Short Call | Of rebound hopes and irrational valuations; Easemytrip flies high, ONGC in fine balance, smooth sail for Adani Port

Some of the seasoned investors are taking money off the table, but the overwhelming majority is still at the game.

“Intelligent speculators and investors who do not play the market feverishly do not need to spend the day beside a ticker or before a quotation board.” - Edwin Lefevre

A steep fall yet again on Monday, the second such in less than three weeks. Well, the market managed to shake off the previous correction, so this one should not be any different: that’s the popular view on the Street. Nine out of ten people feel that valuations of many mid, small and micro cap shares have become irrational. And, yet it is hard to book profits, when the prices are only getting even more irrational. Besides, there are no compelling bear arguments at this point. Some of the seasoned investors are taking money off the table, but the overwhelming majority is still at the game. As for new entrants, any correction is the invitation they had been longing for.

Easemytrip (Rs 43.35, +4.71%)

The stock gained on heavy trading volumes. Some 11 crore shares traded on January 8, compared to one-month average of 3 crore shares. Two triggers: The company took a strong stance and suspended all flight bookings to Maldives,  and it incorporated a subsidiary company in the name of EaseMyTrip Insurance Broker.

Bull argument: Cheaper than Yatra. Return on equity over 40 percent. Healthy repeat transactions on the platform. Online travel market in India is set to grow at 12-13 percent CAGR till FY27

Bear argument: Institutional holding is less than 5 percent. Promoters have pared stake in past two quarters. If a new player enters the market and offers better deals, EMT can quickly lose customer loyalty.

ONGC (Rs 217.8, +0.65%)

The stock made a fresh 52-week high on January 8 after ONGC commenced

production from its deep water KG-DWN-98/2 block, off the coast of the Bay of Bengal.

Bull argument: This development is set to boost ONGC's overall oil and gas output by 11 percent and 15 percent. “The stock is forming higher highs and higher lows on both weekly and daily frames, indicating a bullish trend,” said Shivangi Sarda of MOFS.

Bear argument: Crude prices are hovering around $75 a barrel and a further dip may trigger a free fall in ONGC’s earnings. Nuvama estimates FY25 net profit to erode 19 percent on every $10 fall in ONGC’s realisation below $75 a barrel.

Marico (Rs 524.2, +1.8%)

Marico's domestic volumes grew in low single digits, said the company in its Q3FY24 update.

Bull argument: Softening input costs of copra, edible oils, and crude derivatives will expand the gross margins this quarter, say analysts. Marico is diversifying into more premium products in value-added hair oils segment.

Bear argument: Rural demand continues to be weak.

Adani Ports (Rs 1172.40, +1.57%)

Citi has raised its target price to Rs 1,368 and put it on its list of top picks.

Bull argument: Recent SC judgement has helped boost investor confidence. Analysts confident of the company's growth in financials and volume in the coming days on the back of a strong balance sheet.

Bear argument: Impact on EXIM volumes due to global conflicts could be a concern.