Eqwires Best Intraday tips provider in India, top trading tips company, Best Stock Advisory service in India

Tata Motors has become the worst-performing stock in the Nifty 50, with its shares dropping 44% from a high of Rs 1,179 in July 2024 to the current price of Rs 661.75, wiping out Rs 1.9 lakh crore in market capitalization. This sharp decline is attributed to sluggish demand for Jaguar Land Rover (JLR) in key markets like China and the UK, coupled with concerns over potential US import tariffs on European-made cars.

Domestically, weak sales in the medium and heavy commercial vehicle (M&HCV) segment, along with growing competition in the passenger and electric vehicle (EV) markets, have further weighed down investor sentiment. With the stock continuing its downward trend, the big question remains: Is the worst behind, or is there more decline in store?

The stock has been under pressure due to the weak demand outlook for JLR in major markets, as well as lower expectations for Tata Motors’ heavy commercial and passenger vehicle sales for FY 2025-2026.

Adding to the pressure is the looming risk of US import tariffs on European-made vehicles, which would hit JLR’s sales in the US, a market that accounts for 25% of its retail sales.

The Threat from Tesla’s India Entry

Concerns are rising about Tesla’s imminent debut in India and its potential impact on local automakers like Tata Motors. However, leading brokerages believe that Tesla’s entry may not pose a major threat. Analysts at Nomura suggest that Tesla’s expected pricing of over Rs 4 lakh would limit direct competition with Indian EV manufacturers, including Tata Motors. While Tesla’s brand recognition and technology may attract some consumers, analysts remain confident that domestic automakers will continue to dominate the mass-market EV segment.

Should Investors Do Bottom Buying?

After the significant drop in share price, is it a good time to accumulate Tata Motors stock at these levels? Here’s what analysts are saying:

“Tata Motors is at levels last seen in September-October 2023, having retraced nearly 50% from its all-time highs. The stock has strong support around the Rs 630-Rs 640 range, which should hold. I recommend holding on to Tata Motors and possibly accumulating at lower levels. We can expect the stock to move towards Rs 850-Rs 900 levels over the next year and a half,” said Ashish Kyal of Waves Strategy Advisors.

Gaurang Shah of Geojit Financial Services points to the positive outlook for JLR production at Sanand, which could lead to lower model prices. He also highlights strong domestic sales for Tata Motors, particularly in the commercial vehicle business, and notes that the company plans to make its balance sheet debt-free. “From current levels, downside risk is extremely limited. Hold on to Tata Motors if you have a long-term investment horizon,” he added.

Recently, CLSA upgraded Tata Motors and added it to its list of high-conviction outperform stocks. The firm believes the current share price implies a valuation of Rs 200 per share for JLR, compared to their target of Rs 450, providing a cushion against the impact of potential US tariff hikes.

Among the 34 analysts covering Tata Motors, 20 have given it a “buy” rating, 9 have a “hold” rating, and 5 recommend a “sell.” The consensus price target suggests a potential upside of 25% for the stock.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

Shares of small-sized banks and non-banking financial companies (NBFCs) rallied on Thursday, February 27, after the Reserve Bank of India (RBI) eased risk weight norms to boost lending growth.

The central bank on Tuesday lowered the risk weights of loans given by banks to NBFCs to 100% from 125%. Lower risk weights mean banks will have to set aside less capital for loans given to NBFCs, resulting in a substantial release of capital for lending purposes. This would help in improving banks’ capital adequacy ratio (CAR).

Meanwhile, NBFCs will also benefit as banks would be able to extend more loans to these entities, helping them deal with their liquidity issues.

Reacting to the announcement, the NIFTY Bank and Financial Services indices emerged as the top sectoral gainers on Thursday. At 11:30 am, Bandhan Bank shares were trading 4.5% higher after rising over 8% intraday, AU Small Finance Bank was up 4%, IDFC First Bank Ltd gained 2% and IndusInd Bank rallied 0.9%.

Similarly, NBFCs like Shriram Finance shares rallied 4.5%. Cholamandalam Investment and Finance Co. Ltd was trading up 3.8%, Bajaj Finserv Ltd jumped 2.5% and Muthoot Finance Ltd gained 2%.

In a separate circular, RBI also announced that it has excluded microfinance loans from higher risk weights, which are currently applicable to consumer credit.

Bank risk weights for loans extended to microfinance companies will be 75% or 100%, depending on the loan’s nature, compared with 125% earlier. All these new risk weight norms come into effect from April 1, 2025.

What is risk weight and its significance?

In November 2023, RBI increased the risk weight of banks’ exposure to consumption loans, credit card loans, and loans given to NBFCs by 25% to 125% to address the sharp hike in unsecured lending.

Risk weight is essentially a number that determines the minimum amount of capital that a financial institution needs to hold to cover its credit risk. In case the borrower fails to repay the loan, the amount set aside as the risk weight helps the lender to deal with the loss of a particular asset and maintain financial stability.

Different kinds of loans are assigned different risk weights because they pose different levels of risk. Secured loans, like mortgage loans, carry lower risk weights because they are backed by collateral, while unsecured loans, like personal loans, carry higher risk weights.

The easing of risk weight requirements would help banks set aside lower capital to cover risk. This would free up some of their reserves and boost their capital adequacy ratio (CAR), which helps assess a bank’s financial health and ability to withstand economic downturns.

How will NBFCs, microfinance institutions going to benefit?

Lower risk weight on bank loans extended to NBFCs and microfinance institutions (MFIs) will encourage banks to lend more to these entities.

This is likely to improve credit flow to NBFCs and MFIs, which will further flow down as improved credit availability in the retail segment of the economy.

This development is especially significant for MFIs, as recent data showed that the gross loan portfolio in the microfinance segment shrunk by 3.5% year-on-year to ₹3.85 lakh crore during the December 2024 quarter due to curtailed funding. Sequentially, the sector’s loan portfolio declined from ₹4.08 lakh crore in the September 2024 quarter.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

The economy is seen to have recovered to some extent in the third quarter of the current fiscal year but growth is largely expected to be tepid at about 6 per cent or so with improvement in capital expenditure and government spending as well as strong rural demand. Most analysts estimate GDP growth in the region of 6.2 per cent to 6.4 per cent in the October to December 2024 quarter and do not expect a significant variance in the growth projection of 6.4 per cent for the current fiscal.

The National Statistics Office will release the second advance estimates of annual GDP for FY2024-25 and the quarterly GDP estimates for the quarter October-December of 2024-25 on February 28.

The economy grew at an unexpected 5.4 per cent in the second quarter of the fiscal down from 6.7 per cent in the first quarter of the fiscal. The economy grew by 8.6 per cent in the third quarter of last fiscal.

According to Bank of Baroda economists, the economy is expected to grow by 6.6 per cent in the third quarter of the fiscal due to subdued growth in the manufacturing sector, partly attributable to base effect.

ICRA has projected the year-on-year (YoY) expansion of the GDP to rise to 6.4 per cent in the third quarter of the fiscal, benefitting from enhanced Government spending amid uneven consumption. Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA said  economic performance in Q3 FY2025 benefitted from a sharp ramp-up in aggregate government spending on capital and revenue expenditure, high growth in services exports, a turnaround in merchandise exports, healthy output of major kharif crops, which would have buffered rural sentiment. 

“Some consumer-focussed sectors saw a pick-up during the festive season, even as urban consumer sentiment dipped slightly, and other sectors such as mining and electricity saw an improvement after weather-related challenges in the previous quarter,” she noted.

The SBI Ecowrap report has estimated GDP growth for Q3 FY25 at around 6.2-6.3 per cent. Further, presuming no major revisions announced in the erstwhile Q1 and Q2 figures by NSO, it has forecast the FY25 full year GDP at 6.3 per cent.

“We track 36 leading indicators in consumption and demand, Agri, Industry, service and other indicators, which indicate a spike in Q3FY25 growth. The percentage of indicators showing acceleration has increased to 74 per cent in Q3FY25 versus 71 per cent in Q2FY25,” it noted.

Nomura is more conservative in its expectations and has forecast GDP growth at 5.8 per cent in the third quarter of the fiscal with growth in gross value added to rise to 6 per cent from 5.6 per cent in the second quarter of the fiscal. “We expect consumption and government spending to improve, stable investments and a negative contribution from net exports. On the supply side, we expect agriculture growth to remain strong, industrial growth to improve mildly, stable growth in construction and ‘financial services, real estate and professional services’, and underwhelming trends in the ‘trade, hotels, transportation and communication’ sector,” it said in a recent note.

Motilal Oswal said it expects real GDP growth at about 5.7 per cent in the third quarter and real GVA growth could pick-up and reach 6.1-6.3 per cent.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

India has witnessed a notable 69 per cent increase in headcount in the institutional investor sector over the last two years, said a report by CIEL HR Services. 

The report, titled Institutional Investors – Talent Trends and Insights, highlights that India’s market capitalisation has risen over the past decade, growing from $1.2 trillion to $5.2 trillion, spurred by significant expansion in the institutional investor sector. 

The sector has made strides in workforce diversity, with women’s participation at 27 per cent of the overall workforce. However, representation in leadership roles remains a challenge, with women holding just 14 per cent of senior positions.

One notable finding regarding talent mobility revealed that only 17 per cent of professionals, including fund managers, portfolio managers, and senior analysts, are promoted from within their organisations, while 83 per cent are hired externally. This presents an opportunity for companies in the sector to innovate their practices around internal career progression and enhance their work environment to help talent thrive. 

“India’s trajectory towards becoming a $7 trillion economy by 2030 is a reflection of its burgeoning market size and a testament to the rapid transformation taking place across its financial landscape. With an expected growth rate of 6.1 per cent over the next five years and positioning to become the world’s third-largest economy by 2027, India’s institutional investor sector is at the forefront of this evolution,” said K Pandiarajan, executive director and chairman, CIEL HR.

“The sector is experiencing a radical shift, with both established players and new entrants driving innovation in investment strategies and financial products. This dynamic growth signals a pivotal moment for institutional investors to harness emerging opportunities, both within India and globally,” he added. 

The study encompasses over 16,000 executives from 80 companies in the investor sector and provides valuable insights into key areas such as gender diversity, tenure in firms, roles in demand, and career progression. 

“The sector employs crème de la crème talent in the country. With our economy growing at a rapid pace, the demand for these roles will surge, further widening the demand-supply gap. We anticipate skilled professionals to return to India from global markets while also drawing expatriates to the country,” said Aditya Narayan Mishra, managing director and chief executive officer, CIEL HR.

Approximately 25 per cent of the workforce in the institutional investor sector has switched jobs in the past year, emphasising the dynamic and competitive nature of the industry. The average tenure across the institutional investor sector is three years, reflecting high mobility and competition for talent. 

Professionals in the industry often hold advanced qualifications, including MBAs from top Indian and international business schools, as well as prestigious CA and CFA certifications.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

The Securities and Exchange Board of India (Sebi) has proposed a raft of new measures aimed at reducing risks and the potential for manipulation in the equity derivatives market while ensuring a stronger alignment with the cash market. Key proposals include a new methodology for calculating open interest (OI) using a ‘delta’ framework, a review of marketwide position limits (MWPL), and the introduction of position limits for single stocks and index derivatives. 

The new proposal comes close on the heels of six measures introduced by Sebi to curb frenzy in index derivatives. 

These measures — a majority of which have already been implemented — have nearly halved trading volumes.

The fresh proposals may not materially affect traders but could help reduce the frequency of stocks entering the ban period, thereby simplifying their trading experience. The changes also aim to enhance market integrity and ensure a more accurate reflection of market conditions. 

The market watchdog has proposed a new metric called ‘future equivalent’ or a delta-based framework for calculating open interest in futures and options (F&O).

Delta refers to the change in an option’s price when the price of the underlying security changes in the cash market. 

At present, open interest (OI) is measured by adding notional OI in futures and options. OI is key to gauging trader activity and sentiment.

“A more meaningful approach would be to aggregate the delta or future equivalent of options positions with futures OI, thereby reflecting the true price sensitivity of outstanding positions,” observes the consultation paper. 

Sebi also plans to link MWPL to the underlying cash market. 

MWPL refers to the maximum number of open F&O contracts allowed for a single stock. 

Once a scrip exceeds MWPL, further trading in its derivatives is restricted. The regulator has proposed a mechanism to offset trades instead of merely squaring off positions when a stock enters the ban period. The move is intended to help traders reduce their risks.

For instance, if a trader holds a long futures position, they could buy put options or sell call options to reduce total delta exposure. 

Currently, MWPL for each stock is 20 per cent of the stock’s free-float market capitalisation (mcap) and is applied to the total notional OI of F&O. 

Sebi has proposed reducing it to 15 per cent of free-float mcap or 60x the average daily delivery value (ADDV) in the cash market, whichever is lower. This metric will be recalculated every three months based on rolling ADDV. 

The new methodology is expected to reduce instances of stocks moving into the ban period by 90 per cent.

The regulator may also explore the need for an MWPL for index derivatives in the future. 

The new methodology will also be incorporated when considering exposure limits for mutual funds (MFs) and alternative investment funds in derivatives to ensure that it accounts for leverage in long options. Further, Sebi is considering imposing individual entity-level position limits for single scrips so that no single entity, such as a foreign portfolio investor (FPI), stockbroker, or MF, can unduly influence the market. 

Sebi has proposed increasing the end-of-day limit for index futures from ₹500 crore to ₹1,500 crore, considering the rise in market size and trading volumes since March 2020. The intraday limit for the same has been proposed at ₹2,500 crore to facilitate market-making.

Similar revisions have been proposed for index options as well. 

Another key proposal is introducing pre-open and post-closing sessions for derivatives, similar to those in the cash market, to enhance price discovery. 

“This is especially useful, as today there are fewer than 40 stock options with complete liquidity and fewer than 25 that can be traded at a scale of a few hundred crores. These reforms put in place a basis for a more efficient, open derivatives market, but they will succeed only if investors and traders learn to adapt to the new regime,” said Rahul Ghose, chief executive officer of Hedged.in.

Further, Sebi has proposed additional conditions to allow derivatives for sectoral and thematic indices. Such an index must have at least 14 constituents, with the weight of the top constituent not exceeding 20 per cent and the combined weight of the top three not exceeding 45 per cent. 

The clarity will help exchanges offer derivatives on more indices.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Instagram

Call: +91 9624421555 / +91 9624461555

www.eqwires.com