Story of the Day
Auto Sector Surge
The auto sector is buzzing with the news of Hyundai India’s upcoming IPO. Hyundai India is filing the DRHP with SEBI this evening. Just to give you a sense, this is last year’s data, but Hyundai India is the second-largest vehicle manufacturer. Maruti Suzuki had a 41% market share in FY 23, Hyundai had 14.6%, Tata Motors 14%, and Mahindra 9.3%. These are the top four players going forward. Whenever a large player in any industry comes to the market, it usually comes at a premium to the existing players, and all boats in that space get lifted. So, not only are auto stocks getting lifted, but auto ancillaries are also getting lifted alongside. You would have seen all the auto component manufacturers running very hard, especially those supplying to Hyundai India. Mahindra and Mahindra, Maruti, and Tata Motors are zooming. We’ll discuss this topic towards the end of the video, but I want you to guess by then what is the trigger for all this.
Market Overview
The markets showed decent activity today. Nifty was up 0.29%, showing a gradual ascent.
Nifty Next 50
Despite this modest rise, Nifty Junior continued its strong upward trend, increasing by 1.48%. I showed you yesterday how this particular index is just catapulting to a different pace of the race versus both our large cap names.
Nifty Mid and Small Cap
Mid caps also rose by 1%, maintaining a steady upward movement. Similarly, small caps increased by 0.86%, consistently moving upward each day.
Nifty Bank Overview
In contrast, Bank Nifty remained flat and did not move significantly.
FIIS and DIIS
FIIs sold off 3000 crores, and DIIs sold 500 crores. This is a rare day where both are selling. It happened on June 4 and now it is happening here. You still can’t draw too much inference out of it because FIIs no longer hold a significant portion of the equity. The retail now owns more than FIIs, and I’ll show that in another video that I will do shortly.
Nifty Heatmap
Today’s heat map for Nifty showed green in the auto sector, Adani space, steel, and cement stocks. Mahindra and Mahindra, Maruti, and Tata Motors are zooming. We’ll discuss this topic towards the end of the video, but I want you to guess by then what is the trigger for all this. Reliance and HDFC Bank also performed well, with HDFC Bank up 1.1%, which is quite a change. You had IT stocks taking a backseat and the rest, FMCG, etc., were a bit muted.
In terms of Nifty Next 50, much more green was observed. You can see again LIC Housing Finance doing the heavy lifting at 6.4%. ABB and Siemens have been dramatically going up on a day-on-day basis. Trent is going up day-on-day basis, 4.4%. Varun Beverages, Muja Cement, Vedanta, ICICI General Insurance, all the insurance companies were going up. REC moved up along with HAL, BEL, and TVS Motors. So, a lot of pockets moved up in the Nifty Next 50 space.
Sectoral Overview
The auto sector moved front and center, up 1.3% today and 75% for the last twelve months. Public sector enterprise stocks also rose by 0.9%, along with consumption stocks. Real estate also moved fast, up 0.8%, and metals rose by 0.7%. The rest of the sectors showed lesser gains but all were gaining except IT stocks, which lost 0.9%. IT in the last three months is still down 8.1%. IT and FMCG, along with private banks, have been the disappointment of the last twelve months. These sectors are at low teens, whereas other sectors are in triple digits. Choosing the right sector and having a strategy that lands you in the right sector at the right time is very important.
Sectors of the Day
Nifty IT Index
IT today -0.87%, although it is still consolidating within this large candle for the last four days. Until it breaks the bottom or the top, we still think that the larger trend is still up. But below this particular candle, I think the trend will start to break down.
Nifty Auto Index
Auto space up 1.3%. Just see the way autos have been going up after getting out of this sort of a resting zone of a few years. It has just gone bonkers above that. Always look for long-term breakouts of ranges for sectors and stocks, as that always is a high probability of a strong trending move post that.
Stocks of the Day
Mahindra & Mahindra
In the last 14 years, Mahindra & Mahindra is up 1600%, Maruti is up 1400%, and Tata Motors is up 612%. You would not have guessed it if I had not shown you this chart. In fact, I would not have guessed it if I had not seen this chart that Mahindra & Mahindra has topped Maruti over this period and has beaten Tata Motors by a wide margin. Despite Tata Motors’ dominance in the EV market and its global presence through JLR, the performance of Mahindra & Mahindra in the last two to three years has been remarkable. Since the COVID levels, it has gone up dramatically, whereas Tata Motors has not even done half of what Mahindra has done, and Maruti has been there. But if I were to see these three charts over this 14-year period, the most consistent performer has been Mahindra & Mahindra. Yes, it did have a bad patch here, but Maruti had a huge rough patch, and Tata Motors had an even more elongated rough patch. Since 2020, all three have been going up, and recently, Maruti and Mahindra are really going exponential. I think the IPO of Hyundai is going to further add fuel to this fire.
BEML
BEML is in the stock spotlight. The same thesis is playing out that this stock had broken out of a long-term trend in 2023-24 at the Rs. 1200-1300 level. It has moved quickly from Rs. 1200-1300 to Rs. 4700, and today it was up 17% in a single session. A lot of times, we may think that the stock has gone up too much and it will not go up any further. We draw our own sort of ceiling, thinking, “No, no, this cannot go beyond this.” That should not be done at all. You should allow a stock to go wherever it wants to go. A ten-rupee stock can go to 10,000. Why not? Why should you have this overlying bias that a ten-rupee stock can only go to 20 or 30? It could go to 500 or even 5000. It all depends on how the company is doing and what kind of liquidity is flowing into that company.
Gold Chart
Gold is currently flat but gradually coming out. This is going to be a huge Lakshman Rekha for gold now around Rs. 70,000. If it breaks down, then we are likely going to this congestion. But my sense is that we probably will stay here until later in the summer. There is a seasonal change that happens in August, September, and October, where gold is usually seasonally very positive. That’s where we are likely to go.
