull case: Healthy financial metrics, the upturn in the wind energy sector, coupled with an improving pace of execution bodes well. Given a healthy order pipeline, analysts expect Suzlon to perform well due to limited competition in the sector and its large market size.
Bear case: Independent director Marc Desaedeleer last week citing corporate governance issues. This could weigh on sentiment till some more clarity emerges.
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