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January 28, 2025

Upcoming very important events
US Fed policy on 28th-29th Jan, Budget on 1st Feb, Delhi Elections on 5th Feb, RBI Policy on 7th Feb, Delhi election results on 8th Feb.
Don't do anything till Budget & post 1 week.Volatility will kill you. Preserve wealth by not doing anything.
Be like Rahul Dravid - Just Stay on the Pitch & do time pass.
Very important Most of cash stocks results between 3 to 15th Feb.
Burj Khalifa, Dubai Mall, Dubai Downtown: has all been built by a firm called EMAAR.
If you visit Dubai Mall and watch the fountain show: you will see EMAAR's branding everywhere.
One could argue that it is one of the top infra development firms in the world. And, has possibly the best branding.
Despite all this: the stock trades at a P/E of 7-9
Now, compare this to some of India's top infra firms and check their PE. You will easily find them to be trading at 45-50 PE.
Adjust for emerging market: still this PE will be 3X bloated.This means 3 times the sensible valuation.
Game in India: Bloat the PE. This increases the valuation of the firm. The promoter borrows public money against that & that's how they get rich.
Retail investors must have to think.
Received this post in IIM group
India's Weakening Rupee and its Expected Impact on the Indian Stock Market and on Companies with Large USD Borrowings -- Reliance, Tata, Adani, Vedanta, SBI, Bajaj Finance and Others
A SIMPLIFIED EXPLANATION OF WHAT THE ECONOMISTS ARE SAYING
Three days ago, Dr. Arvind Subramaniam, former Chief Economic Advisor (GOI) and currently Senior Fellow at the Peterson Institute, along with two other economists (Josh Felman - former IMF Representative in India; and Abhishek Anand, Founder of Insignia Policy Research), published an important article in the Business Standard, and followed it up with a series of posts on X.
Here is a simplified explanation of what these economists are saying:
1. RBI's new governor Sanjay Malhotra is a "victim" rather than the "perpetrator" of the currency situation he has been handed over.
2. Rupee's further decline cannot be avoided. The only question is: how much more decline?
3. RBI's own calculations indicate a large over-valuation of the rupee, so a lot more decline of the rupee against the dollar must happen, especially if US imposes tariffs.
4. RBI only has two choices before it: (a) Allow gradual decline of the rupee; or (b) Accept large and rapid decline
5. In case of gradual rupee decline, the currency market speculators will know the trend, and will keep shorting the rupee. That can lead to intense exchange rate volatility, and there is a risk with speculative activity that the rupee may lose even more value than it should.
6. In case of large and rapid rupee decline, the economy and stock markets could be disrupted.
7. Both above choices (point 5 and 6) are equally painful. There is no third choice. Therefore, economic turbulence is unavoidable, going forward.
8. Large Indian companies (top names are mentioned in the headline of this post, but there are several more) have huge US Dollar debt (external commercial borrowings or ECBs).
9. Indian companies' external commercial borrowings (ECBs) almost doubled from $26.6 billion in FY2023 to $49.2 billion in FY2024. (For example, just two weeks ago, Reliance raised a new, additional ECB debt of $3 billion from global financiers.)
10. PROBLEM # 1: If the rupee becomes significantly weaker against the dollar, the debt and interest repayment burden of these Indian companies will go up. (As the dollar debt has to be repaid in dollars only.)
11. PROBLEM # 2: If the rupee becomes significantly weaker against the dollar, the FIIs' large holdings of Indian stocks will lose their value. (FIIs count their holdings in dollars, not in rupees.) FIIs are already selling, but a significant weakening of rupee can cause a major "flight of capital" from the Indian stock markets.
12. How did this terrible situation for the rupee happen, and why did large Indian companies increase (double) their foreign debt so fast?
This question is more of academic interest. Please read on for a simplified explanation only if you are interested in knowing "HOW" did we reach this situation.
13. This terrible position for the Indian rupee, according to the article these economists have published, happened because in 2022, the RBI reversed the nation's three-decade long policy of flexible exchange rate, and brought back "de facto peg against dollar".
It means, the RBI started making interventions and started "managing" the rupee exchange rate. This resulted in a loss of India's export competitiveness (not allowing the rupee to find its true value at a natural pace) as well as depletion of India's foreign currency reserves (which were utilized to artificially keep the rupee strong.)
14. These economists have said in their article that nobody knows WHY the RBI made this costly pivot 3 years ago. However, Arvind Subramaniam says in his post on X that it was done mostly to subsidize foreign borrowings by the Indian companies.
If the rupee is strong, then dollar debt becomes cheaper. (EXAMPLE: If you buy a dollar for Rs. 40 or if you buy a dollar for Rs. 80, which is cheaper for you? So, when you strengthen the rupee, you are effectively making the dollar cheap for yourself.)
15. According to these economists, the RBI probably hoped that when Indian companies raise cheap foreign debt (due to strong Indian rupee), they will invest those funds into India's manufacturing, infrastructure, R&D, and other sectors to boost the domestic economy.
But that private investment did not happen. These companies simply substituted their expensive domestic debt with cheap foreign debt.
In other words, the top Indian companies gained at the expense of the national currency, which was kept artificially strong to allow them to raise cheap foreign debt.
16. Now the circle is getting completed. The "cheap foreign debt" of the top Indian companies is once again becoming "expensive" because the RBI is no longer able to stop the rupee decline.
17. So, nobody gained from this RBI pivot of 2022, according to the economists -- and everybody lost. Short-term strategies can sometimes have long-term consequences.
India got into this mess by betting on high GDP growth, which can be the only saviour in this situation. But now the GDP growth itself has slowed. One of the great lessons of Mahabharata is to never get int a Chakravyuh unless you have an escape.
Navigating the Opening Bell with Sbi Securities: 6 Key Technical and Derivative Insights
Avoid Bottom Fishing: Broader Market Under Pressure
1. Global Market:
US technology stocks took a hit on Monday as China's low-cost start-up #DeepSeek made waves with its powerful AI model. The #Nasdaq dropped nearly 3%, the S&P 500 fell 1.46%, while the #Dow outperformed, gaining 0.65%.
Going ahead, for S&P 500, the zone of 6050-6080 will act as a crucial hurdle for the index. While, on the downside, the zone of 5960-5930 will act as immediate support for the index.
On Monday, #BrentOil slipped by nearly 2 percent and ended at $76.21 level. From the recent high, it has tumbled by nearly 7 percent, and currently, it is trading below its 200-day EMA level. Going ahead, any sustainable move below the level of $75.30 will lead to further correction upto the level of $74.
The U.S. Dollar Index (#DXY) has formed a high wave candle on Monday, which shows indecisiveness near its 50-day EMA level. Going ahead, any sustainable move above the level of $108.20 will lead to resume its northward journey.
2. Nifty View:
The benchmark Nifty index extended its downward trajectory, slipping below its recent swing low. It now trades 2% below its 20-day EMA, signaling strong bearish momentum. Additionally, the daily RSI remains in bearish territory, reinforcing the weak sentiment.
Notably, the broader market segments, Nifty Midcap 100 and Nifty Small Cap 100, have shown pronounced weakness over the last couple of sessions. Both indices experienced a fresh breakdown on Monday, indicating likely underperformance in the short term. We advise avoiding bottom fishing for the next few trading sessions.
Going ahead, for Nifty, the zone of 22930-22960 will act as an immediate hurdle for the index. As long as the index is trading below 22960 level, it is likely to test the level of 22700, followed by 22550 level in the short term.
On the upside, if the index surges above the 22960 level, then the next resistance is placed in the zone of 23060-23100 level.
On the #derivatives front, January #futures dipped by 1.16 percent, while the combined #OpenInterest for the current, next, and far series also surged by 2.54 percent, which indicates an overall short build up.
Among the constituents of the #Nifty index, only 2 stocks have witnessed a long build-up, and 5 stocks have witnessed a short covering rally. While 19 stocks have witnessed a short build-up, and 24 stocks have witnessed a long unwinding.
The 22900 strike has significant call open interest, followed by the 23000 strike. On the put side, 22800 has a substantial open interest, followed by a 22700 strike.
For the January monthly series, it is at 0.66.
Bank Nifty outperformed frontline indices on Monday as it has failed to sustain below its recent swing low and witnessed a minor pullback from lower levels. However, it has ended the session near 48000 level with a loss of 0.63 percent. Going ahead, if the index slips below the level of 47800, then we may witness sharp correction in the index. On the upside, the zone of 48400-48500 will act as a crucial hurdle for the index.
3. Sensex View:
The benchmark index #Sensex also witnessed a gap down opening on Monday and ended on a negative note. It has also slipped below its recent swing low, which is a bearish sign.
Going ahead, the zone of 75700-75800 will act as a crucial hurdle for the index. As long as the index is trading below 75800 level, it is likely to test the level of 74800, followed by 74400 level.
While, on the upside, if the index surged above the level of 75800, then the next resistance is placed 76200-76300 zone.
On the #derivative front, January #futures dipped by 1.04 percent, and the #OpenInterest of the current series has also dipped by 19.41 percent, which indicates an overall long unwinding
The 75500 strike has significant call open interest, followed by the 76000 strike. On the put side, 75000 has a substantial open interest, followed by a 74500 strike.
For the weekly series, OI PCR is at 0.62.
4. Key Market Indicators:
The volatility index, India #VIX, surged by over 8 percent on Monday, and it ended above 18 mark, which was the highest daily closing in the last 118 trading sessions. This indicates that overall market volatility has increased significantly.
The #Advance/Decline ratio was largely tilted in favor of decliners.
5. Key Sectors:
Technically, Nifty Media, CPSE, PSE, Energy, Metal, Oil & Gas, Realty, Pharma, and Healthcare space are likely to underperform in the short term.
6. FII/DII Data:
#FIIs sold to the tune of 5015.46 cr while #DIIs bought to the tune of 6642.15 cr.
FIIs' Long short ratio for index futures is at 22.76 as on a net basis, they bought 38470 index futures.
On the stock #futures front, FIIs have bought to the tune of 39147 contracts, while on the #Options Front, FIIs bought 10026 call contracts and sold 70972 Put Option contracts.
Summary of Market Participants Positioning in the Derivative Segment for 27th January, 2025.
Synopsis:
FIIs sold to the tune of 5015.46 cr while DIIs bought to the tune of 6642.15 cr.
FIIs' Long short ratio for index futures is at 22.76 as on a net basis, they bought 38470 index futures.
On the stock futures front, FIIs have bought to the tune of 39147 contracts, while on the Options Front, FIIs bought 10026 call contracts and sold 70972 Put Option contracts.
https://x.com/_sbisecurities/status/1883896241517449318?s=46&t=tAv0kfCQeNv0krS0GhVFNQ
Fund Houses Recommendations
UBS on Siemens: Upgrade to Buy on company, target price at Rs 8000/Sh (Positive)
Nomura on Balkrishna: Upgrade to Buy on company, target price at Rs 3242/Sh (Positive)
Jefferies on DLF: Maintain Buy on Company, target price at Rs 1000/Sh (Positive)
Citi on IGL: Maintain Buy on Company, target price at Rs 450/Sh (Positive)
MS on Coal India: Maintain Overweight on Company, target price at Rs 525/Sh (Positive)
MOSL on Coal India: Maintain Buy on Company, target price at Rs 480/Sh (Positive)
Jefferies on Coal India: Maintain Buy on Company, target price at Rs 475/Sh (Positive)
MS on Coal India: Maintain Overweight on Company, target price at Rs 525/Sh (Positive)
MS on Bajaj Fin: Maintain Overweight on Company, target price at Rs 9000/Sh (Positive)
JP Morgan on Tata Steel: Maintain Overweight on Company, target price at Rs 155/Sh (Positive)
Jefferies on Tata Steel: Maintain Buy on Company, target price at Rs 160/Sh (Positive)
MS on Tata Steel: Maintain Equal weight on Company, target price at Rs 160/Sh (Positive)
MS on ACC: Maintain Equal weight on Company, target price at Rs 2510/Sh (Positive)
CLSA on ACC: Maintain Outperform on Company, target price at Rs 2580/Sh (Positive)
Investec on JK Cement: Maintain Buy on Company, target price at Rs 5147/Sh (Positive)
Investec on Consumer Goods: Rural growth outpaces urban, healthy jewelry demand, apparel strong post festive season (Positive)
Investec on Industrials: Govt and PSU orders steady, L&T benefits, budget insights to guide infra spending (Positive)
CLSA on ACC: Maintain Outperform on Company, target price at Rs 2580/Sh (Neutral)
Nomura on ACC: Maintain Reduce on Company, target price at Rs 1920/Sh (Neutral)
Investec on ACC: Maintain Hold on Company, target price at Rs 2845/Sh (Neutral)
Jefferies on IOCL: Maintain Buy on Company, cut target price at Rs 170/Sh (Positive)
Citi on Petronet: Maintain Sell on Company, target price at Rs 310/Sh (Positive)
MS on Petronet: Maintain Equal weight on Company, target price at Rs 400/Sh (Positive)
Macquarie on Petronet: Maintain Underperform on Company, target price at Rs 260Sh (Neutral)
Citi on PEL: Maintain Sell on Company, target price at Rs 800/Sh (Positive)
JP Morgan on Coal India: Maintain Neutral on Company, target price at Rs 435/Sh (Neutral)
MS on Canara Bank: Maintain Underweight on Bank, target price at Rs 80/Sh (Neutral)
UBS on Federal Bank: Maintain Buy on Bank, cut target price at Rs 235/Sh (Neutral)
HSBC on Bajaj Housing: Maintain Reduce on Company, cut target price at Rs 90/Sh (Neutral)
Nuvama on Balkrishna: Maintain Buy on Company, cut target price at Rs 3300/Sh (Neutral)
HSBC on Credit access Gramin: Downgrade to Hold on Company, cut target price at Rs 810/Sh (Negative)

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