Short Call: PVR bulls bet on Adipurush, CEAT, Gujarat Gas, China’s labour pangs, Uncle Scroogeman Sachs

PVR bulls are betting on Prabhas-Kriti Sanon starrer Adipurush releasing today.

“The only way one makes money in the market is when the market's perception of a stock changes.”  -- Robert Wilson

Interest rates are rising globally, but investors in India do not appear to be too bothered. The undertone remains bullish, and investors are now scouring for value in sectors that have been overlooked so far. Pharma appears to be a beneficiary of this trend

PVR Inox

The stock gained 3 percent on heavy volumes on Thursday. Right now, the market is betting that the Prabhas-Kriti Sanon starrer Adipurush releasing today will have the cash registers ringing loud, judging by the pre-bookings. With stocks of multiplex firms, it seems to be a case of feast or famine. The stock is some way off from its peak of August 22 as a string of tepid releases and periodic concerns about the threat from OTT platforms has kept investors on the sidelines for a while now. Near term sentiment for the stock will be driven by the performance of Adipurush at the box office. For the moment, the stock seems to be more of an opportunistic play than a rerating bet.

CEAT

The stock has risen nearly 50 percent in less than two months, supported by heavy trading volumes. But could there be a speed breaker ahead?

From Nuvama Institutional Equities’ note:

“Management expects volume growth to be moderate in FY24, with high single-digit growth in OEM segment and low-to-mid single-digit growth in replacement. Replacement demand has been flat in Q1 FY24 and recovery is expected over the next two–three quarters. In comparison, exports are likely to grow at a healthy pace, led by improvement in global demand in H2FY24, increase in OHT sales and better penetration in Europe, Latin America and USA.”

Gujarat Gas

Gujarat Gas has sharply reduced gas prices since April, but will that translate into higher volumes? Abhishek Somany of Somany Ceramics says that even after the reduction, natural gas prices are still on par with prices of propane, which became the go-to gas for tile and sanitaryware producers when gas prices were rising. This could mean that customers are unlikely to switch to natural gas in a big way unless they see a meaningful benefit. According to Somany, gas prices are still too high for the comfort industrial customers, and are unlikely to go much lower from here.

China stimulus package

China is mulling a one trillion yuan or about $140 billion package to boost economic growth reports Wall Street Journal, quoting unnamed sources. The funds will be used to finance infrastructure projects, help local governments repay debt, and on other initiatives to boost business confidence. Beijing is also considering plans to scrap purchase restrictions on second homes in China’s smaller cities, as a way to boost the property market. Currently, buyers in many cities are prohibited from buying more than one property, a policy intended to prevent speculation.

Labour pangs

The contrast in the labour market in US and China couldn’t be starker. A strong labour market in the US is making it tough for the Fed to keep inflation under check, while unemployment rate in China has climbed to a fresh record high of 20.8 percent in May. Of the 33 million plus youth who entered the job market, more than 6 million are unemployed. Some economists estimate that number of jobless youth is higher than what it was pre-pandemic

Odd Man Out

Indian-origin executives rising through the ranks to lead global corporations is almost a cultural stereotype at this point. But one case stands out like a sore thumb.

A month after Japanese automaker Nissan said its Chief Operating Officer Ashwani Gupta will not be reappointed to its board, an FT report claims he was forced out due to an internal power struggle. Gupta, who was tipped to be the company’s next president, ran the show along with Nissan’s chief executive Makoto Uchida since 2019. But people inside the group say there was a fierce rivalry between the two executives.While Uchida initially kept a low profile, Gupta did not hide his ambitions for the top position and was widely seen within Nissan as occasionally overstepping his role.

Uncle Scroogeman Sachs

Wall Street titan Goldman Sachs is on a severe belt-tightening spree. Amid the firm's ongoing push to cut USD 1 billion in costs, its managing directors were invited to meetings this month and told to take even more painful steps to cut costs, reports Reuters. Previously, employees were able to spend on subscriptions for websites that provide data and information, or book a business trip to see a client and expense pricey meals. Now senior managers are needed to sign off on such expenditures.

If revenues don't bounce back alongside the aggressive cost-cutting measures, more employees can expect to be laid off this year. The investment bank has already let go of 3,700 employees since September.

Your magic genie

A lot of chatter around generative artificial intelligence has been on its potential to make many professions and jobs redundant. Adobe CEO Shantanu Narayen is in the camp that feels AI won’t replace human ingenuity, but will only augment it

“It is almost like you can focus exactly on what you want the output to be, and the computer does this magic, and so often, as I’ve been playing with it, I tell myself, ‘how did it do that?’” Narayen said in an interview to CNBC. “So, you know, it really is this sort of incredible co-pilot, or agent on your behalf that’s able to understand what you’re trying to accomplish before you even have the desire to do it, it does it for you.”

(With contribution from Abhishek Mukherjee)