See Saw

Nifty50: 16,240 ▼ 19 (-0.1%)
Sensex: 54,208 ▼109 (-0.2%)

Howdy-do!

Midweek blues are in season. Bears crashed yet another bull party today. Delhi is sizzling with heat while unseasonal rains have turned parts of Bengaluru into lakes. In the UK, inflation touched a 40-year high. What about us? We are looking at the Cannes red carpet and wishing we were there.

• The markets gave up initial gains in a volatile session and closed marginally lower.
• Also, other Asian markets gave mixed cues. 
• Meanwhile, the rupee ended flat at 77.58.
• In all, 29 of the Nifty50 stocks closed in the green.

Among the Nifty sectoral indices, FMCG (+1.2%) and Pharma (+1.0%) saw the most gains, while Realty (-1.7%) and PSU Bank (-1.5%) saw losses.

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What’s trending

⭐ DLF builds up robust demand 🌆

DLF shares rose nearly 2% in the early trade owing to strong Q4 pre-sales bookings in its residential segment. The order book stood at ₹2,700 crore at the end of March 2022,   up 158% year-on-year. This reflects robust demand for residential properties. However, the company's Q4 net profit fell 16% year-on-year to ₹405.3 crore. This was led by a 13% drop in the revenue to ₹1,652 crore. 

⭐Alibaba exits Paytm Mall 🛒

The roller coaster ride for Paytm continues as Jack Ma has left the building. Paytm Mall has reportedly bought back the entire stake of  Alibaba and Ant Financials. These two entities have offloaded a total of 43.3% stake in Paytm Mall. The e-commerce company, which was valued at $3 billion in 2020, bought back the stake for ₹42 crore. Following this, Paytm Mall current valuation has plummeted to ₹100 crore. 

⭐Wheat takes the heat 🍞

Wheat prices have hit a 14-year high globally. This comes after India banned wheat exports on May 13 to keep the prices in check. The heatwave in India has impacted wheat production. The world has been staring at a wheat crisis as the war has hit production in Ukraine by 35%. 

⭐ UK inflation touches new high 😱
UK inflation soared to a 40-year high of 9% in April compared to 7% in March. To give you a context, the last time it increased to this extent was when the Indian cricket team won its first-ever cricket world cup at the Lords! The rise delivers a blow to the UK households, who are worried about the rising cost of living. Also, the Bank of England has warned that the worst is yet to come.

⭐ Stranger things at Netflix 😰

Netflix said it has laid off 150 employees, which accounts for 2% of its workforce. This is being seen as a possible fallout of the drop in subscriptions and poor earnings reported by the streaming giant. The lay-offs mostly impact employees in the US. The company's shares are down nearly 70% since the beginning of this year.

In Focus

Testing times for diagnostics stocks

Diagnostics stocks like Thyrocare,. Metropolis and Dr Lal Pathlabs are down 50% from their 52-week-highs as competition in the sector heats up. 

Further, Dr. Lal Pathlabs March quarter results are not encouraging. It reported a 27.1% year-on-year fall in its net profit to ₹62.1 crore. While the revenue jumped by 13% to ₹486 crore, its recent acquisition of Suburban Diagnostics was a major drag on the margins. 

The diagnostics sector boomed during the pandemic when we all scrambled to get tested. And to grab a slice of the expanding pie, many new players like Fortis, Lupin, and Apollo Hospitals entered the space. In fact, today, Tata 1mg offers popular tests like thyroid and diabetes checks at much cheaper prices. So incumbents are surely facing the heat of intense competition. Subsequently, it is putting pressure on their profitability.

Nonetheless, the sector still has immense potential to grow as about 80-85% of this industry is still unorganised.

IPO corner

Investors seem to be sitting on the fence for the Paradeep Phosphates IPO. On day 2, the public issue was subscribed by around 50%. Similarly, the Ethos IPO was subscribed 27% on day 1.

Click here to apply for these IPOs on Upstox.

Good to know

What is asset allocation?

Asset allocation is an investment strategy which involves balancing risk and reward. Investors can put their money in various assets based on their risk tolerance and investment horizon. There are various asset classes such as equity, real estate and fixed income. This strategy helps investors  build a diversified portfolio to manage risks and earn steady returns.

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