Short Call: DIIs, retail investors lap up what promoters, FIIs offload; Aptus Value Housing, HCLTech, KEC International in focus

Cries for a correction have ebbed and flowed like the tides, with investors refusing to budge despite high valuations.

To buy a stock, you need a seller. Demand and supply, push and pull, give and take - the simple tenets of the markets.

In this tearaway rally we’re seeing, with Nifty 50 scaling fresh highs and the small- and mid-cap indices outperforming the benchmarks, DIIs and non-institutional investors are rushing to buy what FIIs and promoters have offloaded.

Let’s look at the numbers. Over the last five years, from December 2019 to June 2024, the average promoter shareholding in Nifty 50 declined by 240 basis points, while FII shareholding declined by 120 basis points.

In contrast, domestic institutional investors significantly increased their shareholding by whopping 460 basis points in Nifty 50. Retail participation also rose, though at a slower pace compared to DIIs.

With retail investors pumping the markets with cash, even when FIIs and promoters are paring their stakes, it makes you wonder: what will it take for the markets to finally take a long pause to catch its breath?

Every piece of bad news has been discarded: from the failure to cinch 400 seats for the majority party to the absence of big triggers to suggest a revival in lagging parts of consumption and private investments, or reforms like privatisation. Muted corporate results have been cheered while disappointments are taken by the market in its stride.

Cries for a correction have ebbed and flowed like the tides, with investors refusing to budge despite high valuations.

The fresh higher highs suggest the market is now dancing to the tune of the domestic investors - either large institutions or retail participants like you and me, leaving those waiting for a correction feeling like they missed the memo.

As investors continue to seek the exaggerated returns of the past, it turns into a feedback loop: they infuse the markets with cash, the markets outperform, and then more people come into equities, seeking to make a quick buck.

Shares rose after Citi gave a 'buy' call and increased the target price.

Bull Case: Management confident of sustaining 28-30% AUM growth. Expanding footprint in Maharashtra and Odisha; adding 20 new branches primarily in Andhra Pradesh and Telangana in FY25 is a positive.

Bear Case: There's a possibility of a 10-15 bps pressure on NIM due to rising funding costs for NBFCs.

At its recent Investor Day, the company outlined strategic initiatives for medium-term growth, cost-saving measures to fund investments and boost margins.

Bull case: Multiple imperatives to ensure consistent growth trajectory including full-stack AI solutions, increased market participation in focus and new frontier markets along with a larger partner ecosystem beyond OEMs and hyperscalers, writes KIE. Commentary on proactive cost take-out proposals hint at a higher willingness to take risky bets to gain market share.

Bear case: Employee costs as a percentage of revenue are higher than pre-covid levels. More

offers have been made, but further efforts for cost cutting needed, Nuvama believes. Persistent slowdown in the US and a spike in attrition can present downside earnings risk.

Stock jumps on the company winning new Transmission and Distribution (T&D) orders worth Rs 1,171 crore in the Middle East.

Bull Case: Its strategic diversification, robust execution capabilities, and focus on high-growth segments like T&D EPC, railways, and civil infra are poised to drive exponential growth, capitalizing on a multiyear macro T&D capex opportunity.

Bear Case: The company faces risks from potential execution delays, a slowdown in key T&D markets, and exposure to forex and commodity fluctuations, which could pressure revenue and margins, especially with significant fixed-price contracts.