Hello! How are!! Newsletter Padhke Jaana haan! Heads up – Brain isn’t braining. Understandably so. After getting through a week with 150+ results, with most of them dropping within a span of minutes almost every single day, even being Ambidextrous was not enough, just like some of the companies just meeting street estimates – Never enough! But here we are with the latest brew!
Two themes have defined this week. The first one is defiance. As per the Oxford Dictionary, “Defiance” is “The act of openly refusing to obey somebody/something.” The Nifty bulls took that seriously. On a good day, they are the opening batsmen on a rampage, smashing fours and sixes for fun. But on a bad day, they are the Nightwatchman. “Gir raha hai? Theek hai. Bas iske neeche mat girne dena!” (Is it falling? Oh well. Just do not let it fall below that level). For the bulls, that level was 23,800. Come rain, sun, crude at $100, stronger dollar, disappointing results, market falling for all five days of the week, the bulls remained defiant. They found a way to protect 23,800. Every. Single. Time. For what could easily have been a close below 23,600 on Friday, the bulls brought it back to within 20 points of 23,800, yet again!
The second theme is a simple market principle – You deliver the numbers, we reward you. Else, we punish you. Ask Bandhan Bank. All it did was cut its RoA guidance for the year. RoA, Return on Assets. Not the biggest metric when compared to NPAs, Margins, Profitability, Provisions, Loan Growth or Deposit Growth. But what did the street do? The stock was down 17% the next day, and ended 22% lower for the week. The reaction may have been different had the stock not run up 45% YTD before the result announcement, but who knows?! And not just Bandhan, ask CSB Bank, Motilal Oswal, Aditya Birla Sun Life AMC, Spandana Sphoorty, and all other result duds who were smashed by the street the next day. On the flip side, Gandhar Oil, Karur Vysya Bank, Tatva Chintan Pharma, delivered the numbers, and were duly reward with gains between 20% to 40% for the week!
And what do you say to HDFC Bank? The troubles just don’t seem to end for them. After a promising business update, it has all been downhill. Results were disappointing, no clarity yet on CEO succession plans, under investigation in the US by three agencies, it feels as if they won the toss on a green pitch and chose to bat! The stock was down 9% last week, the worst since January 2024. Such has been the disappointment that it even received a downgrade! (If that reminded you of the song Aisa Pehli Baar Hua Hai 17-18 Saalo Mein, we are in the same brainrot ship, friend!)
There is never a dull moment when Samir Arora is in the house, as he was on Friday morning! He is hurt by HDFC Bank too. For a lender of that stature, people would say their portfolios have done well because of it. But he went on to say his funds have done well despite owning HDFC Bank! He still owns it. But is not excited to own more from hereon. He quipped about IT too, saying those buying it forget that they are not just buying the market uncertainty, but the business uncertainty as well! He is looking at all new-age companies very seriously, saying that they are very real, despite the losses!
Oh, and since we are on defiance, Infosys reported disappointing results again, but the street did not punish it. Its ADR fell 5% but recovered by close, as did its Indian entity, which fell close to 3% but ended near the flat line despite a couple of downgrades. Maybe the bears are done battering it after a 35% fall this year already, or the street is now looking forward to the change of guard as Ashiss Kumar Dash will take charge as MD & CEO from April next year and lead the company in its next phase. We wish him good luck!
Big tech companies fit both the themes of this week. Alphabet and Tesla reported numbers on Wednesday. The street has been concerned about the billions that these giants are spending on their AI obsession. More so on whether these billions will ever return as profits! What did Alphabet do to ease these concerns? It said it’ll spend even more! It raised its full-year capex guidance to $205 billion. Tesla said operating expenses will continue to rise. Their numbers? For the first time in many quarters, it did feel as if Chai se Zyada Kitlee Garam Hai! (Teapot is hotter than the tea!) At least for Alphabet. The street knew it too and wiped out $767 billion from their market capitalisation on Thursday. That test continues next week when Microsoft, Amazon, and Meta report numbers as well. Expect some more billions here.
Nilesh Shah of Kotak Mahindra AMC is betting on India’s electrification drive, which is a step towards greater energy independence. He believes the one way to play this theme is through power producers and power equipment companies. He is also looking forward to the mega IPOs of Jio and the NSE, saying that if priced correctly, it will attract lots of investor interest. However, he prefers to remain equal-weight as of now, only advising aggressive investors to consider a marginal overweight.
Rajiv Batra of JPMorgan also remains neutral on Indian equities, stating that it may be a stretch to expect the June outperformance to continue through the rest of the year. He continues to prefer the North Asian markets over the South, including India, though he believes that Indian equities are increasingly being viewed as an AI hedge. So when the KOSPI or the AI/chip stocks sneeze, Indian IT is eating the ice cream!
But what is prompting the bulls to not throw in the towel just yet? What else – Hope. Hope that the US and Iran will calm down eventually and return to the negotiating table. Hope that earnings will start to pick up sooner or later despite there being more duds than hits this time around so far. Hope that the AI/semiconductor trade will unwind faster, prompting investors to look for other assets, thereby driving more foreign flows. As they say, Ummeed par duniya kayam hai! (Hope springs eternal!)
If last week’s earnings and action left you dizzy, you are in for some very stiff competition from next week’s results list. Let us tell you a few: Bharat Electronics, Coal India, Tata Power, L&T, HUL, Varun Beverages, Tata Steel, M&M, ITC, Adani Ports, Ambuja Cements, Bajaj Finance, Sun Pharma, Maruti, Indian Oil, Swiggy, Suzlon, Hyundai, Colgate-Palmolive, and many, many more. The detailed list will be up on our site soon. Not just India, it’s a big week for the US markets as well, as beyond the big tech results, the US Federal Reserve meets, and there is still a 35% probability of a rate hike this week and a 57% probability in September as per the CME FedWatch. Add to that the monthly F&O expiries as well. July is signing out, but it wants to do so with a bang!
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