Yesterday’s Market Performance

Nifty:15,030.15 | 77.95 (0.52%)          Sensex: 49,902.64 | 290.69 (0.58%)
FIIs net sell: 697.75 Cr                       DIIs net buy: 852.52 Cr
DAX: 15,113.56 | 273.02 (1.77%)        FTSE: 6950.20 | 84.04 (1.19%)

Howdy Toasters!

In today’s issue, we discuss “the positive inflow in Mutual Funds”- are the investors rushing back?, the most awaited Zomato’s IPO, and a bit about the food tech space in India (you can guess the other giant we’re talking about, right?), how Indian Overseas Bank has performed in this quarter and an educative concept, also, a quote to start your day. Read along!

Indian Overseas Bank 17.15 | 0.90 (5.54%)

Central Bank of India 18.60 | 0.75 (4.20%)

• Exiting RBIs prompt corrective action framework is a cause for celebration? There were some whispers that these banks were next in exiting the framework and re-starting their growth cycle
• Rumours of privatization continue to swirl when it comes to PSUs, possibly affecting investor sentiment as well

United Breweries 1283.20 | 33.50 (2.68%)

• The base of the red candle that was made 29 trading sessions back, acted as a supply zone for the past 10-12 trading sessions. The script broke the resistance and gave a breakout on the higher side after a good consolidation.

• When a script slumps a lot (more than 5%) the top of that day’s candle can be treated as the next resistance level for the script.

What are our Domestic Institutional Investor friends toasting on? 🥘

• Mutual Funds recorded back to back inflows for the first time in 6 months, albeit not with the same intensity (see graph below)
• They continued their preference for Pharma, Banks & Telecom Services, with the majority AUMs geared towards these sections (three sectors that ideally will continue to thrive, despite soft/hard lockdowns)
• Surprisingly, MFs decreased their weightage towards Consumer Goods & Retailing (something that was in flavour, see Britannia & HUL performance. You still gotta eat right?), Energy & Diversified Financials
• ICICI Bank, Axis Bank & Reliance Industries were top buys of the name in the Large Cap category, with Vedanta, Infy & HUL top sells (these are in no way recommendations, we don’t do that at FinLearn)

Why are you telling me all this?🙄

• MFs make up a majority of our Domestic Institutional Investor Base, and their direction and fund allocation are important to track; tells us where ‘Smart Money’ (whatever that is) is heading.

• An interesting Mid Cap buy included SAIL (the steel/metals rally seems to be heating up)

• PVR Ltd (see our note yesterday) was a Small Cap Buy, re-affirming our belief in the longer-term attraction of a cinema chain as a genuine out of home entertainment option, with space for OTT platforms and cinema chains to happily (tongue out smiley) co-exists

Source: NAV India, Bloomberg, Emkay Alternate & Quantitative Research

Note: We don’t recommend any of these, and the authors don’t own the above either

War of the foodies? What’s up at our favourite food joint? 🥣🧆🥮⚔

Zomato’s IPO plans got us thinking about the Food Tech space, Swiggy, and how you should judge each (Zomato has also filed for its DRHP). We’ve all used both (sometimes on the same day) but what makes each unique in its own ways?

• Zomato has prima facie maintained its focus as an aggregator and food delivery partner for restaurants; with integration more tuned towards utilizing their experience in food tech

• Swiggy has aimed to be quasi logistics play, using its massive fleet (for lack of a better word) to go down the food chain, while continuing its core food delivery business and getting into online grocery, hyper-local delivery & access & cloud kitchens

Okay great. What do I make of all this?🤓

• Valuation aside, Food & Food Tech has seen a massive churn, with the likes of UberEats, FoodPanda, TInyowl, Runnr, and others either perishing or being acquired

• While on the face both seem to be competing for the same prize, going deeper tells us how different the two are

• Both have had their struggles with profitability (although Zomato’s DRHP tells us they’ve cracked their unit economics), however, at the core has been a focus to add to their bottom line (who’d have thought right)

• Zomato’s IPO is keenly awaited, not just for laying a marker for Swiggy, but for all the domestic unicorns that will eventually hit the markets to give their investors an exit.

What else caught our eye? 👀

• Bharti Airtel
  • Continues to maintain data subscriber addition momentum with 1.39 crore additions
  • The cos other verticals, continue to add to the overall performance, with home broadband delivering its best subscriber quarter ever
  • Bharti’s strong performance (continued subscriber addition) continues, in the face of stiff competition (read: Jio), with price hike now a realistic target  (being a leader and not follower) in FY22
• Adani Group
  • Adani Green Energy to acquire SB Energy’s 5 GW India renewable power portfolio for a fully completed EV of USD 3.5 billion. This is to date India’s largest renewable M&A transaction
  • Acquisition from SoftBank & Bharti Group signals a massive push for Adani in this space (like all other sectors Adani is in)
• Axis Bank
  • Government-owned SUUTI to sell over 2% stake in Axis Bank via OFS (Offer for Sale)
  • Department of Investment and Public Asset Management (DIPAM) says the government’s Offer for Sale got a good response on day, the issue was subscribed over 4 times
• Vijay Maliya loses bankruptcy petition (this is still going on?)  amendment high court battle in the UK, “The King of Good Times” in trouble?

OFS (Offer for Sale)

An OFS gives the promoters of listed companies a way wherein they can sell their stakes or holdings through a bidding platform for the exchange. India’s market regulator Sebi (Security Exchange Board of India) first introduced this procedure in 2012 to make it easier for promoters to cut their holdings and comply with the minimum public shareholding norms.

Toast – Quote of the Day 📜

“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong”

-George Soros