Broad Strokes,October 18, 2024

📈 Sensex and Nifty Recover Post Q2 Earnings Boost

Cause: Strong Q2 earnings reports from major banks and metal companies like Axis Bank, Tata Consultancy Services (TCS), and Wipro. Axis Bank’s 18% year-on-year profit surge provided a significant lift to market sentiment.
Effect: The Sensex recovered by 218 points to close at 81,224, while the Nifty climbed 104 points to 24,854. Banking and metal stocks were the main drivers, though foreign institutional investor (FII) selling continues to loom over the market.

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📉 Tata Chemicals Q2 Profit Drops 55%

Cause: Tata Chemicals reported a 55% drop in Q2 net profit, attributed to declining soda ash prices and increased freight costs, exacerbated by adverse weather conditions.
Effect: The company’s shares fell by 3.2%, closing at ₹1,039. Analysts from Morgan Stanley and Motilal Oswal remain cautious, predicting potential recovery in the second half of FY25, but retain ‘Underweight’ and ‘Neutral’ ratings.

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💥 HEG Shares Plunge After Stock Split Confusion

Cause: HEG Ltd’s shares plunged 80% on trading apps following a stock split from a face value of ₹10 to ₹2, causing confusion among investors. Adjusted for the split, the stock actually fell by 3.53% to ₹496.
Effect: Investor confusion led to a massive sell-off, while other gas-related stocks like MGL and IGL also saw significant drops (12-15%) due to government cuts in APM gas allocation.

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🚨 Manappuram Finance Shares Plummet on RBI Restrictions

Cause: RBI imposed restrictions on Asirvad Micro Finance, a subsidiary of Manappuram Finance, due to regulatory violations concerning interest rates and non-compliance with norms.
Effect: Manappuram Finance’s stock dropped nearly 17%, and analysts slashed target prices, with expectations of earnings downgrades and higher funding costs for the company.

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🏦 Kotak Mahindra Bank Acquires StanC Loan Book

Cause: Kotak Mahindra Bank announced its acquisition of Standard Chartered’s ₹4,100 crore personal loan book, aimed at expanding its retail lending.
Effect: This acquisition is expected to enhance Kotak’s market share in the affluent customer segment. Despite ongoing margin pressures in the banking sector, Kotak Mahindra is forecasted to see a 9.4% rise in net profit in Q2.

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🔻 Mahanagar Gas and Indraprastha Gas Shares Nosedive

Cause: Government cuts in priority gas allocations for CNG led to a significant reduction in profitability for Mahanagar Gas (MGL) and Indraprastha Gas (IGL).
Effect: MGL’s stock dropped 14.5%, and IGL fell 13%, both reflecting concerns over the impact of rising gas costs and the companies’ ability to maintain pricing power.

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💼 Zomato Eyes Fundraise via QIP, Adani Enterprises Raises ₹4,200 Cr

Cause: Adani Enterprises successfully raised ₹4,200 crore through a Qualified Institutional Placement (QIP), while Zomato is considering its own QIP fundraise.
Effect: Adani’s share price dropped by 3% after the fundraising news, while Zomato’s stock could see volatility as it prepares for its upcoming QIP.

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💻 Infosys Raises FY25 Guidance Despite Mixed Q2 Results

Cause: Infosys reported a 5% YoY increase in net profit but missed market expectations for Q2 earnings. However, it raised its FY25 guidance to 3.75-4.5%, signaling confidence in future growth.
Effect: Despite the optimistic guidance, Infosys shares fell 4%, reflecting short-term market disappointment with the Q2 performance and lower large deal wins.