Short Call | All investors are equal, but FIIs are ‘more equal'; JSW Energy, Angel One in focus

Short Call

Over the past six months, Indian equities have borne the brunt of relentless selling pressure, tumbling into the correction territory from record-highs. Further, a weakening economy and muted earnings growth has caused India's earnings to reconcile with those of its EM peers, which has stalled the post-COVID19 decoupling, noted Nuvama Institutional Equities.

After COVID-19, even though Foreign Institutional Investors (FIIs) are putting money into Indian markets, their share of Indian equities has decreased. This has led to the idea that domestic investors now drive the markets. While partly true, it misses the bigger picture.

India, as a country with a current account deficit, depends on FII investments for economic stability. These inflows boost market confidence, encouraging domestic investments and driving rallies in small and mid-cap stocks even if FIIs don’t directly invest much in them. "To paraphrase Orwell, all flows are equal, but FII flows are more equal than others," added the report.

Shares soared after the company received a Letter of Intent (LoI) for the acquisition of KSK Mahanadi Power Company

Bull case: Operates across power generation, transmission, and emerging segments, including energy storage systems

(ESS) and Green Hydrogen, positioning itself as a key player in the transition to sustainable energy solutions. Capacity expansion, inorganic growth, early mover advantage in energy storage, and long term Power Purchase Agreements to drive solid growth, believes Axis Securities.

Bear case: Premium valuations over peers and delays in execution of capacity expansion may dent upside in stock.

Revenue falls 17% YoY in Q3 amid new F&O norms

Bear case: The impact of stricter F&O regulations, increased lot sizes, and reduced weekly expiries could weigh heavily on volumes and revenue in the short term, making it challenging for Angel One to sustain profitability without further corrective actions.

Bull case: Angel One has shown resilience in protecting profitability by adjusting pricing strategies, and its expansion into new business lines like wealth management, loans, and AMCs positions it for medium-term growth, potentially improving margins to 45-50%.