Group 1 - Partnership with TCS and HyperVault will facilitate Stargate's entry into the Indian market [1] Group 2 - A new AI 'clone' developed by Sam Altman aims to assist startups in raising funds [2] - The sale of United Spirits' RCB and the demerger of India Cement's CSK highlight contrasting value strategies [2] - Despite a stabilization in the market slump, recovery remains uncertain [2] - Companies preparing for IPOs show strong financials but often struggle post-listing [2] Group 3 - Analysts identify 8 banking stocks with an upside potential exceeding 22% over the next year [5] - A checklist for small-cap stocks suggests strategies for better returns, highlighting 8 small-cap stocks with potential upside of up to 46% [5] - Eight agro-chemical stocks are noted for having an upside potential of up to 36%, despite facing short-term challenges [5]

Summary of the 2026 India Equity Strategy Outlook Industry Overview - The report focuses on the Indian equity market, highlighting a strong recovery expected in 2026 after a significant underperformance over the past three decades [2][3]. Key Points and Arguments Market Recovery Expectations - Indian equities are anticipated to bounce back strongly in the next 12 months due to supportive policy changes and a recovery in nominal growth, which should enhance earnings growth [3][4]. - The BSE Sensex is projected to have a 13% upside through December 2026, with a target of 95,000, assuming continued macro stability, fiscal consolidation, and increased private investment [4][53]. Economic Projections - GDP growth is expected to be 6.8% for F2026, with a gradual decline to 6.5% in the following years [8]. - Sensex earnings are projected to compound at a 17% CAGR through F2028, with EPS growth of 7.0% in F2026 and increasing to 19.5% by F2028 [4][8][54]. Risks and Concerns - The primary risk identified is a potential slowdown in global growth, which could hinder the upside for Indian stocks despite their low beta [5]. - Concerns regarding the expanding issuance pipeline and poor trailing equity returns are deemed misplaced, as domestic flows remain strong [5][34]. Portfolio Strategy - The recommended strategy favors domestic cyclicals over defensives and external-facing sectors, with an overweight position in Financials, Consumer Discretionary, and Industrials, while underweighting Energy, Materials, Utilities, and Healthcare [6][57]. Structural Changes and Long-term Outlook - India's long-term growth story is reinforced by various reforms, including fiscal consolidation and a shift towards equity ownership among households [3][28]. - The report emphasizes a structural rise in discretionary consumption and improvements in macro stability, which are expected to lower real rates and enhance equity valuations [28][44]. Key Catalysts for Growth - The report identifies several catalysts for growth, including: - A positive growth surprise anticipated in the coming months due to policy shifts and reforms [27]. - The potential for a trade deal between India and the US, which could further boost market sentiment [43]. - The upcoming AI Impact Summit in 2026, which may enhance India's position in the global AI landscape [39][43]. Conclusion - The report concludes that the Indian equity market is poised for a significant turnaround in 2026, driven by macroeconomic stability, policy reforms, and a favorable domestic investment environment [25][44]. Additional Important Insights - The report highlights the importance of demographic advantages and a functioning democracy in supporting long-term growth [48]. - It also notes the potential for a consumption revolution in India, which could attract global investors [48]. This comprehensive outlook provides a detailed analysis of the Indian equity market's potential recovery and the factors influencing its trajectory in 2026.

Core Insights - Enterprises in Germany are increasingly integrating AI into application development, focusing on innovation, compliance, and precision engineering [1][2][3] Group 1: AI Integration and Compliance - Companies in Germany are prioritizing the ethical use of AI, which is essential for service delivery, and are seeking providers that can ensure compliance with regulatory requirements, including data protection [2][3] - The 2025 ISG Provider Lens report indicates that GenAI implementations have progressed from exploration to execution, significantly changing how enterprises approach application development and management [2][4] Group 2: Industry Trends and Government Initiatives - The report highlights that mobile application development and public sector digitalization are key trends, with the government expanding e-government platforms and emphasizing usability, security, and data localization [4][5] - In healthcare, the demand for regulated application development is rising, driven by legislation that allows doctors to prescribe digital health apps, necessitating compliance with performance and privacy standards [5][6] Group 3: Market Dynamics and Provider Evaluation - The report evaluates 26 providers in the AI-driven application development services sector, naming adesso SE, Allgeier, and others as leaders, while Coforge is recognized as a Rising Star [8] - LTIMindtree is acknowledged as the global ISG CX Star Performer for 2025, achieving the highest customer satisfaction scores among AI-driven ADM service providers [9]

Core Insights - The company reported $514 million in new deals for the September quarter, marking the fifth consecutive quarter with total contract value (TCV) above $500 million [1][9] - Revenue grew by 4.5% sequentially to $462.1 million, significantly outperforming tier I peers [4][9] - The company has a strong outlook in key verticals such as banking, insurance, and travel, leading to raised earnings estimates by analysts [8][9] Financial Performance - The 12-month executable order book reached $1,635 million, the highest to date, indicating improved revenue visibility [1][9] - In rupee terms, revenue increased by 8.1% to Rs3,985.7 crore, while net profit rose by 18.4% to Rs375.8 crore [4][9] - Operating margin (EBIT margin) expanded by 260 basis points to 14% [4][9] Client Concentration - The concentration of revenue from the top 10 clients increased to 30.8% in the September quarter, up from 29.3% in the previous quarter [2][9] - This concentration has decreased significantly from over 40% seven years ago [2][9] Workforce and Attrition - The company expanded its headcount to 34,896 in the September quarter, up from 31,991 a year ago [6][9] - The attrition rate was stable at 11.4%, slightly higher than the previous quarter's 11.3% [6][9] Market Outlook - Analysts have raised the FY26 earnings per share estimate by 2.3% and FY27 estimate by 5.2%, with a 12-month stock price target increase of 5% to Rs2,030 [7][9] - Elara Capital raised earnings estimates by 4-7% for FY26 and FY27, increasing the 12-month target price to Rs2,010 from Rs1,850 [8][9]

Company Highlights - LTIMindtree has secured its largest-ever deal valued at $580 million with a leading global media and entertainment company, although the client's name remains undisclosed [1] - The company previously announced its second-largest deal of $450 million in May, which was with U.S. agribusiness giant Archer-Daniels-Midland [3] - Following the announcement of the new deal, LTIMindtree's shares experienced a 3% increase, marking the largest daily jump in nearly five months [3] Industry Context - The Indian IT sector, valued at $283 billion, is currently facing macroeconomic uncertainties, tariff-related risks, and changes in U.S. immigration policy [2] - Analysts anticipate muted results for Indian IT companies as they prepare to report their numbers for the September quarter [2] - Mid-cap companies like LTIMindtree are gaining momentum in securing large deals, attributed to their agility and flexibility in developing AI-led value propositions, contrasting with larger firms that are still optimizing legacy portfolios [4]

Market Overview - Indian equities are expected to open positively after six consecutive days of losses, supported by gains in Asian markets and US equity futures [1] - The bond market may also benefit from the government's decision to cut long-tenor bond supply, with traders focused on the upcoming RBI interest rate decision [1] IT Sector - The IT sector is facing challenges, with an index of IT stocks declining for six straight sessions, the longest losing streak since February [2] - Accenture's disappointing commentary and the increase in H-1B visa fees have contributed to a tough demand environment, with analysts predicting a significant demand upswing may be at least a quarter or two away [2] - Analysts at Antique favor HCL Technologies, Coforge, and Mphasis as potential recovery plays in the sector [2] Bond Market - Fixed income traders are closely watching the RBI, with expectations of a 25 basis point rate cut that could lower the 10-year yield by up to 30 basis points [3] - A smaller 10 basis point rally is anticipated if the RBI adopts a dovish tone, but no action could lead to selling pressure [3] - Recent reductions in long-bond issuance have alleviated supply concerns, although most analysts expect the RBI to maintain current rates [3] State-Owned Banks - Analysts at Motilal Oswal see potential for a gradual rerating of state-owned banks due to stronger balance sheets and healthier asset quality [4] - Despite near-term earnings facing margin pressure, public sector banks are trading at reasonable valuations, with healthy capital levels reducing exposure to past asset-quality issues [4] - Top picks include State Bank of India, Punjab National Bank, and Indian Bank [4] Market Reactions - The MSCI India Index has dropped for five consecutive sessions following President Trump's order to overhaul the H-1B visa program, impacting India's $280 billion IT industry [5] - A proposed 100% duty on branded drugs has further pressured pharma shares, leading investors to reconsider expectations for a year-end rally [5] - Foreign investors have resumed selling after a brief period of buying, contributing to the market slump [5]

Core Viewpoint - The imposition of a $100,000 fee on new H-1B applications by the US is expected to significantly impact Indian IT companies, leading to increased operating costs and a decline in stock performance within the sector [1][5]. Group 1: Market Performance - Information technology stocks were the worst performers on Monday, with the Nifty IT index dropping 3 percent and experiencing over $10 billion in market capitalisation erosion [1]. - The NiftyIT index has seen losses ranging from 1.7 to 4.7 percent, with mid-size companies like Persistent Systems, Coforge, LTIMindtree, and Mphasis falling between 4.3 to 4.7 percent [2]. - Over the past week, the NiftyIT index has declined by over 1000 points, attributed to slower deal-making in the US and pricing pressures [2]. Group 2: Revenue Impact - Despite a reduced dependency on H-1B visas, the US still represents nearly 60 percent of revenues for Indian IT companies, indicating a potential near-term negative impact on stock prices due to protectionist risks [3]. - Approximately 71 percent of H-1B visa beneficiaries are Indians, highlighting the significance of this visa category for the Indian IT sector [3]. Group 3: Cost Implications - The new H-1B visa fee will increase operating costs for Indian IT services companies, compounded by a potential 25 percent tax under the proposed HIRE Act for US companies outsourcing to foreign entities [5]. - The top 12 IT companies are expected to see an impact on their earnings ranging from 1.5 to 12 percent due to the new visa costs, affecting them by 14 to 188 basis points [6]. Group 4: Industry Outlook - InCred equities downgraded the IT sector's rating to Neutral from Overweight, citing new regulations as a factor contributing to macroeconomic uncertainty [7]. - Key challenges for FY27 revenues and EBIT margins include rising cost pressures, a decrease in onsite roles, and potential offshoring of existing onsite roles [7].

Core Insights - Mutual funds have shown significant activity in various segments, with notable additions and reductions across large-cap, mid-cap, and small-cap stocks. Large-Cap Segment - Key additions by mutual funds included Eternal (Rs 7,200 crore), Infosys (Rs 5,000 crore), and HDFC Bank (Rs 3,100 crore) [6] - Major reductions were observed in Maruti Suzuki (Rs 3,100 crore), Avenue Super (Rs 2,900 crore), and NTPC (Rs 2,700 crore) [6] - Consistent additions over three months included State Bank of India, Bajaj Finance, Kotak Mahindra Bank, Axis Bank, and Titan Company, while reductions were seen in Coal India, Grasim Industries, TVS Motor Co, LTIMindtree, and Solar Industries [6] Mid-Cap Segment - Significant additions included Bank Of Maharashtra, Escorts Kubota, Blue Star, Gujarat Fluorochem, and Global Health, while key reductions were in ACC, Exide Industries, KPIT Tech, Metro Brands, and Gland Pharma [4][6] - Notable buying was seen in One 97, L&T Finance, Thermax, Tata Communications, and Coforge, with selling occurring in Exide Industries, Muthoot Finance, HDFC AMC, JK Cements, and LIC Housing Finance [6] Small-Cap Segment - Important additions by mutual funds included Bluestone Jewellery (Rs 4,000 crore), Medi Assist Health (Rs 3,000 crore), and Thirumalai Chem (Rs 2,000 crore) [5] - Key reductions were in Aditya Birla Fashion (Rs 4,000 crore), JK Tyre & Industries (Rs 1,000 crore), and Senco Gold (Rs 1,000 crore) [5] - New entries in the small-cap segment included Thirumalai Chemicals, Suven Life Sciences, PSP Projects, Foseco India, and Epack Durable, while exits included Thomas Cook, Sarda Energy, Faze Three, and Hindware Home Interiors [5] Overall Trends - The total cash and equivalents held by mutual funds decreased from Rs 1.85 lakh crore (5.46%) in July to Rs 1.76 lakh crore (5.23%) in August [6] - Significant buying was noted in Clean Science, Home First Finance, Syrma SGS Tech, Krishna Institute, and KFin Technologies, while the highest selling was in Hitachi Energy, BSE, PNB Housing, and Aditya Birla Fashion [5][6]

Investment Ratings - Coforge: Overweight (O/W) with a price target (PT) of Rs2,080 [3][4] - Qualcomm: Overweight (O/W) with a price target (PT) of $185 [3][4] - Apple: Overweight (O/W) with a price target (PT) of $240 [5] - BE Semiconductor: Overweight (O/W) with a price target (PT) of €121 [6] - Celestica: Overweight (O/W) with a price target (PT) of $115 [6] Core Insights - Coforge's management is optimistic about industry-leading growth and margin expansion, expecting a 14% EBIT margin in FY26 [3][4] - Qualcomm's acquisition of Alphawave for $2.4 billion is aimed at enhancing its Data Center portfolio, positioning it competitively in the custom AI ASIC market [6] - Apple's WWDC event revealed limited AI updates, indicating a focus on retaining its existing consumer base rather than attracting new switchers [5][6] - Taiwan's May exports surged by 38.6% year-over-year, driven by strong shipments to the US, indicating robust demand in the tech sector [9] Detailed Highlights - Coforge's proactive sales strategy and large deal execution are expected to drive robust growth in FY26, with a strong pipeline of large deals [3][4] - Qualcomm's strategic acquisition of Alphawave strengthens its position in the Data Center market, with competitors in Asia including Alchip and Mediatek [6] - Apple suppliers such as Murata, Sunny Optical, AAC, and Genius Optical are highlighted as key players in the supply chain [5][6] - BE Semiconductor is preparing for its Capital Markets Day, with expectations for market sizing and customer insights [6] - Celestica's competitive landscape in Switching includes major players like Inventec, Accton, and Arista, with significant growth opportunities identified [6] - OpenAI has reached $10 billion in annual recurring revenue, indicating strong demand for custom AI ASIC projects [6]

Group 1: Legal and Corporate Developments - Elon Musk plans to continue litigation against OpenAI despite the company's decision to maintain its non-profit status while controlling its for-profit operations [1] - PwC is set to lay off approximately 1,500 employees in the U.S., representing 2% of its total workforce of 75,000 [2] - Maserati (China) has undergone a leadership change, with Santo Ficili replacing Davide Grasso as the legal representative and chairman [4] Group 2: Financial Performance and Market Movements - Coforge's fourth-quarter profit was below expectations, with a net profit of 2.61 billion rupees (approximately $31 million), a 16.8% increase but lower than the anticipated 2.81 billion rupees due to a 49% rise in total expenses [3] - DoorDash announced plans to acquire Deliveroo for £2.9 billion (approximately $3.85 billion) as part of its international expansion strategy [9] - eToro aims for a target valuation of $4 billion in its upcoming IPO in the U.S., planning to raise up to $500 million by offering 10 million shares at a price range of $46 to $50 per share [10] Group 3: Operational Changes and Innovations - Waymo is collaborating with Magna to build a new autonomous vehicle factory in the Phoenix metropolitan area, with plans to expand its self-driving taxi service to Atlanta, Miami, and Washington D.C. by 2026 [6] - Volvo's NOVO Energy announced a significant restructuring, including layoffs affecting about 50% of its workforce, following the bankruptcy of its technology partner Northvolt [7] - BabyTree launched an upgraded version of its BabyTree Pregnancy App, introducing the AI Agent product "Mika AI" Beta [8] Group 4: Industry Trends and Insights - Tesla reported that over 95% of the parts used in its Model 3 and refreshed Model Y vehicles are sourced from China [5] - The EU plans to prohibit new natural gas transactions with Russia by the end of this year and gradually eliminate existing contracts by the end of 2027 [14]