In the balance

NIFTY50: 19,680 ▲ 8.2 (+0.04%)
SENSEX: 66,355 ▼ 29 (-0.04%)

Namaste, friends ! 

We’ve all heard of headsets with AR (augmented reality) and VR (virtual reality) features. What if a headset included MR? You read it right… MR as in mind reading! An MIT student has developed an AI-based headset with mind reading features. It can reportedly allow the wearer to order pizza merely by thinking about it, without the need to pick up the phone or speak to a restaurant. We’ll let you decide if ordering pizza is the best use of this new exciting technology. Meanwhile, the markets were in two minds today and closed nearly unchanged. More on that later. 

• Benchmark indices ended almost flat after a choppy session 
• In all, 25 of the NIFTY50 stocks closed in the red
• Germany’s Ifo business confidence in July fell to a three-month low at 87.3 

Among the NIFTY sectoral indices, Metal (+2.9%) and Media (+1.5%) were the top gainers, while PSU Bank (-1.4%) and FMCG (-0.8%) were the top losers.

What’s trending

⭐ Asian Paints reports mixed Q1 numbers  

Asian Paints reported consolidated net sales of ₹9,153 crore, up 6.7% during the June quarter. This growth was mainly due to double-digit growth in volumes. Meanwhile, its net profit increased by 52.5% to ₹1,550 crore aided by increased operational efficiency and ease in raw material prices. Although the company’s revenue missed market estimates, its new profit was above street expectations.        

⭐ Tata Motors vrooms ahead in Q1

The automaker reported robust June quarter earnings. Its consolidated revenue rose by over 42% to ₹102,236 crore driven by sharp improvement in its JLR and commercial vehicle business. As a result, Tata Motors returned to profitability with net profit of ₹3,300 crore compared to net loss of ₹4,950 crore in the corresponding quarter of last year.    

⭐ Poonawalla Fincorp rises on strong Q1 results

Poonawalla Fincorp’s shares closed almost 3% after the Pune-based non-banking finance company posted a 62% rise in net profit at ₹200 crore in Q1FY24, as compared to ₹124 crore in the same quarter last year. Meanwhile, the company’s interest income rose to ₹656 crore from ₹386 crore in the year-ago period. The company’s assets under management stood at ₹17,776 crore, up 41% YoY. 

⭐ Laxmi Organic’s subsidiary facility becomes operational

Specialty chemicals maker Laxmi Organic’s shares rose by almost 1% after the company’s wholly owned subsidiary Yellowstone Fine Chemicals Private Limited commissioned the first phase of its manufacturing facility in Ratnagiri, Maharashtra. Over the next few months, the company will focus on operationalising the entire site in a phased manner. 

In Focus

ITC to demerge hotel biz, but investors check out

Indian markets have been witnessing a string of mergers and demergers of late. After HDFC Bank, Reliance Industries, FMCG major ITC has joined the bandwagon. The company’s board has approved the demerger of its hotel business with the aim of unlocking value for ITC shareholders. However, following this, shares of ITC have fallen 5.7% in the last two days. Why are investors unhappy? Let's find out.

About the merger

The ITC board has given its nod to the demerger of the hotel business into a new entity. This new entity will be called ITC Hotels and will be listed separately, subject to regulatory approvals. The hotel division has 120 hotels across 70+ locations. In FY23, ITC’s hotel business reported nearly ₹2,700 crore in revenue and a net profit of ₹542 crore. 

Experts believe the demerger of the hotel business is a step in the right direction as ITC’s hotels business was highly capital intensive, accounting for over 20% of the conglomerate's capex even though it contributes a mere 4% of its revenue. Thus, after the demerger, profitability of ITC could improve. 

Also, the demerger will help the new entity attract the right set of investors, whose investment approach and risk profiles are aligned towards the hospitality sector.  

Why are ITC shares falling?  

After the demerger announcement, ITC shares fell nearly 6% in the last two days, losing more than ₹34,000 crore in market capitalisation. The low investor confidence seems to be due to the less-than-exciting demerger ratio. The management has decided to retain 40% stake in the demerged entity, while the remaining 60% stake will be held by ITC’s shareholders on a proportionate basis. The expectation on the street was that all the shares of the demerged entity to be offered to shareholders.

Nonetheless, the demerger of the hotel business was widely anticipated and has opened the door for the demerger of ITC’s agri, IT and paper & packaging businesses. This is one of the major factors for the over 40% rally in the stock this year. However, investors may now be concerned that the management could implement a similar demerger structure for future demergers of its other businesses. 

Powerful buying made simple!

Markets often see sharp price movements triggered by positive news or technical patterns. In such situations, you may want to double down on certain high-conviction trades. However, having limited capital could be an obstacle in leveraging such opportunities. With Margin Trading Facility (MTF) on Upstox, you can increase your trading capacity instantly. Click here to know more about MTF.

Benefits of MTF:

🔹 Get 2X leverage on equity delivery orders

🔹 Borrow up to ₹25,00,000 at a time

🔹 Hold stocks bought via MTF for up to 365 days.

Join the Upstox masterclass and trade like a pro!

🔔 New course alert!

Options Delta Hedging Methodologies

Starts: Wednesday, 26 July 2023

Seats are filling fast!

Register Here