Pre-budget rally on cards?

Nifty50: 18,118 ▲ 90 (+0.5%)
Sensex: 60,941 ▲ 319 (+0.5%)

Hi, there!

Are you down with the ‘Reel’ fever too? TBH, this 'viral' condition has most of us in its grip. But the most affected are those who are making a living off it... aka influencers. 

One such influencer from U.P, in her bid to make a trending video, landed in quite a soup. The Ghaziabad police fined her ₹17,000 for violating road safety rules after she stopped a car midway on a highway to pose and shoot a reel.

Lesson: Don't 'reel' under the pressure of likes and followers. Your safety comes first. 

As for the markets, there were hardly any bumps on the road today. Here is a quick round-up.

• The markets snapped two-day losing streak.
• 32 Nifty50 stocks made gains.
• Markets took positive cues from Asian and European indices.

Among the Nifty sectoral indices, IT (+1.8%) and Pharma (+0.8%) were the top gainers, while Realty (-0.6%) and Metal (-0.4%) were the sole losers.

What’s trending

⭐Axis Bank surpasses expectations  

The private bank’s (-0.06%) net profit rose 62% YoY to ₹5,853 crore in the December quarter. The sharp growth in the profit was backed by a 32% YoY growth in net interest income (difference between interest earned on loans and interest paid on deposits). 

⭐ Canara Bank rises on robust Q3 numbers 

Shares of the lender (+1.2%) rose after it reported a 91% YoY surge in its net profit to ₹2,882 crore. The bank’s asset quality also improved with bad loans or gross non-performing assets (GNPA) declining (1.91%) to 5.8% of the total loan book. 

⭐ Route Mobile’s Q3 profit rises 

The cloud communication platform services provider (-3.1%) posted its best-ever quarterly net profit of ₹85 crore, up 18% YoY. The management highlighted that the company is making significant progress with quality deal wins across the ‘communications platform as a service’ (CPaaS) value chain.    

⭐ Trent’s new JV 

The retail arm of Tata Group (-0.6%) has entered into a joint venture with MAS to design, develop and manufacture intimate wear and other apparel products. MAS Holdings is the largest apparel tech company in South Asia, and one of the leading design-to-delivery solution providers in apparel and textile manufacturing. 

⭐ Foreign investors turn net sellers 

Foreign portfolio investors (FPIs) sold around ₹15,000 crore worth of Indian equities on a net basis between 1 and 21 January 2022. On the other hand, they have been net buyers in the debt market with inflows worth ₹1,286 crore.

In Focus

DMart: Two sides of a retail story 

Shares of the DMart chain operator, Avenue Supermarts, have tanked around 15% this month. Subdued performance in the December quarter has dented investors’ confidence in this hypermarket chain, which is popular for offering a variety of products at a discounted price. 

So, let’s deep dive and understand why investors are leaving Dmart out of their cart. 

Tepid non-FMCG growth

Around 25% of the retail chain’s revenue comes from general merchandise and apparel business like bed and bath, toys and games, and home appliances. In the December quarter, this discretionary, non-FMCG segment business witnessed tepid growth. ICYDK, this is a relatively high margin (aka higher profitability) business. This led to EBITDA margins declining to 8.6% in Q3FY23 from 9.6% in Q3FY22. 

Intense competition 

The entry of a deep-pocketed player like Reliance Retail in the food and grocery space is being perceived as yet another challenge. Food and grocery is a low margin segment, and the Ambani-owned retail chain has been making inroads at a rapid pace. Reliance Retail added 789 new stores in the December quarter alone, taking its total store count to more than 17,000 stores across India! Reliance Retail also recently acquired wholesaler Metro India which has 31 large format stores across 21 cities in India. 

But it’s not all gloom and doom for Avenue Supermarts, which has been the darling of investors since listing in 2017. 

Strong FMCG sales growth  

In an inflationary environment, DMart’s ability to offer discounts is a big pull for customers. As a result, the food and FMCG segment (accounts for 75% of the revenue) outperformed the general merchandise and apparel segment in the December quarter.

Here’s how DMart’s discount strategy works: It procures products from vendors at low prices by buying in bulk and offering quick payment. Secondly, it buys properties instead of renting them. The savings are then directly passed on to the consumers in terms of discounts.  

Expansion drive 

Despite rising competition, Avenue Supermarts is banking on its steady expansion strategy. It has added 22 new retail stores in the current financial year. The retailer is also gradually expanding its e-commerce business (D-Mart Ready). 

Wellness business   

Joining the likes of other major retailers like Reliance Retail, Amazon and Flipkart, DMart has also decided to foray into the pharmacy and wellness space. Here too, DMart can offer discounts as it will end up saving on costs such as rent. It already has stores in place and venturing into this space will only improve its sales per square feet.  

While the company faces fresh challenges, it’s trying to keep its moat intact by expanding into new territories. So, will investors continue to discount the everyday low cost and low price retailer?

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

🔹Applicable 375+ NSE stocks

🔹Borrow up to ₹25,00,000 at a time

🔹Hold stocks bought via MTF for up to 365 days

Good to know

What is divestment?

Companies or governments sell their subsidiaries or stakes in a bid to raise money. This is called divestment. Usually, the money raised through the divestment process is used to reduce debt, pay dividends or expand capacity (capital expenditure). In the case of the government, the divestment proceeds are used to fund schemes or infrastructure projects to boost the economy. Click here to watch a Bollywood-style explainer on divestment.

Click here to join us on Telegram for trading and investment-related videos, daily market updates, details on upcoming IPOs and more.