“We start with the assumption that the stock market is always wrong, so that if you copy everybody else on Wall Street, you're doomed to do poorly.” - George Soros
Consumer inflation rose in November, but that does not seem to be a worry for bulls at the moment as liquidity flows remain strong. The consensus view on the Street is that foreign investors have little choice but to invest in India. The other commonly held view is that the RBI is unlikely to cut interest rates before the Fed does so. And it does not seem as though the Fed is any hurry to cut rates, though inflation in the US appears to be coming under control. So, be prepared for putting up with high interest rates for some more time.
HDFC Life (Rs 707.75, +5.30%)
The tax appellate tribunal has ruled in favour of the company in a Rs 232-crore dispute. Second such instance in a month. Both were old cases.
Bull argument: Most favoured insurance stock. Strong backing from bancassurance channel. New product launches are improving margins.
Bear argument: There is a Rs 942-crore GST demand notice still to contend with. The ruling can go any way.
PI Industries (Rs 3485.85, -10.02%)
The stock tanked on the news of Chinese major Rainbow Agro entering pyroxasulfone market. Pyroxasulfone contributes a big chunk to PI
Industries' topline.
Bull argument: Profits have been compounding at a faster pace than sales, so margins are expanding. FII stake has increased over the quarters. The management has said that pyroxasulfone is a patented product in most developed markets.
Bear argument: China comes back with a bang and the impact is higher than anticipated, meanwhile domestic revenues remain subdued.
Krsnaa Diagnostics (Rs 669.4, +0.28%)
The stock has outperformed Nifty Pharma over the last month, gaining nearly 5 percent. The company is in the process of rolling out a website and mobile app to increase private walk-ins and improve positioning.
Bull argument: While public-private partnership remains the core focus, this new experiment can incrementally contribute to growth over the medium to long term, says JMFL.
Bear argument: Margin may remain subdued in the near term due to large new centre implementation costs. Also, the National Health Mission agreement with Rajasthan is yet to be signed despite the high court ruling in favour of the company.
Mankind Pharma (Rs 1,850, -3.65%)
Private equity firm Chrys Capital and the Capital Group have trimmed their stakes by 7.6 percent, selling a little over three crore shares combined. Kotak MF bought 20 lakh shares.
Bull argument: The stock’s addition to the FTSE All World and All Cap Indices expected to provide inflows of $30 million according to IIFL. Company expects to meet its EBITDA margin guidance of 24-26 percent for the year.
Bear argument: The stock is expensive relative to peers. Broking firm Systematix says earnings growth to slow down after FY25 as its operating leverage would have played out by then.
ITC (Rs 453, + 0.14%)
The stock closed flat as the company’s recent analyst meet was largely on expected lines. The stock has been drifting lower since the last week of July when it hit a peak of Rs 500.
Bull argument: The company is focussed on improving profitability in the FMCG business. If tax rates remain stable, then cigarette volume growth should start looking up.
Bear argument: The much-awaited rerating has come through. Unless the company has some more restructuring plans up its sleeves, it is likely to be a steady compounding story.
L&T (Rs 3345, -1.2%)
The company has signed a multi-year engineering services pact with energy major bp.
Bull argument: L&T deal wins have improved, with better margin performance. The company has bagged 13 deals of total contract value of over $25 million in Q3.
Bear argument: The company has cut its revenue growth outlook to 17.5-18.5 percent from 20 percent projected earlier due to increased macro uncertainty. Conditions of weaker working capital still persist.
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