Short Call | Market revival or red ink repeat? The event-packed week may hold the answer; Amara Raja, Azad Engg in focus

Short Call

After a gloomy October—the month usually known for lifting spirits, the market is now staring at an event-packed week ahead. US Presidential elections, Federal Reserve's monetary policy outcome, a deep dive into China's mega stimulus plans, with quarterly earnings being the cherry on top.

With this line-up of big-bang market-moving events, investors are juggling between hopes of potentially favourable outcomes sparking a revival rally and fears of unfavourable outcomes digging into a deeper correction. Though several variables are in play, the bottomline doesn't offer much promise.

Though there’s hope for a quarter-point rate cut from the Fed, the real spotlight is on one of the closest presidential races in US history. Emkay Institutional Equities says that a ‘Red’ sweep might spark a short-lived rally in Indian stocks, but any lasting impact will depend on earnings momentum and valuations. Other outcomes could bring jitters to the market.

Adding to the risk? If China’s detailed stimulus plan is as bold as investors expect, it could prompt a fresh wave of FII selling in Indian equities, a preview of which was already felt in October. Bottom line: buckle up for a nail-biting week in the markets!

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Amara Raja Energy & Mobility (Rs 1,372, -2.37%)

The company reported a 6.3% YOY growth in net profit of Rs 240.7 crore for Q2FY25. Its revenue jumped to Rs 3,135.8 crore.

Bull Case: Amara Raja's expansion into EVs, with lithium cell plants set for FY26 and FY28, alongside OEM partnerships with Piaggio and Ather, enhances long-term growth. Its established auto and industrial battery segments are projected to grow EBITDA by 10%.

Bear Case: Rising competition in the lithium battery space could pressure margins and delay plant utilization, while slowdowns in OEM and industrial demand might impact revenue growth, potentially weakening Amara’s return on recent investments.

Azad Engineering (Rs 1,575 | +7.8%)

Bags Rs 700 crore order from Mitsubishi

Bull case: As the only Indian provider of 3D airfoils to global OEMs, Azad Engineering enjoys a unique competitive advantage. The specialized nature of 3D airfoils and the capital-intensive process create high entry barriers, positioning Azad as a vital player in the industry.

Bear case: Despite high projections, Azad faces considerable pressure to execute on recent order wins, reduce finance costs, and expand client relationships. Any delays or missteps could dampen its projected PAT growth rate, leading to lower-than-expected earnings.

(With inputs from Harshita and Lovisha)