SMT Stakes Up for Grabs
Aaj Ka Bazaar
The US market closed lower overnight as United Health lowered its full-year earnings outlook, and data showed that business activity at manufacturing firms in New York State contracted unexpectedly in October. The Asian market was broadly lower this morning, with Japanese markets leading regional losses due to fading optimism about the Chinese stimulus and a broader weakness in the semiconductor sector. On Wednesday, China's central bank said it injected $90.23 billion through seven-day reverse repos. The People's Bank of China (PBOC) said the operation was meant to counteract factors, including maturing medium-term lending facility (MLF) and reverse repo loans, to keep banking system liquidity reasonably ample. The Indian market is set to open on a tepid note on Wednesday as investors react to weak cues from global markets and market regulator SEBI's decision to hike position limits for trading members in F&O contracts. Position limits are calculated on the notional value of a contract.
Markets Around Us?
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Sector: Insurance
HDFC Life posts strong Q2FY25 numbers
HDFC Life Insurance reported a mixed performance for the period, with a 17% growth in the Value of New Business (VoNB) supported by strong new business premiums. However, the VoNB margin showed weakness, declining by 200 bps YoY. With new policy surrender guidelines coming into effect from October 1st, we anticipate further contraction in VoNB margins over the coming quarters. We will closely monitor the management's strategy on pricing and how they plan to adopt a prudent approach to mitigate this risk. Further, the company said that it has successfully relaunched more than 40 top products contributing about 95% of the business, in-line with revised regulations and plans to relaunch other products in the coming quarters.?
Why it Matters:
We believe that the company plans to keep its product mix balanced going ahead so that there is no major impact of the regulation change on a particular product. A key monitorable going forward would be the sustenance of VNB margin.
NIFTY 50 GAINERS
HDFCLIFE - 720.45?(0.87%)
DRREDDY - 6,656.85?(0.68%)
ASIANPAINT - 3,087.95?(0.68%)
NIFTY 50 LOSERS
TCS - 4,086.85 (0.73%)
INFY - 1,947.30 (0.61%)
KOTAKBANK - 1,884.00?(0.59%)
Sector: Pharmaceuticals
Cipla and Alkem Lab reaches last leg to acquire SMT?
Cipla and Alkem Laboratories are leading the race to buy a controlling stake in Sahajanand Medical Technologies (SMT), India's largest cardiac stent maker, after private equity firms KKR, TPG, and Apax Partners dropped out. The deal is expected to value SMT at Rs 3,500-4,000 crore, with binding offers due soon. The Kotadia family, SMT's founders, plan to keep a 15-20% stake post-sale. SMT is also considering an IPO if they don’t get the desired valuation through the sale. SMT controls 31% of the Indian drug-eluting stent market and is expanding in Europe.
Why it Matters:
For Cipla or Alkem, acquiring SMT would provide access to the fast-growing cardiac stent market, which is expanding at a 12% CAGR. This diversification into medical devices could strengthen their product portfolio and revenue streams, making both companies more competitive in the healthcare space.
Around the World
Most Asian stocks fell on Wednesday, led by declines in technology shares, especially chipmakers, after weak sales guidance from industry leader ASML. Japan's Nikkei 225 dropped 1.9%, with major losses in tech companies like Lasertec and Tokyo Electron. South Korea's KOSPI fell 0.7%, affected by drops in SK Hynix and Samsung. ASML's disappointing outlook for 2025 hit global chipmakers, including Taiwan's TSMC, which fell 2%. Chinese stocks continued to slide as optimism over stimulus faded due to a lack of details from Beijing. Weak economic data, including sluggish export growth, also pressured Chinese markets.
Option Traders Corner
Max Pain
Nifty 50 - 25,150
Bank Nifty - 51,900
Nifty 50 - 25,092 (Pivot)
Support - 24,972, 24,888, 24,769
Resistance - 25,176, 25,296, 25,380
Bank Nifty - 51,875 (Pivot)
Support - 51,729, 51,552, 51,405
Resistance - 52,052, 52,198, 52,375
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