The Federal Reserve has aligned its actions with market expectations, opting to pause its rate-cut cycle to reassess the evolving inflation landscape under the newly inaugurated Trump administration. With inflationary risks still looming large, fuelled by uncertainty over Trump's proposed policy shifts, the Fed has adopted a cautious "wait and watch" stance.
While Powell reassured markets that the pause doesn’t signal a shift in policy direction, he also emphasised there’s no urgency to resume rate cuts. As the Fed holds rates at slightly lower levels for the time being, the question is: Will the RBI follow suit and take a breather, or do pressing domestic liquidity concerns necessitate immediate easing?
The RBI appears more preoccupied with local liquidity conditions, hinting that a rate cut could be on the table as early as its February meeting. Just days ahead of the Union Budget, the central bank has already opened the liquidity floodgates, aiming to inject Rs 1.5 lakh crore into the system through a mix of forex and money market measures.
For the RBI to comfortably lower rates, the upcoming budget is also expected to introduce growth-driven initiatives while maintaining fiscal discipline. With GDP expansion slowing, corporate earnings under pressure, middle-class households grappling with subdued wage hikes, and inflation remaining stubborn, a rate cut could provide the much-needed boost to reignite economic momentum.
Suzlon Energy (Rs 52.77, +5%)
Reported 91% jump in net profit for the quarter ended December 31, 2024.
Bull Case: Suzlon Energy is capable of sustaining its lead in WTG/turnkey EPC execution and the company is best placed to capture demand with industry-leading EPC capacity. There are tailwinds to its growth, including government thrusts on renewable energy. Further, its high-margin services like operating and maintenance will boost profitability.
Bear Case: According to Nuvama analysts, any delay in execution ramp-up will impact its bottom-line. Further any rising competitive intensity will threaten Suzlon's dominance as a market leader.
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JSW Infrastructure (Rs 280, +7%)
Shares surged after the port operator reported a 32.35 percent rise in net profit to Rs 336 crore for the December quarter, compared to the same period last year.
Bull Case: Management expects 10% volume growth in FY25 and robust port/logistics business performance driving double-digit growth in FY26. Integration of assets like PNP terminals, Navkar logistics, and liquid terminals bolstering revenue growth. Port growth is expected to be in double digits in FY26, driven by a strong performance in the logistics segment.
Bear Case: Subdued growth in base cargo, especially from JSW Steel, which is expected to pick up only in late FY26. Any downturn in global trade, port regulations, or economic slowdown could impact cargo volumes and pricing power.
Bajaj Auto (Rs 8,648; +3%)
Stock surges after firm delivers beat Q3 earnings
Bull case: Bajaj Auto’s EV segment is now profitable, with soaring market share in both two- and three-wheelers, driving strong Q3 earnings and future growth potential. With a positive volume outlook and robust export momentum, the company is well-positioned for sustained expansion.
Bear case: Market share losses in the entry-level motorcycle segment pose a risk, as this high-volume category remains crucial to overall growth. If this trend persists, it could offset EV gains and weigh on long-term performance.
(With inputs Zoya, Neeshita, and Lovisha)
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