NVIDIA's Meteoric Rise
NVIDIA, a leading name in the tech industry, has recently achieved a significant milestone by surpassing Apple to become the world’s second-largest company by market capitalization (for a brief period). This remarkable achievement reflects not only the company’s impressive stock performance but also its strategic positioning and innovative prowess in key technology sectors.
The stock is up 32 times in the last 5 years
The revenue & profits are up 5 and 10 times respectively in the last 4 years and are expected to increase by another 3X in next 3 years
Factors Behind NVIDIA’s Meteoric Rise
Dominance in AI and Data Centers: NVIDIA has established itself as a powerhouse in artificial intelligence (AI) and data center markets. Its Graphics Processing Units (GPUs) are critical for AI computations, machine learning, and high-performance computing, making them indispensable for tech giants and researchers.
Gaming Sector Leadership: The company’s roots in gaming remain strong, with its GPUs being the gold standard for gaming enthusiasts. The continued demand for high-performance gaming hardware has been a steady revenue stream.
Strategic Acquisitions and Partnerships: NVIDIA’s strategic acquisitions, like Mellanox Technologies and Arm Holdings, have bolstered its technological capabilities and market reach. These moves have diversified its product portfolio and opened new revenue streams.
Growth in Automotive Technology: NVIDIA is making significant strides in the autonomous vehicle market. Its DRIVE platform is a comprehensive solution for self-driving technology, attracting partnerships with major automotive manufacturers.
Expansion into Metaverse and Omniverse: The company is also venturing into the burgeoning fields of the Metaverse and Omniverse. These platforms are designed for creating virtual worlds and simulations, positioning NVIDIA at the forefront of next-generation digital experiences.
Picture of the month
Quote of the month
Winning at money is 80 percent behavior and 20 percent head knowledge. What to do isn’t the problem; doing it is. Most of us know what to do, but we just don’t do it. If I can control the guy in the mirror, I can be skinny and rich.
– Dave Ramsey
“India is a wow country” American investor, Jim Rogers
India to become second-largest contributor to global growth, says BofA Securities
Wall Street Lands on India, Looking for Profits It Can’t Find in China
Economic Indicators Overview:
GDP: The Indian economy grew at a robust 8.2% year-on-year (y/y) in FY24, surpassing the advance estimates of 7.6% y/y.
Manufacturing PMI: India’s Manufacturing Purchasing Managers’ Index (PMI) in May 2024 remained strong at 57.5 (compared to 58.8 in April 2024), marking the 34th consecutive month in the expansion zone, driven by accelerating new export orders and job growth.
Services PMI: India’s services sector displayed strong growth in May 2024, registering a PMI reading of 60.2.
GST Collection: Gross GST collections stood at INR 1.73 trillion (+10% y/y) in May 2024, marking the 27th consecutive month of collections exceeding the INR 1.4 trillion mark.
Core Sector Production: The index of eight core sector industries accelerated year-on-year to +6.2% in April 2024, compared to a +6% increase in March 2024.
Industrial Production: Factory output growth, as measured by the Index of Industrial Production (IIP), decelerated to -4.9% in March 2024, compared to a growth of +5.7% y/y in February 2024, driven by positive y/y growth in three major sectors: Mining, Manufacturing, and Electricity.
Credit Growth: Scheduled Commercial Bank credit growth reached 19.54% y/y as of May 17, 2024, compared to a y/y growth of 15.42% observed on May 19, 2023.
Equity Market Overview:
BSE SENSEX: The BSE SENSEX remained flat in May 2024, registering a slight decline of -0.7%, in line with the NSE NIFTY index.
BSE Mid-cap and Small-cap Indices: The BSE Mid-cap and Small-cap indices outperformed the BSE Sensex, with performances of +2.3% and -0.1% respectively.
Sector Performance: Capital Goods, Power, and Metals were the top-performing sectors in May 2024, with gains of +11.2%, +6.6%, and +4.7% respectively. Six of BSE’s 13 sectoral indices ended the month of May 2024 in the green.
Net Foreign Institutional Investors (FII) Flows: Net FII flows into equities were negative for May 2024, amounting to -$3.15 billion.
Domestic Institutional Investors (DIIs): On the other hand, DIIs were net buyers of Indian equities, with net inflows of +$6.43 billion.
Fixed Income:
After a sharp rise in April 2024 due to global financial market repricing, Indian fixed income market yields eased by almost 15-20 basis points during May 2024. This easing was attributed to easing global yields, muted inflation, a record RBI dividend raising hopes of faster fiscal consolidation, and rising expectations of lower gross issuances.
Liquidity:
Banking system liquidity was tight during May 2024, averaging a negative Rs 1.5 trillion, compared to flattish liquidity in April 2024, which is typically a seasonally easy month.
Looking Ahead:
The outcome of the general election suggests a likely continuation of key policies related to development and reforms. Coupled with India’s strong fundamentals, resilient domestic demand, and supportive policies, this continuity may provide buffers against external shocks.
Economic Growth: We maintain an optimistic outlook for economic growth, as past reforms are poised to support future expansion.
Investment Cycle: The investment cycle is expected to progress, with increased private sector participation, assuming no major shifts in global dynamics and risk appetite.
Consumption Recovery: Rural consumption appears well-positioned for a recovery, supported by a low base, falling inflation, and expectations of above-normal monsoons.
Sector Rotation: Post-election results may lead to sector rotation based on valuations and relative growth prospects.
Earnings Growth: We anticipate mid-teen earnings improvement at a broad level. Future market performance is expected to be largely dependent on earnings growth.
Investment Strategies: Large Cap-oriented strategies, such as Large, Flexi, and Multi Cap, appear well-placed. In the thematic space, Banking & Financial Services seem attractive due to relative valuations.
Mid and Small Cap Allocations: For the medium term, Mid and Small Cap allocations should be approached in a staggered manner through systematic investment routes.
