Short Call | Retail bulls keep charging despite smart money wary; Muthoot, Vedanta, D-Mart, Dabur in focus

After all the warnings about froth in the market and crackdown on NBFCs, regulators appear to be lying low for the time being.

Fools rush where angels fear to tread - that's the phrase that comes to mind when it comes to talk of the current trend. Foreign institutions are selling off equities, HNIs are not adding to their existing positions, and domestic funds have turned choosy despite strong inflow of SIP money. But the rally in smallcap and midcap stocks suggests retail investors are convinced that the 'buy on dips' will work this time as well.

After all the warnings about froth in the market and crackdown on NBFCs, regulators appear to be lying low for the time being. That in itself is a big relief for the bull camp. Still, fundamental triggers appear to be missing in the short term.

The rate-setting panel of the Reserve Bank of India will declare the monetary policy stance and its decision on key policy rates on April 5 morning. But the RBI event is likely to be a non-event, as any slim hope of a rate cut would have been dashed by a weakness in the rupee.

Gold loan stocks in general are doing well as gold prices have hit a record high.

Bull argument: The company has seen a steady improvement in asset quality

and growth with a decent Q3 performance. Ambit says clampdown on PSU banks' gold loan practices could mean customers start preferring NBFCs.

Bear argument: Competition from PSU banks may have eased, but analysts at IDBI Bank point out that competition within NBFCs is no less. Also, fluctuating gold prices could be a concern.

Fourth-quarter update showed standalone revenue grew 20 percent to Rs 12,393 crore.

Bull argument: Revenue growth is higher than 18 percent seen in the nine months of FY24, largely led by a five-year-high same-store sales growth (SSSG) of 11 percent, says Morgan Stanley. The retailer is rapidly scaling its private-label assortment, which will drive the next leg of share gains, says CLSA.

Bear argument: Nuvama says the company has revenue concentration in Maharashtra and Gujarat. Its high margin apparel business has not performed well.

The company said in its fourth-quarter update that consolidated Q4 revenue is likely to grow in mid-single digit.

Bull argument: Signs of improvement in rural demand. The company’s India home and personal care segment grow in high-single digits. The management is positive in its outlook on monsoons and rabi season.

Bear argument: Consumer demand is still sluggish, said the management. Rural volumes grew on the back of price rollbacks. The company is heavily investing in A&P, distribution, and branding, which can weigh on margins near term.

The stock hit a 52-week high after delivering the highest-ever annual volume across key businesses.

Bull argument: Commissioned a 1.5-million-tonnes-per-annum (mtpa) facility at its alumina refinery in Lanjigarh, Odisha. Parent Vedanta Resources plans to cut debt by $3 billion over the next three years.

Bear argument: Omar Davis, a veteran banker who was overseeing the restructuring of Vedanta Group, has left the conglomerate within a year of taking the role, dealing a fresh blow to its efforts to reduce a multibillion-dollar debt load, Bloomberg reported.