FOMO (fear of missing out) and FONO (Frustration over neighbour’s opulence) are at play on Dalal Street, as followers of the buy-on-dips strategy are get it good. All these are prompting more retail investors to jump into the fray. Valuations are hard to justify in a vast majority of stocks, but there is no shortage of narratives in a bull market.
The popular theory among market players right now is that the government will not let the market fall before the elections. And why should that be the case? The common answer Short Call got is that a depressed stock market closer to the elections would make for unhappy voters. Such hollow arguments are drawing more people to the market, who feel there is easy money to be made just before the elections.
Whenever there is too much consensus building on one view—whether bullish or bearish—the believers are usually in for a surprise.
Asian Paints (Rs 3,007, flat)
Grasim Industries launches 3 Birla Opus paint plants.
Bull argument: 12 percent volume growth in Q3, company expanded distribution and added 2000 retail touchpoints in the quarter. Still clearly the market leader by far.
Bear argument: Birla Opus’ Rs 6000 crore capex a sign of the coming competition. JSW Paints too upping its gains. Asian Paints has limited scope
to hike prices, and may even to reduce prices if competition resorts to a price war. Margin expansion is unlikely due to ongoing capex. Analysts positive on Asian Paints ability to withstand competition, but feel current valuations offer limited room for upside.
Devyani International (Rs 164.25, -1.65%)
Yum Restaurants India sold a 4.4 percent stake in Devyani International.
Bull argument: Company has acquired around 250 KFC outlets in Thailand. Strong demand for chicken as a category in Thailand will aid overall margins.
Bear argument: Revenue has been declining for the last five quarters. Pizza category is facing the maximum competition in QSR segment. No clear signs of demand revival in discretionary spends.
Cummins India (Rs 2760.85, +6%)
The stock hit a fresh record high as investors bullish on capex story
Bull argument: Highest ever quarterly earnings for the December quarter. Company gaining from new products and implementation of new pollution control norms. Margins improving with softer commodity prices and pricing power. Earnings visibility and growth to remain good in the next year
Bear argument: Exports weak because of poor demand and logistics issues amid the problems in the Red Sea. According to Moneycontrol Pro, the stock is expensive at 37 times estimated FY26 earnings. This could limit upside.
Vodafone Idea (Rs 16.35, +6.5%)
Shares of the telecom major gained as promoter Kumar Mangalam Birla reiterated the company’s commitment to the debt-ridden company.
Bull argument: Parents company’s statements could quell investor concern, successful fund raising will help ease debt
Bear argument: Third quarter earnings were below analyst estimates, weak balance sheet and debt continues to be a concern for the company; subscriber base declining steadily.
ABB (Rs 5,439, +9.11%)
The stock surged after several brokerages assigned a 'Buy' rating and raised target prices.
Bull argument: Order inflow increased 34.8 percent YoY in 4QCY23, led by significant traction in large orders from the Motion business. “We see ABB as a perfect trifecta of automation, electrification, premiumization and hence assume coverage with a Buy rating,” said Nomura.
Bear argument: Core sectors such as cement, oil & gas have not contributed meaningfully to ABB's ordering.
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