Hello Espresso Lovers! Today’s episode was the toughest to write. Not because there was any lack of developments/headlines during the week, but when one subject dominates the entire discourse, even after appearing for just 20 minutes every day, it’s a struggle to prioritise something else. The Closing Auction Session (CAS) has been one such cameo every trading session that has overshadowed every Main Character Energy possible, even getting people to forget that the week had nearly 200 results!
The gap between the reference price and the closing price after Monday’s CAS left people scratching their heads – some out of disbelief, some out of dismay, and some out of sheer confusion. Although that 200-point gap narrowed down to 13 by the time it was Friday, some people are still scratching their heads. The transition to “Yeh Kya Hua, Kaise Hua”, to “Oh Chodo, yeh na socho” is yet to happen. Of course, its a new system and people will eventually figure it out, our friend Prashant Nair made an attempt to tell you “Kya Hai Yeh, Kyun Hai Yeh, Kya Khabar, Haan Magar, Jo Bhi Hai”, with former SEBI Whole-Time Member Ananth Narayan in this interview right here. You may wonder why did I not complete the song with “Bada Accha Lagta Hai”? That’s subjective, at least for now!
Such was the impact of the CAS that we’ve completely forgotten we had an RBI policy decision this week. But we are thankful to Governor Sanjay Malhotra for keeping it an uneventful one. No change in rates, a small increase in growth outlook, a small cut to the inflation projection, all of that is par for the course in policy coverage. What we are grateful for is that nothing came “out of syllabus” to stimulate our already overstimulated brains!
And then there is Donald Trump, without whom we can never complete an episode. His change of tone and the frequency of those could put a playback singer to shame. From blowing up Iran to Iran is begging for a deal, from finishing everything in four days to the war now entering its sixth month, he has managed to explain Paradox better to us than our English teacher ever could in school. This week’s drama also features Treasury Secretary Scott Bessent, who claimed that the Strait of Hormuz would open by Wednesday or Thursday. Maybe he could have also told us which week’s Wednesday or Thursday, because there is neither a deal nor is the Strait fully open yet, or as the President says, “Its sorta open!” We’re back to the similar script, Tareekh Par Tareekh milti rahi, but Strait nahi khula milord, Strait nahi khula!
Abu Dhabi’s national oil refiner ADNOC has claimed that three of its vessels were attacked in the Strait of Hormuz this week, transit through the gulf is down, but oil prices are still subdued. The US economy lost jobs in July compared to expectations of an addition, bond yields are near or at multi-year highs, and there is a growing clamour for the Fed to raise rates. So what! The Dow Jones is at 54,000! (See what I did there?) Does Wall Street care? Not really, at least as of now. In what is Donald Trump’s biggest certificate that he loves flaunting, the markets ended at record highs on Friday after reporting their best week since April! Who says people do not love TACOs! Wall Street surely does!
The US Treasury is also intervening to try to save the Yen, which has fallen to its lowest level since 1986 against the greenback. They sold euros to buy the Yen. They have also promised additional interventions if needed. Anyone in this caught blindsided? European Central Bankers. They say they were not consulted or kept in the loop by the US Treasury before dumping their currency to save someone else’s. They have called it breaking a decades-old post-war norm of close co-ordination and trust among Western Monetary Authorities during currency interventions. This could well turnout to be the next headache for the markets. Stay tuned!
The conundrum does not end for Zee Entertainment either. When they had earlier approved a fundraising proposal, their shareholders rejected it. Now, when the shareholders approved it, SEBI comes and bars the company and its promoters Subhash Chandra and Punit Goenka from accessing the securities market. While experts believe that this would only delay and not stall the fund infusion, the street does not like it. The stock, which went up to as high as ₹120-odd levels after the FIFA deal, was down 17% last week and is back below ₹100.
We are entering the last leg of this earnings season. Three names stood out last week as Result Heroes – Neuland Laboratories, Ather Energy, and Samvardhana Motherson. They showed that not just strong results, but proper, clear, articulate commentary from the management on the road ahead is something that the street will surely reward. Neuland Labs is now at record highs, as are Samvardhana Motherson and Ather Energy. Ather has doubled in value already this year, while SAMIL is up nearly 40%. (Disclosure: Not recommendations, just plain observation and stating facts. Please conduct your own due diligence through a registered financial advisor).
Pankaj Tibrewal of IKIGAI Asset Management expects the next leg of the market rally to be led by financials. He has highlighted tiles, plywood, and home improvement segments as the dark horses for the future. He believes the overall earnings data will be skewed this time around as OMCs reported significant losses. However, expectations going into this season were already very low.
Taher Badshah of Invesco Mutual Fund is confident that FY27 will see a mean reversion in Earnings. He noticed that cost escalations and margin contractions will remain the key factors to watch. He has large positionings towards real estate stocks and lower exposure to derivatives.
You know the one thing that people have not paid enough attention to amidst all of this newsflow? FIIs are back, Ma Broda! They were net buyers in July, and are net buyers so far in August as well. Of course, the underlying trend is still that DII holdings are at new peaks, while FII holdings are down to their lowest on record. On a net basis during the June quarter, FII outflows were at $13.2 billion. They are getting there, we’d think, considering the meltdown in South Korea, and considering the volatility elsewhere, who would not want some stability!
Time to take your leave for the week! When we return next Saturday, India will be celebrating its 80th Independence Day! We will bring you the latest brew on this landmark occasion right here at the same time next week. Do like, share, subscribe and tell us how we can make this better for you! Until then, Jhanda Ooncha Rahe Hamara!
