Weekly Market Wrap-up

Highlights of the week:

1. RBI Keeps Rates Unchanged, Cuts CRR to Boost Liquidity

The Reserve Bank of India (RBI) has decided to maintain the policy repo rate at 6.5%, keeping it unchanged for the 11th consecutive time. While maintaining a neutral stance, the RBI has reduced the Cash Reserve Ratio (CRR) by 50 basis points to 4% to enhance liquidity in the banking system. The move comes amid a slowing growth forecast and rising inflation concerns, with GDP growth projected to be lower at 6.6% for FY25. This adjustment may set the stage for a rate cut in the next policy review in February 2025.

2. India's foreign exchange reserves rose to $658.1 billion as of November 29, 2024, marking a $1.5 billion increase from the previous week. Foreign currency assets fell to $568.854 billion, while gold reserves decreased to $66.98 billion. The rise in reserves follows an eight-week decline, amid fluctuating foreign inflows and RBI interventions.

3. The Indian government is considering mandating hallmarking for gold bullion to ensure traceability and purity, according to Consumer Affairs Secretary Nidhi Khare. Over 40 crore pieces of jewelry have already been hallmarked, and the sector's market is projected to reach $134 billion by 2030. India is also focusing on export growth and lab-grown diamonds to strengthen its global position in the jewelry market.

4. Rupee Strengthens as RBI Takes Liquidity-Boosting Measures

The Indian rupee strengthened by 3 paise to close at 84.70 against the dollar after the RBI kept key rates unchanged and introduced measures to boost liquidity. The RBI also raised deposit rate ceilings and cut the CRR by 50 basis points to increase liquidity by Rs 1.16 lakh crore. Despite these measures, the RBI revised GDP growth for the fiscal year down to 6.6%.

Unlisted Share News:

1. Allen Career Institute is in advanced talks to acquire Unacademy for $800 million, a significant drop from its 2021 valuation of $3.4 billion, with the deal pending approval from Allen's promoters.

Quick Insight ??

Is it the end of the road for Unacademy as ALLEN prepares to acquire the ed-tech startup for $800M, a valuation lower than its total funding of $838.5M?

?Why do startups like Unacademy struggle despite billion-dollar valuations? What went wrong for Unacademy, a company once valued at $3.4 billion? The answer lies in its unsustainable growth strategy and the broader slowdown in India's ed-tech sector. When the pandemic spurred a digital learning boom, Unacademy scaled rapidly, raising massive funds and expanding aggressively, including opening 60 offline centers.

?But was this pivot a smart move??

The numbers suggest otherwise. Despite growing revenues from ?21.8 crore in FY19 to ?1,044 crore in FY23, Unacademy couldn't overcome its losses, which stood at ?631 crore in FY24—a sharp drop from the ?2,848 crore loss in FY22 but still unsustainable.

Byju’s, another ed-tech giant, faced a similar fate, with valuation cuts and layoffs dominating headlines. This raises a critical question: are these billion-dollar startups over-reliant on investor funding without a clear path to profitability? The 87% drop in ed-tech funding from 2021 to 2023 further underscores how fragile this sector has become. ALLEN's acquisition of Unacademy signals consolidation, but the lesson is clear—scaling without profitability is like building a castle on sand. For investors, the takeaway is to look beyond valuations and dig deeper into financial sustainability before betting on the next unicorn.

2. SEBI Approves 7 IPOs Worth ?12,000 Crore

• Ecom Express: ?2,600 crore IPO for infrastructure expansion and debt reduction.
• International Gemological Institute (IGI): ?4,000 crore IPO for acquisitions and corporate expansion.
• Ventive Hospitality: ?2,000 crore IPO to reduce debt and fund luxury projects.
• Carraro India: ?1,811 crore offer-for-sale by the promoter.
• Smartworks Coworking Spaces: ?550 crore IPO for expansion and loan repayment.
• Trualt Bioenergy: ?750 crore IPO for multi-feed stock operations and working capital.
• Concord Enviro Systems: ?192 crore IPO for capital expenditure and debt reduction.

3. Gurugram-based fintech MobiKwik aims to raise ?572 crore in its IPO opening December 11, with proceeds earmarked for growth, R&D, and technology upgrades. Valuation sees a sharp dip of 71.6% from 2021.

Comparison of Mobiwik vs Paytm

4. Paytm to Sell Stake in Japan's PayPay to SoftBank for $250 Million: Paytm's parent company, One97 Communications, plans to sell its stake in Japan's PayPay Corporation to SoftBank Group for $250 million. The move aligns with Paytm's strategy to divest non-core assets and strengthen its core payments business.

5. Flipkart announces "Flipkart Minutes," offering 10-minute delivery for medicines, intensifying competition in India’s fast-growing quick commerce sector.

6. Myntra Launches 30-Minute Delivery with 'M-Now': E-commerce giant Myntra introduces 'M-Now,' a 30-minute delivery service for 10,000 styles across fashion, beauty, and home, aiming to expand to 1 lakh styles in the next few months.

Quick Insight ??

Why is this happening?

Why is Myntra jumping into quick commerce with M-Now? It’s responding to growing consumer demand for speed and convenience. Urban shoppers, especially the trend-conscious, now expect instant delivery for fashion, just as they do for groceries. This move gives Myntra a competitive edge over rivals like Blinkit and Zepto, which are still expanding their fashion offerings.

what makes this model sustainable? Myntra leverages dark stores, brand retail outlets, and potentially Flipkart’s logistics infrastructure, creating a cost-effective and scalable system. With plans to expand to 100,000 products and major cities like Mumbai, Delhi, and Pune, Myntra isn’t just chasing a trend—it’s setting a new benchmark for delivery speed in the fashion industry.

7. Tata Projects Eyes IPO in 12–18 Months: Tata Projects plans to go public within 12–18 months, focusing on financial fitness and strong cash flow before listing. The company reported a ?82 crore profit in 2024, with an order book of ?44,000 crore.

8. LG Electronics India has filed for an IPO with SEBI to sell up to 10.2 crore shares, representing 15% of the company’s stake. The IPO is expected to raise $1 billion to $1.5 billion, which would value LG Electronics India at around $13 billion.

Financials: In FY24, LG Electronics India saw a 7% rise in revenue, reaching Rs 21,352 crore and a 12% increase in profit, totaling Rs 1,511 crore.

9. OYO Expands SUNDAY Brand: OYO launches its premium SUNDAY brand in Dubai and London, expanding its luxury offerings.

10. Cochin Airport Expansion: Cochin International Airport launches a ?265 crore tender for terminal expansion to handle more traffic.

11. RRP S4E Wins ?18 Crore Order: RRP S4E Innovations secures an ?18 crore contract from Adani PLR to supply Reflex Sight Mepro units.

Key Indices Performance

1. Nifty FMCG: -0.34% - The only sector to post a negative performance, signaling weak consumer sentiment or pressure on margins.
2. Nifty Pharma: +0.87% - Posted modest gains as the sector remains steady, likely driven by export demand and domestic resilience.
3. Nifty Energy: +0.96% - Slight increase, possibly reflecting stable oil prices and improved energy demand.
4. Nifty Oil & Gas: +1.97% - Gains supported by stronger refining margins and upstream performance.
5. Nifty Auto: +2.53% - Growth driven by robust demand in the passenger and electric vehicle segments.
6. Nifty Bank: +2.79% - Performed well on the back of healthy credit growth and lower NPAs.
7. Nifty Finance: +2.89% - Improved sentiment around NBFCs and insurance companies drove these gains.
8. Nifty IT: +3.64% - Benefited from easing global headwinds and steady demand for tech services.
9. Nifty Media: +4.02% - Strong performance driven by higher advertising revenue and content demand.
10. Nifty Metal: +4.02% - Boosted by rising global metal prices and increased demand from infrastructure projects.
11. Nifty PSU Bank: +5.01% - Outperformed due to strong quarterly results and improved valuations.
12. Nifty Realty: +5.27% - The top performer, driven by robust housing demand and real estate investment trends.

Weekly Top Gainers:

1. HEG – Closed at ?561, up 27.00%, fueled by strong investor confidence and a robust market rally.
2. MAHSEAMLESS – Closed at ?764, up 19.00%, following impressive earnings and market enthusiasm.
3. SWANENERGY – Closed at ?720, up 18.00%, driven by a surge in energy sector performance and positive sentiment.
4. IGL – Closed at ?384, up 17.00%, buoyed by growing demand and a favorable market outlook.
5. FINCABLES – Closed at ?1,335, up 16.00%, boosted by strong growth in the financial services sector.

Weekly Top Losers:

1. AEGISLOG – Closed at ?807, down 11.00%, hit by negative market sentiment and profit-taking.
2. ATGL – Closed at ?729, down 10.00%, weighed down by investor caution and sectoral weakness.
3. INDGN – Closed at ?619, down 9.00%, reflecting a broader market correction and pressured valuations.
4. ADANIGREEN – Closed at ?1,209, down 8.60%, impacted by a slump in green energy stocks and negative sector trends.
5. EASEMYTRIP – Closed at ?16.7, down 7.00%, amid sluggish travel demand and investor concerns.

Global Market Update:

U.S. and European stock markets have experienced significant gains in the wake of positive earnings reports from major companies, particularly in the technology sector, coupled with rising optimism following recent elections. Investor sentiment has been buoyed by expectations that the U.S. Federal Reserve may implement interest rate cuts, further fueling bullish sentiment across multiple sectors. The Nasdaq Composite saw a strong surge of 3.4%, while the S&P 500 climbed by 1.3%. These moves reflect robust performance, especially in tech-heavy indices. In Europe, optimism spread across markets with the MSCI Europe rising by 1.4%, and the MSCI World index increasing by 1.0%.

Asian Market Performance: Following the positive momentum on Wall Street, Asian indices also showed positive results. The Nikkei 225 in Japan gained 2.1%, while Hong Kong’s Hang Seng Index rose by 2.2%, and China's Shanghai Composite Index gained 2.3%. However, the South Korean Kospi bucked the trend, experiencing a decline of 1.1%, largely driven by regional factors and specific stock underperformance.

FII DII Data

FPIs Turn Net Sellers, Offload Rs 1,830.3 Crore in Indian Stocks

• Foreign Portfolio Investors (FPIs) became net sellers of Indian stocks on Friday after three days of buying.
• FPIs sold Rs 1,830.3 crore worth of stocks, the highest this month.
• Domestic Institutional Investors (DIIs) were net buyers, purchasing Rs 1,659.1 crore worth of stocks after three days of selling.

So far this month:

FPIs have bought equities worth Rs 11,933.6 crore, while DIIs have purchased Rs 1,792.5 crore. In contrast, November saw FPIs selling Rs 45,974.1 crore worth of equities, while DIIs mopped up Rs 44,483.9 crore worth of stocks. The data indicates that foreign investor flows are likely to remain volatile, with slower economic growth possibly affecting investor sentiment negatively.

As of 2024, FPIs have been net sellers of Rs 9,435 crore worth of Indian equities, reflecting caution amidst global economic uncertainties.

IPO Corner

Key Highlights from the Primary Market

The primary market saw strong investor interest on December 6, with two IPOs generating considerable buzz—Suraksha Diagnostic and Ganesh Infraworld. Here’s a quick wrap of the latest updates:

?? Suraksha Diagnostic IPO Stumbles: Shares Close 5% Below Issue Price on Debut ??

Shares of Suraksha Diagnostic Limited made a muted debut on December 6, opening on the BSE at ?437, which is a 0.9% discount from the issue price of ?441. On the NSE, the stock opened at ?438, reflecting a 0.68% discount. Unfortunately, the stock failed to gain momentum and closed the trading session around 5% below the issue price, marking a disappointing debut for the diagnostic chain.

The IPO, which raised ?846.25 crore via an Offer for Sale (OFS) of 1.92 crore shares, faced challenges in the market as investor sentiment appeared lukewarm despite the company's established presence in the healthcare sector. Suraksha Diagnostic will now hope for improved market conditions to boost investor confidence in the coming days.

Ganesh Infraworld Limited IPO:

Ganesh Infraworld made a stellar debut on the NSE SME platform, listing at ?157.7 per share, a 90% premium to its issue price of ?83. The stock surged further by 5%, hitting the upper circuit limit at ?165.55. The company raised ?98.58 crore through a fresh issue of 118.77 lakh shares.

Current SME IPO:

Emerald Tyre Manufacturers IPO:

The Emerald Tyre Manufacturers IPO was met with an overwhelming response on Day 2, with the issue subscribed 111.71 times. The retail segment saw 165.85x subscription, and the NIIs category was booked 133.48x. The IPO aims to raise ?49.26 crore and consists of a fresh issuance of 49.86 lakh shares. The tentative listing date for this IPO is December 12.

Nisus Finance Services IPO:

The Nisus Finance Services IPO saw an incredible subscription of 192.25 times on its final day of bidding. The retail segment was subscribed 139.53x, while the NIIs category was booked 451.6x. This issue is valued at ?114.24 crore and consists of both a fresh issue and an offer-for-sale. The tentative listing date is December 11 on the BSE SME platform.

Vishal Mega Mart IPO: Key Details and Insights

Vishal Mega Mart, the popular hypermarket chain, is set to launch its ?8,000 crore Initial Public Offering (IPO) on December 11, 2024, with the issue closing on December 13, 2024. The price band for the IPO is set at ?74 to ?78 per share.

Key IPO Details:

• Total Issue: 102.56 crore shares via Offer for Sale (OFS).
• Retail Investors: Minimum lot size of 190 shares (?14,820).
• Small Non-Institutional Investors (sNII): Minimum 2,660 shares (?2,07,480).
• Big Non-Institutional Investors (bNII): Minimum 12,920 shares (?10,07,760).
• Reservation: 50% for Qualified Institutional Buyers (QIBs), 35% for retail investors, and 15% for Non-Institutional Investors (NIIs).
• Listing Date: Tentative listing on December 18, 2024 on both NSE and BSE.

Financials:

• Q2 FY25 Revenue: ?5,053.42 crore.
• Net Profit: ?254.14 crore.

Business Model:

Vishal Mega Mart operates 645 stores across 414 cities, catering to middle and lower-middle-income groups. The company sells a wide range of products, including apparel, groceries, and consumer goods, under both its own brands and third-party vendors.

Competitors:

The company faces intense competition from large players like Reliance Retail, Avenue Supermarts (DMart), and Trent Ltd., as well as online marketplaces.

Strengths:

• Pan-India Presence: 645 stores across multiple cities.
• Diverse Product Range: Offers a mix of apparel, FMCG, and general merchandise.
• Consumer-Centric Approach: Focused on serving India’s growing middle-class demographic.

Weaknesses:

• Dependency on Third-Party Vendors: The company doesn’t manufacture its own products.
• Risks from Leasing: Vulnerable to fluctuations in real estate costs due to leased stores and distribution centers.
• Inventory Challenges: Needs to stay ahead of changing consumer preferences to avoid stock mismanagement.

Vishal Mega Mart’s IPO offers an opportunity to invest in a well-established brand in the Indian retail sector, but investors should be aware of potential risks related to its reliance on third-party suppliers and leased properties.

MobiKwik IPO: Key Highlights

MobiKwik, a leading fintech platform, is set to launch its IPO on December 11, aiming to raise ?572 crore with a price band of ?265-279 per share. The company provides a wide range of services, including bill payments, money transfers, UPI payments, and operates a B2B payment gateway.

In FY24, MobiKwik reported a Profit After Tax (PAT) of ?14.08 crore, marking a strong turnaround from the ?83.81 crore loss in FY23. The company also saw a 62% increase in revenue, reaching ?875 crore.

The funds raised from the IPO will be used to fuel growth in financial and payment services, enhance technology, and invest in payment devices. MobiKwik’s profitability and its innovative business model position it as a strong contender in India’s rapidly growing fintech sector.

Check out our other daily newsletter with interesting insights:

1. Wipro Shares: What’s Going On with the Price Drop?
2. Prosus Bold Bet on India: A New Era of Startup IPOs and Growth

Subscribe to our newsletter for amazing content and insightful updates!