“It is a mistake to think that overpriced and going down tomorrow are synonymous. Markets that are overpriced often keep going.” - Howard Marks
“When the music stops in terms of liquidity, things will be complicated,” former Citi CEO Chuck Prince had famously remarked at the peak of the 2007-08 bull market. “But as long as the music is playing, you’ve got to get up and dance.”
This quote is as relevant today as it was around 17 years ago and best captures the current mood among all categories of investors, be they institutions, high net-worth individuals or small investors. Stock prices are soaring, and valuations in many cases do not make sense. But nobody wants to be a passive spectator even though the potential downside from the current level is much higher than the potential upside.
Mutual fund managers have little choice, as long as money gushes into their schemes. As for HNIs, they are sitting on juicy profits (a lot of it on paper) and can afford to risk a small portion of those. It is the small investor with limited resources who needs to be most careful.
Titagarh Rail Systems: (Rs 958, + 1%)
The company bagged an order for Rs 170 crore from the defence ministry for supplying 250 specialised wagons.
Bull argument: Strong order book, consistent uptick in net profit for four quarters in a row. Domestic institutions have been steadily hiking stake in the stock. Market positive on the railway story from a medium-to-long term perspective.
Bear argument: The stock is down 23 percent from its record high, which technically puts it in bear territory. The railway story is fairly well known for now. That reduces the possibility of a further rerating anytime soon.
Life Insurance Corporation: (Rs 1040, -1.5%)
The insurer has received refund orders for Rs 21,740.77 crore from the income tax department.
Bull argument: The development should boost sentiment for the stock as it
will have a positive impact on the financials.
Bear argument: The stock is riding the wave in PSU stocks, rather than any sudden change in operating parameters. It has rallied 70 percent in three months, and could likely consolidate gains near term.
Data Patterns (Rs 2,018, +8.81%)
The stock has gained after the Singapore government, Kotak and Mirae MF bought stakes in the company through bulk deals.
Bull argument: The company delivered on the guidance of 25 percent year-on-year revenue growth in Q3. Margins expanded 43 percent sequentially.
Bear argument: Order inflows declined by 39 percent YoY during the quarter.
MOFSL (Rs 1831, +1.2%)
Shares may come under pressure on reports that the brokerage has fallen victim to a cyber attack, as claimed by LockBit. MOSL is yet to issue a formal statement.
Bear argument: Information of over six million clients of MOFSL is at risk. The attack could also jeopardize company data for its other businesses, including asset management and investment banking.
Bull argument: The brokerage reported impressive numbers for the December quarter, with a 222 percent on-year jump in net profit to Rs 774 crore.
Glenmark Pharmaceuticals (Rs 868.95, +7.25%)
Stock rallied despite the company reporting a net loss for the December quarter.
Bull argument: The management is making efforts to improve efforts to improve earnings outlook in the coming quarters through new launches in both India and US markets and resolving regulatory issues at its manufacturing site.
Bear argument: Despite the company’s efforts, regulatory issues could still take longer-than-expected to be resolved. Domestic institutions are yet to warm up to the stock. Their holding has stayed flat around 10 percent for 9 quarters in a row now.
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