Brief Summary
Alright, so the market ain't looking too hot right now, mainly 'cause of the recent fall. We broke the 20-day moving average, which is a bad sign, and volumes have dried up after that Jane Street thing. Some earnings are disappointing, like TCS not doing salary hikes, but Anand Rathi is doing well. NBFCs are still strong, and FMCG is making a comeback as a defensive play.
- Market's broken 20-day moving average, volumes down.
- TCS results disappointing, no salary hikes.
- NBFCs and FMCG showing strength.
- Pocketed growth is the current trend, not a broad-based rally.
Market Fall Analysis, 20-Day MA Breakdown
The market is currently not looking attractive due to a recent fall. The 20-day moving average has been broken, which is a concerning sign. Typically, after breaking the 20-day MA, the market finds support at the 50-day MA and bounces back. However, the 50-day MA is quite a bit lower, suggesting a potential risk of breaking below 25,000, a significant psychological barrier.
Volume Concerns Post-Jane Street Scenario
The recent market fall is happening because of a couple of reasons. The earning season is upon us and after the Jane Street scenario, where they got banned, volumes in the market have significantly dried up. Jane Street used to contribute a lot to the market volume, and now with them gone, the market is reacting to the reduced liquidity.
TCS Results Disappointment (No Salary Hikes)
TCS results came out and they weren't inspiring. One of the main reasons for this is that TCS has announced they won't be doing any salary hikes for now. This indicates a slight slowdown in their space.
Tata Elxsi Poor Results, KPIT Concerns
Following TCS, Tata Elxsi also delivered poor results. This is concerning because Tata Elxsi has generally been a good performer in the past. Given that Tata Elxsi and KPIT operate in similar spaces, there's a possibility that KPIT might also deliver not-so-great results.
Anand Rathi Positive Results & Guidance Analysis
On the positive side, Anand Rathi has shown very good results. Their revenue has increased from ₹238 crores to ₹274 crores. Anand Rathi usually provides guidance and revises it periodically. For FY26, they had given a revenue guidance of ₹1,175 crores, and they've already achieved 25% of that. The management is transparent and puts their performance and guidance on paper. Anand Rathi is primarily in mutual fund distribution and wealth management, and they don't do lending.
Avenue Supermarkets Slowdown, High P/E Concerns
Avenue Supermarkets (DMart), which has a very high P/E ratio, has also taken a beating in the market. Their results indicate a slowdown. Titan had also previously mentioned witnessing slowdowns in some areas.
Market Pullback Explanation (17% Rally From April-July)
There's nothing inherently wrong with the current market pullback. From April to July, the market rallied by 17%. A pullback is a natural correction after such a significant move. There isn't any major positive news on the horizon to justify the market continuing to go up.
NBFC Sector Strength (Bajaj Finance, Muthoot, Cholamandalam)
Currently, the only sectors that are still looking bullish are NBFCs. Companies like Bajaj Finance and Muthoot Finance are maintaining their rally. However, Cholamandalam Finance looks a bit weaker compared to other NBFCs.
Energy Sector Order Wins
The energy sector continues to perform well, with many companies receiving significant order wins. These orders are also flowing down to smaller companies in the segment.
Midcap vs Large Cap Performance Differential
The midcap index has also broken the 20-day moving average. The small cap index hasn't broken it yet, indicating that the market move has primarily been in large caps and not small caps. HDFC Bank and Reliance Industries have been instrumental in keeping the market up.
Auto Ancillaries Bullish Momentum
Looking at industry-specific trends, auto ancillaries are still bullish and haven't broken the 20-day moving average. Many auto ancillary companies are performing well.
Power & Electrical Equipment Sector Strength
Electrical and power equipment companies are consistently doing well. These companies are holding their ground.
Pocketed Growth vs Broad-Based Rally Discussion
It seems like we might not have a broad-based rally where everything goes up. Pocketed growth, where only specific sectors or companies perform well, is likely the trend for now.
FMCG Sector Pullback as Defensive Play
FMCG (Fast-Moving Consumer Goods) has weirdly started looking attractive and is showing a pullback. This is because money is moving towards FMCG, which is considered a defensive space.
FMCG Stock Performance (Marico, HUL, Dabur)
In the FMCG sector, Marico, Hindustan Unilever (HUL), and Dabur have shown rallies. HUL is up by 4.5%, and Dabur has also gone up quite aggressively.
Banking Sector Strength (Private Banks, NBFCs)
Private banks, NBFCs, agrochemicals, and FMCG are the sectors currently performing well. Financial services are also looking good, taking support at the 20-day moving average. Private banks are looking wonderful.
Data Centers, Railways, VBL Analysis
Data center implementation has slowed down, and there aren't many new orders coming in for railways. Until these triggers happen, it doesn't seem likely that these sectors will pick up. Varun Beverages (VBL) is looking slightly weird because it's currently below the 200-day moving average, which is not a good sign. It's at its support level of ₹445-₹450. Technically, it's looking weak, but fundamentally, the company has always been strong.
Wealth Management, Jio Financial vs Reliance Jio
Wealth management as a field is good and is expected to continue doing well in the long term. Reliance Jio is the telecom arm, while Jio Financial is a fintech company focusing on lending and AMC's.
KPIT Long-Term View, Vedanta Concerns
KPIT has always been a good company from a management standpoint. However, the ER&D space isn't doing great. There might be short-term pain, but the management is good for the long term. Regarding Vedanta, the speaker isn't a big fan because they give heavy dividends, but that's because they own most of the company, and the dividends go back to their UK company to clear loans.
Solar Industries & Force Motors Analysis
Solar Industries has taken a rocket ship, going from ₹8,000 to ₹16,000 in a short period. It was overvalued, and smart investors likely booked profits. Force Motors is still doing well, with a breakout after the last quarter's revenue came out.
CDSL Long-Term Investment Perspective
CDSL is a very good company long-term, but you can't have a short-term mindset with it. Companies like CDSL, NSE, and BSE are long-term plays.
Overvalued Sectors Discussion
Hospitals are on the border of getting overvalued. Pharma and chemicals are still slightly undervalued. Some pockets of the power sector have become overvalued due to euphoria. The telecom and aviation sectors are definitely overvalued, sitting on very high P/E ratios.
Dream Folks Fundamental Issues & Stop-Loss Advice
Dream Folks is fundamentally getting battered because Adani is looking to own the entire value chain. The company had given multiple signs to exit in the past. If investors had maintained their stop-loss, they would have saved money. It's crucial to always have a stop-loss and not be emotional when investing. The fundamental hit is happening because their whole business proposition is in question, and they didn't expand very well.
