“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
Companies are being slapped with tax notices left, right and centre, and IPO subscriptions are ruling the headlines. The boom in luxury houses continues, and also the rally in smallcap stocks.
Cipla
The stock fell 7 percent following reports that the US FDA had pointed out certain data integrity issues at the Pithampur plant that would take longer to resolve. Delta Advisors’ Nimesh Mehta told CNBC-TV18 that Advair and Spiriva were the likely products to be launched from this plant, and that the
company’s inhaler portfolio could come under a cloud. Till a few weeks back, speculation was rife that the promoters would be selling out. This was denied by the company earlier this month, but the stock continued to crawl higher. The steep fall on Thursday could possibly indicate that the Street thinks the US FDA warning may slow down things on the stake sale front.
Petchem
Dark clouds loom over domestic petchem players as China, the world's largest producer and consumer of petrochemicals, pivots towards increasing its capacities. Petchem margins have been subdued in 2023, and Prabhudas Lilladher analysts feel this weakness could carry on into 2024 as well.
Zomato
Shares down 2 percent after company received a Rs 400 crore tax notice for non-payment of GST. To put that number in context, Zomato made a profit of Rs 36 crore in Q2. Sentiment for the stock has improved after the second quarter performance, but then the stock has doubled in the last six months. There is chatter about Swiggy coming up with an IPO in the near future. That, more than anything, would be a bigger worry for Zomato bulls, as it means investors will then have a choice to play the food delivery space.
Jubilant Foodworks
The stock gained 1 percent on Thursday, and is up 8 percent for the month. Morgan Stanley is neutral on the stock, saying its proprietary Alphawise Survey points to higher gains for competition on order frequency compared to Dominos. And this is despite Dominos continuing to dominate on most parameters compared to peers. The other big worry for Jubilant backers, according to Morgan Stanley, is the structural transition to eating out or eating outside home food.
Collateral damage
The popular line of thinking on the Street is that the RBI’s move to increase risk weights on bank loans to NBFCs may not have much of an impact at the macro level. In fact, many of them appreciate the RBI move to check the unbridled growth in consumer loans before it develops into a bigger problem. But things are not so straightforward. FIDC, a representative body of NBFCs, has written to the RBI to tweak its risk-weight norms. “While we understand the purpose of the bank to regulate credit flow to the consumer sector, this measure inadvertently, also has the potential to sharply reduce flow of credit to MSMEs, self-employed and other sectors which rely upon credit from NBFCs,” it said.
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