Month: February 2025

While acknowledging the market downturn, KIE highlighted that returns have remained largely flat over the past 12 months; Key points for investors.

Despite the recent sharp correction in the Indian equity market, analysts at Kotak Institutional Equities (KIE) remain cautious, expecting the market to stay directionless over the next few months as it adjusts to the excess returns of recent years.

While acknowledging the market downturn, KIE highlighted that returns have remained largely flat over the past 12 months. As a result, the firm does not foresee significant value opportunities despite the correction and predicts a subdued trend ahead. KIE’s cautious outlook stems from factors such as high valuations across sectors, the risk of earnings downgrades, persistent global interest rate hikes, and diminished global investor interest in emerging markets.

The firm pointed out that most sectors and stocks are still trading at elevated valuations, with overvaluation becoming more pronounced as market capitalization decreases, particularly in smaller, riskier stocks. In this context, KIE expects small- and mid-cap stocks to face the most pressure.

Looking ahead, the firm anticipates a mixed performance across market caps, sectors, and stocks in the near term. Large-cap indices and stocks may trade within a range, while mid-cap, small-cap, and “narrative” stocks could experience a sharper correction, according to KIE.

Additionally, KIE expects the market to adjust its fair valuation multiples and earnings assumptions in light of the recent correction. Over the past 18-24 months, analysts and investors had increasingly relied on unconventional valuation methods and overly optimistic assumptions about price, profitability, and volume, driven by irrational market exuberance.

In essence, KIE anticipates that the “theory of reflexivity” that fueled the market’s rise will also impact its decline, especially in mid- and small-cap stocks, as well as “narrative” stocks, where valuations had become detached from fundamental realities.

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Mukesh Ambani’s leadership and the company’s strong performance in core sectors may help Reliance to overcome current market challenges.

Reliance Industries Ltd. (RIL), led by Mukesh Ambani, has experienced a major market value erosion of Rs 67,526.54 crore over just five trading sessions last week. The stock price of RIL closed at Rs 1,214.75 on Friday, bringing its market capitalisation down to Rs 16,46,822.12 crore. Despite this setback, Mukesh Ambani still holds the title of Asia’s richest man with a net worth of $90.3 billion, as reported by Forbes.

Reliance Industries, India’s most valuable company, faced a major challenge last week due to market weaknesses. Despite the decline, Reliance remains ahead of TCS, HDFC Bank, and ICICI Bank in terms of market value.

Why Was Reliance Industries Share Price Falling

According to media reports the Reliance share price was falling mainly due to below reasons

Weak Market Sentiment: Indian overall stock indices Sensex and Nifty have faced eight consecutive sessions of losses, due to weak investor sentiment.

Global Economic Pressures: Concerns over U.S. Federal Reserve policy decisions and foreign fund outflows are majorly impacting blue-chip stocks, including Reliance.

Sectoral Challenges: Fluctuations in the oil and gas sector and also impact on the telecom industry have reduced investor confidence.

Reliance Tops Market Losses Among Indian Firms

Reliance led the losses among India’s top companies during last week’s market fall. Collectively, eight of the top ten most valued firms saw a reduction of Rs 2,03,952.65 crore in market capitalisation, with Reliance accounting for the largest portion of this erosion.

Other Major Losers were TCS, HDFC Bank, Infosys, and SBI also faced significant declines. However Bharti Airtel and ICICI Bank emerged as gainers, against the broader market trend.

While short-term market volatility persists, analysts remain optimistic about Reliance’s performance. Recent growth in Jio and digital services is expected to drive significant revenue. Also Reliance’s focus on renewable energy and retail expansion may take the company towards growth. 

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On Friday, the BSE Sensex fell 199.76 points, or 0.26%, to close at 75,939.21 after plunging nearly 700 points intraday. The NSE Nifty declined 102.15 points, or 0.44%, to settle at 22,929.25.

Relentless selling by foreign institutional investors (FIIs) continues to drag Indian equity markets, with the Sensex and Nifty falling for the eighth consecutive session on Friday (February 14). Amid this market downturn, Rajat Sharma, founder of Sana Securities, explained how currency fluctuations and taxes significantly reduce returns for FIIs, making Indian markets less attractive.

“Why are FIIs not investing in India?” Sharma asked while illustrating the impact of currency conversion and long-term capital gains tax. “Imagine you invest by converting 1 US $ into Rupee @ 84/dollar and make 10% profit. Your investment grows to Rs. 92.4. You sell and take it back. You pay LTCG = Rs. 1.05. You get = Rs. 91.35. You convert back with $ trading @ 88 against Rupee. You get = US$ 1.04. Basically, 10% profit = 4% return!!”

Sharma’s remarks come amid growing concerns about why FIIs are cautious and cutting back on their investment in India. On Friday, the BSE Sensex fell 199.76 points, or 0.26%, to close at 75,939.21 after plunging nearly 700 points intraday. The NSE Nifty declined 102.15 points, or 0.44%, to settle at 22,929.25. Over the last eight trading sessions, the Sensex has tumbled 2,644.6 points (3.36%), while the Nifty dropped 810 points (3.41%).

Top laggards on Friday included Adani Ports, UltraTech Cement, Sun Pharma, IndusInd Bank, NTPC, and Tata Steel. On the other hand, Nestle, ICICI Bank, TS, Infosys, and HCL Tech were among the gainers. “Risk-averse sentiment continues to dominate investors’ minds as corporate earnings have fallen significantly below expectations, particularly in the mid- and small-cap segments,” said Vinod Nair, Head of Research at Geojit Financial Services. He added that external factors such as tariffs, INR depreciation, and weak earnings trends are keeping sentiment low. “Volatility is expected to remain elevated until clarity on tariffs and a recovery in corporate earnings emerges.”

FIIs offloaded equities worth Rs 2,789.91 crore on Thursday, according to exchange data. Analysts believe that ongoing uncertainty around India’s trade relationships, including the recently announced talks for a bilateral trade agreement with the US, could also be contributing to the cautious stance of foreign investors.

Meanwhile, India and the US have pledged to double their bilateral trade to $500 billion by 2030. As part of this commitment, Prime Minister Narendra Modi and US President Donald Trump announced plans to negotiate a multi-sector bilateral trade agreement by fall 2025 to improve market access and reduce duties.

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Shares of Mahindra group firm M&M Ltd. sank five percent despite the auto player seeing an overwhelming response for its new electric SUVs, the XEV 9e and BE 6.

Mahindra & Mahindra’s newly launched electric sports utility vehicles have received a significant response, recording 30,179 bookings on the first day. The total booking value stands at Rs 8,472 crore (ex-showroom price).

At 9.30 am, M&M shares were quoting Rs 2,797.45 on the NSE, lower by 4.9 percent compared to the previous close. The auto player’s stock was the top loser on the Nifty 50 index.

The split between the XEV 9e and BE 6 is 56 per cent and 44 per cent respectively, Mahindra & Mahindra said in an official statement. The two models are priced between Rs 18.9 lakh and Rs 30.5 lakh (ex-showroom).

The company said that the strong demand underscores the confidence customers have in Mahindra’s Unlimit India vision—delivering innovative, world-class electric SUVs that offer a distinctive blend of luxury, performance, and technology.

International brokerages Citi Research and Nomura Holdings reiterated their bullish bets on the auto firm.

Citi noted that the deliveries will begin in late March, in a phased schedule. Given that the firm’s capacity is at 5,000 units per month, M&M’s orderbook stands at around six months. The brokerage said it remains to be watched how the EV facility ramps up and what the cancellation rate for the cars is.

Nomura Holdings said the number of bookings marks an impressive start for BEVs (battery electric vehicles), especially since 73 percent of the bookings have come for the top-end 79 kwh Pack Three. The price points for these EVs is very high, as India’s EV market is still in a nascent stage.

Both the brokerages maintained their buy call, with Nomura reiterating a price target of Rs 3,681 per share, while Citi Research’s target for M&M shares was at Rs 3,680 per share.

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Shares of Zen Technologies were locked in the 20 percent lower circuit at Rs 1,080 on February 17 after the company reported its Q3 numbers. While the drone manufacturer’s Q3 earnings showcased growth on an on-year basis, weakness was seen as compared to the previous quarter.

Zen Technologies reported a net profit of Rs 38.62 crore in Q3, reflecting a 22 percent growth from the rs 31.67 crore that it posted in the same quarter last year, driven by higher other income. However, sequentially, net profit nearly halved from Rs 65.24 crore in the previous quarter.

The company’s revenue also showcased a similar trend. It surged 44 percent on year to Rs 141.52 crore in Q3, up from Rs 98.08 crore, however, it was down 41 percent from the Rs 241.69 crore it clocked in the September quarter, reflecting a significant sequential slowdown.

On the flipside, EBITDA margins showcased a contrasting trend as it weakened to 35.90 percent from 47.34 percent in the year ago period, but improved from 35.12 percent a quarter ago.

“In this quarter, we experienced a rise in profitability due to higher other income; however, we remain confident that we will achieve our EBITDA target of 35 percent and PAT margins of 25 percent by the end of the financial year,” Ashok Atluri, Chairman and Managing Director, Zen Technologies said in an exchange filing.

The company’s order book stood robust at Rs 816.91 crore as of the end of the December quarter, giving the management confidence over a healthy pipeline for the coming quarters.

In Q3, Zen Technologies transferred 9,000 equity shares to eligible employees, who had previously received grants under the Zen Technologies Employee Stock Option Plan-2021, from the Zen Technologies Limited Employees Welfare Trust. In addition, the board of directors approved several acquisitions, including a 100 percent stake in Applied Research International Private Limited and ARI Labs Private Limited in multiple tranches, a 45.33 percent stake in Bhairav Robotics Private Limited through subscription, and a 51 percent stake in Vector Technics Private Limited via subscription.

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