“Equilibrium applies best only to markets that deal with known quantities. But financial markets deal with quantities that are not only largely unknown but unknowable.” - George Soros
The market is showing signs of fatigue at higher levels. No major negative triggers on the horizon for now, except that the third-quarter earnings season is giving a section of investors pause for thought. The widely held view is that just like with interest rates, the ‘higher-for-longer’ trend could persist with stock valuations given a) positive sentiment and b) the amount of money waiting on the sidelines. But one also needs to be prepared for the occasional accidents like Polycab, Zee and Paytm.
LIC (Rs 1,000.35, +6%)
The stock surpassed its issue price and market cap crossed Rs 6 lakh crore mark
Bull argument: Company trying to retain its market share in a profitable manner through better product mix. Analysts bullish about new product launches and spending on digital transformation
Bear argument: Commissions to agents can keep margins under pressure. Premium growth has been flat over the past few years.
Interglobe Aviation (Rs 3,171, +1.4)
The Indigo operator’s profit more than doubled to Rs 2998 crore in the December quarter.
Bull argument: Capacity addition, stable fuel prices, cost control helped the
profit growth. Demand remains strong, and the airline plans to add more capacity.
Bear argument: Erstwhile promoter Rakesh Gangwal likely to sell more stake. Also, 75 aircraft out of 136 with Pratt & Whitney engines are grounded. Elara says P&W’s engine inspection will take 8-10 months to complete. Competitors are adding planes which may impact passenger volumes.
Ashok Leyland (Rs 179, + 3%)
Third quarter net profit rose 61 percent year-on-year
Bear argument: The stock has been a laggard compared to some of its peers. There are concerns of commercial vehicles growth slowing.
Bull argument: Management says the slowdown in domestic sales is due to high base last year, and sees no slowdown in demand.
Tata Motors (Rs 929.75, +6%)
The company’s third quarter numbers were ahead of analyst estimates.
Bull argument: The auto manufacturer reported strong numbers across all its business segments. Order book robust
Bear argument: Shipping issues in the Red Sea could impact material and vehicle delivery schedules. There are signs that commercial vehicle sales growth is cooling, and passenger vehicle dealers are complaining of channel stuffing by companies across the board
TVS (Rs 2,023.1, -1.09%)
The stock fell despite the company reporting a 23 percent on-year increase in vehicle sales in January.
Bull argument: The company has been gaining domestic share and is better placed for the electric vehicle transition than peers. Nuvama expects net debt-to-equity ratio to reduce from 0.4x in FY23 to 0.03x in FY26E.
Bear argument: There could be some increase in logistics costs ahead due to Red Sea issues. Three-wheeler sales in January declined, to 9,576 from 10,405 units last year.
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