Stock Market Analysis 22 Jan 25 in Focus: Sensex, Nifty, and Global Economic Impact
Today evening, the Sensex gained 567 points, closing at 76,405, while the Nifty rose by 131 points, closing at 23,155. Meanwhile, Yes Bank Nifty saw a rise of 153 points in the Nifty and closed at 48,724.
The market's volatility today had a significant impact on investors' portfolios. Many would have noticed that their portfolios were in deep red at one point, but by the end of the day, the market made a relieving recovery. After a decline of around 130 points, the market made an impressive comeback. However, the small-cap and mid-cap indices closed with a 0.5% decline.
Why did the market experience such fluctuations? There was a major fall in the market until afternoon, but then a surge followed. Why did this happen? Let's discuss some key reasons behind this:
- Impact related to China Donald Trump stated that he would impose a 10% tariff on China starting February 1. This had a clear impact on the Chinese currency and Chinese markets. Additionally, the Chinese handset market was also affected. However, other Asian, European, and US markets remained stable.
- FIIs’ selling in the Indian market In recent days, there has been continuous selling in the Indian market, especially by Foreign Institutional Investors (FIIs). The selling in the Indian market has been higher compared to the low FIIs' selling in other Asian, US, and European markets. This selling is likely due to fears related to Trump's statements about imposing more tariffs on India.
- Tariff dispute between Trump and India After India raised import duties, Trump warned that if India did so, the US would retaliate. This fear could be a significant reason behind the FIIs' selling in the Indian market.
- Discussion on capital gains tax A recent discussion about potential changes in capital gains tax in the upcoming budget has created some unease in the market. However, news broke in the afternoon that the government would not be making any changes to the capital gains tax, which brought some stability to the market.
- Other important updates
- Strong figures from HDFC Bank: This helped stabilize the Nifty and Bank Nifty.
- Stability in the rupee: The rupee has stabilized over the past five days, reducing the pressure from FIIs' selling.
- Dollar index and bond market: The dollar index decreased from 109 to 108, and bond prices also saw a period of stagnation.
Outlook ahead The upcoming budget presentation on February 1 could have a significant impact on the market, either strengthening or weakening it.
If the government does not make any changes to capital gains tax, it will be a positive signal for the market. Additionally, strong investments coming from the US could put pressure on the Indian market."
Here’s the updated data for FII/FPI and DII:
Today, they are still selling around ₹4000 crore. This is probably the 14th consecutive trading session of continuous selling. This is the first time in January. They have sold nearly ₹56,000 crore so far. Previously, in October, they sold more than ₹1 lakh crore. Since then, they haven't sold such a large amount in a single month.
I think January is the best time to sell products related to the budget. So far, ₹56,000 crore has been sold, and today another ₹4000 crore has been added. The concern now is that they might sell up to ₹60,000 crore. The last time they increased taxes on capital gains, so the question is, will they do the same this time?
Budget 2025: Finance Minister Nirmala Sitharaman's budget on February 1 might not have any significant changes this time. But if there are no changes, the ongoing selling might turn into market activity again. Our market conditions, especially with respect to Nifty and large-cap stocks, have entered an attractive zone. It could also be a good time for investing in mid-caps and small-caps. However, investors should wait for a bit.
If the budget doesn’t take any strict steps regarding capital gains tax, it is likely that the investors who left due to taxes might return. This could send a signal to the government that they should avoid taking such harsh steps that destabilize the market.
FII’s outlook and the impact of the US market: If there are no tax-related changes in the budget and FII selling continues, it could indicate that FII’s strategy is shifting towards the US's strong growth rate. Their priority may be investing in the dollar and capitalizing on the growth of US companies.
Long-term investment benefits: The stock market may be volatile in the short term, but in the long term, it shows growth. Investors who invest in quality businesses can build wealth over the long term. Companies continue to grow through bonuses, stock splits, etc. Therefore, treat market declines as short-term events and focus on investing in high-quality businesses.
Akums Drugs & Pharmaceuticals Ltd.:
You may have heard this company's name often in the CDMO space. This particular company is currently under investigation by the Income Tax Department. When the company officially updated the exchange, the stock saw a sudden decline of 7% today. The stock ended in negative territory.
Budget 2025:
Expectations related to the upcoming budget, especially regarding taxes linked to our stock market, have been a topic of discussion in the market recently. According to information from sources, the Economic Times has published that there is unlikely to be any change in the capital gains tax (CGT) in the stock market this time. The government believes that the existing infrastructure for long-term and short-term capital gains tax (LTCG, STCG) should continue and be simplified further.
According to sources, the government does not intend to make any structural changes in capital gains tax this time. This update came around 12:40 PM in the market, and it was later published by the Economic Times. There has been some recovery in the market today. If we look closely, the decline in the market yesterday and the drop in small-cap stocks this morning might have been due to concerns about tax changes. Now, this information is being circulated again that the government will not make any significant changes in taxes.
If there are indeed no changes to taxes in the budget, as I mentioned earlier, this will be a significant positive news for the market. However, if there are changes related to LTCG or STCG, it could make the market a little volatile. We are waiting for an update in the budget. In fact, the absence of any updates itself will be a major positive news.
Railway Budget:
This time, ₹3 trillion has been allocated for the railways. This is more than last year's allocation. The government is focusing specifically on rail facilities, rolling stock, and safety. This budget is a good incentive for the railway sector.
RailTel Corporation:
RailTel has received an order worth ₹46.79 crore from the North Western Railway Division. This order is related to signaling, and RailTel will complete it by July 2026. RailTel has updated the exchange that it will execute this order.
WAAREE Energies Ltd.:
Today, WAAREE Energies' stock fell by more than 12%, closing nearly 10% in the negative. The main reason for this is that the company’s three-month shareholder lock-in period ended today. Let’s understand what this lock-in rule means for new investors in an IPO.
According to SEBI's rules, investors in an IPO are locked in for different time periods (1 month, 3 months, 6 months, 1 year). The purpose is to ensure that large investors who buy before the IPO don't suddenly sell all their shares, leaving retail investors stuck. In this process, investors are allowed to sell their shares gradually.
Due to the completion of the three-month lock-in today, about 40 lakh shares have entered the market, causing a decline in the stock price. The next lock-in will be on April 25, 2025, when 15.3 crore shares (53% of total equity) will be released into the market.
The stock has fallen nearly 35% from its recent high of ₹3743 and is currently trading around ₹2400. However, the company has shown rapid growth in its sales over the past few years:
- 2020: ₹2000 crore
- 2021: ₹2800 crore
- 2022: ₹6700 crore
- 2023: ₹11398 crore
According to Kotak's report, the company's profit could reach ₹5000 crore over the next two years. Due to the company's capacity expansion, modules, sales, and backward integration in wafers, there are good signs for future growth.
Investors should make investment decisions considering the company’s fundamentals and growth. Although the stock price may fluctuate, the company shows strength in its business and development in the long term.
MacroTech Developers Ltd.:
A ₹5000 crore dispute has emerged involving MacroTech Developers. The dispute is between two brothers, Abhishek Lodha and his younger brother. Abhishek has claimed in the High Court that the use of the name "Lodhi" by his younger brother is harming his business interests.
This case involves a trademark dispute between Abhishek's company, MacroTech Developers, and his younger brother's company, House of Abhinandan. Abhishek has demanded ₹5000 crore in compensation from the court.
The next hearing of this case is scheduled for January 27 at 2:30 PM. The outcome of this decision will be crucial for MacroTech Developers. If the verdict is in favor of Abhishek, it could be positive for MacroTech; otherwise, it might affect the company’s name and reputation.
We will provide updates on this case as soon as any new information becomes available.
Laurus Labs: Update and Important Information
Friends, we have an important update regarding Laurus Labs. But before that, former President Donald Trump made a statement about withdrawing from the World Health Organization (WHO). Has he issued any orders regarding this? Trump has previously had a negative stance towards WHO, especially regarding the funding from the U.S. to the WHO. However, during the Biden administration, WHO received full support, but with Trump’s return, this issue has resurfaced.
WHO Funding and U.S. Contribution:
According to data, the U.S. contributes 15-20% of WHO's total budget. This funding is related to programs such as polio eradication, infectious diseases, global vaccination programs, and diseases like HIV/AIDS. If the U.S. withdraws from WHO, this funding could be affected. It is possible that private organizations like the Melvin Foundation, Bill and Melinda Gates Foundation, or other donors may attempt to fill this gap. However, if this doesn't happen, many countries could face their own issues.
Impact on HIV/AIDS and ARV Drugs:
The U.S. withdrawal from WHO could impact HIV/AIDS and associated ARV (anti-retroviral) drugs. The U.S. is a major contributor to the PEPFAR program for HIV/AIDS. If this funding stops, Laurus Labs’ ARV business could be affected.
For Laurus Labs, it is essential that management ensures their funding is not reliant on WHO. If management can confidently state that they can handle these issues, it could have only a temporary effect.
Laurus Labs' Business and Prospects:
It is not yet clear what role Laurus Labs’ ARV business plays in relation to WHO’s funding. Public records do not mention any specific procurement related to Laurus Labs and WHO. However, this situation requires a deeper study.
If there is a reduction in WHO funding, whether other countries and organizations will fill this gap needs to be clarified by management. This question may be raised during the company’s future conference calls. After that, we may get more accurate information on this matter.
SoftBank Group: Important Update
Friends, I'm about to play a one-minute clip for you. Please listen carefully. It will be in English, but if you don't understand it, I will explain it to you afterward. It’s quite interesting.
Masayoshi Son’s (CEO of SoftBank) Statement:
Masayoshi Son said that when you (former U.S. President) won the election, I promised that I would invest $100 billion in America. At that time, you asked me to invest $200 billion. But now, I’m not going to invest 100 or 200, I am going to invest $500 billion.
Financial Perspective:
- 1 billion dollars = 8600 crores INR
- 500 billion dollars = 4,30,000 crores INR
SoftBank has announced that it will make a significant investment in the United States. This investment is being seen as the beginning of America’s "Golden Age." Masayoshi Son believes that this growth will benefit not only American companies but also companies from other countries.
Impact on India:
Whenever there is significant economic growth somewhere, it doesn’t just stay confined to that country.
Global Economy:
Indian companies may also indirectly benefit from this growth.
- Imports and Exports: Indian companies that are related to the U.S. may see an increase in new orders.
- Investment Opportunities: If you want to invest in foreign markets, I have explained how to invest in the stock markets of Japan, the U.S., and other countries in my previous blog.
NSE Stocks Update:
The NSE 500 Index represents the top 500 companies in India. Many of these companies have fallen by as much as 50% from their 52-week highs.
List of Fallen Companies:
- Adani Green
- Network 18
- SW Solar
- Sterlite Technologies
- Kochi Shipyard
- MRPL
These were once major companies in the market, but current data shows their declining performance.
Cyient Ltd:
Cyient Ltd's stock saw a decline of around 14% today.
Key Reasons:
- Revenue Growth, but Profit Decline: The company’s revenue has grown quarter-on-quarter and year-on-year. However, margins have fallen to 20% (previously 26-27%).
- Decline in Other Income: The company’s other income was lower this time. Rising employee costs and other expenses negatively impacted the margins.
- Profit Decline: Year-on-year profit has fallen by 40%.
- Order Book: The company’s order book stands at ₹2143 crore, but this is below expectations. There is no solid improvement expected in new orders and the pipeline.
Jana Small Finance Bank Ltd.:
Here, you can see the total details displayed on the screen. If you observe, their interest income has increased both year-on-year and quarter-on-quarter. Their profitability has also improved compared to recent times. When you look at Non-Performing Assets (NPAs), there has been a reduction in both gross and net NPAs compared to the losses. This is an important statement given by the bank management. They said, "The worst times are behind us." Everything that was seen until now is over, and after this quarter, they are going to apply for a Universal Banking License. This is the main reason for the 17% rise in their shares today.
Polycab India Ltd.:
When talking about Polycab, attention should be given to their revenues, margins, and profitability data. Their quarterly numbers were better than market expectations. They performed well in their wires and cables and FMEG segments. However, the statement which was slightly below market expectations cannot be considered disappointing. The numbers observed on social media regarding Polycab are not disappointing. Although the stock fell by 6%, there will still be potential in India’s infrastructure sector in the future. In their Q3 FY25 Earnings Presentation, Polycab mentioned that this is a "golden era" for the wires and cables segment.
Pataudi Family:
You may have seen a recent incident involving Saif Ali Khan, where he was attacked on social media. However, today, the central government declared the Pataudi family's assets worth ₹15,000 crores as "Enemy Property." According to the Enemy Property Act of 1968, if a person migrated to Pakistan during the 1947 partition, their property in India is considered to belong to the central government. The Madhya Pradesh High Court has approved the central government's acquisition of the Pataudi family's ₹15,000 crores worth of property, which will now come under the Enemy Property Act and become government property.
Oil Market Update:
Oil marketing companies (OMCs) like BPCL and HPCL have presented their figures. In the previous quarter, we said that Q2 numbers would be good, and Q3 numbers would also be better due to margin improvement. Although stocks did not rise as expected, the data shows that in the coming quarters, the figures for OMCs could rise above the current prices. There was strong growth in revenue quarter-on-quarter, but the year-on-year growth was not as robust. However, due to margin improvement, profitability has shown consistent strong growth both quarter-on-quarter and year-on-year. We have three major companies to consider:
- BPCL
- HPCL
- IOC If you haven't studied these companies yet, make sure to analyze them.
Heritage Foods Ltd.:
Heritage Foods performed better than market expectations in terms of revenue, margin, and profitability this quarter. Overall, the growth has been better, which is clearly visible in the quarterly numbers. However, it should be viewed on a year-on-year basis rather than just quarter-on-quarter. The dairy industry is affected by seasonality, as demand for ice cream and other value-added products peaks at certain times.
Tips Music Ltd.:
Tips Music has also released their quarter-on-quarter data. The numbers have remained stable quarter-on-quarter, but year-on-year figures have been strong. Their revenue, margins, profitability, and stock performance have shown positive results recently. All data is displayed on the screen.
HDFC Bank Ltd.:
HDFC Bank's data should be viewed on a year-on-year basis. Banks are affected by seasonality, but there has been an improvement in net interest income, which is better year-on-year, and there has been an increase in net profit as well. Although deposits, CASA, and advances have all increased this quarter, gross and net NPAs have also risen significantly. In fact, Q3 is the quarter where the impact of loan-related issues in major banks is seen. Non-performing assets are slightly higher this time compared to the same quarter last year. Still, the market has overlooked these negative aspects while maintaining strong interest income, profitability, and top-line growth, resulting in a rise in the stock today.
Bank Nifty: Currently, the support and resistance levels for Nifty and Bank Nifty are as follows:
- Nifty Support: Below 23060 and 22950.
- Nifty Resistance: Above 23270 and 23380.
- Bank Nifty Support: Below 48470 and 48190.
- Bank Nifty Resistance: Above 48840 and 49050.
Stay safe, stay informed, and invest wisely!
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