Short Call: Why market veterans are wary; Oberoi Realty, Suzlon, Bajaj Electricals, Supreme Industries in focus

The market may have shrugged off the negatives in the Budget, but seasoned investors are wary.

This was clearly not the Budget that stock market investors were looking forward to, even though Tuesday's closing levels seem to indicate that the market has made peace with the higher capital gains taxes. Given the massive liquidity in the system-domestic as well foreign-there is a feeling that the market simply cannot go down, no matter how bad the news. As one fund manager at a local mutual fund told Short Call, “(Retail) investors are not buying because fundamentals are good, they are buying because they think strong SIP flows will continue to support the market endlessly.” That could well be a dangerous assumption. Mutual fund inflows remain strong and new fund offerings (NFOs) too are selling like hot cakes. But liquidity alone cannot be a cure-all for the market, the fund manager said, recalling the massive subscription that UTI’s Mastergain 92 scheme had got in 1992.

“It mopped up Rs 4472 crore during its NFO period, which as a percentage of the market capitalisation of that time was quite significant. But it still could not prevent the market from plunging over the next year when the Harshad Mehta scam broke,” the fund manager said.

The market may have shrugged off the negatives in the Budget, but seasoned investors are wary. For a market rapidly running out of positive triggers to justify lofty valuations, the Budget has been a bigger dampener than it may seem at first glance. Also, liquidity cannot fix everything all the time, as these veterans have seen many times during their long careers.

Suzlon Energy (57.83, +5%)

Q1 net profit jumps 3x YoY, revenue from operations soars 50% in Q1FY25; brokerages bullish

Bull Case: Strong balance sheet, increased demand driven by the government's ambitious renewable energy targets, positions the company well to benefit from rising demand in both utility and commercial and industrial (C&I) segments.

Bear Case: Despite its growth potential, market underappreciation could limit Suzlon stock upside. Risks include ad-hoc government policy changes, intense competition, and slower-than-expected deliveries due to delays in site readiness.

Bajaj Electricals (CMP: Rs 967, -3.07%)

Anuj Poddar, MD & CEO resigns

Bear case: Prabhudas Lilladher analysts believe that the exit of Anuj Poddar could be sentimentally negative given his pivotal role in the company's transformation. Profits have been under pressure over the last four quarters.

Bull case: The company's Morphy Richards brands has been performing well, according to analysts. A high profile replacement for Poddar should lift near term sentiment.

Oberoi Realty (Rs 1,686, -3.3%)

Delivered a strong Q1 performance

Bear Case: Valuations remain expensive and the company does not have meaningful pre-sales growth visibility beyond the financial year 2027. Furthermore, delays in project launches and regulatory setbacks could hamper financial health.

Bull Case: Occupancy across the office portfolio is expected to rise, with management anticipating that all three Commerz towers will be fully leased by the end of the year. Currently, Commerz 3 is 70 percent leased.

Supreme Industries (Rs 5,510, -3.2%)

Saw broker downgrades, reduced targets as Q1 profit fell short of estimates.

Bull Case: Demand expected to recover after mid-August as PVC prices stabilise. Demand from infrastructure and housing projects expected to support growth. Investment in new product capacities likely to drive near-term growth.

Bear Case: High valuations. Disappointing results attributed to lower volumes and margins. Demand weakened during June-July due to falling PVC prices.

(With inputs from Harshita, Veer, Lovisha, Neeshita)