FINANCIAL SECTOR HEADWINDS
Indian fintech sector sees 59% drop in funding in H1 2024, remains among top three globally
The fintech sector saw a nearly 60% slump in funding for the first six months of 2024. Startups in the space raised $795 million during this period, as against $1.9 billion in the first half of 2023.
Gaurav Misra on two sectoral themes to bet on right now
As a house we have been fairly comfortable within the banking and financial space and that is a space where clearly we are seeing a good credit growth cycle, asset quality cycle, and there is a fair amount of, a few years at least of that continuing from where we are right now, that is one big space actually where we are comfortable with.
Indian software sector earnings will remain modest in Q1: here’s why
Infosys and LTIMindtree are expected to lead a modest increase in average growth for Indian software service providers in the first quarter of FY25. However, previous top performers, Tata Consultancy Services (TCS) and HCLTech, may see pressure on profits and margins as they work to reignite growth.
Gold prices may face headwinds from strong dollar, rising yields
Gold ended last week on a lower note, dropping to a two-week low due to a stronger dollar and higher bond yields, said Prathamesh Mallya, DVP- Research, Non-Agri Commodities and Currencies, Angel One. The dollar surged to a near two-month peak, making gold more expensive for non-dollar holders, while U.S. 10-year yields reached a near two-week high.
IT stocks: A comeback which just needs a bit more confirmation; 7 stocks with an upside potential of up to 23%
Just before the expiry of the June series contract, bulls were seen in a segment of the market which has been long ignored by them — IT stocks. Because the upward movement was taking place at the end of expiry, one could not rule out the element of short covering. If one looks a bit deeper in the trend in IT stocks, two things have become clear. That while the news and opinion has been negative, the price action has not been so bad as has been painted. Now let's look at what happened in the IT sector and why there could be a case for contrarian buying. Yes, the sector has some headwinds which not many had thought would appear two years back. But the bigger question is whether this phase of underperformance is about to get over or not. It might be time to shed the bias of negativity around large IT players.
Nifty bulls await directional move, auto stocks in focus
Auto stocks were in focus amid the release of June month sales numbers. Shares of Samvardhana Motherson, Hero Moto, Bharat Forge, Maruti Suzuki, and Bajaj Auto rallied over 1% each. Within the Nifty50 pack, JSW Steel, and Bharti Airtel rallied over 1%, while NTPC, Power Grid, and Apollo Hospitals fell up to 2%.
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How MSMEs can boost India's real estate market
With streamlined regulations and increased credit access, MSMEs have the potential to boost India's real estate sector.
Short-term headwind, long-term opportunities for investors: 4 small finance banks with upside potential of up to 35%
The increase in credit costs has been an issue which has been bothering banks, some more, some less. Even the chairman of India’s largest bank had to come out and give a statement regarding it. However the question arises when these headwinds which are periodic in nature and part of the business cycle hits any sector what should be done. Should one move out of the sector? Should one continue to stay invested or should one buy more of the stock of that sector. The answer is dependent on one simple factor which is how large is the opportunity which that sector has. If the answer is that the opportunity is very large, then probably, it is the second and third option which one may look at. Probably in case of small finance banks, which are today reeling under the pressure due to guidance by one bank fit the bill. These banks are no stranger to dealing with challenges since the time they were born. Challenges thrown by regulatory tightening and economic cycles.
Headwinds of high FPI exposure, but good for long term: 6 stocks the financial services sector with an upside potential of up to 25 %
One of the most intriguing aspects of presenting the return performance of stocks, or any asset class for that matter, is how a slight adjustment in the calculation date can dramatically alter the perception, making the glass appear either half full or half empty. This phenomenon is particularly evident in the case of financial service stocks. Recently, these stocks have often been portrayed as underperformers. However, this overlooks the fact that over the long term, they have provided substantial returns and generated significant wealth. The short-term underperformance of these stocks can be attributed to their heavy ownership by Foreign Portfolio Investors (FPI). As FPIs have been net sellers in Indian equities, financial service stocks have faced selling pressure. Nevertheless, the relative decline in stock prices is considerably less severe than in previous instances of similar selling activity. Given the robust fundamentals of these stocks compared to a few years ago, it is prudent to view them from a long-term investment perspective.
MFs cut weight on technology stocks by 170 bps in just 3 months. What are cues for investors?
In May, several MFs reduced tech stock weights by 0.1%-0.9%, with HSBC making the highest cut at 0.9%. HDFC MF, Mirae, and Franklin Templeton increased weights by up to 0.2%.
Q4 results: Stable costs boost India Inc. profits
Steady costs and firm domestic demand supported corporate performance in the March quarter.
Anshul Saigal on sectors where investors can deploy fresh money
You could find opportunities in banking space in the 5 to 10 times price to earnings rate. I would not call that expensive by any measure. So, there are reasonable opportunities in the market to take advantage of.
Consumer sector in focus post-election results! D-Mart, Tata Consumer could give 12-18% in 1 year
We believe this rally in staple stocks is driven by not only its ‘defensive sector’ tag but also the underlying excitement, which was triggered by strong post-Q4 management commentary.
There is a rebound in FMCG today, IT stocks could be next, don't write them off: 10 IT stocks with upside potential of up to 43%
It is not only that nifty it has been changing color in every second day, In the last two days FMCG stocks have seen a strong price action and a couple of up-grades have also come. There is literally a 360 degree change in the narrative about the sector and its fortune that was being heard . What happens in reality will be known later but this just highlights two things. First a business which has survived for long, there are phases where they are ignored by the street and then make sudden come back, just due to reason that they have size. Second, never write off a good balance sheet. Now the same thing applies to the IT sector, they have been ignored by the street for a good reason, lower growth and business challenges which AI is bringing to table. But the fact is that they also have strong balance sheets and the fact that they cater to demand where the market size is big and is global in nature and have a track record of adapting well to changes.
RBI projects real GDP growth at 7% in FY25, says outlook for Indian economy remains bright
The Reserve Bank of India's annual report projects a 7% growth for the Indian economy in the current fiscal year. It highlights the economy's resilience and sustained strengthening of macroeconomic fundamentals. The report notes a robust expansion in the previous fiscal year, with real GDP growth reaching 7.6%. Despite headwinds, the outlook remains positive due to government investments and consumer optimism.
Stocks with tailwinds called advantage India: 5 largecap stocks from 3 different sectors with an upside potential of upto 36 %
In terms of valuations and sentiment we are not far from the place where we were in the last quarter of 2023 or early part of this year. When it was not possible to find stocks which can be called as “fairly valued” forget “undervalued”, and the sentiment was very bullish. The only difference between then and now is that we have election results which are coming up. Surely a confirmation on 4th June that continuity in the policy making is a big factor. But there is another thing which long term investors need to look at before investing. Whether the company or the sector has an advantage due to India as a country. A well known example, which has been present for decades is that of the IT industry. India as a country is a factory of software engineers, and that is our strength. So when investing for the long term, look at sectors where we have some strong tailwinds due to our human capital.
Staying with stronger ones is always better option: 5 Midcap stocks from different sectors with upside potential of upto 42%
In its lifetime every midcap company sees some headwinds. There are many examples from history which show the difference between the companies which have been able to survive and grow even after all the trouble is that of the parent company. A company belonging to a strong industrial group which has a track record of handling many economic cycles in the past has a higher probability of surviving a bad phase and coming back on a growth path as compared to a company in the same line of business which does not have the backing of a strong parent. The reasons are simple, when that midcap company of a large group will see a tough time, at a group level there is management bandwidth in terms of both financial and human resources to help it over bad times. Look over the last two decades at how companies like Voltas, Tata chemicals, which at one point if time were mid sized companies because large and stable business. So, if one is looking at investing in mid-cap, surely have a look if it has the back of a large and strong industrial house.
Beat stock market volatility with Sharpe ratio: 8 stocks with up to 37% upside potential
Stocks that have delivered good risk-adjusted returns can effectively manage the rising market uncertainty.
Waiting with cash in hand; will invest once election results are out on June 4: Aveek Mitra
Aveek Mitra of Aveksat Financial Advisory strategizes for post-election investments, considering policy changes, Budget implications, and real estate opportunities in the MMR region for long-term growth. Mitra says: "We have built up different scenarios with most likeliest scenarios to the not likeliest scenario and based on that we will immediately try to see that what best we can do with the cash after the 4th June result."
Bearing the brunt today, but good for long term: 6 stocks from the financial services sector with upside potential of up to 30%
For all those who were again thinking why the financial services sector stocks are leading the recent phase of decline. A look into FPI holding patterns would throw the answer. It is the financial services, including banks where FPIs have the maximum exposure, so if they are booking profit, the first round of selling is bound to come in the sector where they have maximum holding.But there is another part to the story, which is when they come back, it is the very same sectors where they buy the first, because financial services and banks are the best proxy play to GDP growth. Also the fact that the majority of these stocks have ample liquidity plays an important part in the kinds of strong moves these stocks see.
SRF expects demand-supply imbalance, margin pressures in BOPET to continue
SRFLimited, an Indian chemicals business, anticipates ongoing demand-supply imbalances and margin pressures in the BOPET sector in the short to medium term, according to a stock exchange filing. However, the agrochemicals segment shows signs of improvement following inventory rationalization in FY24, with robust customer inquiries and progress in active ingredients (AIs) development.
IT service companies stare at second year of muted revenue growth at 5-7%: Crisil
The subdued outlook is attributed to continuing global macroeconomic headwinds lead to modest increase in technology spends in the key markets of the US and Europe.
Financial service stocks: Some hit by headwinds, for some tailwinds are back, only waiting for ___ to be back
All of a sudden yesterday, one stock which led the turnaround of the market was HDFC bank. There were two announcements, first regarding business and second regarding the shareholding changes in the last one quarter in which the stake of FII had come down. In normal cases a decline in FII holding is seen as negative but the reaction of the street was positive in this case. The reason was technical in nature because of buying which could emerge due to MSCI adjustment. But the fact is that every single stock in the financial services space has an element of high FII exposure and because they have been sellers for quite some time, these stocks have not performed as well when compared to other sectors. But as soon as they are back, which probably might be in the second half of the year, these stocks may be back in the limelight. But because each of the subsegments of the financial service space has its own operating matrix, analysts have a very different potential return estimate for each of them.
Nifty financial service index stocks: Are headwinds slowing down?
In the last three years, different segments of financial service have witnessed very different trends. Trend not in terms of business but in terms of headwinds or tailwinds. While the large private banks have stagnated, some of the small private sectors have come back into the limelight. PSU banks as a pack have made a comeback, insurance companies are still searching for direction, asset management companies have been able to get their mojo back while NBFC are facing new challenges in terms of higher provisions to regulatory. So,each to own it probably defines when it comes head or tailwinds. But what is the common factor is that most of these have a high FPI holding. Now FPIs have largely been the seller in the Indian markets, occasionally they have made a comeback for a short period of time. At this point of time, they are neither major buyers or sellers, but this equilibrium will change. When that happens, it is this set of 20 stocks which will signal which way the wind is blowing for which segment.
Opportunity in short term headwinds? 4 AMC stocks with upside potential of up to 37%
While there is always a talk about how many new demat accounts have been opened every few months. But how many folios have got added in the mutual fund industry is something which does not make it to headlines. What makes a headline is just the headwinds, about new rules and regulations or a new competition coming up. But in reality, this fact is that for mutual funds houses or AMC companies, these headwinds are very minor things to handle, because they have the biggest macro tailwind of financialisation of saving, a trend which got really strong post demonetisation. Let's look at the different headwinds and some narratives around them which the AMC industry has dealt with over many years and still come out strong.
Short term industry headwinds are long term opportunities? 6 mid cap cement stocks with upside potential of up to 17 to 41%
Recent reports indicate a decline in cement prices, causing a significant correction in cement stocks. However, it's important to consider broader factors before making investment or trading decisions in the cement sector. Despite a temporary price dip, the sector continues to benefit from increased demand driven by infrastructure projects and improved balance sheet quality. This suggests the sector's long-term prospects remain intact despite short-term price fluctuations.
Forget large, mid and small; bucket market in terms of quality and growth: Vinay Paharia
Vinay Paharia, CIO of PGIM India Mutual Fund, discusses the fund's sector preferences, being overweight on financials, healthcare, and consumer discretionary, while underweight on the IT sector. He emphasizes the importance of differentiating between companies with good quality and high growth versus poor quality and low growth. Paharia also cautions against investing in low-quality and low-growth companies.
Do short term headwinds provide a long term opportunity? 6 stocks from sugar sector with upside potential of up to 38%
In a sector, where government policies have a major impact, the risk of any change in policy impacting the players is always present. That is the reason why the valuations of these stocks from such sectors don't cross a certain threshold. Probably the sugar sector tops the lists of such sectors and the reason is because both the central and state governments have some say in the policy making. Recently, there was a tweak in how much sugar cane juice can go for ethanol production and now a rise in fair remunerative price (FRP) which companies have to pay to farmers. In different states, it is called by different names, like state advised price or minimum support price also, however the reaction of the street was that all the sugar stocks tumbled. The fact is that in some states this price which sugar mills pay was hiked months back and that does not mean any negative impact. So, it has to be case by case rather than broad brush.
Goldilocks period for financial sector over: Goldman
The brokerage has downgraded its ratings on SBI and ICICI Bank, while upgrading Bajaj Finance. It reiterated its buy rating on HDFC Bank.
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