Short Call | A little bit of Bitcoin for extra flavour; Aster DM, RBL Bank in focus

Short Call

While the equity market takes a leisurely stroll toward modest near-term returns, Bitcoin just sprinted through one of its best months this year, leaping nearly 40 percent in November. The ambassador behind this crypto rally? None other than the second coming of Donald Trump as US President, determined to set the crypto world free from its regulatory shackles.

Here’s the kicker: Trump has a plan to turn the 208,109 Bitcoins chilling in federal custody into a strategic national Bitcoin stockpile. That’s over 1 percent of the world’s Bitcoin supply, currently valued at a jaw-dropping $20 billion. On the campaign trail, he’s been pitching himself as the crypto industry’s saviour, promising to bring it out of the shadows of unclear regulations and the SEC’s enforcement-heavy antics under Chair Gary Gensler.

Crypto pundits are now popping champagne bottles, predicting Bitcoin will soon hit the $100,000 milestone. Riding these tailwinds, Jefferies' Christopher Wood’s global portfolio is easing up with a 10 percent allocation to Bitcoin ETFs. His advice? Not to try and trade these positions, most particularly in the pension fund portfolio. Still, for those with a more tactical focus, Wood suggests cashing in some Bitcoins around the $150,000 mark since his base case is that the crypto will rally three times in this post-halving cycle since the trend has been for the capital gains on holding it to more than halve following each halving cycle. A halving cycle is where prices for Bitcoin correct to around half of its recent highs over a period of time following which it sees a retracement towards higher levels.

Bitcoin’s halvings have a history of fueling massive gains. After the first halving in November 2012, Bitcoin skyrocketed 90x in 12 months. The second halving in July 2016 saw a 30x jump in 18 months. The third halving in May 2020 brought a 7.5x rise in 11 months, eventually hitting a record $68,992 in November 2021, marking an 8x gain in 18 months. Since the most recent halving  in April 2023, Bitcoin has already climbed 54 percent to a high of $98,450.

With bullish trends in Bitcoin are now making it hard for investors to ignore it, Trump’s mainstreaming push is giving the crypto an undeniable spotlight. But hold your golden horses—Wood warns against swapping gold for Bitcoin just yet. Instead, think of it as your digital alternative worth a shot. One that is worth giving a try.

RBL Bank (Rs 162.71, +4.3%)

Shares surged over 4 percent, amid heavy volumes. The stock also recovered from its previous day losses after it ended its partnership with Bajaj Finance on cobranded credit cards.

Bull Case: The lender said the move to stop the partnership is in line with its vision to build a diverse range of collaborations with NBFCs such as Mahindra & Mahindra Finance Limited, TVS Finance Limited as well as consumer brands like IOC and IRCTC. The bank’s growth is likely to revive in H2FY25, as the bank scales up arrangements with new co-branding partners.

Bear case: As a result of the move, the bank's headline credit growth could moderate 200 basis points to 13-14 percent in FY25, said Investec. There could be a corresponding decline in NIIs, leading to an estimates downgrade.

Aster DM Healthcare (Rs 483.10; -2.5%)

Shares fell after the company's merger with Blackstone-backed Quality Care India (QCIL) through a share swap agreement.

Bull Case: Combined entity will operate a network of 38 hospitals with over 10,150 beds across 27 cities, positioning it as one of India's top-three hospital chains. The merger strengthens the company's presence in Central and South India, potentially boosting patient volumes and fending off competition.

Bear Case: Elara Securities highlighted that while the deal is fair, it does not foresee immediate value creation for shareholders. Centrum Broking maintained its estimates as the deal is yet to be finalised.

(With inputs from Zoya and Neeshita)