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The Working Committee on Futures and Options has proposed several measures to control the rapid increase in derivatives trading volume. According to a report, the key recommendations include raising the minimum lot size of derivative contracts from ₹5 lahks to a range of ₹20 lakh- ₹30 lakh, restricting weekly options to one expiry per stock exchange per week, and reducing the number of strike prices for options contracts. These changes aim to address the excessive speculation in the derivatives market.

Last month, the Securities and Exchange Board of India (SEBI) established this expert committee to tackle the issue of high retail participation driving excessive speculation, it said.

Among the committee’s suggestions, two primary measures could significantly impact trading volumes if implemented: the substantial increase in contract size, which would make trading derivatives unaffordable for small-ticket traders, and the limitation on weekly expiries, which would reduce trading opportunities, said the report.

Other proposals include limiting strike prices, requiring upfront collection of option premiums from buyers, intra-day monitoring of position limits, and increasing margin requirements closer to expiry, it added.

These recommendations will be reviewed by the Secondary Market Advisory Committee before a final decision is made.

The surge in derivatives volume in India has raised concerns. Although SEBI Chairperson Madhabi Puri Buch has stated that the increase does not pose a systemic risk due to a robust margining system, the social consequences of high retail participation in derivatives trading are troubling, noted the report.

It further observed that anecdotal evidence suggests many individuals are borrowing money to trade options, hoping for quick profits, despite SEBI studies showing that nearly 90 percent of retail traders lose money on options bets. Market experts argue that most weekly contracts are used for speculation rather than for hedging purposes, the report says.

In response to a query from reports, SEBI Chairperson Buch expressed openness to removing any derivative products if recommended by the committee. “We are entirely data-driven. If that’s what needs to be done, and that’s what the committee recommends, and we agree with the logic, we will do it,” she stated at a press conference following the last Board Meeting on June 28.

According to SEBI data, the overall derivative turnover has soared from ₹210 lakh crore in FY18 to ₹500 lakh crore in FY24. The Futures and Options (F&O) segment has seen growing retail investor participation, increasing by over 40 percent from 65 lakh in FY23 to 96 lakh in FY24. Individual participation in index options has also surged, rising from 2 percent in FY18 to 41 percent in FY24, according to the report.

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Titan’s share price declined over 2% in early Monday trade after the Tata Group company reported weak growth in the jewelry business during the first quarter of FY25, disappointing the street. Titan shares plunged as much as 3.46% to ₹3,156.15 apiece on the BSE, extending the fall for the fifth trading session.

Titan Company registered a growth of 9% year-on-year (YoY) in Q1FY25, the company said in its quarterly business update on July 5. Its domestic jewelry operations grew 8% YoY, impacted by weakness in consumer demand on account of a surge in gold prices and a lower number of wedding days.

Domestic growth came largely through an increase in average selling prices whereas buyer growth was in the low single digits, the company said.

In the Watches & Wearables segment, the domestic business grew 14% YoY, with revenue growth in analog at a healthy 17% YoY. Wearables witnessed a decline of 6% YoY.

EyeCare’s domestic business recorded a growth of 3% YoY, while the division’s foray into affordable fashion is aiding volume growth for the category.

Titan Company added a total of 61 stores (net) during the June 2024 quarter expanding its combined retail network presence to 3,096 stores.

Titan’s Q1FY25 quarter performance was below Antique Stock Broking’s expectations due to weakness in the jewelry business.

Caratlane continues to perform strongly, growing 18% YoY while Emerging businesses witnessed moderation with revenue growing 4% with Taneira and Fragrances & Fashion Accessories growing 4% YoY.

Antique Stock Broking remains optimistic about Titan Company over the long term, given its ability to gain market share across geographies (including the South) on the back of strong execution and brand. It expects Titan to deliver sales/ earnings CAGR of 21%/ 28% over FY24–27E.

The brokerage firm maintained its ‘Buy’ recommendation on Titan shares with a target price of ₹4,490 per share.

On Friday, Titan shares ended nearly 2% lower after Kotak Institutional Equities downgraded the stock to ‘Reduce’ from ‘Add’ and cut the target price to ₹3,075 per share from ₹3,600 earlier citing multiple margin headwinds and unfavorable risk-reward.

The brokerage cut Titan’s FY 2025-2027 EPS (earnings per share) estimates by 5-6% factoring in external headwinds such as competitive intensity that is likely to exacerbate with the launch of Aditya Birla Group’s Novel Jewels and direct/indirect impact of LGDs on Tanishq’s studded growth and profitability.

“We admire Titan’s execution, but the risk-reward is unfavorable amid these headwinds and high expectations,” Kotak Equities said in a note.

Titan’s share price has fallen over 8% in one month and 16% in three months. The stock is down over 14% year-to-date (YTD).

At 9:20 am, Titan shares were trading 3.38% lower at ₹3,158.70 apiece on the BSE.

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Budget 2024: The Indian stock market is at record highs, foraying into unchartered territory, underpinned by solid economic growth, easing inflation, and expectations of a well-balanced Union Budget aimed at fiscal consolidation while boosting manufacturing, infrastructure, and rural sectors.

The stock market has discounted most triggers, and the upcoming Union Budget is expected to offer fresh fuel to go higher. The government is unlikely to lose its grip on fiscal prudence, which is a positive factor for the market. Besides, markets will look for measures to boost consumption, support the rural sector, and some relief on personal taxation.

Mint spoke to several experts to gather their expectations for the upcoming Union Budget 2024. Here are their insights:

Mahendra Kumar Jajoo, CIO – Fixed Income, Mirae Asset Investment Managers (India)

The Federal Budget for FY25 is expected to be announced towards the end of July.

The continuation of the same government is a reasonable sign that the broad direction of the policy framework will also continue, such as the path towards fiscal consolidation, infrastructure push, social upliftment, etc.

There are expectations of some reduction in market borrowings following a bumper dividend pay-out by RBI.

There is also some buzz around special status/assistance that may be given to states like Bihar and Andhra.

Further, some hopes for reduced tax benefits to the mid-range earning bracket.

Markets also hope that the capital gain tax benefit available on equities is not curtailed.

On the growth front, apart from capital expenditure (capex), there is the possibility of pushing agriculture and manufacturing further to cater to the last mile.

Overall, the Budget should be well-balanced. While the existing agendas may not be tweaked, markets will look at how consumption will get a boost, what will be done to support agriculture, and if there are any tweaks on personal taxation.

Aamar Deo Singh, Senior Vice President, Research, Angel One

Markets are positive about Budget expectations. This will be the first budget led by a coalition government post-2014, so it will be interesting to watch how the government balances growth and the challenges faced by inflationary trends and job creation.

Overall, the market expects the reforms to gain pace, but populist means cannot be ruled out. Given the rising price rise, some relief for taxpayers is expected.

Kunal Shah, Senior Research Analyst, Carnelian Asset Management & Advisors

We have always maintained that risks often come from “unexpected sources.”

The last few days have given us a slight glimpse of the same, with the market reacting to extremes on both sides.

From the BJP-led government to the NDA-led government, we have already seen a roller coaster movement, and people with a view on either side turned out to be right.

Continuity in government spending and investments will be the most looked-after number in the Budget.

With fiscal under control and a big amount coming in from RBI, we can surely see some extra rural-led spending, which will be good for the rural segment of the country.

These two would be major things to watch out for in the coming Budget.

Prashanth Tapse, Senior VP and a research analyst at Mehta Equities

Looking at strong economic growth and the speed of GDP, I wish the new government led by Prime Minister Narendra Modi would focus on enhancing consumer spending by allowing more cash in the hands of the common man, who would eventually spend or invest for economic growth, and focus on higher capex towards infrastructure development.

I also expect the government to focus on rationalizing taxes for the common man and working towards a $5 trillion economy.

From a stock market perspective, there should be no change in long-term and short-term capital gain taxes, and the reforming action should continue in continuation of last year’s budget with no change and no reduction in sector-wise capex.

Dikshit Mittal, Fund Manager & Senior Equity Research Analyst, LIC Mutual Fund Asset Management Ltd

We expect the Union Budget 2024 to ensure policy continuity.

The Budget may focus on infrastructure spending, job creation, sustaining capital expenditure momentum, and pushing for revenue growth.

At the same time, the Budget is expected to continue with the process of fiscal consolidation.

Some measures to boost consumer purchasing power cannot be ruled out.

Markets are generally driven by earning outlook and cost of capital, and if no major negative surprise comes on the taxation front, markets are likely to take the budget positively.

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Multiagger stock Shilchar Technologies has emerged as a top performer for long-term investors, demonstrating phenomenal returns. Over the last four years, its stock price has skyrocketed by an astounding 11550 percent, surging from ₹53.28 in June 2020 to approximately ₹6,207 presently. This exceptional growth underscores Shilchar’s consistent value appreciation, positioning it prominently in the penny stock segment and solidifying its reputation as a lucrative investment opportunity.

Moreover, in the past three years alone, the stock has surged impressively by 6168 percent, climbing from ₹99 in June 2021.

Recent performances have further underscored Shilchar’s stellar track record, with gains of 577 percent over the past year and a remarkable 145 percent year-to-date in 2024.

The stock has shown a strong performance this year, with gains in 5 out of the 7 months. July alone saw a robust increase of over 12 percent in just 4 trading sessions, following a 9.5 percent rise in June. However, it faced a setback in May with a decline of approximately 22 percent. Before that, April marked a significant rally of 68 percent after a slight dip of 3.2 percent in March. The positive trend began earlier in the year, with gains of 17.5 percent in February and 33.5 percent in January.

The stock is currently just 5.5 percent away from its record high of ₹6,769.50, hit on April 24, 2024. Meanwhile, it has soared 614 percent from its 52-week low of ₹895.

Shilchar Technologies Limited engages in the manufacture and sale of transformers and parts in India. It provides power and distribution transformers, and electronics and telecommunication transformers for solar and wind energy. The company also exports its products. Shilchar Technologies Limited was formerly known as Shilchar Electronics Limited. The company was incorporated in 1986 and is based in Vadodara, India.

Brokerage house Anand Rathi recently visited Shilchar Technologies’ Vadodara plant and engaged with its management. A specialized firm, Shilchar focuses on supplying transformers, including inverter duty transformers (IDT) and distribution transformers, primarily for the solar and wind sectors in renewable energy. While capable of manufacturing transformers up to 132kV, the majority of its production remains focused on 66kV and lower, noted the brokerage.

Approximately 50 percent of its revenue comes from exports, with an average realization of around ₹1 million per MVA. The company is expanding its capacity by 3,500 MVA from its current 4,000 MVA to meet growing demand in both domestic and international renewable energy markets. Anand Rathi believes Shilchar Technologies is well-positioned to benefit from the ongoing capital expenditure in the renewables sector.

The brokerage noted that from FY21 to FY24, Shilchar Technologies achieved a robust 50 percent compound annual growth rate (CAGR) in revenue, with the EBITDA margin expanding significantly from 8.1 percent to 28.5 percent. Adjusted profit after tax (PAT) also grew at a compound annual growth rate of 155 percent.

Currently, the stock is trading at 33 times the FY24 earnings per share (EPS) of ₹120. Looking forward to FY26, the company previously guided revenue expectations in the range of ₹800 crore to ₹900 crore, while aiming to maintain its full-year margin of around 28 percent.

However, risks identified by the brokerage include intensified competition from peers potentially entering the inverter duty transformer (IDT) manufacturing segment, and increased competitive pressures in the export market that could impact margins.

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Shares of Stanley Lifestyles, the freshly listed Indian furniture company, rose 9.11 percent to reach an all-time high of ₹517.20 during Monday’s trading session. The rally happened after the American investment bank Morgan Stanley picked up ₹16.76 crore worth of stake in the company on June 28, according to data collected from the Bombay Stock Exchange (BSE).

Stanley Lifestyles’ share price opened 6.97 percent higher on Monday than its previous close of ₹474 on Friday, June 28.

A subsidiary of Morgan Stanley, named Morgan Stanley Asia Singapore Pte, bought 3.5 lakh shares in a bulk deal at a share price of ₹478.87, according to exchange data. The biggest bulk deal for the stock was from Oman India Joint Investment Fund II, which sold 33.16 lakh shares at the same share price, and another lot of 7.65 lakh shares at a share price of ₹479.51, bringing the total up to 40.8 lakh shares sold.

Other big deals for the stock came from Nippon India Mutual Fund, purchasing 32.25 lakh shares at a share price of ₹478.71, as per block deal data from the exchange.

The company’s shares were listed on the stock exchange with a premium of 35.23 percent on Friday.

The Mint reported earlier that Stanley Lifestyles promoters Sunil Suresh and Shubha Sunil would each sell up to 1,182,000 equity shares in the offer for sale (OFS).

Akriti Mehrotra, research analyst at StoxBox, told Mint on Friday that the brand has a robust retail presence in the market and plans to expand by opening stores both in India and abroad. He also said that the company aims to diversify its portfolio over the product categories into the luxury furniture sector amid India’s urbanization and rising disposable income.

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