Short Call: Algos will drive sentiment, the bull case for silver, NMDC, RITES, Bata, Lemon Tree in focus

Volatility is a given over the next few sessions

With barely two trading sessions to go before the election results, there is not much dispute among market participants on where stock prices are headed over the next 6-12 months. (Higher, is the popular view) It is only the next one week that is causing a lot of anxiety. A look at major events in the past shows that the market shrugs it off in less than a week and moves on to the next trigger. The one big difference, however, between the previous elections and this time is that this is a market where algos have a bigger say in how prices move. So irrespective of the verdict, volatility is a given over the next few sessions.

Quotable

“If it (NDA winning 400 seats) doesn’t happen, no big deal…you can still see incredible growth trajectory for India going forward.”

Mark Mobius in an interview to CNBC Asia

Silver

Broking firm Ambit is making a case for a bull market in silver. The starting point for precious metals in general is that real interest rates are set to fall hereon, not rise.

From the report:

“For silver, industrial demand, higher offtake by solar cells have been known for 10+ years. It has been under-owned, undervalued for a decade. But when these rallies come every two decades or so, they don't fizzle out soon. If history is a guide, we may have just got started.”

NMDC (Rs 249, -3.4%)

Company reported a weak set of Q4 earnings

Bull argument: Profitability to improve from this quarter, says Nuvama. Also, disruption to volumes because of worker protests to be offset by additional 1.5 mt EC limit at Donimalai mine in Karnataka, say analysts Ashish Kejriwal and Jyoti Singh.

Bear argument: Margins may have peaked says Kotak Institutional Equities, adding that Increasing captive iron ore by integrated steel companies remains a structural headwind for the company.

Lemon Tree Hotels (Rs 138.25, flat)

Bull argument: There are around 2.8 million unbranded hotels which can be converted into branded hotels and this is a big growth opportunity for Lemon Tree says Devin Joshi of Keynote Capital.

Bear argument: Rainy season may be a turn off for vacations, implying lower occupancies.

Bata India (Rs 1372, flat)

Company reported a marginal dip in net profit YoY in Q4FY24

Bull argument: Playing the premium theme through sneakers. Constantly adding new stores and renovating the existing ones. The management is optimistic about demand revival going ahead.

Bear argument: Stock has lost 16 percent in the last six months. Even with a lower premium portfolio, it is most expensive among its peers.

RITES (Rs 703.00, -2.1%)

Bull argument: Higher capex outlay in the Interim budget for railways and highways, robust order book position with a clean balance sheet, high return ratios, and a healthy dividend payout. Company looking to step up presence in global markets.

Bear argument: Stock has almost doubled over last year. Slower order wins may impact revenue growth, and higher competitive intensity may impact margins.

(With inputs from Srushti, Anishaa and Harishita)