Track your Portfolio

Login / Sign Up

Month: November 2024

Posted on

Tatas are blessed by God

The Tata Group, founded in 1868 by 29-year-old Jamsetji Nusserwanji Tata, began as a modest trading venture with an initial capital of just ₹21,000. Today, the conglomerate spans a vast array of industries, from salt to steel, with a market capitalization exceeding ₹33 lakh crore.

 

The late Rakesh Jhunjhunwala, one of India’s most respected investors, famously said, “The Tatas are blessed by God.”

 

Jhunjhunwala, who made a significant portion of his fortune through his investment in Titan (bought 6 crore shares of the company at just ₹3 in 2001 and held onto them for more than two decades). This investment delivered an extraordinary 83,250% return.

 

Investing in Tata Group entities, especially during times of turbulence, presents a compelling case. Let’s deep dive (not a recommendation to invest):

Tata Motors:

What went wrong?

 

-> Jaguar Range Rover sales dropped massively

-> The ambitious low-cost Nano car failed to capture the market

-> COVID-19 Impact

-> Demonetization & GST Fallout

-> Shrinking Domestic Market Share

 

Stock declined 89% from Rs. 600 to Rs. 63

Action taken

 

-> Tata turnaround plan

-> New models introduced and focus on hatchbacks, SUVs & EV

 

Revenue touched all time high of Rs. 4.4 lac crore in FY 2024 – growing by 25% CAGR in last 2 years

 

Stock appreciated from Rs. 63 to Rs. 1150

Titan:

What went wrong?

 

-> Lockout in Hosur factory

-> Low net profit margin

-> Low return on capital employed

 

Titan share was available around Rs. 3 in 2003

Action taken

 

-> Leveraged ‘Tata’ brand

-> Aggressive marketing of Tanishq, Skinn and Titan (watches)

Revenue touched all time high of Rs. Rs. 50,000 crore in FY 2024

Stock appreciated to Rs. 3,800 in 2024

Voltas:

What went wrong?

 

-> Intense competition from foreign brands

-> No advance technology

-> No customer loyalty

 

Stock price fell from Rs. 12 to Rs. 2.8 in 2001

Action taken

 

-> Invested 1% of revenue in training

-> Foreign collaborations

-> New product introductions

 

Revenue touched all time high of Rs. Rs. 12,000 crore in FY 2024

 

Stock touched all time high of Rs. 1946 in 2024

Trent:

What went wrong?

 

-> Intense competition from Pantaloon (2005-2006)

-> Low footfall

-> No Brand loyalty

 

The stock was available around Rs. 40 in 2008

 

Action taken

 

-> Launch of fast fashion brand Zudio

-> Restructuring of Westside

-> Close of loss making stores

 

Revenue touched all time high of Rs. Rs. 12,000 crore in FY 2024

 

Stock appreciated to Rs. 7,500 in 2024

Tata Elxsi:

What went wrong?

 

-> No growth in business

-> Recession in Japan (auto sector)

-> Wrong investments in movie VFX

 

The stock fell to Rs. 20 post doc com crises (2001)

 

 

Action taken

 

-> Focus on technology & AI

-> Focus on operating cash flows, EPS, and dividend

 

Revenue touched all time high of Rs. Rs. 3,500 crore in FY 2024

 

Stock appreciated crossed Rs. 9,000 in 2022

Posted on

India in the Era of Trump 2.0: What to Expect

With Donald Trump set to return to the presidency, there is considerable uncertainty surrounding his policies, especially as foreign investors are withdrawing capital from global markets at record levels. According to Nomura, Japan’s leading investment bank, emerging markets are likely to be affected—primarily China—but India stands to benefit the most from this shift.

 

Moody’s ratings suggest that New Delhi could gain significantly as global power dynamics shift under Trump 2.0. The US accounts for about 18% of India’s merchandise exports, with key exports including electronics, pearls and precious stones, pharmaceuticals, nuclear reactors, petroleum products, and to a lesser extent, iron and steel, autos, and textiles. In addition, India is one of the world’s leading exporters of services, particularly IT and professional services (including global capability centers involved in outsourcing value-added services). The US remains a key customer for these sectors.

 

Trump’s Top Priorities: Reducing US Debt, Boosting Domestic Manufacturing, and Tackling Illegal Immigration

 

So, how exactly will Trump’s second term impact India? Let’s break it down.

1. Geopolitical Stability with Reduced Tensions in Ukraine

  • Trump is likely to reduce US funding to Ukraine and prioritize domestic issues. This could lead to a reduction in global geopolitical tensions, creating a more stable international environment. A reduction in military spending and focus on domestic policies may be more favorable for India, especially in terms of global stability and security, allowing India to focus more on economic growth and regional security issues.

     

2. Higher Tariffs on China Could Benefit India

  • Trump has hinted at imposing significant tariffs (60%) on Chinese imports, which would help reduce US debt and incentivize local manufacturing. As a result, businesses looking to avoid high tariffs on Chinese goods could shift their supply chains to India, giving a boost to Indian exports. India could become a key beneficiary of this trade reorientation, particularly in sectors such as electronics, textiles, and automotive components.

     

3. US Inflation Could Lead to a Stronger Dollar

  • With higher tariffs and a push for increased domestic manufacturing in the US, inflation in the US is likely to rise. This, in turn, could push the US dollar to strengthen. While a strong dollar may lead to capital outflows from emerging markets, including India, it could also attract more foreign direct investment (FDI) into India as companies seek alternative, cost-effective manufacturing hubs outside of China.

     

4. Fossil Fuel Focus May Impact India’s Renewable Exports

  • Trump’s push for more fossil fuel exploration in the US could hurt Indian firms exporting renewable energy equipment like solar panels and wind turbines. With a less favorable regulatory environment for renewable energy in the US, Indian companies in this sector may face reduced demand. However, India’s broader energy transition strategy, focused on solar and wind, could still find opportunities in other global markets.

     

5. US Crypto Policies Could Offer New Opportunities for Indian Tech

  • Trump’s pro-crypto stance may create new opportunities for blockchain and decentralized finance technologies. India, which has been cautious about cryptocurrency regulation, could find itself at a crossroads: either embrace crypto innovation or continue to regulate it. Indian tech firms with blockchain capabilities might benefit from the global rise in crypto adoption, though India’s stance will be key in determining how much of this growth they can capture.

     

6. Stronger US Border Policies and Immigration Crackdown

  • Trump’s likely focus on curbing illegal immigration in the US could affect Indian IT professionals and students, especially those on H1-B visas. Although this might lead to a reduction in the influx of Indian talent to the US, it could simultaneously open up opportunities for Indian firms to offer outsourced services and tech talent solutions to the US market, as American companies look to diversify their workforce sourcing.

     

7. Tariff Concessions for Tesla Could Stimulate India’s EV Industry

  • Trump’s close relationship with Elon Musk could lead to favorable tariff concessions for Tesla’s electric vehicle (EV) project in India. If India opens up its market to Tesla and provides incentives for manufacturing EVs locally, this could accelerate India’s transition to cleaner transportation and make India an EV hub for both domestic consumption and exports.

     

8. Muted Comments on India-Canada Issues Could Strengthen US-India Ties

  • Trump’s likely more muted approach to the Indo-Canadian tensions (e.g., the Pannun-Nijjar issue) could reduce friction in India-Canada relations, ensuring that these issues don’t become a major stumbling block in broader India-US ties. This could create a more stable diplomatic and trade relationship between India and the US, fostering stronger bilateral cooperation.

     

9. Supply Chain Relocation Could Accelerate India’s Rise as a Manufacturing Hub

  • As companies around the world look to de-risk their supply chains and move out of China, India is well-positioned to benefit from this trend. Trump’s “America First” policies, combined with a push for supply chain diversification, could lead to an accelerated relocation of global manufacturing to India. India’s large consumer market, competitive labor costs, and improving infrastructure make it an attractive alternative to China for multinational companies.

     

10. Greater Economic Collaboration in Technology and Services

  • India’s export of IT services, particularly business process outsourcing (BPO), software development, and consulting services, is a critical pillar of the US-India trade relationship. Trump’s “America First” rhetoric may push for more collaborative ventures between US and Indian firms, especially in tech, where India already holds a significant competitive advantage. However, trade policies that favor US manufacturing over outsourcing could lead to adjustments in the way Indian companies operate with their American counterparts, but long-term, India’s digital prowess may continue to drive growth in the services sector.

Posted on

Monthly Market Outlook – OCTOBER’24

The Most Successful deals of all time

Facebook bought Instagram

In 2012, Facebook bought Instagram for $1 billion, which added $153 billion to its market value.

 

In 2023, out of Meta’s total revenue of $134.9 billion, Instagram’s contribution was $39 billion at approx. 29%

EBay bought Paypal

In 2002, eBay bought PayPal for $1.5billion

 

Thirteen years later, in 2015, eBay spun off PayPal as an independent public company, realizing $47.1 billion in value – 31 times what it initially paid.

Facebook bought Instagram

In 2006, Google bought Youtube for $1.65 billion.

 

In 2023, Youtube’s advertising revenue accounted for approx. 10.25% of Google’s total revenue. That year, the video platform’s annual ad revenues amounted to $31.5 billion

Google bought Android

In 2005, Google bought Android for around $50 million. Android helped Google compete with Apple and Microsoft by giving it a mobile OS.

 

Today, Android powers about 69.7% of all smartphones, making Google a global tech leader

India in Focus: A Growth Story Unfolding

 

“India deserves to be in list of global superpowers”: Russia’s Putin

 

“Every product category is on a growth path” Henrique Braun, EVP & President of International Development at The Coca-Cola Company

 

“Bharat is unstoppable” PM Modi on Make-in-India anniversary

Economic Indicators Overview – October 2024

 

Manufacturing PMI: India’s Manufacturing Purchasing Managers’ Index (PMI) increased to 57.4 in October 2024 from 56.5 in September, marking the 39th consecutive month of expansion (above 50). Growth was driven by accelerated exports and sales, despite rising input costs.

Services PMI: The Services PMI also showed strength, rising to 58.5 in October from 57.7 in September 2024, indicating continued robust activity in the service sector.

GST Collections: October 2024 registered the second-highest GST collections at INR 1.87 trillion, a 9% year-on-year increase. This marked the 32nd straight month of collections above INR 1.4 trillion, bolstered by stronger compliance, higher output prices, festive demand, and increased transaction volumes both domestically and through imports.

Core Sector Production: The index of eight core sector industries saw a modest 2% year-on-year growth in September 2024, down from 9.5% growth in September 2023, impacted by an unfavorable base effect. Growth was led by five out of the eight core sectors, with refinery production rising by 5.8% year-on-year.

Industrial Production: The Index of Industrial Production (IIP) reflected a 4.2% month-on-month decrease in June 2024, following a 5.9% year-on-year growth in May. This slowdown came as the Mining, Manufacturing, and Electricity sectors showed stable, albeit moderate, year-on-year growth.

Credit Growth: As of October 18, 2024, scheduled commercial bank credit growth stood at 11.52% year-on-year, down from 19.98% in October 2023 due to a high base effect post the merger of Housing Development Finance Corporation (HDFC) and HDFC Bank. For the first time in several quarters, bank deposit growth surpassed credit growth as the loan-to-deposit ratio normalized.

These metrics collectively highlight a resilient economic environment despite base effects and input cost pressures, underscoring sustained expansion across manufacturing and services with strong tax collection performance.

 

Equity Market Overview

 

The BSE SENSEX declined by 5.8% in October 2024, mirroring the performance of the NSE NIFTY index.

 

Mid and Small-Cap Performance: The BSE Mid-cap index underperformed the SENSEX with a 6.9% drop, while the BSE Small-Cap index outperformed, falling only 3.8% over the month.

 

Sector Highlights: Healthcare, Information Technology (IT), and Teck sectors led performance, with declines of 0.7%, 2.3%, and 4.6%, respectively. All 13 of BSE’s major sectoral indices ended October 2024 in the red.

 

Foreign and Domestic Institutional Flows: Foreign Institutional Investor (FII) flows into equities were negative in October 2024, amounting to an outflow of $11.2 billion, following an inflow of $6.9 billion in September.

 

Domestic Institutional Investors (DIIs) continued as net buyers, with a strong inflow of $12.76 billion in October, up from $3.8 billion in September.

 

For the calendar year 2024 (CY2024), net FII flows into equities totaled $0.6 billion, while net DII investments in the cash markets reached $53.6 billion, significantly surpassing FII activity.

 

Indian Fixed Income Market Outlook

 

Monetary Policy: In October 2024, the RBI held the policy rate steady at 6.50% and shifted its stance to “Neutral” from the prior “Focus on withdrawal of accommodation,” signaling flexibility for future rate adjustments. Key factors influencing this shift include improved clarity on inflation, expectations for food inflation to ease by Q4 due to favorable food production forecasts, and a stable growth outlook. With inflation and growth risks balanced, the RBI Governor emphasized that future actions will align with evolving economic conditions and the macro outlook.

 

Liquidity: Banking system liquidity saw an uptick in October, averaging Rs. 1.53 trillion, supported by government spending. Overall liquidity (system liquidity plus government balances) moderated slightly to an average of Rs. 4.1 trillion by the end of October (compared to Rs. 4.3 trillion in September and Rs. 4.1 trillion in August).

 

Currency Performance: The rupee depreciated slightly in October 2024, averaging 84.03 against the dollar, after remaining relatively stable at 83.81 in September (compared to 83.90 in August and 83.59 in July).

 

Fixed Income Market: Fixed income yields eased and were range-bound in the first half of the month, influenced by the RBI’s neutral stance, before edging higher in the latter half amid rising global uncertainties (geopolitical tensions and U.S. election developments). The 10-year G-sec yield fluctuated between 6.72% and 6.85% during the month, closing slightly higher at 6.81% (compared to 6.75% in September), reflecting global cues.

Key Events to Watch in November 2024:

  • Oil Prices: Volatility in oil prices remains a major focal point for both global and Indian markets. Contributing factors include ongoing geopolitical tensions, China’s recovery following recent fiscal stimulus, and production cut reversals by OPEC+ members that began in December 2023.

  • US Election Developments: Updates surrounding the United States elections are anticipated to influence market sentiment.

  • Festive Season Demand: The strength of demand during the festive season will be a key indicator for retail and consumer sectors.

  • Reserve Bank of India (RBI) Policy Stance: The RBI’s upcoming policy announcements are expected to shape market outlooks, particularly in light of inflation and growth concerns.

  • Indian and Global Earnings Seasons: Earnings reports from both Indian and global companies will provide insight into corporate health and market direction

 
Looking Ahead
 

  • October Performance: October 2024 was a challenging month for the Indian stock market, impacted by reduced foreign institutional investor (FII) inflows following China’s stimulus, global geopolitical uncertainties, and softer earnings in the initial Q2 results, which largely missed market expectations.

  • Sectoral Impact: All sector indices closed October in the red, with sectors reporting weaker results seeing substantial sell-offs by Foreign Portfolio Investors (FPIs).

  • Economic Indicators: Key indicators show signs of a slowdown, including discretionary spending and vehicle sales, while core inflation has risen, signaling potential economic constraints.

  • Valuations: Equity valuations remain elevated relative to historical norms, with mid-caps trading at significant premiums, followed by small and large caps. Current valuations anticipate growth to sustain, but they offer limited cushion for earnings disappointments across much of the market.

  • Growth Prospects: Upside potential may come from a recovery in international demand and rural resilience. However, market performance going forward is expected to rely heavily on earnings growth.

  • Investment Strategy: Given recent geopolitical events and current market valuations, heightened volatility is anticipated. Investors may benefit from focusing on large-cap-oriented strategies, such as Large Cap, Flexi Cap, or Multi Cap funds, over the medium term.

  • Downside Protection: Investors seeking to mitigate downside risk might consider diversified strategies like Multi Asset Allocation or Dynamic Equity funds.

  • Mid and Small-Cap Exposure: Long-term investors with sufficient risk tolerance can approach mid and small-cap allocations incrementally, utilizing systematic investment routes to manage exposure.

Onesta Capital Ventures is a Multi Family Office based out of Gurugram (India). We aim to provide tailored independent wealth management and other family governance solutions to individuals and corporates.

Download Mobile App

Apple Android
Quick Links
Our Services
Get In Touch

Office Address

207-208, 2nd Floor, Apna Bazar, Gurudwara Road, Gurgaon 122001

Call Us

+91-9810423511

Send us Email

support@onestacapital.in

Facebook Instagram

AMFI Registered Mutual Fund Distributor | ARN-224076 | Initial Date of Registration: 04 March 2022 | Validity: 03 March 2028

Copyright 2022. Onesta Capital Ventures. Disclaimer | Disclosure | Privacy Policy | Terms & Condition