Broad Strokes, July 30, 2024

Capital Gains Tax Impact on Stock Market

• The government collected Rs 98,681 crore from long-term capital gains tax on listed equities in FY 2022-23, a 15% increase from the previous year.
• Minister of State for Finance Pankaj Chaudhary emphasized the impact of the LTCG tax introduced in 2018.
• The 2024-25 Budget raised the LTCG tax on equities to 12.5% and increased the exemption threshold.
• Market reactions and concerns over potential further tax hikes have been noted, with implications for investors and market sentiment.

Oil Marketing Companies Rally, HPCL, BPCL Stocks Hit New Highs

• State-run oil marketing companies like BPCL and HPCL have seen significant rallies, with UBS forecasting a 16-18% upside.
• Anticipated crude price moderation and improved integrated margins have driven the positive outlook.
• BPCL, HPCL, and IOC rallied over 40% in 2024, supported by India’s robust economic growth prospects and increased oil consumption.
• Analysts have mixed views, with Nomura positive on BPCL and Jefferies offering mixed reviews on HPCL.

Varun Beverages Announces Stock Split and Dividend

• Varun Beverages announced a 2:5 stock split and an interim dividend of Rs 1.25 per share.
• The company reported a 26% YoY increase in profit and a 28% revenue growth for the June quarter.
• Strategic moves aim to enhance retail participation and shareholder value, focusing on high-demand Indian market and international expansion.
• The stock saw a 5% decline in trading following the announcements.

PNB Housing Finance Block Deal with Carlyle Group

• Carlyle Group increased its block deal in PNB Housing Finance, aiming to offload a 12.8% stake for Rs 2,511 crore.
• The floor price for the deal is set at Rs 755 per share, a 5% discount from the previous closing level.
• This follows PNB Housing Finance’s 25% jump in net profit for the June quarter, focusing on retail mortgage growth.
• Institutional investors’ reactions indicate significant developments in the housing finance sector.

NTPC Stock Hits All-Time High

• NTPC’s stock hit an all-time high, rallying 5% after Jefferies raised its target price to Rs 485.
• NTPC reported an 11% YoY net profit increase in Q1 FY25, with a market cap crossing Rs 4 trillion.
• Analysts see growth potential in thermal and nuclear power, despite Kotak’s ‘sell’ rating citing valuation concerns.
• The company’s focus on renewable energy expansion and capacity additions aligns with India’s rising electricity demand.

BEL Stock Performance

• UBS downgraded Bharat Electronics (BEL) to ‘Neutral’ from ‘Buy’ following Q1FY25 results.
• BEL’s stock rallied 145% in the past year, driven by a 70% increase in order intake in FY24.
• Despite a strong Q1FY25 performance, UBS sees limited upside potential with a revised price target of Rs 340.
• BEL’s robust order book and earnings growth are positive, but the stock’s medium-term potential is considered priced in.

Stock Performance: RVNL, Jindal Drilling, Kalpataru Projects, Jindal Saw, Tata Steel

• Jindal Saw’s stock surged to a 52-week high after a 70.5% YoY increase in net profit and a 12.1% rise in revenue.
• Jindal Drilling saw an 18% stock price jump despite mixed Q1 performance.
• RVNL’s shares rose 3% after securing a substantial order, while Kalpataru Projects faced a 5% stock decline due to weak Q1 results.
• Tata Steel is expected to report improved EBITDA in Q1, driven by Indian and European operations.

RVNL Stock Price Surge and New Project Wins

• RVNL’s stock surged 9.76% as the company emerged as the lowest bidder for a Rs 739.07 crore project in Himachal Pradesh.
• The project is expected to be completed in 24 months, contributing to RVNL’s growth momentum.
• RVNL’s board will review quarterly financial results on August 8, indicating a positive outlook for the company.

Ola Electric IPO Set for Promising Debut

• Ola Electric, led by Bhavish Aggarwal, is set for a promising IPO debut, with aggressive pricing to attract a wide range of investors.
• The company focuses on EVs and aims to make India a global EV hub.
• The IPO, opening on August 2, includes a fresh share sale of up to Rs 5,500 crore and an offer for sale by promoters.
• A lawsuit by MapMyIndia alleging data misuse adds complexity to the IPO journey.

Stocks with High Upside Potential Across Different Sectors

• Large and midcap stocks like Bajaj Finance, IndusInd Bank, and Delhivery are receiving high analyst ratings with up to 32% returns potential.
• Positive market sentiment with marginal rises in Sensex and Nifty, led by auto and energy sectors.
• Institutional investors have increased stakes in 12 stocks, indicating confidence in their growth potential amidst global market stability.

Suzlon Energy Stock Surges After Strong Q1 Performance

• Suzlon Energy’s stock surged by 23% following a 200% YoY profit increase and a 50% rise in revenue in Q1.
• The company’s strong order book of 3,817 MW and optimistic growth projections have driven investor bullishness.
• Maruti Suzuki’s upcoming Q1FY25 results are anticipated to show a profit growth of up to 37%, with potential margin declines.
• Firstsource Solutions hit a 52-week high after reporting a robust Q1 performance.